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Network Codes

Network Codes and Guidelines are important instruments to organise access to the European Union's gas market. They aim at lowering barriers to entry for market participants, promoting market integration and improving market efficiency to the benefit of all EU citizens.

Why are the Network Codes important ?

The gas industry is based on a vast interconnected physical network consisting of pipelines, LNG terminals, and gas storage facilities. Access to the EU gas market depends on access to the cross-border gas networks. To facilitate networks' access across EU Member States, the Union law foresaw to harmonise the relevant market rules in a number of Network Codes and Guidelines.

There are currently four gas Network Codes covering capacity allocation, tariffs, balancing rules, interoperability and data exchange rules, along with a Guideline on congestion management.

Capacity Allocation: ensures auctioning of standard capacity products across the EU. The allocation rules foresee bundling of pipeline capacities at both sides of a border and selling them as a single product, thus simplifying trades between neighbouring systems.
Harmonised Transmission Tariffs: provides transparent and harmonised measures for the charging methodologies, revenue recovery, reserve and payable price across the EU. These rules facilitate competition and promote the efficient use and development of the gas transmission network.
Balancing Rules: market-based balancing rules financially incentivise network users to balance their positions with short-term products. In doing so, balancing rules contribute to the creation and development of short-term gas wholesale markets in the EU.
Interoperability and Data Exchange Rules: create operational, technical, communication and business rules for the proper operation and interoperability of gas transmission systems.
Congestion Guidelines: facilitate the efficient use and maximisation of capacities in the gas transmission networks.

Why are the Network Codes important?

ACER and ENTSOG are responsible for jointly drafting the Network Codes, which are adopted by the European Commission through comitology procedure as binding regulations. The European Commission is also in charge of developing specific Guidelines, after consultation with ACER and ENTSOG. The Network Codes' and Guidelines' implementation takes place nationally, while the Agency offers guidance and monitors the effectiveness of the implemented rules at European level. ACER occasionally takes individual decisions in case of disagreement between NRAs on a cross-border issue, to ensure a consistent application of the legislation.

What is the role of ACER?

Functionality Platform

Capacity

Balancing

Tariffs

Interoperability and Data Exchange

Monitoring

Gas Regional Initiatives

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Decarbonisation of Gas

Currently, gaseous fuels used in the European Union are dominated by natural gas, a fuel of fossil origin. Natural gas is composed mostly of methane and is consequently associated with greenhouse gas emissions of carbon dioxide when the natural gas is used as fuel or as methane when the natural gas is produced, processed, transported and used.

Decarbonisation of gas can be achieved by different ways and means. In other words, decarbonisation entails different ways by which the greenhouse gas emissions associated with the life cycle of natural gas from its source to the end user can be avoided, eradicated, or mitigated.

On 15 December 2021, the European Commission published its hydrogen and decarbonised gas market legislative proposals. See the ACER-CEER Position Paper on Key Regulatory Requirements to Achieve Gas Decarbonisation (20 December 2021).

The current situation

Documents

One way to decarbonise natural gas is to find ways to produce methane from renewable resources, such as biomass or natural waste. The resulting fuel is typically biogas (a mixture of methane and other gases) or biomethane (resulting from the separation of methane from the other biogas components).

Another way to decarbonise is to replace the natural gas with a sustainably produced non-methane one. Hydrogen produced via water electrolysis with the help of electricity from renewable resources is an example.

A third way is capturing the carbon contained in the natural gas, either before its use (pre-combustion, for example by converting it in a mixture of hydrogen and carbon dioxide destined for storage) or post-combustion, for instance by capturing the carbon dioxide and placing it in long-term geological storage.

There are other possible ways and means to decarbonise gas apart from the examples above. Methane emissions can be eradicated or minimised by applying a host of common sense practices, such as preventing venting during the exploration and production of natural gas, prohibiting flaring (especially when natural gas is produced as “associated gas” along with liquid hydrocarbons), avoiding fugitive emissions from valves and compressor stations, and making sure that burning is not incomplete.

Many of these “common sense” approaches apply not only to natural gas, but also to methane-containing decarbonised gases. It is therefore important to develop and deploy the relevant regulatory tools and methods for all methane-containing gases, decarbonised or not.

Decarbonised gases are only produced and used in the European Union on a minor scale, with the bulk being biogas and biomethane. Besides, most of the natural gas is imported (ca. 80%).

The ramping up of gas decarbonisation poses thus numerous challenges, ranging from assuring that the field is level for all available technology options and pathways, to supporting innovation by the right regulation, to monitoring, reporting and verifying greenhouse gas emissions across the entire international gas supply chain, to properly defining “green gases”, to making sure that competition is fair and market integration works.

Across this broad range of issues, ACER is committed to fostering the decarbonisation of the gas sector, by tackling different aspects in its regulatory tasks.