The EU has adopted new regulations for the internal gas market, now also including regulations on renewable gases and hydrogen. The two legal acts, a directive and a regulation, were published in the Official Journal on July 15 and entered into force in the EU 20 days later. The Norwegian Ministry of Energy sent the legal acts on public consultation on August 26, with a deadline for responses 25 October. The Ministry is planning an input meeting on 10 October for all interested parties, and has indicated that they consider the two legal acts to be EEA-relevant and acceptable with adaptations.

Norway has great ambitions for the development of a low- and zero-emission hydrogen industry. Furthermore, Norway and Germany have expressed a desire for large-scale exports of Norwegian hydrogen to Germany, and in the long term it may be relevant to use other parts of the gas infrastructure between Norway and Europe for hydrogen exports. Therefore, it is of great importance for Norwegian stakeholders in both the hydrogen and gas markets, that the framework in Norway and in our most important trading partner, the EU, coincide in terms of market access and ensure a level playing field. Hence, rapid implementation of the revised legislation is important for Norwegian business interests and also for the realization of Norway’s ambitions for the hydrogen sector. If there is a delay in implementing the regulations in Norway, it could mean that Norwegian hydrogen operators will not have access to the European hydrogen market on the same terms as European competitors. In particular, lack of implementation of these legal acts could constitute a barrier to access necessary infrastructure for the distribution of Norwegian hydrogen in Europe, difficulties tied to different certification regimes for hydrogen between Norway and Europe, and hinder the Norwegian System Operators for hydrogen networks to participate in the development of the hydrogen market through the cooperation body ENNOH. 

Brief review of the main changes related to hydrogen in the legal acts

The revised Directive on common rules for the internal markets for renewable gas, natural gas and hydrogen (2024/1788/EU) and the Regulation on the internal markets for renewable gas, natural gas and hydrogen (2024/1789/EU) were presented as part of the EU’s “Fit for 55” package in 2021, with the aim of contributing to decarbonization by restructuring the gas market to include renewable gases and hydrogen. After the invasion of Ukraine, the need for energy security and security of supply also increased through the desire to reduce dependence on Russian gas in Europe. Against this background, in connection with the “Re-power EU” package presented in the spring of 2022, further changes were made to the legal acts surrounding the internal gas market.

The internal gas market Directive has been revised to include rules for renewable gases, synthetic gases and hydrogen, in addition to the existing market rules for natural gas, with the aim of establishing a framework for the decarbonization of the gas market which can contribute to achieving the energy and climate goals in Europe. The regulations will facilitate the phasing-in of renewable and low-emission gas. Low-emission gas is defined in the directive as a 70% reduction in lifecycle emissions compared to a fossil gas and is to be calculated based on the methods for estimating lifecycle emissions for different energy sources in the Renewable Energy Directive (2018/2001/EU). 

Article 9 of the Directive provides a detailed framework for the certification of renewable and low-emission gases and informs that further delegated acts to specify the methodology for assessing emission savings from low-emission gases will be developed. The methodology shall be consistent with the methodology for certification of greenhouse gas emission savings for renewable gases of non-biological origin, so-called RFNBOs, developed under the Renewable Energy. A delegated act on the certification mechanisms for renewable hydrogen (2023/1184/EU) has already been adopted. Article 9, point 11 also stipulates that operators must use the EU database established under the Renewable Energy Directive or a national database linked to it to provide information on, among other things, the sustainability characteristics of the gas. As Norway has not yet implemented the Renewable Energy Directive, the only option is to use a corresponding national database with a link to the EU database. This may result in less flexibility in the system for Norwegian players than direct use of the EU database under the Renewable Energy Directive.

Further, the Directive has been expanded with a number of market provisions relating to renewable gases and hydrogen, which to a large extent mirror the framework for natural gas. It provides for smart metering in the hydrogen system, third-party access to infrastructure such as networks, terminals and storage, separation of ownership and company structures in vertical value chains to ensure competition in the market and so on.

The Ministry of Energy has made a thorough review of the directive in the EEA position paper available here. 

The internal gas market Regulation is closely related to the Directive and the two legal acts must be read together. The revised Regulation is now divided into chapters and has increased in scope from 32 articles and one annex to 89 articles and three annexes, mainly due to the inclusion of provisions related to the hydrogen transmission network. The main purpose of the Regulation is to ensure non-discriminatory market access to the natural gas and hydrogen transmission systems. Furthermore, the regulation shall contribute to the development of a well-functioning market for natural gas and hydrogen and ensure security of supply.

Among the general rules for market organization in chapter two of the regulation, it is particularly worth noting Article 18, which states that discounts shall be granted for renewable and low-emission gases at entry points. Renewable gases shall be granted a 100% discount, and low-emission gases shall be granted a 75% discount. This is to stimulate the uptake of low-emission and renewable gases in the system. In order to receive this discount, the gas must be certified in line with the Renewable Energy Directive’s rules in Articles 29 and 30, and the certificate must be registered in the Union’s database for renewable gases, cf. Article 31a of the Renewable Energy Directive, and in line with the provisions of Article 9 of the Gas Market Directive, see above. For Norwegian operators that produce renewable gases, the link made to the Renewable Energy Directive’s Union database entails an obstacle to receiving the rebates since Norway has not implemented the Renewable Energy Directive.

Chapter three of the regulation is new and contains rules for hydrogen networks that largely mirror the rules that apply to the transmission network for natural gas but adjusted for the peculiarities of hydrogen. The provisions also cover requirements for cooperation and information exchange between the operators of the transmission networks in order to avoid restrictions on the cross-border flow of hydrogen as a result of differences in hydrogen quality. Similarly to ENTSO-G and ENTSO-E for gas and electricity respectively, an ENNOH (European Network of Network Operators for Hydrogen) will be established in 2025 to ensure cooperation across transmission network operators at Union level and to promote the development of a well-functioning and integrated internal market for hydrogen. To participate in ENNOH, an operator must be a certified hydrogen transmission network operator or have a hydrogen infrastructure project where the investment decision is taken within four years of joining ENNOH. If the operator is not certified or the investment decision is not made after four years, membership in ENNOH will cease. The specific requirements for certification of transmission system operators are found in Article 71 of the Directive and are similar to past versions of the Directive but extended to include operators of hydrogen networks. Further, Article 8 of the Directive sets out general requirements for licensing and permits if the national state chooses to set requirements for licensing and permits under national law. Article 8(5) states, among other things, that a licensing process shall not take more than two years, including all relevant procedural steps with the competent authority.

The Regulation also contains provisions on exemptions from a number of the requirements in the Regulation and the Directive for major infrastructure projects for hydrogen and natural gas. This relates, among other, to the requirements for third-party access to the infrastructure and the requirements for ownership unbundling in a vertical hydrogen value chain (cf. Article 68 of the Directive, cf. Article 60).

The Ministry of Energy has also made a thorough review of the internal gas market Regulation in the EEA position paper available here.

The article was written by Haavind’s lawyers Christopher Sveen, Silje Helen Bakkevig Dagsland, Alexander Sæthern and Sofie Fogstad Vold.