Pilot project to bolster EU hydrogen market in new directive on gas markets

MEPs have adopted plans that will facilitate the uptake of renewable and low-carbon gases, including hydrogen, into the EU gas market.

The new directive and regulation on the gas and hydrogen markets aim to decarbonise the EU’s energy sector, enhancing the production and integration of renewable gases and hydrogen.

These measures are designed to secure energy supplies disrupted by geopolitical tensions, particularly the Russian war against Ukraine, and address climate change. In negotiations with Council on the directive, MEPs focused on securing provisions around transparency, consumer rights, and support for people at risk of energy poverty. Plenary adopted the directive with 425 votes in favour, 64 against and 100 abstentions.

The new regulation, adopted with 447 votes in favour, 90 against and 54 abstentions, will beef up mechanisms for fair pricing and stable energy supply, and will allow member states to limit gas imports from Russia and Belarus. The legislation will introduce a joint gas purchasing system to avoid competition among member states and a pilot project to bolster the EU’s hydrogen market for five years.

The regulation also focuses on increasing investments in hydrogen infrastructure, especially in coal regions, promoting a transition to sustainable energy sources like biomethane and low-carbon hydrogen.

“Europe’s steel and chemical industries, which are hard to decarbonise, will be placed at the centre of the development of a European hydrogen market,” lead MEP on the directive Jens Geier (S&D) said. “This will enable fossil fuels to be phased out of industry, secure European competitiveness, and preserve jobs in a sustainable economy. Unbundling rules for hydrogen network operators will correspond to existing best practices in the gas and electricity market.”

Lead MEP on the regulation Jerzy Buzek (EPP) said: “The new regulation will transform the current energy market into one based primarily on two sources – green electricity and green gases. This is a huge step towards meeting the EU’s ambitious climate goals and making the EU more competitive on global markets. We have introduced a legal option for EU countries to stop importing gas from Russia if there is a security threat, which gives them a tool to phase out our dependence on a dangerous monopolist.”

The legislative package reflects the EU’s growing climate ambitions, as set out in the European Green Deal and its ‘Fit for 55’ package. The updated directive aims to decarbonise the energy sector and includes provisions on consumer rights, transmission and distribution system operators, third-party access and integrated network planning, and independent regulatory authorities. The updated regulation will push existing natural gas infrastructure to integrate a higher share of hydrogen and renewable gases, by means of high tariff discounts. It includes provisions to facilitate blending hydrogen with natural gas and renewable gases, and greater EU cooperation on gas quality and storage.