Renewable Gas Act: the law for the energy transition?

Renewable gas is an essential component of the energy transition. The Renewable Gas Act (EGG) is intended, not least against the backdrop of the war in Ukraine, to promote the expansion of green gas production by imposing mandatory quotas on suppliers.

The draft of the Renewable Gas Act was approved by the Council of Ministers on February 21st, 2024, and submitted to parliament as a government bill. This article, authored by Johannes Hartlieb and Alexander Gimona, provides an overview of the draft law.

Background

In 2023, Austria consumed 76 TWh of natural gas. Although many industries are already switching to alternative energy sources, it will not be possible to completely do without gas in the near future. In certain areas, especially in industries that use gas primarily for process heat, it will continue to be needed. The largest consumers are the chemical and paper industries as well as steel producers. In order to also transition these sectors to green energy, the focus will be on “green gas” in the future.

Goals

The current draft version of the EGG stipulates that Austria must produce at least 7.5 TWh of domestic renewable gas per year by 2030. The planned increase from the current 0.14 TWh therefore represents more than a fifty-fold jump in domestic production. Gas suppliers are to ensure that at least 9.75% of the gas supplied to customers comes from renewable sources.

Obligations for companies: green gas quota

There are plans to introduce a mandatory green gas quota by 2030, which will then be extended until 2040. The quota must be met by all suppliers that supply end consumers in Austria for a fee.

The draft law proposes that the quota for green gases be gradually increased annually as follows:

2024	2025	2026	2027	2028	2029	2030
0,35%	0,95%	1,70%	3,05%	4,84%	7,10%	9,75% however altogether at least 7,5 TWh

„Grün-Gas-Quoten“

“Green gas quotas”

Domestic production of renewable gases is the focus of the draft. Imports may not be used to fulfill the quota.

This means that suppliers who supply end consumers in Austria for a fee must comply with the above-mentioned quotas from January 1st, 2024, meaning they must replace fossil gas quantities with “green” gas.

“Sanctions”: compensation payments

Suppliers who do not meet the green gas quota from 2025 onwards must pay a compensation amount. This amount is set at 15 cents per kWh for the calculated shortfall and must be paid by the supplier within a deadline set by the regulatory authority, not exceeding four weeks. The funds obtained through the compensation payments are to be invested in the expansion of the gas infrastructure.

Next steps in the parliamentary process

It remains to be seen whether the National Council will give its approval. If the draft will be passed in its current form is uncertain, especially since it requires a two-thirds majority in parliament.

Result: “Hydrogen regulation” is gaining momentum

The production of renewable hydrogen is set to become more competitive compared to fossil alternatives. Also, it is becoming apparent that the “hydrogen regulation” is gaining momentum and that various measures are being implemented to contribute to the market competitiveness of renewable hydrogen (we have already reported in detail on the draft Hydrogen Promotion Act).

The expert team of the 360° Renewable Energy practice group is available to answer further questions and provide legal advice on this topic. Further articles on the topic of renewable energy can be found on the 360° Renewable Energy website.

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this article.

15. May 2024