EC sees only 'marginal' role for fossil gas in European energy transition

New York — The European Commission sees only a "marginal" role for unabated fossil gas during the energy transition, its executive vice-president Frans Timmermans said March 25, as he made the case for the wide-scale development of hydrogen and low-carbon gas.

The EC is due to bring legislation later this year on a number of energy transition initiatives including a revised Gas Directive and Renewable Energy Directive.

Speaking at the annual conference of gas industry body Eurogas, Timmermans said he wanted to be "crystal clear" that fossil fuels had no viable future in Europe. "And that also goes for fossil gas in the longer run," he said.

Timmermans said Europe's energy system still relied heavily on fossil fuels despite the "huge" progress made in deploying renewable energy.

"But by 2050, our energy system will have to change completely. At the end of that road, there will be no more space for coal, very little room for oil and only a marginal role for fossil gas," he said.

"We have to decarbonize our power sector as soon as possible, and electrify new sectors such as road transport and parts of industry. Electrify what can be electrified, I would say," he said.

Coal-fired power plant closures, he said, were already happening much more quickly than expected.

After coal is dealt with in the transition, he said, fossil gas would be next. "Fossil gas is a fuel that will need to be scaled back at considerable speed as we pursue the transition to net zero," he said.

Timmermans said Europe could "leapfrog" from coal to clean energy, but that it would not always be possible at the necessary scale and speed.

"Where, and as long as, clean energy cannot yet be deployed on the scale needed, fossil gas may still play a role in the transition from coal to zero-emission electricity," he said.

"For some member states, where there are no other affordable options, gas will have to play a transitional role for a limited period of time," he said, adding that he had recently discussed the issue with Poland, which is a country where fossil gas could play a bigger role in the transition.

But, he added, "the future is in carbon-free electricity and a decarbonized gas sector, which embraces hydrogen as a new energy carrier and green hydrogen as the final destination."

Hydrogen market

Timmermans said hydrogen would be key to helping decarbonize the gas sector. "In Europe, we aim to stay ahead of the curve and create a strong European hydrogen market," he said.

The EU's hydrogen strategy aims for 40 GW of electrolyzer capacity in Europe by 2030. "If we work well with the region's bordering Europe -- North Africa and the east -- we can double that to 80GW of green hydrogen capacity," he said.

In Algeria, Libya, and Morocco, he said, cheap renewable electricity was already produced from solar, so producing hydrogen becomes an "interesting option."

"Today these countries depend on revenues from fossil fuels. A decade from now they could be selling clean energy. The same goes for Ukraine and for Russia hopefully," he said.

"A year ago, our hydrogen targets were seen as unachievable, now it looks like we might overshoot them in the next decade. The market might go faster than our biggest dreams on this."

Timmermans added that supportive policy frameworks would be needed to help generate demand for renewable and low-carbon fuels in the transitional period until they become fully competitive.

"We are looking at options to make this happen via, for example, carbon contracts for difference," he said.

Europe, he said, also doesn't need to invest in any new infrastructure for carrying fossil gas. "Instead, we should be thinking about retrofitting existing pipelines to transport hydrogen. This can be done at about 25% of the cost of building brand new pipelines," he said.

'Fig leaf'

Addressing the European gas industry directly, Timmermans said he was counting on the industry not to see hydrogen and biomethane as a "fig leaf or a side activity."

"They will become the new mainstream. Our policy will reflect that and I trust that your investment decisions will reflect that as well," he said.

"The direction is set. The path will require new policies that we will present in June."

This summer, the EC will present its "Fit for 55" package with around a dozen proposals, including reform to the ETS and new energy efficiency standards.

In addition, as part of the revision of the Renewable Energy Directive, the EC will propose a "fully-fledged" scheme for hydrogen certification, including renewable and low-carbon hydrogen, but also other low carbon and renewable fuels such as biogas, Timmermans said.

"Robust, clear and reliable certification is an important first step to allow for renewable and low-carbon gases to be traded across Europe," he said.

The EC also plans a review of EU gas market legislation to be adopted by the end of 2021, to support the uptake of renewable and low-carbon gas, and the development of an EU hydrogen market.