Gas as a transformational fuel: system stability, flexibility, and the limits of decarbonization

Gas as a Transformational Fuel: System Stability, Flexibility, and the Limits of Decarbonization Panel

March 25, 2026, PCC, Level 0, Room 1

The aim of the panel is to provide an in-depth analysis of the role of natural gas in the context of the tightening European Union climate policy, particularly in the context of the Fit for 55 package, and to attempt to answer the question at what point does gas cease to be a transition fuel supporting the stability of the transition and begin to generate stranded asset risk. The discussion will cover regulatory, systemic, and economic dimensions, with a perspective of 2030 and beyond.

Gas in the Definition of an "Efficient District Heating System"

The revision of the Energy Efficiency Directive significantly changes the definition of an "efficient district heating system," gradually limiting the eligibility of traditional high-efficiency gas-fired cogeneration as a solution consistent with long-term climate goals. New thresholds for the share of renewable energy and waste heat shorten the investment horizon for new CHP units based solely on natural gas. In practice, this means increased regulatory risk and the need to design installations to enable subsequent "greening" of the fuel through integration with biomethane or hydrogen. The panel will discuss whether investments implemented in the middle of this decade will be economically viable throughout their full technological lifecycle, and whether gas without a renewable component will maintain its status as a system fuel after 2030.

Gas-fired Unit Flexibility in the Service of National Power System Stability

With the growing share of weather-dependent sources, particularly wind and photovoltaics, gas-fired generators (OCGTs) and combined cycle generators (CCGTs) play a role in ensuring flexibility and stability in the power system. Their relatively short start-up time, ability to operate in a regulated mode, and ability to balance active power make them a crucial element of the NPS's operational security. At the same time, rising emission allowance prices and regulatory pressure are making this function increasingly costly. The panel will provide an opportunity to reflect on whether gas-fired dispatchable capacity is a bridge solution until the development of energy storage, nuclear power, and flexible demand management, or whether it will remain a permanent element of the energy mix in the long term.

CO₂ Economics and the Profitability of Gas-fired Units After 2030

A key factor determining the profitability of gas-fired energy generation is the cost of emissions under the EU Emissions Trading System. With allowance prices hovering around EUR 70–100/tonne of CO₂ in recent years, the variable cost of generating energy from gas is increasing significantly, which translates into higher tariffs and pressure on competitiveness with renewable energy sources and zero-emission sources. In the 2030+ perspective, further tightening of climate policy may lead to a situation in which new gas-fired units will require system support mechanisms or a capacity market to maintain profitability. The discussion will address the sensitivity of business models to scenarios of high CO₂ prices and the financial risks for investors and institutions financing gas-fired projects.

The Limits of Decarbonization – Does Gas Need to Be "Greened"?

The debate will also address the limits of gas's efficiency as a transition fuel. With increasing reduction requirements, there is a need to gradually replace natural gas with renewable fuels such as biomethane and hydrogen to maintain compliance with the definition of an efficient system and EU climate goals. Integrating hydrogen admixtures into gas networks, developing biomethane infrastructure, and adapting gas turbines to burn renewable fuels are becoming elements of a regulatory risk mitigation strategy. The panel will attempt to determine the balance between system flexibility and decarbonization requirements, and whether gas without a renewable component will still play a stabilizing role after 2030, or whether it will become a declining technology in the European energy mix.