The general approach of the gas package (a directive and a regulation) was adopted by the 27 Energy Ministers meeting in Council on Tuesday 28 March, despite opposition between Member States on the inclusion of low-carbon hydrogen that can be produced from nuclear power.
A compromise on nuclear power
During the morning’s discussions, most Member States had supported the political agreement (‘general approach’) as a whole and recognised the dossier as a priority for “developing the hydrogen market and giving a clear signal to investors”, but significant concerns remained over the definition of renewable hydrogen that had previously been included in the text, only to be withdrawn the preceding day (see EUROPE 13150/3).
For several days, Member States were effectively divided on Article 8a of the Gas Directive concerning the inclusion of low-carbon hydrogen (produced from nuclear energy) in the renewable energy targets.
At the meeting, members of the ‘nuclear alliance’ (see EUROPE 13131/7), such as France, the Czech Republic and Slovakia, stressed the “importance of technological neutrality”.
The ‘pro-renewable’ countries, such as Germany, Spain and Estonia, sought to point out that nuclear energy is not renewable and wanted “the integrity of the Renewable Energy Directive to be respected”.
Although the Renewable Energy Directive (under inter-institutional negotiation - see EUROPE 13149/5) was not on the EU Council’s agenda, several Member States indicated in the morning that they would not vote on the gas package until an agreement was reached on low-carbon gases in the Renewable Energy Directive (see EUROPE 13150/3). A political agreement was finally reached by mid-afternoon, which means that negotiations with the Parliament can begin. However, Article 8a remained ‘crossed out’ in the EU Council text.
Rules on tariffs clarified in the Regulation
Compared to the objectives set by the Commission, the EU Council has in particular clarified the rules for setting tariffs and tariff reductions for hydrogen and renewable gases, while giving Member States more flexibility to set them.
The text also introduces a 100% reduction on capacity-based transmission and distribution tariffs for underground gas storage facilities and LNG facilities.
The general approach also allows hydrogen to be blended into the natural gas system up to 2% by volume (instead of 5%).
A security clause was also added, allowing Member States to take measures to temporarily limit imports from Belarus and Russia.
The EU Council then strengthened and improved the provisions allowing for the implementation of geographically limited hydrogen networks and included a revision clause to consider potential rules for future transmission and distribution network operators in the hydrogen market, once the hydrogen infrastructure and market are more developed.
Criteria specified in the Directive
The EU Council’s proposal aims, firstly, to ensure that the definition of ‘low carbon’ is more precise than in the Commission’s proposal (which defines a 70% threshold) and adds a comparator to fossil fuels.
The proposal maintains full ownership unbundling as the default model, while allowing the independent transmission network operator model (where energy supply companies can still own and operate networks, but must use a subsidiary), under certain conditions.
With regard to the deployment of smart metering systems, Member States will have more flexibility.
The EU Council then extended the transitional phase for the implementation of the detailed hydrogen rules until 2035 and added the possibility of public intervention to set prices in case of emergency.
To see the EU Council’s general approach to the Regulation: https://aeur.eu/f/63e
To see the EU Council’s general approach to the Directive: https://aeur.eu/f/63d (Original version in French by Pauline Denys)