The European Council and European Parliament have recently reached provisional political agreement on changes to the Gas Directive and Gas Regulation, establishing common EU rules on how methane and hydrogen markets should be organised. This provisional agreement now needs to be formally endorsed by the Parliament and Council before coming into effect.
Key changes to current legislation include:
- Increased co-ordination between network development plans for hydrogen, electricity and natural gas, and the creation of a new EU entity for Hydrogen Network Operators (ENNOH)
- Facilitating connection and access to the gas grid for renewable and low-carbon gases
- Establishing a certification system for low-carbon gases, including hydrogen (with detailed rules to be set out in a delegated act)
- Rules for unbundling and tariff-setting for hydrogen transmission and distribution
- Extending the mechanism established in the energy crisis for joint purchases of gas, though with participation remaining voluntary, with a mechanism also to be created to support the development of the hydrogen market
- Allowing Member States to restrict the supply of natural gas from Russia or Belarus to protect security interests
- Establishing default provisions for “solidarity” between Member States (including rules on compensation between member state) in the event of a gas crisis
- Preventing long-term contracts for unabated fossil gas from lasting beyond 2049
The political agreement on the European Commission’s proposed package on hydrogen and decarbonised gases marks the end of a process that began as the current Commission started its term over four years ago.
Prior to the Commission publishing its proposals, and during the legislative process, Frontier has been active in advising a range of clients on the potential options for reform and their potential impacts. This includes four studies, on which Frontier either led or played a major role, for the Commission as it prepared its legislative proposals, which considered:
- Overarching barriers to integration of different energy vectors and to the uptake of low-carbon gases (see here);
- How dedicated hydrogen networks should be regulated (see here);
- How to manage cross-border differences in gas quality cross the EU (see here); and
- Policies for gas distribution and gas consumers (see here).