13.Briefing for Commissioner Simson meeting with ENTSOG on 16 January 2020 Redacted.pdf

Ref. Ares(2023)5688707 - 21/08/2023
BRIEFING FOR COMMISSIONER KADRI SIMSON
Meeting with ENTSOG
16 January 2020, 11:00, Brussels
DELEGATION FROM ENTSOG:
-
Stephan KAMPHUS – ENTSOG President, Chairman of the Board of
Management of Vier Gas Transport GmbH (VGT), the sole owner of Open Grid
Europe GmbH (German TSO)
-
Jan INGWERSEN – ENTSOG General Director, seconded from Energinet (Danish
gas and electricity TSO)
AGENDA:
1. Gas and gas-related initiatives in the Green Deal
2. Sector integration
3. TEN-E review
1

SCENE SETTER

ENTSOG has requested a meeting to discuss about the gas related initiatives in the
Green Deal, sector integration and infrastructure initiative.
You are meeting the President, Mr Stephan Kamphus and the General Director, Mr
Jan Ingwersen.
ENTSOG  published on 11 December 2019 its “ENTSOG 2050 Roadmap for Gas
Grids” setting out its view on TSOs’ role in the energy transition. The topics listed by
ENTSOG correspond to a high degree to those we identified as relevant for the
initiative on a decarbonised gas market design.
In our view, the future role of TSOs in a decarbonised energy system has to be
carefully considered respecting the main principles of the 3rd Energy Package, in
particular the unbundling rules.

POSITION OF ENTSOG:
ENTSOG published its 2050 Roadmap for Gas Grids in December 2019 as
contribution to the European Green Deal. In this, ENTSOG calls for:
x  Creating one EU gas market, i.e. inclusion of hydrogen and strengthening
biomethane in existing legislation combined with including and remunerating
new TSO services (blending, conversion, digitalisation);
x  Establishing a regulatory framework for a hybrid energy system, i.e. for a
coupled electricity and gas system with coordinated planning of electricity and
gas infrastructure investments;
x  Ensuring unhindered cross-border flow of hydrogen blended into natural gas
(alignment of the threshold/gas quality at cross-border Interconnection Points);
x  Defining the role of system operators in owning and operating Power-to-Gas
facilities, offering regulatory flexibility for TSO pilot projects and considering
Power-to-Gas as conversion facility.

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LINES TO TAKE

x  Welcome the very good cooperation between the Commission and
ENTSOG in:
o the development and implementation of our gas acquis,
o  its work on infrastructure for the European internal gas market
and
o  gas security of supply, in particular the support you provided
ahead of this winter prior to reaching an agreement on supplies
through Ukraine.
x  Decarbonising the EU’s economy and energy system means a
fundamental change for the gas sector. I am convinced, that gas will
play a role in the energy transition and contribute to the
decarbonisation of the EU’s economy. I am aware of the key role of the
TSOs and ENTSOG and look forward to working with you.
x  Our common goal of European Green Deal and a climate neutral
Europe by 2050 requires: putting energy efficiency first, a power
sector largely based on renewable sources, a rapid phase out of coal
and an increasingly decarbonised gas sector.

1. Smart sector integration, the role of the gas sector:
•  We see the benefits of linking the various components of our energy
system:
o First, it helps decarbonising sectors that are more difficult to
decarbonise (e.g. transport or industrial processes) by linking
them with sectors that are easier to decarbonise (in particular
electricity);
o Second, it provides the necessary flexibility for more
renewables in the electricity sector, for storing or transporting
energy – in particular here, the gas sector can play a key role;
o This will help to lower the overall cost of the clean energy
transition – for the benefit of people.
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x  For the gas system to play this role credibly, we need to:
o  First, make sure that gases do not escape and address the issue
of energy-related methane emissions (improve measurement
and reporting).
o  Second, the gas system must increasingly decarbonize the gas
sector through clean gases like biogas or hydrogen. We are
looking which market rules can make this happen.
o  At the same time, we want to ensure the resilience and
competitiveness of the current and the future decarbonised gas
market.
x  In this work we will look at the opportunities of closer linking the
electricity and gas markets and their infrastructure. This will allow
Member States to benefit from the synergies across these two sectors.
x  [ENER will be meeting with ENTSOG end of January for a detailed
exchange on these issues.]

2.  Ten Year Network Development Plan / TEN-E review:
x ENTSOG’s  ten-year network development plan (TYNDP)
constitutes the basis for gas network planning and for the European
Union list of projects of common interest (PCI).
x  We have started preparing the revision of the TEN-E Regulation to
make a proposal by the end of this year. This framework should
foster the deployment of innovative technologies and infrastructure,
such as smart grids, hydrogen networks, energy storage or carbon
capture, storage and utilisation, also enabling sector integration.
x  Gas will be an important debate in the TEN-E review. We welcome in
this context that ENTSOG has already started collecting Energy
Transition Projects for the TYNDP 2020.

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DEFENSIVES

Do you plan to present a strategy on smart sector integration?
When?
x  The Clean Energy Package already sets the foundation to promote
sector integration through specific provisions to promoting the linking
of the transport and heating and cooling sectors (Renewables
Directive) and facilitate renewables integration and the deployment of
energy storage into the electricity market (Electricity Regulation). Its
timely transposition and implementation by Member States is key.
x  Nevertheless, more is needed to facilitate a cost-effective energy
transition towards climate neutrality in 2050 and to reap the vast
cost-competitive renewable electricity potential.
x  The Commission is doing preparatory work on sector integration in
order to identify the barriers that prevent further sector integration of
the sectors and its infrastructure and identify the opportunities for
development of new technologies, services and business models.
x  This will serve as an input for a EU Strategy on decarbonising energy
through sector integration currently planned to be put forward before
the summer as one of the follow-up actions of the European Green
Deal.

How does the Commission see the role of TSOs in owning and
operating Power-to-Gas facilities?

x Hydrogen obtained from electrolysis using renewable electricity is a
promising enabler for a decarbonised energy system. The large-
scale deployment of electrolysers throughout the EU is one possible
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approach to increase domestic hydrogen production to contribute to
the decarbonisation of our economy.
x  We understand that some TSOs are advocating a central and
permanent role for TSOs in the large-scale deployment, ownership
and operation of Power-to-Gas facilities.
x  However, the Third Energy Package sets out clear rules for the
unbundling of energy supply and generation from the operation of
transmission networks.
x  The most efficient development of new technologies and services is
market-based. It has not yet been proven that large-scale Power-to-
Gas cannot be brought forward by the market. Indeed, it could help
certain electricity producers to manage their impact on the system,
e.g. it could complement renewables’ installations by helping to
evacuate excess generation.
x  Allowing Power-to-Gas ownership by TSOs would risk jeopardising
market-based and hence market-funded development of large-scale
Power-to-Gas.

How does the Commission plan to follow-up on the Sector Coupling
study?

x  The sector coupling study was published in December 2019.
x  The study’s purpose was the identification of regulatory barriers and
gaps preventing closer linking of the EU electricity and gas sectors
and hindering the deployment of renewable and low-carbon gases.
x  It is just one of a series of studies the we have commissioned; it
provides useful background for considerations.

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When will the Commission amend existing gas Network Codes?

x  We have seen calls for amending the existing Network Codes.
x  We are studying what changes might be useful in the Network
Codes, with an objective to group all revisions at the same time.

Regarding the TEN-E Regulation, when does the Commission plan
to review it?

x  The review process has been launched with the publication of an
evaluation roadmap in June 2019. A new legislative proposal is
scheduled by end 2020, as announced in the Communication on the
Green Deal. My services have already set up a meeting with
ENTSOG’s team in January for a more detailed exchange.

Contacts:



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CV OF THE PARTICIPANTS

Mr Stephan Kamphues is ENTSOG President since 2009
(currently appointed until end of 2021) and Chairman of the Board
of Management of Vier Gas Transport GmbH (VGT), the sole
owner of Open Grid Europe GmbH (formerly E.ON Gastransport
GmbH). Mr. Kamphues has held various positions at E.ON
Ruhrgas AG, which he joined as Head of the Business Law/East
European Law Section in 1992 after practicing as a lawyer. In
1996, he took over as Head of the Legal Department at E.ON
Ruhrgas International AG (formerly Ruhrgas Energie
Beteiligungs-AG) before becoming a member of the Management
Board in May 2004. While there, his main focus was on the
acquisition and development of the company’s foreign
shareholdings in Western and Central Europe. During this period,
he also served on several supervisory and management boards.

Mr Jan Ingwersen is ENTSOGs General Director as of January
2016. He is seconded from Energinet, the Danish gas and
electricity TSO.
Mr Ingwersen has been with ENTSOG since January 2014. He
has more than 25 years of experience in the gas industry, holding
senior positions at Energinet, Gastra, DONG Energy as well as
consultancies. He holds a technical MSc from University of
Aalborg, Denmark, supplemented with a commercial degree from
Copenhagen Business School and an executive programme from
IMD, Switzerland.
Mr Ingwersen has been involved in most parts of the gas sector
value chain. He was heading the implementation of the gas
market liberalization in Denmark for Energinet/Gastra (2000-
2005) – including development of network codes. He has been
heading DONG Energy’s storage and offshore transmission
activities (2006-2013), the gas regulatory affairs department and
was responsible for DONG Energy’s gas release programme. In
1990s he was in charge of DONG’s gas purchase & export
activities as well as the system operation.

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BACKGROUND

ENTSOG

ENTSOG has been created by the 3rd Energy Package in 2009 to better coordinate
the activity of the gas Transmission System Operators in the EU, who operate the
European (cross-border) gas transmission networks. It is notably tasked to make
proposals for market and operational rules, including drafts for the EU-wide network
codes, Ten-Year Network Development Plan and Cost Benefit Analyses for planned
infrastructure.
ENTSOG contributed to the integration of the EU internal gas market and to the strong
EU-level cooperation of TSOs. However, ENTSOG represents the TSOs, i.e.
commercial network operators with significant economic interests. In this sense,
ENTSOG proposals are not necessarily neutral but often try to limit the risks and costs
for TSOs.
ENTSOG’s operations are governed by its General Assembly. Nevertheless, the role
of the ENTSOG President and the Brussels office is significant in setting the strategic
vision for the role of TSOs in the energy transition.
ENTSOG Governance
The ENTSOG General Assembly, comprising all members, is the leading body of the
association. The ENTSOG Board, consisting of 13 members including the ENTSOG
President, has a significant role in making strategic proposals to the General Assembly
and in performing the day-to-day management of the Association, together with the
General Director.
The General Director of ENTSOG and the secretariat in Brussels are involved in
setting the priorities for the Association and have some pro-European influence.
Developing ENTSOG’s position on decarbonisation and green gas issues lead to a
certain divide between Western and Eastern European member TSOs. These topics
are mostly driven by Western European TSOs while a number of Eastern European
TSOs (mainly Visegrad 4) are more interested in increasing the share of natural gas
transported as their Member States are replacing more emitting fossil fuels (coal, oil)
by natural gas in their decarbonisation efforts.

ENTSOG role
The 3rd Energy Package established ENTSOG and gave it a number of important
roles, including the development of the EU-wide gas Ten-Year Network Development
Plan, CBA for new infrastructure investments and the preparation of draft network
codes. ENTSOG also has to develop and run the EU-wide supply and infrastructure
disruption simulation under the Gas security of supply Regulation which forms the
basis of regional and national risk assessments.
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The internal ENTSOG business areas are divided into three areas: Market, System
Development and System Operation. These areas deal with the many activities with
which ENTSOG are tasked - the development and implementation of network codes
and guidelines, activities associated with scenario building and future gas
infrastructure planning, cooperation for security of supply and providing transparency
and technical cooperation.

ENTSOG position / Roadmap 2050
In general, TSOs are interested in transporting high volumes of gases also in the
coming decades, be it natural gas, biomethane, synthetic methane or hydrogen.
Therefore, ENTSOG is engaged in European level discussions about the future role
of gases and advocates for a prominent role of gas TSOs in the energy transition.
At the same time, the positions of TSOs divert, reflecting also the decarbonisation
policy of “their” Member States. While a number of Western and South European
TSOs fully support the green policy direction, some Eastern European TSOs’ (e.g. the
Slovak TSO Eustream) ambition is different. These Member States aim at
decarbonising their energy systems partly by replacing more emitting fossil fuels by
natural gas. Therefore, these TSOs focus on extending their role in natural gas
transportation rather than in exploring and investing in new technologies.

Infrastructure planning and TEN-E review

Ten-Year Network Development Plan
ENTSOG has the legal mandate [TEN-E Regulation] to deliver the TYNDP every two
years. ENTSOG’s ten-year network development plan is crucial, as it constitutes the
basis for the future gas network planning and for the list of projects of common interest
(PCI), meaning that only the projects that are in the TYNDP can apply for the PCI
process and the Commission considers, for consistency reasons, only the ENTSOG
projects assessment in the PCI process.
For the first time in 2020 TYNDP ENTSOG has included a number of Energy Transition
Projects . We are currently analysing the possibility to consider such projects in the
PCI process under the current legal framework. TYNDP 2020 Energy transition
projects include, but are not limited to, the following types of projects: e.g. Power to
Gas intended for the production of hydrogen and synthetic methane; reverse flow
projects between DSO and TSO in order to facilitate flows of renewable/decarbonized
gases; upgrading of gas transmission grid to receive blended or pure hydrogen
blended or pure; Carbon Capture and Storage - CCS and/or related CO2 transport
being national or cross-border.
Cooperation is on-going with ENTSOG for the next TYNDP 2020. Cooperation
Platform meetings are currently held before the PCI process 2020-2021 (5th PCI list).
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TEN-E review
Given the important progress made in the implementation of trans-European energy
infrastructure and considering new policy challenges such as the accelerated take-up
of renewable energy sources and smart sector integration, the review of the TEN-E
Regulation is timely.
As part of the political agreement on the Connecting Europe Facility (CEF) for the new
MFF, the co-legislators agreed that the Commission should evaluate the TEN-E
Regulation by end 2020. The Communication on the European Green Deal calls for a
review of the TEN-E Regulation to ensure consistency with the climate neutrality
objective and the Roadmap foresees that this review should be carried out in 2020 as
announced by Commissioner Simson at the ITRE committee meeting on 5 December
2019.

Natural gas
x Gaseous fuels currently account for more than one fourth of total energy
consumption in the EU energy mix. They are a major source for heating purposes
in a number of Member States and are difficult to replace in industries such as steel
or fertilizers. In energy transport terms, gas networks are up to eight times more
efficient than electricity networks. Gas power plants are the most flexible source of
back-up for intermittent sources of renewable electricity. Replacing natural gas with
decarbonized and renewable gases allows persistent reliance on these benefits
and brings new advantages not achievable through an electricity-only transition:
o  more flexibility and storage for renewable electricity
o  avoiding complete replacement to end-use appliances in industrial sectors
o  reducing costly and unpopular electricity infrastructure investments
o  securing supply of heat during winter peaks
x  The electricity sector with the provisions of the Clean Energy Package, contains
provisions inciting and enabling flexibility and short-term markets (such as
balancing and intra-day markets, storage and demand response) whereas the gas
markets operate in longer-time frames. Further development of the liquid spot
markets for gases will enable departure from the long-term gas supply contracts
and long-term capacity products that otherwise could reach beyond 2040 and
jeopardise the 2050 objectives. In order to match the flexibility of the electricity
sector, the gas market needs to:
o  become more flexible across the EU, and more focused on short-term
products in order to respond to the general changes in the energy mix and
seasonal and short-term variations in demand for gas and electricity.
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o  accommodate new forms of gas, i.e. bio-methane, hydrogen (green
hydrogen but also hydrogen produced from natural gas and CCUS) and
synthetic methane
x  The gas market of the future (in which new forms of gases wil  be present) wil  be
creating price signals for renewable electricity that is characterised by the zero
marginal production costs: the mere possibility to produce electricity or gases
(hydrogen, synthetic methane) from wind or solar power will create price signals
necessary to incite investments in wind and solar power plants whilst improve
security of supply by increasing the capacity for demand side flexibility and the
storability of energy.

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Renewable and low-carbon gases
x  Renewable and low-carbon gases (in particular biomethane and hydrogen) will
increasingly contribute to decarbonisation. Especially the production of hydrogen
from renewable electricity offers a key opportunity for fostering smart sector
integration, and in particular the coupling the electricity and gas sectors.
x The Commission’s  Long Term Strategy (LTS) scenarios which achieve GHG
neutrality by 2050 (the 1.5 scenarios) project between 200 and 250 Mtoe of
gaseous fuels consumption (which represents between 50% and 62.5% of today's
consumption of gases), including an important contribution from carbon-free gases
such as biogases but also from hydrogen (produced from RES electricity or with
CCS/U) and synthetic gases as well as a - relatively more minor - role for natural
gas.
x  Renewable and low-carbon gases are covered and promoted under the revised
Renewables Directive for the period 2021 to 2030 (REDII). This is done through
a number of measures including a 14 % renewables target for the transport sector
and a specific sub-target of 3.5% on advanced biofuels for which biogases from
certain residue and waste-based feedstock can count. Furthermore, Member
States wil  also be able to use gaseous recycled carbon fuels (including renewable
hydrogen) towards the 14 % transport target.

Methane emissions in the energy sector
x  Methane is covered by the Effort Sharing Regulation on Member State level, with
binding targets for a variety of sectors. However, there is to date no specific policy
or regulatory framework at the company level that would address methane
emissions for its climate impact.

x  For the energy sector, the key challenge is to accurately measure the real
emissions of methane. The numbers reported in the EU under the UNFCCC are in
most cases based on standard emission factors multiplied by per kilometre of
pipeline or per cubic meter of stored or produced gas, for example, and has no link
to real emissions. At the same time, studies from North America show that reported
emissions significantly underestimate real emissions (by as much as 60%) and it
is often a small number of emitters (“super-emitters”) that account for the lion’s
share of energy-related methane emissions, suggesting the potential for cost-
effective mitigation.
x  With this in mind, DG Energy launched a study in August 2019 to better understand
the size and nature of the methane emissions issue within the EU. A methane
strategy could address this key challenge by pushing for actual measurements,
transparent reporting and verification (MRV) of methane emissions. This will lead
to the identification of major emissions and leaks which then will have to be
repaired.
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x  An ambitious methane policy should also have a strong international pillar. Most
emissions happen outside of the EU borders but as a major importer of gas and
oil, the EU has a responsibility. Cooperation between major gas importers such as
Japan, South Korea or China could have an impact on emissions of the whole
energy supply chain. The EU should also continue raising this issue with major
producers, such as the US, Canada (and Russia), as part of the EU's energy
diplomacy efforts.
Energy storage
x  Energy storage plays an important role in the energy transition and for a
successful European Green Deal as an instrument of security and flexibility.

x  With the aim to identify and exploit the potential of energy storage in Europe,
the Commission is carrying out a study to identify the state of play of energy
storage facilities and projects in Europe. In addition, the study will quantify the
contribution of energy storage to the security of electricity supply in the Member
States in the light of the 2030 and 2050 decarbonisation targets.

x  Based on the results of the study (finalisation expected by beginning of 2020), the
Commission could develop an action plan to facilitate the deployment of energy
storage and its role as enabler of the smart sector integration of the energy sector
(electricity, gas, heating), transport and industry. This wil  accelerate the
deployment of clean energy across the economy and deliver the transition more
cost-effectively.

Sector Integration

1. Definition of sector integration
Energy “sector integration” can be broadly defined as the holistic linking, through a set
of technologies, processes and business models, of components of the energy system
(in-between primary energy production and final energy consumption1), that were
previously separated or not sufficiently integrated. Sector integration encompasses
several concepts:
x The electrification of certain end-uses in buildings, transport, industry, that
were typically relying on fossil fuels. Examples: heat pumps for heat in
buildings; electric vehicles for transport; electrification of certain industrial
processes.

x The
decarbonisation of these end-uses through the consumption of liquid or
gaseous fuels that qualify as renewable or have been
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produced using low carbon electricity. Examples: green hydrogen used in
industrial processes; synthetic liquid fuels used in transport, sustainable
biomethane and biofuel.

x  The mobilisation across sectors of (waste) resources for energy production, in
a more “circular” energy system. Examples: industrial waste heat or waste heat
from data centres used in district heating; production of biogas from agricultural
residues.

x The
“upward” integration of energy supply at local and distribution level,
moving away from a purely ‘centralised supply to decentralised demand’ flow
to a system allowing also smaller units to become active component of the
energy system. Examples: bi-directional flow of heat between industrial,
commercial and residential energy consumers in smart district heating and
cooling systems; vehicle-to-grid use of EV batteries; reverse flow from gas
distribution to gas transmission networks to allow integration of biomethane
injected at local level.

2. Benefits of sector integration
Sector integration essentially allows pursuing Energy Union objectives by:
a.  Achieving higher levels of decarbonisation in the electricity sector
in the first place, as such linking with other sectors allows integrating
higher shares of variable renewable energy sources (by absorbing
excess renewable electricity when it is abundant and cheap, by providing
flexibility/storage when renewable electricity is scarce, including from
other progressively to be decarbonised energy sectors such as those for
gases);

b. Facilitating energy savings and reducing the cost of the energy
transition by avoiding an over-sizing of the energy system and the
associated investments in infrastructure and production installations;

c.  Speeding-up the deployment of clean energy across the economy
by decarbonising sectors that are more difficult (considering costs,
technology, public acceptance and implementation) to decarbonise
(e.g. transport or industrial processes) by linking them with sectors
that are easier to decarbonise (in particular electricity);

d. Promoting the competitiveness of the European economy by
promoting new more efficient technologies, production and consumption
methods, their standardisation and market uptake
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enabling sector coupling, which are expected to play a growing role in
the energy systems worldwide;

e.  Developing a more resilient, adaptive and resource-efficient energy
system, resulting in higher energy security and lower consumption of
land and other resources.
Overall, sector integration allows achieving higher levels of decarbonisation for given
total system costs (or the same decarbonisation at lower costs) relative to a scenario
where each sector is decarbonised separately and energy markets are not integrated
deeper. All deep decarbonisation scenarios (including in the Long Term Strategy)
foresee a significant level of sector integration to decarbonise significantly at a
reasonable cost.
For the energy as such, sector integration refers to the deeper linking of electricity,
gas and heat markets in order to support deep decarbonisation objectives in a cost-
effective manner.

3. Possible areas of action
Internal scoping work within DG ENER preliminarily concluded that sector integration
could be fostered through actions in the following broad areas:
1.  Heating and cooling: increase the replacement rate of fossil fuel boilers and
promote electrification, in particular through heat pumps; foster the deployment
of smart district heating and cooling systems; achieve greater mobilisation of
waste heat; in the longer term, promote hydrogen fuel cells for heat.

2.  Transport: accelerate the electrification of transport (in particular light-duty
vehicles), including through a faster roll-out of charging infrastructure; provide
greater incentives to the penetration of renewables, including in maritime and
aviation; in the longer term, promote hydrogen fuel cell vehicles (for heavy duty
road transport, maritime and aviation).

3.  Unlocking synergies between electricity, heat and gases: Penetration of
renewable energies becomes feasible and more cost-effective by exploiting the
flexibility of different energy carriers and infrastructures. Gaseous energy
carriers and heat are much more efficiently transported and stored than
electricity. This requires the removal of existing barriers between energy
carriers and addressing the regulatory uncertainty preventing investments in
and the development of a market for hydrogen. Furthermore, a more holistic
planning of different energy infrastructures is needed, as well as infrastructure
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development to accommodate new forms of gas (such as biomethane,
hydrogen, synthetic methane), possibly in the Trans-European Energy
Networks (TEN-E) framework. \

4.  Enabling and incentivising the decarbonisation of gases through gas
market reforms: to harness the flexibility of the gas system on the way to
climate-neutrality requires natural gas to be progressively replaced by
decarbonised and renewable gases, including hydrogen. Suitable market rules
should be developed. This substitution needs to be incentivised through new
instruments (such as of guarantees of origin or harmonised taxonomy for green
certificates) and by adapting rules to facilitate decentralised gas production and
cross-border trade (including gas quality standards). The gas markets need to
be become flexible and more focused on short-term products. The development
of more liquid spot markets for gases will enable a departure from long term
gas contracts and long-term capacity products that would reach otherwise
beyond 2040 and create a lock-in, jeopardising the achievement of the 2050
objectives. Low-carbon hydrogen – produced using low-carbon electricity and
water through electrolysis (instead of using natural gas) – requires addressing
the high capital costs of electrolysis; it needs incentives and enabling measures
for renewable hydrogen demand (notably in transport and heating and cooling,
e.g. through fuelling stations) and foster the use of fuel cells by end users (e.g.
long-distance/heavy duty transport).

5.  Energy storage: incentivising the deployment of storage solutions will facilitate
the penetration of renewables, demand side response and smart integration.
This requires the removal of existing barriers, facilitation of market access for
energy storage and encouragement of innovation and investments.

6.  Agriculture and bioenergy: incentivise a more optimal use of available
biomass for energy purposes; provide incentives to a wider mobilisation of such
biomass; accelerate the uptake of renewable technologies (incl. electrification)
in agriculture, including through the development of self-consumption and
energy communities.

7.  Industry and Carbon capture, storage and utilisation. Incentivise a greater
use of industrial waste (heat) for energy purposes; address the high costs of
electrolysis, methanation, and CCS/U; incentivise greater flexibility of industry
(electricity) demand.

8.  Taxes and levies: address the uneven pricing of carbon in various end-use
sectors; address the heavy taxation of electricity relative to fossil fuels; assess
whether the cost of energy transition borne by electricity charges can be spread
out over other energy carriers.
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4. Possible next steps
Next steps envisaged are:
1.  Continue the work within ENER of (i) identifying specific barriers to sector
integration and (ii) mapping possible actions. Such work wil  be supported by a
small number of targeted studies, managed by ENER.

2.  Interact with other DGs most relevant to sector integration. In particular,
action may be required in areas dealt with by CLIMA (e.g. ETS, CO2 standards
for cars), AGRI (CAP), MOVE (alternative fuels infrastructure), REGIO (use of
structural funds), TAXUD (energy taxation), COMP (State aid guidelines), and
RTD (Horizon Europe). ENER organised an Inter-Service meeting on
decarbonising energy through sector integration, on 19 November. This
first ISG meeting allowed (i) flagging to other DGs the ongoing work on sector
integration, and (ii) receiving early input in identifying policy areas under the
remit of their DG that can contribute to sector integration.

3. Gather input from relevant external experts; organise a wider event with
stakeholders.

4.  On the basis of 1 to 2 above: advance work on a possible Communication on
energy sector integration to be adopted in Q2 2020, together with a possible
action plan and timeline. Relevant actions might be brought forward by a
combination of legislative measures, through a potential revision of some
existing ENER and non-ENER legislation, and non-legislative measures,
including financing.

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