European Council authorizes gas and hydrogen market package

The Council of the European Union (EU) has adopted a regulation and a directive establishing common internal market rules for renewable and natural gases and hydrogen and reforming the existing EU gas legislation.

According to the Council, the gas package sets out “solid” rules for the organization of the natural gas market and establishes a “strong” framework for the development of the future hydrogen market, including for dedicated hydrogen infrastructure. It contains specific rules for the transport, supply and storage of natural gas and hydrogen.

The Council said that the new rules call for integrated and transparent network planning across the EU, “under the principle of ‘energy efficiency first’ and with a forward-looking approach,” adding that gas and hydrogen network operators will prepare a 10-year EU network development plan.

“The new rules will help make the shift to renewable and low-carbon gases, in particular hydrogen, in the energy system, with a view to achieving the EU’s decarbonisation targets,” the Council stated, revealing that member states will provide for tariff discounts and incentives to facilitate their market and system integration, especially for the nascent hydrogen market, and so to ensure a “just” transition.

To ensure the phase-out of fossil fuels, long-term contracts for fossil gas will no longer be concluded as of 2049. A voluntary mechanism will also be set up to support the hydrogen market for five years.

The regulation and the directive will now be signed and published in the Official Journal of the EU. The regulation will become directly applicable six months after its publication, and as regards the directive, member states will have two years to adapt their national legislation to its provisions.

To note, the hydrogen and decarbonized gas markets package is part of the Fit for 55 batch of legislation. The updated regulation and directive were put forward as a proposal by the European Commission (EC) on December 15, 2021, and the negotiations with the European Parliament on the final shape of the texts started on June 1, 2023. A final deal on the directive was reached on November 27, 2023, and on the regulation on December 8, 2023.