Fit for 55: Council Approves Gas and Hydrogen Market Package

In a landmark decision, the Council of the European Union has adopted a regulation and directive aimed at reforming the gas and hydrogen markets. This legislative move is part of the broader Fit for 55 initiative, designed to advance the EU’s decarbonization goals.

What is Fit for 55?

Fit for 55 is a comprehensive package of policies by the European Union aimed at reducing greenhouse gas emissions by 55% by 2030 compared to 1990 levels. This initiative includes various measures across different sectors to ensure the EU stays on track to meet its climate goals, promoting sustainability and enhancing energy efficiency across the continent.

Key Facts and Recent Developments

The newly approved rules establish common internal market regulations for renewable and natural gases and hydrogen, significantly updating the existing EU gas legislation. The primary aim is to facilitate the transition to renewable and low-carbon gases, particularly hydrogen, thus supporting the EU’s ambitious decarbonization targets.

Designing the Gas and Hydrogen Market

The gas package introduces robust regulations for the organization of the natural gas market and lays down a comprehensive framework for the emerging hydrogen market. It includes specific rules for the transport, supply, and storage of both natural gas and hydrogen, emphasizing integrated and transparent network planning across the EU. Gas and hydrogen network operators are mandated to prepare a 10-year EU network development plan, guided by the principle of 'energy efficiency first'.

Switching to Renewable Gas

To ensure a gradual phase-out of fossil fuels, long-term contracts for fossil gas will cease as of 2049. The new rules promote the integration of renewable and low-carbon gases, particularly hydrogen, in coal and carbon-intensive regions.

Member states are encouraged to provide tariff discounts and incentives to support market integration and system adaptation, ensuring a just transition.

Protecting Consumers from Energy Poverty

The new legislation includes measures to protect vulnerable consumers and those affected by energy poverty, particularly in remote areas. These measures include protections against disconnections and the appointment of suppliers of last resort to maintain supply continuity.

Next Steps

Following the Council’s adoption, the regulation and directive will be signed and published in the Official Journal of the European Union. The regulation will become applicable six months post-publication, while member states will have two years to adapt their national legislation to comply with the directive's provisions.

Background and Legislative Process

The hydrogen and decarbonized gas markets package is a key component of the Fit for 55 initiative, aiming to align the existing gas legislation with the EU’s climate goals. The updated regulation and directive, proposed by the Commission on 15 December 2021, underwent negotiations with the European Parliament starting on 1 June 2023. A final agreement was reached on 27 November for the directive and on 8 December 2023 for the regulation.

The adoption of this package represents a critical step towards a sustainable energy future, positioning the EU as a leader in the global transition to renewable and low-carbon gases.

You can find the full press release here.

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