ACM: tariff regulation cannot impede the growth of green natural gas

According to the Dutch Climate Agreement, two billion cubic meters of green natural gas must be produced in 2030 in the Netherlands as a sustainable alternative to natural gas. To help meet this goal, the Dutch cabinet will impose a blending requirement (information available in Dutch), which should ensure that, from 2025, more and more green natural gas will be injected into the network. The Netherlands Authority for Consumers and Markets (ACM) believes it is important that system operators are able to start on time with the investments that are necessary for injecting green natural gas on a larger scale. That is why ACM will assess what costs systems operators will incur in connection therewith, and how they will be able to be compensated for these costs through their transport tariffs. This is the most important outcome of a market scan into green natural gas, which was carried out by ACM.

As a climate-neutral alternative to natural gas, green natural gas can offer a solution for making processes that cannot be electrified more sustainable. Green natural gas is produced by the gasification of biomass, such as plant residues, algae, or manure, and, after the necessary adjustments, can be transported using existing gas networks. Green natural gas can be produced in many different locations. This is a major difference with regular natural gas, which that can only be extracted in several, fixed locations, or can enter the Netherlands at central points and is subsequently transported to homes and businesses. This means that system operators must expand their networks at various locations, in order to be able to inject the increased amount of green natural gas. To keep the system operators’ workload manageable for the next few years, it is important to have certainty soon about the locations where natural gas will be produced. This will allow system operators to start investing in the gas network on time. That is why ACM believes it is important that the Dutch Ministry of Economic Affairs and Climate Policy (EZK) together with municipalities and provinces designate areas where producers of green natural gas can establish their operations.

In order to ensure that system operators will also have sufficient financial leeway for making the necessary investments, ACM will examine in what way the necessary costs for system operators can be incorporated into the tariffs. ACM expects to introduce a new method in 2027 with which the compensation for the costs of system operators will be determined. If, before 2027, system operators experience any obstacles in connection with investments that are necessary for making injection of green natural gas possible, ACM encourages them to report this to ACM.

See also: 

22-03-2023 Market scan into green natural gas (in Dutch)