Establishing a market for hydrogen one of the main aims of "Fit for 55"

Executive Vice-President for the European Green Deal, Frans Timmermans, said: “Europe needs to
turn the page on fossil fuels and move to cleaner energy sources. This includes replacing fossil gas
with renewable and low carbon gases, like hydrogen. Today, we are proposing the rules to enable
this transition and build the necessary markets, networks and infrastructure. To address methane
emissions, we are also proposing a solid legal framework to better track and reduce this powerful
greenhouse gas, helping us to fulfil the Global Methane Pledge and tackle the climate crisis.”
Commissioner for Energy, Kadri Simson said: “With today's proposals, we are creating the
conditions for the green transition in our gas sector, boosting the use of clean gases. A key element
of this transition is establishing a competitive hydrogen market with dedicated infrastructure. We
want Europe to lead the way and be the first in the world to lay down the market rules for this
important source of energy and storage. We are also proposing strict rules on methane emissions
from gas, oil and coal, to reduce emissions in these sectors by 80% by 2030 and to trigger action on
methane outside the EU. Our proposals also strengthen the security of gas supply and enhance
solidarity between Member States, to counteract price shocks and make our energy system more
resilient. As requested by Member States, we improve the EU's gas storage coordination and create
the option for voluntary joint purchase of gas reserves.”
The Commission's proposals (regulation and directive) create the conditions for a shift from fossil
natural gas to renewable and low-carbon gases, in particular biomethane and hydrogen,
and strengthen the resilience of the gas system. One of the main aims is to establish a market for
hydrogen, create the right environment for investment, and enable the development of dedicated
infrastructure, including for trade with third countries. The market rules will be applied in two
phases, before and after 2030, and notably cover access to hydrogen infrastructures, separation of
hydrogen production and transport activities, and tariff setting. A new governance structure in the
form of the European Network of Network Operators for Hydrogen (ENNOH) will be created to
promote a dedicated hydrogen infrastructure, cross-border coordination and interconnector network
construction, and elaborate on specific technical rules.
The proposal foresees that the national network development plans should be based on a joint
scenario for electricity, gas and hydrogen. It should be aligned with National Energy and Climate
Plans, as well as EU-wide Ten Year Network Development Plan. Gas network operators have to
include information on infrastructure that can be decommissioned or repurposed, and there will be
separate hydrogen network development reporting to ensure that the construction of the hydrogen
system is based on a realistic demand projection.
The new rules will make it easier for renewable and low-carbon gases to access the existing
gas grid, by removing tariffs for cross-border interconnections and lowering tariffs at injection
points. They also create a certification system for low-carbon gases, to complete the work started in
the Renewable Energy Directive with the certification of renewable gases. This will ensure a level
playing field in assessing the full greenhouse gas emissions footprint of different gases and allow
Member States to effectively compare and consider them in their energy mix. In order to avoid
locking Europe in with fossil natural gas and to make more space for clean gases in the European gas
market, the Commission proposes that long-term contracts for unabated fossil natural gas
should not be extended beyond 2049.
Another priority of the package is consumer empowerment and protection. Mirroring the
provisions already applicable in the electricity market, consumers may switch suppliers more easily,
use effective price comparison tools, get accurate, fair and transparent billing information, and have
better access to data and new smart technology. Consumers should be able to choose
renewable and low carbon gases over fossil fuels.
High energy prices in recent months have drawn attention to the importance of energy security,
especially in times when global markets are volatile. The Commission has proposed today to
improve the resilience of the gas system and strengthen the existing security of supply
provisions, as promised in the Communication and Toolbox on Energy Prices of 13 October, and as
requested by Member States. In case of shortages, no household in Europe will be left alone, with
enhanced automatic solidarity across borders through new pre-defined arrangements and
clarifications on controls and compensations within the internal energy market. The proposal extends
current rules to renewables and low carbon gases and introduces new provisions to cover emerging
cybersecurity risks. Finally, it will foster a more strategic approach to gas storage, integrating
storage considerations into risk assessment at regional level. The proposal also enables voluntary
joint procurement by Member States to have strategic stocks, in line with the EU competition
rules.
Tackling Methane Emissions
In parallel, in a first-ever EU legislative proposal on methane emissions reduction in the
energy sector, the Commission will require the oil, gas and coal sectors to measure, report and
verify methane emissions, and proposes strict rules to detect and repair methane leaks and to
limit venting and flaring. It also puts forward global monitoring tools ensuring transparency of
methane emissions from imports of oil, gas and coal into the EU, which will allow the Commission to
consider further actions in the future.
The proposal would establish a new EU legal framework to ensure the highest standard of
measurement, reporting, and verification (MRV) of methane emissions. The new rules would
require companies to measure and quantify their asset-level methane emissions at source and carry
out comprehensive surveys to detect and repair methane leaks in their operations. In addition,
the proposal bans venting and flaring practices, which release methane into the atmosphere,
except in narrowly defined circumstances. Member States should also establish mitigation plans,
taking into consideration methane mitigation and measurement of abandoned mine methane and
inactive wells.
Finally, with respect to the methane emissions of the EU's energy imports, the Commission proposes
a two-step approach. First, importers of fossil fuels will be required to submit information about how
their suppliers perform measurement, reporting and verification of their emissions and how they
mitigate those emissions. The Commission will establish two transparency tools that will show
the performance and reduction efforts of countries and energy companies across the globe
in curbing their methane emissions: a transparency database, where the data reported by importers
and EU operators will be made available to the public; and a global monitoring tool to show methane
emitting hot-spots inside and outside the EU, harnessing our world leadership in environmental
monitoring via satellites.
As a second step, to effectively tackle emissions of imported fossil fuels along the supply chain to
Europe, the Commission will engage in a diplomatic dialogue with our international partners and
review the methane regulation by 2025 with a view to introducing more stringent measures on
fossil fuels imports once all data is available.
Background
Today's proposals, together with the legislative package presented on 14 July 2021 and the revision
of the Energy Performance of Buildings Directive unveiled today, represent an important step in
Europe's decarbonisation path and will help to deliver the target of reducing greenhouse gas
emissions by at least 55% by 2030, and becoming climate neutral by 2050.
The legislative proposals adopted today follow from the strategic vision set out in the EU energy
system integration strategy, EU Hydrogen Strategy and the EU Methane Strategy in 2020. The EU is
leading international action to tackle methane emissions. At the COP26 UN Climate Conference, we
launched the Global Methane Pledge in partnership with the United States, whereby over 100
countries committed to reduce their methane emissions by 30% by 2030 compared to 2020 levels.

Source: European Commision