Regulation 2022/1369 - Coordinated demand-reduction measures for gas - Main contents

EN

Official Journal of the European Union

L 206/1

The Russian Federation, the Union’s main external gas supplier, has started a military aggression against Ukraine, a Contracting Party of the Energy Community. The escalation of the Russian military aggression against Ukraine since February 2022 has led to gas supplies declining markedly, in a deliberate attempt to use gas supply as a political weapon. Pipeline flows of gas from Russia through Belarus have stopped and gas supplies through Ukraine have steadily decreased. Overall gas flows from Russia are now less than 30 % of average gas flows in the period 2016-2021. That supply reduction has led to historically high and volatile energy prices, contributing to inflation and creating a risk of further economic downturn in Europe.

Against this background, the Commission, further to its communication of 8 March 2022 entitled ‘REPowerEU: Joint European Action for more affordable, secure and sustainable energy’, presented the REPowerEU plan on 18 May 2022 with the aim to end the Union's dependence on Russian fossil fuels as soon as possible, and at the latest by 2027. To achieve that aim, the REPowerEU plan sets out measures related to energy savings and energy efficiency and proposes an accelerated roll-out of clean energy to replace fossil fuels in homes, industry and power generation. Further measures on the supply side could include, inter alia, better coordination of gas purchases and the facilitation of joint purchases by European gas market operators on the international gas market, as well as best efforts to preserve electricity production capacities that do not rely on imported gas supplies.

The Union has taken further measures to increase its level of preparedness as regards gas supply disruption. Regulation (EU) 2022/1032 of the European Parliament and of the Council (1) was adopted to ensure the filling of underground storage sites for the coming winter seasons.

Furthermore, in February 2022 and in May 2022 the Commission carried out in-depth reviews of all national emergency plans and has also carried out in-depth monitoring of the security of supply situation. The measures taken by the Union since February 2022 were designed to enable a full phase-out of Russian gas by 2027, and to reduce the risks stemming from a further major supply disruption.

However, the recent escalation of disruption of gas supply from Russia points to a significant risk that a complete halt of Russian gas supplies may materialise in the near future, in an abrupt and unilateral way. The Union should therefore anticipate such a risk and prepare, in a spirit of solidarity, for the possibility of a full disruption of gas supply from Russia at any moment. Immediate proactive action is necessary to anticipate further disruptive action and strengthen the resilience of the Union to future shocks. Coordinated action at Union level can avoid serious harm to the economy and to citizens resulting from a possible gas supply interruption.

The current legal framework for security of gas supply set by Regulation (EU) 2017/1938 of the European Parliament and of the Council (2) does not adequately address disruptions of a major gas supplier lasting more than 30 days. The lack of a legal framework for such disruption leads to a risk of uncoordinated action by Member States, which threatens to endanger security of supply in neighbouring Member States and may place an additional burden on the Union’s industry and consumers.

In its resolution of 7 April 2022 on the conclusions of the European Council meeting of 24-25 March 2022, the European Parliament called for a plan to continue ensuring the Union’s security of energy supply in the short term to be presented. In its meetings on 31 May and 23 June 2022, the European Council requested the Commission to make proposals for improving preparedness for possible major supply disruption as a matter of urgency, with a view to securing energy supply at affordable prices. Following that request from the European Council, the Commission is exploring together with the Union’s international partners ways to curb rising energy prices, including the feasibility of introducing temporary import price caps where appropriate. Further to that request, the Commission is also pursuing work on the optimisation of the functioning of the European electricity market, including the effect of gas prices on it, so that it is better prepared to withstand future excessive price volatility, delivers affordable electricity and fully fits a decarbonised energy system, while preserving the integrity of the single market, maintaining incentives for the green transition, preserving the security of supply and avoiding disproportionate budgetary costs.

Article 122(1) of the Treaty on the Functioning of the European Union enables the Council to decide, on a proposal from the Commission and in a spirit of solidarity between Member States, upon the measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy. The risk of a complete halt of Russian gas supplies by the end of 2022 constitutes such a situation.

Given the imminent risk of disruption of gas supplies to the Union, Member States should take measures now to reduce their demand ahead of the 2022-23 winter season. Such voluntary demand reduction would contribute in particular to the filling of storage capacities, which would not be depleted by the end of the 2022-23 winter season and would therefore enable Member States to cope with possible cold spells in February and March of 2023 and facilitate the filling of storage capacities to ensure adequate levels of security of supply for the 2023-24 winter season. Reducing demand for gas will also help ensure adequate supply and drive energy prices down, to the benefit of Union consumers. Therefore, measures taken at Union level to reduce demand would benefit all Member States by decreasing the risk of a more substantial impact on their economies.

The volume of the voluntary demand reduction takes into account the volumes of gas demand which would be at risk of non-delivery in the event of a full disruption of Russian gas supply. The reduction effort should be the same for all Member States, based on a comparison with each Member State's average consumption over the last five years.

Voluntary demand-reduction measures may not by themselves be sufficient to ensure security of supply and market functioning. Therefore, in order to promptly address the specific challenges of the ongoing and anticipated severe worsening of gas supply shortages and avoid distortions between Member States, a new instrument introducing the possibility for a mandatory gas demand reduction for all Member States should be established. It should become operational sufficiently in advance of autumn 2022. Under such instrument, the Council could, on a proposal from the Commission, declare a Union alert by means of an implementing decision. Conferring an implementing power on the Council adequately takes into account the political nature of the decision to trigger a mandatory Union-wide demand-reduction obligation and its horizontal implications for Member States. Before presenting such a proposal, the Commission should consult the relevant risk groups, as set out in Annex I of Regulation (EU) 2017/1938 (‘risk groups’), and the Gas Coordination Group (GCG), established by that Regulation. A Union alert should only be declared in the event that the voluntary demand-reduction measures prove to be insufficient to address the risk of a serious supply shortage. Five or more competent authorities of Member States which have declared national alerts pursuant to Article 11(1), point (b), of Regulation (EU) 2017/1938 should be given the possibility to request the Commission to present a proposal to the Council to declare a Union alert.

The Union alert should serve as a Union-specific crisis level, which should trigger a mandatory demand reduction, independently of national crisis levels pursuant to Article 11(1) of Regulation (EU) 2017/1938. Once a Union alert has been declared, Member States should reduce their gas consumption within a pre-defined period. The volume of the mandatory demand reduction takes into account the volumes of gas demand which could be at risk in the event of a full disruption of Russian gas supplies to the Union and should fully take into account any demand reduction already achieved. The volume of the mandatory demand reduction should also take into account the level of storage filling as reported pursuant to Article 6d(1) and (2) of Regulation (EU) 2017/1938, the development concerning the diversification of sources of gas, including liquefied natural gas (LNG) supplies and the development of fuel substitutability in the Union.

Demand reductions achieved by Member States before the Union alert is declared will be reflected in the volume of the mandatory demand reduction.

In view of the significant distortions of the internal market which are likely to occur if Member States react in an uncoordinated manner to a potential or actual further disruption of Russian gas supply, it is crucial that all Member States reduce their gas demand in a spirit of solidarity. All Member States should therefore achieve the voluntary and mandatory demand-reduction targets. While some Member States might be more exposed to the effects of a disruption of Russian gas supplies, all Member States could be negatively affected and could contribute to limiting the economic harm caused by such disruption, be it by freeing up additional volumes of pipeline gas or LNG cargoes which can be used by Member States with significant gas deficits, by the positive effect on gas prices which a demand reduction is likely to have or by avoiding market distortion through uncoordinated and contradicting demand-reduction measures. This Regulation therefore reflects the principle of energy solidarity, which has recently been confirmed by the Court of Justice as a fundamental principle of Union law (3).

However, certain Member States are, due to their specific geographical or physical situation, such as not being synchronised with the European electricity system, or their lack of direct interconnection to the gas interconnected system of another Member State, not able to free up significant volumes of pipeline gas to the benefit of other Member States. Member States should therefore be given a possibility to rely on one or more grounds to limit their mandatory demand-reduction obligations. The Member States concerned should commit to making all efforts to remove the interconnection deficits as soon as possible.

Regulation (EU) No 347/2013 of the European Parliament and of the Council (4) puts in place a framework for Member States and relevant stakeholders to work together in a regional setting to develop better-connected energy networks with the aim, in particular, to connect regions currently isolated from European energy markets and to strengthen existing and promote new cross-border interconnections. Cross-border interconnections strongly contribute to the security of supply. In light of the current disruption of gas supply from Russia, such cross-border interconnections play a key role in ensuring the functioning of the internal energy market and in the distribution of gas to other Member States, in a spirit of solidarity. In this context, Member States should pursue their efforts to improve the integration of their networks, including by assessing the potential increase of new cross-border interconnection capacity in line with the objectives of Regulation (EU) 2022/869 of the European Parliament and of the Council (5).

In order to facilitate Member States’ efforts to fulfil the objectives of Regulation (EU) 2022/1032 with regard to gas storage, the volume of gas used by Member States for storage in excess of the intermediate target for 1 August 2022 should also be taken into account for the purpose of determining the volume of their mandatory demand reduction.

In addition, to take proper account of the high dependency on gas of Member States’ critical industries, Member States should be able to exclude gas consumption in those industries when determining the volume of their mandatory demand reduction. Monitoring by the Commission should ensure that national limitations do not lead to undue distortions of the internal market. Member States should also be able to limit the volume of their mandatory demand reduction where such limitation is necessary to maximise the supply of gas to other Member States and where they are able to produce evidence that their interconnector commercial export capacities to other Member States or their domestic LNG infrastructure are used to re-direct gas to other Member States to the utmost extent. The Commission should monitor that the conditions for the application of those derogations are fulfilled.

The Member States, with regard to specific demand circumstances from interconnected Member States, should be able to temporarily limit the mandatory demand reduction where necessary to ensure security of energy supply, including where a Member State faces an electricity crisis as referred to in Regulation (EU) 2019/941 of the European Parliament and of the Council (6). Account should also be taken of the storage capacity and the storage level in excess of the intermediate target, as set out in Annex Ia to Regulation (EU) 2017/1938.

Member States should be free to choose the appropriate measures to achieve the demand reduction. When identifying appropriate demand-reduction measures and prioritising customer groups, Member States should consider making use of the measures identified by the Commission in its communication of 20 July 2022 entitled “Save Gas for a Safe Winter”. Member States should in particular consider economically efficient measures such as auctions or tender schemes, by which they can incentivise a reduction of consumption in an economically efficient manner. The measures taken at national level may also include financial incentives or compensation to market participants affected.

Any measure taken by Member States to achieve the demand reduction must comply with Union law and in particular Regulation (EU) 2017/1938. In particular, such measures should be necessary, clearly defined, transparent, proportionate, non-discriminatory and verifiable, and should not unduly distort competition or the proper functioning of the internal market in gas or endanger the security of gas supply of other Member States or of the Union. It is necessary to consider the interests of protected customers also in relation to gas supply to centralised heating systems in the case of security of supply crisis.

In order to ensure that demand-reduction measures are implemented in a coordinated manner, Member States should establish regular cooperation within each of the relevant risk groups. Member States are free to agree on the coordination measures best suited in a given region. The Commission and the GCG should be able to have an overview of the national measures implemented by the Member States and share best practices for the coordination of measures within the risk groups. Member States should also use other bodies to coordinate their action.

In order to ensure that the national emergency plans reflect the voluntary or mandatory demand-reduction measures set out in this Regulation, the competent authority of each Member State should take the necessary steps to update the national emergency plan established pursuant to Article 8 of Regulation (EU) 2017/1938 by 31 October 2022. Given the short timeframe for that update, the coordination procedures pursuant to Article 8(6) to (11) of Regulation (EU) 2017/1938 should not apply. However, each Member State should consult other Member States on the update of its national emergency plan. The Commission should convene the risk groups, the GCG or other relevant bodies to discuss potential issues related to demand-reduction measures.

Regular and effective monitoring and reporting are essential for the assessment of progress made by the Member States in the implementation of the voluntary and mandatory demand-reduction measures, and for measuring the social and economic impact of those measures as well as the impact on employment. The competent authority of each Member State or another entity designated by the Member State should monitor the demand reduction achieved on its territory and regularly report the results to the Commission. The GCG should assist the Commission in monitoring the fulfilment of the demand-reduction obligations.

To prevent significant economic harm to the Union as a whole, it is crucial that each Member State reduce its demand after a Union alert has been declared. That reduction will ensure that there is sufficient gas for all, even during the winter. The demand reduction across the Union is an expression of the principle of solidarity, enshrined in the Treaty. It is therefore warranted that the Commission supervise strictly that the mandatory demand reductions are carried out by Member States. In the event that the Commission identifies a risk that a Member State may not be able to fulfil its mandatory demand-reduction obligation, the Commission should be able to request that Member State to submit a plan setting out a strategy and measures to effectively achieve the mandatory demand reduction. That Member State should take due account of any comments and suggestions made by the Commission regarding that plan.

As the solidarity principle gives every Member State the right to be supported by neighbouring Member States under certain circumstances, Member States who ask for such support should also act in a spirit of solidarity when it comes to reducing their domestic gas demand. Therefore, when requesting a solidarity measure under Article 13 of Regulation (EU) 2017/1938, Member States should have implemented all appropriate gas demand-reduction measures. The Commission should be able to request the Member State requesting a solidarity measure to submit a plan with measures to achieve possible further demand reductions. That Member State should take due account of the Commission’s opinion.

The Commission should inform the European Parliament and the Council regularly about the implementation of this Regulation.

Considering the imminent danger to the security of gas supply brought about by the Russian military aggression against Ukraine, this Regulation should enter into force as a matter of urgency.

Given the exceptional nature of the measures set out in this Regulation, this Regulation should apply for one year after its entry into force. By 1 May 2023, the Commission should report on its functioning to the Council and may, if appropriate, propose to prolong its period of application.

Since the objective of this Regulation cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the 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 to achieve that objective,

‘competent authority’ means a national governmental authority or a national regulatory authority designated by a Member State to ensure the implementation of the measures provided for in Regulation (EU) 2017/1938;

‘Union alert’ means a Union-specific crisis level triggering a mandatory demand reduction and which is not related to any of the crisis levels pursuant to Article 11(1) of Regulation (EU) 2017/1938;

‘gas consumption’ means the overall supply of natural gas for activities on the territory of a Member State, including the final consumption of households, industry and electricity generation, but excluding, inter alia, gas used to fill storage capacities, in line with the definition for ‘supply, transformation and consumption of gas’ used by the Commission (Eurostat);

‘feedstock’ means ‘non-energy use of natural gas’ as referred to in energy balances calculations by the Commission (Eurostat);

‘reference gas consumption’ means the volume of a Member State’s average gas consumption during the reference period; for Member States where gas consumption increased at least by 8 % in the period from 1 August 2021 to 31 March 2022 compared to the average gas consumption during the reference period, ‘reference gas consumption’ means only the volume of gas consumption in the period from 1 August 2021 to 31 March 2022;

‘reference period’ means the periods from 1 August to 31 March during the five consecutive years preceding the date of entry into force of this Regulation, starting with the period from 1 August 2017 to 31 March 2018;

‘intermediate target’ means the intermediate target as set out in Annex Ia to Regulation (EU) 2017/1938.

not unduly distort competition or the proper functioning of the internal market in gas;

not endanger the security of gas supply of other Member States or of the Union;

comply with the provisions of Regulation (EU) 2017/1938 as regards protected customers.

the impact of a disruption on supply chains that are critical for society;

the possible negative impacts in other Member States, in particular on supply chains of downstream sectors that are critical for society;

the potential long-lasting damage to industrial installations;

the possibilities for reducing consumption and substituting products in the Union.