The European Commission has released the much-anticipated proposals of the Gas Package revision, which aims to create the regulatory framework for the decarbonisation of Europe’s gas infrastructure. The Gas Package consists of the Gas Directive and Gas Regulation, key legislative instruments to lay the commons rules for the gas markets and conditions for access to the gas transmission networks.
CATF welcomes the revision of the Gas Package in order to align the Gas Directive and Regulation with the bloc’s climate targets and harmonise these legislations with the first round of Fit for 55 proposals released in July 2021.
“The crucial context for these policies is the exponential growth in demand of hydrogen for key, difficult-to-electrify sectors across the EU in the next decades,” said Alessia Virone, CATF’s EU Affairs Manager. “As a major new area of the energy sector, there are of course issues to be worked out. But we know that the biggest emitting industries and sectors in Europe will need hydrogen to decarbonise. No matter what, we are going to see a massive spike in demand – Europe’s core challenge is meeting that demand as quickly and cleanly as possible.”
In 2018, the total hydrogen demand in Europe was estimated at 8.3 million tonnes per year. It is expected that renewable and low-carbon hydrogen will displace unabated fossil gas molecules as Member States transition to energy systems that are kinder to the environment. By 2050, the demand of hydrogen in Europe is expected to increase to 60 million tonnes per year. For context, Europe currently has a pure hydrogen generation capacity 9.9 million tonnes per year, with just 0.1% of that coming from renewable sources.
Hydrogen production scaling will be critical to achieve the decarbonisation of the hard-to-electrify sectors, such as shipping, trucking, and steel production. In these sectors, the required energy demand cannot yet be commercially met through electrification alone. These industries are already at the heart of our societies and produce the basic materials and services required for the development of a new energy system.
In Europe, it is expected that the final electricity share in the energy system will increase from 20% in 2020 to 50% by 2050. In 2020, only one-fifth of the electricity came from sun and wind energy and, while encouraging, there is a herculean challenge ahead to both decarbonise the grid and generate enough electricity to produce renewable hydrogen.
The European Clean Power Sector in 2020 report released by German NGO Agora Energiewende concluded that the current rate of renewable energy development must triple in order to achieve the Green Deal targets. For this reason, CATF welcomes the Commission’s technology-open approach to allow renewable and low-carbon molecules to replace current unabated fossil gases. Such an approach will allow for a faster transition from our current reliance on fossil fuels whilst the grid is being decarbonised and renewable electricity becomes plentiful enough to produce enough renewable hydrogen to match demand. This is aligned with Europe’s hydrogen strategy that recognises the role of low-carbon fuels to achieve climate neutrality.
CATF supports the direct deployment of hydrogen in those sectors where electrification is not commercially viable, but production volumes will likely be constrained for some time. The Commission’s decision not to include targets for hydrogen blending is sensible in this regard.
“Low-carbon hydrogen can play a role in the transition while green hydrogen is not yet available in sufficient quantity,” said Magnolia Tovar, Director of Zero Carbon Fuels for CATF. “But to access these new markets low-carbon hydrogen should be produced with very high levels of carbon capture, minimal associated CO2 emissions in energy inputs, and methane emissions should be cut to as close to zero as possible”.
For forthcoming Delegated Act defining low-carbon hydrogen will be crucial in establishing a robust definition and certification scheme based on full life-cycle emissions, including strict methane leakage rates on the full value-chain and a high level of carbon capture and permanent storage. The thresholds used to define low-carbon hydrogen should be ambitious and adaptative in order to follow technology developments. However, the Delegated Act specifying the methodology for assessing greenhouse gas emissions savings from low carbon fuels will only be adopted by end of 2024.
Rowan Emslie, Communications Director, EU, [email protected], +32 476-97-36-42
About Clean Air Task Force
Clean Air Task Force (CATF) is a global nonprofit organization working to safeguard against the worst impacts of climate change by catalyzing the rapid development and deployment of low-carbon energy and other climate-protecting technologies. With 25 years of internationally recognized expertise on climate policy and a fierce commitment to exploring all potential solutions, CATF is a pragmatic, non-ideological advocacy group with the bold ideas needed to address climate change. CATF has offices in Boston, Washington D.C., and Brussels, with staff working virtually around the world.