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European Parliament and European Council agree updated EU hydrogen market rules

The European Parliament and the European Council reached a provisional agreement on Friday (8 December) on updated EU rules to decarbonise the gas market and create a hydrogen market, which has been welcomed by the European Commission.

The agreement reinforces the long-term planning of the necessary infrastructure for a decarbonised gas sector in Europe. It foresees that national network development plans should be based on joint scenarios for electricity, gas and hydrogen. These should be aligned with National Energy and Climate Plans, as well as an EU-wide Ten Year Network Development Plan.

According to the proposed rules, hydrogen and gas network operators would have to include information on infrastructure that can be decommissioned or repurposed and there would be specific hydrogen network development plans to ensure that the construction of the hydrogen system is based on a realistic demand projection.

The agreed framework would facilitate connection and access to the existing gas grid and allow discounts to cross-border and injection tariffs for these gases, aiming to enable the uptake of renewable and low-carbon gases in the EU. The new rules would also establish a certification system for low-carbon gases including hydrogen, complementing the certification of renewable gases and hydrogen foreseen in the revised Renewable Energy Directive.

“Making a smooth transition from fossil gas to renewable and low-carbon gases is important for our climate ambitions and our industrial competitiveness. Today’s agreement on new market rules is good news for industry and household consumers. I am also delighted that we will continue our successful joint purchasing of gas and that we will start a pilot project for hydrogen,” said Maroš Šefčovič, Executive Vice-President for European Green deal, Interinstitutional Relations and Foresight.

A new hydrogen market

The agreement foresees that rules would be applied in two phases, before and after 2033. In the ramp-up phase, a simplified framework would apply with clear visibility about the future rules for a developed hydrogen market. These provisions cover notably access to hydrogen infrastructure, separation of hydrogen production and transport activities (unbundling) and tariff setting.

A new governance structure in the form of the European Network of Network Operators for Hydrogen (ENNOH) would be established to promote a dedicated hydrogen infrastructure, cross-border coordination and interconnector network construction. It would also be responsible for elaborating specific technical rules.

A permanent joint gas and hydrogen purchasing platform

The revised gas market framework aligns with existing electricity market provisions, facilitating consumer supplier switching. The co-legislators have also backed the European Commission’s proposal that long-term contracts for unabated fossil gas should not last beyond 2049. In line with REPowerEU, both institutions agreed on a mechanism allowing EU countries to limit upfront bidding for capacity for access to the network and LNG terminals for natural gas and LNG from Russia and Belarus.

The revised rules would also automatically apply default solidarity rules to protect vulnerable customers across EU countries without direct connections. Additionally, crisis management procedures would be strengthened by adding safeguards for the cross-border flows of gas during an emergency and by allowing the reduction of non-essential consumption.

Following the launch of the EU Energy Platform, a permanent demand aggregation and joint purchasing mechanism for natural gas would also be established. Moreover, the new rules would introduce a five-year pilot project to bring together demand and supply of hydrogen and create market transparency under the European Hydrogen Bank.

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The provisional agreement now requires formal adoption by both the European Parliament and the European Council. Once this process is completed, the new legislation will be published in the Official Journal of the Union and enter into force 20 days later.

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