Golden age or greenwashing? Mixed reaction as EU unveils new hydrogen and gas market proposals

The European Commission (EC) has adopted a set of legislative proposals that aim to decarbonise the EU gas market while ensuring energy security and slashing methane emissions.

The EC’s proposals — which take the form of regulations and directives — have been crafted to create the conditions for a shift from fossil gas to renewable and low-carbon gases, particularly biomethane and hydrogen, and strengthen the resilience of the gas system.

According to the commission, these proposals — assuming they become legislation — will underpin efforts to cut EU greenhouse gas emissions by at least 55% by 2030 and become climate-neutral by 2050.

Hydrogen market

At the heart of the proposals is a move to establish the world’s first market framework for hydrogen, including trade with non-EU countries, while at the same time calling for long-term contracts for unabated natural gas to end in 2049 to “avoid locking” Europe into fossil fuels and to create “more space” for clean gases.

The hydrogen market rules, said the EC in a statement, will be applied in two phases, before and after 2030, and notably cover access to H2 infrastructures, the 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 will be created to promote dedicated hydrogen infrastructure, cross-border co-ordination and interconnector network construction, and elaborate on specific technical rules.

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National network development plans should be based on electricity, gas and hydrogen and be aligned with member states’ energy and climate plans, as well as the EU’s ten-year Network Development Plan, according to the EC.

It stressed that gas network operators must include information on infrastructure that can be decommissioned or repurposed, while there will be separate hydrogen network development reporting to ensure that construction of a hydrogen system is based on realistic demand projections.

“The new rules will make it easier for renewable and low-carbon gases to access the existing gas grid, by removing tariffs for cross-border interconnections and lowering tariffs at injection points,” said the EC.

These rules also aim to create a certification system for low-carbon gases, completing the work started in the EU’s Renewable Energy Directive with the certification of renewable gases.

The overarching goal is to ensure a level playing field in assessing the full emissions footprint of different gases and allow member states to compare and consider them in their energy mix.

Another priority is to establish market conditions that allow consumers to choose between renewables, low carbon gases and fossil fuels.

Mixed reaction: greenwashing or golden age?

There was a mixed response to the plans, which were unveiled on Wednesday, with some observers accusing the EC of greenwashing and others hailing the planned legislation as ushering in hydrogen’s golden age.

At the centre of the argument is whether hydrogen or other gases should play a long-term role in the heating of buildings, with multiple independent studies finding that renewables-powered heat pumps would be the cheapest option by far.

Tara Connolly, senior gas campaigner at non-profit Global Witness, was highly critical of the legislative proposals.

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

“National governments and the European Parliament need to pull out all the stops next year to make sure the final law gets gas out of our homes, kicks the fossil-fuel industry out of the decision-making process, and puts us on a pathway to clean, renewable heating and power for everyone.”

Rita Tedesco, senior programme manager for energy systems at the Environmental Coalition on Standards — another non-profit — was equally scathing.

“This day will go down in history as the moment when the EU gave in to the gas industry’s pressure, laying the foundations for a broad market uptake of hydrogen produced from fossil fuels and nuclear.”

She said EU member states and the European Parliament still have a chance to stop these “greenwashed” proposals, remarking that “it is a moment of truth for the clean energy transition”.

However, Jorgo Chatzimarkakis, chief executive of the Hydrogen Europe trade association/lobby group, welcomed the commission’s plans, claiming that the “golden age of hydrogen starts today” because the proposals will establish hydrogen as a traded commodity.

The group said the proposals recognise hydrogen “as a separate energy carrier” able to mitigate climate change and an enabler to sector integration, while warning that the future evolution of policies, markets and financing “will make or break” the sector.

The Renewable Hydrogen Coalition also welcomed the proposals, with impact director Francois Paquet saying: “The Commission’s gas markets and hydrogen package is a new step for the development of hydrogen networks and markets, to foster access to new players and further energy system integration with renewables.

“We will not work with the co-legislators to empower green investment and help support the Fit for 55 Package’s ambition of prioritising the uptake of renewable hydrogen.”

‘Turning the page on fossil fuels’

Announcing the EC’s plans, Frans Timmermans, executive vice-president for the European Green Deal, said: “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.”

“We are proposing the rules to enable this transition and build the necessary markets, networks and infrastructure.”

EU energy commissioner Kadri Simson said the proposals aim to create the conditions needed for the green transition of the gas sector by boosting the use of clean gases, particularly hydrogen.

“A key element of this transition is establishing a competitive hydrogen market with dedicated infrastructure. We want Europe to lead the way and be the first in the world to lay down the market rules for this important source of energy and storage,” she said.

Methane emissions and monitoring

Part of the new proposals include efforts to tackle emissions of methane, a greenhouse gas that is 86 times more powerful than CO2 over a 20-year period.

Methane emissions are one of several reasons why climate campaigners oppose blue hydrogen made from natural gas with carbon capture and storage, a largely untested technology promoted by the fossil-fuel sector that could enable hydrocarbons to be used for decades to come as part of a net-zero scenario.

The European Commission will 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 venting and flaring.

It also plans to use monitoring tools to ensure transparency of methane emissions from EU oil, gas and coal imports, a move that will pressure exporters to offset their emissions or look for other markets.

The commission said it will “engage in a diplomatic dialogue with our international partners and review the methane regulation by 2025, with a view to introducing more stringent measures on fossil fuels imports once all data is available.”

The new rules would require companies to measure and quantify asset-level methane emissions at source and conduct comprehensive surveys to detect and repair methane leaks in their operations.

In addition, the proposal also bans venting and flaring, except in narrowly defined circumstances.

“We are proposing a solid legal framework to better track and reduce this powerful greenhouse gas, helping us to fulfil the global methane pledge [launched last month at COP26] and tackle the climate crisis,” said Frans Timmermans, executive vice-president for the European Green Deal.

The goal is to slash emissions in theoil gas and coal sectors by 80% by 2030 and to also “trigger action” on methane outside the EU.

“Our proposals also strengthen the security of gas supply and enhance solidarity between [EU] member states to counteract price shocks and make our energy system more resilient,” said energy commissioner Kadri Simson.

This post appeared first on Recharge News.

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