EU institutions agree on internal markets directive for hydrogen

The Council of the European Union (EU) and the Parliament have reached a provisional political agreement on the directive to establish common rules for the internal markets in hydrogen as well as renewable and natural gases.

Archive; Courtesy of the European Commission/Photo by Mauro Bottaro

According to the Council, the directive seeks to facilitate the penetration of renewable and low-carbon gases into the energy system, enabling a shift from natural gas, with a view to reaching the EU’s goal of climate neutrality in 2050.

The directive is part of the hydrogen and gas markets decarbonization package, which also includes a regulation, the Council said, noting that both the directive and the regulation are part of the ‘Fit for 55’ package, which aims to align EU climate and energy laws with the EU’s target to reduce greenhouse gas emissions by at least 55% by 2030 and to achieve the goal of becoming climate-neutral by 2050.

Both aim to create a regulatory framework for dedicated hydrogen infrastructure and markets and integrated network planning, and they set rules for consumer protection and strengthen the security of supply, the Council noted, adding that the remaining part of the gas package is expected to be agreed upon by the Council and the Parliament at a later stage.

The Council further said that the two institutions agreed on the split between Transmission System Operators (TSOs) and Distribution System Operators (DSOs) for hydrogen.

As for the protection of vulnerable groups, the Council said that the member states must ensure that the right to switch supplier or market participant is granted to customers in a non-discriminatory manner in terms of cost, effort and time, noting that the provisional agreement provides arrangements on how disconnections could take place, in order to protect customers from the future decommissioning of the gas network or its repurposing to hydrogen.

The provisional agreement also provides for increased coordination between network development plans for hydrogen, electricity and natural gas, the Council stated, pointing out that network development plans will be built on sector integration, the ‘energy efficiency first’ principle and prioritizing the use of hydrogen in hard-to-decarbonize sectors.

As the next step in the process, the provisional agreement needs to be endorsed and formally adopted by both institutions.

Teresa Ribera Rodríguez, third Vice-President of the Spanish government and Minister for the Ecological Transition and the Demographic Challenge, said: “This agreement is a great achievement as it will boost the deployment of the emerging hydrogen sector, the transition of the gas sector towards renewable energy and it also sets rules for consumer protection and strengthens the security of supply. This is undoubtedly a big step closer to the EU’s goal of reaching climate neutrality in 2050, which we should all be proud of.”

To note, the European Commission presented this proposal in December 2021 as part of the second batch of proposals under the ‘Fit for 55’ package.