2009 on conditions for access to natural gas transmission networks - Main contents

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dossier	COM(2022)135 - Amendment of Regulation 2017/1938 concerning measures to safeguard the security of gas supply and 715/2009 on conditions for ...
source	COM(2022)135
date	23-03-2022

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

a) Security of supply

The potential threats to the security of gas supply of the EU, mainly linked to its dependence for primary energy from third countries, have already triggered preparations to deal with additional challenges. With the introduction of the European Green Deal in particular, up-grading and extending LNG infrastructure and the diversification of sources and routes of pipeline gas, it has already taken important steps to shield households and enterprises against supply shocks.

The international tensions have underlined the need of advancing plans and actions with the objective to become more independent from third countries. Accelerating the green transition will reduce emissions, reduce dependency on imported fossil fuels, and protect against price hikes. However, the current geopolitical situation requires additional short term measures to deal with the market imbalances for energy and for securing supplies in the years ahead. As supply disruptions of pipeline gas may occur anytime, measures introducing an insurance policy regarding the filling level of EU storage facilities are introduced. Well-filled gas storage contributes to more secure gas supplies for the winter 2022/2023.

b) Role of storage and current problems

Gas storage contributes to security of supply by providing additional supply in case of strong demand or supply disruptions; storage supplies 25-30% of gas consumed in winter. During the heating season, storage reduces the need to import additional gas. Storage contributes to absorbing supply shocks.

Over the last six months, an unbalanced gas market has led to a sharp increase in gas prices. The EU level of filling of storage during the winter was largely below the level of the preceding years – 10% less in percentage points in January. This has amplified uncertainties as regards security of supply and the volatility of prices. This proposal seeks to address the three more specific problems below:

–The difference of gas prices between summer and winter is important to attract gas in storage. Given the ongoing geopolitical developments and high energy prices, an estimate of the foreseeable summer/winter spread is very unreliable. The situation is expected to be particularly problematic ahead of next winter, as prices may be higher in summer than in winter. This is expected to lead to a situation in which storage is not attractive to market participants and filling needs to be ensured by public interventions, including financial support to incentivise the use of storage.

–The Commission and the Gas Coordination Group carried out an EU wide reinforced risk preparedness analysis in February 2022. This analysis indicated that while the winter 2021/2022 was eventually safe, there could be risk of insufficient gas in storage ahead of the next winter 2022/2023. Optimising the storage capacities over the filling season would require immediate injection as from the start of the filling season (April 2022). Such early actions would reduce the risks of bottlenecks when filling storage during possible disruptions from the East that would require to transport gas to storage sites from other routes.

–Gas storage levels in 2021/2022 have proven to be particularly low at sites owned by third country entities. This has contributed to nearly half of the unusually low storage level this year. Storage facilities are strategic assets and critical for the security of supply of the Union and its Member States. The control and use of storage facilities by third countries entities may create security of supply risks, impacting on other essential security interests, and undermine further the strategic autonomy of the EU.

c) Objectives of the proposal

This proposal aims at addressing the very significant risks for security of supply and the Union’s economy resulting from the dramatically changed geopolitical situation. The proposal aims notably at ensuring that storage capacities in the Union, which are crucial to ensure security of supply, do not remain unused, to ensure that storages can be shared across the Union, in a spirit of solidarity.

For that purpose, a mandatory minimum level of gas in storage facilities will reinforce the security of supply ahead of the winter 2022/2023 and for the following winter periods. A mandatory certification of storage system operators will ensure that potential security of supply risks resulting from influence over the critical storage infrastructure can be excluded. Finally, the use of storage will be incentivised by allowing to exempt storage users from transmission tariffs at storage entry or exit points.

• Consistency with existing policy provisions in the policy area

This proposal amends two existing regulations, Regulation (EU) 2017/1938 concerning measures to safeguard the security of gas supply and Regulation (EU) 715/2009 on conditions for access to natural gas transmission networks. It builds on the existing framework for gas security of supply and internal gas market rules, adding further measures needed to ensure security of supply of natural gas in the Union in the context of the severe energy crisis caused by recent changes of the geopolitical situation.

The proposed rules on mandatory storage filling targets are related to a proposal on the use of storage which was included in Article 67 of the Commission’s Proposal for a Regulation on the internal markets for renewable and natural gases and for hydrogen of 15 December 2021 ¹ . This Article proposed to insert a new Article 7(b) into Regulation (EU) 2017/1938 in order to incentivise Member States to use some storage-related measures to enhance security of supply, without introducing a mandatory storage obligation. However, since the geopolitical situation has significantly changed since December 2021, enhanced measures to ensure security of supply have become crucial. The Commission, in coordination with the Gas Coordination Group, carried out a dedicated risk analysis which showed that more stringent rules to ensure a better use of storage facilities in the Union are urgently needed.

A swift negotiation of the comprehensive Proposal for a Regulation on the internal markets for renewable and natural gases and for hydrogen of 15 December 2021 is key for the Green Deal and to lowering Europe’s dependency on fossil gas. To avoid a disruption of the negotiation process on the proposal of 15 December 2021, the proposal for rules to enhance storage filling levels is made in a form of a separate Regulation, which is limited to three well-targeted amendments (storage filling obligation, storage certification and tariff rebate). The short and well-targeted proposal should allow Council and Parliament to adopt it within a short timeframe, since new rules to ensure storage filling in times of souring energy prices are urgently needed.

To avoid a legal conflict between Article 67 of the Proposal for a Regulation on the internal markets for renewable and natural gases and for hydrogen of 15 December 2021 and the current proposal, the validity of the proposed regulation shall be limited until the entry into force of the recast Regulation (EU) of the European Parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen, based on the Commission’s proposal of 15 December 2021.

The provisions related to the filling of storage in this proposal are meant to be adopted as soon as possible to ensure their effectiveness before the start of the heating season in October 2022. They could be easily integrated into the Regulation on the internal markets for renewable and natural gases and for hydrogen at a later stage.

• Consistency with other Union policies

The proposal is consistent with a broader set of initiatives to enhance the Unions energy resilience and prepare against possible emergency situations, notably the Commission’s ‘Fit for 55’ proposals, in particular the revision of the Third Energy Package for gas (Directive 2009/73/EU and Regulation 715/2009/EU) which are designed to regulate competitive decarbonised gas markets and to create a sustainable energy sector for the long term, in the benefit of European consumers.

In October 2021, the European Commission presented a Communication to enact and support appropriate measures to mitigate the impact of the rising energy prices. The Communication also provides measures to secure affordable energy and sufficient level of storage, making the EU more resilient to future shocks.

Following the recent geopolitical developments, in March 2022, the Commission issued the ‘REPowerEU’ Communication for a Joint European Action for more affordable, secure and sustainable energy. According to the REPowerEU Communication, the Commission will make a legislative proposal so as to ensure an annual adequate level of storage by next winter. The Communication stressed not only the urgent need to full storage facilities in the Union, but clarified also that it is possible to use state aid for financial support to the filling of storages ² .

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

This proposal amends Regulation (EU) 2017/1938, whose legal base was Article 194(2) of the Treaty on the Functioning of the European Union. It also amends Regulation (EU) 715/2009, which was, since the Treaty on the Functioning of the European Union was not in force at that time, based on Article 95 of the Treaty establishing the European Community, now Article 114 of the Treaty on the Functioning of the European Union. This proposal is based on Article 194(2) of the Treaty on the Functioning of the European Union.

• Subsidiarity (for non-exclusive competence)

The planned measures of the present initiative are fully in line with the subsidiarity principle. Because of the risk and the significant effect of possible gas supply interruption on the entire Union, there is a need for an EU level action.

Given the unprecedented nature of the gas supply crisis and its transboundary effects, and the fact that EU countries are connected through a joint gas network, action at Union level is warranted, as Member States alone cannot sufficiently effectively address the risk of serious economic difficulties resulting from significant supply disruptions in a coordinated manner. Only EU action motivated by a spirit of solidarity between Member States can ensure an effective preparedness against a supply disruption, which would lead to lasting harm for citizens and the economy.

• Proportionality

The initiative complies with the proportionality principle. In view of the unprecedented geopolitical situation and the significant threat for consumers and the EU economy in the event of gas supply disruptions, there is a clear need for coordinated and urgent action. Despite the urgency, the proposal takes into account that Member States will need some time to set up the necessary measures to ensure storage filling. The proposal therefore provides for a “phase-in” mechanism, ie rules which are less stringent for the year 2022 than for the following years (e.g. lower filling target, fewer intermediary targets, obligation for the Commission to take the limited time of application into account in its enforcement). Hence, the proposal does not go beyond what is necessary to achieve the objectives laid down in the current instrument. The proposed measures are considered proportionate and build to the extent possible on existing approaches. The support of solidarity measures and requirement of storage filling effectively ensure that security of supply risks are minimised at regional level. The choice of the required filling level has been carefully considered. It was discussed with stakeholders in the framework of the Gas Coordination Group and followed intensive consultations with sector experts and Member States. Based on these consultations, the proposed 90% filling rate is a necessary and appropriate level in order to ensure security of supply over the winter in case of serious supply disruptions, without putting an excessive burden on Member States, energy companies or citizens.

• Choice of the instrument

This is a proposal to amend two regulations, Regulation (EU) 2017/1938 and Regulation (EU) 715/2009, therefore the instrument chosen is an amending Regulation. Given that this is not a full revision of either Regulation, a recast is not considered appropriate.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Stakeholder consultations

Due to the urgency of the proposal, which is made in reaction to an unexpected geopolitical crisis and needs to be urgently adopted to ensure filled storages ahead of the heating season, stakeholder consultations had to be kept less formal. Nevertheless, targeted stakeholder consultations were carried out, including through the Gas Coordination Group, as well as manifold bilateral consultations with key stakeholders, sector experts and Member States.

The Commission published its Communication COM(2022) 108 final “REPowerEU: Joint European Action for more affordable, secure and sustainable energy” on 8 March 2022, which set out the main content of the current proposal on storage filling measures and already allowed for a consultation of relevant stakeholder with regard to the proposed measures. Based on this document, all parties interested - for example authorities, stakeholders and citizens - had the opportunity to comment on the Commission’s legislative approach, as outlined in the Communication.

• Collection and use of expertise

Due to the politically sensitive and urgent nature of the proposal, no external expertise was commissioned apart from the extensive stakeholder consultations.

• Impact assessment

Due to the politically sensitive and urgent nature of the proposal, no impact assessment was carried out but an EU wide reinforced risk preparedness analysis (see above) and targeted consultations were carried out.

The storage filling measures and possible alternatives were assessed and intensively discussed with stakeholders ahead of the proposal, in particular in the Gas Coordination Group ³ .

During the meeting of the Gas Coordination Group of 23 February 2022, participants underlined that measures should be taken as soon as possible to refill storage ahead of the next winter. Interventions focused on ways to promote filling, using where possible market mechanisms, the filling level to achieve, the way to finance storage, including possible state aid, and the way to coordinate between Member States.

At the meeting of the Gas Coordination Group of 11 March 2022, the Commission presented the storage measures envisaged in this proposal, and outlined in the REPowerEU Communication. The Group welcomed the Communication and commented on the target date to fill storage, the degree of flexibility to reach the target in each Member States, the possible incentives to market operators, and ways to improve cooperation.

• Fundamental rights

The measure will allow support to some of the most vulnerable customers, and in particular those already experiencing energy poverty.

4. BUDGETARY IMPLICATIONS

The budgetary impact on the EU budget associated to this proposal concerns the human resources and other administrative expenditures of the European Commission’s Directorate-General (DG) for Energy.

The proposal sets out a new, enhanced Gas Security of Supply architecture, with new obligations for Member States and, correspondingly, a reinforced role for DG Energy in a wide range of areas – namely:

·Overall management and implementation of the Regulation (1 FTE),

·Management of the reinforced Role of the Gas Coordination Group (0.5 FTE),

·Monitoring of filling rates and definition of technical implementation elements, such as filling trajectories (including economic and technical analysis and data management) (1.5 FTE),

·Legal implementation of the measures foreseen in the new Article 6d i (estimated yearly average: 5 warning decisions; 2 decisions on measures of last resort.) (2 FTE),

·Management of the LNG platform foreseen in the new article 6b i (5 FTE),

·Assessment of the notifications on burden-sharing foreseen in article 6c (1 FTE),

·Opinion on the certification of storage system operators (3 FTE),

·Administrative support (1 FTE).

For the implementation of the above-mentioned new responsibilities, the human resources of DG Energy need therefore to be reinforced by 12 additional FTE on a permanent basis plus 3 temporary FTE specifically devoted to certification till such time as this process is concluded.

Moreover, the implementation, coordination and follow-up of this amending regulation amongst MS will require additional administrative appropriations as follow: 150,000 €/year for missions and experts’ meetings (notably: Gas Coordination Group).

5. OTHER ELEMENTS

• Detailed explanation of the specific provisions of the proposal

Article 1 amends Regulation (EU) 2017/1938.

Article 1 i added definitions to Article 2 of Regulation (EU) 2017/1938, to define ‘filling trajectory’, ‘filling target’, ‘strategic storage’ and ‘strategic stock’.

Article 1(2) inserts new Articles 6a to 6d.

–Article 6(a). This new provision will require the Member States to ensure that the storage infrastructures in its territory are, in principle, filled up to at least 90% of their capacity at Member State level by 1 November each year, with intermediary targets for each Member State in February, May, July, and September. A lower target and a different filling trajectory apply for 2022, taking into account that Member States have limited time to implement this Regulation. The Commission is mandated to ensure that the filling targets are met in case intermediate targets are missed.

–Article 6b sets out the measures Member States shall take to ensure that the mandatory filling targets pursuant to Article 6a are reached.

–Article 6c. A burden sharing mechanism is introduced, as although not all Member States have storage facilities in their territories, all will benefit from having a guaranteed high filling level, in terms of the insurance value against security of supply risks and price dampening effects in winter.

–Article 6d. This new provision provides for effective instruments to monitor the new filling obligations and reinforces the role of the Gas Coordination Group, giving it an explicit mandate to monitor Member States' performance in the area of gas security of supply, and to develop best practices on that basis. The updated of National energy and climate plans and the integrated national energy and climate progress reports adopted pursuant Article 17 of the Regulation 2018/1999 shall reflect the progress on the filling trajectories and the filling targets, and the planned policies and measures to achieve it.

Article 2 amends Regulation (EU) 715/2009.

Article 2 i inserts a new Article 3a on the certification of storage system operators, under which Member States shall certify all undertakings which own a storage system operator, including transmission system operators, to ensure that the owner of the storage system operator does not put at risk the security of energy supply in the Union or any Member State.

Article 2(2) adds a new final paragraph to Article 13, applying a discount of 100 % to capacity-based transmission tariffs at entry points from and exit points to storage facilities.

Article 3 concerns entry into force.