Considerations on COM(2021)804 - Internal markets for renewable and natural gases and for hydrogen (recast) - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2021)804 - Internal markets for renewable and natural gases and for hydrogen (recast). |
|---|---|
| document | COM(2021)804  |
| date | December 15, 2021 |
(1) Regulation (EU) No 715/2009 of the European Parliament and of the Council 4 has been substantially amended several times. Since further amendments are to be made, that Regulation should be recast in the interests of clarity.
715/2009 recital 1 (adapted)
(2) The internal market in natural gas, which has been progressively implemented since 1999, aims to deliver real choice for all consumers in the Community Union , be they▪citizens or businesses, new business opportunities and more cross-border trade, so as to achieve efficiency gains, competitive prices and higher standards of service, and to contribute to security of supply and sustainability.
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(3) The European Green Deal and the Climate law set the target for the EU to become climate neutral by 2050 in a manner that contributes to European competitiveness, growth and jobs. For a decarbonised gas markets to be set up and contribute to the energy transition, significantly higher shares of renewable energy sources in an integrated energy system with an active participation of consumers in competitive markets are needed.
(4) This Regulation aims to facilitate the penetration of renewable and low-carbon gases into the energy system enabling a shift from fossil gas, and to allow these new gases to play an important role towards achieving the EU’s 2030 climate objectives and climate neutrality in 2050. The Regulation aims also to set up a regulatory framework that enables and incentivises all market participants to take the transitional role of fossil gas into account while planning their activities to avoid lock-in effects and ensure gradual and timely phase-out of fossil gas notably in all relevant industrial sectors and for heating purposes.
(5) The EU hydrogen strategy recognises that, as EU Member States have different potential for the production of renewable hydrogen, an open and competitive EU market with unhindered cross-border trade has important benefits for competition, affordability, and security of supply. Moreover, it stresses that moving towards a liquid market with commodity-based hydrogen trading would facilitate entry of new producers and be beneficial for deeper integration with other energy carriers. It would create viable price signals for investments and operational decisions. The rules laid down in this Regulation should thus be conducive for hydrogen markets and commodity-based hydrogen trading and liquid trading hubs to emerge and any undue barriers in this regard should be eliminated by Member States. Whilst recognising the inherent differences, existing rules that enabled efficient commercial operations developed for the electricity and gas markets and trading should be considered for a hydrogen market.
715/2009 recital 2
Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas 5 and Regulation (EC) No 1775/2005 of the European Parliament and of the Council of 28 September 2005 on conditions for access to the natural gas transmission networks 6 have made significant contributions towards the creation of such an internal market in natural gas.
715/2009 recital 3
Experience gained in the implementation and monitoring of a first set of Guidelines for Good Practice, adopted by the European Gas Regulatory Forum (the Madrid Forum) in 2002, demonstrates that in order to ensure the full implementation of the rules set out in those guidelines in all Member States, and in order to provide a minimum guarantee of equal market access conditions in practice, it is necessary to provide for them to become legally enforceable.
715/2019 recital 4
A second set of common rules entitled ‘the Second Guidelines for Good Practice’ was adopted at the meeting of the Madrid Forum on 24 and 25 September 2003 and the purpose of this Regulation is to lay down, on the basis of those guidelines, basic principles and rules regarding network access and third party access services, congestion management, transparency, balancing and the trading of capacity rights.
715/2009 recital 5 (adapted)
(6) [Recast Gas Directive as proposed in COM(2021) xxx] Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas 7 provides for the possibility of a combined transmission and distribution system operator. The rules set out in this Regulation do not therefore require modification of the organisation of national transmission and distribution systems that are consistent with the relevant provisions of that Directive.
715/2019 recital 6
High-pressure pipelines linking up local distributors to the gas network which are not primarily used in the context of local distribution are included in the scope of this Regulation.
715/2009 recital 7
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(7) It is necessary to specify the criteria according to which tariffs for access to the network are determined, in order to ensure that they fully comply with the principle of non-discrimination and the needs of a well-functioning internal market and take fully into account the need for system integrity and reflect the actual costs incurred, insofar as such costs correspond to those of an efficient and structurally comparable network operator and are transparent, whilst including appropriate return on investments, and enabling the integration of renewable and low carbon gases and, where appropriate, taking account of the benchmarking of tariffs by the regulatory authorities. The rules on network access tariffs in this Regulation are complemented by further rules on network access tariffs, notably in the network codes and guidelines adopted on the basis of this Regulation, in [ TEN-E Regulation as proposed in COM(2020) 824 final], [Methane Regulation as proposed in COM(2021) xxx], Directive (EU) 2018/2001 and [Energy Efficiency Directive as proposed in COM(2021) 558 final].
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(8) It is, generally, most efficient to finance infrastructure by revenues obtained from the users of that infrastructure and to avoid cross-subsidies. Moreover, such cross-subsidies would, in the case of regulated assets, be incompatible with the general principle of cost-reflective tariffs. In exceptional cases, such cross-subsidies could nonetheless bring societal benefits, in particular during earlier phases of network development where booked capacity is low compared to technical capacity and uncertainty as to when future capacity demand will materialise is significant. Cross-subsidies could therefore contribute to reasonable and predictable tariffs for early network users and de-risk investments for network operators. Cross-subsidies could thus contribute to an investment climate supportive to the Union’s, decarbonisation objectives. Cross-subsidies should not be financed by network users in other Member States, regardless as to whether directly or indirectly. It is thus appropriate to collect financing for cross-subsidies only from exit points to final customers within the same Member State. Moreover, as cross-subsidies are exceptional, it should be ensured that they are proportional, transparent, limited in time and set under regulatory supervision.
715/2009 recital 8
In calculating tariffs for access to networks, it is important to take account of the actual costs incurred, insofar as such costs correspond to those of an efficient and structurally comparable network operator, and are transparent, as well as of the need to provide appropriate return on investments and incentives to construct new infrastructure, including special regulatory treatment for new investments as provided for in Directive 2009/73/EC. In that respect, and in particular if effective pipeline-to-pipeline competition exists, the benchmarking of tariffs by the regulatory authorities will be a relevant consideration.
715/2009 recital 9 (adapted)
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(9) The use of market-based arrangements, such as auctions, to determine tariffs has to be compatible with the provisions laid down in recast Gas Directive as proposed in COM(2021) xxx Directive 2009/73/EC and Commission Regulation (EU) 2017/459 .
715/2009 recital 10 (adapted)
(10) A common minimum set of third-party access services is necessary to provide a common minimum standard of access in practice throughout the Community Union , to ensure that third-party access services are sufficiently compatible and to allow the benefits accruing from a well-functioning internal market in natural gas to be exploited.
715/2009 recital 11 (adapted)
At present, there are obstacles to the sale of gas on equal terms, without discrimination or disadvantage in the Community. In particular, non-discriminatory network access and an equally effective level of regulatory supervision do not yet exist in each Member State, and isolated markets persist.
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(11) Arrangements on third party access should be based on the principles laid down in this Regulation. The organisation of entry-exit systems, which enable a free allocation of gas on the basis of firm capacity, was welcomed by the XXIV. Madrid Forum already in October 2013. Therefore a definition of entry-exit system should be introduced and the integration of the distribution system level in the balancing zone be ensured, which would help to achieve a level playing field for renewable and low carbon gases connected to either the transmission or distribution level. Tariff setting of distribution system operators and the organisation of capacity allocation between the transmission and distribution system should be left to the regulatory authorities on the basis of the principles enshrined in [recast Gas Directive as proposed in COM(2021) xxx].
(12) Access to the entry-exit system should be generally based on firm capacity. Network operators should be required to cooperate in a way that maximises the offer of firm capacity, which in turn enables network users to freely allocate the gas entering or exiting on the basis of firm capacity to any entry or exit point in the same entry-exit system.
(13) Conditional capacity should only be offered when network operators are not able to offer firm capacity. Network operators should define the conditions for conditional capacity on the basis of operational constraints in a transparent and clear manner. The regulatory authority should ensure that the number of conditional capacity products is limited to avoid a fragmentation of the market and to ensure compliance with the principle of providing efficient third-party access.
715/2009 recital 12
(14) A sufficient level of cross-border gas interconnection capacity should be achieved and market integration fostered in order to complete the internal market in natural gas.
715/2009 recital 13
The Communication of the Commission of 10 January 2007 entitled ‘An Energy Policy for Europe’ highlighted the importance of completing the internal market in natural gas and creating a level playing field for all natural gas undertakings in the Community. The Communications of the Commission of 10 January 2007 entitled ‘Prospects for the internal gas and electricity market’ and ‘Inquiry pursuant to Article 17 of Regulation (EC) No 1/2003 into the European gas and electricity sectors (Final Report)’ demonstrated that the present rules and measures neither provide the necessary framework nor provide for the creation of interconnection capacities to achieve the objective of a well-functioning, efficient and open internal market.
715/2009 recital 14
In addition to thoroughly implementing the existing regulatory framework, the regulatory framework for the internal market in natural gas set out in Regulation (EC) No 1775/2005 should be adapted in line with those communications.
715/2009 recital 15 (adapted)
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(15) In particular, iIncreased cooperation and coordination among transmission and, where relevant, distribution system operators is required to create network codes for providing and managing effective and transparent access to the transmission networks across borders, and to ensure coordinated and sufficiently forward looking planning and sound technical evolution of the transmission natural gas system in the Community Union , including the creation of interconnection capacities, with due regard to the environment. The network codes should be in line with framework guidelines which are non-binding in nature (framework guidelines) and which are developed by the European Union Agency for the Cooperation of Energy Regulators (ACER) established in accordance with by Regulation (EU) 2019/942 (EC) No 713/2009 of the European Parliament and of the Council 8 9 of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators 10 (the Agency). ACER The Agency should have a role in reviewing, based on matters of fact, draft network codes, including their compliance with the framework guidelines, and it should be enabled to recommend them for adoption by the Commission. ACER The Agency should assess proposed amendments to the network codes and it should be enabled to recommend them for adoption by the Commission. Transmission system operators should operate their networks in accordance with those network codes.
715/2009 recital 16 (adapted)
(16) In order to ensure optimal management of the gas transmission network in the Community Union, a European Network of Transmission System Operators for Gas (the ENTSO for Gas), should be provided for established. The tasks of the ENTSO for Gas should be carried out in compliance with Community the Union’s competition rules which remain are applicable to the decisions of the ENTSO for Gas. The tasks of the ENTSO for Gas should be well-defined and its working method should ensure efficiency, transparency and the representative nature of the ENTSO for Gas. The network codes prepared by the ENTSO for Gas are not intended to replace the necessary national network codes for non cross-border issues. Given that more effective progress may be achieved through an approach at regional level, transmission system operators should set up regional structures within the overall cooperation structure, whilst ensuring that results at regional level are compatible with network codes and non-binding ten-year network development plans at Union Community level. Cooperation within such regional structures presupposes effective unbundling of network activities from production and supply activities. In the absence of such unbundling, regional cooperation between transmission system operators gives rise to a risk of anti-competitive conduct. Member States should promote cooperation and monitor the effectiveness of the network operations at regional level. Cooperation at regional level should be compatible with progress towards a competitive and efficient internal market in gas gases .
715/2009 recital 17 (new)
All market participants have an interest in the work expected of the ENTSO for Gas. An effective consultation process is therefore essential and existing structures set up to facilitate and streamline the consultation process, such as the European Association for the Streamlining of Energy Exchange, national regulators or the Agency should play an important role.
715/2009 recital 18 (adapted)
(17) In order to ensure greater transparency regarding the development of the gas transmission network in the Community Union , the ENTSO for Gas should draw up, publish and regularly update a non-binding Community Union -wide ten-year network development plan on the basis of a joint scenario and the interlinked model (Community Union -wide network development plan). Viable gas transmission networks and necessary regional interconnections, relevant from a commercial or security of supply point of view, should be included in that network development plan.
715/2009 recital 19
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(18) To enhance competition through liquid wholesale markets for gas, it is vital that gas can be traded independently of its location in the system. The only way to do this is to give network users the freedom to book entry and exit capacity independently, thereby creating gas transport through zones instead of along contractual paths. To ensure the freedom of booking capacity independently at entry and exit points, tariffs set for one entry point should therefore not be related to the tariff set for one exit point, and vice versa offered for these points separately and the tariff should not bundle the entry and exit charge in a single price. The preference for entry-exit systems to facilitate the development of competition was already expressed by most stakeholders at the 6th Madrid Forum on 30 and 31 October 2002. Tariffs should not be dependent on the transport route. The tariff set for one or more entry points should therefore not be related to the tariff set for one or more exit points, and vice versa.
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(19) While Commission Regulation (EU) 312/2014 establishing a Network Code on Gas Balancing of Transmission Networks provides rules for setting up technical rules that build up a balancing regime, it leaves various design choices for each balancing regime that is applied in a specific entry-exit system. The combination of choices made lead to a specific balancing regime that is applicable in a specific entry-exit system, which are currently mostly reflecting Member States territories.
(20) Network users are to bear the responsibility of balancing their inputs against their off-takes with trading platforms established to better facilitate gas trade between network users. In order to better integrate renewable and low carbon gases within the entry-exit system, the balancing zone should also cover the distribution system level. The virtual trading point should be used to exchange gas between balancing accounts of network users.
715/2019 recital 20
(21) References to harmonised transport contracts in the context of non-discriminatory access to the network of transmission system operators do not mean that the terms and conditions of the transport contracts of a particular system operator in a Member State must be the same as those of another transmission system operator in that Member State or in another Member State, unless minimum requirements are set which must be met by all transport contracts.
715/2009 recital 21
There is substantial contractual congestion in the gas networks. The congestion-management and capacity-allocation principles for new or newly negotiated contracts are therefore based on the freeing-up of unused capacity by enabling network users to sublet or resell their contracted capacities and the obligation of transmission system operators to offer unused capacity to the market, at least on a day-ahead and interruptible basis. Given the large proportion of existing contracts and the need to create a true level playing field between users of new and existing capacity, those principles should be applied to all contracted capacity, including existing contracts.
715/2019 recital 22
Although physical congestion of networks is, at present, rarely a problem in the Community, it may become one in the future. It is important, therefore, to provide the basic principle for the allocation of congested capacity in such circumstances.
715/2009 recital 23
Market monitoring undertaken over recent years by the national regulatory authorities and by the Commission has shown that current transparency requirements and rules on access to infrastructure are not sufficient to secure a genuine, well-functioning, open and efficient internal market in gas.
715/2019 recital 24
(22) Equal access to information on the physical status and efficiency of the system is necessary to enable all market participants to assess the overall demand and supply situation and to identify the reasons for movements in the wholesale price. This includes more precise information on supply and demand, network capacity, flows and maintenance, balancing and availability and usage of storage. The importance of that information for the functioning of the market requires alleviating existing limitations to publication for confidentiality reasons.
715/2009 recital 25
(23) Confidentiality requirements for commercially sensitive information are, however, particularly relevant where data of a commercially strategic nature for the company are concerned, where there is only one single user for a storage facility, or where data are concerned regarding exit points within a system or subsystem that is not connected to another transmission or distribution system but to a single industrial final customer, where the publication of such data would reveal confidential information as to the production process of that customer.
715/2009 recital 26
(24) To enhance trust in the market, its participants need to be sure that those engaging in abusive behaviour can be subjected to effective, proportionate and dissuasive penalties. The competent authorities should be given the competence to investigate effectively allegations of market abuse. To that end, it is necessary that competent authorities have access to data that provides information on operational decisions made by supply undertakings. In the gas market, all those decisions are communicated to the system operators in the form of capacity reservations, nominations and realised flows. System operators should keep information in relation thereto available to and easily accessible by the competent authorities for a fixed period of time. The competent authorities should, furthermore, regularly monitor the compliance of the transmission system operators with the rules.
715/2009 recital 27
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(25) Access to natural gas storage facilities and liquefied natural gas (LNG) facilities is insufficient in some Member States, and therefore the implementation of the existing rules needs to be improved , including as regardsin the transparency area. Such improvement should take into account the potential and uptake of renewable and low-carbon gases for these facilities in the internal market. Monitoring by the European Regulators' Group for Electricity and Gas concluded that the voluntary guidelines for good third-party access practice for storage system operators, agreed by all stakeholders at the Madrid Forum, are being insufficiently applied and therefore need to be made binding.
715/2019 recital 28
(26) Non-discriminatory and transparent balancing systems for natural gas, operated by transmission system operators, are important mechanisms, particularly for new market entrants which may have more difficulty balancing their overall sales portfolio than companies already established within a relevant market. It is therefore necessary to lay down rules to ensure that transmission system operators operate such mechanisms in a manner compatible with non-discriminatory, transparent and effective access conditions to the network.
715/2009 recital 29
The trading of primary capacity rights is an important part of developing a competitive market and creating liquidity. This Regulation should therefore lay down basic rules relating to such trading.
715/2019 recital 30
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(27) National rRegulatory authorities should ensure compliance with the rules contained in this Regulation and the network codes and gGuidelines adopted pursuant thereto.
715/2009 recital 31 (adapted)
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(28) In the gGuidelines annexed to this Regulation, specific more detailed implementing rules are defined on the basis of the Second Guidelines for Good Practice. Where appropriate, those rules will should evolve over time, taking into account the differences of national gas systems and their development .
715/2009 recital 32
(29) When proposing to amend the Guidelines annexed to this Regulation, the Commission should ensure prior consultation of all relevant parties concerned with the Guidelines, represented by the professional organisations, and of the Member States within the Madrid Forum.
715/2009 recital 33
(30) The Member States and the competent national authorities should be required to provide relevant information to the Commission. Such information should be treated confidentially by the Commission.
715/2019 recital 34 (adapted)
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(31) This Regulation and the network codes and gGuidelines adopted in accordance with it are without prejudice to the application of the Community Union rules on▪competition.
715/2009 recital 35 (new)
11 The measures necessary for the implementation of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission.
715/2009 recital 36 (new)
In particular, the Commission should be empowered to establish or adopt the Guidelines necessary for providing the minimum degree of harmonisation required to achieve the aims of this Regulation. Since those measures are of general scope and are designed to amend non-essential elements of this Regulation, inter alia by supplementing it with new non-essential elements, they must be adopted in accordance with the regulatory procedure with scrutiny provided for in Article 5a of Decision 1999/468/EC.
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(32) Member States and the Energy Community Contracting Parties should closely cooperate on all matters concerning the development of an integrated gas trading region and should take no measures that endanger the further integration of natural gas markets or the security of supply of Member States and Contracting Parties.
(33) Transmission system operators could be allowed to reserve storages for natural gas exclusively for carrying out their functions and for the purpose of security of supply. The filling of these strategic stocks could be done by means of joint purchasing using the trading platform as mentioned in Article 10 of Commission Regulation (EU) No 312/2014 without prejudice to Union competition rules. Withdrawal of natural gas should only be possible for the transmission system operators to carry out their functions or in case of a declared emergency situation, as mentioned in Article 11 (1) of that Regulation, in order not to interfere with the regular functioning of the market.
(34) Where a regional markets integration is undertaken, the relevant transmission system operators and regulatory authorities should address issues having a cross-border impact such as tariff structures, balancing regime, capacities at remaining cross-border points, investment plans and the fulfilment of transmissions system operators’ and regulatory authorities’ tasks.
(35) The energy transition and the continuing integration of the gas market will require further transparency on the allowed or target revenue of the transmission system operator. A number of decisions related to natural gas networks will be based on that information. For example, the transfer of transmission assets from a natural gas network to a hydrogen network or the implementation of an inter-TSO compensation mechanism (ITC) require more transparency than currently exists. In addition, the assessments of tariff evolutions on the long term requires clarity on both natural gas demand and cost projections. Transparency on allowed revenue should enable the latter. Regulatory authorities should, in particular, provide information on the methodology used to calculate the revenues of transmission system operators, the value of their regulatory asset base and its depreciation over time, the value of operational expenditures, the cost of capital applied to transmission system operators and the incentives and premia applied.
(36) Transmission system operators’ expenditures are predominantly fixed costs. Their business model and the current national regulatory frameworks rely on the assumption of a long-term utilisation of their networks entailing long depreciation periods (30 to 60 years). In the context of the energy transition, regulatory authorities should therefore be able to anticipate gas demand decrease to modify the regulatory arrangements in due time and prevent a situation where the cost recovery of transmission system operators through tariffs threatens the affordability for consumers due to an increasing ratio of fixed costs to gas demand. Where necessary, the depreciation profile or remuneration of transmission assets could, for example, be modified.
(37) Transparency on transmission system operators allowed or target revenue should be increased to enable benchmarking and an assessment by network users. Increased transparency should also facilitate cross-border cooperation and the setting up of ITC mechanisms between operators either for regional integration or for the implementation of tariff discounts for renewable and low carbon gases as set out in this Regulation.
(38) In order to exploit the most economic locations for the production of renewable and low carbon gases, network users should benefit from discounts in capacity-based transmission tariffs. These should include a discount for injection from renewable and low carbon gases production facilities, a discount for tariffs at entry points from and exit points to storage facilities and a discount on the cross-border tariff and entry points from LNG facilities. In case of a change of the value of non-cross border discounts, the regulatory authority needs to balance out the interest between networks users and network operators taking into account stable financial frameworks specifically for existing investments, in particular for renewable production facilities. Where possible, indicators or conditions for changing the discount should be provided sufficiently before any decision to change the discount is taken. This discount should not affect the general tariff setting methodology, but should be provided ex-post on the relevant tariff. In order to benefit from the discount, network users should present the required information towards the transmission system operator on the basis of a certificate which would be linked to the union database.
(39) Revenue decreases from the application of discounts shall be treated as general revenue decreases, e.g. from reduced capacity sales and need to be recovered via tariffs in a timely manner, for instance by an increase of the specific tariffs following the general rules contained in Article 15 of this Regulation. The Commission should be empowered to change the discount levels via delegated acts to mitigate structural imbalances of revenues for transmission system operators.
(40) In order to increase efficiencies in the natural gas distribution networks in the Union and to ensure close cooperation with transmission system operators and the ENTSO for Gas, an entity of distribution system operators in the Union (‘EU DSO entity’) should be provided for which also includes natural gas distribution system operators. The tasks of the EU DSO entity should be well-defined and its working method should ensure efficiency, transparency and representativeness among Union distribution system operators. The EU DSO entity should closely cooperate with the ENTSO for Gas on the preparation and implementation of the network codes where applicable and should work on providing guidance on the integration inter alia of distributed generation and other areas, which relate to the management of distribution networks.
(41) Distribution system operators have an important role to play when it comes to the integration of renewable and low carbon gases into the system, as for example about half of the biomethane production capacity is connected to the distribution grid. In order to facilitate the participation of these gases in the wholesale market, production facilities connected to the distribution grid in all Member States should have access to the virtual trading point. Furthermore in accordance with the provisions of this Regulation distribution system operators and transmission system operates should work together to enable reverse flows from the distribution to the transmission network or to ensure the integration of the distribution system through alternative means, equivalent in effect, to facilitate the market integration of renewable and low carbon gases.
(42) The integration of growing volumes of renewable and low-carbon gases in the European natural gas system will change the quality of natural gas transported and consumed in Europe. To ensure unhindered cross-border flow of natural gas, maintain the interoperability of markets and enable market integration, it is necessary to increase transparency on gas quality and on the costs of its management, provide for a harmonised approach on the roles and responsibilities of regulatory authorities and system operators and reinforce cross-border coordination. While ensuring a harmonised approach on gas quality for cross-border interconnection points, Member States’ flexibility as regards the application of gas quality standards in their domestic natural gas systems should be maintained.
(43) The blending of hydrogen into the natural gas system is less efficient compared to using hydrogen in its pure form and diminishes the value of hydrogen. It also affects the operation of gas infrastructure, end-user applications, and the interoperability of cross-border systems. The Member States’ decision on whether to apply blending hydrogen in their national natural gas systems should be preserved. At the same time, a harmonised approach on blending hydrogen into the natural gas system in the form of a Union-wide allowed cap at cross-border interconnection points between Union Member States, where transmission system operators have to accept natural gas with a blended hydrogen level below the cap, would limit the risk of market segmentation. Adjacent transmission systems should remain free to agree on higher hydrogen blending levels for cross-border interconnection points.
(44) A strong cross-border coordination and dispute settlement process between transmission system operators on gas quality, including on biomethane and hydrogen blends, is essential to facilitate efficient transport of natural gas across natural gas systems within the Union and thereby to move towards greater internal market integration. Enhanced transparency requirements on gas quality parameters, including on gross calorific value, Wobbe Index and oxygen content, and hydrogen blends and their development over time combined with monitoring and reporting obligations should contribute to the well-functioning of an open and efficient internal market in natural gas.
(45) In order to amend non-essential elements of this Regulation and to supplement this Regulation in respect of non-essential elements of certain specific areas which are fundamental for market integration, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making 12 . In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council should receive all documents at the same time as Member States' experts, and their experts should systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.
(46) Commission Regulation (EU) 2015/703 13 sets out interoperability and data exchange rules for the natural gas system, in particular with respect to interconnection agreements, including rules for flow control, measurement principles for gas quantity and quality, rules for the matching process and for the allocation of gas quantities, communication procedures in case of exceptional events; common set of units, gas quality, including rules on managing cross-border trade restrictions due to gas quality differences and due to differences in odorisation practices, short- and long-term gas quality monitoring and information provision; data exchange, and reporting on gas quality; transparency, communication, information provision and cooperation among relevant market participants.
(47) In order to ensure optimal management of the Union hydrogen network and to allow trading and supplying hydrogen across borders in the Union, a European Network of Network Operators for Hydrogen (‘ENNOH’) should be established. The tasks of the ENNOH should be carried out in compliance with Union competition rules. The tasks of the ENNOH should be well-defined and its working method should ensure efficiency, transparency and the representative nature of the ENNOH. The network codes prepared by ENNOH should not replace the necessary national network codes for non cross-border issues.
(48) Until the ENNOH is established, a temporary platform should be set up under the lead of the Commission with the involvement of ACER and all relevant market participants, including the ENTSO for Gas, the ENTSO for Electricity and the EU DSO entity. This platform should support early work on scoping and developing issues relevant for the building up of the hydrogen network and markets without formal decision-making powers. The platform should be dissolved once ENNOH is established. Until the ENNOH is established, the ENTSO for Gas will be responsible for the development of Union-wide network development plans, including hydrogen networks.
(49) In order to ensure transparency regarding the development of the hydrogen network in the Union, the ENNOH should establish, publish and regularly update a non-binding Union-wide ten-year network development plan for hydrogen targeted at the needs of the developing hydrogen markets. Viable hydrogen transportation networks and necessary interconnections, relevant from a commercial point of view, should be included in that network development plan. The ENNOH should participate in the development of the energy system wide cost-benefit analysis – including the interlinked energy market and network model including electricity, gas and hydrogen transport infrastructure as well as storage, LNG and electrolysers –, the scenarios for the ten-year network development plans and the infrastructure gaps identification report as set out in Articles 11, 12 and 13 of [the TEN-E Regulation as proposed in COM(2020) 824 final] for the development of the lists of projects of common interest. For that purpose, the ENNOH should closely cooperate with the ENTSO for Electricity and the ENTSO for Gas to facilitate system integration. The ENNOH should undertake those tasks for the first time for the development of the 8th list of projects of common interest, provided it is operational and in the position to deliver the necessary input to the ten-year network development plan by 2026.
(50) All market participants have an interest in the work expected of the ENNOH. An effective consultation process is therefore essential. Overall, ENNOH should seek, build on and integrate in its work experience with infrastructure planning, development and operation in cooperation with other relevant market participants and their associations.
(51) Given that more effective progress may be achieved through an approach at regional level, hydrogen network operators should set up regional structures within the overall cooperation structure, while ensuring that results at regional level are compatible with network codes and Union-wide non-binding ten-year network development plans. Member States should promote cooperation and monitor the effectiveness of the network at regional level.
(52) Transparency requirements are necessary to ensure that trust in the emerging hydrogen markets in the Union can develop among market participants. Equal access to information on the physical status and functioning of the hydrogen system is necessary to enable all market participants to assess the overall demand and supply situation and to identify the reasons for market price developments. Information should be always disclosed in a meaningful and easily accessible manner and on a non-discriminatory basis.
(53) The ENNOH will establish a central, web-based platform for making available all data relevant for market participants to gain effective access to the network.
(54) The conditions for access to hydrogen networks in the early phase of market development should ensure efficient operation, non-discrimination and transparency for network users while preserving sufficient flexibility for operators. Limiting the maximum duration of capacity contracts should reduce the risk of contractual congestion and capacity hoarding.
(55) General conditions for granting third-party access to hydrogen storage facilities and hydrogen terminals should be set out in order to ensure non-discriminatory access and transparency for network users.
(56) Hydrogen network operators should cooperate to create network codes for providing and managing transparent and non-discriminatory access to the networks across borders and to ensure coordinated development of the network in the Union, including the creation of interconnection capacities. The network codes should be in line with non-binding framework guidelines developed by ACER. ACER should have a role in reviewing, based on matters of fact, draft network codes, including their compliance with the framework guidelines, and it should be enabled to recommend them for adoption by the Commission. ACER should assess proposed amendments to the network codes and it should be enabled to recommend them for adoption by the Commission. Hydrogen network operators should operate their networks in accordance with those network codes.
(57) The network codes prepared by the European Network of Network Operators for Hydrogen are not intended to replace the necessary national rules for non-cross-border issues.
(58) The quality of hydrogen transported and consumed in Europe can vary depending on its production technology and transportation specificities. Therefore, a harmonised approach at Union level to hydrogen quality management at cross-border interconnectors should lead to the cross-border flow of hydrogen and to market integration.
(59) Where the regulatory authority considers it necessary, hydrogen network operators could become responsible for managing hydrogen quality in their networks, within the framework of applicable hydrogen quality standards, ensuring reliable and stable hydrogen quality for end-consumers.
(60) A strong cross-border coordination and dispute settlement process between hydrogen system operators is essential to facilitate the transport of hydrogen across hydrogen networks within the Union and thereby to move towards greater internal market integration. Enhanced transparency requirements on hydrogen quality parameters and on their development over time combined with monitoring and reporting obligations should contribute to the well-functioning of an open and efficient internal market in hydrogen.
(61) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers in accordance with Article 291 of TFEU should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council. 14
(62) To ensure the efficient operation of the European hydrogen networks, hydrogen network operators should be responsible for the operation, maintenance and development of the hydrogen transport network in close cooperation with other hydrogen network operators as well as with other system operators their networks are connected with, including to facilitate energy system integration.
(63) It is in the interest of the functioning of the internal market to have standards which have been harmonised at Union level. Once the reference to such a standard has been published in the Official Journal of the European Union, compliance with it should raise a presumption of conformity with the corresponding requirements set out in the implementing measure adopted on the basis of this Regulation, although other means of demonstrating such conformity should be permitted. In line with Article 10 of Regulation 1025/2012, the European Commission can request European standardisation organisations to develop technical specifications, European standards and harmonised European standards. One of the main roles of harmonised standards should be to help operators in applying the implementing measures adopted under this Regulation and recast Gas Directive as proposed in COM(2021) xxx.
(64) In order to fully take into account the quality requirements of hydrogen end-users, technical specifications and standards for the quality of hydrogen in the hydrogen network will have to consider already existing standards setting such end-user requirements (for instance, the standard EN 17124).
(65) Hydrogen system operators should build sufficient cross-border capacity for the transportation of hydrogen accommodating all economically reasonable and technically feasible demands for such capacity, thereby enabling market integration.
(66) ACER should publish a monitoring report on the status of congestion.
(67) In view of the potential of hydrogen as energy carrier and the possibility that Member States will engage in trade in hydrogen with third countries, it is necessary to clarify that intergovernmental agreements relating to energy in the field of energy relating to gas subject to notification obligations in accordance with Decision (EU) 2017/684 include intergovernmental agreements relating to hydrogen, including hydrogen compounds such as ammonia and liquid organic hydrogen carriers.
(68) In reaction to the significant and EU-wide energy price increases evidenced in autumn 2021 and their negative impacts, the Communication of the Commission of 13 October 2021 entitled ‘Tackling rising energy prices: a toolbox for action and support’ highlighted the importance of an effective and well-functioning internal energy market and of the effective use of gas storages in Europe across the Single market. The Communication also emphasised that a better coordination of security of supply across borders is crucial for the resilience against future shocks. On 20/21 October 2021, the European Council adopted conclusions inviting the Commission to swiftly consider measures that increase the resilience of the EU’s energy system and the internal energy market, including measures which enhance security of supply. To contribute to a consistent and timely response to this crisis and possible new crisis at Union level, specific rules to improve cooperation and resilience, notably concerning better-coordinated storage and solidarity rules, should be introduced in this Regulation and in Regulation (EU) 2017/1938.
(69) The analysis of the functioning of the storage capacities in the regional common risk assessments should be based on objective assessments of the needs for the security of supply, duly taking into account cross-border cooperation and the solidarity obligations under this Regulation. It should also take into account the importance of avoiding stranded assets in the clean energy transition and the goal of reducing the dependency of the Union to external fossil fuels providers. The analysis should include an assessment of the risks linked to the control of storage infrastructure by third country entities. The analysis should take into account the possibility to use storage facilities in other Member States and for transmission system operators to set up joint procurement of strategic stocks for emergency situations provided that the conditions of this Regulation are respected. The regional common risk assessments and national risk assessments should be consistent with each other in order to identify the measures of the national preventive and emergency plans in compliance with this Regulation ensuring that any measures taken do not harm the security of supply of other Member States and do not unduly hinder the effective functioning of the gas market. For instance they should not block or restrict the use of cross-border transport capacities.
(70) Cooperation of Member States with the Contracting Parties to the Treaty establishing the Energy Community 15 that have large available storage capacities could support actions where storage in the Union is not feasible or cost effective. This can include the possibility to consider to use these storage capacities located outside the Union in the relevant common risk assessment. Member States may request the relevant regional risk groups to invite experts from the third country to ad-hoc sessions of the regional risk groups without creating a precedent of regular and full participation.
(71) Joint procurement of strategic stocks by several transmission operators of different Member States should be designed in a way so that they can be used in case of Union wide or regional emergency as part of the actions coordinated by the Commission pursuant to Article 12(3) of Regulation (EU) 2017/1938. Transmission system operators which engage in joint procurement of strategic stocks shall ensure that any joint purchasing agreement complies with the EU competition rules, and in particular with the requirements of Article 101 TFEU. The notification done to assess the compliance with this Regulation is without prejudice to the notification of aids granted by States, where applicable, under Article 108(3) TFEU.
(72) The European energy sector is undergoing an important change towards a decarbonised economy, while ensuring security of supply and competitiveness. While cybersecurity in the electricity sub-sector is already advancing with a network code on cross-border electricity flow, sector-specific mandatory rules for the gas sub-sector are needed to ensure security of the European energy system.
(73) As demonstrated in the Union wide simulation of 2017 and 2021, regional cooperation and solidarity measures are essential to ensure the resilience of the Union in case of serious deterioration of the supply situation. Solidarity measures should ensure the supply of protected solidarity customers such as households across borders in all situations. Member States should adopt the necessary measures for the implementation of the provisions concerning the solidarity mechanism, including by the Member States concerned agreeing on technical, legal and financial arrangements. Member States should describe the details of those arrangements in their emergency plans. For Member States who have not agreed the necessary bilateral agreement, the default template of this Regulation should apply in order to ensure such effective solidarity.
(74) Such measures may therefore give rise to an obligation for a Member State to pay compensation to those affected by its measures. To ensure that the compensation paid by the Member State requesting solidarity to the Member State providing solidarity is fair and reasonable, the national energy regulator authority for energy or the national competition authority should have, as independent authority, the power to audit the amount of compensation requested and paid and if necessary request a rectification.
715/2009 recital 37 (adapted)
(75) Since the objective of this Regulation, namely the setting of fair rules for access conditions to natural gas transmission networks, storage and LNG facilities, cannot be sufficiently achieved by the Member States and but can therefore rather, by reason of the scale or effects of such an action, be better achieved at Community Union level, the Community Union may adopt measures, in accordance with the principle of subsidiarity, as set out in Article 5 of the Treaty on European Union . In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.
715/2009 recital 38 (adapted)
Given the scope of the amendments that are being made herein to Regulation (EC) No 1775/2005, it is desirable, for reasons of clarity and rationalisation, that the provisions in question should be recast by bringing them all together in a single text in a new Regulation,
715/2009 (adapted)
new