Taxonomy & TEN-E

In the last editorial I prepared you with dismal descriptions about gas prices, market turbulences and storage filling levels for the year. Unfortunately, end of January it looks even worse. The trading prices for gas dropped substantially but are again on their way to 100.00 Euro/MWh. And the security of supply situation did not improve. Storage filling levels went down substantially in January. If it becomes cold in February and/or March at least local supply problems can’t be ruled out. On top comes a scenario of an invasion of Russian troops into Ukraine Every daily German newspaper started to speculate whether this will be accompanied with a cut off of complete Russian gas supplies and how gas supplies will be maintained in that case (it will not be maintained!).

Remarkable is how clear the new Minister of Economics Robert Habeck expresses that he wants to introduce as a lesson from this situation a storage regulation (because the whole discussion is not very transparent, I report in the market rumour section). I assume, his main concern is the impact of the price turbulences for power production from gas. Due to the high and volatile prices power from natural gas is expensive and coal-fired power plants are prior to gas-fired power plants in the merit order. Not a good scenario for Mr Habeck’s climate protection ambitions.

A second word on Mr Habeck and this time on the coalition treaty. Regarding one topic I presumably underestimated the impact of a stipulation in the coalition treaty on the gas demand or gas sales business. The treaty says that from 2025 every new installed heating system must be fuelled with a 65 share of renewable energies. This does not exclude gas, but its heroic to assume the availability of sufficient renewable gases or biomethane in 2025. And “every new heating system” means “every new heating system”, not only in new buildings but also in existing buildings. The ministry clarified this point in its answer to a question of one member of the parliament recently. In 2020 more than 600,000 new gas boilers were installed. The Energy in Buildings Act (GEG) shall be amended in 2022. A proposal shall be part of Mr Habeck’s “Easter” or “Summer” Package. A bit more on packages in this edition.

Dr. Heiko Lohmann
Freelancer

E-Mail +49 30 8824005

TOPIC OF THE MONTH 2021 Taxonomy & TEN-E

In ener|gate Gasmarkt 05/21, I reported extensively about the role of natural gas under the financing framework of sustainable infrastructure projects (TEN-E) and the classification of sustainable activities, the so-called taxonomy. After the EU Commission published its proposal for including natural gas into the taxonomy at the end of 2021, fierce debates started in Germany. I will report about this below. Regarding TEN-E, a new agreement was reached in December. This should not be forgotten here in my report, but it is a minor topic.

1.1 Taxonomy

Considering the whole discussion about power production from natural gas - and from nuclear energy - as sustainable activities, the hefty debates after the Commission’s proposal was published are not surprising. Already in spring, several proposals were very controversial. At the time, the decision to include natural gas and nuclear energy or not was delayed due to the very different standpoints of member states. In autumn, the discussion was back after the Commission resumed work on the proper dealing with natural gas and nuclear energy. Exactly on the last day of 2021, it published the proposals. Until January 21 (the first deadline was January 15), the platform for sustainable finance and the member states could provide written comments…