At the beginning of the year (2021) the European Commission initiated the public consultation on ist roadmap for a Hydrogen and Gas Markets Decarbonisation Package. The objective of the first consultation is to seek stakeholder views on how the Internal Gas Market Directive and Gas Regulations should be revised to facilitate the introduction of renewable and low-carbon gases while ensuring an integrated, liquid and interoperable EU internal gas market. FNB Gas already participated in this process by submitting a position paper. A second consultation step is now preparing the concrete revision of the existing gas market rules in a legislative "Hydrogen and Gas Markets Decarbonisation Package".
FNB Gas representing the German Gas TSOs welcomes the EU Commission’s initiative. As gas transmission system operators (TSOs), we are fully committed to the ambitious targets of the European Green Deal and the European Hydrogen Strategy and are eager to contribute to the energy transition with our gas infrastructure.
The TSOs believe that the following key issues should be addressed by the EU Commission within this crucial legislative initiatives:
- Application of gas market rules to hydrogen: It is to be expected that the future hydrogen network will share very similar characteristics with the current gas network. The TSOs therefore believe that the regulatory principles for gas should also apply to the hydrogen market right from the start in order to give legal certainty to investors. These regulatory principles comprise unbundling of infrastructure from production, storage and trade, Third Party Access (TPA) to the system, non-discriminatory network charges and transparency on rules and procedures. The most efficient way of ensuring regulatory and planning alignment between gas and hydrogen is to incorporate the regulatory framework for hydrogen within the gas legislation. The TSOs are of the legal opinion that the scope of the Internal Gas Market Directive and the various natural gas regulations already includes hydrogen. An explicit extension of the scope of the Gas Directive and the Gas Regulations to other types of gas, including hydrogen, would create further legal certainty in this respect.
- Defining the role of gas TSOs: It is crucial that the European legislation for gas and hydrogen explicitly defines that certified gas TSOs are allowed to own, operate and finance hydrogen infrastructure (on- and offshore), be it repurposed from existing gas infrastructure or newly built. This principle should be valid for all gas TSOs irrespective of their applied unbundling model.
- Financing the hydrogen infrastructure: The TSOs welcome that the EU Commission is very ambitious when it comes to hydrogen and wants concrete infrastructure projects to be realized soon, which is also reflected in EU initiatives such as the European Clean Hydrogen Alliance. To achieve this, it is essential that appropriate financing and tariffication arrangements are established for gas TSOs that ensure the recovery of investment costs within a regulatory framework. The obvious solution to address this issue is to provide a legislative framework that enables the mutualisation of network costs for hydrogen and gas, resulting in a joint cost recovery mechanism for TSOs and combined network charges for the users of the gas and hydrogen systems.
- Increase use of green gases through quota: The TSOs are convinced that a quota for decarbonized and climate-neutral gases, which obliges suppliers to provide a defined share of green gases (e.g. hydrogen) in their portfolio, is an efficient and suitable mechanism to create incentives for the use of green gases and the ramp-up of the corresponding technologies.
- Integrated network planning as an enabler of the energy transition: The TSOs believe that all energy infrastructures (electricity, gas and hydrogen) should be planned in a systemic, technology-neutral and coordinated way, choosing the most efficient infrastructure type for each individual demand situation. Uniform assumptions based on common scenarios are an essential prerequisite for such an integrated network planning approach. Since hydrogen infrastructure will be developed primarily on the basis of existing natural gas infrastructure, a joint network development plan for hydrogen and natural gas infrastructure is necessary, reasonable and efficient.
- Technology-neutrality for the use of hydrogen: In its hydrogen strategy, the European Commission focuses strongly on the use of hydrogen in the industrial and mobility sectors, while the heating sector is hardly taken into consideration. The TSOs do not consider this political pre-determination to be purposeful, as the electrification of the heating market will quickly reach its limits, especially in urban areas. Gas grids are often already in place in these areas and can deliver climate-neutral gaseous energy directly to homes. Without the use of hydrogen and other green gases, the decarbonization of the heating sector cannot succeed. The legal framework to be created now should therefore be open to all technologies and should not hinder or disadvantage any technologies.