EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 16.7.2009 
SEC(2009) 980 final 
  
COMMISSION STAFF WORKING DOCUMENT 
 
Accompanying document to the 
Proposal for a 
 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
 
concerning measures to safegu ard security of gas supply  
and repealing Directive 2004/67/EC 
  
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  
{COM(2009) 363} 
{SEC(2009) 979} 
EN 2   EN 1. P ROBLEM DEFINITION  
The Commission set out in the 2nd Strategic Energy Review an EU approach to security 
of energy supply, including a five-point EU Energy Security and Solidarity Action 
Plan1. The approach and the Action Plan ha ve been solidly e ndorsed by Council, 
Parliament and European Council2, also by stakeholders3. This impact assessment 
concerns one element in the Action Plan - the strengthening of pr ovisions for crisis 
prevention and response in the gas fiel d and in particular, the revision of Directive 
2004/67/EC  on measures concerning th e security of gas supply. 
The basic idea in the Directive, as in the earlier and subsequent internal gas market 
Directives, is that the internal gas market  should be well-functioning and flexible enough, 
with sufficient infrastructure, to mitigate mo st gas supply disruptions. At the same time, 
for disruptions which turn out to be beyond th e capacity of the market to mitigate, the 
2004 Directive establishes a framework, comp atible with the in ternal market, for 
emergency measures. This joint focus on th e functioning of the market and emergency 
measures if needed is a fundamental structure in gas security of s upply policy in Europe.  
In recent years, much has changed as re gards Europe's secur ity of gas supply. 
Dependence on imports is increa sing and at the same time, supply and transit risks are 
growing. The Russian-Ukrainian gas crisis  in January 2009 brought an unprecedented 
disruption of gas supplies to Europe, far gr eater than any earlier  disruptions. 30% of 
Europe's imports were cut off for two weeks. This is now a realisti c gas supply disruption 
scenario. The situation within Europe ha s also been changing. With the growing 
importance of long-distance network flows of ga s and the development of the internal gas 
market, gas supply crises are quickly felt acro ss large parts of Europe and by the same 
token, the internal gas market is offering an increasingly powerful means of mitigating gas supply disruptions. The increasingly im portant European dimension requires an 
adequate regulatory framework for security of supply at EU level. 
There are two main issues. One is whether fl exibility in the internal gas market is 
developing sufficiently to mitigate gas supply disruptions such as that of January 2009. 
Are updated standards or some other incentive needed? The second is the effectiveness of 
emergency arrangements as currently implem ented at national, regional and EU levels, 
their impact on capacity of the internal ga s market to mitigate disruptions and on 
solidarity. Is a better organization needed?  
The January 2009 gas crisis provided a pr actical demonstration of the European 
dimension of today's gas supply disruptions and of the response. By the time Russian supplies via Ukraine reached Europe ag ain, action within Europe had largely 
compensated for the supply gaps. At the same time, the crisis demonstrated that investments in infrastructures across Europe to prevent di sruptions becoming crises are 
                                                
 
1 COM(2008) 781, "2nd Strategic Energy Review: An EU En ergy Security an d Solidarity Action 
Plan". 
2 EP Resolution of 2 February 2009 on the 2nd Strategic Energy Review (2008/2239(INI)); Energy 
Council Conclusions, 19 February 2009 (6692/09); Presidency Conclusions, European Council, 
19 March 2009. 
3 See report of public consultation, Annex 5. 
EN 3   EN still needed (e.g. storage, reverse flows, some new interconnector s) and that further 
market integration would improve security of supply. The question of the compatibility 
with the internal market of emergency measures of Member States has arisen. The crisis 
thus supports the two issues identified.  
In addition to risks of underinvestment in infrastructure and supplies intended to be 
available for mitigating disruptions, preventing crises, there seems also to be a regulatory/implementation failure. The notions  used in the 2004 Directive to specify 
security of supply standards and planning for emergencies are not su fficiently precise and 
effective in today's context.  Moreover, implementation has been uneven across the EU, 
as demonstrated in the Commission's report on the implementation of Directive 2004/67/EC
4.  
The ultimate sufferer from inefficient gas secu rity of supply arrangements in Europe are 
European citizens  (dependent on gas for cooking and heat, directly or via district 
heating; many dependent on gas-fi red electricity generation) and industry (e.g. power 
sector, chemicals, fertilizers). While cost s for security of supply will normally be 
reflected in tariffs, impacts of  disruptions are likely to be much greater. Substantial job 
losses could be a result of c ontinuation of inadequate gas se curity of supply arrangements 
in Europe. There could also be a substantial impact on the environment, climate and 
sustainable development . With insecure gas supplies, th e issue of back-up fuels, often 
more carbon-intensive comes to the fore . Doubts about security of supply could 
undermine the contribution expected of gas in  the transition to a high-efficiency, low-
carbon energy system, notably in the period before renewables are competitive.  
2. A NALYSIS OF SUBSIDIARITY  
The inclusion of security of energy supply in the Lisbon Treaty energy article and the 
endorsement of the 2nd Strategic Energy Review  point to an EU role, consistent with the 
growing reality of the in ternal energy market.  
The adoption of the 3rd internal energy market packag e will strengthen the market.  In a 
situation in which national markets are be ing integrated, it will not be possible to 
consider security of supply primarily as a na tional concern. Conseque ntly the legal basis 
of the related EU legislation should no longer be disconnected from the internal market 
rules of the EU Treaty. Any proposal should – consistently with the legal basis for the 
internal energy market of whic h it is arguably an extension – be based on Article 95. This 
is the legal basis of a similar instrument adopted in 2005 in the field of electricity (Directive 2005/89/EC). 
No single Member State, acting on its own, can assure sufficient regulatory framework 
and investments in the internal market for security of gas suppl y. Only EU-wide action 
can do this. No single Member State, acti ng on its own, can ensure that all Member 
States have effective provisions in place to handle gas supply emergencies. Moreover, 
individual non-coordinated act ions by Member States might  hamper further development 
of the internal market; lead to discriminatory treatment and might even put security of supply in other Member States at risk. 
                                                
 
4 November 2008 evaluation report on the implementation of Directive 2004/67/EC. 
EN 4   EN 3. O BJECTIVES OF THE EU INITIATIVE : WHAT ARE THE MAIN POLICY 
OBJECTIVES ?  
The general policy objective is to secure an adequate level of preparedness  in Europe 
for gas supply disruptions. The weaknesses ma de evident in the 2009 gas crisis must be 
tackled quickly, before any further crisis.  
This initiative is complementary to the 3rd internal market package which enhances 
market transparency; facilitates cross-border trade and investment and enables increased 
solidarity among the EU countries.  
Reflecting the two issues identified, th e specific/operationa l objectives are: 
(i) Achievement of sufficient flexibility in the internal gas market to mitigate most 
gas supply disruptions, by establishing th e necessary incentives for investments 
in infrastructures and gas and the well-functioning of the market.  
(ii) Effective cooperation in dealing with  gas supply emergencies in Europe, with 
pre-defined emergency plans involving a ll players, at Member State and EU 
levels, geared to supply disruptions of the size and scope expe rienced in January 
2009.  
4. P OLICY OPTIONS : WHICH OPTIONS HAVE BEEN CONSIDERED AND WHICH HAVE 
BEEN ASSESSED IN DETAIL ?  
Five options have been identified: 
1. No new EU action 2. Better enforcement of the 2004 Directive 
3. Voluntary approach by industry 4. A new directive 5. A new regulation The baseline scenario – no new EU action - may well partially deliver the objectives over 
the next years, through the 3
rd internal energy market package, the European Economic 
Recovery Plan, the revision Council Regula tion (EC) No 736/96 on  notification of 
investment projects in the gas, electricity and petroleu m sector, the TEN-E programme, 
the existing 2004 gas security of suppl y Directive and cooperation on emergency 
planning following the January gas crisis, In terms of timing, as the 3rd package will not 
be fully operational until 2011 and a new gas supply disruption could happen at any time, 
cooperation on network development planning has been started in advance. Nevertheless, 
there is arguably need for clear guidance and support at EU level, such as agreement on a 
security of supply standard fo r infrastructures could provid e, to enable regulators and 
Transmission System Operators to tackle, at Member State, regional and EU level, the 
difficult questions of which ad ditional investments make mo st sense, who should pay for 
them.. The current security of supply standa rds in the 2004 Directiv e are too imprecise.  
EN 5   EN As regards option 2, the Commission's repo rt on the implementation of the 2004 
Directive demonstrated very heterogeneous  results and uneven implementation. With 
such imprecise standards and unc lear obligations, strict enforcement is impossible, which 
is why the option 2 "Better enforcement of  2004 Directive" has not been analysed 
further.  
A voluntary approach by some stakeholders involved to some aspects of security of 
supply inadequately covered by the Directiv e could be imagined and some initiatives 
have already been taken. A disadvantage of a voluntary approach is  that reliance on 
market forces to deliver security of gas supply has limits. Provisions for emergencies cannot be left to the market. A further disadvantage is that pa rticipation of all participants 
cannot be guaranteed. Many aspects of security  of supply rely on a collective effort. Any 
work of industry on developing standards would need to be followed through into a 
binding instrument. On these grounds, opti on 3 has not been analysed further.  
The two policy options (4 and 5) will introduce new elements: clear standards for 
security of supply and confidence that they will be met; clear definition of emergency 
plans at Member State and EU level. Thes e two policy options as well as "No new EU 
action" have been assessed in details in sections 5 and 6.  
5. A
SSESSMENT OF IMPACTS : WHAT ARE THE MAIN ECONOMIC , ENVIRONMENTAL 
AND SOCIAL IMPACTS OF EACH OPTI ON PARTICULARLY IN TERMS OF 
(QUANTIFIED /MONETISED ) BENEFITS AND COSTS (INCLUDING ESTIMATES ON 
ADMINISTRATIVE BURDEN ), OTHER COMPLIANCE COSTS AND 
IMPLEMENTATION COSTS FOR PUBLIC ADMINISTRATIONS )?  
The economic impacts of both short listed Policy Options would be dominated by the 
investment costs and the result ant benefits of the implementation of the n-1 standard and 
subsequent Preventive Action Plans. The pr eliminary calculations of n-1 can give an 
appreciation of the improvements in infrastr uctures and supplies wh ich may be necessary 
across Europe to reduce the risk of unma nageable gas supply di sruptions. Eligible 
projects under the European Economic Recovery Plan, except  reverse flow projects (for 
data reasons), have been incl uded in the following chart:  
EN 6   EN PRELIMINARY CALCULATION OF N -1 FOR MEMBER STATES : 
 
0%50%100%150%200%250%300%
DK GR DE BE SK AT PL NL LV CZ EE ES IT HU FR UK RO SE LU PT BG SI LT IE FI EUN-1
Normal EERP
 
The major infrastructure – "1" in "n-1" - is the main import pipeline in most Member 
States. For UK, Netherlands and Denmark it is the main production facility. For Spain 
and Portugal it is the main LNG terminal. In  many of the importing countries, storage is 
important but the usually the main import pipeline has a higher capacity than the main storage facility.  
Based on this preliminary calculation, nine Member States do not meet the proposed n-1 
standard. These Member States are in a variet y of situations, and can bring a variety of 
security of supply measures to bear. A good idea of necessary infrastructure 
developments can be developed. Many if not mo st of the necessary in frastructure projects 
are in the list of eligible projects in th e European Economic Recovery Plan. The total 
European Economic Recovery Plan support for gas infrastructure projects is 1440 m € over 2 years, a maximum of 50% of the eligib le project costs. Thus, as an order of 
magnitude, the n-1 standard applied Europe wi de, could imply an investment cost of a 
few b €. However, if the projects are alre ady launched under the European Economic 
Recovery Plan, the extra investment costs from the application of the n-1 standard 
Europe-wide would be smaller.  
There would be a positive interaction with the internal market through strengthening 
incentives for investment, creating a level play ing field in terms of security of supply 
obligations, and clearly delimiting emergency situations in which non-market instruments could be brought into play. The in frastructure improvements, such as more 
EN 7   EN flexible interconnections, should improve trade possibilities, liquidity and price 
formation in the internal market as well as security of supply.  
The administrative costs for businesses and fo r public authorities of both short-listed 
Policy Options would be marginal compared to investment and other costs.  
As regards jobs, the substantial use of gas in  industry suggests that job losses are possible 
as a direct result of any lack  of confidence in supplies. So me 25% of gas consumption in 
the EU is in industry (fertiliz ers, other chemicals etc.).  
As regards the environment, inadequate pr ovisions for security of gas supply will 
encourage ad hoc recourse to substitute fuel s. In power generation, in the period before 
renewables are competitive and the necessary grid developments have been put into 
place, and before Carbon Capture and Sequestrati on is commercially available, this could 
mean more investment in coal-fired  generation and the lock-in of high CO 2 emissions 
technologies.  
6. C OMPARISON OF OPTIONS : WHAT IS THE PREFERRED OPTION ON THE BASIS OF 
WHICH CRITERIA / JUSTIFICATION ?  
The impacts of the baseline option and two s hort-listed Policy Options can be compared 
as follows:  
Policy 
Option Effectiveness in 
achieving objectives Efficiency Coherence 
No new 
EU policy May partially deliver, 
through the 3rd IEM 
package, the European Economic Recovery Plan, TEN-E, awareness of the need for effective cooperation on crises. However, timing issue, as 3
rd package not be 
fully operational until 2011. Also, absence of clear security of supply standard for infrastructure could make work of TSOs and regulators on network development more difficult. Implementation of 3
rd 
package likely to need support, notably assessments of potential gas supply disruptions at EU level and practical guidance to regulators; current security of supply standards in the 2004 Directive too imprecise. Not relevant 
Revision 
of Directive  Yes Would imply well-
focused, limited investment costs; also provisions by market participants, similarly 
well-focused and on a Would have a positive effect 
on the development and functioning of the internal energy market; positive effect on the environment, notably 
by reducing unplanned 
EN 8   EN level playing field; 
would diminish disincentives to investment in security of supply by market participants, thus relieving the burden on the public and public authorities; would imply administrative burden on public authorities as regards emergency provisions  recourse to higher-emissions 
substitute fuels; positive effect on competitiveness and jobs in gas-using industry, and on households.  
New Regulation  Yes Compared to a 
revision of the Directive, would have the advantage of being operational more quickly; a major gas supply disruption could happen anytime; also a more direct impact on provisions and investments by market participants; would be more effective in achieving clear arrangements for cooperation around emergencies with clear obligation to cooperate; comparable administrative burden on public authorities as regards emergency provisions;  If it can be achieved, it would 
constitute a more direct engagement of public authorities and market participants in security of gas supply in an EU perspective, with systems in place earlier. The costs would not be very different from those implied in the revision of the Directive  
Both short-listed Policy Opti ons would have similar economi c, social and environmental 
impacts compared to the no new EU policy option. The major difference between them 
concerns the speed and effectiveness of their implementation. Arguably the Regulation 
option is more likely to be effective (clearly attributin g responsibilitie s to market 
participants), fair (a level playing field in terms of secu rity of supply obligations) and 
could be in place and in effect more quickly.  
EN 9   EN 7. 7.  MONITORING AND EVALUATION : WHAT ARE THE ARRANGEMENTS TO 
ESTABLISH THE ACTUAL COSTS AND BENEFITS AND THE ACHIEVEMENT OF THE DESIRED EFFECTS
? 
A reporting and monitoring system is in place for the internal energy market. In addition, 
the role of the Gas Coordination Group coul d be expanded to include regular monitoring 
and assessment, drawing from the envisage d reviews of risk assessments by Member 
States. EU-level analyses should support evaluations of security of supply risks.