The European Council (EU) has formally adopted a new regulatory package to establish common market rules for natural gas, renewable gas, and hydrogen. These rules are designed to help shift to renewable and low-carbon gasses, especially hydrogen, in the energy system to support more decarbonization. 

This may generate new deal flow for impact investors and lenders in private markets as many companies across the clean energy supply chain seek additional capital to take advantage of the new rules. Firms that are able to surface hidden deal opportunities quickly and engage with companies before other firms will gain an advantage in an accelerating clean energy transition. 

Let’s explore the new rules on the gas and hydrogen market in detail.

What does the EU’s new rules for the gas and hydrogen market do?

• Facilitates access and connection to the gas grid for low carbon and renewable gasses.
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  Increases coordination between the network development plans for electricity, hydrogen, and natural gas with the creation of a new EU entity: the European Network of Network Operators for Hydrogen (ENNOH)
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  Revises rules for tariff setting and unbundling for hydrogen distribution and transmission. 
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  Calls for integrated and transparent network planning across the EU under the “energy efficiency first” principle. The gas and hydrogen network operators will prepare a 10-year EU network development plan.
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  Protects customers from disconnections and appoints suppliers to ensure continuity of supply to remote areas as well. 
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  Prevents long-term contracts for unabated fossil gas to last beyond 2049.
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  Supports the strategy to end the EU’s reliance on Russian fossil fuels.
  Issue Background

Facilitating the use of hydrogen and decarbonized gas is a part of the Fit for 55 batch of legislation, which updates the gas regulation and directive adopted in 2009. The latest revised directive and regulation were presented as a proposal by the commission on 15 December 2021. On 1 June 2023, negotiations over the final form of the texts began with the European Parliament. Finally, on 27 November 2024, a final agreement was achieved on the directive and on 8 December 2024 on the regulation. 

What’s next?

The final announcement to reform the rules was made on 21 May 2024, following the legislation approved in April by the EU parliament. 

The directive and regulation have yet to be signed off and published in the Official Journal of the EU. They will become directly applicable as soon as six months after their publication, and member states will have two years to adapt their national legislation to the new provisions.

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NOTE: There was no compliance rule or penalty mentioned to follow this regulation also I couldn’t find the impacted parties.