European legislative proposals to decarbonise the EU gas market and to ensure energy security for all citizens in Europe intended to facilitate a shift into renewable energy.
The European Commission has issued a set of legislative proposals to decarbonise the EU gas market by facilitating the uptake of renewable and low carbon gases, including hydrogen, and to ensure energy security for all citizens in Europe. The Commission is also following up on the EU Methane Strategy and its international commitments with proposals to reduce methane emissions in the energy sector in Europe and in the global supply chain. The European Union needs to decarbonise the energy it consumes to reduce greenhouse gas emissions by at least 55% by 2030 and become climate-neutral by 2050, and these proposals are instrumental in delivering that goal.
Shift to renewable energy
The gas markets and hydrogen package published on 15 December 2021 consists of a recast of the Gas Directive and Gas Regulation. They create the conditions for a shift from fossil natural gas to renewable and low-carbon gases, in particular biomethane and hydrogen, and strengthen the resilience of the gas system. New definitions for renewable gas and both low-carbon gas and hydrogen are proposed. The existing rules on natural gas also apply to all gases that primarily consist of methane and can technically and safely be injected into and transported through the natural gas system. These have been recast with a particular mention for biomethane. Renewable gases will be certified in accordance with articles 29 and 30 of the Renewable Energy Directive (EU) 2018/2001.
One of the main aims is to establish a market for hydrogen, create the right environment for investment and enable the development of dedicated infrastructure, including for trade with third countries. The market rules will be applied in two phases, before and after 2030, and notably cover access to hydrogen infrastructures, separation of hydrogen production and transport activities, and tariff setting. A new governance structure in the form of the European Network of Network Operators for Hydrogen (ENNOH) will be created to promote a dedicated hydrogen infrastructure, cross-border coordination and interconnector network construction, and elaborate on specific technical rules. Member States will firstly be required to implement a system of regulated third-party access to hydrogen networks, terminals and storage based on published tariffs and applied objectively and without discrimination between any hydrogen network users. Refusal of access and connection will be limited, both for natural gas and hydrogen undertakings, to where there is a lack of capacity.
The proposal foresees that the national network development plans should be based on a joint scenario for electricity, gas and hydrogen. It should be aligned with National Energy and Climate Plans, as well as EU-wide Ten Year Network Development Plan. Gas network operators have to include information on infrastructure that can be decommissioned or repurposed, and there will be separate hydrogen network development reporting to ensure that the construction of the hydrogen system is based on a realistic demand projection.
The new rules will make it easier for renewable and low-carbon gases to access the existing gas grid, by removing tariffs for cross-border interconnections and lowering tariffs at injection points. They also create a certification system for low-carbon gases, to complete the work started in the Renewable Energy Directive with the certification of renewable gases. This will ensure a level playing field in assessing the full greenhouse gas emissions footprint of different gases and allow Member States to effectively compare and consider them in their energy mix. In order to avoid locking Europe in with fossil natural gas and to make more space for clean gases in the European gas market, the Commission proposes that long-term contracts for unabated fossil natural gas should not be extended beyond 2049.
Consumer empowerment and protection
Mirroring the provisions already applicable in the electricity market, consumers may switch suppliers more easily, use effective price comparison tools, get accurate, fair and transparent billing information, and have better access to data and new smart technology. Consumers should be able to choose renewable and low carbon gases over fossil fuels. The proposal extends current rules to renewables and low carbon gases and introduces new provisions to cover emerging cybersecurity risks. Finally, it will foster a more strategic approach to gas storage, integrating storage considerations into risk assessment at regional level. The proposal also enables voluntary joint procurement by Member States to have strategic stocks, in line with the EU competition rules.
In parallel, in a first-ever EU legislative proposal on methane emissions reduction in the energy sector, the Commission will require the oil, gas and coal sectors to measure, report and verify methane emissions, and proposes strict rules to detect and repair methane leaks and to limit venting and flaring. It also puts forward global monitoring tools ensuring transparency of methane emissions from imports of oil, gas and coal into the EU, which will allow the Commission to consider further actions in the future.
The proposal would establish a new EU legal framework to ensure the highest standard of measurement, reporting, and verification (MRV) of methane emissions. The new rules would require companies to measure and quantify their asset-level methane emissions at source and carry out comprehensive surveys to detect and repair methane leaks in their operations. In addition, the proposal bans venting and flaring practices, which release methane into the atmosphere, except in narrowly defined circumstances. Member States should also establish mitigation plans, taking into consideration methane mitigation and measurement of abandoned mine methane and inactive wells.
Finally, with respect to the methane emissions of the EU's energy imports, the Commission proposes a two-step approach. First, importers of fossil fuels will be required to submit information about how their suppliers perform measurement, reporting and verification of their emissions and how they mitigate those emissions. The Commission will establish two transparency tools that will show the performance and reduction efforts of countries and energy companies across the globe in curbing their methane emissions: a transparency database, where the data reported by importers and EU operators will be made available to the public; and a global monitoring tool to show methane emitting hot-spots inside and outside the EU, harnessing our world leadership in environmental monitoring via satellites.
The position in Cyprus
Cyprus currently depends on imported oil to meet most of its growing energy needs. At the same time, cost reductions on renewable energy technologies, coupled with abundant renewable energy resources, provide the chance to reduce dependency on fossil fuels and fulfilling the country’s own targets for 2030. To address these challenges, Cyprus had co-operated with the International Renewable Energy Agency (IRENA) and developed in 2015 a roadmap for renewable energy deployment based on detailed demand forecasts, long-term energy modelling and a review of relevant technologies for the grid integration of variable renewable energy. The strategic documents relevant to the climate and energy policy are the National strategy and action plan for the adaptation to climate change adopted in May 2017 by the Council of Ministers (decision no. 82.555) and the National Action Plan for the improvement of air quality in Cyprus adopted in May 2018.
The Integrated National Energy and Climate Plan (INECP) submitted to the European Commission in 2020 provides a detailed analysis of deployment options and delivers quantitative insights to assist Cyprus with upcoming energy policy decisions. As this plan roadmap shows, Cyprus key objective in the RES target towards 2030 is to achieve at least 23% RES in final Energy Consumption, while the transport target was set to 14% in final energy consumption by 2030. As far as heating and cooling is concerned, there is an indicative target of an increase in RES H&C by 1% per year. Both the transport and the heating and cooling targets will be very challenging to achieve, since considerable investments and EU funding will be needed in order to reach the desired levels. Based on the scenario with existing measures, Cyprus originally set a 19% share of energy from renewable sources in gross final consumption of energy in 2030. This level of ambition was increased significantly with the new proposed policies and measures to reach 23% in 2030. The plan can be found here.
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