European gas package: European Parliament approves new rules for hydrogen

Negotiations on the first part of the EU’s new rules for the hydrogen and natural gas market concluded on Monday. The legislation is intended to facilitate investment in new hydrogen infrastructure, the news website Euractiv reports.

On Monday evening, EU lawmakers completed the approval process for the first part of the EU’s hydrogen and gas package. The rules, originally proposed in December 2021, set out the conditions for investment in hydrogen infrastructure and give priority to hard-to-decarbonise sectors such as steelmaking and the chemical industry.

"The agreement is a great success, as it will support the development of the emerging hydrogen sector and the gas sector’s transition to renewable energy sources, while also establishing rules to protect consumers and strengthening security of supply," said Spain’s Minister for the Ecological Transition Teresa Ribera, who represented the EU’s 27 member states in the negotiations on behalf of the Spanish EU presidency.

One of the compromises eventually agreed by the negotiators concerns so-called unbundling. The rules will ultimately be more flexible for renewable gases than in the European Commission’s original proposal, helping to develop the future market for renewable gases and hydrogen.

European lawmakers also consider the adoption of new consumer protection rules a success. Consumers are set to gain greater rights and support as they switch to gas supplies free of fossil fuels. Rules to prevent households from being disconnected from networks were also adopted.

Despite lawmakers’ positive reaction, the final version of the package has drawn criticism. The German think tank Agora Energiewende, for example, said the new rules would impose unnecessarily high costs on taxpayers, make it harder for new producers of renewable hydrogen and ammonia to enter the market, and fail to clarify what qualifies as “low-carbon” hydrogen and biomethane. For now, the Union has only defined green hydrogen, with a definition that is highly restrictive.

Hydrogen is one of the key commodities in the EU’s energy transition. The agreement will now need to be approved by Parliament and EU countries through the Council. No major changes are expected, however.  The new legislation is formally expected to be approved in March next year.