EU unveils plans for new energy framework to decarbonise gas market

The European Commission has unveiled a new raft of legislative proposals which aim to decarbonise the EU gas market by facilitating the adoption of renewable and low carbon gases, including hydrogen.

The EU executive also put forward a proposal to cut methane emissions in the European energy sector and the global supply chain.

Read more: EU lays out "Fit for 55" goals to cut carbon emissions

In July, the Commission unveiled its "Fit for 55" package, which aims to decarbonise the energy it consumes to reduce its overall greenhouse gases emissions by 55% by 2030 to become climate-neutral by 2050, and says that these proposals will help reach that goal.

"Europe needs to turn the page on fossil fuels and move to cleaner energy sources. This includes replacing fossil gas with renewable and low carbon gases, like hydrogen," said EC vice president for the European Green Deal Frans Timmermans. 

"Today, we are proposing the rules to enable this transition and build the necessary markets, networks and infrastructure. To address methane emissions, we are also proposing a solid legal framework to better track and reduce this powerful greenhouse gas, helping us to fulfil the Global Methane Pledge and tackle the climate crisis."

The Commission says the proposals, which are both regulation and directive, create the conditions for a transition from fossil natural gas to renewable and low-carbon gases, in particular hydrogen and biomethane. One of its main aims is to establish a hydrogen market, by creating the right investment conditions, and enabling the development of a dedicated infrastructure, including for trade with third countries.

Read more: Biomethane has a "long-term role to play" in EU emissions goals

The market rules will be applied in two phases, before and after 2030, and notably cover access to hydrogen infrastructures, separation of hydrogen production and transport activities, and tariff setting. A new governance structure in the form of the European Network of Network Operators for Hydrogen (ENNOH) will be created to promote a dedicated hydrogen infrastructure, cross-border coordination and interconnector network construction, and elaborate on specific technical rules.

The new proposals will also remove tariffs for cross-border interconnections and reduce tariffs at injection points. A new certification system for low-carbon gases would also be created as part of the new rules, which the Commission says will "complete the work started in the Renewable Energy Directive with the certification of renewable gases". The aim of this is to ensure a level playing field in assessing the full greenhouse gas emissions footprint of different gases and allow Member States to compare and consider them in their energy mix.

The EU executive also proposed that long-term contracts for unabated fossil natural gas should not be extended beyond 2049 to avoid locking Europe in with fossil natural gas and to make more space for clean gases in the European gas market.

The proposals also include consumer empowerment, with consumers able to switch suppliers more easily using price comparison tools to get fair and accurate billing information and have improved access to data and new smart technology. 

Read more: Green hydrogen now cheaper to produce than grey - ICIS report

Addressing the current record-high energy prices, the proposals look to improve the resilience of the gas system and strengthen the existing security of supplies. There is also an extension to current rules to renewables and low carbon gases and new provisions to cover emerging cybersecurity risks. A more strategic approach to gas storage is also included, which aim to include storage options and considerations into regional level risk assessment.

On tackling methane emissions, the proposed legislation would require the oil, gas and coal sectors to measure, report and verify methane emissions, and proposes strict rules to detect and repair methane leaks and to limit the practices of venting and flaring. It also puts forward global monitoring tools ensuring transparency of methane emissions from imports of oil, gas and coal into the EU, which will allow the Commission to consider further actions in the future.

A new EU legal framework is also proposed, to ensure higher standards of measurement, reporting, and verification of methane emissions. The new rules would require companies to measure and quantify their asset-level methane emissions at source and carry out comprehensive surveys to detect and repair methane leaks in their operations.

In terms of the methane emissions of the bloc's energy imports, the proposals include a requirement for fossil fuel importers to submit information about how their suppliers perform, such as emissions measurement, reporting and verification and in what ways those emissions are mitigated. 

Read more: Making net-zero possible

Two transparency tools will also be created as part of the proposed legislation to make public the performance and reduction efforts of countries and energy firms across the world in terms of methane emissions. The first of these tools is a transparency database where the data reported by importers and EU operators will be made available to the public. The second is a global monitoring tool to show methane emitting hot-spots inside and outside the EU, using environmental monitoring satellites.

On top of the new proposals, the Commission says it will be looking to engage in a "diplomatic dialogue" with its international partners to tackle emissions along the European supply chain. The methane regulation will also be reviewed in 2025 to bring in more stringent measures on the import of fossil fuels.

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