Changes from plenary report to adopted text

RemovedDRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

AddedCommon rules for the internal markets for renewable gas, natural gas and hydrogen (recast)

Removedon the proposal for a directive of the European Parliament and of the Council on common rules for the internal markets in renewable and natural gases and in hydrogen (recast)

AddedCommittee on Industry, Research and Energy

Removed(COM(2021)0803 – C90468/2021 – 2021/0425(COD))

AddedPE732.908

Removed(Ordinary legislative procedure: first reading)

AddedEuropean Parliament legislative resolution of 11 April 2024 on the proposal for a directive of the European Parliament and of the Council on common rules for the internal markets in renewable and natural gases and in hydrogen (recast) (COM(2021)0803 – C9-0468/2021 – 2021/0425(COD))

Added(Ordinary legislative procedure – recast)

▸6 unchanged paragraphs

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2021)0803),

– having regard to Article 294(2) and Article 194(2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90468/2021),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the reasoned opinions submitted, within the framework of Protocol No 2 on the application of the principles of subsidiarity and proportionality, by the Czech Chamber of Deputies and the Czech Senate, asserting that the draft legislative act does not comply with the principle of subsidiarity,

– having regard to the opinion of the European Economic and Social Committee of 19 May 2022,

Changed– having regard to the opinion of the Committee of the Regions of 1012 October 2022,

– having regard to the Interinstitutional Agreement of 28 November 2001 on a more structured use of the recasting technique for legal acts,

– having regard to the letter of 2 February 2023 sent by the Committee on Legal Affairs to the Committee on Industry, Research and Energy in accordance with Rule 110(3) of its Rules of Procedure,

Added– having regard to the provisional agreement approved by the committee responsible under Rule 74(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 20 December 2023 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

▸7 unchanged paragraphs

– having regard to Rules 110 and 59 of its Rules of Procedure,

– having regard to the opinions of the Committee on the Internal Market and Consumer Protection and the Committee on Agriculture and Rural Development,

– having regard to the report of the Committee on Industry, Research and Energy (A9-0035/2023),

A. whereas, according to the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission, the Commission proposal does not include any substantive amendments other than those identified as such in the proposal and whereas, as regards the codification of the unchanged provisions of the earlier acts together with those amendments, the proposal contains a straightforward codification of the existing texts, without any change in their substance;

1. Adopts its position at first reading hereinafter set out, taking into account the recommendations of the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

RemovedAMENDMENTS BY THE EUROPEAN PARLIAMENT*

AddedP9_TC1-COD(2021)0425

Removedto the Commission proposal

AddedPosition of the European Parliament adopted at first reading on 11 April 2024 with a view to the adoption of Directive (EU) 2024/… of the European Parliament and of the Council on common rules for the internal markets for renewable gas, natural gas and hydrogen, amending Directive (EU) 2023/1791 and repealing Directive 2009/73/EC (recast)

Removed---------------------------------------------------------

Added(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Directive (EU) 2024/1788.)

Removed2021/0425 (COD)

RemovedProposal for a

RemovedDIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

Removedon common rules for the internal markets in renewable gas and natural gas and in hydrogen (recast)

RemovedTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

RemovedHaving regard to the Treaty on the Functioning of the European Union, and in particular Article 194(2) thereof,

RemovedHaving regard to the proposal from the European Commission,

RemovedAfter transmission of the draft legislative act to the national parliaments,

RemovedHaving regard to the opinion of the European Economic and Social Committee,

RemovedHaving regard to the opinion of the Committee of the Regions,

RemovedActing in accordance with the ordinary legislative procedure,

RemovedWhereas:

Removed(1) Directive 2009/73/EC of the European Parliament and of the Council has been substantially amended several times. Since further amendments are to be made, that Directive should be recast in the interests of clarity.

Removed(2) The internal market in natural gas, which has been progressively implemented throughout the Union since 1999, aims to deliver real choice for all consumers of the European Union, be they citizens or businesses, new business opportunities and more cross-border trade, so as to achieve efficiency gains, competitive prices, and higher standards of service, and to contribute to security of supply and sustainability.

Removed(3) Directive 2003/55/EC of the European Parliament and of the Council and Directive 2009/73/EC of the European Parliament and of the Council have made a significant contribution towards the creation of such an internal market in natural gas.

Removed(3a) Internal market rules for gaseous fuels need to be aligned with the Union’s climate and energy law, in particular, Regulation (EU) 2021/1119 of the European Parliament and of the Council. The legal framework set out by this Directive is therefore amended accordingly.

Removed(3b) In response to the hardships and global energy market disruption caused by Russia’s unprovoked and unjustified military aggression against Ukraine, and in line with the communication of the Commission of 18 May 2022 ‘REPowerEU Plan’ (the ‘REPowerEU Plan’), the Union and the Member States should phase out its dependency on Russian energy imports as soon as possible and well before 2030, because those imports are detrimental to the objectives of the Energy Union, including energy solidarity, to effective functioning of and competition in the internal energy market, as well as to security of energy supply and the essential security interests of the Union and of the Member States.

Removed(3c) The REPowerEU Plan pledge to phase out Russian gas imports as soon as possible, equalling 155bcm in 2019 and representing 40 % of final fossil gas demand, translates into a higher ambition for the gas savings and the acceleration of the uptake of renewable alternatives, including biomethane, electricity, district heating and cooling, as well as the ramp-up of the European hydrogen market. Taking into account the fact that fossil gas demand in the Union has been rising over the recent years, there is a need to establish governance underpinning that ambition and the Union’s independence.

Removed(4) As part of the Package ‘Clean Energy for all Europeans’ proposed by the Commission on 30 November 2016, Regulation (EU) 2019/943 of the European Parliament and of the Council and Directive (EU) 2019/944 of the European Parliament and of the Council brought about a further step in the development of the internal market for electricity with citizens at its core and contributing to the Union’s objectives of transition to a clean energy system and reducing greenhouse gas emissions. The internal market in natural gas should be built on those same principles and, in particular, ensure an equal level of consumer protection. In particular, Union energy policy should address vulnerable customers and tackle energy poverty.

Removed(5) The Union must cut greenhouse gas emissions and promote modern, decentralised, efficient and integrated energy systems. It has therefore adopted a set of initiatives to reach that goal, including the energy system integration strategy, the communication of the Commission of 8 July 2020 on a hydrogen strategy for a climate-neutral Europe (the ‘EU Hydrogen Strategy’), Commission Recommendation (EU) 2021/1749, European Parliament resolution of 10 July 2020 on a comprehensive European approach to energy storage as well as Regulations (EU) 2018/1999 and(EU) 2021/1119 which together set out how to update the energy markets, including the decarbonisation of gas markets ▌. Those initiatives also call for transitioning to a more decentralised energy system with energy efficiency and energy system efficiency at its core, greater direct electrification of end-use sectors, prioritising demand-side solutions whenever they are more cost-effective than investments in energy infrastructure, greater focus on energy storage solutions, and prioritising the use of hydrogen for end-users in hard-to-decarbonise sectors where no other more energy and cost-efficient alternatives are available. The Union has also adopted a set of initiatives and mandatory targets to encourage decarbonisation in those sectors. This Directive should contribute to achieving those goals as well as the REPowerEU Plan ambition to phase out fossil imports from Russia as soon as possible ensuring security of supply and a well-functioning internal market for gas, including for hydrogen, and facilitating efficient and integrated energy systems.

Removed(6) This Directive aims to facilitate the penetration of renewable gas and low-carbon gas into the energy system enabling a shift from fossil gas and to allow such new gas to make their contribution towards achieving the Union’s 2030 energy and climate objectives and climate neutrality in 2050, as well as to steering of gaseous molecules towards those applications and sectors that cannot be directly electrified with renewables, with this creating the necessary space for renewables electricity and other thermal renewables for heating and transport purposes. This Directive aims also to set up a regulatory framework which enables and incentivises all market participants to shift away from fossil gas and plan their activities to avoid lock-in effects and ensure gradual and timely phase-out of fossil gas notably in all relevant industrial sectors and for heating purposes.

Removed(6a) The integration of biomethane in the natural gas system supports the Union's climate objectives and helps to diversify the energy supply in line with the REPowerEU Plan. Requests for the grid connection of renewable gas production should be assessed within reasonable time limits and permitting procedures should not be hampered by a lack of administrative capacities. It should be possible to prioritise connection requests for renewable gas production over connection request for the production of natural gas and low-carbon gas.

Removed(7) The EU hydrogen strategy recognises that, as EU Member States have different potential for the production of renewable hydrogen, an open and competitive EU market with unhindered cross-border trade has important benefits for competition, affordability, and security of supply. Moreover, it stresses that moving towards a liquid market with commodity-based hydrogen trading would facilitate entry of new producers and be beneficial for deeper integration with other energy carriers. It would create viable price signals for investments and operational decisions. The rules laid down in this Directive should thus be conducive for hydrogen markets, commodity-based hydrogen trading and liquid trading hubs to emerge and any undue barriers in this regard should be eliminated by Member States. Whilst recognising the inherent differences, existing rules that enabled efficient commercial operations developed for the electricity and gas markets and trading should be rendered applicable to Union hydrogen markets to the extent appropriate and within a suitable time frame, also taking into account methane and hydrogen leakages.

Removed(7a) Hydrogen should be prioritised for feedstock, raw material or energy purposes in hard-to-decarbonise industries such as steel or chemicals and hard-to-decarbonise maritime and aviation applications. Conversely, all efforts should be made to avoid the use of hydrogen for applications where more energy or cost efficient alternatives exist. Other renewable gas, such as biogas, will be able to contribute to the energy and climate goal as long as they are produced using only truly sustainable feedstocks, such as waste and residues referred to in Annex IX, Part A, of Directive (EU) 2018/2001 of the European Parliament and of the Council.

Removed(8) In line with the EU Hydrogen Strategy and the REPowerEU Plan, 10 mt of domestic renewable hydrogen and 10 mt of imported renewable hydrogen are expected to be deployed already by 2030 and onwards for the purpose of increasing the flexibility of the electricity system and decarbonising certain sectors and applications where no other more energy or cost efficient alternative is available, ranging from aviation and shipping to hard-to-decarbonise industrial sectors. In addition, hydrogen will contribute to replacing Russian fossil fuels as swift as possible. Hydrogen use from domestic production or imported from third countries should be prioritised in hard-to-decarbonise sectors in which more energy and cost-efficient options are not available. All final customers connected to hydrogen systems will benefit from basic consumer rights applicable to final customers connected to the natural gas system such as the right to switch supplier and accurate billing information. In those instances where customers are connected to the hydrogen network, e.g. industrial customers, they will benefit from the same consumer protection rights applicable to natural gas customers. However, consumer provisions designed to encourage household participation on the market, such as price comparison tools and active customers, do not apply to the hydrogen system.

Removed(9) In line with the EU Hydrogen Strategy, the priority for the Union is to develop renewable hydrogen produced using mainly wind and solar energy. Renewable hydrogen produced using biomass energy falls under the definition of biogas, as defined in Article 2, point (28), of Directive (EU) 2018/2001. Renewable hydrogen is the only option compatible with the Union’s climate neutrality and zero pollution goal in the long term and the most coherent with an integrated energy system. However, renewable hydrogen production is not likely to scale fast enough to meet the expected growth in demand for hydrogen in the Union. Therefore, low-carbon fuels (LCFs), such as low-carbon hydrogen (LCH), may play a role in the energy transition in line with the Union climate targets, particularly in the short and medium term to rapidly reduce emissions of existing fuels, and support the transition of the Union’s industry in hard-to-decarbonise sectors in which more energy or cost-efficient options are not available, including in heavy-duty transport. In order to support the transition, it is necessary to adopt a technology-neutral approach and to establish a threshold for greenhouse gas emission reductions for low-carbon hydrogen and synthetic gaseous fuels. Such threshold should become more stringent for hydrogen produced in installations starting operations from 1 January 2031 to take into account technological developments and better stimulate the dynamic progress towards the reduction of greenhouse gas emissions from hydrogen production. The EU Energy System Integration strategy highlighted the need to deploy an EU–wide certification system to also cover low-carbon fuels with the aim of enabling Member States to compare them with other decarbonisation options and consider them in their energy mix as a viable solution. In order to ensure that LCF have the same decarbonisation impact as compared to other renewable alternatives it is important that they are certified by applying a similar methodological approach based on a life cycle assessment of their total greenhouse gas (‘GHG’) emissions, which should take into account at least upstream emissions from extraction of the fossil fuel, feedstock production and transportation, emissions from LCF production and processing, and emissions from transportation and distribution of LCF as well end-use emissions, considering methane leakages all along the value chain. Until the delegated act defining the methodology is adopted, the requirements of Commission Delegated Regulation (EU) 2021/2139 for hydrogen production should be guiding the definition of LCF for funding purposes. This would allow deploying a comprehensive Union-wide certification system, covering the whole Union energy mix. Taking into consideration that LCF and LCH are not renewable fuels, their terminology and certification could not be included in the proposal for the revision of Directive (EU) 2018/2001 ▌. Therefore, their inclusion in this Directive fills in this gap. When using the Union Database as single mass balance system for the certification of renewable and low LCF, there should be no physical tracking of the molecules inside the single mass balance system.

Removed(9a) Although priority should be given to promoting a domestic hydrogen production within the Union, the Union may not be able to produce enough renewable and low-carbon hydrogen to meet its demand. Imports of renewable and low-carbon hydrogen are likely to be necessary for the rapid availability of large quantities of hydrogen catering for the Union’s demand, in particular from neighbouring countries and regions such as Norway, Ukraine, North Africa and the Middle East. Therefore, the Commission and the Member states should engage in an open and constructive dialogue in order to establish mutually beneficial cooperation and partnerships with neighbouring regions safeguarding the Union’s strategic interests and the energy security of both the Union and its partners. Hydrogen partnerships and intergovernmental agreement with third countries on hydrogen imports should contribute to the creation of clean and new technology markets through the transfer of knowledge and the achievement of the United Nations Sustainable Development goals. A level playing-field, based on equivalent rules or standards in third countries in terms of environmental protection, sustainability and mitigating climate change should be promoted while avoiding negative social or environmental effects, for example the relocation of environmental impacts, including greenhouse gas emissions, any delay in the decarbonisation of energy in third countries, access to energy for local population, threats to the drinking water supply or exploitative working conditions. In that context, hydrogen production and export from third countries should be subject to internationally recognised due diligence principles, such as the United Nations Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the OECD Due Diligence Guidance for Responsible Business Conduct (RBC). Hydrogen should become an element of the Union’s international cooperation, inter alia within the framework of the International Renewable Energy Agency’s (IRENA’s) work, research cooperation, climate and energy diplomacy and the European Neighbourhood Policy. The certification and life cycle assessment methodology of LCF should also apply to imports. This would ensure that partner countries can easily identify the Union requirements for LCF to be certified as such, ensure market confidence, and foster transparent imports of LCF. By developing such a methodology, the Union can also take a leading role in developing global standards for LCF certification and strengthen its role as a global climate leader, using its climate diplomacy to develop mutually beneficial cooperation with exporting partners.

Removed(9b) Against the background of the EU Hydrogen Strategy and REPowerEU Plan, the Commission should assess in the report whether additional measures such as setting an indicative greenhouse gas intensity reduction target for gas consumed in the Union by 2030 may be necessary to cater for an investment and pathway for further upscaling of renewable gas and low carbon gas across the Union, while taking into account the gradual phase-out of fossil gas and the assumed reduction of demand for gas in sectors other than hard-to-decarbonise sectors where no other more energy and cost-efficient options are available. Such measures could provide predictability to customers, in particular in hard-to-decarbonise sectors, to make the necessary investments to transform their operations. Without prejudice to the prioritisation of the roll-out and uptake of renewable gas, they may also enable different technologies to contribute towards the Union indicative target and the overall Union decarbonisation commitments. Low-carbon gas should be regarded as transitional as long as renewable gas, in particular renewable hydrogen, are a scarce source.