IOGP input to the forthcoming EU Strategy for Energy System Integration

This document outlines IOGP’s input to the forthcoming EU Strategy for Energy System Integration.

Today’s energy sector in the EU is the result of the completion of the Third Energy Package, which for natural gas meant the development of an internal market for natural gas in Europe. We believe that it is the right time to develop an energy system which would build on this success in a cost-effective manner, leading to decarbonisation by integrating various energy sources, increasing energy efficiency and linking them to the existing internal energy market(s) and end users.

Overall, the future energy system needs to be underpinned by market-based carbon pricing and take a technology-neutral approach to drive the most cost-efficient and cost-effective decarbonisation.

Overview

The document provides a set of recommendations for how an integrated energy system could be developed to lead to the emissions reduction needed in Europe, focusing on the following topics:

• Main features and challenges of an integrated energy system
• The role of electrification
• The role of renewable gases
• The role of hydrogen
• Circular economy and the use of waste
• Creation of a more integrated energy system
• Knowledge sharing for an integrated energy system: examples of integrated projects
• Policy recommendations to make the energy system integration a success

• The EU should allow technology-neutral market mechanisms such as carbon pricing drive cost-efficient emission reductions from coal-to-gas switching in power generation
• Full electrification must not be an objective in itself as more cost-effective carbon-emission reductions may be achieved by using low-carbon liquids (biofuels, syn-fuels) and low-carbon gases (biogas, hydrogen, syn-gas) in hard-to-decarbonise sectors such as aviation, marine, heavy-duty vehicles and industry
• An inclusive and holistic approach, taking account of life-cycle emissions, is needed
• All low-carbon gases should be rewarded for their contribution to decarbonisation goals
• IOGP supports a strategy which comprises all hydrogen production pathways, regardless of their ‘colour’. What matters is the ability to cost-effectively reduce GHG emissions and contribute to reaching targets
• Any changes to the gas regulatory regime must recognise the development of hydrogen from reforming natural gas and pyrolysis as well as hydrogen from electrolysis
• The volumes needed for delivering on the EU’s ambitions can be produced within Europe from natural gas in combination with CO2 management technologies such as CCS or methane pyrolysis