General comments
The Swedish Gas Association welcomes the fact that the EU is taking an ambitious holistic approach to climate policy. The legislation package "Fit for 55" is an important step in reducing emissions by at least 55 percent by 2030, and achieving climate neutrality by 2050 – two important goals that we fully support and stand behind. The EU's emissions trading system (EU ETS) and the renewables directive (RED) are two important regulations that lay the foundation for the transition.
Utmost importance that mass balance is accepted both in EU ETS 1 and EU ETS 2
The Swedish Gas Association welcome the clear inclusion of RFNBO and RCF in the MRR rules. We also welcome the clear link to the RED definitions and sustainability criteria to be fulfilled to be zero-rated – which should be done using a mass balance system. We welcome that it is clarified that the “green gas concept” or mass balance approach for biomethane co-distributed with natural gas in gas grids is expanded and valid to all sustainable gases including RFNBO and RCF, which means that the biomass/RFNBO/RCF-fraction of the gas is determined by purchase agreements and not analyses.
We also welcome that it is clarified that proof of registration and withdrawal from the Union database can be used to determine the fraction of zero-rated carbon for biomass, RFNBO and RCF.
In the newly adopted MRR guidance for ETS 2 very important rules was introduced that allow for mass balance approach to determine the biomass fraction in blended or co-distributed fuels. This is crucial and very much welcome. With that the ETS system is reflecting how the market works and can thus become an important steering instrument for increased share of fossil free fuels.
All renewable or fossil gases uses the same infrastructure and distribution network - on grid or off grid, in gaseous form or liquid form. The possibility for co-distribution of fossil and renewable gases and allocation based on purchase agreements and proof of sustainability via a mass balance system is crucial for an effective gas market and for the transition of the user sectors to fossil free energy. As we interpret the ETS 2 guidance, this will be possible for gaseous fuels both on-grid and off-grid within ETS2.
However, with this amendment of the MRR we expected a clarification that the fraction of zero-rated carbon may be determined by a mass balance approach according to the RED Article 30, allowing for blends and co-distribution of gases with different origin, and where the zero-rated fraction is determined and allocated to different users by purchase agreement and validated by the sustainability and mass balance system imposed by RED. Some of the new suggested paragraphs regarding RFNBO and RCF may be interpreted in such direction but clear provisions allowing for mass balance approach for all gaseous fuels both in ETS 1 and ETS 2 are still missing.
The Swedish Gas Association urge for amendments in the MRR that clearly introduces a general possibility to use purchase agreements and the RED mass balance approach to determine the fraction of biomass fuels, RFNBO, RCF and low carbon gases (thus to determine the zero-rated fraction) both for ETS 1 and ETS 2 – not only for gas grids but also off-grid.
With the Union database (which will register all gaseous sustainable fuels including biomass fuels, RFNBO and RCF for any energy purpose) an extra layer of protection against fraud or double counting is added to the already robust certification and mass balance systems in place. Proof of sustainability complemented with Guarantees of origin is another way achieving the same certainty and extra protection against double counting.
Please see attached document for our full reply.