EU's decarbonisation package has arrived - a bold move with surprises

On 15 December 2021, the European Commission presented the long-awaited decarbonisation package for the gas market. The package includes proposals to revise the Directive and Regulation for the internal gas market and access to gas transmission networks. The goal of climate neutrality by 2050 is supported by promoting the sustained development of a European hydrogen economy. This evolution shall be realised in particularly transforming the existing gas industry and infrastructure.

The importance of gas infrastructure in decarbonised energy system has been acknowledged

The draft recognises the future role of gas infrastructure and the associated economic advantages in the development of a hydrogen market. Member states shall interpret permits and rights of way applied for existing gas infrastructure as if hydrogen pipelines and network assets are encompassed. The future hydrogen network is expected to be created primarily by retrofitting existing gas infrastructure and selectively by new built hydrogen pipelines. The draft stipulates that transmission system operators must accept and enable cross-border gas flows with a hydrogen content of up to 5 percent by volume ("blending") from 1 October 2025. Thanks to this, the integration of renewable and low-carbon gases will be enabled at an early stage.

According to the draft, certain flexibility is temporarily allowed. For instance, the possibility to conclude capacity contracts with a maximum term of 20 years or that hydrogen networks do not have to be organised as an entry/exit systems until the end of 2030. This is generally welcomed, however, it is not certain whether this period will suffice to implement cross-border value chains for hydrogen and how the transition from the negotiated tariffs into regulated ones will be arranged. From network operators point of view, the tariff regulations for hydrogen transport is designed very complex and do not invite for investments.

The EU package does not exclude any technologies, in contrast to Austria where some raise voice against gas heating. Nevertheless, the draft fails to mention further possibilities, such as operating power-to-gas or "Deblending" facilities. The addition of "Deblending" would allow the transport of pure hydrogen in the existing gas grids. Thus, even if hydrogen is admixed into the gas grid, the use as a feedstock can already be possible in the market ramp-up phase.

Discrimination against market participants hampers rapid development of hydrogen market

According to the provisions on vertical unbundling, the "Independent Transmission Operator" (ITO) model, which is generally recognized and proven in Europe, would only be applicable for hydrogen network operators until 2030. In addition, the horizontal unbundling mentioned in the package stipulates that gas transmission system operators may not operate dedicated hydrogen pipelines unless a separate legal entity is created for this purpose. Thresholds are not provided for this.

Gas Connect Austria is ready, able and willing to help shaping the future hydrogen market and create transport opportunities. This is well exemplified by the submitted IPCEI projects (Important Projects of Common European Interest) or the participation in the EHB initiative (European Hydrogen Backbone). However, the proposed regulations on unbundling would exclude existing transmission system operators from the hydrogen transport business and make the cost-effective transformation of existing infrastructure more difficult, especially in the build-up phase. Possible synergies in the transformation of the existing pipeline system to a future hydrogen network would be nipped in the bud.

Synergies of gaseous energy sources should be fully utilised

The decarbonisation package is largely based on the revision of the existing provisions on gas. The endeavor to profit from corresponding synergies is already evident in the new definition of "gases", which includes natural gas (with biogas) and hydrogen. However, the proposal does not manage to consistently adhere to the possible synergy gains in pipeline transport. Rather, avoidable duplications of existing procedures: "H2 TYNDP" (separate 10-year network development plan for H2), institutions " (establishment of own umbrella association for H2 “ENNOH") and rules (specially designed network codes for H2) are envisaged.

This not only delays the development of a hydrogen market, but also increases costs, which shall be borne by the hydrogen network users.

The hydrogen network development planning is already part of the TYNDP process. The hydrogen demand and supply modelling is already included in the scenarios developed jointly by ENTSO-G and ENTSO-E. Hydrogen is linking the gas and electricity sector, and therefore crucial for the integration of energy systems. Creating separate "silos", such as parallel hydrogen network development planning by the new organisation ENNOH, would hinder rather than promote this integration.

In future, cross-border hydrogen transport and trade should be possible within and from outside the EU. For this, recognisable proofs of origin and sustainability are necessary, also from outside the EU, such as Ukraine or North Africa. This is also not sufficiently addressed in the Commission's proposal. A reduction of 70% CO2 emission is merely mentioned, without defining this in detail.

Especially in the light of a future integrated energy system, we therefore still see a need for change in order to make optimal use of synergies and to make regulation simple and clear.


Armin Teichert, Press spokesperson
Peak Vienna
Floridsdorfer Hauptstraße 1
1210 Wien
+ 43 1 27500-88050

We are at APA OTS