Despite the EU strongly being impacted by one of the worst energy price crises, EU policy makers could miss the opportunity to take strong measures to exit fossil gas: through a filthy gas based governance for future hydrogen networks under the gas package and what could be a quick stop to fossil gas based heating systems in the building sector.
Brussels, 7th February, 2023
What is happening: This Thursday, 9th February, MEPs within the European Parliament’s Committee on Industry, Research and Energy (ITRE) will be making their final decision on both the EU Gas Package and the Energy Performance Buildings Directive (EPBD). The ITRE vote on the Gas Package will be decisive as the file will not go to plenary and define the European Parliament’s position for the upcoming trilogue negotiations starting probably only in the second half of 2023 under the Spanish presidency. For the EPBD, the ITRE Committee’s vote will be an important indication of what the outcome from the plenary vote later this year may be.
Why is this important: Despite the current energy price crisis and the looming climate crisis, the EP’s position on the Gas Package sends weak signals on the overall picture on how to reduce fossil gas consumption in different end use sectors and thereby contributing to a much needed fossil gas phase out by 2035. The regulation risks opening doors to the gas industry by giving crucial responsibilities on modelling and planning the future hydrogen network to gas Transmission System Operators (ENTSOG). Instead of calibrating the future hydrogen and gas networks to primarily the specific needs of key hydrogen priority sectors (energy intensive industry and long distance transport) and secondarily to decreasing fossil gas consumption to heat our buildings, this risks leading to the exact opposite i.e. overexpansion of gas and hydrogen infrastructure, fossil fuel lock-in and increasing energy prices for tens of millions of Europeans.
Among the final pieces of the ‘Fit for 55’ climate and energy legislative package, the prospect of a revised and ambitious EPBD was seen as a welcomed solution to decarbonising the EU’s building stock and significantly improving energy savings within the building sector. However, the Directive has been facing constant opposition from some EU member states, which is reflected in the latest compromise deal. In particular, the provision on Minimum Energy Performance standards (MEPS) introducing the mandatory renovation of the worst-performing buildings; and fossil fuel based boilers phase out provisions have raised criticisms in the environmental NGOs community.
Meanwhile the deal managed to secure the original structure of MEPS and a higher ambition level than the original Commission’s proposal; several concessions have been made at the request of the major political parties, weakening the legislation at the expense of the residential sector. Moreover, despite the current energy price crisis, more needs to be done when it comes to banning fossil fuel installation in our buildings as inhabitants should not be forced to pay the rising costs of dangerous fossil fuels.
What does CAN Europe propose:
A stronger gas package that leads the way to a gas phase out by 2035
Relating to the regulation, progressive industry and NGOs have signed a joint letter in support of better governance and the creation of an independent hydrogen network development entity (ENNOH, as initially proposed by the Commission, article 40) to help achieve green deal objectives and climate neutrality. The proposed entity must be run by hydrogen network operators whose sole mission and interest are in planning a cost-efficient and proportionate hydrogen infrastructure development with no conflict of interest.
The Directive includes main elements of a definition for low carbon gases including full life cycle emissions with minimum methane and carbon capture rates. While this is a step in the right direction, it needs to be rapidly finalised in a delegated act. Currently, EU or state aid funds can be attributed to low carbon projects (fossil based hydrogen, CCS etc.) in the absence of a clear definition for low carbon gases and their carbon intensity. This loophole needs to be urgently closed, even more given the US Inflation Reduction Act which does include criteria for low carbon gases.
The directive also includes important elements on integrated planning on local level involving multiple stakeholders and linked to heating and cooling plans to be developed by municipalities. This will help to further electrify our heating systems with renewables and to plan for the decommissioning of gas networks on Distribution Operator System (DSO) level, in line with decreasing EU gas consumption as projected by REPowerEU.
“While some worst case scenario elements have been avoided, the EP’s final deal on the package does not lay solid grounds for a genuine fossil gas exit, which the shock wave of the Russian aggression should actually have catalysed. The package does not give clear guidelines on where hydrogen networks will be useful and where gas networks will need to go. Considerable governance problems giving gas operators too much space will not help to ease the climate emergency and reduce energy prices impacting heavily on millions of EU consumers.” – Esther Bollendorff, Gas Expert at CAN Europe.
An ambitious and tighter regulatory framework for more energy savings and a truly fossil fuel phase out use in buildings by 2035
With pressure coming from member states and interested parties, it is crucial that the ITRE committee secures an agreement on the strongest possible legislation for the EPBD. More needs to be done on MEPS as these instruments represent an opportunity to address the priorities coming from the Renovation Wave Strategy, and more broadly our energy and climate goals. Placing further limits on this provision does not benefit people’s homes and erodes the prospect of just and inclusive energy transition. Limiting derogations and investing in a stronger enabling framework comprising financing, technical assistance and adequate social safeguards is a must.
From the lastest agreement, positive elements such as the inclusion of a main phase out date for fossil fuel use in buildings (2035), coupled with an earlier stop to subsidies for the installation of fossil fuel-based boilers (2024) can be easily undermined by the flexibilities included in the text that would enable boilers using hydrogen, biogas etc. in a blended mix with fossil gas to be installed in both existing and new buildings. In order to truly achieve the 2035 goal, we must stop promoting false solutions and start supporting other parallel initiatives (i.e. Ecodesign Regulation revision). For these reasons, boilers certified to run on renewable fuels should not be counted as “non-fossil heating technologies”, and should not be used in existing buildings undergoing major renovation and (especially) in new constructions.
In regards to the solar mandate, the European Parliament’s deal introduces positive wording on the need to couple solar installations deployment with other actions on the envelope and replacement of heating systems (whenever a building undergoes major or deep renovation) which is a welcomed addition. Timelines have been slightly improved but faster ones are needed with a better focus on existing residential buildings. This can be a step in the right direction to empower households in producing their own energy and it is something the Parliament needs to continue pushing once the trilogue negotiations will come.
“The constant push for more and more flexibility, and the derogations and exemptions included in the latest compromise deal that will be voted on during the ITRE Committee meeting send a worrying signal. Even in times of crisis, politicians are not willing to make the necessary bold moves. Further compromise on the buildings directive, particularly around weakening the legislation on MEPS and phasing out of fossil fuel boilers, can risk leaving many people exposed to energy poverty and dependent on polluting technologies for the winters to come” – Eva Brardinelli, EU Buildings Policy Expert at CAN Europe.
Notes to the Editor:
EU Gas Package
EU Buildings Directive
NGOs Checklist for a successful EPBD Recast
Reaction: Energy Ministers fail to build on EU Commission’s ambitious buildings recast proposal
Position paper on the Energy Performance of Buildings Directive recast proposal
CAN Europe’s Recommendation for an ambitious EU-wide solar mandate