Renewable Gas, Natural Gas and Hydrogen Markets Regulation

Introduction

Regulation (EU) 2024/1789 acts as a cornerstone of the European Union's "Decarbonised Gas and Hydrogen Package." It serves as a recast of Regulation (EC) No 715/2009, significantly updating the rules for the internal market in natural gas while introducing a comprehensive regulatory framework for the burgeoning hydrogen market. The Regulation aligns the gas sector with the European Green Deal, facilitating the phase-out of fossil fuels and the integration of renewable and low-carbon gases.

Main Goal

The primary objective is to facilitate the penetration of renewable gas (biomethane) and low-carbon gas (specifically hydrogen) into the energy system. It aims to ensure a competitive, secure, and decarbonized energy market by establishing rules for transmission, distribution, supply, and storage, and by creating a dedicated infrastructure planning framework for hydrogen.

Who It Applies To

This Regulation applies to:

• Transmission System Operators (TSOs) for natural gas and hydrogen.
• Distribution System Operators (DSOs) for natural gas and hydrogen.
• LNG System Operators and Hydrogen Terminal Operators.
• Storage System Operators (natural gas and hydrogen).
• Regulatory Authorities (NRAs) and ACER.
• Network Users (shippers, traders, suppliers).

Key Dates

• Entry into Force: 4 August 2024.
• General Application: 5 February 2025.
• Joint Purchasing Provisions: Applicable from 1 January 2025 (with some exceptions applicable from August 2024).
• Hydrogen Entry-Exit System: Mandatory from 1 January 2033.

Key Provisions

Market Organisation

• ENNOH: Establishment of the European Network of Network Operators for Hydrogen (ENNOH) to manage the development of hydrogen infrastructure, parallel to ENTSO-G for gas.
• Unbundling: Strict rules separating energy production/supply from network operation to prevent conflicts of interest, extended to hydrogen networks.
• Tariff Discounts: Introduction of tariff discounts (up to 100%) for renewable and low-carbon gases to incentivize their access to the grid and cross-border trade.

Infrastructure and Planning

• Hydrogen Networks: Rules for the development of dedicated hydrogen networks, including a ten-year network development plan (TYNDP).
• Repurposing: Frameworks to facilitate the repurposing of natural gas pipelines for hydrogen transport.
• Cross-Border Coordination: Mechanisms to handle cross-border gas quality issues and hydrogen blending (up to 2% hydrogen in natural gas flows).

Security of Supply

• Demand Aggregation: Establishment of a permanent mechanism for demand aggregation and joint purchasing of natural gas (excluding Russian gas) to secure supplies and stabilize prices.
• Strategic Storage: Provisions allowing Member States to restrict capacity booking by entities from Russia/Belarus to protect essential security interests.

Exemptions

• New Infrastructure: Major new gas and hydrogen infrastructure (interconnectors, terminals, storage) may be exempted from certain provisions (e.g., third-party access, tariff regulation) under specific conditions (Article 78) to encourage investment.
• Geographical Derogations: Specific derogations exist for isolated markets or systems with limited interconnection.

Penalties

Member States are required to lay down rules on penalties for infringements of this Regulation. The penalties must be effective, proportionate, and dissuasive. Specifically, the Commission may impose fines on undertakings not exceeding 1% of the total turnover in the preceding business year for intentionally or negligently supplying incorrect, incomplete, or misleading information.