The path to climate neutrality: Gas network is fit for 55

As part of the European Green Deal and in order to achieve the contained climate targets, legislation in the EU is to be adapted accordingly. The EU Climate Change Act provides the political and legal framework for achieving the overriding goal of climate neutrality by 2050 or a CO2 reduction of -55% by 2030. Therefore the EU presented the "Fit for 55" package of measures in July, consisting of 12 legislative proposals. This envisages major changes for many economic sectors and will also have a general impact on society.

 

We have taken a look at the draft package and what the proposals mean for the energy system and consumers. In general, it can be said that all sectors of the economy will have to gradually save energy over the next few years and renewable energy sources will be massively expanded. The existing emissions trading system will be revised and extended to include space heating and transport. Particularly vulnerable groups such as low income households are to be relieved.

Impact on the space heating sector

The more CO2-intensive the energy source used, the more it should  cost in the future. By extending emissions trading to the buildings sector, CO2 emissions in this area are to be limited and fuels with a negative environmental impact made more expensive by requiring more emissions certificates to be purchased for them as CO2 offsets.
In addition, the revision of the energy taxation directive provides for a gradual increase in the minimum tax rates by 2033 – the extent of the increase will depend on the environmental impact and energy content. Oil will be taxed the most, followed by less harmful energy sources such as natural gas and blue hydrogen. Biogases and green hydrogen fall into the lowest tax bracket. The EU does not envisage any explicit bans on fossil energies here.

Impact on the mobility sector

The second major area to undergo extensive changes is transportation. Also here, emissions trading provides for tighter regulations with higher prices for fossil fuels such as diesel and gasoline. According to the new proposal for the Energy Taxation Directive, conventional fuels will fall into the highest taxation category, while biofuels will fall into the second or lower taxation category. National tax concessions such as the so-called diesel privilege could thus be dropped, as countries will have to comply with EU requirements.
Until now, travel within the EU has been fully exempt from energy tax. However, the EU plans to no longer fully exempt kerosene used as fuel in aviation and heavy fuel oil used in maritime shipping, and to gradually raise the minimum tax rates for these two fuels over a period of ten years. The use of more sustainable fuels, on the other hand, is to be encouraged with a mandatory zero tax rate.

Support of vulnerable groups

The ambitious plans to mitigate climate change, pose an enormous challenge for many households and businesses. Therefore, "Fit for 55" under the Modernization or Social Climate Fund also provides supports for groups that will suffer the most from price increases during the transition: Member states are to provide support to vulnerable groups that are particularly affected by the impact of emissions trading on the space heating and transport sectors: These include low- and middle-income households, transport users and micro-enterprises. This is to be financed by revenues from emission certificates for buildings and road transport.

Necessity of green gas plans

The ambitious climate targets of the EU do not only mean challenges, but at the same time offer great opportunities to advance new technologies and innovations. Gas Connect Austria, with its high-performance gas infrastructure, is an important part of the solution to ensure security of supply and affordability in the energy transition. That is why we are consistently researching how the gas network can be made fit for the transport of renewable gases such as hydrogen, both today and increasingly in the future. However, in order to realize and accelerate the transition to climate friendly energy sources such as green gases, the appropriate regulatory and political framework conditions are urgently needed. Gas Connect Austria has commented on this in detail as part of the consultation on the "decarbonization package". We hope that appropriate plans will soon be published for the green gas sector as well, paving the way for an affordable and supply-secure energy future.

Contact

Armin Teichert, Press spokesperson
Peak Vienna
Floridsdorfer Hauptstraße 1
1210 Wien
+ 43 1 27500-88050
armin.teichert(at)gasconnect.at

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