Decarbonizing Gas Markets, Promoting Hydrogen, and Reducing Methane Emissions are All Part of New EU Framework

On December 15, the European Commission approved a set of legislative measures aimed at decarbonizing the EU gas market by supporting the adoption of renewable and low-carbon gases, such as hydrogen, and ensuring energy security for all European citizens.

Europe is abandoning its fossil fuels in favor of greener energy sources, which includes substituting renewable and low-carbon gases such as hydrogen.

The Commission is also developing ideas to reduce methane emissions in Europe’s energy sector and throughout the global supply chain in response to the EU Methane Strategy and its international obligations.

These recommendations would help the European Union achieve its objective of decarbonizing its energy consumption in order to cut greenhouse gas emissions by at least 55 percent by 2030 and become climate-neutral by 2050.

The recommendations announced on December 15 set the circumstances for a green transition in the EU gas industry, boosting the use of clean gases.

The Commission’s proposed regulations and directives set the circumstances for a shift away from fossil natural gas and toward renewable and low-carbon gases, particularly biomethane and hydrogen, while also bolstering the gas system’s resilience. One of the key goals is to build a market for hydrogen, create an investment-friendly climate, and enable the creation of dedicated infrastructure, including for international trade.

The European Network of Network Operators for Hydrogen (ENNOH) will be established as a new governance structure to support dedicated hydrogen infrastructure, cross-border coordination, and interconnector network construction, as well as provide particular technical guidelines.

The idea proposes that national network development plans be based on a combined power, gas, and hydrogen scenario. It needs to be in line with national energy and climate plans, as well as the EU’s ten-year network development plan. Gas network operators must provide information on infrastructure that can be decommissioned or repurposed, and separate hydrogen network development reporting will be required to verify that the hydrogen system is built on the basis of a realistic demand forecast.

By abolishing barriers for cross-border interconnections and cutting tariffs at injection sites, the Commission expects the new rules to make it easier for renewable and low-carbon gases to access the current gas system. They also create a certification system for low-carbon gases, completing the work begun with the certification of renewable gases in the Renewable Energy Directive. This will ensure a fair playing field for measuring the total greenhouse gas emissions footprint of various gases, allowing the Member States to evaluate and consider them in their energy mix. Long-term contracts for unabated fossil natural gas should not be extended beyond 2049, as per the Commission, in order to avoid locking Europe in with fossil natural gas and to make greater room in the European gas market for clean gases.

The proposal also prioritizes consumer empowerment and protection. Consumers will be able to transfer suppliers more easily, use effective price comparison tools, receive accurate, fair, and transparent billing information, and have improved access to data and new smart technology, all of which mirror measures already in place in the electricity market. Renewable and low-carbon gases should be available to consumers instead of fossil fuels.

In a first-ever EU legislative proposal on methane emissions reduction in the energy sector, the oil, gas, and coal sectors will be required to measure, report, and verify methane emissions, and that strict rules will be proposed to detect and repair methane leaks, as well as to limit venting and flaring. It also proposes global monitoring tools to ensure transparency of methane emissions from oil, gas, and coal imports into the EU, allowing the Commission to consider future steps.

Finally, the Commission proposed a two-step approach to reducing methane emissions from EU energy imports. To begin, fossil fuel importers will be expected to submit information on how their suppliers measure, monitor, and verify their emissions, as well as how they mitigate those emissions. The Commission hopes to establish two transparency tools to show the performance and reduction efforts of countries and energy companies around the world in reducing methane emissions: a transparency database, where data reported by importers and EU operators will be made public; and a global monitoring tool, which will show methane emitting hotspots inside and outside the EU, leveraging its world leadership in environmental monitoring.

As a second step, the Commission will engage in a diplomatic engagement with its international partners and reassess the methane rule by 2025, with the goal of imposing more strict regulations on imported fossil fuels once all data is available.