Internal Markets for Renewable Gas, Natural Gas and Hydrogen Rules

Introduction

Directive (EU) 2024/1788 is a recast of the EU's common rules for internal gas markets, significantly amending previous frameworks to integrate renewable gas, natural gas, and hydrogen. Part of the "Hydrogen and Decarbonised Gas Market Package," it aims to align the gas sector with the European Green Deal and the REPowerEU plan. The Directive establishes a regulatory framework for the development of a dedicated hydrogen infrastructure and market, facilitates the access of renewable and low-carbon gases to the existing gas grid, and strengthens consumer rights.

Main Goal

The primary objective is to facilitate the decarbonisation of the energy system by enabling the ramp-up of a hydrogen market and the integration of renewable and low-carbon gases, while ensuring security of supply, market competitiveness, and consumer protection. It aims to progressively phase out fossil gas usage.

Who It Applies To

This legislation applies to:

• Natural Gas Undertakings: Producers, suppliers, transmission system operators (TSOs), distribution system operators (DSOs), and storage operators.
• Hydrogen Undertakings: Operators of hydrogen networks, storage, and terminals, as well as hydrogen producers and suppliers.
• Regulatory Authorities: National energy regulators tasked with oversight and tariff setting.
• Member States: Governments responsible for transposition and designation of operators.

Key Dates

• Entry into Force: 4 August 2024.
• Transposition Deadline: 5 August 2026 (Member States must transpose most provisions into national law).
• Hydrogen Network Derogations: Various derogations for existing hydrogen networks expire around 2030 or upon significant expansion.
• Regulated Third-Party Access (Hydrogen): Becomes the default by 1 January 2033 (end of negotiated access phase).
• Fossil Gas Phase-out: Long-term contracts for unabated fossil gas must not extend beyond 31 December 2049.

Exemptions

• Small DSOs: Member States may exempt DSOs serving fewer than 100,000 customers from unbundling requirements.
• Geographically Confined Networks: Specific derogations available for confined industrial or commercial hydrogen networks.
• Isolated Regions: Specific derogations for hydrogen networks in regions like Cyprus, Malta, and parts of Finland/Sweden until 2044.
• Existing Hydrogen Networks: Derogations available for networks belonging to vertically integrated undertakings as of August 2024, subject to specific conditions.

Key Provisions

Market Rules & Unbundling

• Natural Gas: Maintains unbundling rules separating production/supply from transport (ownership unbundling, ISO, ITO).
• Hydrogen: Introduces unbundling rules for hydrogen network operators. From August 2026, hydrogen transmission network operators must be unbundled (with derogations allowed for existing networks).
• Third-Party Access (TPA): Establishes regulated TPA for natural gas and hydrogen networks (negotiated TPA allowed for hydrogen during a transition period until 2032).

Consumer Empowerment

• Rights: Strengthens rights for gas and hydrogen consumers, mirroring electricity market rules (e.g., right to switch supplier within 24 hours by 2026, protection from disconnection).
• Smart Meters: Mandates cost-benefit assessments for deploying smart metering systems.
• Vulnerable Customers: Requires protection measures for energy-poor and vulnerable households.

Network Planning

• Ten-Year Network Development Plans (TYNDP): Requires biannual plans for both gas and hydrogen, based on joint scenarios with electricity and heating sectors to ensure system integration.
• Decommissioning: Introduces requirements for planning the decommissioning of natural gas networks where demand decreases.

Renewable & Low-Carbon Gases

• Certification: Sets a 70% greenhouse gas emission savings threshold for low-carbon hydrogen and fuels to be certified.
• Access: Guarantees non-discriminatory access for renewable and low-carbon gases to the grid, including tariff discounts and firm capacity requirements.

Penalties

Regulatory authorities are empowered to impose effective, proportionate, and dissuasive penalties for non-compliance. Specifically, they may impose penalties of up to 10% of the annual turnover of the transmission system operator, hydrogen network operator, or the vertically integrated undertaking for non-compliance with obligations under the Directive.