Article 23 Extension of solidarity protection to critical gas volumes for electricity security of supply
1. By way of derogation from Article 13(3) of Regulation (EU) 2017/1938, a solidarity measure pursuant to Article 13(1) and (2) of that Regulation shall apply only if the Member State requesting solidarity has not been able to cover: (a) the deficit in gas supply to its solidarity protected customers or, where a Member State has taken temporary measures to reduce the non-essential consumption of protected customers in accordance with Article 24 of this Regulation, the essential volumes of consumption of gas to its solidarity protected customers; (b) the critical gas volume for electricity security of supply, despite the application of the measure referred to in Article 11(3) of Regulation (EU) 2017/1938. The conditions set out in Article 13(3), points (b), (c) and (d), of Regulation (EU) 2017/1938 shall apply. 2. The Member States which are obliged to provide solidarity pursuant to paragraph 1 shall be entitled to deduct from the solidarity offer: (a) supplies to its solidarity protected customers to the extent essential volumes are affected or, where a Member State has taken temporary measures to reduce the non-essential consumption of protected customers in accordance with Article 24, the supplies of the essential volumes of consumption of gas of its solidarity protected customers; (b) supplies of critical gas volumes for electricity security of supply; (c) supplies of gas volumes for the electricity needed for the production and transportation of gas; and (d) gas volumes necessary for the operations of security of supply critical infrastructure as referred to in Annex II as well as other installations crucial for the functioning of military, national security and humanitarian aid services. 3. The critical gas volumes for electricity security of supply as referred to in paragraph 1, point (b), and paragraph 2, points (b) and (d), shall not exceed the volumes indicated in Annex I. If a Member State can demonstrate that a higher volume of gas is required to avoid an electricity crisis of a Member State, the Commission may, upon a duly reasoned request, decide to allow the deduction of higher volumes. 4. If Member States whose electricity system is synchronised only with the electricity system of a third country are requested to provide solidarity measures, they may exceptionally deduct higher volumes of gas in the event that the electricity system is desynchronised from that third country’s system for as long as isolated power system services or other services to the power transmission system operator are required to ensure the safe and reliable operation of the power system.
Amendment rationale: CONTEXT OF THE PROPOSAL 1.1 Reasons for and objectives of the proposal Since Russia’s unprovoked and unjustified full-scale invasion of Ukraine, supplies of gas to the EU by Russia have been disrupted as a deliberate attempt to use energy as a political weapon. Russia has been for many years the main gas supplier of the EU. Historically, the EU relied on Russia for more than 40% of its gas supplies. The supply of gas has continuously decreased since February 2022. The pipeline flows of gas from Russia had been less than 10% of the EU’s gas imports in the first half of 2023. Twelve Member States activated the first or second crisis level pursuant to the common EU classification, as foreseen by the Gas Security of Supply Regulation (EU) 2017/1938. This supply shock has had significant impacts on the price level and volatility of gas and electricity, on inflation, on the overall EU financial and macroeconomic stability, and on all citizens. The wholesale price in 2022 was on average more than five times higher than the pre-crisis level and even spiked above 300 €/MWh at the peak of the crisis in summer 2022. They remain to this date at markedly higher levels than in the pre-crisis period, with strong volatility. Companies, in particular energy-intensive industries, experienced loss of competitiveness, while citizens face reduced purchasing power. In this context, the Council adopted on 19 December 2022 the Council Regulation (EU) 2022/2576 to enhance solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. Regulation (EU) 2022/2576 provides a temporary legal basis in respect of: · better coordination of gas purchases (Chapter II) ; · measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III), and ; · measures for the case of a gas emergency (Chapter IV). Regulation (EU) 2022/2576 aims at mitigating the impact on the price for gas by addressing demand and supply, ensuring security of supply across the entire European Union, and enhancing solidarity. It contains different elements designed to work, in a coherent manner, towards avoiding very high prices and reinforcing solidarity and security of supply. This proposal seeks to prolong by one year the period of application of the provisions of Regulation (EU) 2022/2576 in view of the persisting risks for energy supplies in the Union. The Union’s response under REPowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to mitigating the effects of Russia’s invasion of Ukraine on the supplies of gas, and its subsequent impacts on price levels, inflation, financial and macroeconomic stability, and on all citizens. However, global gas markets continue to be very tight and market balances are expected to 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. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include 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; and a deterioration of the geopolitical environment and threat landscape in supplying regions, for example with the crisis in the Middle East. Should the relevant Union measures cease to apply, this would alter 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 imports. 1.1.1. The m ain elements of Regulation (EU) 2022/2576 (1) Demand aggregation and better coordination of gas purchases Pursuant to Regulation (EU) 2022/2576, the Commission designed and implemented, with the support of a service provider, the “AggregateEU” mechanism, which allows for aggregation of demand, organisation of tendering rounds vis à vis international gas suppliers and matching the demand with suppliers’ bids. The mechanism is open to participation, as buyers, of undertakings established in the EU and in the Energy Community Contracting Parties. The Regulation provides for mandatory demand aggregation by laying down on Member States an obligation to require domestic undertakings to use the service provider to aggregate demand with sufficiently high volumes of gas. Volumes equivalent to at least 15 % of storage filling targets (around 13,5 billion cubic metres for the Union as a whole), are to be included by Member States’ undertakings in the demand aggregation process. To prevent that the objective of diversification from the gas supplied from the Russian Federation is put at risk, Regulation (EU) 2022/2576 provides that participation of undertakings or other bodies controlled by Russian natural or legal persons or undertakings established in the Russian Federation is excluded. In addition, natural gas originating in the Russian Federation is excluded from the demand aggregation and joint purchasing mechanism, including natural gas supplies entering the Member States or Energy Community Contracting Parties through a list of entry points. Regulation (EU) 2022/2576 contains provisions aimed at ensuring a better coordination of gas purchases in the Union and energy solidarity among Member States. To achieve this, the Regulation seeks to provide the Commission with an overview of upcoming tenders or contracts related to the sale and purchase of gas. Accordingly, natural gas undertakings or undertakings consuming gas are required to send notifications to the Commission of any upcoming tenders or contracts of a volume above 5 TWh/year. The Commission then may issue recommendations to such undertakings in cases where such tenders or contracts may negatively impact the joint purchasing mechanism, market functioning, security of supply or solidarity. (2) Efficient operation of pipelines and LNG terminals Regulation (EU) 2022/2576 also enhances the efficient operation of pipelines and LNG terminals. Diversification of supply sources away from Russian gas has been changing the gas flow patterns in the EU. Therefore, the routes from LNG terminals to consumption centres have become more relevant than the formerly predominant East-West flows. However, such changes in gas flows have led to particularly high levels of congestion at interconnection points, notably in north-western Europe. To enhance the gas system’s responsiveness to congestion and improve the system’s flexibility, Article 14 of Regulation (EU) 2022/2576 contains provisions obliging TSOs to offer underutilised contracted firm capacity for all interconnectors, not only congested ones, either through (i) the implementation of a new monthly “use-it-or-lose-it” (UIOLI) procedure, or (ii) the extension of existing procedures with the same objective. Moreover, it has become of utmost importance to optimise the LNG absorption capacity of the EU LNG terminals and the usage of storage facilities. For this purpose, increased transparency was deemed necessary by market participants, similar to the level of transparency existing for the transport of gas via pipelines. Gas Infrastructure Europe (GIE) operates two main platforms covering all EU Member States as well as the United Kingdom and Ukraine: the Aggregated Gas Storage Inventory (AGSI) for gas storage and the Aggregated LNG Storage Inventory (ALSI) for LNG. Following the entry into force of Regulation (EU) 2022/2576 (Articles 12 and 13), new components were added to these platforms, including information on services offered and the conditions that apply to those services, contracted and available storage and LNG facility capacities, tariffs, etc. The platforms currently cover almost all EU large-scale LNG terminals and 98% of EU storage facilities. In addition to the EU-wide platforms, the individual storage and LNG operators were obliged to create more transparency around the possibilities to book secondary capacity. To this end, they were required to set up individual booking platforms. Greater transparency makes for a better and more comprehensive overview of the LNG and storage markets in the EU. It also results in more efficient use of these infrastructures and increases the potential to attract additional suppliers. (3) Action on the level of gas prices Development of a new complementary benchmark for LNG The EU’s LNG market is still consolidating. Hub indexed pricing remains influenced by pipeline supplies and by existing infrastructure bottlenecks, and therefore it does not always accurately reflect the price at which LNG is actually imported into the Union. Also, as Russian gas still represents a non-negligible – though decreasing – part of EU imports, increasingly concentrated in some areas, gas markets remain vulnerable to Russian gas supplies manipulation. There is a need to provide for stable and predictable pricing for LNG imports, which are indispensable to replace the supply shortfalls caused by the likely halt of Russian gas imports. Regulation 2022/2576 has tasked the European Agency for the Cooperation of Energy Regulators (‘ACER’) to create within a short time frame an objective price assessment tool, and over time a benchmark, of the EU’s LNG imports by collecting real-time information on all daily transactions. ACER has developed such a benchmark, which provides more comprehensive information to buyers and increases price transparency. Regulation 2022/2576 granted ACER the necessary powers to collect the transaction data needed for the establishment of the LNG benchmark, building on and reinforcing the tasks and powers ACER already had under Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency and Commission Implementing Regulation (EU) No 1348/2014 of 17 December 2014 on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (hereinafter together referred to as ‘REMIT’). (4) Action to reduce price volatility Intra-day price volatility management mechanism: Financial legislation (MiFID II) already requires a set of mechanisms to be set up by trading venues to contain significant volatility in financial markets, and ESMA has been working on ways to improve the functioning of circuit breakers across all asset classes, which will have a more permanent positive impact on trading of all asset classes, including energy derivatives. The just concluded MiFIR Review has also added the notion of emergency situation and given additional powers to ESMA on circuit breakers. Those changes are due to be transposed in national legislations by the second half of 2025. The intra-day volatility management mechanism set out in Regulation (EU) 2022/2576 has been introduced so that trading venues set up mechanisms to prevent excessive movements of prices within a trading day, either through the adaptation of existing circuit breakers or through the creation of an additional mechanism. Large volatility spikes on gas and electricity markets make it difficult for energy firms to continue participating in those markets and meet their hedging needs while ensuring security of energy supply for the end-consumers. Therefore, Regulation (EU) 2022/2576 lays down a requirement for trading venues to establish a temporary intra-day volatility management mechanism aimed at limiting large price movements in energy-related derivatives contracts within the same trading day. Trading venues can implement the intra-day volatility management mechanism either by integrating it into their existing circuit breakers already established in accordance with Directive 2014/65/EU or as an additional mechanism. (5) Security of supply Extension of solidarity protection obligation to critical gas fired power plants Under Regulation (EU) 2017/1938, a Member State where critical gas-fired power plants may play a key role for security of electricity supply, would have to curtail these power plants, to the possible detriment of the security of electricity supply of other Member States, before this Member State is allowed to request solidarity measures under Regulation (EU) 2017/1938. To prevent such negative spill-over effects into electricity generation, Regulation (EU) 2022/2576 allows Member States to trigger a solidarity request, under certain limits, if gas-fired power plants, that are needed to ensure the electricity system’s adequacy, are at risk of not being supplied with critical gas volumes. For the same reason, Member States providing solidarity will be entitled to ensure that the operation of their critical gas-fired power plants is not endangered when providing solidarity to another Member State. Default rules for bilateral solidarity Specific measures in Regulation (EU) 2022/2576 introduced a default mechanism between the Member States to ensure they help each other to supply the “solidarity protected customers” (households and under certain conditions district heating and essential social services) and critical gas-fired power plants, in an emergency leading to very severe shortage of gas. The security of supply rules resulting from Regulation (EU) 2017/1938 introduced the principle of such solidarity but its actual use in a crisis requires detailed legal, technical and financial arrangements which were supposed to be agreed bilaterally between Member States. However, only eight out of 40 required arrangements have been agreed so far. Articles 27 and 28 of Regulation (EU) 2022/2576, therefore, spell out the rules and procedures that will automatically apply between Member States which have not agreed on bilateral solidarity arrangements. Solidarity has to be provided based on fair compensation pursuant to Article 13 of Regulation (EU) 2017/1938. However, possible indirect costs resulting from judicial or arbitration proceedings after the curtailment of industry will remain to be limited to 100% of the price of gas. The reason is that the cost of compensation to industry resulting from curtailment is partially covered by the price of gas and, should a part remain from litigation, this part is highly uncertain and can largely exceed the costs of the gas. The uncertainty about indirect compensation costs therefore has proved to be a major obstacle for Member States to conclude bilateral solidarity agreements. However, Member States will still be able to agree on different compensation conditions. The current solidarity obligation, stemming from Regulation (EU) 2017/1938, applies between the Member States that are directly connected or via a third country. This proposed prolongation will maintain the extension of this obligation to Member States with LNG facilities, which, even if not directly connected, could provide solidarity to a Member State in an emergency if endowed with the infrastructure necessary to receive this LNG. 1.1.2. The c urrent situation : severe difficulties and risks for the EU’s security of gas supply persist The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576 , helped mitigate the consequences of the crisis and prepared the EU to a degraded security of gas supplies situation. In the Report on the main findings of the review of Regulation (EU) 2022/2576, in view of the general situation of gas supply to the Union 1 , the Commission concluded that the Regulation’s provisions have played an important role in stabilising the situation of the gas market and ensuring adequate gas supply to the Union, and that the Regulation is an important element of the EU gas security of supply tool kit . If not prolonged, the Regulation will cease to apply on 30 December 2023. However, as of the date of adoption of this proposal, severe difficulties in gas supplies to the Union persist. 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 in 2023, and these unreliable imports may be further reduced or stopped. This figure would be approximately 110 bcm less than in 2021. Global gas markets remain very tight and are expected to remain as such for some time as only very limited new LNG liquefaction capacity globally is planned to be operational before 2026. This situation has negative consequences on gas prices which, despite being lower than the peak experienced in summer 2022 (when prices spiked above 300 EUR/MWh), remain more than twice as high than pre-crisis levels. Over the previous decade, prices had moved within a band of EUR 5 MWh to EUR 35 MWh and averaged around EUR 20/MWh. In early autumn 2023 prices ranged between EUR 40 MWh and EUR 50 MWh. This level of prices still has inevitable repercussions on the EU citizens’ purchasing power and the competitiveness of European businesses. Market volatility is also a consequence of the market tightness and represents an additional risk for the EU economy. Summer and autumn 2023 saw a number of episodes of significant volatility when prices increased by more than 50% in few weeks. This shows that gas markets are still fragile and may have large reactions to any unexpected and sudden shock to supply and demand, as was the case following the strike in Australian LNG facilities, the Middle East crisis and the disruption of the Balticconnector. Under these conditions, the fear of scarcity may trigger large reactions with serious repercussions on prices. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include: a rebound in Asian liquefied natural gas (LNG) demand that further reduces 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 conditions potentially affecting hydropower storage or nuclear production which would require higher recourse to gas-fired power generation and/or trigger increased demand for gas, and further possible gas supply disruptions, including a complete halt of gas imports from Russia or a disruption of existing critical gas infrastructure. Furthermore, since the adoption of the Report on the main findings of the review of Regulation (EU) 2022/2576, the threat landscape has deteriorated. Armed conflicts of high intensity are now hitting several of the key EU supply regions, in addition to Russia’s war of aggression against Ukraine (Azerbaijan, Middle East). Recent examples illustrate the likelihood and relevance of the risks related to the disruption of critical gas infrastructure. In September 2022, the NordStream 1 pipeline was damaged by acts of sabotage to such a degree that it currently cannot transport any gas and will not be able to do so in the foreseeable future. In October 2023, the Balticconnector, an important pipeline connecting Finland to Estonia, was disrupted. The investigation is examining whether the damage was external and made by a vessel’s anchor. As a result of the Balticconnector disruption, Finland is now no longer able to meet the N-1 criterion as part of the infrastructure standard defined in Article 5 of Regulation (EU) 2017/1938. The N-1 criterion ensures that Member States take measures so that in case of a disruption of the single largest gas infrastructure, they still have the technical capacity to satisfy their total demand during a peak day, As a result of the Balticconnector disruption, on 27 October 2023 Finland raised its crisis level pursuant to Article 11 of Regulation (EU) 2017/1938 from “early warning” to “alert”, which is the last crisis level before an emergency. This new infrastructure incident illustrates the likelihood and relevance of the risks related to new disruptions of critical gas infrastructure. It should be also noted that the significant reduction in demand for natural gas (-18% between August 2022 and September 2023) is contributing to preserve the gas balance in the EU. This reduction is a result of economic factors (e.g. high prices) and administrative measures adopted by Member States pursuant to Regulation 2022/1369 on coordinated gas demand reduction and Regulation (EU) 2023/706 that prolonged it. A possible increase in demand, due to a rebound in the gas use in the residential, commercial and industrial sectors or in case the administrative measures aimed at reducing demand were not prolonged further, represents an additional risk that, given the current situation of tight global gas markets, could undermine EU’s security of gas supply. In three subsequent reports of December 2022 , February and July 2023 , the I nternational E nergy A gency (IEA) has consistently been highlighting the risks for the EU security of gas supply and warning against complacency in the light of the improvement of the situation compared to the peak of the crisis in summer 2022. According to the report of February 2023 , “ g lobal gas supply is set to remain tight in 2023 and the global balance is subject to an unusually wide range of uncertainties and exogenous risk factors. This includes the possibility of complete cessation of Russian piped gas deliveries to the European Union, as well as a recovery of China’s LNG imports in line with the country’s long-term LNG contracts and a potential lower availability of LNG supply ” The IEA warned that “ the improved outlook should not be a distraction from the measures necessary (…) to mitigate the European Union’s exposure to the exogenous risks ” 2 . It developed stress scenario s w ith a halt to Russian gas supplies , LNG supplies remain ing tight and weather-related demand increases , which could result in a potential supply-demand gap of 40 bcm i n the EU . In its report of July 2023, the IEA highlighted that “ risks and uncertainties remain ahead of the 2023/24 Northern Hemisphere winter ” and “ full storage sites are no guarantee against winter volatility and the risk of renewed market tensions ” 3 . In addition, the European Network of Transmission System Operators (ENTSOG) published its yearly Winter Supply Outlook with a summer overview, i n line with Art icle 8 of Regulation (EC) 715/2009. ENTSOG concluded that although the general security of supply situation in the EU has significantly improved, additional measures may be needed in case of a full Russian supply disruption. In addition, careful management of the storages throughout the winter of 2023-2024 is needed, as a 46% filling level is likely needed at the beginning of the injection season to achieve the 90% storage target set out by Regulation (EU) 2022/1032 4 . In conclusion, in the light of the persisting severe difficulties and risks, the situation related to gas supplies, while improved compared to the peak of the crisis in summer 2022, remains fragile. The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to improve the situation. Should the relevant Union measures cease to apply, this would alter 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 imports. In the light of these persisting severe difficulties and risks for the EU’s security of gas supply, and not to alter the current fragile balance, it is necessary and urgent to prolong Regulation (EU) 2022/2576. Hence, this Proposal seeks to prolong by one year the period of application of Regulation 2022/2576 enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. The prolongation by one year is necessary and proportionate due to the persistent nature of the severe difficulties and the additional risks, and the uncertainty of the current situation which is expected to continue during the whole of 2024. 1.1.3. Reasons for prolonging the Regulation’s provisions in the current situation The different provisions of Regulation (EU) 2022/2576, which the current proposal seeks to prolong, are necessary to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply, for the following reasons. Better coordination of gas purchases (Chapter II – Section 1 and 2) In general, demand aggregation and better coordination of gas purchases help to ensure more equal access for undertakings across Member States, especially those in landlocked countries or without direct access to international markets, to new or additional gas sources in urgent situations where solidarity is required. It can, in the spirit of solidarity, reduce the detrimental effect of outbidding, which is driving prices up and help in particular smaller undertakings to benefit from more advantageous purchasing conditions resulting from aggregated demand. Pursuant to Regulation (EU) 2022/2576, the Commission designed and launched, with the assistance of a service provider, the demand aggregation and joint purchasing mechanism under the name of “AggregateEU”. Member States and natural gas undertakings as well as undertakings consuming gas have effectively participated in the demand aggregation and joint purchasing mechanism 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. The matched volumes in the same period amounted to 34.77 bcm, corresponding to around 10% of EU consumption in 2022. This shows that "AggregateEU” attracted significant interest by market participants. The Commission also implemented supporting measures as mandated by the Regulation, including those on transparency and information exchange, governance of the EU Energy Platform and mandatory use of “AggregateEU”. Under the transparency and information exchange provisions of the Regulation, the Commission issued two recommendations by July 2023. In these instances, the Commission considered that further coordination with regards to tenders for the purchase of gas was needed, as it could improve the functioning of joint purchasing or prevent a negative impact on the internal market, on security of supply or on energy solidarity. In the Report on the main findings of the review of Regulation (EU) 2022/2576, the Commission concluded that the “AggregateEU” mechanism, based on the demand aggregation provisions of the Regulation, provided additional opportunities for European buyers (undertakings established in the EU and in the Energy Community Contracting Parties) 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. In view of the above, demand aggregation and better coordination of gas purchases remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply. The relevant provisions should therefore be prolonged by one year. Measures to enhance the use of LNG facilities, gas storage facilities and pipelines (Chapter II – Section 3) The provisions of Regulation (EU) 2022/2576 increasing the transparency around available capacities and services offered at LNG terminals and gas storage sites facilitated the increased influx of LNG into the Union and facilitated the accommodation of the altered gas flows. The situation has not changed since the adoption of the Regulation as the EU still needs to import large volumes of LNG to compensate for the Russian pipeline supply and it will continue to do so in the foreseeable future. This is why enhanced transparency around LNG terminals and storage sites remains necessary. Regulation (EU) 2022/2576 requires having use-it-or-lose-it mechanisms in place at all interconnection points in Europe, whereas this was only a requirement for certain interconnection points in the past. Such mechanisms enable the system to react to possible congestion resulting from changed gas flows in a swift and flexible manner. The measures to enhance the use of LNG facilities, gas storage facilities and pipelines remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III) Due to the difficulties to assess the accuracy of LNG prices prevailing in the marketplace, Regulation (EU) 2022/2576 tasks the European Union Agency for the Cooperation of Energy Regulators (ACER) to collect all the data on transactions pertaining to LNG deliveries to the Union necessary to establish a daily LNG price assessment and a daily LNG benchmark, determined as the spread between the LNG daily price assessment and the settlement price for the TTF futures front-month. On trading, Regulation (EU) 2022/2576 includes a measure to manage excess volatility in gas and electricity derivatives markets, while preserving the price formation processes. The intra-day price spike collar aims at avoiding excessive price volatility and prevent extreme price spikes in prices on energy derivative market over a trading day. As concluded in the Report on the main findings of the review of Regulation (EU) 2022/2576, since gas markets still feature episodes of significant volatility, the provisions in Chapter III –of Regulation (EU) 2022/2576 may play a role in preventing excessive price spikes and in stabilising the market. The episodes of pronounced volatility observed in summer and autumn 2023 reinforce the conclusion that gas markets are still fragile and vulnerable to extreme price spikes. The intra-day volatility mechanism could remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures for the case of a gas emergency (Chapter IV) Regulation (EU) 2022/2576 temporarily complemented the Gas Security of Supply Regulation, notably by making the solidarity mechanism applicable by default in absence of bilateral agreements, as well as by extending the solidarity mechanism to liquified natural gas (LNG) and critical gas volumes (CGV) for electricity. In addition, a provision was added to facilitate demand reduction by protected customers, as well as a provision to safeguard cross-border flows. In December 2022, the Commission carried out a joint solidarity ‘dry run’ exercise with EU Member States and ENTSOG, which tested the emergency rules and procedures, as well as the solidarity mechanism. In addition, the Commission circulated a questionnaire to the Gas Coordination Group to gather feedback on e.g. the provisions set out in Regulation (EU) 2022/1576. The outcomes of the ‘dry run’ exercise and the questionnaire are further detailed in the Report on the main findings of the review of Regulation 2022/2576. Based on the findings of the Report on the main findings of the review of Regulation (EU) 2022/2576 and the new threat landscape, the Commission concludes that the concepts set out in Chapter IV remain essential to mitigate possible gas crises and reduce the collective costs of such a crisis, and for facilitating ongoing or future demand reduction efforts. In particular, the absence of bilateral agreements is a structural vulnerability that persists, meaning that a prolongation of default rules is necessary. Critical gas volumes for electricity generation too remain crucial to prevent that a potential gas crisis does not spread to the electricity system. 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. In addition, the supply landscape of the EU has changed significantly, with LNG being the main supply source in 2023. Solidarity should therefore still be extended to include Member States with LNG facilities, to reflect this changed reality. Lastly, the concepts of non-essential consumption of protected customers and the additional safeguards for cross-border flows in an emergency were assessed to be beneficial concepts for preventing and mitigating crises and therefore useful provisions to prolong. 
Revised version (Article 23 Extension of solidarity protection to critical gas volumes for electricity security of supply):
3. The critical gas volumes for electricity security of supply as referred to in paragraph 1, point (b), and paragraph 2, points (b) and (d), shall not exceed the volumes indicated in Annex I. If a Member State can demonstrate that a higher volume of gas is required to avoid an electricity crisis of a Member State, the Commission may, upon a duly reasoned request, decide to allow the deduction of higher volumes. 4. If Member States whose electricity system is synchronised only with the electricity system of a third country are requested to provide solidarity measures, they may exceptionally deduct higher volumes of gas in the event that the electricity system is desynchronised from that third country’s system for as long as isolated power system services or other services to the power transmission system operator are required to ensure the safe and reliable operation of the power system.
Article 24 Demand reduction measures concerning protected customers
1. Member States may, exceptionally, take temporary measures to reduce the non-essential consumption of protected customers, as defined in Article 2, point (5), of Regulation (EU) 2017/1938, in particular when one of the crisis levels pursuant to Article 11(1) and Article 12 of Regulation (EU) 2017/1938, or the Union alert pursuant to Regulation (EU) 2022/1369, has been declared. Such measures shall be limited to non-essential uses of gas and shall take into account the elements set out in Article 6(2) of Regulation (EU) 2022/1369. Such exceptional measures may be taken only after an assessment is carried out by the competent authorities, as defined in Article 2, point (7), of Regulation (EU) 2017/1938, with regard to the conditions to determine such non-essential volumes of gas. 2. As a result of measures referred to in paragraph 1 of this Article, the consumption of vulnerable customers, as defined by Member States in accordance with Article 3(3) of Directive 2009/73/EC, shall under no circumstance be reduced, and Member States shall not disconnect protected customers as a result of the application of paragraph 1 of this Article.
Article 25 Safeguards for cross-border flows
In the case of a Commission request pursuant to Article 12(6), first subparagraph, of Regulation (EU) 2017/1938 to terminate undue restrictions of cross-border gas flows or of access to gas infrastructure, or measures endangering the gas supply in another Member State, the competent authority, as defined in Article 2, point (7), of Regulation (EU) 2017/1938, or the Member State, as referred to in Article 12(6), first subparagraph of that Regulation, shall instead of following the procedure provided for in Article 12(6), second subparagraph, of Regulation (EU) 2017/1938, modify its action or take action in order to ensure compliance with Article 12(5) of that Regulation.
Article 26 Temporary extension of solidarity obligations to Member States with LNG facilities
1. The obligation to provide solidarity measures pursuant to Article 13(1) of Regulation (EU) 2017/1938 shall not only apply to Member States directly connected to the Member State requesting solidarity, but also to Member States with LNG facilities, provided the necessary capacity in the relevant infrastructure, including the LNG vessels and carriers, is available. 2. Article 13, paragraphs 2 to 9, of Regulation (EU) 2017/1938 shall apply to Member States with LNG facilities unless otherwise provided in this Regulation. 3. Member States with LNG facilities that are not directly connected to a Member State requesting solidarity may agree bilaterally with any other Member State on the necessary technical, legal and financial solidarity arrangements that apply to the provision of solidarity. 4. The default rules for the provision of solidarity measures pursuant to Article 27 shall also apply to the non-connected Member States in so far as a bilateral arrangement is not concluded at the time of the receipt of a solidarity request.
Article 27 Default rules for solidarity measures
1. Where two Member States have not agreed on the necessary technical, legal and financial arrangements pursuant to Article 13(10) of Regulation (EU) 2017/1938 (‘solidarity agreement’), the delivery of gas pursuant to the obligation in Article 13(1) of that Regulation in the event of an emergency shall be subject to the conditions set out in this Article. 2. The compensation for the solidarity measure shall not exceed reasonable costs and, by derogation from Article 13(8) of Regulation (EU) 2017/1938, it shall in any event include: (a) the price for gas in the Member State providing solidarity; (b) the storage and transport costs, including possible fees resulting from the deviation of LNG cargoes to the interconnection point requested; (c) litigation costs for related judicial or arbitration proceedings involving the Member State providing solidarity; (d) other indirect costs that are not covered by the price for gas, such as the reimbursement of financial or other damages resulting from enforced firm load shedding of customers related to the provision of solidarity, provided that those indirect costs do not exceed 100 % of the price for gas. 3. If a Member State requests compensation for indirect costs pursuant to paragraph 2, point (d), exceeding 100 % of the gas price, the Commission shall, after consulting the relevant competent authorities, decide whether a higher compensation is appropriate, taking into account the specific contractual and national circumstances of the case and the principle of energy solidarity. 4. Unless the Member State requesting solidarity and the Member State providing solidarity agree on another price, the price for the gas supplied to the Member State requesting solidarity shall correspond to the day-ahead market price in the Member State providing solidarity the day preceding the request for solidarity or the corresponding day-ahead market price at the closest accessible exchange, at the closest accessible virtual trading point, or at an agreed hub over the day preceding the request for solidarity. 5. Compensation for the gas volumes delivered in the context of a solidarity request pursuant to Article 28 shall be paid directly by the Member State requesting solidarity to the Member State providing solidarity or the entity both Member States indicate in their response to the solidarity request and the confirmation of receipt and of the volume to be taken. 6. The Member State to which the request for a solidarity measure is addressed shall provide the solidarity measure as soon as possible and no later than three days after the request. A Member State may refuse to provide solidarity to a Member State requesting solidarity only if it demonstrates that: (a) it does not have enough gas for the volumes referred to in Article 23(2); or (b) it does not have sufficient interconnection capacity available, as set out in Article 13(7) of Regulation (EU) 2017/1938, and it does not have the possibility to provide sufficient volumes of LNG. 7. In addition to the default rules provided for in this Article, Member States may agree on technical arrangements and coordination of the provision of solidarity. 8. This Article shall be without prejudice to existing arrangements for the safe and reliable operation of the gas system.
Amendment rationale: CONTEXT OF THE PROPOSAL 1.1 Reasons for and objectives of the proposal Since Russia’s unprovoked and unjustified full-scale invasion of Ukraine, supplies of gas to the EU by Russia have been disrupted as a deliberate attempt to use energy as a political weapon. Russia has been for many years the main gas supplier of the EU. Historically, the EU relied on Russia for more than 40% of its gas supplies. The supply of gas has continuously decreased since February 2022. The pipeline flows of gas from Russia had been less than 10% of the EU’s gas imports in the first half of 2023. Twelve Member States activated the first or second crisis level pursuant to the common EU classification, as foreseen by the Gas Security of Supply Regulation (EU) 2017/1938. This supply shock has had significant impacts on the price level and volatility of gas and electricity, on inflation, on the overall EU financial and macroeconomic stability, and on all citizens. The wholesale price in 2022 was on average more than five times higher than the pre-crisis level and even spiked above 300 €/MWh at the peak of the crisis in summer 2022. They remain to this date at markedly higher levels than in the pre-crisis period, with strong volatility. Companies, in particular energy-intensive industries, experienced loss of competitiveness, while citizens face reduced purchasing power. In this context, the Council adopted on 19 December 2022 the Council Regulation (EU) 2022/2576 to enhance solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. Regulation (EU) 2022/2576 provides a temporary legal basis in respect of: · better coordination of gas purchases (Chapter II) ; · measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III), and ; · measures for the case of a gas emergency (Chapter IV). Regulation (EU) 2022/2576 aims at mitigating the impact on the price for gas by addressing demand and supply, ensuring security of supply across the entire European Union, and enhancing solidarity. It contains different elements designed to work, in a coherent manner, towards avoiding very high prices and reinforcing solidarity and security of supply. This proposal seeks to prolong by one year the period of application of the provisions of Regulation (EU) 2022/2576 in view of the persisting risks for energy supplies in the Union. The Union’s response under REPowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to mitigating the effects of Russia’s invasion of Ukraine on the supplies of gas, and its subsequent impacts on price levels, inflation, financial and macroeconomic stability, and on all citizens. However, global gas markets continue to be very tight and market balances are expected to 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. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include 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; and a deterioration of the geopolitical environment and threat landscape in supplying regions, for example with the crisis in the Middle East. Should the relevant Union measures cease to apply, this would alter 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 imports. 1.1.1. The m ain elements of Regulation (EU) 2022/2576 (1) Demand aggregation and better coordination of gas purchases Pursuant to Regulation (EU) 2022/2576, the Commission designed and implemented, with the support of a service provider, the “AggregateEU” mechanism, which allows for aggregation of demand, organisation of tendering rounds vis à vis international gas suppliers and matching the demand with suppliers’ bids. The mechanism is open to participation, as buyers, of undertakings established in the EU and in the Energy Community Contracting Parties. The Regulation provides for mandatory demand aggregation by laying down on Member States an obligation to require domestic undertakings to use the service provider to aggregate demand with sufficiently high volumes of gas. Volumes equivalent to at least 15 % of storage filling targets (around 13,5 billion cubic metres for the Union as a whole), are to be included by Member States’ undertakings in the demand aggregation process. To prevent that the objective of diversification from the gas supplied from the Russian Federation is put at risk, Regulation (EU) 2022/2576 provides that participation of undertakings or other bodies controlled by Russian natural or legal persons or undertakings established in the Russian Federation is excluded. In addition, natural gas originating in the Russian Federation is excluded from the demand aggregation and joint purchasing mechanism, including natural gas supplies entering the Member States or Energy Community Contracting Parties through a list of entry points. Regulation (EU) 2022/2576 contains provisions aimed at ensuring a better coordination of gas purchases in the Union and energy solidarity among Member States. To achieve this, the Regulation seeks to provide the Commission with an overview of upcoming tenders or contracts related to the sale and purchase of gas. Accordingly, natural gas undertakings or undertakings consuming gas are required to send notifications to the Commission of any upcoming tenders or contracts of a volume above 5 TWh/year. The Commission then may issue recommendations to such undertakings in cases where such tenders or contracts may negatively impact the joint purchasing mechanism, market functioning, security of supply or solidarity. (2) Efficient operation of pipelines and LNG terminals Regulation (EU) 2022/2576 also enhances the efficient operation of pipelines and LNG terminals. Diversification of supply sources away from Russian gas has been changing the gas flow patterns in the EU. Therefore, the routes from LNG terminals to consumption centres have become more relevant than the formerly predominant East-West flows. However, such changes in gas flows have led to particularly high levels of congestion at interconnection points, notably in north-western Europe. To enhance the gas system’s responsiveness to congestion and improve the system’s flexibility, Article 14 of Regulation (EU) 2022/2576 contains provisions obliging TSOs to offer underutilised contracted firm capacity for all interconnectors, not only congested ones, either through (i) the implementation of a new monthly “use-it-or-lose-it” (UIOLI) procedure, or (ii) the extension of existing procedures with the same objective. Moreover, it has become of utmost importance to optimise the LNG absorption capacity of the EU LNG terminals and the usage of storage facilities. For this purpose, increased transparency was deemed necessary by market participants, similar to the level of transparency existing for the transport of gas via pipelines. Gas Infrastructure Europe (GIE) operates two main platforms covering all EU Member States as well as the United Kingdom and Ukraine: the Aggregated Gas Storage Inventory (AGSI) for gas storage and the Aggregated LNG Storage Inventory (ALSI) for LNG. Following the entry into force of Regulation (EU) 2022/2576 (Articles 12 and 13), new components were added to these platforms, including information on services offered and the conditions that apply to those services, contracted and available storage and LNG facility capacities, tariffs, etc. The platforms currently cover almost all EU large-scale LNG terminals and 98% of EU storage facilities. In addition to the EU-wide platforms, the individual storage and LNG operators were obliged to create more transparency around the possibilities to book secondary capacity. To this end, they were required to set up individual booking platforms. Greater transparency makes for a better and more comprehensive overview of the LNG and storage markets in the EU. It also results in more efficient use of these infrastructures and increases the potential to attract additional suppliers. (3) Action on the level of gas prices Development of a new complementary benchmark for LNG The EU’s LNG market is still consolidating. Hub indexed pricing remains influenced by pipeline supplies and by existing infrastructure bottlenecks, and therefore it does not always accurately reflect the price at which LNG is actually imported into the Union. Also, as Russian gas still represents a non-negligible – though decreasing – part of EU imports, increasingly concentrated in some areas, gas markets remain vulnerable to Russian gas supplies manipulation. There is a need to provide for stable and predictable pricing for LNG imports, which are indispensable to replace the supply shortfalls caused by the likely halt of Russian gas imports. Regulation 2022/2576 has tasked the European Agency for the Cooperation of Energy Regulators (‘ACER’) to create within a short time frame an objective price assessment tool, and over time a benchmark, of the EU’s LNG imports by collecting real-time information on all daily transactions. ACER has developed such a benchmark, which provides more comprehensive information to buyers and increases price transparency. Regulation 2022/2576 granted ACER the necessary powers to collect the transaction data needed for the establishment of the LNG benchmark, building on and reinforcing the tasks and powers ACER already had under Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency and Commission Implementing Regulation (EU) No 1348/2014 of 17 December 2014 on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (hereinafter together referred to as ‘REMIT’). (4) Action to reduce price volatility Intra-day price volatility management mechanism: Financial legislation (MiFID II) already requires a set of mechanisms to be set up by trading venues to contain significant volatility in financial markets, and ESMA has been working on ways to improve the functioning of circuit breakers across all asset classes, which will have a more permanent positive impact on trading of all asset classes, including energy derivatives. The just concluded MiFIR Review has also added the notion of emergency situation and given additional powers to ESMA on circuit breakers. Those changes are due to be transposed in national legislations by the second half of 2025. The intra-day volatility management mechanism set out in Regulation (EU) 2022/2576 has been introduced so that trading venues set up mechanisms to prevent excessive movements of prices within a trading day, either through the adaptation of existing circuit breakers or through the creation of an additional mechanism. Large volatility spikes on gas and electricity markets make it difficult for energy firms to continue participating in those markets and meet their hedging needs while ensuring security of energy supply for the end-consumers. Therefore, Regulation (EU) 2022/2576 lays down a requirement for trading venues to establish a temporary intra-day volatility management mechanism aimed at limiting large price movements in energy-related derivatives contracts within the same trading day. Trading venues can implement the intra-day volatility management mechanism either by integrating it into their existing circuit breakers already established in accordance with Directive 2014/65/EU or as an additional mechanism. (5) Security of supply Extension of solidarity protection obligation to critical gas fired power plants Under Regulation (EU) 2017/1938, a Member State where critical gas-fired power plants may play a key role for security of electricity supply, would have to curtail these power plants, to the possible detriment of the security of electricity supply of other Member States, before this Member State is allowed to request solidarity measures under Regulation (EU) 2017/1938. To prevent such negative spill-over effects into electricity generation, Regulation (EU) 2022/2576 allows Member States to trigger a solidarity request, under certain limits, if gas-fired power plants, that are needed to ensure the electricity system’s adequacy, are at risk of not being supplied with critical gas volumes. For the same reason, Member States providing solidarity will be entitled to ensure that the operation of their critical gas-fired power plants is not endangered when providing solidarity to another Member State. Default rules for bilateral solidarity Specific measures in Regulation (EU) 2022/2576 introduced a default mechanism between the Member States to ensure they help each other to supply the “solidarity protected customers” (households and under certain conditions district heating and essential social services) and critical gas-fired power plants, in an emergency leading to very severe shortage of gas. The security of supply rules resulting from Regulation (EU) 2017/1938 introduced the principle of such solidarity but its actual use in a crisis requires detailed legal, technical and financial arrangements which were supposed to be agreed bilaterally between Member States. However, only eight out of 40 required arrangements have been agreed so far. Articles 27 and 28 of Regulation (EU) 2022/2576, therefore, spell out the rules and procedures that will automatically apply between Member States which have not agreed on bilateral solidarity arrangements. Solidarity has to be provided based on fair compensation pursuant to Article 13 of Regulation (EU) 2017/1938. However, possible indirect costs resulting from judicial or arbitration proceedings after the curtailment of industry will remain to be limited to 100% of the price of gas. The reason is that the cost of compensation to industry resulting from curtailment is partially covered by the price of gas and, should a part remain from litigation, this part is highly uncertain and can largely exceed the costs of the gas. The uncertainty about indirect compensation costs therefore has proved to be a major obstacle for Member States to conclude bilateral solidarity agreements. However, Member States will still be able to agree on different compensation conditions. The current solidarity obligation, stemming from Regulation (EU) 2017/1938, applies between the Member States that are directly connected or via a third country. This proposed prolongation will maintain the extension of this obligation to Member States with LNG facilities, which, even if not directly connected, could provide solidarity to a Member State in an emergency if endowed with the infrastructure necessary to receive this LNG. 1.1.2. The c urrent situation : severe difficulties and risks for the EU’s security of gas supply persist The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576 , helped mitigate the consequences of the crisis and prepared the EU to a degraded security of gas supplies situation. In the Report on the main findings of the review of Regulation (EU) 2022/2576, in view of the general situation of gas supply to the Union 1 , the Commission concluded that the Regulation’s provisions have played an important role in stabilising the situation of the gas market and ensuring adequate gas supply to the Union, and that the Regulation is an important element of the EU gas security of supply tool kit . If not prolonged, the Regulation will cease to apply on 30 December 2023. However, as of the date of adoption of this proposal, severe difficulties in gas supplies to the Union persist. 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 in 2023, and these unreliable imports may be further reduced or stopped. This figure would be approximately 110 bcm less than in 2021. Global gas markets remain very tight and are expected to remain as such for some time as only very limited new LNG liquefaction capacity globally is planned to be operational before 2026. This situation has negative consequences on gas prices which, despite being lower than the peak experienced in summer 2022 (when prices spiked above 300 EUR/MWh), remain more than twice as high than pre-crisis levels. Over the previous decade, prices had moved within a band of EUR 5 MWh to EUR 35 MWh and averaged around EUR 20/MWh. In early autumn 2023 prices ranged between EUR 40 MWh and EUR 50 MWh. This level of prices still has inevitable repercussions on the EU citizens’ purchasing power and the competitiveness of European businesses. Market volatility is also a consequence of the market tightness and represents an additional risk for the EU economy. Summer and autumn 2023 saw a number of episodes of significant volatility when prices increased by more than 50% in few weeks. This shows that gas markets are still fragile and may have large reactions to any unexpected and sudden shock to supply and demand, as was the case following the strike in Australian LNG facilities, the Middle East crisis and the disruption of the Balticconnector. Under these conditions, the fear of scarcity may trigger large reactions with serious repercussions on prices. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include: a rebound in Asian liquefied natural gas (LNG) demand that further reduces 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 conditions potentially affecting hydropower storage or nuclear production which would require higher recourse to gas-fired power generation and/or trigger increased demand for gas, and further possible gas supply disruptions, including a complete halt of gas imports from Russia or a disruption of existing critical gas infrastructure. Furthermore, since the adoption of the Report on the main findings of the review of Regulation (EU) 2022/2576, the threat landscape has deteriorated. Armed conflicts of high intensity are now hitting several of the key EU supply regions, in addition to Russia’s war of aggression against Ukraine (Azerbaijan, Middle East). Recent examples illustrate the likelihood and relevance of the risks related to the disruption of critical gas infrastructure. In September 2022, the NordStream 1 pipeline was damaged by acts of sabotage to such a degree that it currently cannot transport any gas and will not be able to do so in the foreseeable future. In October 2023, the Balticconnector, an important pipeline connecting Finland to Estonia, was disrupted. The investigation is examining whether the damage was external and made by a vessel’s anchor. As a result of the Balticconnector disruption, Finland is now no longer able to meet the N-1 criterion as part of the infrastructure standard defined in Article 5 of Regulation (EU) 2017/1938. The N-1 criterion ensures that Member States take measures so that in case of a disruption of the single largest gas infrastructure, they still have the technical capacity to satisfy their total demand during a peak day, As a result of the Balticconnector disruption, on 27 October 2023 Finland raised its crisis level pursuant to Article 11 of Regulation (EU) 2017/1938 from “early warning” to “alert”, which is the last crisis level before an emergency. This new infrastructure incident illustrates the likelihood and relevance of the risks related to new disruptions of critical gas infrastructure. It should be also noted that the significant reduction in demand for natural gas (-18% between August 2022 and September 2023) is contributing to preserve the gas balance in the EU. This reduction is a result of economic factors (e.g. high prices) and administrative measures adopted by Member States pursuant to Regulation 2022/1369 on coordinated gas demand reduction and Regulation (EU) 2023/706 that prolonged it. A possible increase in demand, due to a rebound in the gas use in the residential, commercial and industrial sectors or in case the administrative measures aimed at reducing demand were not prolonged further, represents an additional risk that, given the current situation of tight global gas markets, could undermine EU’s security of gas supply. In three subsequent reports of December 2022 , February and July 2023 , the I nternational E nergy A gency (IEA) has consistently been highlighting the risks for the EU security of gas supply and warning against complacency in the light of the improvement of the situation compared to the peak of the crisis in summer 2022. According to the report of February 2023 , “ g lobal gas supply is set to remain tight in 2023 and the global balance is subject to an unusually wide range of uncertainties and exogenous risk factors. This includes the possibility of complete cessation of Russian piped gas deliveries to the European Union, as well as a recovery of China’s LNG imports in line with the country’s long-term LNG contracts and a potential lower availability of LNG supply ” The IEA warned that “ the improved outlook should not be a distraction from the measures necessary (…) to mitigate the European Union’s exposure to the exogenous risks ” 2 . It developed stress scenario s w ith a halt to Russian gas supplies , LNG supplies remain ing tight and weather-related demand increases , which could result in a potential supply-demand gap of 40 bcm i n the EU . In its report of July 2023, the IEA highlighted that “ risks and uncertainties remain ahead of the 2023/24 Northern Hemisphere winter ” and “ full storage sites are no guarantee against winter volatility and the risk of renewed market tensions ” 3 . In addition, the European Network of Transmission System Operators (ENTSOG) published its yearly Winter Supply Outlook with a summer overview, i n line with Art icle 8 of Regulation (EC) 715/2009. ENTSOG concluded that although the general security of supply situation in the EU has significantly improved, additional measures may be needed in case of a full Russian supply disruption. In addition, careful management of the storages throughout the winter of 2023-2024 is needed, as a 46% filling level is likely needed at the beginning of the injection season to achieve the 90% storage target set out by Regulation (EU) 2022/1032 4 . In conclusion, in the light of the persisting severe difficulties and risks, the situation related to gas supplies, while improved compared to the peak of the crisis in summer 2022, remains fragile. The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to improve the situation. Should the relevant Union measures cease to apply, this would alter 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 imports. In the light of these persisting severe difficulties and risks for the EU’s security of gas supply, and not to alter the current fragile balance, it is necessary and urgent to prolong Regulation (EU) 2022/2576. Hence, this Proposal seeks to prolong by one year the period of application of Regulation 2022/2576 enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. The prolongation by one year is necessary and proportionate due to the persistent nature of the severe difficulties and the additional risks, and the uncertainty of the current situation which is expected to continue during the whole of 2024. 1.1.3. Reasons for prolonging the Regulation’s provisions in the current situation The different provisions of Regulation (EU) 2022/2576, which the current proposal seeks to prolong, are necessary to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply, for the following reasons. Better coordination of gas purchases (Chapter II – Section 1 and 2) In general, demand aggregation and better coordination of gas purchases help to ensure more equal access for undertakings across Member States, especially those in landlocked countries or without direct access to international markets, to new or additional gas sources in urgent situations where solidarity is required. It can, in the spirit of solidarity, reduce the detrimental effect of outbidding, which is driving prices up and help in particular smaller undertakings to benefit from more advantageous purchasing conditions resulting from aggregated demand. Pursuant to Regulation (EU) 2022/2576, the Commission designed and launched, with the assistance of a service provider, the demand aggregation and joint purchasing mechanism under the name of “AggregateEU”. Member States and natural gas undertakings as well as undertakings consuming gas have effectively participated in the demand aggregation and joint purchasing mechanism 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. The matched volumes in the same period amounted to 34.77 bcm, corresponding to around 10% of EU consumption in 2022. This shows that "AggregateEU” attracted significant interest by market participants. The Commission also implemented supporting measures as mandated by the Regulation, including those on transparency and information exchange, governance of the EU Energy Platform and mandatory use of “AggregateEU”. Under the transparency and information exchange provisions of the Regulation, the Commission issued two recommendations by July 2023. In these instances, the Commission considered that further coordination with regards to tenders for the purchase of gas was needed, as it could improve the functioning of joint purchasing or prevent a negative impact on the internal market, on security of supply or on energy solidarity. In the Report on the main findings of the review of Regulation (EU) 2022/2576, the Commission concluded that the “AggregateEU” mechanism, based on the demand aggregation provisions of the Regulation, provided additional opportunities for European buyers (undertakings established in the EU and in the Energy Community Contracting Parties) 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. In view of the above, demand aggregation and better coordination of gas purchases remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply. The relevant provisions should therefore be prolonged by one year. Measures to enhance the use of LNG facilities, gas storage facilities and pipelines (Chapter II – Section 3) The provisions of Regulation (EU) 2022/2576 increasing the transparency around available capacities and services offered at LNG terminals and gas storage sites facilitated the increased influx of LNG into the Union and facilitated the accommodation of the altered gas flows. The situation has not changed since the adoption of the Regulation as the EU still needs to import large volumes of LNG to compensate for the Russian pipeline supply and it will continue to do so in the foreseeable future. This is why enhanced transparency around LNG terminals and storage sites remains necessary. Regulation (EU) 2022/2576 requires having use-it-or-lose-it mechanisms in place at all interconnection points in Europe, whereas this was only a requirement for certain interconnection points in the past. Such mechanisms enable the system to react to possible congestion resulting from changed gas flows in a swift and flexible manner. The measures to enhance the use of LNG facilities, gas storage facilities and pipelines remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III) Due to the difficulties to assess the accuracy of LNG prices prevailing in the marketplace, Regulation (EU) 2022/2576 tasks the European Union Agency for the Cooperation of Energy Regulators (ACER) to collect all the data on transactions pertaining to LNG deliveries to the Union necessary to establish a daily LNG price assessment and a daily LNG benchmark, determined as the spread between the LNG daily price assessment and the settlement price for the TTF futures front-month. On trading, Regulation (EU) 2022/2576 includes a measure to manage excess volatility in gas and electricity derivatives markets, while preserving the price formation processes. The intra-day price spike collar aims at avoiding excessive price volatility and prevent extreme price spikes in prices on energy derivative market over a trading day. As concluded in the Report on the main findings of the review of Regulation (EU) 2022/2576, since gas markets still feature episodes of significant volatility, the provisions in Chapter III –of Regulation (EU) 2022/2576 may play a role in preventing excessive price spikes and in stabilising the market. The episodes of pronounced volatility observed in summer and autumn 2023 reinforce the conclusion that gas markets are still fragile and vulnerable to extreme price spikes. The intra-day volatility mechanism could remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures for the case of a gas emergency (Chapter IV) Regulation (EU) 2022/2576 temporarily complemented the Gas Security of Supply Regulation, notably by making the solidarity mechanism applicable by default in absence of bilateral agreements, as well as by extending the solidarity mechanism to liquified natural gas (LNG) and critical gas volumes (CGV) for electricity. In addition, a provision was added to facilitate demand reduction by protected customers, as well as a provision to safeguard cross-border flows. In December 2022, the Commission carried out a joint solidarity ‘dry run’ exercise with EU Member States and ENTSOG, which tested the emergency rules and procedures, as well as the solidarity mechanism. In addition, the Commission circulated a questionnaire to the Gas Coordination Group to gather feedback on e.g. the provisions set out in Regulation (EU) 2022/1576. The outcomes of the ‘dry run’ exercise and the questionnaire are further detailed in the Report on the main findings of the review of Regulation 2022/2576. Based on the findings of the Report on the main findings of the review of Regulation (EU) 2022/2576 and the new threat landscape, the Commission concludes that the concepts set out in Chapter IV remain essential to mitigate possible gas crises and reduce the collective costs of such a crisis, and for facilitating ongoing or future demand reduction efforts. In particular, the absence of bilateral agreements is a structural vulnerability that persists, meaning that a prolongation of default rules is necessary. Critical gas volumes for electricity generation too remain crucial to prevent that a potential gas crisis does not spread to the electricity system. 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. In addition, the supply landscape of the EU has changed significantly, with LNG being the main supply source in 2023. Solidarity should therefore still be extended to include Member States with LNG facilities, to reflect this changed reality. Lastly, the concepts of non-essential consumption of protected customers and the additional safeguards for cross-border flows in an emergency were assessed to be beneficial concepts for preventing and mitigating crises and therefore useful provisions to prolong. 
Revised version (Article 27 Default rules for solidarity measures):
3. If a Member State requests compensation for indirect costs pursuant to paragraph 2, point (d), exceeding 100 % of the gas price, the Commission shall, after consulting the relevant competent authorities, decide whether a higher compensation is appropriate, taking into account the specific contractual and national circumstances of the case and the principle of energy solidarity. 4. Unless the Member State requesting solidarity and the Member State providing solidarity agree on another price, the price for the gas supplied to the Member State requesting solidarity shall correspond to the day-ahead market price in the Member State providing solidarity the day preceding the request for solidarity or the corresponding day-ahead market price at the closest accessible exchange, at the closest accessible virtual trading point, or at an agreed hub over the day preceding the request for solidarity. 5. Compensation for the gas volumes delivered in the context of a solidarity request pursuant to Article 28 shall be paid directly by the Member State requesting solidarity to the Member State providing solidarity or the entity both Member States indicate in their response to the solidarity request and the confirmation of receipt and of the volume to be taken. 7. In addition to the default rules provided for in this Article, Member States may agree on technical arrangements and coordination of the provision of solidarity. 8. This Article shall be without prejudice to existing arrangements for the safe and reliable operation of the gas system.
Article 28 Procedure for solidarity measures in the absence of a solidarity agreement
1. The Member State requesting the application of the solidarity measures shall issue a solidarity request to another Member State, indicating at least the following information: (a) contact details of the competent authority of the Member State; (b) contact details of the relevant transmission system operators of the Member State (if relevant); (c) contact details of the third party acting on behalf of the Member State (if relevant); (d) delivery period including timing of the first possible delivery and the anticipated duration of deliveries; (e) delivery and interconnection points; (f) gas volume in kWh for each interconnection point; (g) gas quality. 2. The solidarity request shall be sent simultaneously to Member States potentially being able to provide solidarity measures, to the Commission and to the crisis managers designated pursuant to Article 10(1), point (g), of Regulation (EU) 2017/1938. 3. The Member States receiving a solidarity request shall send a response that indicates the contact details referred to in paragraph 1, points (a), (b) and (c), and the volume and quality that can be supplied to the interconnection points at the time requested as referred to in paragraph 1, points (d) to (g). The response shall indicate the volume resulting from possible curtailment, or where it is strictly indispensable, release of strategic stocks if the volume that can be supplied by voluntary measures is insufficient. 4. Solidarity requests shall be submitted at least 72 hours before the indicated delivery time. The response to solidarity requests shall be done within 24 hours. The confirmation of receipt and of the volume to be taken by the Member State requesting solidarity shall be done within 24 hours of the delivery time needed. 5. The request may be submitted for a period of one day or several days, and the response shall match the requested duration. 6. Where there are several Member States providing solidarity and bilateral solidarity arrangements are in place with one or several of them, those arrangements shall prevail between the Member States having agreed bilaterally. The default rules provided for in this Article shall only be applicable in relation to the other Member States providing solidarity. 7. The Commission may facilitate the implementation of solidarity agreements, in particular by means of a template accessible on a secured online platform to enable real-time transmission of requests and offers.
Amendment rationale: CONTEXT OF THE PROPOSAL 1.1 Reasons for and objectives of the proposal Since Russia’s unprovoked and unjustified full-scale invasion of Ukraine, supplies of gas to the EU by Russia have been disrupted as a deliberate attempt to use energy as a political weapon. Russia has been for many years the main gas supplier of the EU. Historically, the EU relied on Russia for more than 40% of its gas supplies. The supply of gas has continuously decreased since February 2022. The pipeline flows of gas from Russia had been less than 10% of the EU’s gas imports in the first half of 2023. Twelve Member States activated the first or second crisis level pursuant to the common EU classification, as foreseen by the Gas Security of Supply Regulation (EU) 2017/1938. This supply shock has had significant impacts on the price level and volatility of gas and electricity, on inflation, on the overall EU financial and macroeconomic stability, and on all citizens. The wholesale price in 2022 was on average more than five times higher than the pre-crisis level and even spiked above 300 €/MWh at the peak of the crisis in summer 2022. They remain to this date at markedly higher levels than in the pre-crisis period, with strong volatility. Companies, in particular energy-intensive industries, experienced loss of competitiveness, while citizens face reduced purchasing power. In this context, the Council adopted on 19 December 2022 the Council Regulation (EU) 2022/2576 to enhance solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. Regulation (EU) 2022/2576 provides a temporary legal basis in respect of: · better coordination of gas purchases (Chapter II) ; · measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III), and ; · measures for the case of a gas emergency (Chapter IV). Regulation (EU) 2022/2576 aims at mitigating the impact on the price for gas by addressing demand and supply, ensuring security of supply across the entire European Union, and enhancing solidarity. It contains different elements designed to work, in a coherent manner, towards avoiding very high prices and reinforcing solidarity and security of supply. This proposal seeks to prolong by one year the period of application of the provisions of Regulation (EU) 2022/2576 in view of the persisting risks for energy supplies in the Union. The Union’s response under REPowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to mitigating the effects of Russia’s invasion of Ukraine on the supplies of gas, and its subsequent impacts on price levels, inflation, financial and macroeconomic stability, and on all citizens. However, global gas markets continue to be very tight and market balances are expected to 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. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include 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; and a deterioration of the geopolitical environment and threat landscape in supplying regions, for example with the crisis in the Middle East. Should the relevant Union measures cease to apply, this would alter 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 imports. 1.1.1. The m ain elements of Regulation (EU) 2022/2576 (1) Demand aggregation and better coordination of gas purchases Pursuant to Regulation (EU) 2022/2576, the Commission designed and implemented, with the support of a service provider, the “AggregateEU” mechanism, which allows for aggregation of demand, organisation of tendering rounds vis à vis international gas suppliers and matching the demand with suppliers’ bids. The mechanism is open to participation, as buyers, of undertakings established in the EU and in the Energy Community Contracting Parties. The Regulation provides for mandatory demand aggregation by laying down on Member States an obligation to require domestic undertakings to use the service provider to aggregate demand with sufficiently high volumes of gas. Volumes equivalent to at least 15 % of storage filling targets (around 13,5 billion cubic metres for the Union as a whole), are to be included by Member States’ undertakings in the demand aggregation process. To prevent that the objective of diversification from the gas supplied from the Russian Federation is put at risk, Regulation (EU) 2022/2576 provides that participation of undertakings or other bodies controlled by Russian natural or legal persons or undertakings established in the Russian Federation is excluded. In addition, natural gas originating in the Russian Federation is excluded from the demand aggregation and joint purchasing mechanism, including natural gas supplies entering the Member States or Energy Community Contracting Parties through a list of entry points. Regulation (EU) 2022/2576 contains provisions aimed at ensuring a better coordination of gas purchases in the Union and energy solidarity among Member States. To achieve this, the Regulation seeks to provide the Commission with an overview of upcoming tenders or contracts related to the sale and purchase of gas. Accordingly, natural gas undertakings or undertakings consuming gas are required to send notifications to the Commission of any upcoming tenders or contracts of a volume above 5 TWh/year. The Commission then may issue recommendations to such undertakings in cases where such tenders or contracts may negatively impact the joint purchasing mechanism, market functioning, security of supply or solidarity. (2) Efficient operation of pipelines and LNG terminals Regulation (EU) 2022/2576 also enhances the efficient operation of pipelines and LNG terminals. Diversification of supply sources away from Russian gas has been changing the gas flow patterns in the EU. Therefore, the routes from LNG terminals to consumption centres have become more relevant than the formerly predominant East-West flows. However, such changes in gas flows have led to particularly high levels of congestion at interconnection points, notably in north-western Europe. To enhance the gas system’s responsiveness to congestion and improve the system’s flexibility, Article 14 of Regulation (EU) 2022/2576 contains provisions obliging TSOs to offer underutilised contracted firm capacity for all interconnectors, not only congested ones, either through (i) the implementation of a new monthly “use-it-or-lose-it” (UIOLI) procedure, or (ii) the extension of existing procedures with the same objective. Moreover, it has become of utmost importance to optimise the LNG absorption capacity of the EU LNG terminals and the usage of storage facilities. For this purpose, increased transparency was deemed necessary by market participants, similar to the level of transparency existing for the transport of gas via pipelines. Gas Infrastructure Europe (GIE) operates two main platforms covering all EU Member States as well as the United Kingdom and Ukraine: the Aggregated Gas Storage Inventory (AGSI) for gas storage and the Aggregated LNG Storage Inventory (ALSI) for LNG. Following the entry into force of Regulation (EU) 2022/2576 (Articles 12 and 13), new components were added to these platforms, including information on services offered and the conditions that apply to those services, contracted and available storage and LNG facility capacities, tariffs, etc. The platforms currently cover almost all EU large-scale LNG terminals and 98% of EU storage facilities. In addition to the EU-wide platforms, the individual storage and LNG operators were obliged to create more transparency around the possibilities to book secondary capacity. To this end, they were required to set up individual booking platforms. Greater transparency makes for a better and more comprehensive overview of the LNG and storage markets in the EU. It also results in more efficient use of these infrastructures and increases the potential to attract additional suppliers. (3) Action on the level of gas prices Development of a new complementary benchmark for LNG The EU’s LNG market is still consolidating. Hub indexed pricing remains influenced by pipeline supplies and by existing infrastructure bottlenecks, and therefore it does not always accurately reflect the price at which LNG is actually imported into the Union. Also, as Russian gas still represents a non-negligible – though decreasing – part of EU imports, increasingly concentrated in some areas, gas markets remain vulnerable to Russian gas supplies manipulation. There is a need to provide for stable and predictable pricing for LNG imports, which are indispensable to replace the supply shortfalls caused by the likely halt of Russian gas imports. Regulation 2022/2576 has tasked the European Agency for the Cooperation of Energy Regulators (‘ACER’) to create within a short time frame an objective price assessment tool, and over time a benchmark, of the EU’s LNG imports by collecting real-time information on all daily transactions. ACER has developed such a benchmark, which provides more comprehensive information to buyers and increases price transparency. Regulation 2022/2576 granted ACER the necessary powers to collect the transaction data needed for the establishment of the LNG benchmark, building on and reinforcing the tasks and powers ACER already had under Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency and Commission Implementing Regulation (EU) No 1348/2014 of 17 December 2014 on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (hereinafter together referred to as ‘REMIT’). (4) Action to reduce price volatility Intra-day price volatility management mechanism: Financial legislation (MiFID II) already requires a set of mechanisms to be set up by trading venues to contain significant volatility in financial markets, and ESMA has been working on ways to improve the functioning of circuit breakers across all asset classes, which will have a more permanent positive impact on trading of all asset classes, including energy derivatives. The just concluded MiFIR Review has also added the notion of emergency situation and given additional powers to ESMA on circuit breakers. Those changes are due to be transposed in national legislations by the second half of 2025. The intra-day volatility management mechanism set out in Regulation (EU) 2022/2576 has been introduced so that trading venues set up mechanisms to prevent excessive movements of prices within a trading day, either through the adaptation of existing circuit breakers or through the creation of an additional mechanism. Large volatility spikes on gas and electricity markets make it difficult for energy firms to continue participating in those markets and meet their hedging needs while ensuring security of energy supply for the end-consumers. Therefore, Regulation (EU) 2022/2576 lays down a requirement for trading venues to establish a temporary intra-day volatility management mechanism aimed at limiting large price movements in energy-related derivatives contracts within the same trading day. Trading venues can implement the intra-day volatility management mechanism either by integrating it into their existing circuit breakers already established in accordance with Directive 2014/65/EU or as an additional mechanism. (5) Security of supply Extension of solidarity protection obligation to critical gas fired power plants Under Regulation (EU) 2017/1938, a Member State where critical gas-fired power plants may play a key role for security of electricity supply, would have to curtail these power plants, to the possible detriment of the security of electricity supply of other Member States, before this Member State is allowed to request solidarity measures under Regulation (EU) 2017/1938. To prevent such negative spill-over effects into electricity generation, Regulation (EU) 2022/2576 allows Member States to trigger a solidarity request, under certain limits, if gas-fired power plants, that are needed to ensure the electricity system’s adequacy, are at risk of not being supplied with critical gas volumes. For the same reason, Member States providing solidarity will be entitled to ensure that the operation of their critical gas-fired power plants is not endangered when providing solidarity to another Member State. Default rules for bilateral solidarity Specific measures in Regulation (EU) 2022/2576 introduced a default mechanism between the Member States to ensure they help each other to supply the “solidarity protected customers” (households and under certain conditions district heating and essential social services) and critical gas-fired power plants, in an emergency leading to very severe shortage of gas. The security of supply rules resulting from Regulation (EU) 2017/1938 introduced the principle of such solidarity but its actual use in a crisis requires detailed legal, technical and financial arrangements which were supposed to be agreed bilaterally between Member States. However, only eight out of 40 required arrangements have been agreed so far. Articles 27 and 28 of Regulation (EU) 2022/2576, therefore, spell out the rules and procedures that will automatically apply between Member States which have not agreed on bilateral solidarity arrangements. Solidarity has to be provided based on fair compensation pursuant to Article 13 of Regulation (EU) 2017/1938. However, possible indirect costs resulting from judicial or arbitration proceedings after the curtailment of industry will remain to be limited to 100% of the price of gas. The reason is that the cost of compensation to industry resulting from curtailment is partially covered by the price of gas and, should a part remain from litigation, this part is highly uncertain and can largely exceed the costs of the gas. The uncertainty about indirect compensation costs therefore has proved to be a major obstacle for Member States to conclude bilateral solidarity agreements. However, Member States will still be able to agree on different compensation conditions. The current solidarity obligation, stemming from Regulation (EU) 2017/1938, applies between the Member States that are directly connected or via a third country. This proposed prolongation will maintain the extension of this obligation to Member States with LNG facilities, which, even if not directly connected, could provide solidarity to a Member State in an emergency if endowed with the infrastructure necessary to receive this LNG. 1.1.2. The c urrent situation : severe difficulties and risks for the EU’s security of gas supply persist The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576 , helped mitigate the consequences of the crisis and prepared the EU to a degraded security of gas supplies situation. In the Report on the main findings of the review of Regulation (EU) 2022/2576, in view of the general situation of gas supply to the Union 1 , the Commission concluded that the Regulation’s provisions have played an important role in stabilising the situation of the gas market and ensuring adequate gas supply to the Union, and that the Regulation is an important element of the EU gas security of supply tool kit . If not prolonged, the Regulation will cease to apply on 30 December 2023. However, as of the date of adoption of this proposal, severe difficulties in gas supplies to the Union persist. 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 in 2023, and these unreliable imports may be further reduced or stopped. This figure would be approximately 110 bcm less than in 2021. Global gas markets remain very tight and are expected to remain as such for some time as only very limited new LNG liquefaction capacity globally is planned to be operational before 2026. This situation has negative consequences on gas prices which, despite being lower than the peak experienced in summer 2022 (when prices spiked above 300 EUR/MWh), remain more than twice as high than pre-crisis levels. Over the previous decade, prices had moved within a band of EUR 5 MWh to EUR 35 MWh and averaged around EUR 20/MWh. In early autumn 2023 prices ranged between EUR 40 MWh and EUR 50 MWh. This level of prices still has inevitable repercussions on the EU citizens’ purchasing power and the competitiveness of European businesses. Market volatility is also a consequence of the market tightness and represents an additional risk for the EU economy. Summer and autumn 2023 saw a number of episodes of significant volatility when prices increased by more than 50% in few weeks. This shows that gas markets are still fragile and may have large reactions to any unexpected and sudden shock to supply and demand, as was the case following the strike in Australian LNG facilities, the Middle East crisis and the disruption of the Balticconnector. Under these conditions, the fear of scarcity may trigger large reactions with serious repercussions on prices. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include: a rebound in Asian liquefied natural gas (LNG) demand that further reduces 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 conditions potentially affecting hydropower storage or nuclear production which would require higher recourse to gas-fired power generation and/or trigger increased demand for gas, and further possible gas supply disruptions, including a complete halt of gas imports from Russia or a disruption of existing critical gas infrastructure. Furthermore, since the adoption of the Report on the main findings of the review of Regulation (EU) 2022/2576, the threat landscape has deteriorated. Armed conflicts of high intensity are now hitting several of the key EU supply regions, in addition to Russia’s war of aggression against Ukraine (Azerbaijan, Middle East). Recent examples illustrate the likelihood and relevance of the risks related to the disruption of critical gas infrastructure. In September 2022, the NordStream 1 pipeline was damaged by acts of sabotage to such a degree that it currently cannot transport any gas and will not be able to do so in the foreseeable future. In October 2023, the Balticconnector, an important pipeline connecting Finland to Estonia, was disrupted. The investigation is examining whether the damage was external and made by a vessel’s anchor. As a result of the Balticconnector disruption, Finland is now no longer able to meet the N-1 criterion as part of the infrastructure standard defined in Article 5 of Regulation (EU) 2017/1938. The N-1 criterion ensures that Member States take measures so that in case of a disruption of the single largest gas infrastructure, they still have the technical capacity to satisfy their total demand during a peak day, As a result of the Balticconnector disruption, on 27 October 2023 Finland raised its crisis level pursuant to Article 11 of Regulation (EU) 2017/1938 from “early warning” to “alert”, which is the last crisis level before an emergency. This new infrastructure incident illustrates the likelihood and relevance of the risks related to new disruptions of critical gas infrastructure. It should be also noted that the significant reduction in demand for natural gas (-18% between August 2022 and September 2023) is contributing to preserve the gas balance in the EU. This reduction is a result of economic factors (e.g. high prices) and administrative measures adopted by Member States pursuant to Regulation 2022/1369 on coordinated gas demand reduction and Regulation (EU) 2023/706 that prolonged it. A possible increase in demand, due to a rebound in the gas use in the residential, commercial and industrial sectors or in case the administrative measures aimed at reducing demand were not prolonged further, represents an additional risk that, given the current situation of tight global gas markets, could undermine EU’s security of gas supply. In three subsequent reports of December 2022 , February and July 2023 , the I nternational E nergy A gency (IEA) has consistently been highlighting the risks for the EU security of gas supply and warning against complacency in the light of the improvement of the situation compared to the peak of the crisis in summer 2022. According to the report of February 2023 , “ g lobal gas supply is set to remain tight in 2023 and the global balance is subject to an unusually wide range of uncertainties and exogenous risk factors. This includes the possibility of complete cessation of Russian piped gas deliveries to the European Union, as well as a recovery of China’s LNG imports in line with the country’s long-term LNG contracts and a potential lower availability of LNG supply ” The IEA warned that “ the improved outlook should not be a distraction from the measures necessary (…) to mitigate the European Union’s exposure to the exogenous risks ” 2 . It developed stress scenario s w ith a halt to Russian gas supplies , LNG supplies remain ing tight and weather-related demand increases , which could result in a potential supply-demand gap of 40 bcm i n the EU . In its report of July 2023, the IEA highlighted that “ risks and uncertainties remain ahead of the 2023/24 Northern Hemisphere winter ” and “ full storage sites are no guarantee against winter volatility and the risk of renewed market tensions ” 3 . In addition, the European Network of Transmission System Operators (ENTSOG) published its yearly Winter Supply Outlook with a summer overview, i n line with Art icle 8 of Regulation (EC) 715/2009. ENTSOG concluded that although the general security of supply situation in the EU has significantly improved, additional measures may be needed in case of a full Russian supply disruption. In addition, careful management of the storages throughout the winter of 2023-2024 is needed, as a 46% filling level is likely needed at the beginning of the injection season to achieve the 90% storage target set out by Regulation (EU) 2022/1032 4 . In conclusion, in the light of the persisting severe difficulties and risks, the situation related to gas supplies, while improved compared to the peak of the crisis in summer 2022, remains fragile. The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to improve the situation. Should the relevant Union measures cease to apply, this would alter 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 imports. In the light of these persisting severe difficulties and risks for the EU’s security of gas supply, and not to alter the current fragile balance, it is necessary and urgent to prolong Regulation (EU) 2022/2576. Hence, this Proposal seeks to prolong by one year the period of application of Regulation 2022/2576 enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. The prolongation by one year is necessary and proportionate due to the persistent nature of the severe difficulties and the additional risks, and the uncertainty of the current situation which is expected to continue during the whole of 2024. 1.1.3. Reasons for prolonging the Regulation’s provisions in the current situation The different provisions of Regulation (EU) 2022/2576, which the current proposal seeks to prolong, are necessary to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply, for the following reasons. Better coordination of gas purchases (Chapter II – Section 1 and 2) In general, demand aggregation and better coordination of gas purchases help to ensure more equal access for undertakings across Member States, especially those in landlocked countries or without direct access to international markets, to new or additional gas sources in urgent situations where solidarity is required. It can, in the spirit of solidarity, reduce the detrimental effect of outbidding, which is driving prices up and help in particular smaller undertakings to benefit from more advantageous purchasing conditions resulting from aggregated demand. Pursuant to Regulation (EU) 2022/2576, the Commission designed and launched, with the assistance of a service provider, the demand aggregation and joint purchasing mechanism under the name of “AggregateEU”. Member States and natural gas undertakings as well as undertakings consuming gas have effectively participated in the demand aggregation and joint purchasing mechanism 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. The matched volumes in the same period amounted to 34.77 bcm, corresponding to around 10% of EU consumption in 2022. This shows that "AggregateEU” attracted significant interest by market participants. The Commission also implemented supporting measures as mandated by the Regulation, including those on transparency and information exchange, governance of the EU Energy Platform and mandatory use of “AggregateEU”. Under the transparency and information exchange provisions of the Regulation, the Commission issued two recommendations by July 2023. In these instances, the Commission considered that further coordination with regards to tenders for the purchase of gas was needed, as it could improve the functioning of joint purchasing or prevent a negative impact on the internal market, on security of supply or on energy solidarity. In the Report on the main findings of the review of Regulation (EU) 2022/2576, the Commission concluded that the “AggregateEU” mechanism, based on the demand aggregation provisions of the Regulation, provided additional opportunities for European buyers (undertakings established in the EU and in the Energy Community Contracting Parties) 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. In view of the above, demand aggregation and better coordination of gas purchases remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply. The relevant provisions should therefore be prolonged by one year. Measures to enhance the use of LNG facilities, gas storage facilities and pipelines (Chapter II – Section 3) The provisions of Regulation (EU) 2022/2576 increasing the transparency around available capacities and services offered at LNG terminals and gas storage sites facilitated the increased influx of LNG into the Union and facilitated the accommodation of the altered gas flows. The situation has not changed since the adoption of the Regulation as the EU still needs to import large volumes of LNG to compensate for the Russian pipeline supply and it will continue to do so in the foreseeable future. This is why enhanced transparency around LNG terminals and storage sites remains necessary. Regulation (EU) 2022/2576 requires having use-it-or-lose-it mechanisms in place at all interconnection points in Europe, whereas this was only a requirement for certain interconnection points in the past. Such mechanisms enable the system to react to possible congestion resulting from changed gas flows in a swift and flexible manner. The measures to enhance the use of LNG facilities, gas storage facilities and pipelines remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III) Due to the difficulties to assess the accuracy of LNG prices prevailing in the marketplace, Regulation (EU) 2022/2576 tasks the European Union Agency for the Cooperation of Energy Regulators (ACER) to collect all the data on transactions pertaining to LNG deliveries to the Union necessary to establish a daily LNG price assessment and a daily LNG benchmark, determined as the spread between the LNG daily price assessment and the settlement price for the TTF futures front-month. On trading, Regulation (EU) 2022/2576 includes a measure to manage excess volatility in gas and electricity derivatives markets, while preserving the price formation processes. The intra-day price spike collar aims at avoiding excessive price volatility and prevent extreme price spikes in prices on energy derivative market over a trading day. As concluded in the Report on the main findings of the review of Regulation (EU) 2022/2576, since gas markets still feature episodes of significant volatility, the provisions in Chapter III –of Regulation (EU) 2022/2576 may play a role in preventing excessive price spikes and in stabilising the market. The episodes of pronounced volatility observed in summer and autumn 2023 reinforce the conclusion that gas markets are still fragile and vulnerable to extreme price spikes. The intra-day volatility mechanism could remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures for the case of a gas emergency (Chapter IV) Regulation (EU) 2022/2576 temporarily complemented the Gas Security of Supply Regulation, notably by making the solidarity mechanism applicable by default in absence of bilateral agreements, as well as by extending the solidarity mechanism to liquified natural gas (LNG) and critical gas volumes (CGV) for electricity. In addition, a provision was added to facilitate demand reduction by protected customers, as well as a provision to safeguard cross-border flows. In December 2022, the Commission carried out a joint solidarity ‘dry run’ exercise with EU Member States and ENTSOG, which tested the emergency rules and procedures, as well as the solidarity mechanism. In addition, the Commission circulated a questionnaire to the Gas Coordination Group to gather feedback on e.g. the provisions set out in Regulation (EU) 2022/1576. The outcomes of the ‘dry run’ exercise and the questionnaire are further detailed in the Report on the main findings of the review of Regulation 2022/2576. Based on the findings of the Report on the main findings of the review of Regulation (EU) 2022/2576 and the new threat landscape, the Commission concludes that the concepts set out in Chapter IV remain essential to mitigate possible gas crises and reduce the collective costs of such a crisis, and for facilitating ongoing or future demand reduction efforts. In particular, the absence of bilateral agreements is a structural vulnerability that persists, meaning that a prolongation of default rules is necessary. Critical gas volumes for electricity generation too remain crucial to prevent that a potential gas crisis does not spread to the electricity system. 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. In addition, the supply landscape of the EU has changed significantly, with LNG being the main supply source in 2023. Solidarity should therefore still be extended to include Member States with LNG facilities, to reflect this changed reality. Lastly, the concepts of non-essential consumption of protected customers and the additional safeguards for cross-border flows in an emergency were assessed to be beneficial concepts for preventing and mitigating crises and therefore useful provisions to prolong. 
Revised version (Article 28 Procedure for solidarity measures in the absence of a solidarity agreement):
2. The solidarity request shall be sent simultaneously to Member States potentially being able to provide solidarity measures, to the Commission and to the crisis managers designated pursuant to Article 10(1), point (g), of Regulation (EU) 2017/1938. 3. The Member States receiving a solidarity request shall send a response that indicates the contact details referred to in paragraph 1, points (a), (b) and (c), and the volume and quality that can be supplied to the interconnection points at the time requested as referred to in paragraph 1, points (d) to (g). The response shall indicate the volume resulting from possible curtailment, or where it is strictly indispensable, release of strategic stocks if the volume that can be supplied by voluntary measures is insufficient. 4. Solidarity requests shall be submitted at least 72 hours before the indicated delivery time. The response to solidarity requests shall be done within 24 hours. The confirmation of receipt and of the volume to be taken by the Member State requesting solidarity shall be done within 24 hours of the delivery time needed. 5. The request may be submitted for a period of one day or several days, and the response shall match the requested duration. 6. Where there are several Member States providing solidarity and bilateral solidarity arrangements are in place with one or several of them, those arrangements shall prevail between the Member States having agreed bilaterally. The default rules provided for in this Article shall only be applicable in relation to the other Member States providing solidarity. 7. The Commission may facilitate the implementation of solidarity agreements, in particular by means of a template accessible on a secured online platform to enable real-time transmission of requests and offers.
Article 29 Committee procedure
1. The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011. 2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.
Article 30 Review
By 1 October 2023, the Commission shall carry out a review of this Regulation in view of the general situation of the gas supply to the Union and shall present a report on the main findings of that review to the Council. The Commission may, based on that report, propose to prolong the validity of this Regulation.
Article 31 Entry into force and application
This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. It shall apply for a period of one year from its entry into force. Article 14 shall apply from 31 March 2023.
Amendment rationale: CONTEXT OF THE PROPOSAL 1.1 Reasons for and objectives of the proposal Since Russia’s unprovoked and unjustified full-scale invasion of Ukraine, supplies of gas to the EU by Russia have been disrupted as a deliberate attempt to use energy as a political weapon. Russia has been for many years the main gas supplier of the EU. Historically, the EU relied on Russia for more than 40% of its gas supplies. The supply of gas has continuously decreased since February 2022. The pipeline flows of gas from Russia had been less than 10% of the EU’s gas imports in the first half of 2023. Twelve Member States activated the first or second crisis level pursuant to the common EU classification, as foreseen by the Gas Security of Supply Regulation (EU) 2017/1938. This supply shock has had significant impacts on the price level and volatility of gas and electricity, on inflation, on the overall EU financial and macroeconomic stability, and on all citizens. The wholesale price in 2022 was on average more than five times higher than the pre-crisis level and even spiked above 300 €/MWh at the peak of the crisis in summer 2022. They remain to this date at markedly higher levels than in the pre-crisis period, with strong volatility. Companies, in particular energy-intensive industries, experienced loss of competitiveness, while citizens face reduced purchasing power. In this context, the Council adopted on 19 December 2022 the Council Regulation (EU) 2022/2576 to enhance solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. Regulation (EU) 2022/2576 provides a temporary legal basis in respect of: · better coordination of gas purchases (Chapter II) ; · measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III), and ; · measures for the case of a gas emergency (Chapter IV). Regulation (EU) 2022/2576 aims at mitigating the impact on the price for gas by addressing demand and supply, ensuring security of supply across the entire European Union, and enhancing solidarity. It contains different elements designed to work, in a coherent manner, towards avoiding very high prices and reinforcing solidarity and security of supply. This proposal seeks to prolong by one year the period of application of the provisions of Regulation (EU) 2022/2576 in view of the persisting risks for energy supplies in the Union. The Union’s response under REPowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to mitigating the effects of Russia’s invasion of Ukraine on the supplies of gas, and its subsequent impacts on price levels, inflation, financial and macroeconomic stability, and on all citizens. However, global gas markets continue to be very tight and market balances are expected to 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. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include 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; and a deterioration of the geopolitical environment and threat landscape in supplying regions, for example with the crisis in the Middle East. Should the relevant Union measures cease to apply, this would alter 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 imports. 1.1.1. The m ain elements of Regulation (EU) 2022/2576 (1) Demand aggregation and better coordination of gas purchases Pursuant to Regulation (EU) 2022/2576, the Commission designed and implemented, with the support of a service provider, the “AggregateEU” mechanism, which allows for aggregation of demand, organisation of tendering rounds vis à vis international gas suppliers and matching the demand with suppliers’ bids. The mechanism is open to participation, as buyers, of undertakings established in the EU and in the Energy Community Contracting Parties. The Regulation provides for mandatory demand aggregation by laying down on Member States an obligation to require domestic undertakings to use the service provider to aggregate demand with sufficiently high volumes of gas. Volumes equivalent to at least 15 % of storage filling targets (around 13,5 billion cubic metres for the Union as a whole), are to be included by Member States’ undertakings in the demand aggregation process. To prevent that the objective of diversification from the gas supplied from the Russian Federation is put at risk, Regulation (EU) 2022/2576 provides that participation of undertakings or other bodies controlled by Russian natural or legal persons or undertakings established in the Russian Federation is excluded. In addition, natural gas originating in the Russian Federation is excluded from the demand aggregation and joint purchasing mechanism, including natural gas supplies entering the Member States or Energy Community Contracting Parties through a list of entry points. Regulation (EU) 2022/2576 contains provisions aimed at ensuring a better coordination of gas purchases in the Union and energy solidarity among Member States. To achieve this, the Regulation seeks to provide the Commission with an overview of upcoming tenders or contracts related to the sale and purchase of gas. Accordingly, natural gas undertakings or undertakings consuming gas are required to send notifications to the Commission of any upcoming tenders or contracts of a volume above 5 TWh/year. The Commission then may issue recommendations to such undertakings in cases where such tenders or contracts may negatively impact the joint purchasing mechanism, market functioning, security of supply or solidarity. (2) Efficient operation of pipelines and LNG terminals Regulation (EU) 2022/2576 also enhances the efficient operation of pipelines and LNG terminals. Diversification of supply sources away from Russian gas has been changing the gas flow patterns in the EU. Therefore, the routes from LNG terminals to consumption centres have become more relevant than the formerly predominant East-West flows. However, such changes in gas flows have led to particularly high levels of congestion at interconnection points, notably in north-western Europe. To enhance the gas system’s responsiveness to congestion and improve the system’s flexibility, Article 14 of Regulation (EU) 2022/2576 contains provisions obliging TSOs to offer underutilised contracted firm capacity for all interconnectors, not only congested ones, either through (i) the implementation of a new monthly “use-it-or-lose-it” (UIOLI) procedure, or (ii) the extension of existing procedures with the same objective. Moreover, it has become of utmost importance to optimise the LNG absorption capacity of the EU LNG terminals and the usage of storage facilities. For this purpose, increased transparency was deemed necessary by market participants, similar to the level of transparency existing for the transport of gas via pipelines. Gas Infrastructure Europe (GIE) operates two main platforms covering all EU Member States as well as the United Kingdom and Ukraine: the Aggregated Gas Storage Inventory (AGSI) for gas storage and the Aggregated LNG Storage Inventory (ALSI) for LNG. Following the entry into force of Regulation (EU) 2022/2576 (Articles 12 and 13), new components were added to these platforms, including information on services offered and the conditions that apply to those services, contracted and available storage and LNG facility capacities, tariffs, etc. The platforms currently cover almost all EU large-scale LNG terminals and 98% of EU storage facilities. In addition to the EU-wide platforms, the individual storage and LNG operators were obliged to create more transparency around the possibilities to book secondary capacity. To this end, they were required to set up individual booking platforms. Greater transparency makes for a better and more comprehensive overview of the LNG and storage markets in the EU. It also results in more efficient use of these infrastructures and increases the potential to attract additional suppliers. (3) Action on the level of gas prices Development of a new complementary benchmark for LNG The EU’s LNG market is still consolidating. Hub indexed pricing remains influenced by pipeline supplies and by existing infrastructure bottlenecks, and therefore it does not always accurately reflect the price at which LNG is actually imported into the Union. Also, as Russian gas still represents a non-negligible – though decreasing – part of EU imports, increasingly concentrated in some areas, gas markets remain vulnerable to Russian gas supplies manipulation. There is a need to provide for stable and predictable pricing for LNG imports, which are indispensable to replace the supply shortfalls caused by the likely halt of Russian gas imports. Regulation 2022/2576 has tasked the European Agency for the Cooperation of Energy Regulators (‘ACER’) to create within a short time frame an objective price assessment tool, and over time a benchmark, of the EU’s LNG imports by collecting real-time information on all daily transactions. ACER has developed such a benchmark, which provides more comprehensive information to buyers and increases price transparency. Regulation 2022/2576 granted ACER the necessary powers to collect the transaction data needed for the establishment of the LNG benchmark, building on and reinforcing the tasks and powers ACER already had under Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency and Commission Implementing Regulation (EU) No 1348/2014 of 17 December 2014 on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (hereinafter together referred to as ‘REMIT’). (4) Action to reduce price volatility Intra-day price volatility management mechanism: Financial legislation (MiFID II) already requires a set of mechanisms to be set up by trading venues to contain significant volatility in financial markets, and ESMA has been working on ways to improve the functioning of circuit breakers across all asset classes, which will have a more permanent positive impact on trading of all asset classes, including energy derivatives. The just concluded MiFIR Review has also added the notion of emergency situation and given additional powers to ESMA on circuit breakers. Those changes are due to be transposed in national legislations by the second half of 2025. The intra-day volatility management mechanism set out in Regulation (EU) 2022/2576 has been introduced so that trading venues set up mechanisms to prevent excessive movements of prices within a trading day, either through the adaptation of existing circuit breakers or through the creation of an additional mechanism. Large volatility spikes on gas and electricity markets make it difficult for energy firms to continue participating in those markets and meet their hedging needs while ensuring security of energy supply for the end-consumers. Therefore, Regulation (EU) 2022/2576 lays down a requirement for trading venues to establish a temporary intra-day volatility management mechanism aimed at limiting large price movements in energy-related derivatives contracts within the same trading day. Trading venues can implement the intra-day volatility management mechanism either by integrating it into their existing circuit breakers already established in accordance with Directive 2014/65/EU or as an additional mechanism. (5) Security of supply Extension of solidarity protection obligation to critical gas fired power plants Under Regulation (EU) 2017/1938, a Member State where critical gas-fired power plants may play a key role for security of electricity supply, would have to curtail these power plants, to the possible detriment of the security of electricity supply of other Member States, before this Member State is allowed to request solidarity measures under Regulation (EU) 2017/1938. To prevent such negative spill-over effects into electricity generation, Regulation (EU) 2022/2576 allows Member States to trigger a solidarity request, under certain limits, if gas-fired power plants, that are needed to ensure the electricity system’s adequacy, are at risk of not being supplied with critical gas volumes. For the same reason, Member States providing solidarity will be entitled to ensure that the operation of their critical gas-fired power plants is not endangered when providing solidarity to another Member State. Default rules for bilateral solidarity Specific measures in Regulation (EU) 2022/2576 introduced a default mechanism between the Member States to ensure they help each other to supply the “solidarity protected customers” (households and under certain conditions district heating and essential social services) and critical gas-fired power plants, in an emergency leading to very severe shortage of gas. The security of supply rules resulting from Regulation (EU) 2017/1938 introduced the principle of such solidarity but its actual use in a crisis requires detailed legal, technical and financial arrangements which were supposed to be agreed bilaterally between Member States. However, only eight out of 40 required arrangements have been agreed so far. Articles 27 and 28 of Regulation (EU) 2022/2576, therefore, spell out the rules and procedures that will automatically apply between Member States which have not agreed on bilateral solidarity arrangements. Solidarity has to be provided based on fair compensation pursuant to Article 13 of Regulation (EU) 2017/1938. However, possible indirect costs resulting from judicial or arbitration proceedings after the curtailment of industry will remain to be limited to 100% of the price of gas. The reason is that the cost of compensation to industry resulting from curtailment is partially covered by the price of gas and, should a part remain from litigation, this part is highly uncertain and can largely exceed the costs of the gas. The uncertainty about indirect compensation costs therefore has proved to be a major obstacle for Member States to conclude bilateral solidarity agreements. However, Member States will still be able to agree on different compensation conditions. The current solidarity obligation, stemming from Regulation (EU) 2017/1938, applies between the Member States that are directly connected or via a third country. This proposed prolongation will maintain the extension of this obligation to Member States with LNG facilities, which, even if not directly connected, could provide solidarity to a Member State in an emergency if endowed with the infrastructure necessary to receive this LNG. 1.1.2. The c urrent situation : severe difficulties and risks for the EU’s security of gas supply persist The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576 , helped mitigate the consequences of the crisis and prepared the EU to a degraded security of gas supplies situation. In the Report on the main findings of the review of Regulation (EU) 2022/2576, in view of the general situation of gas supply to the Union 1 , the Commission concluded that the Regulation’s provisions have played an important role in stabilising the situation of the gas market and ensuring adequate gas supply to the Union, and that the Regulation is an important element of the EU gas security of supply tool kit . If not prolonged, the Regulation will cease to apply on 30 December 2023. However, as of the date of adoption of this proposal, severe difficulties in gas supplies to the Union persist. 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 in 2023, and these unreliable imports may be further reduced or stopped. This figure would be approximately 110 bcm less than in 2021. Global gas markets remain very tight and are expected to remain as such for some time as only very limited new LNG liquefaction capacity globally is planned to be operational before 2026. This situation has negative consequences on gas prices which, despite being lower than the peak experienced in summer 2022 (when prices spiked above 300 EUR/MWh), remain more than twice as high than pre-crisis levels. Over the previous decade, prices had moved within a band of EUR 5 MWh to EUR 35 MWh and averaged around EUR 20/MWh. In early autumn 2023 prices ranged between EUR 40 MWh and EUR 50 MWh. This level of prices still has inevitable repercussions on the EU citizens’ purchasing power and the competitiveness of European businesses. Market volatility is also a consequence of the market tightness and represents an additional risk for the EU economy. Summer and autumn 2023 saw a number of episodes of significant volatility when prices increased by more than 50% in few weeks. This shows that gas markets are still fragile and may have large reactions to any unexpected and sudden shock to supply and demand, as was the case following the strike in Australian LNG facilities, the Middle East crisis and the disruption of the Balticconnector. Under these conditions, the fear of scarcity may trigger large reactions with serious repercussions on prices. A number of risks can, if they materialise, fuel the fear of scarcity which, given the fragility of the market due to its tightness, may trigger large reactions with serious repercussions on prices. These risks include: a rebound in Asian liquefied natural gas (LNG) demand that further reduces 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 conditions potentially affecting hydropower storage or nuclear production which would require higher recourse to gas-fired power generation and/or trigger increased demand for gas, and further possible gas supply disruptions, including a complete halt of gas imports from Russia or a disruption of existing critical gas infrastructure. Furthermore, since the adoption of the Report on the main findings of the review of Regulation (EU) 2022/2576, the threat landscape has deteriorated. Armed conflicts of high intensity are now hitting several of the key EU supply regions, in addition to Russia’s war of aggression against Ukraine (Azerbaijan, Middle East). Recent examples illustrate the likelihood and relevance of the risks related to the disruption of critical gas infrastructure. In September 2022, the NordStream 1 pipeline was damaged by acts of sabotage to such a degree that it currently cannot transport any gas and will not be able to do so in the foreseeable future. In October 2023, the Balticconnector, an important pipeline connecting Finland to Estonia, was disrupted. The investigation is examining whether the damage was external and made by a vessel’s anchor. As a result of the Balticconnector disruption, Finland is now no longer able to meet the N-1 criterion as part of the infrastructure standard defined in Article 5 of Regulation (EU) 2017/1938. The N-1 criterion ensures that Member States take measures so that in case of a disruption of the single largest gas infrastructure, they still have the technical capacity to satisfy their total demand during a peak day, As a result of the Balticconnector disruption, on 27 October 2023 Finland raised its crisis level pursuant to Article 11 of Regulation (EU) 2017/1938 from “early warning” to “alert”, which is the last crisis level before an emergency. This new infrastructure incident illustrates the likelihood and relevance of the risks related to new disruptions of critical gas infrastructure. It should be also noted that the significant reduction in demand for natural gas (-18% between August 2022 and September 2023) is contributing to preserve the gas balance in the EU. This reduction is a result of economic factors (e.g. high prices) and administrative measures adopted by Member States pursuant to Regulation 2022/1369 on coordinated gas demand reduction and Regulation (EU) 2023/706 that prolonged it. A possible increase in demand, due to a rebound in the gas use in the residential, commercial and industrial sectors or in case the administrative measures aimed at reducing demand were not prolonged further, represents an additional risk that, given the current situation of tight global gas markets, could undermine EU’s security of gas supply. In three subsequent reports of December 2022 , February and July 2023 , the I nternational E nergy A gency (IEA) has consistently been highlighting the risks for the EU security of gas supply and warning against complacency in the light of the improvement of the situation compared to the peak of the crisis in summer 2022. According to the report of February 2023 , “ g lobal gas supply is set to remain tight in 2023 and the global balance is subject to an unusually wide range of uncertainties and exogenous risk factors. This includes the possibility of complete cessation of Russian piped gas deliveries to the European Union, as well as a recovery of China’s LNG imports in line with the country’s long-term LNG contracts and a potential lower availability of LNG supply ” The IEA warned that “ the improved outlook should not be a distraction from the measures necessary (…) to mitigate the European Union’s exposure to the exogenous risks ” 2 . It developed stress scenario s w ith a halt to Russian gas supplies , LNG supplies remain ing tight and weather-related demand increases , which could result in a potential supply-demand gap of 40 bcm i n the EU . In its report of July 2023, the IEA highlighted that “ risks and uncertainties remain ahead of the 2023/24 Northern Hemisphere winter ” and “ full storage sites are no guarantee against winter volatility and the risk of renewed market tensions ” 3 . In addition, the European Network of Transmission System Operators (ENTSOG) published its yearly Winter Supply Outlook with a summer overview, i n line with Art icle 8 of Regulation (EC) 715/2009. ENTSOG concluded that although the general security of supply situation in the EU has significantly improved, additional measures may be needed in case of a full Russian supply disruption. In addition, careful management of the storages throughout the winter of 2023-2024 is needed, as a 46% filling level is likely needed at the beginning of the injection season to achieve the 90% storage target set out by Regulation (EU) 2022/1032 4 . In conclusion, in the light of the persisting severe difficulties and risks, the situation related to gas supplies, while improved compared to the peak of the crisis in summer 2022, remains fragile. The Union’s response under RepowerEU and following initiatives, including the measures set out in Regulation (EU) 2022/2576, contributed to improve the situation. Should the relevant Union measures cease to apply, this would alter 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 imports. In the light of these persisting severe difficulties and risks for the EU’s security of gas supply, and not to alter the current fragile balance, it is necessary and urgent to prolong Regulation (EU) 2022/2576. Hence, this Proposal seeks to prolong by one year the period of application of Regulation 2022/2576 enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. The prolongation by one year is necessary and proportionate due to the persistent nature of the severe difficulties and the additional risks, and the uncertainty of the current situation which is expected to continue during the whole of 2024. 1.1.3. Reasons for prolonging the Regulation’s provisions in the current situation The different provisions of Regulation (EU) 2022/2576, which the current proposal seeks to prolong, are necessary to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply, for the following reasons. Better coordination of gas purchases (Chapter II – Section 1 and 2) In general, demand aggregation and better coordination of gas purchases help to ensure more equal access for undertakings across Member States, especially those in landlocked countries or without direct access to international markets, to new or additional gas sources in urgent situations where solidarity is required. It can, in the spirit of solidarity, reduce the detrimental effect of outbidding, which is driving prices up and help in particular smaller undertakings to benefit from more advantageous purchasing conditions resulting from aggregated demand. Pursuant to Regulation (EU) 2022/2576, the Commission designed and launched, with the assistance of a service provider, the demand aggregation and joint purchasing mechanism under the name of “AggregateEU”. Member States and natural gas undertakings as well as undertakings consuming gas have effectively participated in the demand aggregation and joint purchasing mechanism 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. The matched volumes in the same period amounted to 34.77 bcm, corresponding to around 10% of EU consumption in 2022. This shows that "AggregateEU” attracted significant interest by market participants. The Commission also implemented supporting measures as mandated by the Regulation, including those on transparency and information exchange, governance of the EU Energy Platform and mandatory use of “AggregateEU”. Under the transparency and information exchange provisions of the Regulation, the Commission issued two recommendations by July 2023. In these instances, the Commission considered that further coordination with regards to tenders for the purchase of gas was needed, as it could improve the functioning of joint purchasing or prevent a negative impact on the internal market, on security of supply or on energy solidarity. In the Report on the main findings of the review of Regulation (EU) 2022/2576, the Commission concluded that the “AggregateEU” mechanism, based on the demand aggregation provisions of the Regulation, provided additional opportunities for European buyers (undertakings established in the EU and in the Energy Community Contracting Parties) 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. In view of the above, demand aggregation and better coordination of gas purchases remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply. The relevant provisions should therefore be prolonged by one year. Measures to enhance the use of LNG facilities, gas storage facilities and pipelines (Chapter II – Section 3) The provisions of Regulation (EU) 2022/2576 increasing the transparency around available capacities and services offered at LNG terminals and gas storage sites facilitated the increased influx of LNG into the Union and facilitated the accommodation of the altered gas flows. The situation has not changed since the adoption of the Regulation as the EU still needs to import large volumes of LNG to compensate for the Russian pipeline supply and it will continue to do so in the foreseeable future. This is why enhanced transparency around LNG terminals and storage sites remains necessary. Regulation (EU) 2022/2576 requires having use-it-or-lose-it mechanisms in place at all interconnection points in Europe, whereas this was only a requirement for certain interconnection points in the past. Such mechanisms enable the system to react to possible congestion resulting from changed gas flows in a swift and flexible manner. The measures to enhance the use of LNG facilities, gas storage facilities and pipelines remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures to prevent excessive gas prices and excessive intra-day volatility in energy derivatives markets (Chapter III) Due to the difficulties to assess the accuracy of LNG prices prevailing in the marketplace, Regulation (EU) 2022/2576 tasks the European Union Agency for the Cooperation of Energy Regulators (ACER) to collect all the data on transactions pertaining to LNG deliveries to the Union necessary to establish a daily LNG price assessment and a daily LNG benchmark, determined as the spread between the LNG daily price assessment and the settlement price for the TTF futures front-month. On trading, Regulation (EU) 2022/2576 includes a measure to manage excess volatility in gas and electricity derivatives markets, while preserving the price formation processes. The intra-day price spike collar aims at avoiding excessive price volatility and prevent extreme price spikes in prices on energy derivative market over a trading day. As concluded in the Report on the main findings of the review of Regulation (EU) 2022/2576, since gas markets still feature episodes of significant volatility, the provisions in Chapter III –of Regulation (EU) 2022/2576 may play a role in preventing excessive price spikes and in stabilising the market. The episodes of pronounced volatility observed in summer and autumn 2023 reinforce the conclusion that gas markets are still fragile and vulnerable to extreme price spikes. The intra-day volatility mechanism could remain a valuable tool to address the above-mentioned severe difficulties and risks for the EU’s security of gas supply and the relevant provisions should therefore be prolonged by one year. Measures for the case of a gas emergency (Chapter IV) Regulation (EU) 2022/2576 temporarily complemented the Gas Security of Supply Regulation, notably by making the solidarity mechanism applicable by default in absence of bilateral agreements, as well as by extending the solidarity mechanism to liquified natural gas (LNG) and critical gas volumes (CGV) for electricity. In addition, a provision was added to facilitate demand reduction by protected customers, as well as a provision to safeguard cross-border flows. In December 2022, the Commission carried out a joint solidarity ‘dry run’ exercise with EU Member States and ENTSOG, which tested the emergency rules and procedures, as well as the solidarity mechanism. In addition, the Commission circulated a questionnaire to the Gas Coordination Group to gather feedback on e.g. the provisions set out in Regulation (EU) 2022/1576. The outcomes of the ‘dry run’ exercise and the questionnaire are further detailed in the Report on the main findings of the review of Regulation 2022/2576. Based on the findings of the Report on the main findings of the review of Regulation (EU) 2022/2576 and the new threat landscape, the Commission concludes that the concepts set out in Chapter IV remain essential to mitigate possible gas crises and reduce the collective costs of such a crisis, and for facilitating ongoing or future demand reduction efforts. In particular, the absence of bilateral agreements is a structural vulnerability that persists, meaning that a prolongation of default rules is necessary. Critical gas volumes for electricity generation too remain crucial to prevent that a potential gas crisis does not spread to the electricity system. 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. In addition, the supply landscape of the EU has changed significantly, with LNG being the main supply source in 2023. Solidarity should therefore still be extended to include Member States with LNG facilities, to reflect this changed reality. Lastly, the concepts of non-essential consumption of protected customers and the additional safeguards for cross-border flows in an emergency were assessed to be beneficial concepts for preventing and mitigating crises and therefore useful provisions to prolong. 
Revised version (Article 31 Entry into force and application):
This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. It shall apply until 31 December 2024. Article 14 shall apply from 31 March 2023.