Climate news by BPO – MEPs approve reforms for a more sustainable and resilient EU gas market

On April 11, MEPs adopted plans to facilitate the uptake of renewable and low-carbon gases, including hydrogen, into the EU gas market. The new directive and regulation on the gas and hydrogen markets aim to decarbonise the EU's energy sector, enhancing the production and integration of renewable gases and hydrogen.

These measures are designed to secure energy supplies disrupted by geopolitical tensions, particularly the Russian war against Ukraine, and address climate change. In negotiations with Council on the directive, MEPs focused on securing provisions around transparency, consumer rights, and support for people at risk of energy poverty. Plenary adopted the directive with 425 votes in favour, 64 against and 100 abstentions.

The new regulation, adopted with 447 votes in favour, 90 against and 54 abstentions, will beef up mechanisms for fair pricing and stable energy supply, and will allow member states to limit gas imports from Russia and Belarus. The legislation will introduce a joint gas purchasing system to avoid competition among member states and a pilot project to bolster the EU’s hydrogen market for five years.

The regulation also focuses on increasing investments in hydrogen infrastructure, especially in coal regions, promoting a transition to sustainable energy sources like biomethane and low-carbon hydrogen.

"Europe’s steel and chemical industries, which are hard to decarbonise, will be placed at the centre of the development of a European hydrogen market," lead MEP on the directive Jens Geier (S&D, DE) said. "This will enable fossil fuels to be phased out of industry, secure European competitiveness, and preserve jobs in a sustainable economy. Unbundling rules for hydrogen network operators will correspond to existing best practices in the gas and electricity market."

Lead MEP on the regulation Jerzy Buzek (EPP, PL) said: "The new regulation will transform the current energy market into one based primarily on two sources - green electricity and green gases. This is a huge step towards meeting the EU's ambitious climate goals and making the EU more competitive on global markets. We have introduced a legal option for EU countries to stop importing gas from Russia if there is a security threat, which gives them a tool to phase out our dependence on a dangerous monopolist."

Baltic context

Due to the threats related to gas supplies, it was necessary to find alternative suppliers. The task turned out to be a significant challenge, especially for the countries of Central and Eastern Europe, whose domestic consumption was highly dependent on Russian raw materials.

Without a shadow of a doubt, seaports equipped with appropriate reception infrastructure play an important role in the new way of distributing natural gas. However, the current capacity of European terminals cannot replace the high demand. Immediate responses were necessary in the form of investments in the expansion of existing or construction of new facilities for receiving liquid natural gas. The largest increase in projects takes place in Germany, where it was decided to build their own terminals in record time and on an unprecedented scale. Berlin's plans for LNG import infrastructure include a total of five FSRU (Floating Storage and Regasification Unit) terminals, i.e. units for storage and regasification of liquefied gas, and three land terminals - gas ports (Table). Launching the facilities in Wilhelmshaven, Lubmin and Brunsbuttel in less than a year after the decision was made would not have been possible without the special act adopted for this purpose simplifying administrative procedures.

The scale of investments in LNG reloading terminals carried out not only in the Baltic Sea region, but throughout Europe, indicates that European countries currently do not intend to give up the use of this fuel as a bridge fuel in the energy transformation in the near future. The reduction of pipeline supplies by the Kremlin, which was supposed to be an element of a political game and an instrument to force the European Union to make concessions regarding the sanctions introduced, ultimately contributed to increasing the security buffer of European countries and the possibility of diversifying the directions of gas imports. Although current data do not indicate that Europe will completely stop purchasing gas from Russia, the newly constructed facilities certainly provide an opportunity for increased diversification of future supplies, in line with the EU's planned departure from Russian gas by 2027 indicated in the REPowerEU plan.