A short overview of European gas transmission network operators’ views on smart sector integration

Since its foundation in 2009, the European Network of Transmission System Operators for Gas (ENTSOG) has made a significant contribution to the development and liberalisation of the EU’s internal energy market. Now it’s necessary to meet the challenges of the European climate targets at the same time as retaining the benefits of the internal market.

In a public process, the views of ENTSOG will be summarised along with representatives from the gas, hydrogen and electricity value chain. In order to promote coordinated and coherent interaction between all energy sources under the Green Deal, ENTSOG is recommending a consolidated debate with Member States.

The central question here is how future infrastructure can be developed. This includes the infrastructure needed to meet both hydrogen demand and the developing market for Power to Gas. Transmission system operators are now concentrating on the decarbonisation of the gas industry and gas networks, and are committed to being both the driving force and enablers of this change.

Combining electricity and gas sector to boost hydrogen market

Smart sector integration should allow all sources and energy sources to compete on a level playing field. Costs and charges should be appropriately allocated for an efficient energy system and to avoid market distortions. The Power to Gas concept offers solutions for balancing overloaded power grids. Transmission system operators are ready to prepare the gas systems for renewable gases. However, the right incentives need to be created in terms of costs and value. The individual technologies have been tried and tested and matured, but they need to be expanded massively in order to offer cost-effective climate benefits.

Proof of origin and EU ETS

One of the main tools for achieving decarbonisation at the lowest possible cost is an EU ETS  (Emissions Trading System) – a recognised system of proof of origin. This system should cover both renewable and low-carbon gases. This would make it possible to reward energy sources based on their carbon content and to ensure a level playing field for all decarbonised and low-carbon energy sources.

Maintaining the internal energy market while integrating hydrogen

Gas networks are a necessary part of the energy transition. As decarbonisation progresses, increasing amounts of biomethane and hydrogen will need to be managed. The use of existing natural gas networks in terms of cost-efficiency makes sense. Transmission system operators assess the capacity of the systems to absorb mixtures of hydrogen and natural gas, thereby contributing to the revival of the hydrogen market. A single EU market for renewable gas would promote EU competition and security of supply to the benefit of end-users.

Maintaining interoperability of gas systems

Gas transmission system operators are best placed to provide services and address challenges such as quality management of different types of gas – for example, the conversion of methane into hydrogen – and the interoperability of different gases in order to maintain and facilitate cross-border trade in an internal market. This will require new services to be offered by gas transmission system operators to network users to ensure that gas can continue to be freely traded, even if the quality varies from one Member State to another.

Ensuring an appropriate tax system

The European Commission has committed itself to adapting the Energy Tax Directive to the EU’s future energy market. The sectoral coupling initiative must ensure a level playing field for the various energy sources and energy carriers. Therefore, general taxes such as VAT and other taxes should not discriminate between energy types. Carbon taxes and equivalent levies must be charged and calculated objectively, according to the carbon content.

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