Coordinated demand-reduction measures for gas

 

SUMMARY OF:

Council Regulation (EU) 2022/1369 on coordinated demand-reduction measures for gas

WHAT IS THE AIM OF THE REGULATION?

• The regulation aims to secure gas supplies in the European Union (EU), applying a voluntary demand reduction and improving coordination, monitoring and reporting of national gas demand-reduction measures. It introduces the possibility of declaring an EU alert triggering a mandatory EU-wide demand-reduction obligation.
• The regulation was originally adopted against the background of the escalation of the Russian military aggression against Ukraine in spring 2022, which led to gas supplies declining markedly in a deliberate attempt to use them as a political weapon. It applied for 1 year from 9 August 2022.
• Amending Regulation (EU) 2023/706 extended by a further year the EU Member States’ voluntary gas-demand-reduction target and maintained the possibility for the Council of the European Union to trigger an EU alert.

KEY POINTS

Voluntary demand reduction

Under amending Regulation (EU) 2023/706, Member States must use their best efforts to reduce gas consumption by at least 15% in the period from 1 April 2023 to 31 March 2024 (reduction period) compared to the average in the period from 1 April 2017 to 31 March 2022 (reference period).

This follows effective gas-demand reductions across the EU of more than 15% over the period from August 2022 to January 2023 under the initial period covered by Regulation (EU) 2022/1369.

Mandatory demand reduction when the EU declares an alert

In the event of an EU alert, each Member State is obliged to reduce gas consumption by at least 15% compared to its gas consumption over the reference period. Any demand reductions achieved by Member States during the period before the alert was declared must be taken into account for the purpose of the mandatory demand reduction.

The Council can declare an EU alert, based on a European Commission proposal. The Commission must submit such a proposal if it believes there is:

• a substantial risk of a severe gas supply shortage; or
• an exceptionally high demand for gas which results in a significant deterioration of the gas supply situation.

The Commission is also obliged to submit a proposal to declare an EU alert at the request of five or more competent authorities of Member States that have declared an alert at the national level in accordance with Regulation (EU) 2017/1938 (see summary).

The Commission will also consult the relevant risk groups set out in Annex I to Regulation (EU) 2017/1938, and the Gas Coordination Group.

Exceptions

Exceptions to the mandatory 15% reduction include cases where:

• a Member State’s electricity system is synchronised only with the electricity system of a non-EU country and is then desynchronised, if the exception is necessary to ensure the system operates safely and reliably;
• a Member State is not directly interconnected to a gas interconnected system of any other Member State.

A Member State may limit the reference gas consumption for calculation of the mandatory demand reduction:

• by the volume of gas equal to the difference between its intermediate target for 1 August 2022 and the actual volume of stored gas on 1 August 2022, if it fulfils the intermediate target on that date;
• by the volume of gas consumed as feedstock* during the reference period.

Partial, temporary or full derogation may be applied when a Member State is facing an electricity crisis, if there are no other economic alternatives to replace the gas necessary for producing electricity without seriously endangering security of supply.

Time limits apply for Member States to notify the Commission if they wish to claim exceptions based on reference gas consumption or any other derogation.

Measures to achieve the demand reduction

The competent authority in each Member State is responsible for monitoring its implementation of demand-reduction measures.

Member States are free to choose the appropriate measures to reduce demand. They should be clearly defined, transparent, proportionate, non-discriminatory and verifiable, taking into account the principles set out in Regulation (EU) 2017/1938. The measures shall, in particular:

• not unduly distort competition or the internal market in gas;
• not endanger the security of gas supply of other Member States or the EU;
• comply with Regulation (EU) 2017/1938 as regards protected customers.

A protected customer is principally a household customer connected to a gas supply. Member States may also include small and medium-sized enterprises and essential social services, and also district heating installations delivering to such entities if they are unable to switch to other fuels than gas.

Member States may also exclude these customers from such measures on the basis of objective and transparent criteria, taking into account:

• economic importance;
• the impact of disruption on supply chains (including downstream in other Member States) critical for society;
• potential long-lasting damage to industrial installations;
• possibilities for reducing consumption and substituting products in the EU.

Member States must also consider:

• measures to reduce gas consumed in the electricity sector;
• measures to encourage fuel switching in the industry;
• national awareness-raising campaigns; and
• targeted obligations to reduce heating and cooling, promote switching to other fuels and reduce consumption by industry.

New rule for the specific case of increased consumption of gas due to a coal-to-gas switch

Amending Regulation (EU) 2023/706 includes a new rule whereby a Member State may adjust the reference gas consumption used to calculate the mandatory demand-reduction target by the volume of increased gas consumption resulting from the switch from coal to gas used for district heating, if that increase is of at least 8% in the period from 1 August 2023 to 31 March 2024 compared to the average gas consumption during the reference period and to the extent that this increase is directly attributable to the switch.

Coordination, monitoring, enforcement and review

Member States must:

• cooperate with each other within each of the relevant risk groups;
• update their national emergency plans under Regulation (EU) 2017/1938 by 31 October 2022;
• consult the Commission and the relevant risk groups before adopting revised emergency plans;
• monitor the implementation of the demand-reduction measures on their territory, reporting to the Commission every 2 months.

If an EU alert is declared, the reporting must be submitted on a monthly basis.

Member States may include in their reporting a breakdown of gas consumption per sector.

Where the Commission identifies the risk that a Member State will not be able to fulfil its mandatory demand-reduction obligation, the Commission asks the Member State to submit a plan setting out its strategy to achieve that obligation.

The Commission had to carry out a review of this regulation in the light of the general situation of gas supply to the EU, and to present a report on the main findings of that review to the Council by 1 March 2024. Based on that report, the Commission was to decide whether to propose extending the period of application of Regulation (EU) 2022/1369.

FROM WHEN DOES THE REGULATION APPLY?

• Regulation (EU) 2022/1369 applied from 9 August 2022 and amending Regulation (EU) 2023/706 applied from 1 April 2023.
• Amending Regulation (EU) 2023/706 applied until 31 March 2024.

BACKGROUND

In spite of the demand reduction achieved under Regulation (EU) 2022/1369 in the course of the winter 2022–23, concerns persisted for the security of energy supply coming into winter 2023–24, with episodes of significant volatility seen in summer and autumn 2023, when prices increased by more than 50% in a matter of weeks.

The Commission’s February 2024 review (mentioned above) found that, collectively, the EU reduced gas demand by 18% between August 2022 and December 2023, saving around 101 billion cubic metres of gas. The reduction, in fact, had exceeded the target set in summer 2022 and had been crucial in preserving stable supplies, stabilising EU energy markets, and showing solidarity with Ukraine.

In light of the above, the Commission proposed that, rather than extending the validity of Regulation (EU) 2022/1369, a Council recommendation on continued gas demand reduction measures be adopted. Accordingly, on 25 March 2024, the Council adopted its Recommendation on continuing coordinated demand-reduction measures for gas. This encourages the Member States to continue taking voluntary measures to maintain a collective 15% gas demand reduction compared to the average demand between April 2017 and March 2022.

For further information, see:

• Secure gas supplies (European Commission)
• Energy prices and security of supply (Council of the European Union).

KEY TERMS

MAIN DOCUMENT

Council Regulation (EU) 2022/1369 of 5 August 2022 on coordinated demand-reduction measures for gas (OJ L 206, 8.8.2022, pp. 1–10).

Successive amendments to Regulation (EU) 2022/1369 have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED DOCUMENTS

Council Recommendation of 25 March 2024 on continuing coordinated demand-reduction measures for gas (OJ C, C/2024/2476, 27.3.2024).

Report from the Commission to the Council: review on the functioning of Regulation (EU) 2022/1369 on coordinated gas demand reduction, amended by Regulation (EU) 2023/706 (COM(2024) 88 final, 27.2.2024).

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – ‘Save gas for a safe winter’ (COM(2022) 360 final, 20.7.2022).

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 – REPowerEU plan (COM(2022) 230 final, 18.5.2022).

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, pp. 1–56).

See consolidated version.

Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005 (OJ L 211, 14.8.2009, pp. 36–54).

See consolidated version.

last update 08.02.2024