(1)

The Russian Federation’s unprovoked and unjustified war of aggression against Ukraine and the unprecedented reduction of natural gas supplies from the Russian Federation to Member States threaten the security of supply of the Union and its Member States. At the same time, the weaponisation of the gas supply and the Russian Federation’s manipulation of the markets through intentional disruptions of gas flows have led to skyrocketing energy prices in the Union, endangering not only the economy of the Union, but also seriously undermining security of supply.

(2)

This requires a strong and coordinated response from the Union, to protect its citizens and its economy against excessive and manipulated market prices and to make sure that gas flows to all consumers in need across borders, also in situations of gas scarcity. To lower the dependency on supplies of natural gas from the Russian Federation and to bring excessive prices down, a better coordination of gas purchases from external suppliers is crucial.

(3)

Article 122(1) of the Treaty on the Functioning of the European Union (TFEU) enables the Council to decide, on a proposal from the Commission and in a spirit of solidarity between Member States, upon the measures appropriate in the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy. The high risk of a complete halt of Russian gas supplies and the extreme increase in energy prices undermining the Union’s economy constitute such severe difficulties.

(4)

The Commission announced in its communication of 18 May 2022 entitled ‘REPowerEU plan’ the setting up of an EU Energy Purchase Platform together with the Member States for the common purchase of gas, liquified natural gas (LNG) and hydrogen. That announcement was endorsed by the European Council of 30 and 31 May 2022. As part of the REPowerEU Plan, the Commission also presented the strategy for an EU external energy engagement, which explains how the Union supports a global, clean and just energy transition to ensure sustainable, secure and affordable energy, including by diversifying the Union’s energy supply, in particular by negotiating political commitments with existing or new gas suppliers to increase gas deliveries and thus to replace Russian gas deliveries to Europe.

(5)

The EU Energy Purchase Platform can play a pivotal role in seeking mutually beneficial partnerships that contribute to security of supply and lead to lower import prices of gas purchased from third countries, making full use of the Union’s collective weight. Enhanced international outreach to gas suppliers (both pipeline and LNG) as well as the green hydrogen suppliers of the future is essential for this purpose. In particular a much stronger coordination with and among Member States via-à-vis third countries via the EU Energy Purchase Platform would ensure the Union’s collective weight is more effective.

(6)

As a situation of severe difficulties in ensuring security of supply persists, joint purchasing should help ensure more equal access for undertakings across Member States to new or additional gas sources and, to the benefit of final consumers, help ensure lower prices than might otherwise have applied to those purchasing the gas through the service provider individually.

(7)

Joint purchasing could result in granting a more beneficial treatment or support to the supply of renewable gases such as biomethane and hydrogen, insofar as they can safely be injected into the gas system, and to the supply of gas which would otherwise be vented or flared. In the absence of a formal legal requirement in any relevant jurisdiction, undertakings concluding contracts pursuant to this Regulation will be able to use the UN Oil and Gas Methane Partnership 2.0 reporting framework to measure, report and verify methane emissions along the supply chain to the Union.

(8)

The new mechanism developed under this Regulation should consist of two steps. As a first step, natural gas undertakings or undertakings consuming gas established in the Union would aggregate their gas demand through a service provider, contracted by the Commission. This would allow gas suppliers to make offers on the basis of large aggregated volumes, instead of many smaller offers to purchasers approaching them individually. In a second step, natural gas undertakings or undertakings consuming gas established in the Union may conclude gas purchase contracts, individually or in a coordinated manner with others, with natural gas suppliers or producers that have matched the aggregated demand.

(9)

As a situation of severe difficulties in ensuring security of supply persists, demand aggregation and joint purchasing should help ensure more equal access for undertakings across Member States to new or additional gas sources and, to the benefit of final consumers, help ensure lower prices than might otherwise have applied to undertakings purchasing the gas through the service provider. A first reference to the possibility of a very limited form of joint purchasing of gas for balancing purposes is already included in the Commission’s proposal for a Regulation on the internal markets for renewable and natural gases and for hydrogen. However, that proposal dates from a time before the Russian Federation’s war of aggression against Ukraine. Furthermore, no detailed concept was included in that proposal, which only concerned the very specific needs of transmission system operators for balancing energy. As an immediate and much more comprehensive solution to the problem of missing structures for coordinated gas purchasing is needed, it is appropriate to propose a temporary fast-track solution.

(10)

Demand aggregation and joint purchasing could, therefore, strengthen Union solidarity in purchasing and distributing gas. In a spirit of solidarity, joint purchasing should support particularly those undertakings that were previously purchasing gas only or mainly from Russian suppliers by helping them to obtain supplies from alternative natural gas suppliers or providers in advantageous conditions, as a result of the demand aggregation and joint purchasing.

(11)

The demand aggregation and joint purchasing should help fill up gas storage facilities in the current emergency situation, should most of the European gas storage facilities be depleted after the upcoming winter. Moreover, those measures should help purchase gas in a more coordinated manner in the spirit of solidarity.

(12)

It is therefore necessary to urgently and on a temporary basis establish demand aggregation and joint purchasing. This would allow the rapid establishment of a service provider, which would enable the aggregation of demand. The service provider contracted by the Commission would have only some basic functionalities and the process it organises would only have mandatory elements regarding participation in aggregating demand but would not yet include a mandatory coordination of the contractual conditions or an obligation to submit binding offers to purchase gas through it.

(13)

No requirement should be imposed on natural gas undertakings or undertakings consuming gas to buy gas through the service provider, by concluding gas supply contracts or memoranda of understanding with the gas suppliers or producers that have matched the aggregated demand. However, natural gas undertakings or undertakings consuming gas are strongly encouraged to explore forms of cooperation which are compatible with competition law, and to make use of the service provider to fully reap the benefits of the joint purchasing. A mechanism could, therefore, be developed between the service provider and participating undertakings, setting out the main conditions under which participating undertakings enter into a commitment to buy the gas matching aggregated demand.

(14)

It is important for the Commission and the Member States to have a clear picture of intended and concluded gas supply contracts across the Union, in order to assess whether the objectives of security of supply and energy solidarity are met. Therefore, undertakings or authorities of Member States should inform the Commission and the Member States in which those undertakings are established of large planned gas purchases above 5 TWh/year. This should in particular apply to basic information regarding new or renewed contracts. The Commission should be allowed to issue recommendations to the natural gas undertakings or authorities of the relevant Member States, in particular where further coordination could improve the functioning of joint purchasing or where the launch of a tender for the purchase of gas or planned gas purchases may have a negative impact on security of supply, the internal market or energy solidarity. The issuing of a recommendation should not prevent natural gas undertakings or authorities of the relevant Member States from proceeding with the negotiations in the meantime.

(15)

Member States should assist the Commission in assessing whether the relevant gas purchases enhance security of supply in the Union and are compatible with the principle of energy solidarity. Therefore, an ad hoc Steering Board composed of representatives of the Member States and the Commission should be established to help coordinate this assessment.

(16)

The process of aggregating demand for the purpose of joint purchasing should be carried out by a suitable service provider. Therefore, the Commission should contract a service provider through a procurement procedure in accordance with the Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (1), which is able to develop an appropriate information technology tool (‘IT tool’) and organise the process of aggregation of demand. Fees could be collected from participants of the joint purchasing to cover operating costs.

(17)

When allocating access rights to the supply among undertakings aggregating demand, the service provider should apply methods that would not discriminate between smaller and larger participants of the demand aggregation and should be fair regardless of gas volumes requested by individual undertakings. For instance, the service provider should allocate access rights in proportion to the gas volumes that individual undertakings declared to buy for the given delivery time and destination. This might be relevant in cases when supply does not sufficiently cover demand in the Union market.

(18)

The aggregation of demand and the purchasing of natural gas are complex processes, which need to take into account various elements, which are not limited to prices, but also include volumes, delivery points and other parameters. Therefore, the selected service provider should have the necessary level of experience in managing and aggregating purchases of natural gas or associated services at the Union level. Also, the aggregation of demand and the purchasing of natural gas is a crucial element in ensuring the security of the gas supply and safeguarding the principle of energy solidarity in the Union.

(19)

The protection of commercially sensitive information is of utmost importance when information is made available to the Commission, the members of the ad hoc Steering Board or the service provider setting up or managing the IT tool for demand aggregation. The Commission should therefore apply effective instruments to protect this information against any unauthorised access and cybersecurity risks. Any personal data that might be processed as part of demand aggregation and joint purchasing should be processed in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council (2) and Regulation (EU) 2018/1725 of the European Parliament and of the Council (3).

(20)

Joint purchasing could take different forms. It could take place through tenders or auctions organised by the service provider that aggregates the demand of natural gas undertakings and undertakings consuming gas, in order to potentially match it with offers from natural gas suppliers or producers, through the use of an IT Tool.

(21)

One of the objectives of demand aggregation and joint purchasing is to reduce the risk of unnecessary price increases driven by undertakings bidding for the same tranche of gas. Ensuring that the full benefits of joint purchasing reach final consumers ultimately depends on the decisions of the undertakings themselves. Large undertakings should be restrained even if they can sell the gas at higher prices. Undertakings benefiting from lower prices for the purchase of gas from joint purchasing should pass those benefits to the consumers. The pass-through of lower prices would be an important indicator for the success of joint purchasing, as it is crucial for consumers.

(22)

Demand aggregation and joint purchasing should be open to natural gas undertakings and undertakings consuming gas established in the Union. In particular, industrial consumers which use gas intensively in their production processes, such as producers of fertilisers, steel, ceramic and glass, may also benefit from joint purchasing by enabling them to pool their demand, to contract gas and LNG cargoes, and to structure supply according to their particular needs. The process of organising the joint purchasing should have transparent rules on how to join it and should ensure its openness.

(23)

Opening of demand aggregation and joint purchasing also for Western Balkans and the three associated Eastern Partnership countries is a declared political aim of the Union. Therefore, undertakings established in the Energy Community Contracting Parties should be allowed to participate in the demand aggregation and joint purchasing established by this Regulation provided that necessary arrangements are in place.

(24)

It is necessary to lower the dependency of the Union on gas supplied from the Russian Federation. Undertakings controlled by the Russian Federation or any Russian natural or legal person, or undertakings targeted by Union restrictive measures established on the basis of Article 215 TFEU, or owned or controlled by any other natural or legal person, entity or body subject to such restrictive measures should therefore be excluded from participating in joint purchasing as well as from organising the process of joint purchasing.

(25)

In order to prevent the objective of diversification from the gas supplied from the Russian Federation being put at risk or jeopardised by participation in demand aggregation and joint purchasing of undertakings or other bodies controlled by Russian natural or legal persons or undertakings established in the Russian Federation, participation of those entities should also be excluded.

(26)

Moreover, natural gas originating in the Russian Federation should not be subject to joint purchasing. For this purpose, natural gas entering the Member States or Energy Community Contracting Parties through specific entry points should not be subject to joint purchasing since natural gas originating in the Russian Federation is likely to enter the Member States or Energy Community Contracting Parties through those entry points.

(27)

Participants of the joint purchasing of gas may need financial guarantees, if any of the undertakings would not be able to pay for the final volume contracted. Member States or other stakeholders might provide financial support, including guarantees, to participants in joint purchasing. Providing financial support should take place in accordance with Union State aid rules, including the Temporary Crisis Framework adopted by the Commission on 23 March 2022, as amended on 28 October 2022, where applicable.

(28)

Filling gas storage facilities is vital to ensure security of supply in the Union. Due to the drop in supplies of natural gas from the Russian Federation, Member States may face challenges in filling the gas storage facilities to ensure the security of the gas supply for winter 2023/2024 as prescribed by Regulation (EU) 2022/1032 of the European Parliament and of the Council (4). Using the demand aggregation possibility of the service provider could help the Member States to diminish those challenges. It could, within the limits of competition law, in particular support coordinated filling and storage management in view of the next filling season, avoiding the excessive price peaks caused, inter alia, by uncoordinated storage filling.

(29)

In order to ensure that joint purchasing contributes to filling gas storage facilities in line with the intermediate targets set out in Regulation (EU) 2022/1032, Member States should take appropriate measures to ensure that natural gas undertakings and undertakings consuming gas under their jurisdiction use the process organised by the service provider as one possible means to meet the filling targets.

(30)

Regulation (EU) 2022/1032 requires that Member States fill their gas storage facilities up to 90 % by 1 November 2023. This target is higher than the target for 1 November 2022 (80 %). Joint purchasing could help the Member States meet this new target. In doing so the Member States should require domestic undertakings to use the service provider to aggregate demand with sufficiently high volumes of gas in order to decrease the risk that their gas storage facilities cannot be filled. Member States should require that volumes equivalent to at least 15 % of their storage filling target volume for next year, which is equivalent to around 13,5 billion cubic metres for the Union as a whole, be included by their undertakings in the demand aggregation process. Member States without underground gas storage facilities in their territory should participate in the demand aggregation process with volumes equivalent to 15 % of their burden-sharing obligation under Article 6c of Regulation (EU) 2017/1938 of the European Parliament and of the Council (5).

(31)

Demand aggregation and joint purchasing does not prescribe the management of gas storage facilities, including strategic gas storage facilities, and is without prejudice to Regulations (EU) 2017/1938 and (EU) 2022/1032.

(32)

In order to effectively use the joint purchasing and to conclude gas agreements with suppliers offering gas to the service provider, undertakings should be able to coordinate conditions of the purchase, such as volumes, gas price, delivery points and time, within the limits of Union law. Undertakings participating in a gas purchasing consortium should, however, ensure that the information directly or indirectly exchanged is limited to what is strictly necessary to achieve the objective pursued, in line with Article 101 TFEU. In addition, the transparency and governance provisions of this Regulation should ensure that contracts of the buying consortium do not endanger security of supply or jeopardise energy solidarity, in particular where Member States are directly or indirectly involved in the purchase process.

(33)

Whilst more than one gas purchasing consortium may be formed, the most effective option would be to form a single gas purchasing consortium encompassing as many undertakings as possible to aggregate demand through the service provider and designed in a way that is compatible with Union competition law. Additionally, joining forces into a single gas purchasing consortium should bring strengthened Union negotiation power into the market and enable advantageous conditions that would hardly be achieved by smaller undertakings or in the case of fragmented action.

(34)

The set-up and implementation of gas purchasing consortia under this Regulation should be done in compliance with the Union’s competition rules, as applicable in light of the current exceptional market circumstances. The Commission has indicated that it is ready to accompany undertakings in the design of such a gas purchasing consortium and to issue a decision, pursuant to Article 10 of Council Regulation (EC) No 1/2003 (6), on the inapplicability of Articles 101 and 102 TFEU, if relevant safeguards are incorporated and respected. The Commission has also stated its readiness to provide informal guidance to the extent that the participating undertakings in any other consortia face uncertainty with regard to the assessment of one or more elements of their joint purchasing arrangement under the Union competition rules.

(35)

In accordance with the principle of proportionality, the measures with respect to demand aggregation and joint purchasing do not go beyond what is necessary to achieve their objective, as those measures will be implemented on a voluntary basis, with only a limited exception as regards mandatory participation in demand aggregation for the purpose of filling gas storage facilities, and private undertakings will remain parties to the contracts for gas supply concluded under the joint purchasing.

(36)

In order to optimise the LNG absorption capacity of the Union’s LNG facilities and the usage of gas storage facilities, enhanced transparency arrangements and an organised market facilitating secondary trade in gas storage capacities and capacities of LNG facilities are necessary, similar to those existing for transport of gas via pipelines. This is particularly important in times of emergency and changes in gas flows from pipeline gas from the Russian Federation to LNG. The Commission proposals for a Directive on common rules for the internal markets in renewable and natural gases and in hydrogen and for a Regulation on the internal markets for renewable and natural gases and for hydrogen contain provisions to this effect. Frontloading those provisions as part of the crisis response is crucial to use the LNG facilities and gas storage facilities more efficiently and with the necessary transparency. Regarding Europe-wide transparency platforms, it should be possible for Member States to use the existing Union's transparency platforms for LNG facilities and gas storage facilities to ensure a swift implementation of this Regulation. As regards a secondary booking platform, the LNG facility operators and gas storage facility operators should be able to make use of their existing platforms by enriching them with the necessary features.

(37)

In relation to long-term bookings of gas transportation capacities, the existing congestion management rules provide for ‘use-it-or-lose-it’ procedures. Those procedures, however, are slow as they take at least six months before they show effect, and require the heavy administrative procedures of national regulatory authorities. Therefore those rules should be strengthened and simplified in order to provide the gas system operators with tools to react rapidly to changes in gas flows and to address possible congestions. In particular, the new rules could accelerate marketing of unused long-term capacities which would otherwise remain unutilised, rendering the use of pipelines more efficient.

(38)

The transmission system operators should analyse the available information on the usage of the transmission network by the network users and should determine whether there is underutilisation of the contracted firm capacity. Such underutilisation should be defined as the situation where a network user has used or offered on the market on average less than 80 % of the booked firm capacity in the last 30 days. In the case of underutilisation, the transmission system operator should publish the available capacity for the next monthly auction and subsequently auction it. Alternatively, the national regulatory authorities should be able to decide to use a firm day ahead ‘use-it-or-lose-it’ mechanism instead. In this latter case, the mechanism should apply to all interconnection points, whether congested or not.

(39)

Companies purchasing gas or offering to deliver gas to predefined destinations via joint purchasing should secure transport capacities from the points of delivery of gas to its destination. The applicable internal market rules, including the gas network codes, apply to help in securing the transport capacities. The national regulatory authorities, transmission system operators, LNG facility operators and gas storage facility operators as well as booking platforms should explore possibilities of how to improve the infrastructure usage in an affordable manner by exploring the possibility for development of new transport capacity products linking intra-EU interconnection points, LNG facilities and gas storage facilities while respecting applicable internal market rules, in particular the Commission Regulation (EU) 2017/459 (7).

(40)

While the extraordinary crisis circumstances lead to changes of flow patterns in the European gas networks, resulting in extraordinarily high congestion rents at certain interconnection points in the Union, some flexibilities could be found in dialogue with the relevant regulatory authorities of the impacted Member States under the existing rules, if appropriate with the facilitation of the Commission.

(41)

The invasion of Ukraine by the Russian Federation has led to major uncertainties and disruptions in the European natural gas markets. As a result, those markets have for the past months reflected the uncertainty on the supply, and this uncertainty has turned the resulting market expectation into extremely high and volatile natural gas prices. This has in turn put additional pressure on market participants and undermined the smooth functioning of the Union energy markets.

(42)

Directive 2014/65/EU of the European Parliament and of the Council (8) sets out rules to ensure the proper functioning of trading venues on which energy-related commodity derivatives are also traded. That Directive provides that Member States are to require a regulated market to have mechanisms in place to guarantee fair and orderly functioning financial markets. However, such mechanisms are not intended to set a limit on the intra-day evolution of prices and have failed to prevent the episodes of exceptional volatility observed in the gas and electricity derivatives markets.

(43)

Given the difficulties faced by market participants in the trading venues on which energy-related commodity derivatives are traded, and the urgency to ensure that energy derivatives markets keep fulfilling their role in providing for the hedging needs of the real economy, it is appropriate to require trading venues on which energy-related commodity derivatives are traded to set up temporary intra-day volatility management mechanisms to apprehend excessive price movements more efficiently. In order to ensure that such mechanisms apply to the most relevant contracts, they should apply to energy-related derivatives the maturity of which does not exceed 12 months.

(44)

Trading venues offering energy-related commodity derivatives often admit for participation various energy firms from all Member States. Such energy firms rely heavily on derivatives traded on such trading venues to ensure crucial supplies of gas and electricity across the Union. Excessive price movements occurring on trading venues on which energy-related commodity derivatives are traded therefore affect the operation of energy firms across the whole Union, ultimately also adversely affecting end-consumers. Therefore, in a spirit of solidarity between Member States, coordination of the implementation and application of the intra-day volatility management mechanisms should be undertaken, to ensure that operators essential for the security of the energy supply in all Member States benefit from safeguards against large price movements that are detrimental to the continued operation of their business, which would also be detrimental to the end-consumers.

(45)

The intra-day volatility management mechanisms should ensure that excessive movements in prices within a trading day are prevented. Those mechanisms should be based on the observed market price at regular intervals. Given the wide diversity of instruments in energy derivatives markets and the peculiarities of the trading venues associated with such instruments, the intra-day volatility management mechanisms should be adapted to the specificities of those instruments and markets. Therefore, price limits should be set up by trading venues taking into account the specificities of each relevant energy-related commodity derivative, the liquidity profile of the market for such derivative and its volatility profile.

(46)

When determining the opening price for the purpose of setting the first reference price in a trading day, the trading venue should rely on the methodology it normally applies to determine the price at which a specific energy-related commodity derivative first trades upon the start of the trading day. In determining the opening price after any interruption of trading that might occur during the trading day, the trading venue should apply the methodology it deems most appropriate to ensure that orderly trading resumes.

(47)

Trading venues should be able to implement the intra-day volatility management mechanism either by integrating it into their existing circuit breakers already established in accordance with Directive 2014/65/EU, or as an additional mechanism.

(48)

In order to ensure transparency in the functioning of the intra-day volatility management mechanism that they implement, the trading venues should without undue delay make public a description of its general features for whenever they apply a modification. However, to safeguard fair and orderly trading, the trading venues should not be required to publish all the technical parameters of the mechanism they put in place.

(49)

Where the information collected by the European Securities and Markets Agency (ESMA) about the implementation of the volatility management mechanism by trading venues on which energy-related commodity derivatives are traded in the Union show that higher consistency of implementation of the mechanism is needed to ensure more efficient management of excessive price volatility across the Union, the Commission should be able to specify uniform conditions of implementation of the intra-day volatility management mechanism, such as the frequency at which the price boundaries are renewed, or the measures to be taken if trading moves outside those price boundaries. The Commission should be able to take into account the specificities of each energy-related commodity derivative, the liquidity profile of the market for such derivative and its volatility profile.

(50)

In order to give enough time to trading venues to robustly implement the intra-day volatility management mechanism as specified in this Regulation, trading venues should be granted until 31 January 2023 to set up that mechanism. In order to ensure that trading venues are capable of dealing with excessive price movements quickly even before that mechanism is set up, they should have in place a preliminary mechanism that can broadly achieve the same objective as the intra-day volatility management mechanism.

(51)

The obligations and restrictions imposed on trading venues and traders by the intra-day volatility management mechanisms do not go beyond what is necessary in order to allow energy firms to continue participating in gas and electricity markets and meet their hedging needs, thereby contributing to the security of the energy supply for final consumers.

(52)

In order to ensure an efficient application of the intra-day volatility management mechanisms, competent authorities should supervise their implementation by trading venues, and report regularly to ESMA on such implementation. In order to ensure a consistent implementation of the intra-day volatility management mechanisms, competent authorities should also ensure that divergences in the implementation of those mechanisms by trading venues are duly justified.

(53)

To address potential divergences in the application of the intra-day volatility management mechanisms between the Member States, and on the basis of the reports submitted by competent authorities, ESMA should coordinate the action of the competent authorities of the Member States, and document any divergences observed in the way the intra-day volatility management mechanisms are implemented by trading venues across jurisdictions in the Union.

(54)

Given the unprecedented reduction of the natural gas supply from the Russian Federation and the persisting risk of further sudden supply disruptions, the Union faces the urgent need to diversify its gas supplies. However, the LNG market for Europe is still emerging and it is difficult to assess the accuracy of prices that prevail in this marketplace. In order to obtain an accurate, objective and reliable assessment of the price for LNG deliveries to the Union, the European Union Agency for the Cooperation of Energy Regulators (ACER) established by Regulation (EU) 2019/942 of the European Parliament and of the Council (9) should collect all the LNG market data that are necessary to establish a daily LNG price assessment.

(55)

The price assessment should be undertaken based on all transactions pertaining to LNG deliveries to the Union. ACER should be empowered to collect this market data from all participants active in LNG deliveries to the Union. All such participants should be obliged to report all of their LNG market data to ACER as close to real time as technologically possible either after the conclusion of a transaction or the posting of a bid or offer to enter into a transaction. The ACER price assessment should comprise the most complete dataset including transaction prices and, as of 31 March 2023, bids and offer prices for LNG deliveries to the Union. The daily publication of this objective price assessment, and of the spread established in comparison to other reference prices on the market in the form of an LNG benchmark, paves the way for its voluntary uptake by market participants as the reference price in their contracts and transactions. Once established, the LNG price assessment and the LNG benchmark could also become a reference rate for derivatives contracts used for hedging the price of LNG or the difference in price between the LNG price and other gas prices. In view of the urgent need to introduce the LNG price assessment, the first publication of that assessment should take place no later than 13 January 2023.

(56)

The current empowerments vested on ACER by Regulation (EU) No 1227/2011 of the European Parliament and of the Council (10) and Commission Implementing Regulation (EU) No 1348/2014 (11) (together referred to as ‘REMIT’) do not suffice to create a complete and comprehensive dataset of all LNG deliveries into the Union. However, such a comprehensive and complete dataset for daily price assessment is necessary for the Union to manage, in a spirit of solidarity, its procurement policies for international LNG imports, in particular during the on-going crisis situation. Relevant data and information on LNG contracts are also necessary to ensure monitoring of price developments as well as perform data quality control and quality assurance. This ad hoc instrument should allow ACER to collect all market data that is required to establish a comprehensive and representative assessment of the price of LNG deliveries to the Union.

(57)

Although the establishment of a daily LNG price assessment and LNG benchmark on a permanent basis should at a later stage be included in a more comprehensive revision of the REMIT, the on-going crisis situation requires urgent action already now to address the immediate situation of severe difficulties in the supply and accurate pricing of LNG deliveries to the Union on a temporary basis until such revision of the REMIT can be adopted in accordance with the ordinary legislative procedure.

(58)

In order to immediately increase price transparency and planning security in the LNG import market, it should be specified that the relevant dataset should comprise both information on the prices and quantities of completed LNG transactions, prices and quantities of bids and offers pertaining to LNG deliveries into the Union, as well as the price formula in the long-term contract from which the price is derived, if relevant.

(59)

LNG market participants subject to a reporting obligation should be defined as those engaged in either the purchase or sale of LNG cargoes destined for delivery into the Union. Those LNG market participants should be subject to the obligations and prohibitions applying to market participants in accordance with the REMIT.

(60)

ACER, in cooperation with the Commission, should have a broad mandate to specify the quality and the substance of the market data it collects to establish a daily price assessment for LNG deliveries into the Union. It should also enjoy broad discretion in the choice of its preferred transmission protocol. In order to achieve the highest possible quality in the market data to be reported, ACER should be empowered to specify all the parameters of the market data that should be reported to it. Such parameters should include, without being limited to, the reference units in which price data is reported, the reference units in which quantity data is reported, the forward tenors of transaction or pre-transaction bid and offer data, as well as the transmission protocols to be used to convey the required data to ACER.

(61)

ACER should also set out the methodology it employs to provide a daily LNG price assessment and LNG benchmark, as well as the process for a regular review of this methodology.

(62)

The price assessment published under this Regulation should provide more transparency to Member States and other market participants on the prevailing price of LNG imports to Europe. More price transparency should in turn allow Member States and private entities domiciled in the Union to act in a more informed and coordinated manner when purchasing LNG on global markets and in particular, when using the service provider. More coordination in purchasing LNG should enable Member States to prevent outbidding each other or bidding prices that are not in line with the prevailing market price. Therefore, price assessments and benchmark spreads published under this Regulation are crucial to bringing about more solidarity between Member States in procuring limited LNG supplies.

(63)

The obligation on market operators to provide ACER with information on LNG transactions is necessary and proportionate to achieve the objective of enabling ACER to establish an LNG benchmark, in particular as it is aligned with market operators’ existing obligations under the REMIT and ACER will keep sensitive business information confidential.

(64)

In addition to the circuit breaker and the LNG benchmark other interventions are available including a temporary dynamic price corridor, as requested in the conclusions of the European Council of 20 and 21 October 2022, taking into account the following safeguards: it should apply to natural gas transactions in the Title Transfer Facility (TTF) Virtual Trading Point, operated by Gasunie Transport Services B.V.; other Union gas trading hubs may be linked to the corrected TTF spot price via a temporary dynamic price corridor; and it should be without prejudice to over-the-counter gas trades, should not jeopardise the Union’s security of gas supply, should depend on progress made in implementing the gas savings target, should not lead to an overall increase in gas consumption, should be designed in such a manner that it will not prevent market-based intra-EU flows of gas, should not affect the stability and orderly functioning of energy derivative markets and should take into account the gas market prices in the different organised market places across the Union.

(65)

Regulation (EU) 2017/1938 already provides the possibility for Member States, during an emergency, to prioritise the gas supply to certain critical gas-fired power plants, given their importance to ensuring the electricity security of supply and avoiding grid imbalances. The critical gas-fired power plants and associated gas volumes may have an important impact on the gas volumes available for solidarity in an emergency. In that context, Member States should, by way of derogation from Article 13(1), (3) and (8) of Regulation (EU) 2017/1938, be, temporarily, able to request emergency solidarity measures also when they are not able to secure those critical gas volumes necessary to ensure the continuation of electricity production in critical gas-fired power plants. For the same reason, Member States providing solidarity should also be entitled to ensure that supplies to their solidarity protected customers or other essential services, such as district heating, and the operation of their critical gas-fired power plants are not endangered when providing solidarity to another Member State.

(66)

A maximum limit of the critical gas volumes needed in each Member State to preserve the security of the electricity supply should be established so as to avoid unnecessary or abusive solidarity requests or undue limitations to solidarity provided to a Member State in need. The methodology used in the European Network of Transmission System Operators for Electricity (ENTSO-E) Winter Outlook provides a basis identifying critical gas volume for electricity security of supply and for setting such limits. The critical gas volumes for electricity security of supply calculated by ENTSO-E reflect the volumes of gas absolutely needed for ensuring pan-European electricity adequacy using all market resources, always considering gas to be the last in the order of merit. The ENTSO-E methodology is based on a large sample of worst case climate and forced outages scenarios. The fact that the ENTSO-E methodology does not take into account all combined heat and power does not prevent Member States from considering district heating installations of protected customers as protected pursuant to the definition of Regulation (EU) 2017/1938. Member States for which the electricity generation relies exclusively on LNG deliveries with no significant storage capacities, critical gas volumes for electricity security of supply should be adapted accordingly. The critical gas volume for electricity security of supply can be lower than the historic level of gas consumed for electricity generation since electricity adequacy can be provided by other means, including by providing supplies between Member States.

(67)

This however does not exclude that actual minimum gas volumes required by a Member State requesting solidarity or a Member State providing solidarity could be higher than the values modelled by ENTSO-E to avoid an electricity crisis. In such cases, the Member State requesting solidarity or the Member State providing solidarity should be able to exceed the maximum values set out in this Regulation if it can justify that this is necessary to avoid an electricity crisis, such as cases that require to call upon frequency restoration reserves and alternative fuels, or in exceptional scenarios which were not taken into account in the ENTSO-E Winter Outlook, in particular considering the hydrological levels or unexpected developments. Critical gas volume for electricity security of supply by definition includes all the gas needed to ensure a stable electricity supply, and therefore includes the electricity required to produce and transport gas as well as crucial sectors of critical infrastructure and installations crucial for the functioning of military, national security and humanitarian aid services.

(68)

The restrictions imposed on market operators by the extension of solidarity protection to critical gas volumes are necessary to ensure security of the gas supply during a situation of reduced gas supply and increased demand during the winter season. Those restrictions build on existing measures laid down in Regulation (EU) 2017/1938 and Council Regulation (EU) 2022/1369 (12) respectively, aiming at making those measures more effective under the current circumstances.

(69)

This Regulation is without prejudice to the freedom of the Member States to take into account the potential long-lasting damage to industrial installations when prioritising the demand that should be reduced or curtailed to be able to provide solidarity to another Member State.

(70)

Certain customers, including households and customers providing essential social services, are particularly sensitive to the negative effects of gas supply disruptions. For this reason, Regulation (EU) 2017/1938 introduced a solidarity mechanism between Member States to mitigate the effects of a severe emergency within the Union and ensure that gas can flow to solidarity-protected customers. However, in certain cases, the use of gas also by protected customers could be considered as non-essential. The reduction of this type of use which clearly goes beyond what is needed would not undermine the objectives set out in Regulation (EU) 2017/1938, in particular as the missing gas consumed for non-essential purposes could lead to severe harm in other private or commercial sectors. Member States should therefore have the possibility to achieve gas savings also by reducing the non-essential consumption of protected customers under specific circumstances, where such reduction is physically feasible without affecting essential uses. However, any reduction measures taken by the Member States should strictly be limited to non-essential consumption and by no means reduce the basic use by protected customers nor limit their ability to heat their homes adequately.

(71)

Member States and their competent authorities should be free to determine the applicable reduction measures and the activities corresponding to non-essential consumption, such as outdoor heating, the heating of residential swimming pools and other complementary residential facilities. By having the possibility to limit non-essential consumption, Member States should be able to strengthen the safeguards and ensure that gas is being supplied to other essential sectors, services and industries, enabling them to continue their operation during a crisis.

(72)

Any measure to reduce non-essential consumption of protected customers should be necessary and proportional, applying particularly in situations of a declared crisis pursuant to Article 11(1) and Article 12 of Regulation (EU) 2017/1938 or of a Union alert pursuant to Regulation (EU) 2022/1369. Despite the application of non-essential consumption reduction measures, protected customers should continue to benefit from protection against disconnection. Member States should also ensure that such measures do not limit the protection required for the vulnerable customers whose current consumption should be considered as essential without prejudice to interruption of supplies due to technical reasons.

(73)

Member States are free to decide on whether and how to distinguish between essential consumption and non-essential consumption of protected customers. A Member State requesting solidarity measures which decides not to make this distinction, should not be required to demonstrate that the non-essential consumption could be reduced before the request for solidarity. A Member State providing solidarity should not be required to make a distinction between essential and non-essential customers to determine the volume of gas available for solidarity measures.

(74)

In the case of an emergency, Member States, as well as the Union, should ensure that gas flows within the internal market. This means that measures taken at national level should not give rise to security of supply issues in another Member State while access to cross-border infrastructure should remain safe and technically possible at any time. The current legislative framework does not provide for a process which can effectively solve conflicts between two Member States on measures negatively affecting cross-border flows. As the Union's gas and electricity grids are interconnected, this could not only lead to serious security of supply problems, but also weaken the Union’s unity vis-à-vis third countries. By derogation from Article 12(6) of Regulation (EU) 2017/1938, the Commission should therefore be given the power to evaluate the national measures taken and to arbitrate, where necessary, within a reasonable time frame. To this end, the Commission should be able to request the modification of such national measures if it observes threats to the security of the gas supply of other Member States or the Union. Given the exceptional nature of the current energy crisis, complying with the Commission’s decision should take place without delays that can potentially hinder the Union’s gas supply. Therefore, for the period of application of this Regulation, reconciliation procedures should be suspended for the sake of securing the functioning of the internal market.

(75)

The principle of energy solidarity is a general principle under Union law (13) and applies to all Member States, and not only to neighbouring Member States. Furthermore, the efficient use of the existing infrastructure, including cross-border transmission capacities and LNG facilities, is important to safeguard the security of the gas supply in a spirit of solidarity. In times of gas supply disruptions at Union, regional or national level, and a significant switch from pipeline gas to LNG, Member States in a severe crisis situation should not only be able to benefit from supply possibilities from neighbouring pipelines, but also from supplies from countries which dispose of an LNG facility. Some Member States should be in a position to provide solidarity to other Member States, even if they are not directly connected via a gas pipeline or through a third country or other Member States, provided that the Member State requesting solidarity has exhausted all market-based measures in its emergency plan, including LNG purchases in the global market. It is therefore appropriate to expand the obligation to provide solidarity to non-connected Member States with LNG facilities, taking into account the differences between pipeline gas and LNG markets and infrastructure, including LNG vessels and carriers, in imposing obligations on operators, and taking into account the lack of enforcement powers with respect to LNG assets such as LNG carriers and including possibilities to swap between natural gas and LNG if there is no gas liquefaction facility on the territory of a Member State providing solidarity.

(76)

A Member State with LNG facilities, when providing solidarity to another Member State, should not be held responsible for bottlenecks or other potential issues that may occur outside its own territory or that result from lack of enforcement powers over LNG vessels and carriers owned by a third-country operator, where such bottlenecks or other issues impact the actual flow of gas and ultimately prevent the volume of gas needed reaching the Member State requesting solidarity. Where the Member State providing solidarity does not have enforcement powers, it should not be held responsible for the lack of swapping of an LNG cargo for natural gas.

(77)

In implementing the principle of energy solidarity, Regulation (EU) 2017/1938 introduced a solidarity mechanism intended to enhance cooperation and trust between the Member States in the event of a severe crisis. To facilitate the implementation of the solidarity mechanism, Member States are required to agree on a number of technical, legal and financial issues in their bilateral arrangements, pursuant to Article 13(10) of Regulation (EU) 2017/1938.

(78)

Despite a legal obligation to conclude bilateral solidarity arrangements by 1 December 2018, only a few such arrangements have been finalised, putting at risk the implementation of the legal obligation to provide solidarity support in an emergency. The Commission’s proposal for a Regulation on the internal markets for renewable and natural gases and for hydrogen included a first model for a template solidarity agreement. However, as that template was developed before the invasion of Ukraine by the Russian Federation, with a view to the current situation of extreme gas scarcity and exploding prices and the urgent need to have temporary default rules in place already for the coming winter, it is appropriate to create a temporary framework of default rules for the provision of the required solidarity measures by derogation from Article 13(1) and (2) of Regulation (EU) 2017/1938 which are effective and swiftly implementable, do not depend on long bilateral negotiations and are adapted to the current situation of excessive prices and highly volatile gas prices. In particular, clearer default rules should be introduced for the compensation of the costs of the gas provided and, in a spirit of solidarity between the Member States, for the limitation of potential additional costs the Member State providing solidarity may charge. The rules on solidarity measures pursuant to Article 13 of Regulation (EU) 2017/1938 should remain applicable unless expressly provided otherwise.

(79)

Solidarity should, in principle, be provided based on fair compensation directly paid by the Member State requesting solidarity or its delegated entities. The compensation should cover the gas price, any actual or potential storage costs, the cross-border transportation and associated costs. The compensation should be fair, both for the Member States requesting solidarity as well as for the Member States providing solidarity.

(80)

The current crisis is leading to price levels and regular price peaks which are far beyond the situation of a possible supply crisis at the time of the adoption of Regulation (EU) 2017/1938. The intra-day price volatility currently characterising the gas market as a result of the existing gas crisis should therefore be considered when determining the amount of compensation for Member States providing solidarity. On the basis of solidarity, and in order to avoid pricing in extreme market circumstances, it would be problematic to take the fluctuating intra-day market price as the basis for the default price of the solidarity measure. The gas price should reflect the average day-ahead market price of the day preceding solidarity request in the Member State providing solidarity. Taking this into account, the compensation is still based on the market price, as stipulated in Commission Recommendation (EU) 2018/177 (14). The average day-ahead market price is more independent from the volatility and very high spot prices during crisis situations, and as such, limits any perverse incentives.

(81)

As highlighted in Recommendation (EU) 2018/177, the cost of damages to curtailed industry may only be covered by compensation if it is not reflected in the gas price that the Member State requesting solidarity has to pay and the Member State that requested solidarity should not have to pay compensation for the same costs twice. Taking into account the exceptional circumstances where gas prices have reached unprecedented levels, a Member State receiving solidarity should not be automatically obliged to fully cover other costs, such as damages or costs of legal proceedings, occurring in the Member State providing solidarity, unless another solution is agreed upon in a solidarity agreement. Experience has shown that the obligation for the receiving Member State to bear the full financial risk for all direct or indirect compensation costs which may possibly result from the provision of solidarity measures is a key obstacle to the conclusion of solidarity agreements. The unlimited liability should therefore be alleviated in the default rules for solidarity agreements, to enable the conclusion of the outstanding agreements as soon as possible, as those agreements are a cornerstone of Regulation (EU) 2017/1938, reflecting the Union principle of energy solidarity. As far as the compensation for indirect costs does not exceed 100 % of the price for gas, is justified and is not covered by the price of gas, those costs should be covered by the receiving Member State.

However, if the requested cost goes beyond 100 % of the price for gas the Commission should, after consulting relevant competent authorities, establish a fair cost compensation and therefore have the possibility to verify whether the limitation of the cost compensation is appropriate. The Commission should therefore be able to allow for a different compensation than that set out in Regulation (EU) 2017/1938 in individual cases, taking into account the specific circumstances of the case, including measures to save gas and reduce gas demand, and the principle of energy solidarity. In the assessment, the Commission should give due consideration to avoid excessive indirect costs as a consequence of curtailment or disconnection of customers of gas.

(82)

The rules of this Regulation related to the payment of compensation for solidarity measures between Member States are without prejudice to the principles of compensation for damages under national constitutional law.

(83)

The conclusion of solidarity arrangements with neighbouring Member States, as required pursuant to Article 13(10) of Regulation (EU) 2017/1938, is the most appropriate instrument to implement the obligation to provide solidarity measures pursuant to Article 13(1) and (2) of that Regulation. Member States should therefore be allowed to depart from the default compensation rules set out in this Regulation if they agree on other rules in a solidarity agreement. In particular, Member States should retain the possibility to agree bilaterally upon additional compensation, covering other costs, such as the full costs incurred from an obligation to pay compensation in the Member State providing solidarity, including damages to curtailed industry. In bilateral solidarity agreements, such costs can be included in the compensation if the national legal framework provides for the obligation to pay damages to curtailed industry, including compensation for economic damage, in addition to the gas price.

(84)

As a last-resort measure, default solidarity mechanism should only be triggered by a Member State requesting solidarity where the market fails to offer the necessary gas volumes, including LNG and those offered voluntarily by non-protected customers, to meet the demand from solidarity protected customers. Pursuant to Regulation (EU) 2017/1938, Member States are required to have exhausted all measures in their emergency plans including forced curtailment down to the level of solidarity-protected customers.

(85)

The urgent nature and the consequences of a potential activation of the solidarity mechanism should entail the close cooperation between the involved Member States, the Commission and the competent crisis managers as designated by Member States in accordance with Article 10(1), point (g), of Regulation (EU) 2017/1938. The request should, therefore, be communicated to all parties in due time and contain a minimum set of elements that allow the Member States providing solidarity to respond without delay. The response of the Member States providing solidarity should include information on the volume of gas that could be delivered to the Member State requesting solidarity, also including those volumes that could be freed when non-market-based measures are applied. Member States may agree on additional technical and coordination arrangements to facilitate the timely response to a solidarity request. When providing solidarity, Member States and their competent authorities should ensure the network’s operational safety and reliability.

(86)

The Member State requesting solidarity should be able to receive solidarity from multiple Member States. The default solidarity mechanism should be triggered only if the Member State providing solidarity has not concluded any bilateral arrangement with the Member State requesting solidarity. In the case of a bilateral arrangement between the Member State requesting solidarity and the Member State providing solidarity, that arrangement should prevail and apply between them.

(87)

The Commission should be able to monitor the application of the default solidarity mechanism and, if deemed necessary, should be able to facilitate the matching of solidarity demand requests. To this end, the Commission should provide for an interactive platform, which should serve as a template and allow the continuous, real-time submission of solidarity requests and their coupling with the respective, available volumes.

(88)

Member States and the Energy Community Contracting Parties may also conclude voluntary arrangements for the application of solidarity measures.

(89)

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (15).

(90)

Since the objective of this Regulation cannot be sufficiently achieved by the Member States but can rather be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve that objective,

(1)

The Russian Federation’s war of aggression against Ukraine and the unprecedented reduction of natural gas supplies from the Russian Federation to Member States threaten the security of supply of the Union and its Member States. At the same time, the weaponisation of the gas supply and the Russian Federation’s manipulation of the markets through intentional disruptions of gas flows have led to skyrocketing energy prices in the Union, not only endangering the economy in the Union, but also seriously threatening security of supply. A fast deployment of renewable energy sources can help to mitigate the effects of the current energy crisis, by forming a defence against Russia’s actions. Renewable energy can significantly contribute to counter Russia’s weaponisation of energy by strengthening the Union’s security of supply, reducing volatility in the market and lowering energy prices.

(2)

In recent months, Russia’s actions have further aggravated the situation in the market, in particular by increasing the risk of a complete halt of Russian gas supplies to the Union in the near future, a situation which has affected the Union’s security of supply. That sharply increased the volatility of energy prices in the Union and increased gas and electricity prices to all-time highs during the summer leading to growing electricity retail prices which are expected to continue gradually trickling down to most consumer contracts, increasingly burdening households and businesses. The aggravated situation in the energy markets has substantially contributed to the general inflation in the euro area, slowing down economic growth across the Union. That risk will persist regardless of any temporary reduction of wholesale prices and will be even more pertinent next year, as recognised in the emergency proposal by the Commission accompanying the Communication from the Commission of 18 October 2022 on Energy Emergency - preparing, purchasing and protecting the EU together. European energy companies could face severe difficulties in filling gas storage facilities next year, as it is highly probable that less or even no pipeline gas will reach the Union from Russia given the current political situation. In addition, the target for 2023, set out in Regulation (EU) 2022/1032 of the European Parliament and of the Council (1), is to fill 90% of the Union’s gas storage capacities as opposed to 80% for this winter. Also, unpredictable events such as sabotage of pipelines and other risks of disruption to security of supply could create additional strain on gas markets. Additionally, the competitiveness outlook of European renewable energy technology industries has been weakened by recent policies in other world regions aimed at providing support and speeding up the scale up of entire renewable energy technology value chains.

(3)

In this context, and in order to tackle the exposure of European consumers and businesses to high and volatile prices which are causing economic and social hardship, to ease the required reduction in energy demand by replacing natural gas supplies with energy from renewable sources and to increase security of supply, the Union needs to take further immediate and temporary action to accelerate the deployment of renewable energy sources, in particular by means of targeted measures which are capable of accelerating the pace of deployment of renewables in the Union in the short term.

(4)

Those urgent measures have been selected because of their nature and potential to contribute to solutions for the energy emergency in the short term. More particularly, several of the measures in this Regulation can be implemented by Member States rapidly in order to streamline the permit-granting process applicable to renewable energy projects, without requiring burdensome changes to their national procedures and legal systems and ensuring a positive acceleration of the deployment of renewables in the short term. Some of those measures are of general scope, such as the introduction of a rebuttable presumption that renewable energy projects are of overriding public interest for the purposes of the relevant environmental legislation, or the introduction of clarification regarding the scope of certain environmental directives as well as the simplification of the permit-granting framework for the repowering of renewable energy power plants by focusing on the impact stemming from the changes or extensions compared to the original project. Other measures target specific technologies, such as the significantly shorter and faster permit-granting for solar energy equipment on existing structures. It is appropriate to implement those emergency measures as quickly as possible, and to adapt them as necessary to accurately address the current challenges.

(5)

It is necessary to introduce additional urgent and targeted measures addressed to specific technologies and types of projects which have the highest potential for quick deployment and immediate effect on the objectives of reducing price volatility and reducing the demand for natural gas without constraining the overall energy demand. In addition to the acceleration of the permit-granting processes, with regard to solar energy equipment on artificial structures it is appropriate to promote and accelerate the deployment of small-scale solar installations, including for renewables self-consumers and collective self-consumers, such as local energy communities, since those are the options that cost least, are most accessible and have the least environmental or other type of impact for a fast roll-out of new renewable installations. In addition, those projects directly support households and companies that are facing high energy prices and shield consumers from price volatility. The repowering of renewable energy power plants is an option for rapidly increasing renewable energy production with the least impact on the grid infrastructure and the environment, including in the case of those renewable energy production technologies, such as wind power, for which permit-granting processes are typically longer. Lastly, heat pumps are a direct renewable alternative for natural gas boilers and have the potential to significantly reduce the demand for natural gas during the heating season.

(6)

Due to the urgent and exceptional energy situation, Member States should be able to introduce exemptions from certain assessment obligations set in Union environmental legislation for renewable energy projects and for energy storage projects and electricity grid projects that are necessary for the integration of renewable energy into the electricity system. In order for those exemptions to be introduced, two conditions should be met, namely that the project is located in a dedicated renewable or grid area and that such area should have been subject to a strategic environmental assessment. In addition, proportionate mitigation measures or, where not available, compensation measures should be adopted to ensure species protection.

(7)

This Regulation should apply to permit-granting processes that have a starting date within the period of its application. In view of the objective of this Regulation, and the emergency situation and exceptional context of its adoption, in particular the fact that a short term acceleration of the pace of deployment of renewables in the Union justifies the application of this Regulation to pending permit-granting processes, Member States should be allowed to apply this Regulation, or certain of its provisions, to pending permit-granting processes for which a final decision of the relevant authority has not been taken, provided that the application of those rules duly respects the pre-existing rights of third parties and their legitimate expectations. Member States should therefore ensure that the application of this Regulation to pending permit-granting processes is proportionate and appropriately protects the rights and legitimate expectations of all interested parties.

(8)

One of the temporary measures consists of the introduction of a rebuttable presumption that renewable energy projects are of overriding public interest and serving public health and safety for the purposes of the relevant Union environmental legislation, except where there is clear evidence that those projects have major adverse effects on the environment which cannot be mitigated or compensated for. Renewable energy plants, including heat pumps or wind energy, are crucial to fight climate change and pollution, reduce energy prices, decrease the Union’s dependence on fossil fuels and ensure the Union’s security of supply. Presuming renewable energy plants, including heat pumps, are of overriding public interest and serve public health and safety would allow such projects to benefit, where necessary, from a simplified assessment for specific derogations foreseen in the relevant Union environmental legislation with immediate effect. Taking into consideration their national specificities, Member States should be allowed to restrict the application of this presumption to certain parts of their territories or certain technologies or projects. It is possible for Member States to consider applying this presumption in their relevant national legislation on landscaping.

(9)

This reflects the important role that renewable energy can play in the decarbonisation of the Union’s energy system, by offering immediate solutions to replace fossil-fuel based energy and by addressing the aggravated situation in the market. In order to eliminate bottlenecks in the permit-granting process and operation of renewable energy plants in the planning and permit-granting process, the construction and operation of energy plants from renewable sources and the development of the related grid infrastructure should be given priority when balancing legal interests in the individual case, at least for projects which are recognised as being of public interest. As regards the protection of species, this priority should only be given if, and to the extent that, appropriate species conservation measures contributing to the maintenance or restoration of the populations of the species at a favourable conservation status are undertaken and sufficient financial resources, as well as areas, are made available for this purpose.

(10)

Solar energy is a key source of renewable energy to put an end to the Union’s dependency on Russian fossil fuels while achieving the transition towards a climate-neutral economy. Solar photovoltaic energy, which is one of the sources of electricity available that costs least, and solar thermal technologies, which provide renewable heating at low cost per unit of heat, can be rolled out rapidly, and can be of direct benefit to citizens and businesses. In this context, in line with the Communication from the Commission of 18 May 2022 entitled ‘EU Solar Energy Strategy’, the development of a resilient industrial solar value chain in the Union will be supported, including through the Solar PV Industry Alliance that will be launched at the end of 2022. Accelerating and improving permit-granting processes for renewable energy projects will help underpin the expansion of the Union’s clean energy technology manufacturing capacity. The current circumstances and, in particular, the very high volatility of energy prices call for immediate action to ensure significantly faster permit-granting processes in order to significantly accelerate the pace of the installation of solar energy equipment on artificial structures, which is generally less complex than installation on the ground, and which can rapidly contribute to mitigate the effects of the current energy crisis, provided that grid stability, grid reliability and grid safety are maintained. Those installations should therefore benefit from shorter permit-granting processes compared to other renewable energy projects.

(11)

The maximum deadline for the permit-granting process for the installation of solar energy equipment and its related co-located storage and grid connections in existing or future artificial structures created for purposes different than solar energy production should be of 3 months. A specific derogation from the requirement to carry out environmental impact assessments under Directive 2011/92/EU of the European Parliament and of the Council (2) should also be introduced for those installations given that they are not likely to raise concerns related to competing uses of space or environmental impact. Investing in small decentralised solar energy installations to become renewable self-consumers is one of the most efficient means for energy consumers to reduce their energy bills and their exposure to price volatility. Member States should be allowed to exclude certain areas or structures from the scope of this shorter deadline and this derogation for certain justified reasons.

(12)

Self-consumption installations including those for collective self-consumers, such as local energy communities, also contribute to reducing overall natural gas demand, to increasing resilience of the system and to the achievement of the Union’s renewable energy targets. The installation of solar energy equipment with a capacity below 50 kW, including installations of renewables self-consumers, is not likely to have major adverse effects on the environment or the grid and does not raise safety concerns. In addition, small installations do not generally require capacity expansion at the grid connection point. In view of the immediate positive effects of such installations for consumers and the limited environmental impacts they may give rise to, it is appropriate to further streamline the permit-granting process applicable to them, provided that they do not exceed the existing capacity of the connection to the distribution grid, by introducing the concept of administrative positive silence in the relevant permit-granting processes in order to promote and accelerate the deployment of those installations and to be able to reap their benefits in the short term. Member States should be allowed to apply a lower threshold than 50 kW due to their internal constraints, provided that the threshold remains higher than 10,8 kW. In any event, during the permit-granting process of 1 month, the relevant authorities or entities may reject the applications received for such installations for reasons related to grid safety, stability and reliability by way of a duly motivated response.

(13)

Repowering existing renewable energy plants has a significant potential to rapidly increase renewable power generation, thus allowing the reduction of gas consumption. Repowering enables the continued use of sites with significant renewable energy potential, which reduces the need to designate new sites for renewable energy projects. Repowering a wind energy power plant with more efficient turbines allows the existing capacity to be maintained or increased whilst having fewer, bigger and more efficient turbines. Repowering also benefits from the existing grid connection, a likely higher degree of public acceptance and knowledge of environmental impacts.

(14)

It is estimated that onshore wind capacity of 38 GW is reaching the end of its normal operational life of 20 years between 2021 and 2025. Decommissioning those capacities instead of repowering would lead to a substantial reduction of the currently installed renewable energy capacity, further complicating the situation in the energy market. An immediate simplification and acceleration of the permit-granting processes for repowering are crucial for maintaining and increasing the renewable energy capacity in the Union. To this end, this Regulation introduces additional measures to further streamline the permit-granting process applicable to the repowering of renewable energy projects. In particular, the maximum deadline of 6 months applicable to the permit-granting process for the repowering of renewable energy projects should include all relevant environmental impact assessments. Moreover, whenever the repowering of a renewable energy plant, or the upgrade of a related grid infrastructure which is necessary to integrate renewable energy into the electricity system, is subject to a screening or environmental impact assessment, it should be limited to assessing the potential significant impacts resulting from the change or extension compared to the original project.

(15)

In order to promote and accelerate the repowering of existing renewable energy plants, a simplified procedure for grid connections should be immediately established where the repowering results in a limited increase in total capacity compared to the original project.

(16)

When repowering a solar installation, increases in efficiency and capacity can be achieved without increasing the space occupied. Thus, the repowered installation would not have a different impact on the environment than the original installation as long as the space used is not increased in the process, and the originally required environmental mitigation measures continue to be complied with.

(17)

Heat pump technology is key to producing renewable heating and cooling from ambient energy, including from wastewater treatment plants and geothermal energy. Heat pumps also allow the use of waste heat and cold. The rapid deployment of heat pumps which mobilises underused renewable energy sources such as ambient energy, geothermal energy and waste heat from industrial and tertiary sectors, including data centres, makes it possible to replace natural gas and other fossil fuel-based boilers with a renewable heating solution, while increasing energy efficiency. This will accelerate the reduction in the use of gas for the supply of heating, both in buildings as well as in industry. In order to accelerate the installation and use of heat pumps, it is appropriate to introduce targeted shorter permit-granting processes for such installations, including a simplified procedure for the connection of smaller heat pumps to the electricity grid where there are no safety concerns, no further works are needed for grid connections and there is no technical incompatibility of the system components, unless no such procedure is required by national law. Thanks to a quicker and easier installation of heat pumps, the increased use of renewables in the heating sector, which accounts for almost half of the Union’s energy consumption, will contribute to security of supply and help tackle a more difficult market situation.

(18)

When applying the deadlines for the installation of solar energy equipment, the repowering of renewable energy power plants and for the deployment of heat pumps, the time during which the plants, their grid connections and the related necessary grid infrastructure are being built or repowered should not be counted within those deadlines except when it coincides with other administrative stages of the permit-granting process. In addition, the time spent on the administrative stages necessary for completing significant upgrades to the grid required in order to ensure grid stability, grid reliability and grid safety should not be counted within those deadlines.

(19)

In order to further facilitate the deployment of renewable energy, Member States should be allowed to retain the possibility to further shorten the deadlines of the permit-granting process.

(20)

The provisions of the United Nations Economic Commission for Europe (UNECE) Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (‘the Aarhus Convention’) regarding access to information, public participation in decision-making, and access to justice in environmental matters, and in particular, the obligations of Member States relating to public participation and to access to justice, remain applicable.

(21)

The principle of energy solidarity is a general principle under Union law as stated by the European Court of Justice in its judgment of 15 July 2021, in Case C-848/19 P (3), Germany v Poland and it applies to all Member States. In implementing the principle of energy solidarity, this Regulation allows for cross-border distribution of the effects of faster deployment of renewable energy projects. The measures set out in this Regulation are directed at renewable energy installations in all Member States and capture a wide scope of projects, including on existing structures, new installations of solar energy equipment and repowering of existing installations. Given the degree of integration of Union energy markets, any increase in renewable energy deployment in a Member State should be beneficial also to other Member States in terms of security of supply and lower prices. It should help renewable electricity flow across the borders to where it is most needed and ensure that renewable electricity produced at low cost is exported to Member States where electricity production is more expensive. In addition, the newly installed renewable energy capacities in the Member States will have an impact on the overall gas demand reduction across the Union.

(22)

Article 122(1) of the Treaty on the Functioning of the European Union allows the Council to decide, on a proposal from the Commission and in a spirit of solidarity between the Member States, upon the measures appropriate for the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy. In the light of recent events and Russia’s recent actions, the high risk of a complete halt of Russian gas supplies, combined with the uncertain outlook for alternatives, poses a significant threat of disruption of the energy supplies, increasing energy prices further and consequently adding pressure on the Union’s economy. Therefore, urgent action is necessary.

(23)

Considering the scale of the energy crisis, the level of its social, economic and financial impact and the need to act as soon as possible, this Regulation should enter into force as a matter of urgency on the day following that of its publication in the Official Journal of the European Union. Its validity is limited to 18 months, with a review clause in order for the Commission to propose extending its validity, if necessary.

(24)

Since the objectives of this Regulation cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives,

(1)

The Russian Federation’s (‘Russia’) unprovoked and unjustified war of aggression against Ukraine and the unprecedented reduction of natural gas supplies from Russia to Member States threaten the security of supply in the Union and Member States. At the same time, Russia’s weaponisation of gas supply and market manipulation through intentional disruptions of gas flows have led to skyrocketing energy prices in the Union. Changing supply routes, resulting in congestion in the European gas infrastructure, the need to find alternative gas supply sources and price formation systems which are not adapted to the situation of a supply shock have contributed to price volatility and price hikes. Higher natural gas prices endanger the economy of the Union through sustained high inflation caused by higher electricity prices, undermining consumer purchasing power, as well as through raising the cost of manufacturing, particularly in energy-intensive industry, and seriously threaten the security of supply.

(2)

In 2022, natural gas prices were exceptionally volatile, with some benchmarks reaching all-time highs in August 2022. The abnormal level of the natural gas prices registered in August 2022 was the result of multiple factors, including a tight supply-demand balance linked to storage refilling and the reduction of pipeline flows, fears of further supply disruptions and market manipulations by Russia, and a price formation mechanism which was not tailored to such extreme demand and supply shifts and which aggravated the excessive price hike. While prices over the previous decade were within a band between EUR 5/MWh and EUR 35/MWh, European natural gas prices reached levels which were 1 000 % higher than the average prices seen before in the Union. Dutch Title Transfer Facility (TTF) Gas Futures (3-month/quarterly products) that are traded on the ICE Endex (2) exchange have been traded at levels slightly below EUR 350/MWh and the TTF day-ahead gas that is traded on European Energy Exchange hit EUR 316/MWh. Gas prices have never before reached levels such as those observed in August 2022.

(3)

Following the damage to the Nord Stream 1 pipeline which was likely caused by an act of sabotage in September 2022, there is no likelihood that gas supplies from Russia to the Union will resume at pre-war levels in the near future. European consumers and businesses remain exposed to a manifest risk of further potential episodes of economically damaging gas price spikes. Unpredictable events, such as accidents or the sabotage of pipelines, that disrupt gas supplies to Europe or that dramatically increase demand may threaten the security of supply. Market tensions triggered by the fear of sudden scarcity, are likely to persist beyond this winter and into next year, as the adaptation to supply shocks and the establishment of new supply relationships and infrastructure is expected to continue for one or more years.

(4)

While derivatives relating to other virtual trading point (‘VTPs’) exist, the TTF in the Netherlands is commonly seen as the ‘standard’ pricing proxy on European gas markets. This is because of its typically high liquidity, which is due to several factors, including its geographical location, which allowed the TTF in a pre-war environment to receive natural gas from several sources, including significant volumes from Russia. As such, it is widely used as a reference price in pricing formulas of gas supply contracts, as well as a price basis in hedging or derivatives operations across the Union, including in hubs not directly linked to the TTF. According to market data, the TTF hub accounted for approximately 80 % of natural gas traded in the first eight months of 2022 in the Union and the United Kingdom of Great Britain and Northern Ireland (the ‘United Kingdom’) combined.

(5)

However, the disruptive changes in Union energy markets since February 2022 have influenced the functioning and effectiveness of the traditional price formation mechanisms in the wholesale gas market, notably on the TTF benchmark. Whilst the TTF was a good proxy for gas prices in other regions of Europe in the past, as of April 2022 it has become detached from prices at other hubs and trading places in Europe, as well as from the price assessments made for liquefied natural gas (‘LNG’) imports by price reporting agencies. This is largely because the gas system of North-Western Europe presents particular infrastructural limitations both in terms of pipeline transmission (West-East) and in terms of LNG regasification capacity. Such limitations were partly responsible for the general increase of gas prices since the beginning of the crisis in Europe following Russia’s weaponisation of energy. The abnormal spread between the TTF and other regional hubs in August 2022 indicates that, under the current specific market circumstances, the TTF may not be a good proxy of the market situation outside North-Western Europe, where markets are facing infrastructure constraints. During scarcity episodes in the North-Western European market, other regional markets outside North-Western Europe may experience more favourable market conditions and are therefore unduly impacted through contract indexation to the TTF. Whilst the TTF still accomplishes its objective of balancing supply and demand in North-Western Europe, action is required to limit the effect of any abnormal episodes of excessively high TTF prices for other regional markets in the Union. Deficiencies in the price formation, to a lesser extent, may also exist in other hubs.

(6)

Different measures are available to address problems with the current price formation mechanisms. A possibility for European companies affected by the recent market disruptions and by deficiencies in the price formation system is to enter into a renegotiation of the existing TTF-based contracts. As price references linked to TTF Gas Futures have a different relevance than in the past and are not necessarily representative of the gas market situation outside North-Western Europe, certain purchasers may seek to address the current issues with price formation and the TTF benchmark by way of a renegotiation with their contract partners, either under the explicit terms of the existing contract or according to the general principles of contract law.

(7)

In the same vein, importing companies or Member States acting on their behalf may engage with international partners in order to renegotiate existing contracts or to agree on new supply contracts with more appropriate pricing formulas, adapted to the current situation of volatility. Coordinated purchasing via the IT tool created under Council Regulation (EU) 2022/2576 (3) may provide opportunities to lower the price of energy imports, in turn lowering the necessity of market intervention.

(8)

Furthermore, Directive 2014/65/EU of the European Parliament and of the Council (4) already includes some safeguards to limit episodes of extreme volatility, for instance by requiring that regulated markets as defined in Article 4(1), point (21), of that Directive have so-called short-term ‘circuit breakers’ which limit extreme price increases for certain hours. The temporary intra-day tool to manage excess volatility in energy derivatives markets, introduced by Regulation (EU) 2022/2576, contributes to limiting extreme volatility of prices in energy derivatives markets within a day. However, such mechanisms only work in the short term, and are not intended to prevent market prices from reaching excessive levels.

(9)

Demand reduction constitutes a further important element to tackle the problem of extreme price peaks. Reducing demand for gas and electricity can have a dampening effect on market prices and can therefore contribute to mitigating the problems with abnormally high gas prices. Therefore, this Regulation should, in line with the Conclusions of the European Council of 20-21 October 2022, ensure that the activation of the mechanism established by this Regulation does not lead to an overall increase in gas consumption.

(10)

In summer 2022, efforts of state-subsidised entities to buy gas for storage without consideration of the impact of uncoordinated purchasing on prices contributed to driving up price benchmarks and in particular TTF prices. Better coordination, where appropriate, between Member States using state-financed entities to purchase gas for filling underground gas storage facilities is therefore important to avoid extreme price peaks in future. The use of the joint purchasing mechanism established by Regulation (EU) 2022/2576 can play an important role in limiting episodes of excessively high gas prices in that regard.

(11)

Whilst existing measures are available to tackle some of the elements leading to the issues with price formation in gas markets, those existing measures do not guarantee an immediate and sufficiently certain remedy for the current problems.

(12)

It is therefore necessary to establish a temporary market correction mechanism (the ‘MCM’) for natural gas transactions in the main markets for TTF derivatives and derivatives linked to other VTPs with maturities between month-ahead and year-ahead, as an instrument against episodes of excessively high gas prices with immediate effect.

(13)

In its conclusions of 20-21 October 2022, the European Council called on the Commission to urgently present a proposal for a temporary dynamic price corridor on natural gas transactions to immediately limit episodes of excessively high gas prices, taking into account the safeguards set out in Article 23(2) of the Commission’s proposal for Regulation (EU) 2022/2576.

(14)

The following safeguards should, on the one hand, be considered when designing the MCM and, on the other hand, be used to guarantee that possible activation of the MCM will be terminated if the conditions for its activation are no longer in place or if unintended market disturbances occur: the MCM should apply to natural gas transactions in the TTF, a virtual trading point operated by Gasunie Transport Services B.V.; other Union gas trading hubs may be linked to the corrected TTF spot price via a dynamic price corridor; it should be without prejudice to over-the-counter (‘OTC’) gas trades; it should not jeopardise the Union’s security of gas supply; it should not depend on progress made in implementing the gas savings target; it should not lead to an overall increase in gas consumption; it should be designed in such a manner that it would not prevent market-based intra-Union flows of gas; it should not affect the stability and orderly functioning of energy derivative markets; and it should take into account the gas market prices in different organised marketplaces across the Union.

(15)

The MCM should be designed to meet two basic criteria, in particular to act as an effective instrument against episodes of extraordinarily high gas prices and to be activated only if prices reach exceptional levels compared to global markets, in order to avoid significant market disturbances and disruptions of supply contracts, potentially resulting in severe risks for the security of supply.

(16)

The intervention through the MCM should be limited to addressing the most important deficiencies in the price formation system. The TTF month-ahead settlement price for derivatives is by far the most widely used benchmark in gas supply contracts across the Union, followed by maturities of two-months ahead and year-ahead. However, shifts of trade to derivatives linked to other VTPs may lead to distortions on Union energy or financial markets, for instance through arbitrage by market participants between corrected and non-corrected derivatives, to the detriment of consumers. Derivatives linked to all VTPs in the Union should therefore, in principle, be included in the MCM. However, the application of the MCM to derivatives linked to VTPs other than TTF is complex and requires additional technical preparation. With a view to the urgent need to introduce the MCM for the most important derivative, TTF derivative, the Commission should be given the power to define the technical details of the application of the MCM to derivatives linked to other VTPs and the selection of derivatives linked to other VTPs which may be excluded on the basis of pre-defined criteria by means of an implementing act.

(17)

The establishment of the MCM should send a clear signal to the market that the Union will not accept excessively high gas prices which result from imperfect price formation. It should also provide certainty to market players as regards reliable limits for gas trading, and could result in important economic savings for both companies and households that will not be left exposed to excessively high energy price episodes.

(18)

The MCM should introduce a dynamic safety ceiling for the price from month-ahead to year-ahead derivatives. The dynamic safety ceiling should be activated if the derivatives price reaches a pre-defined level, and if the price hike does not correspond to a similar hike at regional or world market level.

(19)

A dynamic safety ceiling should therefore ensure that trading orders which would be significantly above LNG prices in other regions of the world are not accepted. Appropriate benchmarks should be used to determine a reference price reflecting global LNG price trends. The reference price should be based on LNG price assessments representative of the European market conditions and, due to the particular importance of the United Kingdom and Asia as competitors in the global LNG market, also on an appropriate benchmark for the United Kingdom and Asian regions. In contrast to pipeline gas, LNG is traded world-wide. Therefore, LNG prices better reflect the gas price developments at global level and can serve as a benchmark to assess whether price levels in continental hubs abnormally diverge from international prices.

(20)

The sample of LNG prices taken into account should be sufficiently broad to be informative even in the event that a specific LNG price is not available on a given day. In view of building a representative basket of European and international prices and in order to ensure that the entities providing the price information are subject to relevant Union regulation, price assessments should be selected by reporting agencies which are listed in the register of administrators and benchmarks established by Regulation (EU) 2016/1011 of the European Parliament and of the Council (5). As timely information is key for the dynamic MCM, only price information from entities providing information relating to the day of publication should be taken into account. In order to allow European Union Agency for the Cooperation of Energy Regulators (‘ACER’) established by Regulation (EU) 2019/942 of the European Parliament and of the Council (6) to exercise its market supervision duties under this Regulation, and to calculate the reference price on time, it is necessary to oblige the reporting agencies that publish price assessments to provide assessments to ACER by 21:00 CET, provided that they are available, in order to allow ACER to publish a reference price before the end of the day. While such reporting obligations concern only existing data and do not place significant additional burden on the reporting agencies and are frequent in energy and financial market regulation, ACER should ensure confidential treatment of the information received, protect any intellectual property rights related to that information and use that information solely for regulatory purposes. ACER should be able to issue guidance on the format in which the relevant data is to be provided.

(21)

Due to their high liquidity, it is appropriate to also include front-month derivatives related to the National Balancing Point (‘NBP’) of the United Kingdom. The daily price assessment carried out by ACER pursuant to Regulation (EU) 2022/2576 should be part of the basket of LNG price assessments.

(22)

While the benchmarks taken into account for the reference price are a good proxy for global LNG price trends, they cannot simply substitute derivative prices. This is mainly because the reference price reflects prices at different locations than the TTF and other VTPs in the Union. For instance, they do not take into account the costs related to possible infrastructure congestions faced when moving gas from the LNG terminal to where the TTF hub is located. TTF prices are therefore usually higher than the prices taken into account for the reference price. The difference amounted to around EUR 35/MWh on average between June and August 2022. Furthermore, it is of key importance for the security of supply that the corrected TTF-derivative price is set at a sufficiently high level to attract LNG imports from other regions in the world. Security of supply premium should therefore be put on the reference price for the calculation of the corrected TTF-derivative price. The formula for the safety ceiling should be fully dynamic, based on a dynamically developing basket of prices reflecting world market prices, and should serve as a certain safety margin to ensure that the security of supply is not at risk. The dynamic safety ceiling can vary every day on the basis of the evolution of global prices contained in the basket.

(23)

The safety ceiling should not be static. The safety ceiling should be adjusted in a dynamic manner and on a daily basis. The publication of a daily settlement price allows the dynamic safety ceiling to remain in line with LNG market developments, and to preserve the price formation process on exchanges and mitigate possible impacts on the orderly functioning of derivatives markets. A dynamic design of the safety ceiling will also reduce risks for central counterparties and limit the impact on participants in futures markets, such as clearing members and their clients. The dynamic safety ceiling should not correct market prices below a certain limit.

(24)

To avoid any risk that a dynamic bidding limit for the price of the month-ahead to year-ahead derivatives result in illegal collusive behaviour amongst natural gas suppliers or traders, financial regulators, ACER and competition authorities should observe the gas and energy derivatives markets particularly carefully during the period when the MCM is activated.

(25)

The MCM should be temporary in nature and should only be activated to limit episodes of exceptionally high natural gas prices, which are also unrelated to prices at other gas exchanges. To this end, two cumulative conditions should be met for the MCM to operate.

(26)

The MCM should only be activated when front-month TTF derivative settlement prices reach a pre-defined exceptionally high level, so as to ensure that the MCM corrects market deficiencies and does not significantly interfere with demand and supply and normal price setting. Unless set at a sufficiently high level, the safety ceiling could prevent market participants from effectively hedging their risks, as the formation of reliable prices for products with a delivery date in the future and the functioning of derivatives markets could be harmed. If the MCM were to be triggered to bring prices artificially down instead of correcting market malfunctioning, it would have a serious negative impact on market participants, including energy firms, who could face difficulties in meeting margin calls and liquidity constraints, potentially resulting in defaults. Some market actors, in particular smaller ones, may be prevented from hedging their positions, further exacerbating volatility in spot markets, and resulting in possibly higher price spikes. Given the significant trading volumes, such development would constitute a manifest risk for the economy which should be prevented by the design of the MCM. Past experiences, such as the exceptional price hike evidenced in August 2022, should therefore guide the definition of the price levels at which the MCM should be triggered. Available data show that in August 2022, the front-month prices for TTF-derivatives reached levels above EUR 180/MWh. The aim of the MCM should be to avoid abnormal prices at a level reached in August 2022.

(27)

Moreover, the MCM should only be activated when TTF prices reach levels which are significantly and abnormally high compared to LNG prices which reflect world market trends. If prices on global markets increase at the same pace and level as TTF prices, the activation of the MCM could impede the purchase of supplies on the global markets, which may result in risks for security of supply. Therefore, the MCM should only be triggered in situations where TTF prices are significantly higher than prices on global markets over a longer duration. Likewise, if the difference to TTF prices were to reduce or disappear, the MCM should be deactivated, in order to avoid any risk for security of supply.

(28)

To be fully compatible with Council Regulation (EU) 2022/1369 (7) and the demand reduction targets set out in that Regulation, the Commission should be able to suspend the activation of the MCM if it negatively affects the progress made in implementing the voluntary demand reduction targets pursuant to Regulation (EU) 2022/1369, or if it leads to an overall increase in gas consumption by 15 % in one month or 10 % in two consecutive months compared to the respective average consumption during comparable months in previous years. To address regional or Union-wide variations caused by seasonality, weather changes and other factors such as the COVID-19 crisis, gas consumption should be measured against consumption in the five years preceding the date of entry into force of this Regulation, in line with the approach in Regulation (EU) 2022/1369 and on the basis of data on gas consumption and demand reduction received from Member States pursuant to that Regulation. The dampening effect on natural gas prices that the MCM may entail should not end up in artificially incentivising natural gas consumption in the Union to the point that it damages the efforts necessary to reduce natural gas demand in accordance with the voluntary and mandatory demand reduction targets pursuant to Regulation (EU) 2022/1369 and demand reduction targets pursuant to Council Regulation (EU) 2022/1854 (8). The Commission should ensure that the activation of the MCM does not slow down the progress of Member States in meeting their energy saving targets.

(29)

Depending on the level of the intervention, the MCM may entail financial risks, contractual risks and risks for the security of supply. The level of risk depends on the frequency with which the MCM is activated and may therefore interfere with the normal functioning of the market. The lower the threshold for intervention, the more frequently the MCM will be triggered, and therefore the more likely it is that the relevant risk will materialise. As such, the conditions for the activation of the MCM should therefore be set at a level linked to abnormal and extraordinarily high levels of the TTF month-ahead price, while at the same time ensuring that it is an effective instrument against episodes of excessively high gas prices that do not reflect international market developments.

(30)

It is important that the MCM is designed in such a manner so as not to alter the fundamental contractual equilibrium of gas supply contracts, but rather to address episodes of abnormal market behaviour. If the triggers for the intervention are set at a level where they correct existing problems with price formation and do not intend to interfere with the demand and supply equilibrium, the risk that the contractual equilibrium of existing contracts will be altered through the MCM or its activation can be minimised.

(31)

In order to ensure that the MCM has an immediate effect, the dynamic bidding limit should be activated immediately and automatically, without the need for a further decision by ACER or the Commission.

(32)

To ensure that possible problems resulting from the activation of the MCM are identified early on, the Commission should mandate the European Securities and Markets Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (9) (‘ESMA’) and ACER to issue a report on possible negative effects from the MCM on financial and energy markets and on security of supply.

(33)

ACER should continuously monitor whether the conditions for the operation of the MCM are fulfilled. ACER is the best placed authority to carry out such monitoring, because it has a Union-wide view of gas markets and the necessary expertise in the operation of gas markets, and is already mandated to monitor trading activities in wholesale energy products under Union law. ACER should therefore monitor the evolution of the front-month TTF settlement price and compare it to the reference price, determined by the average price of LNG price assessments linked to European trading hubs, in order to verify whether the conditions that justify the activation or deactivation of the MCM are met. Once the conditions for activation of the MCM are met, ACER should publish a notice immediately on its website stating that the triggering conditions for the activation of the MCM have been met. The following day, market operators should not accept any orders above the dynamic bidding limit and TTF derivatives market participants should not submit such orders. Market operators and TTF derivatives market participants should monitor the website of ACER where the daily reference price should be published. A similar dynamic bidding limit should apply to derivatives linked to other VTPs under the conditions defined in the implementing act concerning the application of the MCM to such derivatives.

(34)

The activation of the MCM may engender undesirable and unforeseeable effects on the economy, including risks for security of supply and for financial stability. To ensure a swift reaction in case unintended market disturbances occur, efficient safeguards should be established, based on objective criteria, which ensure that the MCM can be suspended at any time. In the event of unintended market disturbances , based on the results of ACER monitoring and concrete indications that a market correction event is imminent, the Commission should be able to request an opinion from ESMA, ACER, and, where appropriate, European Network of Transmission System Operators for Gas (‘ENTSOG’) and the Gas Coordination Group established under Regulation (EU) 2017/1938 of the European Parliament and of the Council (10) (the ‘GCG’) on the impact of a possible market correction event on security of supply, intra-Union flows of gas and financial stability for the Commission to be able to suspend, by means of an implementing decision, the activation of the MCM by ACER swiftly if need be.

(35)

Beyond a daily review on whether the requirements for the dynamic bidding limit are still in place, additional safeguards should be established in order to avoid unintended market disturbances.

(36)

The dynamic bidding limit should not affect OTC transactions, as applying that limit to OTC transactions would raise serious monitoring issues and may lead to problems with the security of supply. However, a review mechanism should apply to assess whether the exclusion of OTC transactions may lead to significant shifts of TTF derivatives trading to OTC markets, thereby endangering the stability of financial or energy markets.

(37)

The MCM should be automatically deactivated if its operation is no longer justified by the situation in the natural gas market. Unless market disturbances occur, the MCM should only be deactivated after a certain period of time, to avoid frequent activation and deactivation. The MCM should therefore be automatically deactivated after 20 days if the dynamic bidding limit is at EUR 180/MWh for a certain period. The deactivation of the MCM should not require any assessment by ACER or the Commission, but should happen automatically once the conditions are fulfilled.

(38)

Should there be a significant reduction in the supply of gas and in the event that the gas supply is insufficient to meet the remaining gas demand, pursuant to Regulation (EU) 2017/1938, the Commission may declare a regional or Union emergency at the request of a Member State which has declared an emergency, and is to declare a regional or Union emergency if two or more Member States have declared an emergency. In order to prevent a situation from occurring where the continued activation of the MCM leads to security of supply problems, the MCM should be automatically deactivated where the Commission has declared a regional or Union emergency.

(39)

It is of key importance that the MCM includes an effective instrument to suspend, based on objective criteria, the dynamic safety ceiling immediately and at any time if the dynamic safety ceiling were to lead to serious market disturbances, affecting the security of supply and intra-Union flows of gas.

(40)

As it is important to thoroughly assess all safeguards to be taken into account when assessing a possible suspension of the MCM, the MCM should be suspended by means of an implementing decision of the Commission. When taking such a decision, which should be without undue delay, the Commission should assess whether the application of the dynamic bidding limit jeopardises the Union’s security of supply, is accompanied by a sufficient demand reduction effort, prevents market-based intra-Union flows of gas, negatively affects energy derivatives markets, accounts for gas market prices in various organised marketplaces across the Union or where it may negatively affect existing gas supply contracts. In such cases, the Commission should suspend the MCM by means of an implementing decision. Considering the need to react swiftly, the Commission should not be required to act in accordance with a committee procedure.

(41)

The MCM should not jeopardise the Union’s security of gas supply by constraining price signals that are essential in attracting necessary gas supplies and intra-Union flows of gas. Gas providers may in fact potentially withhold supplies when the MCM is activated to maximise profits by selling shortly after the deactivation of the safety ceiling. In case the MCM would lead to such risks for the Union’s security of gas supply, but where no regional or Union emergency is declared, the Commission should immediately suspend the MCM. The elements to be taken into account in the assessment of security of supply risks should include a potential significant deviation of one of the components of the reference price compared to the historical trend, and a significant drop of quarterly LNG imports into the Union compared to the same quarter of the previous year.

(42)

As unrestricted intra-Union flows of gas are a key element of security of supply in the Union, the activation of the MCM should also be suspended if it unduly restricts intra-Union flows of gas, endangering the Union’s security of supply.

(43)

The MCM should not end up diminishing the role that price signals fulfil in the Union’s internal market in natural gas and prevent market-based intra-Union flows of gas, as it is essential that natural gas continues to flow where it is needed most.

(44)

The MCM should not unduly jeopardise the continued proper functioning of the energy derivatives markets. Those markets play a key role in enabling market participants in hedging their positions in order to manage risks, in particular with regard to price volatility. Moreover, price interventions through the MCM can result in considerable financial losses for market participants in the derivatives markets. Given the size of the market for gas in the Union, such losses may not only affect the specialised derivatives markets, but may have significant knock-on effects on other financial markets. Price interventions could also lead to a detrimental increase in margin call due to uncertainty. A substantial increase in margin calls could result in considerable financial and liquidity losses for market participants, leading to the default of a clearing member or a final client. Relevant market participants should act in good faith and not unduly change risk management procedures resulting in an increase of margin calls, in particular if not in line with normal market procedures. Therefore, the Commission should immediately suspend the MCM if it jeopardises the orderly functioning of the derivatives market, for instance where it leads to a significant decrease in TTF derivatives transactions within the Union or to a significant shift of TTF-derivative transactions to trading venues outside the Union. In that regard, it is important that the Commission takes into account available expertise from relevant Union bodies. ESMA is an independent authority that contributes to safeguarding the stability of the Union’s financial system, notably by promoting stable and orderly financial markets, such as the derivative markets.

The Commission should therefore take into account reports from ESMA on such aspects. In addition, the Commission should take into account any advice of the European Central Bank (‘ECB’) relating to the stability of the financial system in line with Article 127(4) Treaty on the Functioning of the European Union (‘TFEU’) and Article 25.1 of Protocol 4 on the statute of the European system of central banks and of the European Central Bank annexed to TFEU (the ‘Protocol’). Given the volatility of financial markets and the potentially large impact of market interventions therein, it is important to ensure that the Commission can suspend the MCM quickly. Therefore, the report of ESMA should be issued no later than 48 hours or within the same day in urgent cases after the Commission’s request.

(45)

The MCM should be designed to address only exceptional increases in gas prices caused by deficiencies in the price formation mechanism and as such should not have an impact on the validity of existing gas supply contracts. However, in situations where ACER or the Commission observes that the activation of the MCM has a negative impact on existing gas supply contracts, the Commission should suspend the MCM.

(46)

The design and suspension possibilities of the MCM should take into account that natural gas traders may move the natural gas trade to regions outside the Union, thereby reducing the effectiveness of the MCM. This would be the case, for instance, if traders started engaging in OTC gas trade, which is less transparent, less subject to regulatory scrutiny, and carries greater risks of defaulting on obligations for the parties involved. This would also be the case if traders, whose hedging may be limited by the MCM, sought hedges in other jurisdictions, resulting in the clearing counterpart needing to rebalance the cash underpinning derivatives positions to reflect the capped settlement price, triggering margin calls.

(47)

ACER, ESMA, ENTSOG and the GCG should assist the Commission in monitoring the MCM.

(48)

In carrying out its tasks under this Regulation, the Commission should also have the possibility of consulting the ECB, and to seek its advice, in accordance with the ECB’s role pursuant to Article 127(5) TFEU in order to contribute to the smooth conduct of policies relating to the prudential supervision of credit institutions and to the stability of the financial system and pursuant to Article 25.1 of the Protocol to offer advice to and be consulted by, inter alia, the Commission on the scope and implementation of Union legislation relating to the prudential supervision of credit institutions and to the stability of the financial system. Such a consultation process should be organised in a manner that allows a swift suspension of the MCM, if need be.

(49)

Given the urgent need to address the problems notably in TTF-derivatives price setting in the Union, a swift implementation of the MCM is crucial. ESMA and ACER should carry out an assessment on the impact of the MCM(‘effects assessment’), to analyse whether the fast implementation of the MCM could lead to unintended negative consequences for financial or energy markets or for security of supply. The effects assessment should be submitted to the Commission by 1 March 2023. It should notably analyse the elements necessary for the implementing act on the details of the modalities for the extension of the MCM to derivatives linked to other VTPs and verify whether the key elements of the MCM are still appropriate in light of developments as regards the financial and energy market or security of supply. ESMA and ACER should publish a preliminary data report concerning the introduction of the MCM by 23 January 2023. Taking into account the results of the effects assessment, the Commission should, where appropriate, propose an amendment to this Regulation without undue delay with a view to adapting the choice of the products covered by the MCM.

(50)

The Commission may also propose other amendments to this Regulation, based on the effects assessment, or following a market correction event or a suspension decision, or in light of market and security of supply developments.

(51)

In order to preserve the sound functioning of derivatives markets, in particular the risk management processes of the central clearing counterparties (‘CCPs’), and to minimise the need to call for additional margin as collateral, parties should be allowed to offset or reduce positions in TTF derivatives market in an orderly manner if they wish to do so. Therefore, the dynamic bidding limit should not apply to contracts entered into before the entry into force of this Regulation, nor to trades that allow market participants to offset or reduce positions resulting from TTF derivatives contracts entered into before the entry into force of this Regulation.

(52)

CCPs play a key role in assuring the orderly functioning of markets for TTF derivatives by mitigating counterparty risk. It is therefore necessary that the activities of CCPs, in particular in managing defaulting positions, are not hindered by the MCM. To that end, the dynamic bidding limit should not apply to trades executed as part of a default management process organised by a CCP.

(53)

The MCM is necessary and proportionate in achieving the objective of correcting excessively high gas prices at the TTF and derivatives linked to other VTPs. All Member States are concerned by the indirect effects of the price hikes, such as increasing energy prices and inflation. As regards the deficiencies in the price formation system, such deficiencies play a different role in various Member States, with price increases being more representative in some Member States (e. g. Central European Member States) than in other Member States (e. g. Member States at the periphery or with other supply possibilities). In order to avoid a fragmented action, which could divide the integrated Union gas market, common action is needed in a spirit of solidarity. This is also crucial in order to ensure the security of supply in the Union. Moreover, common safeguards, which may be more necessary in Member States without supply alternatives than in Member States with supply alternatives, should ensure a coordinated approach as an expression of energy solidarity. Indeed, while the financial risks and benefits are very different for various Member States, the MCM should constitute a solidary compromise, in which all Member States agree to contribute to the market correction and accept the same limits for the price formation, even though the level of malfunction of the price formation mechanism and the financial impacts of derivatives prices on the economy are different in some Member States. The MCM would therefore strengthen Union solidarity in avoiding excessively high gas prices, which are unsustainable even for short periods of time for many Member States. The MCM will help to ensure that gas supply undertakings from all Member States are able to purchase gas at reasonable prices in the spirit of solidarity.

(54)

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers to define the technical details of the application of the MCM to derivatives linked to other VTPs should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (11).

(55)

The volatile and unpredictable situation of the natural gas market entering the winter seasons makes it important to ensure that the MCM can be applied as soon as possible, if the conditions justifying its activation are met. This Regulation should therefore enter into force on 1 February 2023. The dynamic bidding limit should apply from 15 February 2023. The obligation to provide a preliminary data report by ESMA and ACER should apply retroactively as of 1 January 2023 in order to obtain the required information as soon as possible,

(1)

Under Article 8a of Directive 2013/36/EU, investment firms that meet the conditions set out in Article 4(1), point (1)(b), of Regulation (EU) No 575/2013 of the European Parliament and of the Council (2) should apply for an authorisation as credit institutions. Those undertakings should provide sufficient information to the competent authorities as to enable them to carry out a comprehensive assessment of the applicant credit institutions.

(2)

The list of information to be provided in an application by entities seeking to obtain the authorisation referred to in Article 8a of Directive 2013/36/EU should be specified in a regulation. Such information should include the identification details and historical information of the applicant credit institution, including its existing licensing, activities proposed, current financial situation, programme of operations, and initial capital.

(3)

To ensure consistency and harmonisation of the authorisation information required for applicant credit institutions, this Regulation should refer to the Commission Delegated Regulation (EU) 2022/2580 (3) on the information to be provided for the authorisation of credit institutions, the requirements applicable to shareholders and members with qualifying holdings and obstacles which may prevent the effective exercise of supervisory functions and should aim to expand its scope to the investment firms that classify as credit institutions.

(4)

Article 4(1) of Regulation (EU) No 575/2013 identifies a type of credit institutions which takes deposits or other repayable funds from the public and grants credits for its own account and another which is the one covered by the scope of this Regulation. Differently, credit institutions the business of which includes taking deposits or other repayable funds from the public and granting credits for its own account should follow the requirements of Delegated Regulation (EU) 2022/2580.

(5)

The list of information requirements provided in this Regulation for the applicant credit institutions should take into consideration the specificities of the investment firms’ business model and any prior licences granted by a competent authority.

(6)

Competent authorities may need to expand the requested information in order to be in a position to assess thoroughly the applicant credit institution, taking into account the range of different business models and legal forms that applicant institutions may take. This Regulation should enable competent authorities to require additional information from an investment firm when assessing the application for a credit institution.

(7)

The competent authority may consider waiving some information requirements in light of the size, nature, scale and complexity of the activities of the applicant credit institution concerned, and taking into account the principle of proportionality and the implementation burden on the institutions. However, this should not compromise the possibility of conducting a comprehensive assessment of the application for a credit institution.

(8)

This Regulation is based on the draft regulatory technical standards submitted by the European Banking Authority (EBA) to the Commission.

(9)

The EBA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council (4),

(1)

The information to be provided in an application for authorisation as a credit institution, as referred to in Article 8(1) of Directive 2013/36/EU, should be sufficiently detailed and comprehensive to enable the competent authority to assess whether an applicant credit institution meets the requirements laid down in Articles 10 to 14 of that Directive and in national law.

(2)

The information submitted in an application for authorisation as a credit institution should be true, accurate, complete and up-to-date from the moment of submission of the application until authorisation and the commencement of activities. For that purpose, competent authorities should be informed of any changes to the information provided in the initial application, and competent authorities should be able to enquire whether any changes or updates have occurred before commencement of the activities. To ensure that competent authorities have a complete overview of the applicant credit institution, competent authorities should be permitted to request, where necessary, specific clarifications or additional information regarding an application for authorisation as a credit institution.

(3)

To ensure efficiency and to avoid duplication, competent authorities should be able to waive the requirement to submit information that they already have, or to submit information that concerns activities that the applicant credit institution will not carry out in the event it is authorised.

(4)

An application for authorisation as a credit institution should describe the applicant credit institution and contain information about any previous commercial activities of the applicant credit institution and its subsidiaries, and about any licences, authorisations, registrations or other permissions held, pending for approval, refused or revoked.

(5)

An application for authorisation as a credit institution should contain a programme of activities, describing the activities, including those referred to in Annex I of Directive 2013/36/EU, which will be performed in the event the authorisation is granted.

(6)

To enable competent authorities to assess the overall risk profile of an applicant credit institution, to protect all stakeholders involved, including in particular depositors, and to ensure the stability of the financial markets in which the applicant credit institution will operate, an application for authorisation as a credit institution should contain information about the operational structure, business lines and target markets of the applicant credit institution, including the geographic distribution of the business. Furthermore, applicant credit institutions should provide in the application information about their membership, if any, of a deposit guarantee scheme as defined in Article 2(1), point (1), of Directive 2014/49/EU of the European Parliament and of the Council (2).

(7)

To enable competent authorities to assess the financial soundness of applicant credit institutions, an application for authorisation as a credit institution should contain financial information about the applicant credit institution, including, where appropriate, at individual, consolidated and sub-consolidated levels. For the same reason, competent authorities should be able to determine the quality, origin and composition of an applicant credit institution’s initial capital, as well as the ability of an applicant credit institution to comply with prudential requirements. An application for authorisation as a credit institution should therefore contain information about the amount of capital issued or to be issued and about the composition of own funds, and proof, where relevant, that the initial capital will be paid in full before the commencement of activities. To ensure that competent authorities can assess whether the activity that generated the initial capital is legitimate, an application for authorisation as a credit institution should also contain information about the origin of that initial capital.

(8)

It is necessary to ensure that an applicant credit institution is under sound and prudent management and robust governance from the outset, in accordance with the requirements that a credit institution has to meet as a matter of on-going supervision. The information provided in an application for authorisation as a credit institution should therefore enable competent authorities to assess the reputation, honesty, integrity, independence of mind and time commitment of each member of the management body of an applicant credit institution, as well as the knowledge, skills and experience of the members of the management body, both individually and collectively. The information provided in an application for authorisation as a credit institution should also enable competent authorities to assess, in specified cases where not already having been assessed as members of the management body, the reputation, honesty, integrity, knowledge, skills and experience of the heads of internal control functions and of the chief financial officer. That information should also enable competent authorities to assess the suitability of the heads of internal control functions and the chief financial officer, where those persons are not part of the management body, of credit institutions that are significant as referred to in Article 76(3) of Directive 2013/36/EU where those credit institutions are not part of a group, are part of a group and are the consolidating credit institution, or are part a group and the consolidating credit institution is not a significant credit institution as referred to in Article 76(3) of Directive 2013/36/EU.

(9)

It is necessary to ensure transparency of the shareholding structure of the applicant credit institution and to prevent criminals and their associates from holding, or being the beneficial owners of, qualifying holdings in credit institutions. Applications for authorisation as a credit institution should therefore contain information about the persons or entities that have or will have, in case of authorisation of the applicant credit institution, qualifying holdings in that credit institution. For the same reason, and where no person or other entity has or will have, in case of authorisation of the applicant credit institution, a qualifying holding in the credit institution, applications for authorisation as a credit institution should contain information about the persons who are or will be, in case of authorisation of the applicant credit institution, the twenty largest shareholders or members and about each person who has or will have, in case of authorisation, close links with the credit institution.

(10)

To assess past events related to the applicant credit institution and to assess the suitability of its shareholders and members, and of the members of the management body, the applicant credit institution should provide the competent authorities with all information about past convictions and pending criminal investigations, civil and administrative cases and other adjudicative actions of the applicant credit institution, its shareholders and members, and of the members of the management body.

(11)

Competent authorities should be able to assess whether there are any obstacles that could prevent the effective exercise of their supervisory functions, taking into account all relevant information, circumstances or situations and having regard to features relating to geographic presence, group structure and supervisory arrangements as set out in Directive 2013/36/EU.

(12)

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Banking Authority (EBA).

(13)

EBA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council (3).

(14)

This Regulation should apply from XX.XX.XXXX in order to grant the competent authorities and applicant credit institutions sufficient time to comply with the requirements laid down in this Regulation,