EC judgement on the Irish Renewable Heat Obligation (RHO) proposal and French biomethane mandate

Back in August last year, I wrote an article on the proposal for the Irish Renewable Heat Obligation (RHO). within that I flagged that this proposal had a significant risk of not being implemented. Specifically because of the preferential bias for domestic gas producers. This creates a skewed market which breaches the EU’s internal market rules.

Republic of Ireland Renewable Heat Obligation (RHO) draft bill

This passed weeks the European Commission (EC) published a judgement on the proposal. Needless to say this agrees with the analysis I provided 8 months ago. Now there is an inevitable scramble to resolve this.

The only trade compliant solution is to have a tradable certificate scheme for the biomethane. This can be supported by a separate domestic gas incentive scheme, but this will need to be compliant with the subsidy control regulations and will need to be explicit in their financial support. It will be more work than the Irish government wanted, but it could be done. A similar judgement was also issued on the French biomethane mandate later in the same week. The French mechanism sought to prohibit the use of non-French biomethane from participating in the scheme at all. 

There also remains the issue that the EC does not view the UK gas network and certificate register as compatible with the Union Database regulations (article 31a RED III). Whilst not publicly listed the Commission has restated that the UK gas network is not compatible with the Union Database and so any gas traded through the UK gas network would not be compatible the the RED III targets. this would further complicate the situation in the Republic of Ireland as it essentially means that only domestic biomethane would be eligible and even gas from Northern Ireland would not be eligible.

This is a very complex situation and one that will take quite some to resolve.