EU Energy Policy
Today, approximately 23% of Europe’s energy is provided by natural gas. The EU, through its ‘Clean Planet for all’ communication and accompanying in depth analysis, has concluded that gaseous fuels will continue to provide 18-22% of Europe’s energy in 2050. The EU Energy System Integration Strategy released in July 2020 added that of this 20%, ’80% should be of renewable origin'.
There are extensive plans at EU level to decarbonise gas networks across Europe through renewable gas. Both biomethane and green hydrogen are key components of the European Green Deal (EGD) – a set of policy initiatives by the European Commission (EC) with the aim of making the EU climate neutral in 2050.
The EGD highlights biomethane as a vital tool in decarbonising agriculture and energy systems. It is also a key component of the EU Farm to Fork Strategy, which aims to reduce the environmental and climate impact of primary food production. The European Commission has identified Ireland as having the highest potential per capita to produce biomethane and described hydrogen as offering 'a solution to decarbonise industrial processes and economic sectors where reducing carbon emissions is both urgent and hard to achieve'.
Renewable Energy Directive (RED II)
In order to ensure a common and standard measurement process to certify renewable energy sources as zero emission or carbon neutral, the EU has developed the Renewable Energy Directive (RED II), which sets out the criteria for certification. It is based on the full life-cycle assessment of the renewable energy, including material used in production and the required transportation. The methodology for calculating the emissions from biomass fuels such as biomethane is set out in Part B of Annex VI. The criterion is binary; if the gas supply meets or exceeds the targeted greenhouse gas saving, it is classified as having a greenhouse gas emissions factor of zero. Biomethane must meet this criterion to be certified as renewable.
The Sustainable Energy Authority of Ireland (SEAI), as part of their national emissions reporting for Ireland, notes that “as long as a biofuel meets the minimum sustainability requirements set out in RED it is counted as zero carbon at the point of combustion.” The Sustainability Report concluded that an Irish agriculture-led biomethane industry developed according to international best practice is aligned with current and emerging policy direction and can meet the RED II requirements, both now and into the future.Read more
EU Hydrogen Strategy
Hydrogen is expected to play an important role in achieving EU objectives to reduce greenhouse gas emissions by a minimum of 55% by 2030 and reach net zero emissions by 2050. In its Hydrogen Strategy, the European Commission has set out a vision of how the EU can turn clean hydrogen into a viable decarbonisation solution – identifying challenges to overcome and presenting a roadmap of actions for the coming years.
From 2020 to 2024, the EU is targeting production of 1 million tonnes of renewable hydrogen, and 6 GW of renewable hydrogen electrolysers. The policy focus is to establish a “liquid and well-functioning hydrogen market and on incentivising both supply and demand.”
From 2025 to 2030, hydrogen will become “an intrinsic part of an integrated energy system.” Hydrogen will play a crucial role in balancing the electricity. Hydrogen clusters will develop, initially relying on local production of hydrogen. The need for EU-wide infrastructure will emerge, with existing gas grids potentially repurposed for transporting hydrogen over long distances.
By 2030, the EC will aim to establish an “open and competitive EU hydrogen market, with unhindered cross-border trade and efficient allocation of hydrogen supply among sectors.” The Commission also recognises that “sustainable biogas may have a role in replacing natural gas in hydrogen production with CCS to create negative emissions.”
In order to deliver this roadmap, the EC has identified the following areas of focus:
- An investment agenda for the EU - Bringing together industry, national, regional and other stakeholder to “build a concrete pipeline of projects” and a range of EU funding mechanisms will be utilised to deliver the required investment.
- Boosting demand for and scaling up production – Through a full value chain approach and with an appropriate policy framework to enable hydrogen to contribute to decarbonisation at the lowest possible cost.
- Designing a framework for hydrogen infrastructure and market rules – The existing pan-European gas infrastructure could be repurposed to provide the necessary infrastructure for large-scale transport of hydrogen. To enable repurposing of existing assets, the review of the regulatory framework for competitive decarbonised gas markets will allow such investment.
- Promoting research and innovation in hydrogen technologies - The EC has identified that to “ensure a full hydrogen supply chain to serve the European economy, further research and innovation efforts are required.” The repurposing of existing gas infrastructure for transporting hydrogen will also require research and standardisation activities.
- The international dimension - The EC has also identified the potential for hydrogen imports from neighbouring countries, including those connected to the EU market through pipelines which have strong potential for renewable hydrogen.
Gas Networks Ireland is participating in a major European project to help the European Union meet its hydrogen goals.Read more
EU Energy System Integration Strategy
The European Commission Strategy for Energy System Integration is one of the most ambitious and all-encompassing elements of the European Green Deal. This strategy sets out to establish the basis for “the coordinated planning and operation of the energy system as a whole, across multiple energy carriers, infrastructures, and consumption sectors.” It is key to developing an optimised energy system which maximises the use of existing assets allowing the energy transition to be delivered at least cost, laying the foundation for the transition to a climate neutral economy.
It comprises a comprehensive action plan across six pillars:
- A more circular energy system, with ‘energy-efficiency-first’ at its core - As well as the energy efficiency first principle, this pillar will focus on the use of waste heat, energy potential of waste residues and recognition that “biogas can be exploited on-site to reduce fossil fuel consumption, or upgraded to biomethane to allow injection into the gas grid.”
- Accelerating the electrification of energy demand, building on a largely renewables-based power system – As per the EC, the share of renewable energy in the electricity mix should double by 2030. However, there is recognition that without energy system integration, “electrification can present challenges for the management of the electricity system”.
- Promote renewable and low-carbon fuels, including hydrogen, for hard-to-decarbonise sectors - There are a number of end-use applications where electrification will not be feasible, or cost effective. In such cases, renewable fuels such as renewable and low carbon hydrogen, biogas, biomethane and other advanced biofuels can provide a solution.
- Making energy markets fit for decarbonisation and distributed resources - According to the EC “gaseous fuels are expected to continue to play an important role in our energy mix”. The EC will review “the legislative framework to design a competitive decarbonised gas market, fit for renewable gases”.
- A more integrated energy infrastructure - The EC recognises that “network planning will require a more integrated and cross-sectoral approach, notably of the electricity and gas sectors”, and full alignment with National Energy and Climate Plans.
- A digitalised energy system and a supportive innovation framework - Digitalisation of the energy system will enable “dynamic and interlinked flows of energy carriers”, providing the necessary data to match demand and supply and optimise energy flows in real time.
EU Hydrogen and Decarbonisation Gas Package
On 15th December 2021, the European Commission launched its legislative proposals on the Gas Package, consisting of a revision of the 2009 Gas Markets Directive and Regulation. It enables the market to decarbonise gas consumption, with a transition from natural gas to renewable and low carbon gases, in particular biomethane and hydrogen. And puts forward policy measures required for supporting the creation of optimum and dedicated infrastructure, as well as efficient markets. It will remove barriers to decarbonisation and create the conditions for a more cost effective transition.
The updated proposals have 5 core objectives:
- To create a legislative framework for establishing an EU hydrogen market - The proposed revision creates a level playing field based on EU-wide rules for hydrogen market and infrastructure and removes barriers that hamper their development. It also creates the right conditions for natural gas infrastructure to be reused for hydrogen. This brings cost savings and helps decarbonisation at the same time
- To facilitate the integration of Renewable and Low Carbon gases onto the network - The package aims to facilitate the integration of renewable and low-carbon gases into the existing gas network. This is why it proposes to ensure that such gases have access to the gas wholesale market, abolish costs for cross-border tariffs facilitating trade and reduce injection costs for those gases by 75%
- To protect and encourage more active consumer participation in the market - To be able to make sustainable energy choices, customers need sufficient information on their energy consumption and origin, as well as efficient tools to participate in the market. Moreover, EU countries should take the necessary measures to protect vulnerable and energy poor customers.
- To foster more integrated network planning - The new package proposal aims to ensure a more integrated network planning between electricity, gas, and hydrogen networks to make the development of energy infrastructure more cost-effective and allow transnational exchanges of information on transmission systems usage.
- To enhance resilience and security of supply - Decarbonising the energy sector will only work if energy security is guaranteed and if the EU energy system is resilient. This proposal also amends the security of gas supply regulation and aims to extend the scope of the regulation to renewable and low-carbon gases in the natural gas grid, while also adapting it to new risks, such as cyber threats.
REPowerEU: Joint European action for more affordable, secure and sustainable energy
REPowerEU is the European Commission’s plan to reduce the European Union’s dependence on Russian fossil fuels by diversifying gas supplies and speeding up the roll-out of renewable gases. The REPowerEU Plan will increase the resilience of the EU-wide energy system and will be based on two pillars:
- Diversifying gas supplies, via higher LNG imports and pipeline imports from non-Russian suppliers and higher levels of biomethane and hydrogen; and
- Reducing the EU’s dependence on fossil fuels at the level of homes, buildings, industry and power generation, by boosting energy efficiency, increasing the share of renewables and addressing infrastructure bottlenecks.
Biomethane - The Commission recommends an EU-level ambition to produce 35bcm of biomethane by 2030. This is in effect a doubling of the ‘Fit for 55’ ambition which was set at 17bcm by 2030. This proposed boost in biogas production is set in the context that, under current energy prices, biomethane would be competitive with natural gas.
Renewable Hydrogen - To mitigate the EU's dependence on Russian gas, this initiative has set a target of 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of imports by 2030, to replace natural gas, coal and oil in hard-to-decarbonise industries and transport sectors.
LNG Imports – The Commission acknowledges the role of LNG in reducing the EU’s dependence on Russian gas and wishes to consolidate the EU’s ability to buy LNG on the world market. The Commission will also assess whether measures and investments are needed in hydrogen-ready gas infrastructure to overcome bottlenecks to the full use of the EU’s LNG capacity.
REPowerEU acknowledges the importance of energy storage to enhance security of supply. The EU has followed up with a regulation aiming to ensure that gas storage capacities in the EU are filled before the winter season and can be shared between member states in a spirit of solidarity. The regulation provides that underground gas storage on member states’ territory must be filled to at least 80% of their capacity before the winter of 2022/2023 and to 90% before the following winter periods. Overall, the EU will attempt collectively to fill 85% of the total underground gas storage capacity in the EU in 2022.
As EU member states gas storage capacities and national situations differ greatly, there are some variations to the requirements. For more information please see here.
Gas Networks Ireland welcomes the European Commission’s new REPowerEU plan.Read more
For more information on EU energy policy and Gas Networks Ireland's role please contact us at email@example.com