MEPs charged with amending the proposed regulation on the internal markets in natural and renewable gas and hydrogen (recast regulation 715/2009) finalised a series of compromise amendments on Wednesday 25 January, ahead of the vote in the European Parliament’s Committee on Industry, Research and Energy (ITRE) on Thursday 9 February.
This legislative text is part of the gas package presented by the European Commission on 15 December 2021 (see EUROPE 12854/11), together with a proposal for a directive. Together, the two texts are intended to set common rules for the development of a European market for renewable gases and hydrogen.
Cross-subsidies
The compromise amendments obtained by EUROPE provide in particular for the abolition of cross-subsidies, whereas the Commission suggested authorising the financing of these subsidies from the exit points to the final customers within the same Member State and under certain conditions (proportionality, transparency, limitation in time, etc.)
As an alternative, MEPs propose an “inter-temporal cost allocation mechanism” whereby Member States could allow hydrogen network operators to spread the costs of developing the network over time, ensuring that future users pay part of the initial costs. Such a mechanism would be accompanied by a state guarantee to cover the financial risk of the operators.
At the request of rapporteur Jerzy Buzek (EPP, Polish), the compromise also introduces a derogation allowing cross-subsidies. This would be a “last resort measure” and should be accompanied by a prior impact assessment showing that there are no more cost-effective options.
Discounts on rates
In order to promote access for renewable and low-carbon gases to the EU gas network, the Commission wants to grant 75% rebates on tariffs at injection points. It also proposes a 100% discount on tariffs at cross-border interconnection points for these gases (from 1 January of the year following the adoption of the new rules) and, later, for hydrogen (from 1 January 2031).
On this point, the compromise amendments remove the discounts at injection points. However, regulators would be required to “assess whether support should be offered to lower grid connection costs and fees”.
However, they maintain the 100% discount for access to transmission networks at interconnection points between Member States, “unless the regulatory authorities concerned jointly agree on a tariff regime for such access”. In the absence of agreement between the regulatory authorities concerned, the Agency for the Cooperation of Energy Regulators (ACER) would be responsible for deciding on the tariff regime, including the possibility of removing any tariff.
In addition, regulators would have the possibility of applying a discount of up to 100% on capacity-based transmission and distribution tariffs at the entry and exit points of underground storage facilities and liquefied natural gas (LNG) facilities.
‘Blending’
Another particularly important aspect of the gas package is the ‘blending’ of natural gas with hydrogen.
The political groups agreed to lower the maximum level of hydrogen content that Member States would be obliged to accept in gas flows at interconnection points from 5% (Commission proposal) to 3% from 1 October 2025.
Integration of biomethane
In addition, MEPs propose the addition of a new article on the integration of biomethane into the gas system.
According to the target set out in the ’REPowerEU’ plan presented by the Commission on 18 May (see EUROPE 12955/4), Member States would be required to ensure that at least 35 billion m3 of ‘sustainable’ biomethane is produced and fed into the system by the end of 2030.
They would also be obliged to draw up regional maps that identify the most favourable areas for sustainable biogas and biomethane production.
Divisions on governance
In order to ensure optimal management of the future EU hydrogen network, the Commission’s initial proposal foresees the creation of a European Network of Hydrogen Network Operators (ENGRH or ENNOH), modelled on the existing structures for gas (ENTSOG) and electricity (ENTSOE).
This issue has divided the political groups so strongly that Renew Europe and the Greens/EFA have tabled an alternative compromise amendment to the one put forward by the EPP, S&D and ECR negotiators.
They propose to establish a common European organisation of gas transmission system operators and hydrogen system operators (ENTSOG&H).
Fearing that this would give a central role to fossil gas companies in the development of the future hydrogen network, the Greens/EFA and Renew Europe are arguing to keep the Commission’s proposal, but to combine it with a new independent platform.
This platform would aim to accompany the EU-wide network development plans for gas, electricity and hydrogen networks from 2024 onwards, as well as to develop long-term scenarios in line with the EU’s 2050 climate neutrality objective. It would involve ACER, the ‘European Scientific Advisory Board on Climate Change’ and all relevant market players, including ENTSOE, ENTSOG and ENNOH.
Security of supply
The compromise amendments also introduce a series of provisions relating to the EU’s security of energy supply by incorporating elements related to the recently adopted emergency regulations to tackle the energy crisis.
This would allow MEPs to be involved in the legislative process on these texts in the event of their revision. They had been excluded because of the Commission’s decision to use Article 122 of the Treaty on the Functioning of the European Union (TFEU), an urgency procedure allowing the EU Council to legislate alone, on the basis of a Commission proposal.
See the compromise amendments: https://aeur.eu/f/547
And the alternative compromise amendments: https://aeur.eu/f/548 (Original version in French by Damien Genicot)