What changed between the draft committee report and the plenary report

Removed:It is important to provide predominantly transit Member States the necessary tools to develop the hydrogen networks without the need to redistribute the costs throughout a limited number of exit points. Therefore, the collection of the dedicated charge that will ease the development of the hydrogen network should not be limited to end-users exit points of the gas network.

Added:(4) This Regulation aims to facilitate decarbonised, efficient and integrated energy systems consistent with the Commission communications of 8 July 2020 entitled ‘Powering a climate-neutral economy: An EU Strategy for Energy System Integration’ and ‘A hydrogen strategy for a climate-neutral Europe’, and the Commission Recommendation (EU) 2021/1749. Those initiatives call for transitioning to a more circular energy system with energy efficiency at its core, a greater direct electrification of end-use sectors, prioritising demand-side solutions whenever they are more cost-effective than investments in energy infrastructure, and using renewable fuels, including hydrogen, for end-use applications where electrification is not feasible, not efficient or has higher costs. Therefore, this Regulation should facilitate the penetration of renewable gas and low-carbon gas into the energy system enabling a shift from fossil gas, ▌ to allow such new gas to play an important role towards achieving the EU’s 2030 climate objectives and climate neutrality in 2050. Member States should eliminate any undue barriers in that regard. This Regulation aims also to set up a regulatory framework that enables and incentivises all market participants to take the transitional role of fossil gas into account while planning their activities to avoid lock-in effects and ensure gradual and timely phase-out of fossil gas notably in all relevant industrial sectors and for individual heating purposes, while mitigating increasing energy poverty.

Removed:Article 4 – paragraph 2 – point d a (new): (da) the transfer does not lead to market distortions and does not negatively affect trade between Member States.

Added:(5) The EU hydrogen strategy recognises that, as EU Member States have different potential for the production of renewable hydrogen, an open and competitive EU market with unhindered cross-border trade has important benefits for competition, affordability, and security of supply. Moreover, it stresses that moving towards a liquid market with commodity-based hydrogen trading would facilitate entry of new producers and be beneficial for deeper integration with other energy carriers. It would create viable price signals for investments and operational decisions. The rules laid down in this Regulation should thus be conducive for hydrogen markets and commodity-based hydrogen trading and liquid trading hubs to emerge and any undue barriers in this regard should be eliminated by Member States. Whilst recognising the inherent differences, existing rules that enabled efficient commercial operations developed for the electricity and gas markets and trading should be considered for a hydrogen market.

Removed:The allowed financial transfers between regulated services constitutes an exception to the general rule where such transfers are not allowed. Therefore, it should be allowed only in extraordinary situation and under the condition that it will not lead to market distortions and will not negatively affect the trade between Member States.

Added:(6) [Recast Gas Directive as proposed in COM(2021) xxx] provides for the possibility of a combined transmission and distribution system operator. The rules set out in this Regulation do not therefore require modification of the organisation of national transmission and distribution systems that are consistent with the relevant provisions of that Directive.

Removed:Article 4 – paragraph 3 – point c: (c) a financial transfer is approved for a limited period in time and can only be longer than one third of the depreciation period of the infrastructure concerned in duly justified circumstances.

Added:(7) It is necessary to specify the criteria according to which tariffs for access to the network are determined, in order to ensure that they fully comply with the principle of non-discrimination and the needs of a well-functioning internal market and take fully into account the need for system integrity and reflect the actual costs incurred, insofar as such costs correspond to those of an efficient and structurally comparable network operator and are transparent, whilst including appropriate return on investments, and enabling the integration of renewable gas and low-carbon gas. The rules on network access tariffs in this Regulation are complemented by further rules on network access tariffs, notably in the network codes and guidelines adopted on the basis of this Regulation, in [ TEN-E Regulation as proposed in COM(2020) 824 final], [Methane Regulation as proposed in COM(2021) xxx], Directive (EU) 2018/2001 and [Energy Efficiency Directive as proposed in COM(2021) 558 final].

Removed:Article 6 – paragraph 3: 3. The maximum duration for capacity contracts shall be 20 years for infrastructure completed by [date of entry into force] and 15 years for infrastructure completed after this date. Regulatory authorities shall have the right to impose shorter maximum durations if necessary to ensure market functioning, to safeguard competition and to ensure future cross-border integration. When adopting a decision on the imposition of a shorter maximum duration, the regulatory authorities shall take into account negative implications on planning and refinancing possibilities.

Added:(8) It is, generally, most efficient to finance infrastructure by revenues obtained from the users of that infrastructure and to avoid cross-subsidies. Moreover, such cross-subsidies would, in the case of regulated assets, be incompatible with the general principle of cost-reflective tariffs. In exceptional cases, such cross-subsidies could nonetheless bring societal benefits, in particular during earlier phases of network development where booked capacity is low compared to technical capacity and uncertainty as to when future capacity demand will materialise is significant. Cross-subsidies could therefore contribute to reasonable and predictable tariffs for early network users and de-risk investments for network operators, which could thus contribute to an investment climate supportive to the ▌decarbonisation objectives of the Union. In order to avoid undue and excessive cross-subsidies among first and future users of hydrogen networks, it should be possible for hydrogen network operators to spread network development costs over time by allowing Member States to provide for the possibility that future users pay part of the initial costs, by way of an inter-temporal cost allocation mechanism. The methodology and features of that mechanism should be approved by the regulatory authority. The mechanism should be accompanied by a State guarantee to cover the financial risk of hydrogen network operators. As a last resort measure where no more cost-efficient options are available, the regulatory authority should be able to allow, on the basis of an impact assessment, financial transfers between separate regulated services from gas and hydrogen networks. Cross-subsidies should not be financed by network users in other Member States and it is thus appropriate to collect financing for cross-subsidies only from exit points to final customers within the same Member State. Moreover, as cross-subsidies are exceptional, it should be ensured that they are proportional, transparent, limited in time and set under regulatory supervision, subject to notification to the Commission and recommendation by ACER.

Removed:Shorter duration of contracts can have negative impact on network operators and initial customers who need security for the necessary investments into infrastructure needed for the uptake of the hydrogen market and refinancing of those.

Added:(9) The use of market-based arrangements, such as auctions, to determine tariffs has to be compatible with the provisions in recast Gas Directive as proposed in COM(2021) xxx and Commission Regulation (EU) 2017/459.

Removed:Article 6 – paragraph 7: 7. As of 1 January 2031, Article 15 shall apply also to tariffs for access to hydrogen networks. Articles 16 and 17 shall not apply. Where a Member State decides to apply regulated third party access to hydrogen networks in accordance with Article 31 of [recast Gas Directive] before 1 January 2031, paragraph 1 of Article 15 shall be applicable to access tariff to hydrogen networks in that Member State.

Added:(10) A common minimum set of third-party access services is necessary to provide a common minimum standard of access in practice throughout the Union, to ensure that third-party access services are sufficiently compatible and to allow the benefits accruing from a well-functioning internal market in natural gas to be exploited.

Removed:Article 8 – paragraph 1: LNG and storage system operators shall, in cooperation with relevant regulatory authorities and at least every two years, assess market demand for new investment allowing the use of renewable and low carbon gases in the facilities, including repurposing for hydrogen derivatives and hydrogen terminals. When planning new investments, LNG and storage system operators shall assess market demand and take into account security of supply. LNG and storage system operators shall make publicly available any plans regarding new investments allowing the usage of renewable and low carbon gases in their facilities.

Added:(11) Arrangements on third party access should be based on the principles laid down in this Regulation. The organisation of entry-exit systems, which enable a free allocation of gas on the basis of firm capacity, was welcomed by the XXIV. Madrid Forum already in October 2013. Therefore a definition of entry-exit system should be introduced and the integration of the distribution system level in the balancing zone be ensured, which would help to achieve a level playing field for renewable gas and low-carbon gas connected to either the transmission or distribution level. Tariff setting for distribution system operators and the organisation of capacity allocation between the transmission and distribution system should be left to the regulatory authorities on the basis of the principles enshrined in [recast Gas Directive as proposed in COM(2021) xxx].

Removed:Renewable and low-carbon gases have different properties. Whilst biomethane is fully compatible with LNG terminals, this is not the case of hydrogen and its derivatives. At the same time, a hydrogen terminal could co-exist in a single facility together with an LNG terminal. Therefore, hydrogen terminals should be used in the short term for LNG and not the other way around. This will ensure that no assets are stranded.

Added:(12) Access to the entry-exit system should be generally based on firm capacity. Network operators should be required to cooperate in a way that maximises the offer of firm capacity, which in turn enables network users to freely allocate the gas entering or exiting on the basis of firm capacity to any entry or exit point in the same entry-exit system.

Removed:Article 15 – paragraph 2 a (new): 2a. The regulatory authority may apply a discount of up to 100% to capacity-based transmission and distribution tariffs at entry points from and exit points to underground storage and LNG facilities, unless and to the extent that a storage facility which is connected to more than one transmission or distribution network is used to compete with an interconnection point. The Commission shall re-examine that tariff discount by ... [five years after the date of entry into force of this Regulation]. The Commission shall assess whether the level of the reduction set out in this Article remains adequate for the purpose of increasing security of supply and in light of the storage obligation pursuant to Article 6a of Regulation (EU) 2017/1938 of the European Parliament and of the Council1a. / 1a. Regulation (EU) 2017/1938 of the European Parliament and of the Council of 25 October 2017 concerning measures to safeguard the security of gas supply and repealing Regulation (EU) No 994/2010 (OJ L 280, 28.10.2017, p. 1).

Added:(13) Conditional capacity should only be offered when network operators are not able to offer firm capacity. Network operators should define the conditions for conditional capacity on the basis of operational constraints in a transparent and clear manner. The regulatory authority should ensure that the number and type of conditional capacity products is limited to avoid a fragmentation of the market and to ensure compliance with the principle of providing efficient third-party access.

Removed:This amendment is consistent with the Gas Storage Regulation.

Added:(14) A sufficient level of cross-border gas interconnection capacity should be achieved and market integration fostered in order to complete the internal market in natural gas.

Removed:Article 16 – paragraph 1 – point a: (a) entry points from renewable and low carbon production facilities. A discount of 100% shall be applied to the respective capacity-based tariffs for the purposes of scaling-up the injection of renewable and low-carbon gases;

Added:(14a) The Commission communication of 8 March 2022 entitled ‘RePowerEU: Joint European Action for more affordable, secure and sustainable energy’ (RePowerEU) calls for urgent action to mitigate the impact of rising energy prices, diversify the Union gas supply and accelerate the clean energy transition. In order to allow renewable gas, such as biomethane and biogas, to play their important role towards achieving those goals, it is of the utmost importance to achieve by 2030 the production of 35 billion cubic meters (bcm) of biomethane per year within the Union. Achieving that should enable the replacement of 20 % of Russian natural gas imports with a sustainable, cheaper and locally produced alternative, as well as provide the Union with a more resilient and sustainable energy system. The 2030 goal for biomethane is based on the initial projections for production potential for biogas and biomethane, and it takes into account major changes in the energy area such as the high current prices of natural gas and a broad set of additional measures presented in the Commission Staff Working Document of 15 May 2022 entitled ‘Implementing the RepowerEU action plan: investment needs, hydrogen accelerator and achieving the bio-methane targets’ that target the expansion of production of sustainable biomethane and its use. For this scale-up to 35 bcm to happen not only the market integration of renewable gas should be fostered but also the necessary infrastructure should be developed in due time. Specifically, this means developing a strategic approach, based on regional maps identifying the areas that have the highest potential for production of sustainable biogas and biomethane from biomass, to overcome existing technical barriers to boost sustainable biomethane within the Union and to fully integrate biomethane into the current gas system.

Removed:This amendment aims to facilitate the production and integration of renewable and low-carbon gases, notably hydrogen and biomethane, into the existing natural gas system in the Union, in line with the REPowerEU objectives.

Added:(15) Increased cooperation and coordination among transmission and, where relevant, distribution system operators is required to create network codes for providing and managing effective and transparent access to the transmission networks across borders, and to ensure coordinated and sufficiently forward looking planning and sound technical evolution of the natural gas system in the Union, including the creation of interconnection capacities, with due regard to the environment. The network codes should be in line with framework guidelines which are non-binding in nature (framework guidelines) and which are developed by the European Union Agency for the Cooperation of Energy Regulators (ACER) established in accordance with Regulation (EU) 2019/942 of the European Parliament and of the Council. ACER should have a role in reviewing, based on matters of fact, draft network codes, including their compliance with the framework guidelines, and it should be enabled to recommend them for adoption by the Commission. ACER should assess proposed amendments to the network codes and it should be enabled to recommend them for adoption by the Commission. Transmission system operators should operate their networks in accordance with those network codes.

Removed:Article 16 – paragraph 1 – point b: deleted

Added:(16) In order to ensure optimal management of the gas transmission network in the Union, a joint EU organisation of Gas Transmission System Operators and Hydrogen Network Operators (ENTSOG&H), should be provided for. The tasks of the ENTSOG&H should be carried out in compliance with the Union’s competition rules which are applicable to the decisions of the ENTSOG&H. The tasks of the ENTSOG&H should be well-defined and its working method should ensure efficiency, transparency and the representative nature of the ENTSOG&H. The network codes prepared by the ENTSOG&H are not intended to replace the necessary national network codes for non cross-border issues. Given that more effective progress may be achieved through an approach at regional level, transmission system operators should set up regional structures within the overall cooperation structure, whilst ensuring that results at regional level are compatible with network codes and non-binding ten-year network development plans for gas and hydrogen at Union level. Cooperation within such regional structures presupposes effective unbundling of network activities from production and supply activities. In the absence of such unbundling, regional cooperation between transmission system operators gives rise to a risk of anti-competitive conduct. Member States should promote cooperation and monitor the effectiveness of the network operations at regional level. Cooperation at regional level should be compatible with progress towards a competitive and efficient internal market in gases.

Removed:This amendment is consistent with the Gas Storage Regulaion.

Added:(17) In order to ensure greater transparency regarding the development of the gas transmission network in the Union, the ENTSOG&H should draw up, publish and regularly update a non-binding Union -wide ten-year network development plan for gas and hydrogen on the basis of a joint scenario and the interlinked model (Union-wide network development plan). The Union-wide network development plan should be developed following a transparent process involving meaningful public consultation, and it shall be based on objective and scientific criteria. To that effect, the ENTSOG&H should involve independent scientific bodies, such as the European Scientific Advisory Board on Climate Change, established under Regulation (EU) 2021/1119, in plan development. Viable gas transmission networks and necessary regional interconnections, relevant from a commercial or security of supply point of view, should be included in that network development plan. The network development plan should promote the energy efficiency first principle and energy system integration and contribute to the prudent and rational use of natural resources and the achievement of the Union’s climate and energy targets.

Removed:Article 16 – paragraph 5 – subparagaraph 1: Regulatory authorities shall assess the possibility to determine a discount on grid connection costs and fees for renewable and low-carbon gases production facilities. / (deleted)

Added:(18) To enhance competition through liquid wholesale markets for gas, it is vital that gas can be traded independently of its location in the system. The only way to do this is to give network users the freedom to book entry and exit capacity independently, thereby creating gas transport through zones instead of along contractual paths. To ensure the freedom of booking capacity independently at entry and exit points, tariffs set for one entry point should therefore not be related to the tariff set for one exit point, and vice versa offered for these points separately and the tariff should not bundle the entry and exit charge in a single price.

Removed:Article 16 – paragraph 5 – subparagaraph 2: deleted / (deleted) / (deleted) / (deleted) / (deleted)

Added:(19) While Commission Regulation (EU) 312/2014 establishing a Network Code on Gas Balancing of Transmission Networks provides rules for setting up technical rules that build up a balancing regime, it leaves various design choices for each balancing regime that is applied in a specific entry-exit system. The combination of choices made lead to a specific balancing regime that is applicable in a specific entry-exit system, which are currently mostly reflecting Member States territories.

Removed:The suggested mechanism could pose technical and economic challenges, while adversely affecting market liquidity and tradability of renewable and low-carbon gases. The amendment addresses the issue of grid connection costs as they can create obstacles for the swift deployment of renewable and low-carbon gases projects. Regulatory authorities should define appropriate connection regimes facilitating the integration of renewable and low-carbon gases at a reasonable cost for producers and consumers, avoiding undue barriers discouraging entry in the system.

Added:(20) Network users are to bear the responsibility of balancing their inputs against their off-takes with trading platforms established to better facilitate gas trade between network users. In order to better integrate renewable gas and low-carbon gas within the entry-exit system, the balancing zone should also cover, to the extent possible, the distribution system level. The virtual trading point should be used to exchange gas between balancing accounts of network users.

Removed:Article 17 a (new): Article 17a / Facilitating biomethane connections and potential analysis / 1. Member States shall establish regional maps, identifying the areas with the highest potential for sustainable biogas and biomethane production and that fulfil the Union sustainability criteria within the meaning of Directive (EU) 2018/2001 due to the availability of raw materials, such as waste or residues, and existing operating biogas or biomethane plants. / 2. Distribution system operators and transmission system operators shall be obliged to map connection potentials based on existing and expected capacity to facilitate connection requests, taking into consideration the potential for an increase of sustainable biogas and biomethane production provided on the basis of paragraph 1.

Added:(21) References to harmonised transport contracts in the context of non-discriminatory access to the network of transmission system operators do not mean that the terms and conditions of the transport contracts of a particular system operator in a Member State must be the same as those of another transmission system operator in that Member State or in another Member State, unless minimum requirements are set which must be met by all transport contracts.

Removed:This new article aims to facilitate the production and integration of biomethane in the existing natural gas system in the Union, in line with the REPowerEU objectives.

Added:(22) Equal access to information on the physical status and efficiency of the system is necessary to enable all market participants to assess the overall demand and supply situation and to identify the reasons for movements in the wholesale price. This includes more precise information on supply and demand, network capacity, flows and maintenance, balancing and availability and usage of storage. The importance of that information for the functioning of the market requires alleviating existing limitations to publication for confidentiality reasons.

Removed:Article 18 – paragraph 2: 2. Paragraph 1 shall be without prejudice to the possibility for transmission system operators to develop alternatives to reverse flow investments, such as smart grid solutions or connection to other network operators. Firm access may only be limited to offer capacities subject to operational limitations, in order to ensure economic efficiency and safety. The regulatory authority shall ensure that any limitations in firm capacity or operational limitations are introduced on the basis of transparent and non-discriminatory procedures and do not create undue barriers to market entry. Where the production facility bears the costs related to ensuring firm capacity, no limitation shall apply.

Added:(23) Confidentiality requirements for commercially sensitive information are, however, particularly relevant where data of a commercially strategic nature for the company are concerned, where there is only one single user for a storage facility, or where data are concerned regarding exit points within a system or subsystem that is not connected to another transmission or distribution system but to a single industrial final customer, where the publication of such data would reveal confidential information as to the production process of that customer.

Removed:Article 19 – paragraph 1: 1. Transmission system operators shall cooperate to avoid restrictions to cross-border flows due to gas quality differences on interconnection points between Member States. When cooperating, transmission system operators shall take into account characteristics of installations of final gas customers. These customers' rights shall be taken into account in the legal requirements concerning gas quality in order to ensure the compatibility of gas quality delivered to particular facilities.

Added:(24) To enhance trust in the market, its participants need to be sure that those engaging in abusive behaviour can be subjected to effective, proportionate and dissuasive penalties. The competent authorities should be given the competence to investigate effectively allegations of market abuse. To that end, it is necessary that competent authorities have access to data that provides information on operational decisions made by supply undertakings. In the gas market, all those decisions are communicated to the system operators in the form of capacity reservations, nominations and realised flows. System operators should keep information in relation thereto available to and easily accessible by the competent authorities for a fixed period of time. The competent authorities should, furthermore, regularly monitor the compliance of the transmission system operators with the rules.

Removed:The obligation of transmission system operators to cooperate in avoiding restrictions in cross-border gas flow due to gas quality differences should not have an impact on gas quality delivered to final customers. Their rights and perspective should be duly taken into account.

Added:(25) Access to natural gas storage facilities, liquefied natural gas (LNG) facilities and hydrogen facilities is insufficient or non-existent in some Member States, and therefore the implementation of the existing rules needs to be improved as regards transparency and the objectives of the communication of the Commission of 18 May 2022 on REPowerEU Plan (the ‘REPowerEU Plan’), in particular rapidly reducing the Union's dependence on Russian energy resources. Such improvement should take into account the potential and uptake of renewable gas and low-carbon gas, in particular hydrogen and biomethane, for these facilities in the internal market and demand-side solutions. Monitoring by the European Regulators' Group for Electricity and Gas concluded that the voluntary guidelines for good third-party access practice for storage system operators, agreed by all stakeholders at the Madrid Forum, are being insufficiently applied and therefore need to be made binding.

Removed:Article 19 – paragraph 1 a (new): 1a. For hydrogen blended into the natural gas system, this Article should apply only to gas flows with a hydrogen content up to 2% by volume.

Added:(26) Non-discriminatory and transparent balancing systems for natural gas, operated by transmission system operators, are important mechanisms, particularly for new market entrants which may have more difficulty balancing their overall sales portfolio than companies already established within a relevant market. It is therefore necessary to lay down rules to ensure that transmission system operators operate such mechanisms in a manner compatible with non-discriminatory, transparent and effective access conditions to the network.

Removed:The blending of hydrogen into the natural gas system is a last resort solution, as it is less efficient compared to using hydrogen in its pure form and diminishes the value of hydrogen.

Added:(27) Regulatory authorities should ensure compliance with the rules contained in this Regulation and the network codes and guidelines adopted pursuant thereto.

Removed:Article 19 – paragraph 1 b (new): 1b. Member States shall ensure that diverging technical specifications, including gas quality parameters such as oxygen content and hydrogen blending in the natural gas system are not used to restrict cross-border gas flows.

Added:(28) In the guidelines annexed to this Regulation, more detailed rules are defined. Where appropriate, those rules should evolve over time, taking into account the differences of national gas systems and their development.

Removed:Article 19 – paragraph 4 – point a: (a) cooperate and develop technically feasible options, without changing the gas quality specifications, which may include flow commitments and gas treatment, in order to remove the recognised restriction and taking into account information provided by end-customers directly connected to the transmission system operator grid or distribution system operator that could be affected by that process;

Added:(29) When proposing to amend the Guidelines annexed to this Regulation, the Commission should ensure prior consultation of all relevant parties concerned with the Guidelines, represented by the professional organisations, and of the Member States within the Madrid Forum.

Removed:Article 19 – paragraph 6: 6. The concerned regulatory authorities shall take a joint coordinated decision for removing the recognised restriction or for stating that no further action should be pursued, taking into account the cost benefit analysis prepared by the concerned transmission system operators and the results of the public consultation within six months as set out in Article 6(10) of Regulation (EU) 2019/942.

Added:(30) The Member States and the competent national authorities should be required to provide, upon request, relevant information to the Commission. The request for the information should include the reasons why the information is necessary for the purposes of implementing this Regulation. Such information should be treated confidentially by the Commission.

Removed:Article 20: deleted / (deleted) / (deleted) / (deleted) / (deleted)

Added:(31) This Regulation and the network codes and guidelines adopted in accordance with it are without prejudice to the application of the Union rules on competition.

Removed:This amendment is consistent with the changes made to Article 19.

Added:(32) Member States and the Energy Community Contracting Parties should closely cooperate on all matters concerning the development of an integrated gas trading region and should take no measures that endanger the further integration of natural gas markets or the security of supply of Member States and Contracting Parties.