Energy

EU DEVELOPMENTS

Electricity

• Flexibility: ENTSO-E is consulting until 6 December 2024 on the Flexibility Needs Assessment Methodology. This concerns the data that TSOs and DSOs will be required to provide for the assessment required by Article 19e of the IME Regulation.
• Cybersecurity: ENTSO-E is consulting until 5 December 2024 on methodologies for cybersecurity risk assessment, which consider the consequences to the grid’s operational security of cyber-attacks.
• Power Purchase Agreements: Under Article 19b of the IME Regulation, ACER was required to assess whether additional voluntary PPA contract templates are needed to foster transparency, efficiency and integration of the market. ACER concluded that there is no such need and, instead, will recommend how to improve existing templates and remove barriers to market integration. Further information is available here.

Gas

• Low-carbon fuels: The Commission consulted on a draft delegated act setting out the methodology for evaluating the emissions savings of low-carbon hydrogen and fuels. At the October Energy Council meeting, several countries called on the Commission to confirm that, once the act is adopted, the scope of the Hydrogen Bank’s auctions will cover low-carbon hydrogen in addition to renewable hydrogen.
• Hydrogen market: The Council adopted conclusions on the Court of Auditors report on the hydrogen market, calling for implementation of the regulatory framework, development of an interconnected transportation network, and measures to support industry and security of investment. Further information is available here.
• Hydrogen corridors: ENTSOG published ‘Learnbook on Implementation of Hydrogen Supply Corridors’ describing plans to create six corridors by 2030.
• Biofuels: The Commission consulted on a draft delegated regulation to update the rules for the Database on Biofuels to improve traceability of data along the entire supply chain.
• Natural Gas Storage: EU natural gas storage capacity is full to 95% capacity, as reported by the Commission here.
• Natural Gas Security of Supply: ACER provided an Opinion on the decision of the German and Czech regulators’ decision to exempt the TSOs from the requirement to have permanent bi-directional gas flow capacity on the basis that, based on market demand, there is no additional demand for permanent physical reverse flow capacities from the Czech Republic to Germany.
• Market Monitoring: The Q3 report on gas wholesale markets is available here. Supply uncertainty re-emerged but severe price volatility was avoided. The REMIT Quarterly is available here.

Investment

• Innovation Fund: The Commission selected 85 net-zero projects with a cleantech manufacturing focus to receive €4.8 billion in grants. Further information is available here.

Energy Efficiency

The Commission announced that 49 financial institutions joined the European Energy Efficiency Financing Coalition, which aims to identify actions to improve financing for energy efficiency. A second call for membership is likely to be launched in early 2025.

Climate Action

The EU Climate Action Progress Report 2024 is available. The energy sector was the most significant driver of the decrease in emissions (down by 18% in 2023 compared with 2022). Emissions were down 6% in industry, 5.6% in buildings, and 0.8% in transport. EU ETS emissions were down 15.6% and Effort Sharing sector emissions were down by 1.6%. Further information is available here.

Trading and Cooperation Agreement

It is intended to establish a Working Group on Security of Supply under the EU-UK Trading and Cooperation Agreement. The EU’s position is available here.

CLIMATE ACTION LITIGATION

Appeal in Milieudefensie v Shell

In June 2021, we looked at the judgment in Milieudefensie v Royal Dutch Shell, a first example of a private company being ordered to take action to comply with climate targets to vindicate citizens’ rights. The Hague District Court agreed with NGOs that Shell’s emissions contribute to climate change and create risks that impinge on human rights under international law and engage the “the unwritten standard of care” in the Dutch Civil Code. The Court ordered Shell “to limit or cause to be limited the aggregate annual volume of all CO2 emissions into the atmosphere due to the business operations and sold energy-carrying products of the Shell group to such an extent that this volume will have reduced by at least net 45% at end 2030, relative to 2019 levels”.

Shell’s appeal to the Court of Appeal has now been successful. The press release from the Dutch Court of Appeal is available here. It states: “At issue in the appeal was whether Shell must have reduced its CO2 emissions by 45% in 2030 compared to 2019. The court of appeal ruled that Shell is obliged to reduce its CO₂ emissions, but that it was unable to determine which percentage should apply.” It is worth noting that the court of appeal maintained that Shell has an obligation towards citizens to limit its CO2 emissions, based on the human right to protection against dangerous climate change. However, the Court was unable to establish that the social standard of care entails an obligation for Shell to reduce its CO2 emissions by 45%, or some other percentage.