Commission welcomes deal to decarbonise EU gas markets and promote hydrogen

The Commission welcomes the provisional agreement reached today between the European Parliament and Council on updated EU rules to decarbonise the gas market and create a hydrogen market. The
new rules will facilitate the uptake of renewable and low carbon gases,
including hydrogen, while ensuring security of supply and affordability
of energy for all citizens in the EU. The decarbonisation of the gas
sector and the creation of a hydrogen market will make a key
contribution to the EU’s efforts to reach climate neutrality by 2050. Renewable and low-carbon gases will help cut emissions in heavy-emitting sectors
and support the competitiveness of European industry. This agreement
will help the EU reinforce its energy independence and further reduce
imports of fossil fuels from Russia, as set out in the REPowerEU Plan.

A cleaner European gas market

The agreement reinforces the long-term planning of the necessary
infrastructure for a decarbonised gas sector in Europe. It foresees that
national network development plans should be based on joint scenarios for electricity, gas and hydrogen. These should be aligned with National Energy and Climate Plans,
as well as an EU-wide Ten Year Network Development Plan. Hydrogen and
gas network operators will have to include information on infrastructure
that can be decommissioned or repurposed, and there will be specific hydrogen network development plans to ensure that the construction of the hydrogen system is based on a realistic demand projection.

The agreed framework will enable the uptake of renewable and low-carbon gases in the EU by facilitating connection and access to the existing gas grid and allowing discounts to cross-border and injection tariffs for these gases. A certification system for low-carbon gases, including hydrogen, is also established  complementing the certification of renewable gases and hydrogen foreseen in the revised Renewable Energy Directive.
This will ensure a level playing field and consistency in assessing the
full greenhouse gas emissions footprint of different gases and allow
Member States to effectively compare and consider them in their energy
mix. Detailed rules on the methodology and assessment of greenhouse gas
reduction will be determined in a delegated act.

The deal establishes a market design for hydrogen in Europe.
The agreement foresees that rules will be applied in two phases, before
and after 2033. In the ramp-up phase a simplified framework will apply
with clear visibility about the future rules for a developed hydrogen
market. These provisions cover notably access to hydrogen
infrastructures, separation of hydrogen production and transport
activities (so-called “unbundling”) and tariff setting. A new governance
structure in the form of the European Network of Network Operators for
Hydrogen (ENNOH) will be established to promote a dedicated hydrogen
infrastructure, cross-border coordination and interconnector network
construction. It will also be responsible for elaborating specific
technical rules.

Empowering consumers and guaranteeing sustainability and security of supply

Better consumer empowerment and protection is
another important element of the provisional agreement struck today.
The revised gas market framework will mirror the provisions already
applicable in the electricity market, so that consumers will be able to switch suppliers more easily, use effective price comparison tools, get accurate, fair and transparent billing information, and have better access to data and new smart technologies. In short, consumers should be able to easily choose renewable and low carbon gases over fossil fuels.

The co-legislators have also backed the Commission’s proposal that long-term contracts for unabated fossil gas should not last beyond 2049. 
This will help avoid locking Europe into fossil gas imports while
incentivising the use of renewable and low-carbon gases, which will be
in large part domestically produced and thus reinforce our energy
security. Crucially, and in line with the objectives of the REPowerEU Plan, they also agreed on a mechanism allowing Member States to limit upfront bidding for capacity for access to the network and LNG terminals for natural gas and LNG from Russia and Belarus.

The revised rules will also reinforce energy security. Default solidarity rules will apply automatically to protect vulnerable customers, including between Member States that do not have a direct connection. Crisis
management procedures have also been strengthened by adding safeguards
for the cross-border flows of gas during an emergency and by allowing
the reduction of non-essential consumption.

New provisions are also introduced to cover emerging cybersecurity risks. In
particular, the Commission is empowered to adopt specific rules for the
cybersecurity of cross-border gas flows and Member States will have to
take such risks into account when preparing their preventative and
emergency plans.

Building on the success of the EU Energy Platform, established as a tool to tackle the energy crisis last year, a permanent demand aggregation and joint purchasing mechanism
for natural gas will be established for voluntary use. In addition, the
deal introduces a five-year pilot project to bring together demand and
supply of hydrogen and create market transparency under the European
Hydrogen Bank.

Next steps

Today’s provisional agreement now requires formal adoption by both
the European Parliament and the Council. Once this process is completed,
the new legislation will be published in the Official Journal of the
Union and enter into force 20 days later.

Background

The Commission put forward the decarbonised gases and hydrogen package
in December 2021 as part of the European Green Deal. These measures are
key to put the EU on a pathway to reach climate neutrality by 2050 and
reduce emissions by at least 55% by 2030. The proposals followed from
the strategic visions set out in the  EU Energy System Integration Strategy and EU Hydrogen Strategy in 2020.