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Assistance to assessing options improving market conditions for bio-methane and gas market rules
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Assistance to assessing options improving market conditions for bio-methane and gas market rules

Final report

Assistance to assessing options improving market conditions for bio-methane and gas market rules

Final report

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The EU Green Deal, as presented by the European Commission in late 2019, fixes the objective to make Europe the first climate-neutral continent, i.e., to achieve net-zero greenhouse gas emissions by 2050. In order to meet this target, a review of major EU Directives and Regulations is required. One of the obstacles to overcome is the fact that the current energy system is still built on several parallel, vertical energy value chains, where specific energy resources are rigidly linked with specific end-use sectors. This very segregated approach cannot deliver a climate-neutral economy in a cost-efficient way, and it is technically and economically inefficient. The EU Strategy for Energy System Integration1 proposes concrete policy and legislative measures at EU level to gradually shape a new integrated energy system, aiming at the coordinated planning and operation of the energy system ‘as a whole’, across multiple energy carriers, infrastructures, and consumption sectors. It sets energy efficiency at the core of a more circular energy system and foresees an electrification of end-uses where deemed possible and cost-efficient (as electricity may be decarbonised in a more cost-efficient manner than other energy carriers). The Strategy also considers the use of renewable and low-carbon fuels (such as hydrogen, renewable gases and liquids) as a key prerequisite for deep decarbonisation, notably for sectors that are difficult to electrify directly (e.g., specific end uses in transport or industry). Biomethane as an equivalent substitute for natural gas enables the decarbonisation of methane gas supply. In addition, biomethane allows to make use of biological waste which fosters the objectives outlined in the Circular Economy Action Plan. Furthermore, hydrogen can be produced from renewable electricity (other alternatives include steam methane reforming combined with CCS), and is a potential significant contributor to the decarbonisation of the European economy if combined with an important deployment of renewable electricity generation technologies. Finally, the EU’s Energy System Integration Strategy calls for a more integrated, ‘multi-directional’ energy system in which consumers play an active role in energy supply. Vertically integrated, decentralised production units (such as biomethane or hydrogen producers) and customers are expected to contribute actively to the overall balance and flexibility of the system. In addition, the existing gas network provides ample capacities across the EU to integrate renewable and low-carbon gases. The major challenge consists of ensuring it is effectively exploited for the sake of a cost-efficient energy system transformation.
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