Council Regulation (EU) 2022/2576 enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders

Summary:

Regulation (EU) 2022/2576 - formally adopted by the Council of the European Union on 19 December 2022 - addressing high gas prices in the European Union (EU) and ensuring security of supply in the winter.

Further information:

Russia's invasion of Ukraine and the weaponisation of energy greatly exacerbated a crisis in the energy markets across the European Union. This crisis caused a sharp rise in energy prices and compromised the security of energy supply.

In May 2022, the European Commission adopted its REPowerEU strategy aimed at bringing dependence on Russian gas to an end as soon as possible. EU Member States have since then asked for the creation of an EU Energy Platform, with a view to ensuring security of supply. This Platform should support, in a spirit of solidarity, Member States and Energy Community Contracting Parties and their gas undertakings in obtaining additional supplies of LNG and pipeline gas to replace missing Russian gas supplies.

Further measures were set out by the Commission in July 2022, but the situation is still deemed extremely challenging at the onset of winter. In this context, the draft law aims to work, in a coherent manner, towards lowering prices and reinforcing solidarity and security of supply. The initiative contains the following elements:

• Aggregation of EU demand and joint gas purchasing;
• Advancing work to create a new LNG pricing (longer term);
• Proposing a price correction mechanism (short term) and temporary collar;
• Default solidarity rules in case of supply shortages;
• Mechanism for gas allocation for affected by gas supply emergency.

The draft Regulation was adopted by the European Commission on 18 October 2022 alongside a Communication bringing context to the emergency measures. A political agreement on the content of this file was reached in the Council of the European Union on 24 November, but disagreement remained on a parallel proposal relating to a cap on gas prices. Full endorsement of the draft Council Regulation took place on 19 December 2022. The Act was published in the Official Journal on 29 December 2022.

Official

EUR-LEX: COM(2022)549: Proposal for a Council Regulation enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders and reliable price benchmarks https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2022:549:FIN

European Commission: Topics: Energy security https://energy.ec.europa.eu/topics/energy-security_en

General Secretariat of the Council: Policies: Energy prices and security of supply https://www.consilium.europa.eu/en/policies/energy-prices-and-security-of-supply/

European Commission: Press Release, 18/10/2022: Commission makes additional proposals to fight high energy prices and ensure security of supply https://ec.europa.eu/commission/presscorner/detail/en/ip_22_6225

European Commission: Questions and Answers on proposals to fight high energy prices and ensure security of supply (18 October 2022) https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_6226

European Commission: Statement by President von der Leyen on a new package of measures to address high energy prices and ensure security of supply (18 October 2022) https://ec.europa.eu/commission/presscorner/detail/en/statement_22_6243

European Commission: Opening remarks by Commissioner Simson and Commissioner McGuinness at the press conference on a new package of measures to fight high energy prices and ensure security of supply (18 October 2022) https://ec.europa.eu/commission/presscorner/detail/en/speech_22_6245

Council of the European Union: Press Release, 24/11/2022: Council agrees on substance of new measures on joint purchases of gas and a solidarity mechanism https://www.consilium.europa.eu/en/press/press-releases/2022/11/24/further-measures-to-tackle-the-energy-crisis-council-agrees-on-joint-purchases-of-gas-and-a-solidarity-mechanism/

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News

Deutsche Welle, 18/10/2022: EU presents blueprint for tackling soaring energy costs https://www.dw.com/en/eu-presents-blueprint-for-tackling-soaring-energy-costs/a-63480816

The Guardian, 18/10/2022: EU proposes to cap ‘excessive and volatile’ gas prices this winter https://www.theguardian.com/business/2022/oct/18/eu-cap-gas-prices-winter-russia-ukraine

Associated Press (AP News), 25/10/2022: EU ministers delay for a month decision on more energy unity https://apnews.com/article/russia-ukraine-europe-business-european-union-climate-and-environment-9127e097bc269658c2f73937c07ebd97

EurActiv, 26/10/2022: Energy ministers split on EU gas price cap, move towards joint purchasing https://www.euractiv.com/section/energy/news/energy-ministers-split-on-eu-gas-price-cap-move-towards-joint-purchasing/

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Commentary and Analysis

Financial Review: Opinio, 10/10/2022: Why Europe is about to make its energy crisis worse https://www.afr.com/world/europe/why-europe-is-about-to-make-its-energy-crisis-worse-20221010-p5bojc

Euro|topics, October 2022: EU takes small step towards joint gas purchases https://www.eurotopics.net/en/290244/

EPRS: At a Glance, November 2022: Enhancing solidarity in EU gas markets https://www.europarl.europa.eu/thinktank/en/document/EPRS_ATA(2022)738226

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