EU adopts new rules to decarbonise gas, build hydrogen market

The European Council announced the adoption of a new regulatory package establishing common market rules for renewable gas, natural gas and hydrogen, aimed at advancing Europe’s shift to renewable and low carbon gases and shifting away from fossil fuels, as well as supporting the EU’s decarbonisation goals.

The announcement by the EU Council marks the last major step towards the final adoption of the new regulation, following the legislation’s approval in April by the EU Parliament.

The new regulation forms part of a series of proposals by the European Commission in December 2021 to decarbonise the EU gas market, as part of the European Green Deal, supporting the EU goal to achieve climate neutrality by 2050, as well as the ‘Fit for 55’ roadmap – the EU’s proposed strategy to cut greenhouse gas (GHG) emissions by 55% by 2030, compared to 1990 levels.

The rules are also aimed at supporting the Commission’s REPowerEU strategy to end the EU’s reliance on Russian fossil fuels.

The new regulation supports the establishment of common internal market rules for renewable and natural gases and hydrogen, and mandates national network development plans based on joint scenarios for electricity, gas and hydrogen. According to the Commission, the regulation will help enable the uptake of renewable and low-carbon gases through the facilitation of connection and access to the existing gas grid, and will see the establishment of a connection and access to the existing gas grid, allowing for consistency in assessing the emissions footprint of different gases, in order to enable member states to compare and consider them in their energy mix.

The new regulation also includes provisions aimed at phasing out fossil fuels, with long-term contracts for unabated fossil gas directed to not last beyond 2049, and rules supporting the promotion of the penetration of renewable and low carbon gases – particularly hydrogen – in coal and carbon-intensive regions, including tariff discounts for renewable and low carbon gas, and the establishment of a voluntary mechanism to support the hydrogen market.

The regulation will become applicable six months after its publication in the Official Journal of the European Union, with member states given two years to adapt national legislation to the new provisions.

Source: EU Adopts New Rules to Decarbonize Gas, Build Hydrogen Market – ESG Today

About the Authors

Associate Director, Investment Banking

Prachurjya has over 16 years of experience in investment banking with Acuity Knowledge Partners. At Acuity, he has led sector and product-specialist pilot teams across Capital Markets, ESG, Debt Advisory, Loan Syndications, Metals & Mining and Real Estate. He has been actively involved in setting up and on-boarding new ESG Advisory, ESG DCM and Sustainable Finance teams for various bulge bracket investment banks. Within DCM and Rating Advisory, he has been instrumental in helping the clients achieve over 30% in annual savings on both regular and adhoc tasks through standardization of the outputs and deployment of our proprietary BEAT tools.

Delivery Manager, Investment Banking

Puja has 7 years of extensive experience in ESG, Climate Change & Sustainability and she is supervising the ESG team at Acuity. She also has diverse experience in conducting ESIA, EHS compliance audits, ESG Risks and Controls, EHS & ESG Due Diligence assessments. Prior to joining Acuity, she was working with companies like KPMG Global Services, EY India and ERM India. She has expertise in provisioning extensive research requirements for clients through preparation of Peer Benchmarking, Target Compilation, Sustainability report, Sustainable Finance Updates and Sectoral ESG Thematic Detailing Engagement.

Connect with the experts at contact@acuitykp.com