22

2024

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05

EU's hydrogen and low-carbon gas markets package to become law after sign-off from member states

Author:

HydrogenInsight


 

The European Council, consisting of government ministers from the 27 member states, has today signed off on the EU's low-carbon and hydrogen markets package, the final hurdle before being officially adopted across the bloc.

 

The package consists of one directive and one regulation that lay out common rules for the internal markets for hydrogen, renewable gas and natural gas.

 

The regulation, which lays out principles for phasing out fossil gas, introduces a European Network of Network Operators for Hydrogen (ENNOH), which would be required to establish, publish and regularly update a non-binding ten-year network development plan for hydrogen infrastructure in the EU.

 

By 2033, it envisages an “entry-exit system” for hydrogen, rather than infrastructure directly linking up production and contracted offtakers.

The regulation also sets out a maximum duration for capacity contracts of 20 years for infrastructure completed before 1 January 2028 and 15 years if completed on or after that date.

 

It also includes a 100% discount on tariffs for renewable gases (ie, biogas and renewable fuels of non-biological origin as previously defined by the EU) injected from production facilities into pipeline networks and 75% for low-carbon gases, with both seeing a 100% discount for capacity-based tariffs on storage.

 

The directive includes a definition of low-carbon hydrogen and gases as having 70% lower greenhouse gas emissions compared to their fossil fuel equivalent.

 

However, it also sets a deadline of 12 months from being signed into law for the European Commission to publish a Delegated Act that outlines the methodology for calculating emissions reduction.

 

This would take into account leakage throughout the value chain for both upstream methane and hydrogen, as well as whether captured CO2 had already received emissions credits under other provisions.

 

Much of the directive aims to prevent monopolies from forming via “vertical unbundling”, or preventing one business from owning the infrastructure for hydrogen production, transportation, and storage, and “horizontal unbundling” — ie, preventing gas and electricity transmission network operators from also operating H2 pipelines under the same corporate entity.

 

The directive also sets a standard for “regulated third-party access” for hydrogen networks and storage infrastructure, where tariffs are set by the regulator, although it allows for “negotiated third-party access”, where prices are negotiated between the customer and hydrogen network operator, up to the end of 2032.

 

However, this clause has been controversial among some developers, particularly those seeking to import ammonia and crack it back to H2 in Europe, which have interpreted the rule as preventing them from fully utilising their own private infrastructure or selling full capacity on long-term offtake contracts.

 

Once published in the Official Journal of the European Union, the regulation will enter into force within six months, while governments for member states have two years to update their national policies in line with the directive.

 

Source: HydrogenInsight

 

 

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