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An EU body has backed funding networks to use hydrogen blended
with natural gas, prolonging gas' use for a decade despite the
president of the European Investment Bank, Werner Hoyer, saying in
January that "gas is over."
The Council of the European Union (Council), which represents
member state executives and has veto power alongside the EU
Parliament, overcame internal debates to reach a proposal for the
revision of the TEN-E regulation that finances gas and electric
networks, according to an 11 June statement.
The Council's proposal will serve as a basis for its
negotiations with the European Parliament, in view of reaching a
compromise that can be put into legislation.
Its plan presses forward with decarbonization by ending support
for new natural gas and oil exploration, terminal, or pipeline
projects and introducing mandatory sustainability criteria for all
projects.
However, it would not only support hydrogen blending for most of
the next decade, but it will also continue to fund natural gas grid
interconnections in the case of non-connected states like Cyprus
and Malta.
The hydrogen blending points of the proposal were praised by the
European Network of Transmission System Operators for Gas (ENTSOG),
but disputed by 11 countries and the EC, who all insisted funding
for natural gas grids should end so the EU can comply with its 2050 climate neutrality
objective.
Support for blending, smart hydrogen gas
grids
The Council's proposal will see the EU finance natural gas
assets' conversion to dedicated hydrogen assets, which could be
used temporarily to store or transport hydrogen blended with
natural gas or biomethane, although the blend ratio was not
announced.
If passed, backers of natural gas projects seeking financial
support from the EU would have to prove how the assets will cease
to be natural gas assets and become dedicated hydrogen assets by 31
December 2029 and "not lead to the prolongation of the lifetime of
natural gas."
Blending would gradually decarbonize grids and increase the
share of renewable gases in pipelines, the Council said. Support
for its position came from Croatia, Czechia, Poland, Hungary,
Slovakia, Romania, Bulgaria, Malta, and Cyprus. Italy and France
also supported a transitional period for blending.
The proposed revision of the TEN-E rule also updates the
infrastructure categories eligible for EU financing, with a new
focus on offshore electricity grids, hydrogen infrastructure, and
smart grids.
For network operators represented by ENTSOG, installing smart
gas grids will let them integrate more renewable and low-carbon
gases such as biomethane and hydrogen in their networks.
ENTSOG agreed with the Council's view that existing EU gas
infrastructure can play a key role in achieving EU climate goals
efficiently and economically. "To this end, we welcome the
Council's proposal and see it as an important stepping stone to the
creation of the TEN-E regulation that reflects the challenges of
the energy transition," said ENTSOG External Communication Manager
Carmel Carey.
In addition, some executives believe the energy transition won't
be possible without natural gas. Fortum CEO Markus Raumaro said 22
June that natural gas would be "indispensable" for Europe,
especially in the short- and medium-term, as it seeks to meet
decarbonization goals. The commodity offered multiple suppliers and
flexibility, he told Reuters' Global Energy Transition
2021 conference.
According to ENTSOG calculations, blending would save the EU
money. "Existing infrastructure can also be repurposed, at a
fraction of the cost of new infrastructure construction, for the
transport of hydrogen to support the creation of an EU-wide
hydrogen market," Carey added.
Anise Ganbold, Research Leader, Commodities and Hydrogen at
Aurora Energy Research, sees blending helping both grid operators
and hydrogen newcomers. "For gas grid operators, this means there
is now funding available to help refurbish their gas network to
carry hydrogen after 2030. Grid operators are now planning for the
new, net-zero world, and many have focused on hydrogen to limit
stranded assets," she said.
Ganbold pointed out that most of the hydrogen pipelines in
Europe would be in the northwest of the continent: Germany, the
Netherlands, Britain, Denmark, and Norway. "Analysis we did in
December showed that refurbished or new hydrogen pipelines will be
the cheapest way to transport large volumes of hydrogen across
land," said Ganbold.
For green hydrogen producers, hydrogen grid blending could open
a way to sell and transport production to gas consumers who want to
green their supply, she said. "The scheme would be similar to
today's guarantees of original for renewable energy," she
added.
"Even more beneficial to green hydrogen producers would be if
certificates are recognized across Europe as a whole, meaning that
green hydrogen producers can produce hydrogen where costs are
lowest, and inject into their nearby gas grid, without needing to
arrange for a physical offtaker nearby, or arrange to transport
hydrogen by truck, pipeline, or ship to the consumer," said
Ganbold.
Supporting green hydrogen markets is part and parcel of reaching
40 GW of installed hydrogen electrolyzer capacity by 2030 under the
EC's proposed Hydrogen Strategy.
Opposition to blending hydrogen
On the other hand, Denmark published a statement—also signed
by Austria, Belgium, Germany, Estonia, Spain, Ireland, Luxembourg,
Latvia, the Netherlands, and Sweden—opposing hydrogen
blending.
Think tank E3G also
raised concerns about hydrogen blending in grids slowing
progress on the EU's climate targets, pointing out that Energy
Commissioner Kadri Simson had warned against it in the Hydrogen
Strategy.
Proposals to finance hydrogen grid blending were a bad omen for
the European Green Deal package of climate policies set to be
debated this summer, E3G Senior Policy Adviser, Gas Politics,
Raphael Hanoteaux said.
"The precedent it sets for the upcoming packages, and especially
the 'Fit for 55%' and the December gas package, where we are likely
to hear very similar discussions … shows that there is a number of
countries still supporting gas as a transition fuel, regardless of
the EU's own climate commitment and of the need to decrease gas use
by roughly 35% in 2030 and 96% by 2050 relative to 2015
consumption," Hanoteaux said.
"In terms of climate ambition and clarity over the
decarbonization pathway and the place of gas, this is worrying. The
inclusion of blending has a high potential impact to delaying the
decarbonization of gas infrastructure and support stranded assets,"
he explained.
If passed, the Council's proposal would open EU coffers for
hydrogen grid blending projects as soon as next January, said
Hanoteaux.
He echoed the criticism of the European
Environmental Bureau (EEB) when he noted that unless the price of
green hydrogen falls, blending could raise prices for consumers of
domestic gas heating.
IHS Markit data shows the cost of green hydrogen in Europe
ranged from about €4/kg to €9/kg in 2020.
Posted 22 June 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability