Changes from report parliamentary committee draft to plenary report

Added(54) In view of the vertical links between the electricity and gas sectors, the unbundling provisions should apply across the two sectors.

RemovedNetwork operators have to play a key role in ensuring natural gas purity levels at the exit point of their networks. For industrial sectors using natural gas as a feedstock, in particular, high-purity levels are essential to avoid damage to the underlying assets (requires >98% purity by volume).

Added▌

RemovedArticle 36 – paragraph 1: 1. Without prejudice to Article 68 or any other legal duty to disclose information, each transmission, storage or LNG system operator, and each transmission system owner, shall preserve the confidentiality of commercially sensitive information obtained in the course of carrying out its activities, and shall prevent information about its own activities which may be commercially advantageous from being disclosed in a discriminatory manner. If the transmission, storage or LNG system operator, or the transmission system owner is part of a vertically integrated undertaking, it shall not disclose, in particular, any commercially sensitive information to the remaining parts of the vertically integrated undertaking other than transmission system operators, distribution system operators or hydrogen network operators, unless this is necessary for carrying out a business transaction. In order to ensure the full respect of the rules on information unbundling, Member States shall ensure that, where the transmission system operator is unbundled in accordance with the rules on the independent system operator for natural gas set out in Section 2 of Chapter IX, the transmission system owner including, in the case of a combined operator, the distribution system operator, and the remaining part of the vertically integrated undertaking other than transmission system operators, distribution system operators or hydrogen network operators do not use joint services, such as joint legal services, apa…

Added(56) Under ownership unbundling, to ensure full independence of network operation from supply and production interests and to prevent exchanges of any confidential information, the same person should not be a member of the managing boards of both a transmission system operator or a transmission system and an undertaking performing any of the functions of production or supply. For the same reason, the same person should not be entitled to appoint members of the managing boards of a transmission system operator or a transmission system and to exercise control or any right over a production or supply undertaking.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text. This amendment aims to clarify that the limitations to the exchange of commercially sensitive information and the use of joint services within a vertically integrated undertaking only apply to the vertically integrated parts of the undertaking, meaning those parts that are involved in activities of production and/or supply of energy.

Added(57) The setting up of a system operator or a transmission operator that is independent from supply and production interests should enable a vertically integrated undertaking to maintain its ownership of network assets whilst ensuring an effective separation of interests, provided that such independent system operator or such independent transmission operator performs all the functions of a system operator and detailed regulation and extensive regulatory control mechanisms are put in place.

RemovedArticle 37 – paragraph 2 a (new): 2 a. For the purpose of the swift implementation of grid connection of renewable gas production, Member States shall ensure: / (a) that the transmission system operator complies with reasonable time limits to assess the requests for injection of renewable gases, make an offer and implement the connection, with monitoring of the national regulatory authority in accordance with Article 72(1), point (t); / (b) that permitting procedures for the implementation of the connection are not hampered by a lack of administrative capacity and do not create a hurdle to the achievement of the national renewable energy target.

Added(58) Where, on 3 September 2009, an undertaking owning a transmission system was part of a vertically integrated undertaking, Member States should therefore be given a choice between ownership unbundling and setting up a system operator or transmission operator which is independent from supply and production interests.

RemovedThis amendment aims to improve the “right of injection” included in the proposal by setting time limit for the transmission system operators to deliver on the connection request. The time taken can negatively impact the project development and increasing injection of biomethane.

Added(59) To fully preserve the interests of the shareholders of vertically integrated undertakings, Member States should have the choice of implementing ownership unbundling either by direct divestiture or by splitting the shares of the integrated undertaking into shares of the network undertaking and shares of the remaining supply and production undertaking, provided that the requirements resulting from ownership unbundling are complied with.

RemovedArticle 40 – paragraph 1: 1. Each distribution system operator shall be responsible for ensuring the long-term ability of the system to meet reasonable demands for the distribution of gas, and for operating, maintaining, developing and decommissioning under economic conditions a secure, reliable and efficient system in its area, with due regard for the environment , the obligations laid down in [Regulation (EU) 2022/ … (Methane Regulation)] and energy efficiency.

Added(60) The full effectiveness of the independent system operator or independent transmission operator solutions should be ensured by way of specific additional rules. The rules on the independent transmission operator provide an appropriate regulatory framework to guarantee fair competition, sufficient investment, access for new market entrants and the integration of gas markets. Effective unbundling through the independent transmission operator provisions should be based on a pillar of organisational measures and measures relating to the governance of transmission system operators and on a pillar of measures relating to investment, connecting new production capacities to the network and market integration through regional cooperation. The independence of the transmission operator should also, inter alia, be ensured through certain ‘cooling-off’ periods during which no management or other relevant activity giving access to the same information as could have been obtained in a managerial position is exercised in the vertically integrated undertaking.

RemovedAs the use of natural gas for district heating and cooling is expected to decline, consequentially, decommissioning should be included as task of distribution system operators.

Added(61) In order to develop competition in the internal market in gas, large non-household customers, engaged in large-scale commercial activities, should be able to choose their suppliers and enter into contracts with several suppliers to secure their gas requirements. Such customers should be protected against exclusivity clauses, the effect of which is to exclude competing or complementary offers.

RemovedArticle 41 – paragraph 1 a (new): 1a. For the purpose of the swift implementation of grid connection of renewable gas production, Member States shall ensure: / (a) that the distribution system operator complies with reasonable time limits to assess the requests for injection of renewable gases, make an offer and implement the connection, with monitoring of the national regulatory authority in line with Article 72(1), point (t); / (b) that permitting procedures for the implementation of the connection are not hampered by lack of administrative capacity and that do not create a hurdle to the achievement of the national renewable energy target.

Added(62) A Member State should have the right to opt for full ownership unbundling in its territory. Where a Member State has exercised that right, an undertaking should not have the right to set up an independent system operator or an independent transmission operator. Furthermore, an undertaking performing any of the functions of production or supply should not directly or indirectly exercise control or any right over a transmission system operator from a Member State that has opted for full ownership unbundling.

RemovedThis amendment aims to improve the “right of injection” included in the proposal by setting time limit for the distribution system operators to deliver on the connection request. The time taken can negatively impact the project development and increasing injection of biomethane.

Added(63) Different types of market organisation exist in the internal market in natural gas. The measures that Member States could take in order to ensure a level playing field should be based on overriding requirements of general interest. The Commission should be consulted on the compatibility of the measures with the TFEU and Union law.

RemovedArticle 42 – title: Unbundling of distribution system operators and hydrogen distribution network operators

Added(64) The implementation of effective unbundling should respect the principle of non-discrimination between the public and private sectors. To that end, the same person should not be able to exercise control or any right, in violation of the rules of ownership unbundling or the independent system operator option, solely or jointly, over the composition, voting or decision of the bodies of both the transmission system operators or the transmission systems and the production or supply undertakings. With regard to ownership unbundling and the independent system operator solution, provided that the Member State in question is able to demonstrate that the requirement is complied with, two separate public bodies should be able to control production and supply activities on the one hand and transmission activities on the other.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text. The regulatory framework for gas should also apply to hydrogen. Instead of applying the provisions for the unbundling of hydrogen transmission network operators in accordance with Article 62, which mirror the rules for transmission system operators in the natural gas system, the provisions for the unbundling of distribution system operators in the natural gas system should also apply to hydrogen distribution network operators.

Added(65) Fully effective separation of network activities from supply and production activities should apply throughout the Union to both Union and non-Union undertakings. To ensure that network activities and supply and production activities throughout the Union remain independent from each other, regulatory authorities should be empowered to refuse certification to transmission system operators that do not comply with the unbundling rules. To ensure the consistent application of those rules across the Union, the regulatory authorities should take utmost account of the Commission’s opinion when the former take decisions on certification. To ensure, in addition, respect for the international obligations of the Union and solidarity and energy security within the Union, the Commission should have the right to give an opinion on certification in relation to a transmission system owner or a transmission system operator which is controlled by a person or persons from a third country or third countries.

RemovedArticle 42 – paragraph 1: 1. Where the distribution system operator or the hydrogen distribution network operator is part of a vertically integrated undertaking, it shall be independent at least in terms of its legal form, organisation and decision making from other activities not relating to distribution. Those rules shall not create an obligation to separate the ownership of assets of the distribution system from the vertically integrated undertaking.

Added(66) Pipeline networks for hydrogen will constitute an important means of efficient and sustainable transport for hydrogen, both onshore and offshore, and complement the transport for hydrogen by other means such as liquid hydrogen, ammonia or other hydrogen carriers. As a result of the high capital expenditure required for their construction, hydrogen pipeline networks could constitute natural monopolies. Experience with the regulation of natural gas markets has shown the importance of ensuring open and non-discriminatory access to pipeline networks with a view to safeguarding competition on commodity markets. Therefore, well-established principles of network operation, such as third-party access, should be applicable to onshore and offshore hydrogen networks in the Union. The development of and the investment in such pipeline networks for hydrogen should be based on reasonable assumptions about the future demand and production of hydrogen and follow a transparent planning process, including stakeholder consultations.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text.

Added(67) The operation of hydrogen networks should be separated from activities of energy production and supply in order to avoid the risk of conflicts of interest on behalf of the network operators. The structural separation of ownership of hydrogen networks and participations in energy production and supply guarantees the absence of such conflicts of interest. Member States should be able to rely on the alternative unbundling model of "integrated hydrogen transmission network operator" ▌ to provide a level playing field for existing vertically integrated hydrogen networks. Member States should also be able to allow the use of the "independent hydrogen network operator" model to allow vertically integrated owners of hydrogen transmission networks to retain ownership of their networks while ensuring the non-discriminatory operation of such networks ▌.

RemovedArticle 42 – paragraph 2 – introductory part: 2. In addition to the requirements under paragraph 1, where the distribution system operator or the hydrogen distribution network operator is part of a vertically integrated undertaking, it shall be independent in terms of its organisation and decision-making from the other activities not related to distribution. In order to achieve this, the following minimum criteria shall apply:

Added(67a) In the long term, rights and obligations for the transport of hydrogen is intended to be the same as for the transport of natural gas. The regulatory framework for electricity and gas should therefore also apply to hydrogen, including the requirements to distinguish between the transmission and distribution of hydrogen and to apply the unbundling of distribution system operators to hydrogen distribution network operators.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text.

Added(68) ▌The joint operation of hydrogen networks and gas or electricity grids can create synergies and should therefore be allowed. Transparency regarding financing and the use of access tariffs should be ensured with a clear and transparent separation of accounts under the monitoring of the regulatory authorities. Where a hydrogen network operator is part of an undertaking active in transmission or distribution of natural gas or electricity, the network operator should submit to the regulatory authority a list detailing the infrastructure assets of the undertakings regarding the allocation of the grid to the use of hydrogen or natural gas aiming to ensure full transparency regarding the separation of the regulatory asset base. That list should be updated in line with the usual auditing procedures for accounts.

RemovedArticle 42 – paragraph 2 – point a: (a) the persons responsible for the management of the distribution system operator or the hydrogen distribution network operator shall not participate in company structures of the integrated natural gas undertaking or the vertically integrated undertaking responsible, directly or indirectly, for the day-to-day operation of the production, transmission, transportation and supply of gases;

Added(68a) Given the unprecedented nature of the European hydrogen market, ACER should assess, within 10 years of the entry into force of this Directive, how the application of the unbundling rules laid down in this Directive influence the development of the hydrogen market. The Commission should address potential substantiated structural shortcoming of this Directive.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text.

Added(69) The operation of hydrogen networks should be separated from the activities of energy production and supply in order to avoid the risk of conflicts of interest on behalf of the network operators. The structural separation of ownership of hydrogen networks and participation in energy production and supplies should guarantee the absence of such conflicts of interest. However, Member States should be able to rely on the alternative unbundling model of integrated hydrogen network operator ▌. Member States should also be able to offer the use of an independent hydrogen network operator to allow vertically integrated owners of hydrogen networks to retain ownership of their networks while ensuring the non-discriminatory operation of such networks ▌.

RemovedArticle 42 – paragraph 2 – point b: (b) appropriate measures shall be taken to ensure that the professional interests of persons responsible for the management of the distribution system operator or the hydrogen distribution network operator are taken into account in a manner that ensures that they are capable of acting independently;

Added(70) In order to ensure transparency with regard to the costs and financing of regulated activities, activities of hydrogen network operation should be separated from other network operation activities for other energy carriers ▌ in relation to the ▌ accounts of network operators.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text.

Added(71) Hydrogen networks should be subject to third-party access in order to ensure competition and a level playing field in the market for hydrogen supply. Regulated third-party access on the basis of regulated access tariffs should be the default rule in the long-term. In order to ensure the necessary flexibility for operators and to reduce administrative costs during the ramp-up phase of the hydrogen market, Member States should have the option to allow the use of negotiated third-party access until 2030.

RemovedArticle 42 – paragraph 2 – point c: (c) the distribution system operator or the hydrogen distribution network operator shall have effective decision-making rights, independent from the integrated natural gas undertaking or the vertically integrated undertaking, with respect to assets necessary to operate, maintain or develop the network; in order to fulfil those tasks, the distribution system operator or the hydrogen distribution network operator shall have at its disposal the necessary resources including human, technical, financial and physical resources; this shall not prevent the existence of appropriate coordination mechanisms to ensure that the economic and management supervision rights of the parent company in respect of return on assets, regulated indirectly in accordance with Article 72(7) in a subsidiary are protected; in particular, this shall enable the parent company to approve the annual financial plan, or any equivalent instrument, of the distribution system operator or the hydrogen distribution network operator and to set global limits on the levels of indebtedness of its subsidiary; it shall not permit the parent company to give instructions regarding day-to-day operations, nor with respect to individual decisions concerning the construction or upgrading of distribution lines, that do not exceed the terms of the approved financial plan, or any equivalent instrument;

Added(72) The availability of large-scale underground hydrogen storage facilities is limited and distributed unevenly across Member States. In view of the potentially beneficial role for the functioning of hydrogen transport and markets, the access to such large-scale underground storages should be subject to regulated third party access in order to ensure a level playing field for market participants.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text.

Added(73) Terminals for the conversion of liquid hydrogen or liquid ammonia into gaseous hydrogen constitute a means of hydrogen import, but they compete with other means of hydrogen transport. While third-party access to such terminals should be ensured, Member States should have the choice of imposing a system of negotiated third-party access with a view to reducing administrative costs for operators and regulatory authorities. The transport of imported hydrogen should not be limited to liquid hydrogen or liquid ammonia, but should be non-discriminatory and open to all hydrogen carriers that are technologically available, for example liquid organic hydrogen carrier (LOHC).

RemovedArticle 42 – paragraph 2 – point d: (d) the distribution system operator or the hydrogen distribution network operator shall establish a compliance programme, which sets out measures taken to ensure that discriminatory conduct is excluded, and ensure that observance of it is adequately monitored; the compliance programme shall set out the specific obligations of employees to meet that objective; an annual report, setting out the measures taken, shall be submitted by the person or body responsible for monitoring the compliance programme, the compliance officer of the distribution system operator, to the regulatory authority referred to in Article 70(1) and shall be published; the compliance officer of the distribution system operator or the hydrogen distribution network operator shall be fully independent and shall have access to all the necessary information of the distribution system operator or the hydrogen distribution network operator and any affiliated undertaking to fulfil his task.

Added(74) Existing vertically integrated hydrogen networks should be integrated into the regulatory framework following a transition period.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text.

Added(75) Localised hydrogen uses will be occurring in localised clusters and steered towards priority users and applications and should be an important building block of the European hydrogen networks economy. Such clusters could benefit from simplified regulatory requirements during the ramp-up phase of the hydrogen market.

RemovedArticle 42 – paragraph 3: 3. Where the distribution system operator or the hydrogen distribution network operator is part of a vertically integrated undertaking, the Member States shall ensure that the activities of the distribution system operator or the hydrogen distribution network operator are monitored by regulatory authorities or other competent bodies so that it cannot take advantage of its vertical integration to distort competition. In particular, vertically integrated distribution system operators or the hydrogen distribution network operators shall not, in their communication and branding, create confusion in respect of the separate identity of the supply branch of the vertically integrated undertaking.

Added(76) Pipeline interconnectors with third countries can serve as a means of transport for imports or exports of hydrogen. The operating rules for such hydrogen interconnectors with third countries and rules on the certification of renewable and low-carbon hydrogen, should be enshrined in an intergovernmental agreement to ensure a coherent regulatory framework and its consistent application for the entire infrastructure.

RemovedThis amendment is necessary for pressing reasons relating to the internal logic of the text.

Added(77) To ensure the efficient operation of the European hydrogen networks, hydrogen network operators should be responsible for the operation, maintenance and development of the ▌ network in close cooperation with other hydrogen network operators as well as with other system operators to which their networks are or can be connected with, including to facilitate energy system integration.

Change 3

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Change 4

RemovedHydrogen distribution network operator transport hydrogen through local and regional pipeline networks.

Added(79) In some cases, depending among others on the topography of hydrogen networks and the population of end-users connected to the hydrogen networks, hydrogen quality management by hydrogen network operators could become necessary (e.g. purification). Therefore, regulatory authorities should task hydrogen network operators with ensuring efficient hydrogen quality management in their networks to meet the quality requirements of different end-use applications. When undertaking such activities, hydrogen network operators should ensure stable hydrogen quality for end-users especially in hard-to-decarbonise sectors by complying with the applicable quality standards.

RemovedArticle 46 – paragraph 3: 3. Hydrogen network operators shall be responsible for ensuring efficient hydrogen quality management in their networks in line with applicable hydrogen quality standards, to meet the quality requirements of different end-use applications and subject to the approval of the regulatory authority.

Added(80) Where system operators for natural gas or hydrogen network operators refuse requests for access or connection due to a lack of capacity or a low grade of purity, or impose disconnections, such refusals or disconnections should be duly substantiated ▌ and should be in line with the capacities identified in the network development plans. Operators should be required to enhance their system in order to enable the requested connections or access where it is economic to do so.

RemovedEspecially, energy intensive industries in hard to decarbonise sectors need hydrogen in a high level of purity. Therefore, hydrogen network operators have to play a key role in ensuring hydrogen purity levels and a stable hydrogen quality at the exit point.

Added(81) Obstacles to the completion of the internal market in natural gas which result from the non-application of Union market rules to gas transmission lines to and from third countries should also be addressed. It is necessary to ensure that the rules applicable to gas transmission lines connecting two or more Member States are also applicable, within the Union, to gas transmission lines to and from third countries. This should establish consistency of the legal framework within the Union while avoiding distortion of competition in the internal energy market in the Union and negative impacts on the security of supply. It should also enhance transparency and provide legal certainty to market participants, in particular investors in gas infrastructure and system users, as regards the applicable legal regime.

RemovedArticle 47 – paragraph 1: 1. Member States may decide to grant a derogation from the requirements of Articles 31, 42, 62 and 64 of this Directive, and Articles 6 and 47 of [recast Gas Regulation as proposed in COM(2021) xxx] to hydrogen networks that belonged to a vertically integrated undertaking on [date of entry into force]. The derogation shall be limited in scope to the network capacity in operation on [date of entry into force].

Added(82) Member States and the Contracting Parties to the Treaty establishing the Energy Community should cooperate closely on all matters concerning the development of an integrated gas market and its decarbonisation and should take no measures that endanger the further integration of gas markets or the security of supply of Member States and Contracting Parties. This could include cooperation on storage capacities and invitation of experts to relevant regional gas risk groups.