Europe’s security of gas supply legislation – a short legal history and latest developments

Abstract

The security of Europe’s gas supply has been the subject of much debate. The focus, however, is often on technical or economical considerations. This article is the first to provide a comprehensive overview and analysis of legislative aspects of the security of gas supply to Europe. It uses the three core components of energy security – availability, reliability and affordability – as a tool to shed light on the historical development of gas security legislation in Europe. Starting with the late 1960s, the article distinguishes three broad phases of legislative activities over the last several decades, namely an early phase, a consolidation phase and a third phase of increasing Europeanisation and oversight. The article concludes with some recommendations, amongst them an increased focus of future legislative activities in the field on affordability of the gas supply for all European consumers.

Keywords:

• gas supply
• energy security
• security of gas supply
• Europe
• regulation

1. Introduction

The gas world is in turmoil. The looming conflict between Russia and Ukraine influenced European gas supply security heavily in the past. Now, this conflict is not only a supply crisis but also the main driver behind the emergence of gas security supply legislation in Europe. Particular eruptions of the energy component of this conflict occurred not only in 2022 but also in 2006 and 2009 with the Russia–Ukraine gas crises.¹ These crises used law and contractual obligations as ‘weapons’ for what, in reality, was an energy policy issue.² This article attempts to understand the major implications of this long-standing conflict for European security of gas supply legislation and, to do so, sketches the history of security of gas supply legislation at the EU level.

The development of the legislative framework that aims to safeguard the security of gas supply to Europe can be divided into three phases, namely an early phase, a consolidation phase and the current phase of increasing Europeanisation and oversight. All three phases are marked by key legislative acts (proposals), that changed the orientation and guise of the European security of gas supply framework. As will be seen below, all these changes in direction were reactions to external influences, in many cases global political events. Legislation on gas supply security is, hence, one of the most prominent examples of how energy law is intricately linked to energy policy.

The early phase was marked by first, tentative legislative steps to create a basic, common level playing field for all EU member states. Its hallmark was its voluntary nature. The second phase, here called the consolidation phase, started in the mid-2010s, and purported to consolidate the existing legislation and mould it into one formal legislative act that was (and still is, as of August 2022) legal binding on all member states. However, as this course of action already indicates, the impetus here was to make sure member states were actually working with each other on security of gas supply, and it also entailed some direct requirements for them to do so. Despite this nudging, the compliance of member states with this new, consolidated regulation of 2017 was little more than lip service. When the gas price crisis of fall 2021 hit, and then Russia’s war on Ukraine in 2022, the European Commission decided to up its game and entered the third and most recent phase of increased oversight and Europeanisation. As this is still ongoing, it is marked by proposals and legislative initiatives that partly already have found and partly will have to find their way through the European institutions and the (at times cumbersome) legislative processes.

The article uses the three core components of the energy security concept³ as an analytical prism through which to examine the individual legal instruments that have been produced during these three phases. These core components are availability, reliability, and affordability of energy supply.⁴

Availability refers to the ability to secure sufficient gas from a variety and diversified range of gas sources from all over the world.⁵ But the best source, the largest gas field, is of no use if there is no pipeline, ship or truck infrastructure to bring it to the places where it is needed; and this aspect is addressed by the second component of energy security: reliability. Reliability refers to the level of robustness and resilience of the infrastructure to adapt to changes and absorb the negative effects of shocks and disruptions.⁶ Finally, the best source and the best pipeline do not help if prices are so high that the end consumer cannot afford to pay them. Therefore, the third component, affordability, refers to the necessity to ensure that energy services are affordable for citizens and companies and implies measures to maintain reasonable energy prices and to counter or stabilise their volatility.⁷ This is an issue particularly in the current situation, and the article will demonstrate that this third aspect (affordability) has been largely overlooked in EU gas security supply legislation through the decades. The described energy security concept will be used as a tool to measure the effectivity of the European legal framework on security of the natural gas supply – past, current and future.

The structure of the article traces the three phases. After the introduction we describe the early phase, focusing on Directive 2004/67/EC and Regulation 994/2010. Then the article goes on to sketch the developments that brought the European Commission to consolidate its legislation resulting in the second phase, namely Regulation (EU) 2017/1938. In the fourth section, we describe recent changes and proposals for change in the regulatory framework dating from 2021 and 2022. Finally, the article concludes with an outlook and some recommendations for further action.

2. The early phase: initial development of the European security of gas supply legal framework in the early 2000s

2.1. Background

The first phase of legal considerations concerning the security of hydrocarbon supply to Europe started with the Yom Kippur war in 1967 and the first oil shock in 1973.⁸ Those significant events were the turning point that intensified discussions about the need for legal instruments to secure energy supply. One result was the creation of the International Energy Agency in 1974.⁹ Its key legal text is the International Energy Programme (IEP), which laid the foundations for two crucial safeguard mechanism that exist until today, the Coordinated Response Mechanism (CRM) and the Coordinated Emergency Response Mechanism (CERM). The mechanism was purely designed for oil security and did not include gas,¹⁰ but it brought the general possibility of constructing a legal framework in the sphere of hydrocarbons to the fore.

While after the collapse of the former Soviet Union gas supply to Europe was considered safe and abundant, during the late 1990s and early 2000s perceptions started to change. So did the legislative framework: the EU started ramping up their influence over the gas sector with the commonly named first and second ‘gas packages’.¹¹ These packages, however, had market liberalisation and unbundling of energy companies at their heart.¹² Security of gas supply did not feature prominently in them. It soon became clear that the vulnerability of the structurally changing gas markets required the development of European legal tools to mitigate the risk of supply disruptions.¹³ The completion of the internal gas market needed to be upheld by a common approach to security of gas supply.¹⁴

2.2. Council Directive 2004/67/EC

For this purpose, the EU adopted Council Directive 2004/67/EC, its first attempt to establish a common European approach to the protection of gas supply. Going further than relying on liberalisation and competition as sole instruments of supply protection, the directive defined clear roles and responsibilities for market players in safeguarding security of gas supply.¹⁵ It introduced three key concepts that would stand throughout the evolution of the European security of gas supply framework. These were: first, the formulation of national emergency measures to adopt in the case of supply crisis;¹⁶ second, the obligation to ensure a minimum supply standard for household customers in the case of disruption;¹⁷ and, third, the possibility for member states to achieve this standard by concluding bilateral arrangements to make use of storage facilities that are physically located within another member state.¹⁸ Any measure adopted pursuant to these provisions was required to be compatible with a competitive internal gas market and had to be reported on a yearly basis to the Commission.¹⁹ Such reports were also to include information on the member states’ storage capacity levels, long-term gas supply contracts they had concluded, and national framework incentivising production and infrastructure investments.²⁰ The Commission reserved the right to monitor these reports, but could only issue recommendations, in the case of any findings of irregularities. Finally, the directive created the Gas Coordination Group,²¹ a standing advisory group to coordinate security of gas supply measures within the European Union, which it continues to do today.²²

2.3. Analysis

When put in the perspective of the three aspects of energy security, the proposed measures seem incomplete. The focus of the Council Directive has been to secure uninterrupted availability of natural gas in case of supply shortages. However, in terms of availability the issue of the diversification of main suppliers was not mentioned. Regarding the reliability aspect of energy security, only the level of storage capacity had to be reported to the Commission, while barely any role was given to national infrastructure or interconnector improvements, as instruments of supply disruption prevention and mitigation. Finally, no mention is made of affordability measures to ensure reasonable energy prices.

Besides creating innovative concepts and bodies, the directive presented only a limited number of binding obligations on member states. Many of those lacked substance and did not impose subsequent obligations to improve on member states.²³ These shortcomings were particularly exposed in the events of the two gas crises of 2006 and 2009, triggered by consecutive disputes between Ukraine and Russia.²⁴ The 2009 crisis in particular led to a disruption of gas supply towards the EU, and deprived several member states of about 20% of their gas supply for two weeks during winter.²⁵ Germany and Italy were particularly impacted, with the two countries imposing emergency shutdowns on several of their respective gas-fired plants.²⁶

Those events aptly demonstrated to the EU that there were significant cracks in its legal thinking about European security of gas supply. Prior to the crises EU member states were considered responsible for safeguarding their own gas supply. The crises exposed their vulnerabilities, as they relied upon nationalistic approaches to gas security. Thus, the recognition that coherent and increasingly stringent measures are needed at the EU level to guarantee the supply of gas throughout the Union gained momentum.

2.4. Regulation 994/2010

The year 2009 became a landmark in European energy regulation. Most importantly, the third energy package was adopted that year, which focused firmly on competitive energy markets and prompted a major shift in European gas legislation.²⁷ As part of this third energy package, the ‘Gas’ Directive 2009/73/EC was introduced which, inter alia, recognised the significance of the interplay between a thriving gas market and the security of gas supply.²⁸ Indeed, Article 36 of the directive establishes that major new gas infrastructures, including interconnectors, liquefied natural gas (LNG) facilities and storage facilities, may be exempted from third-party access obligations, provided they enhance the security of gas supply.²⁹ This provision illustrates the penetration of security of supply matters in European energy legislation and a general willingness of the Commission to make a greater commitment to ensuring the secure gas supply of member states. However, it also sheds light on the need to find regulatory balance between the protection of security of supply and the need to enhance competition in the markets, a policy dilemma that will be further analysed in this article.

But this new Gas Directive turned out to be little more than the first ripples in a tidal wave. One year following the adoption of the third energy package, the EU took security of gas supply matters firmly into its hands by putting into place Regulation (EU) 994/2010.³⁰ The European commission itself argued that this step was necessary as a response to the two gas crises of 2006 and 2009.³¹ This time, instead of a directive, the EU decided to opt for a regulation, which allows for less flexibility of member states and more oversight by the EU. This 2010 regulation may be considered the first real and legally binding cornerstone of the EU security of gas supply, and elements of it are still in force until today.

It established a common framework with a much clearer three-stage repartition of responsibilities for security of supply between natural gas undertakings, member states and their competent authorities and the Commission, as well as a hierarchy:³² Natural gas undertakings became primarily responsible to ensure security of supply relying on market mechanisms, but if these mechanisms fail, the competent authorities of member states will step in to ensure the supply of gas to protected customers.³³ The Commission, finally, assumes a position of coordinator to ensure the consistency of the national measures adopted.³⁴ The global aim is to foster a coordinated response to a crisis situation in a spirit of cooperation and solidarity, while increasing preventive tools.³⁵ The regulation is greatly innovative, particularly in creating three new concepts to increase the protection of the gas system against crisis and its overall resilience.

2.4.1. The triad of risk assessments, preventive action plans and emergency plans

The first concept is the new obligation for member states to produce a triad of activities: the states need to conduct national risk assessments that affect security of gas supply. Such assessments must consider the results of the supply and infrastructure standard (to be discussed further below), national circumstances related to gas systems and markets, and other relevant criteria.³⁶ Results of the risk assessments must be sent to the Commission and updated every two years.³⁷

Second, competent authorities of member states are committed to establishing preventive action plans.³⁸ The plans must be based on results of the risk assessments and contain measures to remove or mitigate the identified risks to supply security in the mid- to long term.³⁹ New obligations may be imposed on gas undertakings for better compliance with the standards or to ensure safer operation of the gas system.⁴⁰

Third, emergency plans for each member state must be created, based again on the results of the risk assessment. They must contain short-term measures to remove or mitigate the impacts of potential gas supply disruption.⁴¹ They define the role and responsibilities of gas undertakings and competent authorities in the event of a crisis, based on three gradual crisis levels. The first is the ‘early warning’, which applies if a significant deterioration in the gas supply is likely; second is the ‘alert level’, which corresponds to a significant disruption of gas supply that can still be managed using market-based measures.⁴² Finally, there is the ‘emergency level’, which corresponds to a significant disruption of gas supply where market-based measures⁴³ have been insufficient to remedy the situation and non-market-based measures⁴⁴ have to be additionally implemented.⁴⁵ Member states already back then had the possibility to conclude a regional version of the two plans in collaboration with their neighbouring countries, but very little information was provided by the regulation regarding this prospect at the time.⁴⁶

2.5. Analysis

Neither the risk assessment nor the preventive action plan directly relates to one of the three core components of energy security, although the monitoring requirements might have an indirect effect on the reliability of infrastructure. In contrast, the third component of the triad, the emergency plan, aims to ensure availability of gas supply. It clearly assigns responsibilities in case of crisis with the aim of safeguarding uninterrupted supply. All three are useful legal tools to reinforce European gas supply security via risk identification and mitigation as well as the establishment of coordinated measures in the case of a supply disruption.

2.5.1. Supply standard

Besides this triad of tools, the regulation also featured the supply standard, which was originally introduced in the Directive 2004/67/EC. However, the regulation went beyond the status of 2004 by additionally conceiving the concept of protected customers.⁴⁷ Mainly intended to cover households customers, member states can expand this definition to small and medium enterprises and essential social services.⁴⁸ To comply with the standard, member states are required to adopt measures ensuring the protection of this category of customers against disruptions, as well as their supply of natural gas, in at least the following cases: 7 days of extreme temperature during a peak period occurring with a statistical probability of once in 20 years; a period of 30 days of exceptionally high gas demand with a statistical probability of once in 20 years; a period of 30 days in the case of disruption of the single largest infrastructure under average winter conditions.⁴⁹ Member states can make the decision to implement a higher supply standard, provided it does not have a negative impact on the security of supply of protected customers in another member state.⁵⁰

2.6. Analysis

Availability of energy is a crucial criterion when facing a supply disruption, and the introduction of a common supply standard across member states in case of commonly defined ‘extreme’ scenarios allows the assessment, at the EU scale, of the level of preparedness and potential risks to energy security.

However, the standard is not precise, as ‘extreme temperatures’ an ‘exceptionally high demand’ are not expressly defined, either in the article or in the annexes of the regulation. The lack of common instruction leaves the door open for member states to assess their compliance with the supply standard in a potentially lenient but also unharmonised manner.

2.6.1. Infrastructure standard

The last key concept introduced by Regulation 994/2010 is the infrastructure standard relying on a double-obligation: the so-called N−1 standard and the permanent bi-directional capacity obligation regarding cross-border interconnections.

The N−1 standard is an indicator requiring that in the event of disruption to the largest gas infrastructure in a member state, the remaining infrastructure (N−1) must be capable of satisfying a day of exceptionally high gas demand in a period of extremely cold weather with a statistical probability of once in 20 years.⁵¹ This standard is considered fulfilled where the member state demonstrates in the preventive action plan that market-based or demand-side measures will be sufficient to compensate for the disruption of supply.⁵²

The permanent bi-directional capacity obligation on cross-border interconnections, also called ‘reverse-flow’ obligation,⁵³ is an obligation imposed on transmission system operators (TSOs) to enable the permanent capacity to transport gas in both directions on all interconnectors between member states by 3 December 2013.⁵⁴ Enabling reverse flow capacity on the European interconnectors is essential to the overall continent’s security of supply.⁵⁵ Western gas markets are in general more diverse than in the East, and can rely on ‘new’ technologies such as LNG, which is protected from traditional supply disruptions in Europe.⁵⁶ Therefore, in the case of potential supply disruption from Eastern suppliers, Western European states should be able to transfer gas in both directions.⁵⁷ Regulation 994/2010 enabled TSOs to submit to their national competent authority an exemption request to the reverse-flow obligation.⁵⁸ An exemption can be granted if the TSO proves by way of cost–benefit analysis that enabling bi-directional capacity would not significantly enhance the security of supply of this member state and its neighbouring countries, or that the investment costs would significantly outweigh the prospective benefits for security of supply.⁵⁹

2.7. Analysis

Compliance with the N−1 formula ensures that the availability of natural gas will not be compromised by the failure of the largest gas infrastructure of a member state, but also allows an assessment of the reliability of the remaining infrastructure to ensure supply in the event of such failure. The reverse flow obligation, at the EU level and in the spirit of solidarity, enables the development of alternative and diversified intra-European supply routes. Both obligations can have a direct and positive impact on strengthened physical availability of natural gas in a reliable infrastructure.

Nonetheless, both obligations face some limits. The N−1 formula lacks details and leads to unreliable conclusions.⁶⁰ Its calculation does not consider, in its assessment of the remaining infrastructure technical capacity, the natural gas already in transit, contractual quantities or internal bottlenecks which can skew the results.⁶¹ Also, no indication is given of how to implement these factors in the calculation of the formula. Like the supply standard, such approximation can lead to unharmonised and potentially biased results. As regards the reverse-flow obligation, the conditions to be granted an exemption seem too lenient. The assessment of the positive impacts of enabling reverse-flow capacity only considers the member state itself and its neighbouring countries, without considering potential benefits to the entirety of the supply corridor.

2.8. Conclusion

With the adoption of Regulation 994/2010, the EU has significantly improved and broadened the scope of the EU security of natural gas supply framework. Although some of the newly created provisions seem already to suffer from lack of precision, it remains a legal upgrade compared to Council Directive 2004/67/EC. However, if the availability of natural gas as an energy resource seems to be the priority of this regulation, diversification remains completely unaddressed. In 2010 and as of today, the EU remains highly dependent on a few third-country suppliers.⁶² In terms of reliability, if the infrastructure standard represented a step forward, the potential of LNG or storage capacity would have been more thoroughly explored. While both are mentioned throughout the regulation, they are mostly considered a component of the member states’ national infrastructure, without consideration of their potential as an active tool in improving security of supply. Finally, affordability was not considered at all. As in the interpretation of Council Directive 2004/67/EC, the Commission assimilated ensuring affordability of energy prices into the protection of the internal gas market.

3. The second phase: consolidation in mid-2010s regulation (EU) 2017/1938

3.1. Background

Geopolitical tensions between Russia and Ukraine in 2014 spurred once again a discussion within the European institutions pertaining to the adequacy and robustness of the security of gas supply framework.⁶³ Facing an increased risk of disruption of the European gas supply, the Commission adopted its European Energy Security Strategy, aiming to provide a comprehensive plan to strengthen security of energy supply and calling for the adoption of immediate measures.⁶⁴ As part of this strategy, the ENTSO-G⁶⁵ realised an EU-wide simulation ‘stress test’, in order to assess the resilience of the European gas system to cope with serious disruption of gas supply to the EU.⁶⁶ In the same year, the Commission issued a report on the implementation of the 2010 regulation on security of gas supply.⁶⁷ Both analyses highlighted that vulnerabilities of the European gas system to risks of disruptions still remained, particularly relating to a lack of cooperation between member states.⁶⁸

In the following year, the Commission published its Energy Union Strategy Framework, which was notably motivated by energy security concerns, making it one of the pillars of the EU energy policy.⁶⁹ These conditions paved the way for a recast of the 2010 regulation, and after a proposal by the Commission in February 2016,⁷⁰ Regulation (EU) 2017/1938 on the measures to safeguard the security of gas supply was adopted in October 2017. The new legislation retains most of the Regulation 994/2010 core novelties.⁷¹ Concerning the infrastructure standards, one major improvement was introduced to resolve the issue of the too-large number of exemptions granted against the obligation of enabling reverse-flow capacity on interconnectors.⁷² Pursuant to the new provision in this matter, the cost–benefit analysis accompanying the request for exemption must now take into account the interest of all member states along the entire gas-corridor concerned.⁷³ Moreover, the exemption is now granted temporarily for a maximum of four years.⁷⁴ The whole process pertaining to reverse-flow obligation is now laid down in Annex III of the regulation to specify the different steps to follow in the execution of the provision.⁷⁵

3.2. Risk groups and regional chapters

The creation of risk groups is one of the major novelties of Regulation 2017/1938 and is expected to foster agreements on effective cross-border measures.⁷⁶

The risk groups are formed by the Commission on the basis of the main gas supply sources and routes,⁷⁷ and major transnational risks to security of gas supply.⁷⁸ Consequently, only directly interconnected member states have been gathered into the risk groups.⁷⁹ The composition of the risk groups has been set up directly in the regulation under Annex I: four geographical regions have been created, containing a total of 13 risk groups.⁸⁰ Member states can be listed in several risk groups to better reflect the diversity of regional risks or the cooperation potential.

For each risk group, member states must prepare a common risk assessment including preventive action and emergency plans. These assessed risks will then be addressed through regional mitigation tools in the preventive action plan and risk group crisis management in the emergency plan.⁸¹ To facilitate the adoption of these cross-border measures, member states are advised to create cooperation mechanisms in each risk group, and must rely on the templates provided in Annexes IV, VI and VII of the regulation.⁸²

3.3. Analysis

The creation of the risk groups is a promising extension of the European security of gas supply framework. As the Commission highlighted,⁸³ the lack of cooperation and harmonisation of measures constituted the major shortcoming of the past legislations. It is highly likely to reinforce the reliability of the infrastructure: a better coordination at regional level, especially in the event of a supply disruption, forecasts better management and preparedness of the infrastructure at interconnection points. It is, however, important to keep in mind that for most of the member states, security of natural gas supply remains a national-oriented issue. Hence, member states could make their energy sovereignty prevail over cooperation, preventing the risk group mechanism from working optimally.

3.4. Solidarity mechanism

This is the first time that the concept of solidarity, which can be found in article 194 of the Treaty on the Functioning of the European Union (TFEU), is given a practical application in European energy policy.⁸⁴ In application of article 13 of the regulation (EU 2017/1938), if an emergency has occurred in a member state and that it has exhausted all market-based measures and measures contained in its emergency plan, the member state can request the application of the solidarity measure as a last resort.⁸⁵ It would require the requested member state to reduce the gas flows to its own customers other than protected customers, and reroute the exceeding gas supply to the requesting member states, to provide supply to solidarity protected customers. This category includes private households, essential social services and district heating installations, the latter being included only if it is already defined as protected customers by the member states and if it delivers heating to households or essential social services other than educational and public administration services.⁸⁶ If more than one member state is directly connected and can provide solidarity to the requesting member state, the latter shall seek the most advantageous option based on cost, speed of delivery, reliability and diversification of supply of gas.⁸⁷ However, the regulation does not provide common interpretation tools for these requirements, possibly leaving most of the discretion of the choice to the requesting member state.⁸⁸ Any activation of this mechanism shall lead to a fair compensation,⁸⁹ which must cover the cost of the gas delivered, reasonable costs incurred during the process and reimbursement for any compensation resulting from dispute proceedings.⁹⁰ Member states were required to have signed, by 1 December 2018, bilateral arrangements pertaining to the technical, legal and financial aspects of the potential application of the solidarity mechanism.⁹¹

3.5. Analysis

The mechanism of solidarity ensures that even in the event of an extremely challenging supply disruption that their member state is unable to face alone, solidarity-protected customers are provided an uninterrupted supply of natural gas. Nonetheless, three potential drawbacks can be derived from this mechanism: first is the unwillingness of member states to participate in such a mechanism, as providing solidarity could greatly impair the industry and the economy of the requested country.⁹² By 31 December 2021, Germany was the only member state that had concluded two bilateral solidarity arrangements, which member states were required to have signed by 1 December 2018: the first one was signed with Denmark in December 2020 and the second arrangement was signed with Austria in December 2021.⁹³ Following the requirements of article 13, Germany should have signed these arrangements with each neighbouring country it is directly connected to. This apparent reluctance of Germany and the other member states regarding the cooperative solidarity mechanism seems symptomatic of an indisposition to develop active support among states as regards such a sensitive topic as energy security.

The second possible shortcoming that can be anticipated from the solidarity mechanism is the threat of free-riding.⁹⁴ If the use of solidarity is supposedly limited to the exhaustion of all market-based measures as a last resort, a member state could lower its standards and rely on its neighbouring countries to help in the case of a major supply crisis. However, this potential threat can be countered by the compensation payment. The lack of trust among member states and the fear of being taken advantage of by a ‘free-rider member state’ seems to be a greater threat to the solidarity mechanism as it impacts their willingness to participate.

Furthermore, Article 13(7) of the regulation can potentially represent an ‘exit-gateway’⁹⁵ from this obligation.⁹⁶ It limits and subjects the obligation to provide solidarity to the safe and reliable operation of the gas system of the requested member states and the limit of the maximum interconnection export capability of the infrastructure linking both states.⁹⁷ While this provision duly limits the solidarity mechanism to what is bearable by the requested member state, it risks being improperly used by member states to escape the requirements of this principle.

3.6. Conclusion

The new provisions of Regulation 2017/1938 have the undeniable potential to enhance collaboration at the regional level.⁹⁸ The risk groups can benefit from the availability of natural gas in the EU as well as the reliability of cross-border infrastructure by enabling member states to identify common risks and establish common mitigation and prevention measures. The solidarity mechanism is innovative and strengthens the availability of natural gas to customers through cross-border solidarity – but it suffers from a lack of precision in its application, and a predictable unwillingness of member states to participate to protect their sovereign energy interests.

However, like Regulation 994/2010, Regulation 2017/1938 does not explicitly address the issue of dependency on third-country suppliers. Despite deteriorated relations with Russia, the EU’s main supplier, Regulation 2017/1938 remains silent on the lack of supplier diversification and does not properly address the threats to availability of natural gas it implies. Reliability suffers once again from a lack of storage-focused provision. Considering that in its communication following the ENTSO-G stress test in 2014, the Commission assessed natural gas storage facilities as key tools to secure supply and crucial infrastructures in case of disruption,⁹⁹ it is surprising that storage is, again, mentioned as a component of the infrastructure but not yet considered as an active tool to enhance security of supply. Finally, and similarly to the previous security of supply legislations, affordability remains non-addressed by the Commission.

4. The third phase: Europeanisation and increased oversight 2021/2022

Following the adoption of its new goals to achieve climate neutrality in 2050, the Commission introduced two proposals to update the third gas package adopted in 2009 to amend, respectively, Directive 2009/73/EC and Regulation (EC)715/2009.

4.1. First proposal amending the regulation on security of gas supply

Specifically, the ‘Proposal for a Regulation of the European Parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen’ (Proposal 2021) aims at designing a new framework adapted to foster the ambitious transition of the gas sector towards low-carbon and renewable gases.¹⁰⁰ At the time of this proposal, member states had been facing a natural gas ‘price crisis’,¹⁰¹ in response to which the Commission issued a communication on ‘Tackling rising energy prices’ considering to update Regulation 2017/1938 to the development of renewable gases and adopt storage-focused measurements.¹⁰² The Commission decided to complement the aforementioned Proposal 2021 with suggested amendments to Regulation 2017/1938, gathered in Article 67 of the proposal.¹⁰³ The new provisions aim at expanding measures on gas storage.¹⁰⁴ This might help indirectly with affordability of gas but is not a direct measure. Article 67 also contains amendments to the solidarity mechanism.

4.1.1. Enhancement of the solidarity mechanism provisions

Shortcomings of the solidarity mechanism were highlighted in the previous section, particularly the potential unwillingness of member states to participate in such a mechanism. This reluctance was confirmed by the lack of solidarity arrangements signed by the member states. Moreover, in its Evaluation Report accompanying the proposal, the Commission indicated that member states had encountered difficulties related to finding the appropriate compensation or on the interaction between the normal functioning of the internal market and the introduction of solidarity measures.¹⁰⁵ Therefore, Proposal 2021 recommends changes pertaining to the conditions for the activation of the mechanism, its compensation, and the bilateral arrangements.¹⁰⁶

As such, any state that desires to activate the solidarity mechanism is obliged to have previously declared a state of emergency under article 11 of Regulation 2017/1938, and to have exhausted, additionally to all market-based measures, all non-market-based measures before seeking solidarity.¹⁰⁷ The amendments also provide further regulations on the compensation required from the requesting member state towards the requested member state.¹⁰⁸ Moreover, to overcome the low number of bilateral arrangements voluntarily signed by member states, the new amendment proposes that the absence of such arrangements cannot have any impact on the application of article 13.¹⁰⁹ If the solidarity mechanism is to be activated between two member states who did not sign any arrangements, arrangements comprised in a new Annex as a template shall apply by default.¹¹⁰ This amendment will insure that an absence of arrangements does not enable member states to escape their obligation under the solidarity mechanism. Finally, additional provisions to better monitor the application of the solidarity mechanism have been proposed.¹¹¹

4.2. Analysis

All these proposed measures seem superficial and unable to address the real issue: member states are unwilling to participate in such a mechanism. Providing solidarity does not reward the requested member state with any benefits while it does present risks to their energy interests.¹¹²

4.2.1. Provision on use of storage facilities

As 73% of the European storage capacity is concentrated in only five member states and many other states possess no or little storage capacity,¹¹³ the proposed amendment creates a new article 7(b) ‘Efficient and joint use of infrastructures and gas storage’, for a more strategic use of storage facilities within the EU. Member states have to ensure the efficient use at national and regional levels of their storage facilities, while enhancing cross-border exchange of gas and access to storage facilities.¹¹⁴ The common risk assessment pursuant to Article 7 of Regulation 2017/1938 will also have to provide information¹¹⁵ that enables the member states to identify risks and decide, after consultation within their risk group, to implement measures to incentivise the development of storage facilities, or increase filling of the reserves.¹¹⁶ Finally, in the event of an emergency, member states in the same risk group must agree on a common coordinated procedure to withdraw the gas that is in storage.¹¹⁷

4.3. Analysis

These new measures finally address the role of natural gas storage in gas energy security and ensure a greater and more realistic preparedness for supply disruption. However, no explicit mention is made in the case of a member state having no storage capacity, and under which conditions such a state could have access to the storage resources of the members of its risk group.¹¹⁸ The member state could, for example, be required to provide greater compensation, but the amendment lacks detail on the joint financing and common withdrawal agreements. Moreover, such a process could eventually be considered a form of solidarity. Considering the lack of success of the solidarity mechanism, it would be wise to provide more specifics in this provision on the organisational model for the joint use of storage facilities and the modalities for compensation.

4.3.1. Provision on joint procurement for stocks

A new provision has also been proposed for the ‘Joint procurement for strategic stocks’,¹¹⁹ based on a voluntary mechanism for TSOs as a preventive measure to ensure security of supply. Strategic stocks, in the newly added definition, are ‘gas purchased, managed and stored by transmission system operators exclusively for carrying out their functions as transmission system operators and for the purpose of security of supply’.¹²⁰ In practice, this mechanism would enable EU TSOs to jointly buy strategic reserves of natural gas to be used only in case of EU-wide or regional emergency.¹²¹ This mechanism would be open to participation by all TSOs within the EU that want to take part, after notification to the Commission.¹²²

4.4. Analysis

This new mechanism has the potential to become successful and allows the member states to jointly buy gas from a common supplier without having to compete with each other, while increasing transparency in the markets.¹²³ It also allows them to pool the costs of such operations, which could be a promising way for member states with limited financial resources and storage capacity to secure shared strategic stocks. The measure relies on a bottom-up approach: participation is voluntary, and member states are free to design how the joint purchasing mechanism would work in practice.

4.5. Second proposal amending the regulation on security of gas supply

The Russian attack on Ukraine on 24 February 2022 shifted the attention from affordability towards security and availability of natural gas. Indeed, this war threatens particularly the EU’s security of gas supply and entails a full rethink of natural gas supplying in the EU.¹²⁴ Following these events, the Commission issued, on 8 March 2022, the ‘REPowerEU Communication for a joint European action on energy’, which stated that the EU needs to rush the process of phasing out the EU’s dependence on Russian gas, by diversifying its suppliers and reducing its dependence on fossil fuel energies.¹²⁵

The Commission recognised as well, through this proposal, that elevated levels of storage are essential to protect the EU security of supply and would allow the EU gas system to absorb potential shocks to gas supply in the coming winter. However, the EU level of storage filling for the winter 2021/2022 was 10% lower than the previous year.¹²⁶ This could partly be due, on one hand, to the high volatility of the prices, but also, on the other hand, to gas storage facilities owned by third-country entities.¹²⁷ Another problem identified in this proposal relates to the price difference between summer and winter. Following these observations, the Commission submitted a new proposal to amend Regulation 2017/1938 (Proposal 2022) as well.¹²⁸

4.5.1. New provisions

According to the newly created article 6(a), member states will be required to ensure that storage infrastructures within their territory are filled to 90% of their capacity by 1 November each year.¹²⁹ The minimum level of filling will exceptionally be set at 80% for the year 2022 given the short time period for member states to implement the new rules,¹³⁰ by imposing storage obligations on gas suppliers, TSOs or storage owners, or providing financial incentive such as compensation.¹³¹ If a member state does not respect the filling target, the Commission is allowed to issue a warning and recommend measures to be taken.¹³² Storage operators themselves also have to report the filling level of their facilities to the national competent authority for governmental monitoring.¹³³ However, the proposal failed to clearly designate the type of infrastructure targeted by this provision. Therefore, member states agreed on a negotiation mandate within the European Council,¹³⁴ which specified that the filling target is aimed at all underground storage facilities, including strategic stocks and commercial facilities, and that member states can include in their calculation of the filling level the LNG physically stored and available in its LNG facilities.¹³⁵

As a response to the limits of Proposal 2021, Proposal 2022 introduces the new burden-sharing provision,¹³⁶ pursuant to which member states without storage facilities are required to conclude arrangements with storage operators of other member states to ensure that 15% of their annual consumption in gas is stored within their facilities.¹³⁷ However, no real delimitation is given to these obligations and many questions remain unanswered, such as: Which procedure should a member state without storage capacity observe to decide in which country it will store the required stocks? What if accepting this burden-sharing mechanism prevents a member state from reaching its 90% mandatory filling target?

Alternatively, a member state without storage capacity can opt for the joint development of a burden-sharing mechanism with one or more member states with storage facilities. This mechanism shall be based on the latest risk assessment to identify the needs of the member state and take into consideration the cost of financial support and the gas volumes needed to provide for its protected customers.¹³⁸ The two options of the burden-sharing provision appear to constitute a new form of practical application of the principle of solidarity between member states in the frame of security of supply. It also seems to constitute a more top-down approach to the initial joint use of storage capacity proposed in December. Member states without storage capacity are obliged to conclude agreements with member states possessing the facilities to ensure a minimum reserve. Member states owning storage capacity, on the other hand, will be compelled to free storage reserves for the benefit of the other states that lack storage.

5. Recommendations and conclusion

5.1. Recommendations

Concerning the lack of presence of adequate EU legislation dealing with the affordability aspect of energy security, more political action is required. The current discussions concerning an EU gas price cap¹³⁹ are going into that direction, but it remains to be seen to what extent and how they will be implemented into law.

With a view to natural gas storage, the Commission should go further by imposing the obligation for member states to constitute joint strategic stocks, which remains for the moment based on the voluntarism of national TSOs. A mandatory requirement for each member state to fill its domestic storage capacity would increase the ability to absorb price shocks related to seasonal fluctuations, and protect them against supply disruptions. In October 2022 the Commission issued a new proposal that will be complementary to the new proposals on Regulation 2017/1938 and in line with the REPowerEU plan.

In short, gas purchasing companies of different member states can aggregate their gas demand using a service provider. This service provider publishes the data of the demand on its website and puts up a public tendering procedure to find gas volumes meeting the aggregated demand. This is not mandatory, but member states are required to ensure that volumes equal to 15% of their storage fillings for next year are included by their companies in the demand aggregation process. Thus, these 15% volumes can be considered mandatory and member states can choose to impose further mandatory volumes on their companies, and all gas companies are free to join.¹⁴⁰ The Commission could also consider including in its framework a common emergency mechanism in the case of price spikes, like the present one focused on emergencies due to supply disruptions. Such a mechanism could feature various stages of ‘price crises’, and corresponding measures to be adopted by the member states. State intervention would be legally justified through this measure in the face of market failure, to end the laissez-faire attitude, which has been observed and denounced in the context of natural gas markets. This mechanism would ensure uniformity in the response provided by member states to a natural gas price crisis. It could be further supported by the creation of a collective energy crisis fund,¹⁴¹ to finance assistance to the most vulnerable member states. Finally, it is remarkable to see that each new measure for security of supply at the EU level since Regulation 994/2010 has been adopted or proposed following a crisis. A more forward-looking long-term legislative strategy of the European Commission to prevent risks to security of natural gas supply is necessary.

5.2. Conclusion

Regulation 2017/1938 and the legal tools preceding it had a positive impact on the security of natural gas supply as it established innovative measures to prevent and mitigate the effects of supply disruption. Nonetheless, the regulation failed to address the lack of supplier diversification and neglected measures aiming to preserve the affordability of energy prices. In the event of the two consecutive energy crises faced by the EU over the past half-year, the negative effects of these drawbacks were amplified, and member states suffered directly from them. Issues pertaining to security of supply touch upon member states’ energy sovereignty, and, at times, national and European interests can seem irreconcilable. The two recent proposals by the Commission did present encouraging provisions to address these shortcomings, but their potential is still limited.

Following these findings, European security of supply frameworks need to be revised to a larger extent, integrating affordability concerns into the European legal strategy addressing threats to the security of natural gas, and a thorough assessment of the risks to security of supply. Globally, more attention should be given to the role of preventive measures in ensuring energy security.

The difficulty for the Commission to find a balance in the inclusion of the three components of energy security reflects the conceptual energy trilemma, the energy law policy concept that stresses the inherent difficulties in reconciling different interests when drafting energy legislation.¹⁴² This dilemma also applies to the struggle to find the right balance between European measures that will equally benefit each member state, while enabling the states to conserve their energy sovereignty. When drafting energy security policies, a balance should always be found between these interests to ensure optimal effectivity.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 For more details see Ruven Fleming, ‘A Legal Perspective on Gas Solidarity’ (2019) 124 Energy Policy 102, at 102–103

2 Jonathan Stern, The Russian–Ukraine Gas Crisis of January 2006 (Oxford Institute for Energy Studies 2006) 9, 14; Simon Pirani, Jonathan Stern, and Katja Yafimava, The Russo–Ukrainian Gas Dispute of January 2009: A Comprehensive Assessment (Oxford Institute for Energy Studies 2008) 8, 19–25, 55; Matthias Neumann, Heiko Pleines, and Henning Schröder, ‘Russland Analysen Erdgaskonflikt mit der Ukraine’ [2009] No 176 Forschungsstelle Osteuropa an der Universität Bremen <www.laender-analysen.de/russland/pdf/Russlandanalysen176.pdf> accessed 18 July 2022, 4/5

3 Recognising, however, that there are many more facets to energy security that could be named, such as socio-economic acceptability or environmental sustainability of supply. The concept as defined here is based on the fundamental work of Barton, Redgwell, Rønne and Zillman. For more details see B Barton and others (eds) Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment (1st edn, Oxford University Press 2004) 9

4 For more details see ibid and Ruven Fleming, ‘The Energy Trilemma’ in MM Roggenkamp, KJ de Graaf, and R Fleming (eds), Energy Law, Climate Change and the Environment (Edward Elgar Publishing 2021)

5 Benjamin K Sovacool, ‘Introduction: Defining, Measuring and Exploring Energy Security’ in Benjamin K Sovacool (ed), The Routledge Handbook of Energy Security (Routledge Publishing 2013) 9

6 Ibid

7 Ibid, 9

8 John Paterson and Ruven Fleming, ‘The International Energy Agency’ in Martha M Roggenkamp, Kars J de Graaf, and Ruven C Fleming (eds), Energy Law, Climate Change and the Environment (Edward Elgar Publishing 2021) 80

9 Agreement on an International Energy Program (adopted 18 November 1974, entered into force 19 January 1976) 1040 UNTS 271 (IEP)

10 Paterson and Fleming (n 8), 81

11 More can be found in Hans Vedder et al., ‘EU Energy Law’ in Martha M Roggenkamp et al. (eds), Energy Law in Europe (3rd edn, Oxford University Press 2016)

12 Ibid at paragraph 4.1 and following

13 Council Directive (EC) 67/2004 concerning measures to safeguard security of natural gas supply [2004] OJ L127/92, Recital 3

14 art 3 of Council Directive (EC) 67/2004 concerning measures to safeguard security of natural gas supply [2004] OJ L127/92 [hereinafter: Council Directive 2004/67/EC]

15 Ibid, art 3 Council Directive 2004/67/EC

16 art 8 Council Directive 2004/67/EC

17 art 4(1) Council Directive 2004/67/EC

18 art 4(5) Council Directive 2004/67/EC

19 art 1 and art 5 Council Directive 2004/67/EC

20 art 5(b) and (c) Council Directive 2004/67/EC

21 art 7 Council Directive 2004/67/EC

22 European Commission, ‘Register of Commission Expert Groups and Other Similar Entities’ <https://ec.europa.eu/transparency/expert-groups-register/screen/home?lang=en> accessed 16 August 2022

23 Several measures were only suggested to and not required from member states art 4 Council Directive 2004/67/EC

24 Fleming, ‘A Legal Perspective on Gas Solidarity’ (n 1), 102

25 Marie-Claire Aoun and Daan Rutten, ‘EU Security of Gas Supplies: Solidarity Runs Through the Pipelines’ (IFRI – CIEP, 30 March 2016) <www.ifri.org/sites/default/files/atoms/files/hors-ifri_eu_security_gas_supplies_aoun.pdf> accessed 8 May 2022, 2

26 Fleming, ‘A Legal Perspective on Gas Solidarity’ (n 1), 102

27 European Commission, ‘Third Energy Package’ <https://energy.ec.europa/topics/markets-and-consumers/market-legislation/third-energy-package_en> accessed 20 June 2023

28 Directive 2009/73/EC of the European Parliament and of the Council of July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (hereinafter: Directive 2009/73/EC)

29 art 36(1) Directive 2009/73/EC

30 Regulation (EU) 994/2010 of 20 October 2010 concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/EC [2010] OJ L 295/1 (hereinafter: Regulation (EU) 994/2010)

31 European Commission, Commission Staff Working Document accompanying the Proposal for a Regulation of the European Parliament and of the Council concerning measures to safeguard security of gas supply and repealing Directive 2004/67/EC, ‘The January 2009 Gas Supply Disruption to the EU: An Assessment’ COM (2009) 977 final, 7

32 art 3(1) Regulation (EU) 994/2010; for a more detailed analysis of the Regulation see Silke Muter Goldberg, ‘Chapter IV Regulation 994/2010: A Measure to Improve the Security of Gas Supply in The EU?’ in Martha M Roggenkamp and Ulf Hammer (eds), European Energy Law Report VIII (Intersentia 2011) 61–92; Silke Muter Goldberg ‘Security of Supply in the Context of European Energy Market Liberalisation – A Brief Overview’ (2011) 4 International Business Law Journal 433 in particular 438 and following

33 art 3(1) Regulation (EU) 994/2010

34 art 3(4) Regulation (EU) 994/2010

35 art 1 Regulation (EU) 994/2010

36 art 9(1) (a) to (e) Regulation (EU) 994/2010

37 art 9(4) (a) to (e) Regulation (EU) 994/2010

38 art 4(1) Regulation (EU) 994/2010

39 art 5(1) Regulation (EU) 994/2010

40 art 5(1) (b) and (c) Regulation (EU) 994/2010

41 art 4(1)(a) Regulation (EU) 994/2010

42 art 10 Regulation (EU) 994/2010

43 Annex II of the Regulation (EU) 994/2010 contains an indicative list of market-based measures, which are to be adopted and applied by natural gas undertakings and based on economic incentive, focusing on the supply side or demand side

44 Annex III of the Regulation (EU) 994/2010 contains an indicative list of non-market-based measures, based on non-economic incentive, which are to be adopted and applied by the competent authority or the member state. They are to be used after exhaustion of the market-based measures as they have a greater distorting effect on competition and the internal gas market

45 art 10(3) Regulation (EU) 994/2010

46 art 4(3) Regulation (EU) 994/2010

47 art 2(1) Regulation (EU) 994/2010

48 Provided they are connected to a gas network, and district heating installations if they deliver the previously quoted categories and are not able to switch to other fuels than gas, ibid

49 art 8(1) Regulation (EU) 994/2010

50 art 8(2) Regulation (EU) 994/2010

51 art 6(1) Regulation (EU) 994/2010; a definition and calculation method of the N-1 formula is also provided in the Annex I of the Regulation (EU) 994/2010

52 art 6(2) Regulation (EU) 994/2010

53 art 6(5) Regulation (EU) 994/2010, the Commission refers to bi-direction capacity as ‘reverse-flow’ in art 7(1)(a) Regulation (EU) 994/2010

54 art 6(5) Regulation (EU) 994/2010

55 Friedbert Pflüger, ‘A European View: Europe, Nord Stream 2, and Diversification’ (Atlantic Council 15 March 2019) <www.atlanticcouncil.org/blogs/energysource/a-european-view-europe-nord-stream-2-and-diversification/> accessed 27 June 2022

56 Such as potential geopolitical tensions between the EU and Russia

57 Ruven Fleming, ‘Security of Gas Supply: The New European Approach’ in Martha Roggenkamp and Catherine Banet (eds), European Energy Law Report XII (Intersentia 2018) 284

58 art 7(1)(b) Regulation (EU) 994/2010

59 art 7(4)(b) Regulation (EU) 994/2010

60 Nuria Rodríguez-Gómez, Nicola Zaccarelli, and Ricardo Bolado-Lavin, ‘Is the Gas N-1 Standard of the EU Regulation a Good Indicator of the Security of Gas Supply of a Country?’ (Pipeline Technology Conference Berlin 12 March 2018) DG Joint Research Center <www.pipeline-conference.com/abstracts/gas-n-1-standard-eu-regulation-good-indicator-securitygassupplycountry?fbclid=IwAR2Xm3BxjAspgQ3Dc8UHW_ayAZ0FRgU2R7ogSleYcIqrdmuXckY41jJJToQ> accessed 27 June 2022, 3

61 Ibid; ‘Position Paper on the Revision of the Security of Gas Supply Regulation’ (Bundesverband der Energie und Wasserwirtschaft, 19 April 2016) <www.bdew.de/media/documents/Stn_20160419_Erdgas-SoS-VO-EN.pdf> accessed 25 April 2022, 14; see also ‘Security of Gas Supply in the Internal Market’ (European Financial Congress) <www.efcongress.com/wp-content/uploads/2020/03/analizy-eng__efcs_position_on_security_of_gas_supply_in_the_eu.pdf> accessed 26 June 2022, 4

62 S McClay and L Oertmans, ‘Physical Gas Flows Across Europe and Security and Diversity of Gas Supply in 2010’ (DECC – December 2011)

63 Commission, ‘Communication from the Commission to the European Parliament and the Council – European Energy Security Strategy’ COM(2014) 330 final, 3

64 Ibid

65 ENTSO-G is the European Network for Transmission System Operators of Gas; see <www.entsog.eu/> accessed 3 November 2022

66 Commission, ‘Communication from the Commission to the European Parliament and the Council on the short-term resilience of the European gas system – Preparedness for a possible disruption of supplies from the East during the fall and winter of 2014/2015’ COM (2014) 654 final, 2

67 Commission Staff Working Document, ‘Report on the implementation of Regulation (EU) 994/2010 and its contribution to solidarity and preparedness for gas disruptions in the EU’ SWD (2014) 325 final

68 Ibid, 6

69 Commission, ‘Communication to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank – A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’ COM (2015 80 final, 4

70 Commission, ‘Proposal for a Regulation of the European Parliament and of the Council concerning measures to safeguard the security of supply and repealing Regulation (EU) 994/2010’ COM (2016) 52 final

71 art 3(1) Regulation 2017/1938

72 The share of interconnectors presenting a reverse-flow capacity had increased from 24% in 2009 to 40% in 2014. Commission Staff Working Document, ‘Report on the Implementation of Regulation (EU) 994/2010 and its Contribution to Solidarity and Preparedness for Gas Disruptions in the EU’ SWD(2014) 325 final; see also Fleming, ‘Security of Gas Supply’ (n 57) 283

73 art 5(4) and (5) Regulation (EU) 2017/1938

74 art 5(9) Regulation (EU) 2017/1938

75 Annex III Regulation (EU) 2017/1938

76 art 3(7) Regulation (EU) 2017/1938

77 Recital 12 Regulation (EU) 2017/1938

78 art 3(7) Regulation (EU) 2017/1938

79 Fleming, ‘Security of Gas Supply’ (n 57), 276

80 Annex I Regulation (EU) 2017/1938

81 art 8(3) Regulation (EU) 2017/1938

82 art 7(5) and art 8(5) Regulation (EU) 2017/1938; see also Annexes IV, VI and VII of the Regulation (EU) 2017/1938

83 Commission Staff Working Document, ‘Report on the implementation of Regulation (EU) 994/2010 and its contribution to solidarity and preparedness for gas disruptions in the EU’ SWD (2014) 325 final, 6

84 With the exception of the reverse-flow obligation included in the infrastructure standard, although it is an indirect application of this principle

85 art 13(3) Regulation (EU) 2017/1938

86 The notion of solidarity protected customers is defined in article 2(6) Regulation (EU) 2017/1938

87 art 13(4) Regulation (EU) 2017/1938

88 Fleming, ‘Security of Gas Supply’ (n 57), 290 and 291

89 art 13(8) Regulation (EU) 2017/1938

90 Ibid; if member states cannot agree on a compensation mechanism to include in the arrangement, the Commission will propose a solution that both member states should take ‘utmost account’ of, pursuant to art 13(13) Regulation (EU) 2017/1938

91 art 13(8) Regulation (EU) 2017/1938; pursuant to art 13(11) Regulation (EU) 2017/1938, a member state that can cover the gas consumption for its solidarity-protected customers from its own production is exempted from the obligation to conclude solidarity arrangements, albeit this does not affect its obligation to provide solidarity

92 Pursuant to the definition of solidarity protected customers, article 2(6) Regulation (EU) 2017/1938

93 German Economic Ministry, ‘Germany and Austria Sign Agreement on Solidarity Gas Deliveries’ (2 December 2021) <www.bmwk.de/Redaktion/EN/Pressemitteilungen/2021/12/20211202-germany-and-austria-sign-agreement-on-solidarity-gas-deliveries.html> accessed 25 April 2022

94 A free rider is a type of market failure that occurs when those who benefit from resources, public goods or services do not pay for them, or underpay – as defined by William Baumol, ‘Welfare Economics and the Theory of State’ in CK Rowley and F Schneiders (eds), The Encyclopedia of Public Choice (Springer, New York 2004)

95 Fleming, ‘Security of Gas Supply’ (n 57), 287

96 Ibid, see also art 13(7) Regulation (EU) 2017/1938

97 art 13(7) Regulation (EU) 2017/1938

98 Commission, ‘Communication from the Commission to the European Parliament and the Council on the short-term resilience of the European gas system’ (n 66), 6

99 Ibid, 11

100 Commission, Explanatory Memorandum of the ‘Proposal for a Regulation of the European parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen’ COM (2021) 804 final

101 Yana Popkostova, ‘Europe’s Energy Crisis Conundrum’ (European Union Institute for Security Studies) <www.iss.europa.eu/content/europes-energy-crisis-conundrum#:~:text=The%20steep%2017.4%20%25%20rise%20in,than%20in%202019%20(12)> accessed 26 June 2022, 3

102 Commission, ‘Communication to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the regions – Tackling energy prices: a toolbox for action and support’ COM (2021) 660 final

103 art 67 ‘Amendments to Regulation (EU) 2017/1938’ Proposal for a Regulation of the European parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen’ COM (2021) 804 final

104 Commission, Explanatory Memorandum of the ‘Proposal for a Regulation of the European parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen’ COM (2021) 804 final

105 Commission, ‘Evaluation report accompanying the Proposal for a Regulation of the European Parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen’ COM (2021) 804 final, 52

106 Amended art 13, within art 67 of Proposal 2021

107 Amended art 13(3)(c) within art 67 of Proposal 2021

108 Amended art (14), within art 67 of Proposal 2021

109 The amount of the compensation ‘shall be subject to ex-post control by the Regulatory Authority and/or the Competition Authority of the Providing Member-State, within three months of the lifting of the emergency’, Amended art 13(5)(c) Regulation (EU) 2017/1938, within art 67 of Proposal 2021

110 Ibid

111 Pursuant to the Amended art 14(3) Regulation (EU) 2017/1938, within art 67 of Proposal 2021, any member states that sought the application of the solidarity mechanism to provide the Commission with a detailed description of the circumstances that led to the request and the conditions of application of the mechanism of the emergency and effectiveness of the measures implemented

112 As explained in the previous part describing the solidarity mechanism of Regulation (EU) 2017/1938

113 In decreasing order of capacity: Germany, Italy, France, the Netherlands, and Austria. Max Munchmeyer, ‘Regulating Gas Storage: Enhancing European Security of Supply Through Solidarity?’ (Florence School of Regulation, 21 April 2022) <https://fsr.eui.eu/regulating-gas-storage-enhancing-european-security-of-supply-through-solidarity/> accessed 2 May 2022

114 Proposed art 7b, within art 67 of Proposal 2021

115 More precisely, the common risk assessment should include

an analysis of the adequacy of the capacity of storage facilities available in the region, on the functioning of the storage capacities and their contribution to security of supply of the Union, including risks related to control of storage infrastructure relevant for the security of gas supply by third-country entities Proposed Article 7b (3), within Article 67 of the Proposal 2021

116 Ibid; such measures can include tendering and auctions, minimum filling obligations or the creation of strategic stocks of gas and should be financed following a joint financing scheme

117 Ibid

118 As it is the case for Greece, Ireland, Cyprus, Luxembourg, Slovenia, Lithuania, Estonia, and Finland ‘Infographic – What Is the EU’s Gas Storage Capacity?’ (European Council), <www.consilium.europa.eu/en/infographics/gas-storagecapacity/#:~:text=Cyprus%2C%20Estonia%2C%20Finland%2C%20Greece,to%20secure%20their%20gas%20reserves> accessed 26 June 2022

119 Proposed art 7d, within art 67 of Proposal 2021

120 Amended art 2 Regulation (EU) 2017/1938, within art 67 of Proposal 2021

121 Recital 71 Proposal 2021

122 Proposed art 7d (1), within art 67 of Proposal 2021

123 Christian Egenhofer and Francesco Gazzoletti, ‘Joint Gas Purchasing Could Be a Breakthrough’ (Euractiv, 25 March 2022) <www.euractiv.com/section/energy/opinion/joint-gas-purchasing-could-be-a-breakthough/> accessed 4 May 2022

124 Commission, ‘Communication to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the regions REPowerEU: Joint European Action for more affordable, secure and sustainable energy’ COM (2022) 108 final

125 Ibid, 1

126 Commission, Explanatory Memorandum of the

Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2017/1938 of the European parliament and of the Council concerning measures to safeguard the security of gas supply and Regulation (EC) 715/2009 of the European Parliament and of the Council on conditions for access to natural gas transmission networks. [COM (2022) 135 final, 1]

127 Ibid, 2

128 ‘Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2017/1938 of the European Parliament and of the Council concerning measures to safeguard the security of gas supply and Regulation (EC) no. 715/2009 of the European Parliament and of the Council on conditions for access to natural gas transmission networks’ COM (2022) 135 final; (hereafter: Proposal 2022). See also European Commission, ‘Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions, Security of supply and affordable energy prices: Options for immediate measures and preparing for next winter’ COM (2022)138 final

129 art 6a (2) Proposal 2022

130 Ibid

131 art 6b (1) (a) to (f) Proposal 2022

132 art 6a (8) Proposal 2022

133 art 6d (1) Proposal 2022

134 Release of the Council of the European Union, ‘Gas Storage: Council and Parliament Reach a Provisional Agreement’ (19 May 2022) <www.consilium.europa.eu/en/press/press-releases/2022/05/19/gas-storage-council-and-parliamentreachaprovisionalagreement/#:~:text=The%20co%2Dlegislators%20agreed%20during,before%20the%20following%20winter%20periods> accessed 26 June 2022. The document still needs to be formally approved by the Commission and the European Council. See also Council of the European Union ‘Provisional Political Agreement’ 2022/0090(COD) <https://data.consilium.europa.eu/doc/document/ST-9228-2022-INIT/x/pdf> accessed 26 June 2022

135 art 6a (2)(d) Proposal 2022

136 art 6c Proposal 2022

137 art 6c (1) Proposal 2022

138 art 6c (2) Proposal 2022

139 Euractiv, ‘Gas Price Cap Ready “This Winter” If Countries Agree, Says EU Energy Chief’ <www.euractiv.com/section/energy-environment/news/gas-price-cap-ready-this-winter-if-countries-agree-says-eu-energy-chief/> accessed 3 November 2022

140 arts 4–11 of Proposal for à Council Regulation, ‘Enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders and reliable price benchmarks’ (2022) COM/549 final

141 Y Popkostova, ‘Europe’s Energy Crisis Conundrum’ (European Union Institute for Security Studies) <www.iss.europa.eu/content/europes-energy-crisis-conundrum#:~:text=The%20steep%2017.4%20%25%20rise%20in,than%20in%202019%20(12)> accessed 26 June 2022, 5

142 The three components are energy security, competition and environmental protection, Ruven Fleming, ‘The Energy Trilemma’ in MM Roggenkamp, KJ de Graaf, and R Fleming (eds), Energy Law, Climate Change and the Environment (Edward Elgar 2021) 31