Changes from report parliamentary committee draft to plenary report

The revision of the gas market directive is the key instrument to create a regulatory framework that supports the decarbonisation of the gas market. It lays ground for the ramp-up of the European hydrogen market and paves the way for more energy system integration.

I strongly support the overriding goal to ensure an integrated, liquid market for natural gas but also for hydrogen as one of the main molecular energy carriers in the future. Probably, renewable hydrogen production will not scale fast enough to meet the expected growth in demand for hydrogen in Europe. Therefore, low carbon hydrogen may play a role in the energy transition and back the transition of Europe’s industry in hard to decarbonise sectors where no more energy or cost-efficient options are available. However, in the long-term renewable hydrogen will be the only sustainable option.

The Russian war against Ukraine injects an additional sense of urgency to the gradual phase-out of fossil gas, in particular from Russia. Diversifying our imports of gases is an important objective that the European Union is currently working on and that allows us to be more independent in the short to medium term. At the same time, we have to promote the use of renewable gases, especially biomethane and renewable hydrogen, as the only sustainable solution. Within the scope of this directive, this means to emphasise the integration of biomethane in the natural gas grid and to enable the uptake of the European hydrogen market built on an interconnected dedicated hydrogen system.

Against this background, I propose the following key amendments.

Prioritising the use of hydrogen for industrial customers

Hydrogen will remain a scarce commodity for the foreseeable future. Therefore, we have to ensure that its use is prioritised for industrial customers in hard to decarbonise sectors with the highest greenhouse gas abatement potential where no more energy and cost efficient alternatives are available. In the early stages of the market development, these sectors have to be the heart of a consumer-centered and energy efficient approach in the hydrogen market. The hydrogen demand of these specific sectors will drive production capacity expansion, infrastructure development and overall market liquidity. Furthermore, potential hydrogen network users with the highest greenhouse gas abatement potential should be prioritised if there is less capacity than potential users that request access to a dedicated hydrogen network in order to make the best progress in decarbonisation. Last, hydrogen network operators shall, when elaborating the hydrogen network development report, take into account the location of industrial customers.

Promoting energy system integration

Energy system integration will play a major role in our future energy supply, which is why we need a joint scenario framework that not only considers natural gas and electricity as an integrated system but also include hydrogen and district heating. There are multiple connections between the energy systems that directly affect the network planning in each silo, for instance, in terms of repurposing, the natural gas and the hydrogen grid are interdependent and demand-side solutions not requiring new infrastructure have to be taken into account. Similarly, the hydrogen network development cannot be managed without considering power to gas assets and hydrogen-ready plants. Hydrogen as energy storage will increase the flexibility of the electricity system.

Local heating and cooling planning

Member States should ensure that regional and local authorities prepare local heating and cooling plans that aim to support the use of local renewable sources in the most efficient way and energy system integration on local level. They should include a strategy that defines the requirements of the infrastructure necessary on distribution level in order to meet the current and future demand of heating and cooling of a specific area. The strategy should provide transparency for the public and final customers as well as a reliable timeframe for investors and distribution system operators to meet an area’s heating and cooling needs. The plans should be complementary to the local heating and cooling planning in the Energy Efficiency directive, taking into account the potential of energy efficiency as well as the energy performance of buildings, the joint scenario framework, the hydrogen network development report and the network development plan.

Using existing synergies between the natural gas and the hydrogen infrastructure

In the long term, rights and obligations for the transport of hydrogen will be the same as for the transport of natural gas. For this reason, the regulatory framework for electricity and gas should also apply to hydrogen. First, this includes to distinguish between transmission and distribution of hydrogen and to apply the unbundling of distribution system operators to hydrogen distribution network operators. Second, this means to acknowledge that all three unbundling models of transmission system operators in the natural gas market, namely Ownership Unbundling (OU), Independent Transmission Operator (ITO) and Independent System Operator (ISO), have proven to be equally successful to ensure transparent and non-discriminatory network access while delivering the investments needed in the energy networks. As a result, all three models should be an option for the unbundling of hydrogen transmission system operators. Moreover, setting an end to the ITO model puts at risk the ramp-up of the hydrogen market at least in member states where the ITO model is the common unbundling model. Third, this means to use the synergies that the joint operation of hydrogen and gas networks create in order to promote a faster and more cost-efficient development of the hydrogen network. Therefore, repurposing existing natural gas pipelines is essential and should not be hampered by the legal separation of activities related to hydrogen transport and transmission or distribution of natural gas.

Decarbonising the gas market

The decarbonisation of the gas market is, in line with the EU’s 2030 and 2050 climate targets, one of the key objectives in this directive. The integration of biomethane in the natural gas system delivers on those targets. Therefore, grid connection requests of renewable gas production should be assessed in reasonable time limits and permitting procedures should not hampered by the lack of administrative capacities. In addition, connection requests for renewable gases may be prioritized over connection requests for natural and low carbon gases.

Low carbon hydrogen may play a role in the energy transition as long as there is not enough renewable hydrogen available to meet the expected growth in demand for hydrogen in Europe. Consequentially, we need clarity on the definition of low carbon fuels and low carbon hydrogen as soon as possible. Therefore, a fossil fuel comparator with threshold of 94 gCO2eq/MJ is introduced and the life-cycle assessment of emission specified, considering at least upstream and downstream emissions, including methane leakage, as well as emissions related to the production, the transport and distribution and the end-use of low carbon fuels and low carbon hydrogen. Overall, the regulatory consistency with the methodology used to determine the greenhouse gas emissions reductions of RFNBOs and recycled low carbon fuels should be given.

Consumer protection and empowerment

This directive intents to ensure a high level of consumer protection and empowerment by mirroring, where possible, the legislative framework of the electricity market. Taking it one step further, comprehensive and common concepts of vulnerable consumers and energy poverty are introduced as well as a broader definition of energy security that reflects today’s challenges and requirements of energy system integration.

Furthermore, smart meters systems in the natural gas system should only be deployed after a positive cost-benefit assessment. The provisions of smart meters systems in the hydrogen systems should only apply to industrial customers.