Gas Connect Austria's view on the EU decarbonisation package

On December 15, 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. Gas Connect Austria welcomes the package as an important and courageous step towards the energy future, but there is room for improvement in some points. Tariff regulations for hydrogen transport and envisaged unbundling provisions are viewed critically, as well as the fact that synergies are not being sufficiently used.

"The EU package does not contain any technology bans, such as those demanded by some in Austria for gas heating systems", notes GCA Managing Director Harald Stindl with critically regard to domestic energy policy. In particular, technologies such as "power-to-gas" and "Deblending", which make hydrogen transport via natural gas possible, should also be added to the package. From network operator’s view, the tariff regulations for hydrogen transport are very complex and uninviting for investors.

Discrimination against market participants disables rapid development of the hydrogen market

Unbundling rules, as mentioned in the draft, exclude existing transmission system operators from the hydrogen transport business and impede the cost-effective transformation of existing infrastructure. Synergies that could be achieved by transforming the existing pipeline system into a future hydrogen network would thus be destroyed in the beginning. The additional costs should be borne primarily by the hydrogen network user.

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

Synergies of gaseous energy sources should be used more

Hydrogen network planning is already part of the planning process (TYNDP) for gas. Hydrogen demand and supply modelling is included in the scenarios jointly developed by ENTSO-G and ENTSO-E (European associations of gas and electricity grid operators). Hydrogen represents a natural interface between gas and electricity and is crucial for the integration of energy systems. The creation of a separate "silo", such as parallel hydrogen grid development planning by the new ENNOH organization (intended association of pure hydrogen grid operators) would rather hinder than promote this integration.

Hydrogen should be able to be transported and traded across borders and from outside the EU in the future. This requires recognisable proof of origin and sustainability, also from outside the EU such as Ukraine or North Africa. This is also not sufficiently addressed in the Commission's proposal. The required 70% CO2 savings are not defined in detail.

Gas Connect Austria as enabler of the hydrogen market

Gas Connect Austria is ready, able and willing to help shaping the future hydrogen market and creating transport opportunities. This is documented by the submitted IPCEI (Important Projects of Common European Interest) or by the participation in the EHB (European Hydrogen Backbone) initiative.

"Particularly in the light of a future integrated energy system, we therefore see a need for change in order to make optimum use of synergies and to keep regulation simple and clear. We hope that the EU will still make improvements here, after all, additional expense should be avoided, also in the sense of future hydrogen customers - the clock is ticking, we must act quickly for the energy transition and use all potentials," Harald Stindl concludes.

Further reactions to the decarbonisation package from the industry can be found under the following links:

ENTSOG initial reaction to the publication of the EC’s Hydrogen and Decarbonised Gas Market Package

Hydrogen, Gas Package & Methane emissions: GIE stands ready to support EU’s ambitions

Fachverband Gas Wärme - EU bringt Wasserstoff und Grünes Gas auf den Weg