The European Commission has unveiled new plans to promote "low-carbon gasses" and allow joint procurement of supplies.
In the midst of an energy crunch that has sent electricity bills soaring, the European Commission has unveiled new plans to phase out natural gas and bolster the uptake of so-called "low-carbon gasses", such as biomethane and hydrogen.
The executive wants the EU to weed itself out of its enormous consumption of natural gas, an energy source that, while less polluting than coal, still contributes to man-made climate change.
The Commission proposes member states end all long-term natural gas contracts by 2049 at the very latest, one year before the EU is supposed to become climate neutral.
But completing the transition won't be easy.
The bloc uses over 400 billion cubic metres of gaseous fuels each year – 95% of which are natural gas – in order to cover a quarter of its energy needs, including electricity and heat production. About 83% of all this natural gas is imported from abroad, notably from Russia, an entrenched dependency that entails serious geopolitical consequences.
On the other hand, the nascent sector of low-carbon gases represents less than 5% of the market.
Given its novelty, it is still unclear how effective this alternative can be to completely replace natural gas. Environmental organisations argue that any kind of gas, whether fossil or synthetic, should be removed from the EU's future energy mix due to their carbon footprint.
But the Commission says low-carbon gasses must be promoted and embraced by member states, particularly in sectors where electrification through renewables – like wind and solar power – is not feasible.
These "decarbonised" gasses, the executive says, will bring down costs for consumers and companies. They will also boost the bloc's security because they will be easier to produce locally and will therefore cut down the ties that leave the EU at the mercy of external providers.
"Decarbonising our gas market by 2050 is a complex task and we must create the right conditions for it now," said Kadri Simson, EU Commissioner for energy.
A common market for low-carbon gas
At the core of this undertaking will be hydrogen, a promising resource that is in the early stages of development and provides less than 2% of the EU's energy needs.
The vast majority of the hydrogen produced today – around 96% – comes from natural gas and is not considered clean. However, a technique known as electrolysis, which uses renewable electricity to split water into hydrogen and oxygen, can help slash carbon emissions from the process.
The EU is betting hard on big-scale electrolysis and aims to produce 10 million megatons per year of renewable hydrogen by 2030. Under the new rules unveiled on Wednesday, the bloc will establish a common hydrogen market to trade, invest, build infrastructure and set tariffs.
"A well-functioning hydrogen market will enable our companies to produce green steel, green fertilisers, and zero-carbon ships and planes," said Simson.
The plans also foresee re-purposing the existing gas grid for low-carbon gasses so that member states can have easy and fast access to supplies. A solidarity mechanism will ensure that gas can travel across borders and prevent shortages anywhere in the bloc.
The Commission offers EU countries the possibility of joint gas procurement, an idea that Spain has strongly supported as a solution to the ongoing energy crunch. These collective schemes, which Simson described as a "true bottom-up approach", will be voluntary, open to all member states and in line with competition and state aid rules.
With the measures unveiled on Wednesday afternoon, the executive intends to empower consumers by making it easier to switch from fossil to clean suppliers and having access to fair and accurate billing information.
The Commission also introduced a new EU target to slash methane emissions – a potent and dangerous greenhouse gas – by 80% before the end of the decade, compared to 2020 levels. However, this reduction will only cover 19% of total methane emissions (from the oil, coal and gas sectors) and exclude the 53% produced by agriculture and the 26% coming from waste.
The legislative proposals reflect a growing consensus around the role that gas is poised to play in the bloc's decades-long green transition. EU officials now frequently refer to gas as a "transitional" source that will help fill in the energy gaps as renewables are progressively deployed.
Environmental organisations have blasted this embrace as blatant greenwashing, while the industry has warmly welcomed the Commission's middle-ground position.
"Fundamentally, gases are a key part of Europe’s energy resources, so we need EU policies that help and don’t hinder the role of gas," said James Watson, secretary-general of Eurogas, an association that represents companies across the gas value chain.
By contrast, Greenpeace warned that the updated rules fail to "acknowledge the need to phase out gas in order to tackle the climate crisis" and called on the Commission to end the presence of fossil gas by 2035. The European Environmental Bureau (EEB) also voiced its concerns and said the legislative merits were "marred by compromising trade-offs with the fossil industry".
"Gazprom and the gas industry will be rubbing their hands with glee while Europe becomes more dependent on partly decarbonised-fossil gas and its volatile prices," said Davide Sabbadin, an EEB policy officer, in a statement.
In a separate proposal, the Commission tackled the carbon footprint of buildings, which today account for 40% of the EU's energy consumption and 36% of greenhouse gas emissions. Under the new rules, all new buildings erected after 2030 must be zero-emission and fossil fuel used in heating and cooling should be completely phased out by 2040 at the latest.
All these legislative texts are still draft versions and need to be discussed and approved by the 27 member states and the European Parliament. Lengthy negotiations are expected since the two co-legislators are known for espousing divergent, and sometimes incompatible, positions when it comes to climate policy.
The proposals come as natural gas hit a record-high price of €128 megawatt per hour at the Dutch Title Transfer Facility, Europe's leading benchmark. EU leaders are set to discuss the power crunch on Thursday during a one-day summit in Brussels.