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04 Nov 2021

Transformation is inevitable – getting it right is essential

Transformation is inevitable – getting it right is essential
Since my election as President of Eurogas in June this year, I have been working to define the role of gas in this period of profound change.

Change must happen quickly and cost-efficiently if we are to tackle the climate emergency in this challenging economic context.

Since I came into the post, we have seen the launch of the European Commission’s Fit for 55 proposals, more than 3 000 pages of legislation designed to deliver on increased  climate ambition.

The Decarbonised Gas Market Package, due by the end of the year, will bring even more opportunities to reshape our energy systems. This is a pivotal moment, and we will be  working diligently through it.
 


This article was originally published on The Guide - Season 4 | 2021

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WORKING TOGETHER
Eurogas represents 64 companies and associations in 25 countries and is the leading association of the European gas industry.

Our members’ activities span the value chain from wholesale markets to distribution systems. This includes companies involved in producing, trading, and blending renewable and  low carbon gases, along with innovators using digital solutions to tackle emissions. We have agreed a clear vision to 2050 and recommendations for the legislation to be negotiated in the coming years.

Eurogas holds well-established commitments to the EU’s 2030 and 2050 targets. In fact, we aim to fully decarbonise our networks soon after 2045. To make this a reality, our  members see certain areas as key: a consistent policy framework, a competitive and stable market for all gases, cost-effective decarbonisation of energy networks and strong  consumer protection.

Work to achieve these objectives is well underway, including through collaboration with like-minded associations from other sectors.
 


Targets are a key part of creating the consistent policy framework we need to make investments in the next generation of gas technology. To establish a tradeable market, that framework will need a certification system for all renewable and low carbon gases.



GOALS AND TARGETS
Along with 14 other organisations spanning gas, power generation, mobility and buildings, Eurogas has been calling for binding 2030 EUlevel targets. These would set two goals into
law: lowering the greenhouse gas intensity of gas consumed by at least 20% and increasing the share of renewable gas to at least 11%.

These targets would send the right investment signals to meet climate targets. It is no coincidence that France is becoming a leader in biomethane production, as the country has set
a target for renewable gas consumption of 10% of all gaseous fuels by 2030.

Targets are a key part of creating the consistent policy framework we need to make investments in the next generation of gas technology. To establish a tradeable market, that framework will need a certification system for all renewable and low carbon gases.

If this system was supported by Guarantees of Origin covering climate and sustainability information, end customers could make more informed decisions.

We also take very seriously our commitment to value chain methane emissions reductions. The association is active in the Methane Guiding Principles and the OGMP 2.0 initiative. Upcoming legislation is our chance to establish a regulatory framework to address the issue more comprehensively.

IMPORTANCE OF A HARMONISED APPROACH
Improved accuracy and transparency in reporting is needed along with new measures to ensure emissions reductions. We urgently need a more harmonised approach to Monitoring, Reporting and Verification (MRV) and Leak Detection and Repair (LDAR).

There is a balance to be found here. We need to harmonise, but some flexibility is needed depending on local conditions like grid type.

LDAR is used by DSOs across Europe to ensure the safety of their grid for end-users. Practices differ across Europe and along the value chain. Rolling out MRV across the EU will help improve data availability and transparency across the value chain.

It will ensure that DSOs have a better understanding of their grid. Here, further harmonisation at EU-level would be welcome. The OGMP 2.0 reporting template should be used by all DSOs in the EU to ensure a robust and transparent reporting framework.

BUILDINGS AND TRANSPORT
Another area the association has been working on is buildings and transport. In these sectors it’s clear that the extension of the EU Emissions Trading System (EU ETS) in the long  term is the right move.

However, there is a risk that vulnerable consumers could be disproportionately impacted in the absence of transitionary measures. The revision of the Energy Taxation Directive provides an opportunity to tackle emissions in transport and buildings through carbon pricing, while providing sectoral and national flexibility.

When it comes to taxation, we will also need to make sure that quick wins offered by coal to gas switching are not omitted by broad-brush measures against all fossil energy carriers.

The approach we propose on buildings and transport shows how we can use policy opportunities to adapt to market realities. This logic is also relevant to developing a competitive and liquid market for all gases.

We do need a clear regulatory toolbox for investor certainty, but it should be implemented in a stepwise approach. Eurogas supports the regulation of networks and the benefits this offers, like investor certainty.

HYDROGEN INFRASTRUCTURE
We will work to see hydrogen networks being regulated and the extension of existing rules such as unbundling being applied to them. It’s also clear that certain exemptions will be required in the short term to avoid overregulating a nascent market.

This new market incorporating all gases will of course need stability and interoperability. For that, we must start building economies of scale.

While dedicated infrastructure is the end goal, blending is a transitional step to getting there. Blending hydrogen and biomethane gases with natural gas offers immediate emissions reductions and increases demand, which helps to bring down costs.

There are currently regulatory barriers to blending in many Member States. The potential of blending could be leveraged with harmonised EUwide acceptance levels for blends.

Considering how interconnected Europe’s energy infrastructure is, blended gas should really be able to be transported easily across borders with strong cooperation on gas quality.

GAS AND THE ENERGY TRANSITION
Both Eurogas and the European Commission foresee an important role for gas in the transition. It provides storage, flexibility, and security as we work towards climate targets.

As mentioned, Eurogas is determined to fully decarbonise gas networks soon after 2045. Looking across energy networks and sectors, cost-effective decarbonisation is going to require coordinated infrastructure planning.

This could be enabled through the inclusion of all energy carriers in integrated National Network Development Plans. This would help achieve increased sector integration, while maintaining a level playing field and competition between electricity and gas.
 


The gas sector has an opportunity to work together now and achieve the same for our customers. Improvements could span points from basic contractual rights and switching suppliers to enabling the creation of energy communities.



The final piece in this puzzle is consumers. As we work on this new legislation, we are able to draw from the revision of the Electricity Directive. The relatively recent revision saw strengthened consumer rights.

The gas sector has an opportunity to work together now and achieve the same for our customers. Improvements could span points from basic contractual rights and switching suppliers to enabling the creation of energy communities.

OPPORTUNITIES
Taking a step back from these broad ranging areas of work, we see recurring themes. Frameworks are important but they will need to be flexible given fast-moving changes in policy and technology readiness.

Policy instruments can be used to respond to market realities, be it in the decarbonisation of buildings and transport or the pace at which nascent markets are regulated.

Despite the challenges of the volume of legislation, we have opportunities to improve networks, cooperate across sectors, improve sector integration and serve consumers.
 

Didier   Didier Holleaux
  President
  Eurogas

 

 

 

 

 


This article was originally published on The Guide - Season 4 | 2021

Check out more articles


 

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