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New EU gas rules may impede hydrogen investment

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The European Commission’s proposal to amend the current legislative framework for gas contains significantly stricter unbundling rules for hydrogen operations than what is already envisaged for natural gas in the third energy package.

This is according to a joint statement from the European Social Partners in the gas sector, Eurogas, representing the employers, and EPSU and industriAll Europe, representing the trade unions.

“This could dissuade certain infrastructure operators from investing in hydrogen infrastructure or in the urgently required training and reskilling of its workforce. If infrastructure operators are affiliated with a corporation engaged in competitive operations, they are required by ownership unbundling to sell their dedicated hydrogen infrastructure assets, even if they are effectively segregated in terms of management, organization, legal form, and decision-making. We are certain that applying stricter unbundling rules for hydrogen is neither in the interest of workers, users, nor businesses, nor does it support the transition towards a hydrogen infrastructure. Instead, the EU’s legislative framework must enable the necessary transformation of the gas infrastructure and implement a Just Transition for its workforce, according to the statement.

The authors of the declaration assert that the notion of a Just Transition must be deeply ingrained in EU decarbonization strategy.

“No one can be left behind, and everyone must have access to job-to-job transitions, including through training and lifelong learning, with chances in high-quality strategic jobs. Territories, regions, and industries must help adaptation, and societal repercussions must be adequately managed. The new unbundling requirements for hydrogen infrastructure risk calling into question this fundamental principle.

Consequently, it is vital to prioritize the conversion of existing gas assets over the construction of new grids; according to estimations from the European Commission, the cost savings is 81 percent. Utilizing existing networks permits the combination of supply and demand and the connection of existing underground storage facilities with higher storage capacity. Adaptation not only has economic benefits, notably for customers, but it also maximizes the utilization of existing resources.

It is essential to align climate policy objectives with bottom-up collaboration. This procedure must incorporate all key parties involved in the future integration of hydrogen into the energy system.

The gas industry plays a vital role in achieving carbon neutrality. Its infrastructure is an asset that may be changed to help reduce the transition’s expenses. Europe’s gas sector employs millions of individuals. This infrastructure will be managed and maintained by the fresh talent of today. Today must mark the beginning of an active social debate in order to prepare for future developments.

It is evident how crucial it is to smooth the transition of the gas industry and its vast, highly skilled workforce. The failure to do so will have severe social and economic ramifications, resulting in the unemployment of numerous workers and the waste of vital human capital and energy infrastructure.

The proposed unbundling rules for hydrogen risk doing precisely that. The laws ban the combining of hydrogen and methane operations by a single organization (particularly after 2030). This will dissuade the vast majority of gas infrastructure operators at the distribution and transmission levels from investing in retrofitting, repurposing existing natural gas infrastructure, or constructing dedicated new hydrogen infrastructure. Companies are unwilling to invest in assets that they may not be able to own or operate once they have been constructed.

Without a return on investment, companies are reluctant to invest in the essential reskilling of the people required to construct and operate these assets. At the same time, the law may impede the attraction of new talent that will be crucial for achieving the energy transition, at a time when a lack of competent workers already threatens to slow down the energy transition. Increasing competition should not be pursued as an objective in and of itself, particularly if the benefits are uncertain, because it risks having severe negative impacts on workers and users. Recent months have been particularly difficult for consumers, businesses, and workers, and now is the time for prudent action,” the statement continues.

Nedim Husomanovic

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