Considerations on COM(2023)762 - Amendment of Regulation (EU) 2022/2576 as regards the prolongation of its period of application - Main contents
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| dossier | COM(2023)762 - Amendment of Regulation (EU) 2022/2576 as regards the prolongation of its period of application. |
|---|---|
| document | COM(2023)762 |
| date | December 21, 2023 |
(2) Regulation (EU) 2022/2576 provides a temporary legal framework in respect of better coordination of gas purchases, measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets, and measures for the case of a gas emergency.
(3) The period of the application of Regulation (EU) 2022/2576 was originally limited to 30 December 2023.
(4) In accordance with Article 30 of Regulation (EU) 2022/2576, the Commission carried out a review of that Regulation, the results of which are summarised in the Report on the main findings of the review of the Regulation of 28 September 2023 (‘the Report’)6. The Report concluded that Regulation (EU) 2022/2576 has played an important role in stabilising the situation of the gas market and ensuring adequate gas supply to the Union, and that it is an important element of the Union gas security of supply tool kit.
(5) Regulation (EU) 2022/2576 sets up a demand aggregation platform and requires Member States to take appropriate measures to ensure that natural gas undertakings and undertakings consuming gas under their jurisdiction participate in the process of demand aggregation organised by the service provider as one of the possible means to meet the filling targets referred to in Regulation (EU) 2017/1938 of the European Parliament and of the Council7, as amended by Regulation (EU) 2022/1032. Member States and natural gas undertakings as well as undertakings consuming gas have effectively participated in the demand aggregation and joint purchasing mechanism set up under Regulation (EU) 2022/2576 (“AggregateEU”) and contributed to achieve, by October 2023, a total aggregation of 44.04 bcm of demand for gas, which is equivalent to more than three times the mandatory amounts for demand aggregation. This shows that "AggregateEU” attracted significant interest by market participants.
(6) The Report concluded that the “AggregateEU” mechanism provided additional opportunities for European buyers to procure gas from reliable suppliers at competitive conditions, as well as market transparency on demand and supply, thereby contributing to decreasing volatility of markets.
(7) As regards market oversight rules, Regulation (EU) 2022/2576 requires trading venues on which energy-related commodity derivatives are traded are to set up, for each energy-related commodity derivative traded on it, an intra-day volatility management mechanism based on an upper and lower price boundary (‘price boundaries’) that defines the prices above and below which orders may not be executed (‘intra-day volatility management mechanism’). The Report found that gas markets still feature episodes of significant volatility and that the intraday volatility management mechanism may play a role in preventing excessive price spikes and in stabilising the market.
(8) Pursuant to Regulation (EU) 2022/2576, the European Union Agency for the Cooperation of Energy Regulators (ACER) is required to publish daily liquified natural gas (LNG) price assessments and daily LNG benchmark on the basis of LNG market data on transactions that ACER should systematically collect and process. The LNG price assessments and benchmark have provided the market with greater transparency thereby enhancing market players’ ability to secure LNG supplies at competitive prices. The Report found that the LNG price assessment and benchmark have proven useful in stabilising the market.
(9) Regulation (EU) 2022/2576 provides for a number of security of supply and solidarity provisions for the case of a gas emergency to better coordinate the organisation of energy solidarity measures in an emergency situation. Its Chapter IV temporarily complemented Regulation (EU) 2017/1938, notably by making the solidarity mechanism applicable by default in absence of bilateral agreements, as well as by extending the solidarity mechanism to LNG and critical gas volumes for electricity. In addition, a provision was added to facilitate demand reduction by protected customers, as well as a measure to safeguard cross-border flows. The Report concluded that the temporary security of supply and solidarity provisions have proven to be useful to prevent and mitigate a gas crisis, and facilitate demand reduction efforts.
(10) The conclusion of the Report that severe difficulties persist for the Union’s security of energy supply still holds true. The global situation on the gas market remains very tight. Gas prices are still considerably higher than pre-crisis with inevitable consequences on Union citizens’ purchasing power and the competitiveness of Union businesses. Market volatility is another aspect of the current situation. Recent episodes of significant volatility in summer and autumn 2023, caused by events such as the strike in Australian LNG facilities, or the disruption of the Balticconnector, show that markets are still fragile and vulnerable to even relatively small shocks on demand and supply. The ongoing crisis in the Middle East constitutes an additional significant geopolitical risk with potential impact on prices and gas supply. Under these conditions, the fear of scarcity may trigger large reactions with serious repercussions on prices.
(11) Due to the significant decrease in Russian pipeline gas imports over the past year, availability of gas supplies to the Union is considerably reduced compared to pre-crisis. With the current pipeline gas import levels, the Union is expected to receive approximately 20 bcm of Russian pipeline imports, if these unreliable imports are not disrupted altogether. This would be approximately 110 bcm less than in 2021. This reduction constitutes a risk that gas shortages will occur in the Union.
(12) Global gas markets currently are very tight and are expected to remain tight for a certain time. Global LNG supply grew only modestly in the past two years because of limited liquefaction capacity additions, outages at major export facilities and declining feedgas supply at LNG plants. Significant new LNG liquefaction capacity is set to come online only in the course of 2025. Hence, market balances remain precarious in the immediate future. This situation has negative consequences on gas prices which, despite being lower than the peak experienced in summer 2022, remain more than twice as high than pre-crisis levels.
(13) In view of the current tight market conditions, prices may spike again on the back of unpredictable events and sudden shocks such as a rebound in Asian LNG demand reducing the availability of gas on the global gas market, a cold winter which could lead to an increase of gas demand of up to 30 bcm, extreme weather potentially affecting the hydropower storage and nuclear production due to low water levels, and the subsequent increase in demand for gas fired power generation, further disruptions of critical infrastructures, after the acts of sabotage against the NordStream pipelines in September 2022 and the disruption of the Balticconnector pipeline in October 2023, and a deterioration of the geopolitical environment and threat landscape in supplying regions, for example with the crisis in the Middle East.
(14) Given the current tight supply and demand balance, even moderate disruption to the supply of gas or even the mere threat of such disruptions could have a dramatic impact on the gas market and could cause serious and lasting harm to the economy and to the citizens of the Union.
(15) The current crisis is exposing the entire Union to risks of energy shortage and high energy prices. The persistent severe difficulties still affecting the Union’s security of gas supply, as well as any new additional ones, and the level of gas prices can impact negatively the economic situation, industrial competitiveness and citizens’ purchasing power.
(16) Since the Union is a single market, gas shortage in one Member State would have severe consequences in all other Member States through physical supply shortage of gas, volatility of prices or disruption of industrial chains resulting from possible curtailments of specific industries in a Member State. Moreover, in a spirit of solidarity, all Member States can contribute to continue reducing the risks of energy shortage and thus help contain gas price volatility.
(17) The prolongation of the period of application of Regulation (EU) 2022/2576 constitutes an exceptional and time-limited measure, in response to persistent and new severe difficulties in the supply of energy, which entail a risk of imminent crisis. The prolongation will clearly decrease volatility of markets and enhance solidarity.
(18) The need to act is urgent. Not prolonging the period of application of Regulation 2022/2576, which will cease to apply on 30 December 2023, would risk altering the stabilised but fragile situation the Union has achieved so far and would deteriorate the resilience to likely future developments such as a complete halt of Russian gas imports. A prolongation of the period of application of Regulation (EU) 2022/2576 is also consistent with the “RepowerEU Plan”8 which was meant to protect Union citizens and economy against excessive prices and energy supply shortages.
(19) The persisting energy supply tensions justify a prolongation of the demand aggregation and joint purchasing provisions in Regulation (EU) 2022/2576, as they help ensure more equal access for undertakings across Member States to new or additional gas sources. They also help ensure better conditions than might otherwise have applied to undertakings purchasing the gas through the use of the service provider, thereby contributing to security of supply.
(20) Prolonging the provisions on demand aggregation and joint purchasing would strengthen Union solidarity in purchasing and distributing gas. In a spirit of solidarity, the prolonged availability of demand aggregation and joint purchasing will support particularly those undertakings that were previously purchasing gas only or mainly from Russian suppliers by helping them to obtain supplies from alternative natural gas suppliers or providers in advantageous conditions.
(21) In order to support market participants throughout this winter and next gas storage filling season, continuity in the operation of the demand aggregation and joint purchasing mechanism (“AggregateEU”) should be ensured. This includes the possibility of extending the current contract with the service provider in line with Regulation (EU, Euratom) 2018/10469.
(22) With a view to the advantages for consumers, price stability and energy supply security, a prolongation is also warranted with respect to the provisions establishing an intraday volatility management mechanism and a price assessment and LNG benchmark.
(23) In view of the persisting risks for stable gas supplies set out above, it is also appropriate to prolong to provisions for the case of a gas emergency (Chapter IV) for another year, in line with the findings on the positive effect of the provisions in the Report. The values for critical gas volumes in Annex I remain valid for the period of a prolonged application of the Regulation until the end of 2024.
(24) The extended application of Regulation (EU) 2022/2576 should be temporary, should enter into force on the 31 December 2023 in order to ensure a continued application of the relevant provisions, and should last one year, namely until 31 December 2024. The prolongation by one year is necessary and proportionate due to the persistent nature of the severe difficulties for energy supplies and the resulting risks for prices and security of supply which are expected to continue at least during the whole of 2024. The extension of the period of application of Regulation (EU) 2022/2576 should not introduce any additional obligations beyond the temporary prolongation, in particular as regards measures taken by Member States to ensure participation in demand aggregation.
(25) Regulation (EU) 2022/2576 should therefore apply until 31 December 2024.
(26) 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 in order to achieve that objective.
(27) Regulation (EU) 2022/2576 should therefore be amended accordingly.