Open Consultation on the Hydrogen and Gas Market Decarbonisation Package

Energy transition


June 2021 – The European Green Deal establishes a roadmap for cutting greenhouse gas emissions, fighting biodiversity loss and tackling pollution, while boosting a modern, resource-efficient economy and creating jobs. Energy policy is a central pillar in the European Green Deal and in the decarbonisation of the European economy. Energy instruments are needed to achieve climate targets in a cost-effective manner, to the benefit of EU customers. These include measures already outlined in the relevant initiatives adopted under the European Green Deal. Specifically, the Energy System Integration Strategy and the Hydrogen Strategy adopted on 8 July 2020 set out how the energy markets could contribute to achieving the goals of the European Green Deal, including the decarbonisation of the production and consumption of hydrogen and methane.

This consultation aims to collect views and suggestions from stakeholders and citizens related to a possible proposal for a revision of the Gas Directive (2009/73/EC) and Gas Regulation ((EC) No 715/2009). This review is planned for Q4 2021.

The possible need for legislative changes relates primarily to cost-efficient decarbonisation of the existing gas sector by (i) enabling a market for renewable and low carbon hydrogen allowing it to become a key component of the energy sector, and (ii) facilitating the injection, transmission, distribution and trading of renewable and low carbon gases in the existing gas grid in the context of the wider energy system integration.

Moreover certain renewable gases might not be connected to any network at all, but could be consumed at the place of production (e.g. by small modular electrolysers) or transported by other means (e.g. rail or road) to where they will be used. The scope of the off-grid production compared to production connected to a network depends inter alia on technological developments and market uptake.

While preparing for and incentivising the transition to renewable and low carbon gases, legislative changes may also contribute to a better and more consumer friendly functioning of the gas market, taking into account rapid technological developments and the principles introduced in the recent electricity market design proposals.

To organise the transition from fossil to carbon free fuels and to achieve a climate-neutral Europe by 2050, the Commission will table a Fit for 55 package to reduce greenhouse gas emissions by at least 55% by 2030. This will cover wide-ranging policy areas – from energy efficiency to renewables, energy performance of buildings, as well as land use, energy taxation, effort sharing and emissions trading. The on going reviews of the Renewable Energy Directive ((EU) 2018/2001) and the Energy Efficiency Directive ((EU) 2018/2002) are addressing, among other things, issues of regulatory incentives for production or consumption of renewable energy. The gas market legislation is part of the Fit for 55 package will need to be consistent with measures under both Directives as well as other measures under the package.

In the Commission’s view, in order to deliver the 2030 and 2050 targets, an integrated planning and operation of the energy system as a whole, across multiple energy markets, carriers, infrastructure types, and consumption sectors is necessary.

Households and industrial consumers are at the centre of an integrated energy system. Consumers should be able to choose among the available and accessible renewable and low-carbon technologies that best serve their needs in terms of reliability, resource efficiency and cost. Competitive energy markets are a key tool to achieve the targets of the Green Deal in a cost-efficient manner and to stimulate the significant investments. Putting all technologies into competition, in particular smart electrification, demand response, energy efficiency, and renewable and low-carbon gases like hydrogen and bio methane, or Carbon Capture and Usage/Storage (CCU/S) technologies, will serve customers and empower them to make choices which, in turn, help to achieve decarbonisation targets in a cost efficient way. As such efficiencies and active consumer participation are facilitated, an integrated energy system must be effective and reliable in providing vulnerable and energy poor consumers with a high level of protection.

Direct electrification is in most cases the most cost-effective and energy-efficient way to decarbonise final energy demand. Electrification coupled with increased contribution from renewables, energy efficiency and applying circular economy will thus deliver a substantial part of the emission reductions across the energy system. In certain areas, where a decarbonisation of the current use of gaseous fuels through full electrification is unlikely to be technically or economically viable, gaseous fuels are likely to remain present in the EU’s energy system.

The answers to this questionnaire will feed into the review process of the Gas Directive and Gas Regulation, in particular into the impact assessment that the Commission will carry out to assess whether a revision is needed and, if yes, what revision would be the most appropriate. In the context of developing this initiative, the Commission will conduct an evaluation of the relevant gas market rules. The evaluation will assess the current effectiveness, efficiency, relevance, coherence and the added-value of action at EU level of the Gas Directive and Gas Regulation, in particular in reaching the EU decarbonisation targets.

The combined evaluation roadmap has been consulted previously and is available here.