EU paves way for renewable and low-carbon gases to replace fossil fuel

EU climate chief, Frans Timmermans, speaking at a press conference to unveil a package of proposals on energy and climate action [Jennifer Jacquemart / EC Audiovisual Service]

The European Commission on Wednesday (15 December) unveiled a package of gas legislation that aims to steer Europe away from fossil gas towards more sustainable energy sources, like renewable and low-carbon hydrogen.

To reach its aim of net zero emissions by mid-century, Europe needs to drastically increase the level of electrification across the economy, but the European Commission says there will still be a need for gas in certain sectors that are difficult to electrify, like heavy industry and transport.

“We know that electricity alone cannot deliver all the energy we’ll need in the future and renewable and other low carbon gases will increasingly replace fossil fuels,” said Frans Timmermans, the EU’s climate chief.

“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,” he said.

According to the EU executive, gaseous fuels, like biogas, biomethane, renewable and low-carbon hydrogen, as well as synthetic methane, will represent around a fifth of final energy consumption by 2050.

“Electrification is a primary tool to implement renewable energy sources in all sectors where this is technically and economically feasible. However, electrification is not today at least possible in all sectors,” said a senior EU official who was briefing the press on Tuesday (14 December).

“That is where we will continue to need gaseous fuels and, to meet our Green Deal objectives,” the official continued, saying “these gaseous fuels, which today are mainly fossil-based, need to be decarbonised”.

To enable the transition, the European Commission has introduced measures to support renewable and low carbon gases, reduce methane emissions and decarbonise buildings.

“The aim is to reduce the share of fossil gas in the mix by, on the one hand, energy efficiency measures which reduce the overall consumption, but also then by replacing it with these renewable and low carbon gases and electrification,” said an EU official.

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A draft European Commission proposal to overhaul the EU gas market introduces new rights for consumers to choose their supplier but stops short of setting the targets demanded by industry to ramp up the consumption of renewable and low-carbon gases.

Supporting renewable and low-carbon gases

One of the key measures unveiled today include a revision of EU gas market rules to prioritise renewable and low-carbon gases and ensure these have access to the EU energy market.

“By 2030, we want to have 40 gigawatts of electrolyser capacity in the EU. To deliver those volumes to end-users in the most effective and low-cost manner, we need competitive markets and infrastructure to connect production and consumption. Today’s proposals prepare the ground for a competitive European hydrogen market,” said Timmermans.

To enable this, the European Commission proposed increased support for hydrogen, including an obligation for EU countries to accept cross-border transit of natural gas which has been blended up to 5% with hydrogen.

The idea is to remove some of the barriers for blended hydrogen to help boost its overall role in the gas market. However, it is “not something we consider to be a long term solution,” an EU official explained, saying that “renewable remains, of course, the priority and future”.

The EU executive also laid out plans for a pure hydrogen market, with the idea that this would be fully regulated like the current gas and electricity market from 2030 onwards.

Until then, hydrogen will enjoy a so-called “regulatory holiday” in order to support projects like hydrogen valleys, which it is hoped will ultimately expand to form a hydrogen supply system across Europe.

Further support for hydrogen and other renewable and low-carbon gases comes in the form of taxation support, including the removal of cross-border tariffs. The future hydrogen network will also be free from cross-border tariffs.

However, hydrogen transport and production activities will have to be clearly separated, with a clear “unbundling” of the two types of activities, along the lines of what is already being done in the gas and electricity markets.

“Our objective is to create a hydrogen market with several players competing on a level playing field, with transparent and free access to the network,” said Kadri Simson, the EU’s energy commissioner. “And to get there, we need to ensure that no one can use an initial position of advantage,” she added. “That’s why we are proposing this very clear unbundling.”

The Commission also places a focus on network planning, including a push for gas network operators to include information on infrastructure that can or will be decommissioned and could potentially be repurposed to transport hydrogen.

Finally, a certification scheme will be introduced to confirm whether the gas brought on the market is renewable or low-carbon. The European Commission has now added a definition for low carbon gases and fuels under the same certification scheme as renewable gases.

Under the proposal, low-carbon sources are defined as being produced from an energy source with greenhouse gas emission savings of at least 70% compared to fossil fuels, which would include hydrogen produced using nuclear energy.

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Slashing greenhouse gas emissions

The EU’s new gas legislation is aimed at reaching the bloc’s target to decrease net greenhouse gas emissions by 55% by 2030, which requires improving energy efficiency and reducing the use of fossil gas.

But, like Europe’s coal phase out, the European Commission is not providing targets or end dates for using unabated natural gas – fossil gas without technology such as carbon capture and storage to reduce emissions.

Instead, the EU executive is trying to steer the European economy away from fossil gas by introducing measures, such as a ban on long term supply contracts beyond 2049 for unabated gas. Short terms supply contracts below one year which are important for security of supply and market liquidity will still be allowed, however.

The EU executive has also proposed a ban on public subsidies for new fossil gas boilers from 2027 onwards and has laid out a legal basis for countries that want to introduce a national ban on these.

Alongside this, the European Commission is looking at increasing the energy efficiency of buildings, in order to lessen the demand for fossil fuel energy. With its revised Energy Performance of Buildings Directive (EPBD), it wants EU countries to renovate their worst-performing buildings by 2033 at the latest.

There is also a new focus on addressing greenhouse gases beyond just carbon dioxide. For the first time, the European Commission is tackling methane emissions with a regulation solely for this purpose.

This will introduce a ban on venting and flaring of methane, which emit greenhouse gases into the atmosphere, and introduce obligations on companies to repair leaks in natural gas infrastructure, such as pipelines or storage sites.

“We estimate that the full implementation of this proposal will contribute to reducing methane emissions in oil, gas and coal sector by 80% by 2030, compared to last year, 2020. And it would double the amount of methane emission reductions in sectors compared to what would happen through voluntary corporate action,” Simson said.

The legislation has a strong focus on gathering data, including on imports of fossil fuel. However, there is no direct obligation on importers at this stage. Any potential measures on imports will be envisaged in 2025 “with the view to introducing more stringent measures for imports” said Simson.

LEAK: Draft EU law cracks down on methane leaks from fossil fuels

A European Commission proposal to tackle climate-wrecking methane emissions includes a ban on routine flaring and venting as well as penalties for leaking fossil fuel infrastructure but doesn’t contain binding emissions reduction targets, according to a draft seen by EURACTIV.

Reactions

The Commission’s gas package was hailed as “a landmark in decarbonisation efforts” by the gas industry body Eurogas.

“The European Commission gets the message that gases are good for the energy transition, for industry and for households across Europe. Fundamentally, gases are a key part of Europe’s energy resources, so we need EU policies that help and don’t hinder the role of gas,” said James Watson, Eurogas’ secretary general.

However, he reiterated the industry’s call for certainty from European policymakers to speed up the integration of renewable and low carbon gases into the energy system.

But others are not so positive. For instance, the geothermal industry has long campaigned against the prominence of gas in the EU energy market and says this package means yet more prioritisation of the fuel.

“In just over a month after the COP26, and in the middle of a gas price crisis, the European Commission continues to protect gas markets at the expense of renewable heat and energy efficiency. The Commission should have proposed a regulatory level playing field between fossil gas, renewables and energy efficiency to supply affordable heat to all consumers,” said Sanjeev Kumar, head of policy at the European Geothermal Energy Council.

Environmental organisations, too, have criticised the package, with Global Witness warning that the package will lock in dependence on fossil fuel and hand more decision-making powers to the fossil gas industry.

“Instead of putting the needs of people first and showing a bold vision of a transition to affordable, renewable heating for all, the Commission has announced a masterclass in greenwashing,” said Tara Connolly, senior gas campaigner at Global Witness.

“It has left consumers at the mercy of greedy gas companies, determined to keep investing in expensive gas grids we no longer need,” she added.

Greenpeace was equally critical. “The EU Commission is debating how fast to sail Europe’s heating systems into the rocks, instead of steering us clear completely with a move to renewable heating. Fiddling with blends still locks the EU into dependence on climate-wrecking gas that’s also sending people’s energy bills skyrocketing,” said Greenpeace EU climate and energy campaigner Silvia Pastorelli.

[Edited by Frédéric Simon]

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