Biomethane and the European gas infrastructure EBA Workshop 3 September 2015 Thierry Deschuyteneer Executive Secretary

Who is GIE? Gas Infrastructure Europe (GIE) is an European non-profit lobbying association representing the sole interest of the infrastructure industry in the natural gas business GIE was formally established on 10 March 2005 as a legally independent and non-profit lobbying association with official statutes GIE has currently 67 members in 25 European countries GIE voices the views of its members vis-à-vis the European institutions, regulators and other stakeholders GIE mission is to actively contribute to the construction of a single, sustainable and competitive gas market in Europe underpinned by a stable and predictable regulatory framework as well as by a sound investment climate 3

Who is GIE? 4 GIE is the umbrella organization for its three subdivisions: GTE – Gas Transmission Europe representing Transmission System Operators (TSO) GSE – Gas Storage Europe representing Storage System Operators (SSO) GLE – Gas LNG Europe representing LNG Terminal System Operators (LSO)

GIE Key Messages 6 Enabling a single European Market GIE contributes to develop the regulatory framework for natural gas in Europe in a transparent and proactive manner. Our main objective is regulatory stability and predictability; the essential prerequisites for a sound investment climate Ensuring a backbone for secure supplies Gas infrastructure is the backbone of the energy supply chain from producer to end-user. Transmission pipelines, storage facilities and LNG regasification terminals are among the physical elements of the gas system which ensure that gas is delivered to customers where and whenever needed Building the EU energy future Competition, security of supply and sustainability, main lines of the EU’s energy policy. GIE members adhere to the EU energy objectives and continuously pursue technologically advanced solutions to achieve energy policy goals with the highest safety and efficiency Contributing to a competitive low- carbon European Union Natural gas has proven to be the cleanest fossil fuel. Gas utilization can reduce CO 2 emissions and therefore to contribute to the “ ” policy. As the past decade has shown, the increased share of natural gas in the European energy mix has led to a significant CO2 reduction in Europe

Gas value chain… 7 Production LNG liquefaction LNG regasification Transportation Storage Distribution End-user LNG shipping Residential Industry Electricity generation Transport (CNG) Seasonal storage Short-term storage Peak shaving pipeline End-user Industry Transport (LNG)

… and biogas / biomethane 8 Production LNG liquefaction LNG regasification Transportation Distribution End-user LNG shipping Residential Industry Electricity generation Transport (CNG) pipeline Biogas: direct use Biomethane injection Biomethane liquefaction End-user Industry Transport (LNG) Storage Seasonal storage Short-term storage Peak shaving

Advantages and drawbacks 9 AdvantagesDrawbacks Biogas: direct use+Cheap (CHP)–Supply limited to demand –No connection with market place Biomethane: injection in distribution grid +Bigger demand base +Access to market place –Upgrade to distribution gas quality → costly – Supply limited to seasonal demand Biomethane: injection in transmission grid +Enables seasonal storage +Integration with European Internal Gas Market +Enables cross-border trading –Compression to transmission pressure → costly –Upgrade to transmission gas quality → more costly Biomethane: liquefaction + Decarbonisation of transport sector (trucks, inland waterways) –Liquefaction after gas quality upgrade → very costly

Technical conditions for biomethane injection in transmission grid 10 Interconnection Point Piping, valves, pressure/flow regulation, safety requirements Metering, odorisation (if required) Gas quality monitoring and injection control Physical characteristics Pressure (typically 4-80 bar), temperature Chemical characteristics Gas quality: O 2, CO 2, H 2, H 2 S, Wobbe index Additional requirements possible in case of underground storage National gas quality specifications may not allow biomethane to flow to neighbouring countries

Market conditions for biomethane injection in transmission grid 11 Administrative measures Third Party Access (Network Codes): capacity booking, nominations, allocations TSOs operate entry/exit access regime (Third Energy Package): impossible to distinguish biomethane from natural gas once on the network → biomethane can be traded on Virtual Trading Points → same balancing rules → same interoperability rules → biomethane can physically flow across borders (if right gas quality) Common European market for biomethane? Separate trading platform for biomethane (certificates), independently from physical flows? How to trade biomethane (certificates) between countries? Need for some harmonisation of national rules regarding certificates?

Contributing to a low-carbon economy: Natural gas as transport fuel  Switching to natural gas will deliver not just CO 2 emissions reductions but also significant air quality benefits for citizens, with lower NO X emissions, lower SO X and few particulates Source: NGVA 12

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