Directive (EU) 2024/1788 of the European Parliament and of the Council of 13 June 2024 on common rules for the internal markets for renewable gas, natural gas and hydrogen, amending Directive (EU) 2023/1791 and repealing Directive 2009/73/EC (recast) (Text with EEA relevance)
Directive (EU) 2024/1788 of the European Parliament and of the Councilof 13 June 2024on common rules for the internal markets for renewable gas, natural gas and hydrogen, amending Directive (EU) 2023/1791 and repealing Directive 2009/73/EC(recast)(Text with EEA relevance)THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty on the Functioning of the European Union, and in particular Article 194(2) thereof,Having regard to the proposal from the European Commission,After transmission of the draft legislative act to the national parliaments,Having regard to the opinion of the European Economic and Social CommitteeOJ C 323, 26.8.2022, p. 101.,Having regard to the opinion of the Committee of the RegionsOJ C 498, 30.12.2022, p. 83.,Acting in accordance with the ordinary legislative procedurePosition of the European Parliament of 11 April 2024 (not yet published in the Official Journal) and decision of the Council of 21 May 2024.,Whereas:(1)Directive 2009/73/EC of the European Parliament and of the CouncilDirective 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L 211, 14.8.2009, p. 94). has been substantially amended several times. Since further amendments are to be made, that Directive should be recast in the interests of clarity.(2)The internal market for natural gas, which has been progressively implemented since 1999, aims to deliver real choice for all consumers in the Union, be they citizens or businesses, new business opportunities and more cross-border trade, so as to achieve efficiency gains, competitive prices and higher standards of service, and to contribute to security of supply and sustainability.(3)Directive 2003/55/EC of the European Parliament and of the CouncilDirective 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC (OJ L 176, 15.7.2003, p. 57). and Directive 2009/73/EC have made a significant contribution towards the creation of the internal market for natural gas.(4)Regulation (EU) 2019/943 of the European Parliament and of the CouncilRegulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (OJ L 158, 14.6.2019, p. 54). and Directive (EU) 2019/944 of the European Parliament and of the CouncilDirective (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ L 158, 14.6.2019, p. 125). brought about a further step in the development of the internal market for electricity with citizens at its core and contributing to the Union’s objectives of transition to a clean energy system and reducing greenhouse gas emissions. The internal market for natural gas should be built on those same principles and, in particular, ensure an equal level of consumer protection. In particular, Union energy policy should address vulnerable customers and tackle energy poverty.(5)By means of Regulation (EU) 2021/1119 of the European Parliament and of the CouncilRegulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 ("European Climate Law") (OJ L 243, 9.7.2021, p. 1)., the Union has committed to cutting greenhouse gas emissions. The internal market rules for gaseous fuels need to be aligned with that Regulation. In that context, the Union has set out how to update its energy markets, including as regards the decarbonisation of markets for gas, in the Commission communications of 8 July 2020 entitled "Powering a climate-neutral economy: An EU Strategy for Energy System Integration" (the "EU Energy System Integration Strategy") and "A hydrogen strategy for a climate-neutral Europe" (the "EU Hydrogen Strategy"), as well as in the European Parliament resolution of 10 July 2020 on a comprehensive European approach to energy storageOJ C 371, 15.9.2021, p. 58.. This Directive should contribute to achieving the Union’s objective to cut greenhouse gas emissions at the same time as ensuring security of supply and the proper functioning of the internal markets for natural gas and hydrogen.(6)This Directive complements related Union policy and legislative instruments, in particular those proposed pursuant to Commission communication of 11 December 2019 entitled the "European Green Deal", such as Regulations (EU) 2023/857Regulation (EU) 2023/857 of the European Parliament and of the Council of 19 April 2023 amending Regulation (EU) 2018/842 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement, and Regulation (EU) 2018/1999 (OJ L 111, 26.4.2023, p. 1)., (EU) 2023/957Regulation (EU) 2023/957 of the European Parliament and of the Council of 10 May 2023 amending Regulation (EU) 2015/757 in order to provide for the inclusion of maritime transport activities in the EU Emissions Trading System and for the monitoring, reporting and verification of emissions of additional greenhouse gases and emissions from additional ship types (OJ L 130, 16.5.2023, p. 105)., (EU) 2023/1805Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC (OJ L 234, 22.9.2023, p. 48). and (EU) 2023/2405Regulation (EU) 2023/2405 of the European Parliament and of the Council of 18 October 2023 on ensuring a level playing field for sustainable air transport (ReFuelEU Aviation) (OJ L, 2023/2405, 31.10.2023, ELI: http://data.europa.eu/eli/reg/2023/2405/oj). and Directives (EU) 2023/959Directive (EU) 2023/959 of the European Parliament and of the Council of 10 May 2023 amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading system (OJ L 130, 16.5.2023, p. 134)., (EU) 2023/1791Directive (EU) 2023/1791 of the European Parliament and of the Council of 13 September 2023 on energy efficiency and amending Regulation (EU) 2023/955 (OJ L 231, 20.9.2023, p. 1). and (EU) 2023/2413Directive (EU) 2023/2413 of the European Parliament and of the Council of 18 October 2023 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652 (OJ L, 2023/2413, 31.10.2023, ELI: http://data.europa.eu/eli/dir/2023/2413/oj). of the European Parliament and of the Council, which aim to incentivise the decarbonisation of the Union’s economy and ensure that it remains on a trajectory towards a climate-neutral Union by 2050, in accordance with Regulation (EU) 2021/1119. The main objective of this Directive is to enable and facilitate such transition towards climate neutrality by ensuring the ramp-up of a market for hydrogen and an efficient market for natural gas.(7)The Commission communication of 8 March 2022 entitled "REPowerEU: Joint European Action for more affordable, secure and sustainable energy" (REPowerEU), which was adopted after the beginning of Russia’s unprovoked and unjustified military aggression against Ukraine, highlighted the importance of diversification of gas supplies to phase out the Union’s dependency on Russian energy. That communication recognised that scaling up sustainable biomethane and the roll-out of renewable hydrogen could play a decisive role and, to that end, called on the legislators to swiftly adopt this Directive and Regulation (EU) 2024/1789 of the European Parliament and of the CouncilRegulation (EU) 2024/1789 of the European Parliament and of the Council of 13 June 2024 on the internal markets for renewable gas, natural gas and hydrogen, amending Regulations (EU) No 1227/2011, (EU) 2017/1938, (EU) 2019/942 and (EU) 2022/869 and Decision (EU) 2017/684 and repealing Regulation (EC) No 715/2009 (OJ L, 2024/1789, 15.7.2024, ELI: http://data.europa.eu/eli/reg/2024/1789/oj)..(8)Regulation (EU) No 1227/2011 of the European Parliament and the CouncilRegulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (OJ L 326, 8.12.2011, p. 1). ensures a set of obligations on gas market participants. National regulatory authorities as referred to in that Regulation are responsible for ensuring that that Regulation is enforced in the Member States. Those provisions are key to ensure that trading for gas is subject to transparency obligations.(9)This Directive aims to facilitate the penetration of renewable gas and low-carbon gas and hydrogen into the energy system, enabling a shift away from fossil gas, and to allow renewable gas and low-carbon gas and hydrogen to play an important role in achieving the Union’s 2030 climate objectives and climate-neutrality by 2050. This Directive also aims to set up a regulatory framework which enables and incentivises all market participants to shift away from fossil gas and plan their activities to avoid lock-in effects and aims to ensure a gradual and timely phase-out of fossil gas, in particular in all relevant industrial sectors and for heating purposes.(10)The integration of sustainable biomethane in accordance with the criteria set out in Directive (EU) 2018/2001 of the European Parliament and of the CouncilDirective (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82). in the natural gas system supports the Union’s climate objectives and helps to diversify the energy supply. Requests for the grid connection of renewable gas production should be assessed within reasonable time limits and monitored by the relevant regulatory authorities. It should be possible to prioritise connection requests at transmission and distribution level for renewable gas production over connection requests for the production of natural gas and low-carbon gas.(11)The EU Hydrogen Strategy recognises that, as Member States have different potential for the production of renewable hydrogen, an open and competitive internal market with unhindered cross-border trade has significant benefits for competition, affordability and security of supply. Moreover, the EU Hydrogen Strategy stresses that moving towards a liquid market with commodity-based hydrogen trading would facilitate entry of new producers and be beneficial for deeper integration with other energy carriers and would create viable price signals for investment decisions and operational decisions. The rules laid down in this Directive should thus facilitate the emergence of markets for hydrogen, commodity-based hydrogen trading and liquid trading hubs. Any undue barriers in that regard should be eliminated by Member States. While recognising the inherent differences, existing rules that enabled efficient commercial operations and trading developed for the markets for electricity and natural gas should also be considered for a market for hydrogen. While this Directive lays down general principles applicable to the operation of the market for hydrogen, it is appropriate to take account of the stage of development of that market when applying those principles.(12)In line with the EU Hydrogen Strategy, renewable hydrogen is expected to be deployed on a large-scale basis from 2030 onwards for the purpose of decarbonising certain sectors, ranging from aviation and shipping to hard-to-decarbonise industrial sectors. All final customers connected to hydrogen systems should benefit from basic consumer rights applicable to final customers connected to the natural gas system such as the right to switch supplier and accurate billing information. Where customers are connected to the hydrogen network, for example industrial customers, they should benefit from the same consumer protection rights applicable to natural gas customers. However, consumer provisions designed to encourage household customers’ participation on the market such as price comparison tools and active customers should not apply to the hydrogen system.(13)In line with the EU Hydrogen Strategy, the priority for the Union is to develop renewable hydrogen produced using mainly wind and solar energy. Renewable hydrogen produced using biomass energy falls under the definition of biogas, as defined in Directive (EU) 2018/2001. Renewable hydrogen is the most compatible with the Union’s climate-neutrality objective and zero-pollution goal in the long term and the most coherent with an integrated energy system. However, renewable hydrogen production is not likely to be scaled up fast enough to meet the expected growth in demand for hydrogen in the Union. Therefore, low-carbon fuels such as low-carbon hydrogen may play a role in the energy transition in line with the Union’s climate targets, particularly in the short and medium term, to rapidly reduce emissions of existing fuels and to support the transition of the Union’s customers in hard-to-decarbonise sectors in which more energy or cost-efficient options are not available. In order to support the transition, it is necessary to establish a threshold for greenhouse gas emission reductions for low-carbon hydrogen and synthetic gaseous fuels. Such threshold should become more stringent for hydrogen produced in installations starting operations from 1 January 2031 to take into account technological developments and better stimulate the dynamic progress towards the reduction of greenhouse gas emissions from hydrogen production.(14)The EU Energy System Integration Strategy highlighted the need to deploy a Union-wide certification system to also cover low-carbon fuels with the aim of enabling Member States to compare them with other decarbonisation options and consider them in their energy mix as a viable solution. The certification of low-carbon fuels should be effected in a manner that is coherent with the certification of renewable fuels. It is therefore appropriate to refer to the provisions set out for the certification of renewable fuels in Directive (EU) 2018/2001 and apply them by analogy for certification of low-carbon fuels. In order to ensure that low-carbon fuels have the same decarbonisation impact as compared to renewable alternatives, it is important that they are certified by applying a similar methodological approach based on a life-cycle assessment of their total greenhouse gas emissions. Such a life-cycle assessment should take into account emissions arising from the production of low-carbon fuels over the whole supply chain, including emissions arising from the extraction of the primary energy, processing and transport, and should take into account indirect emissions resulting from the diversion of rigid inputs and actual carbon capture rates. Upstream emissions of methane should be derived building on the measures included in Regulation (EU) 2024/1787 of the European Parliament and of the CouncilRegulation (EU) 2024/1787 of the European Parliament and of the Council of 13 June 2024 on the reduction of methane emissions in the energy sector and amending Regulation (EU) 2019/942 (OJ L, 2024/1787, 15.7.2024, ELI: http://data.europa.eu/eli/reg/2024/1787/oj).. That would allow the deployment of a comprehensive Union-wide certification system, covering the whole Union energy mix. As low-carbon fuels and low-carbon hydrogen are not renewable fuels, their terminology and certification could not be included in the scope of Directive (EU) 2018/2001. Therefore, their inclusion in this Directive fills that gap.(15)Methane and hydrogen contribute to global warming. Their leakage from the natural gas and hydrogen system should thus be avoided in line with the energy efficiency first principle and in order to minimise their climate impact. Natural gas transmission, distribution, underground storage and liquefied natural gas terminals need to comply with the relevant provisions of Regulation (EU) 2024/1787. That Regulation lays down rules for the accurate measurement, quantification, monitoring, reporting and verification of methane emissions in the energy sector in the Union, as well as for the abatement of those emissions, including through leak detection and repair surveys, repair obligations and restrictions on venting and flaring. Moreover, this Directive should provide for hydrogen network, storage and terminal operators to take measures to prevent and minimise hydrogen emissions in their operations and carry out, at regular intervals, a hydrogen leak detection and repair survey of all relevant components under the operator responsibility. Where appropriate, the Commission should report on the environmental and climate risks of hydrogen leakage and, where appropriate, submit proposals for measures including maximum hydrogen leakage rates to minimise possible risks of hydrogen leakage. Where such measures are adopted, they should be considered in the methodology for assessing greenhouse gas emissions savings from low-carbon fuels.(16)Imports of renewable and low-carbon hydrogen are likely to complement hydrogen produced in the Union with a view to ensuring the rapid availability of large quantities of hydrogen catering for the Union’s demand. It is therefore mutually beneficial for the Commission and the Member States, in line with their respective competence, to engage in an open and constructive dialogue in order to establish cooperation with third countries. Such cooperation could in particular contribute to promoting the creation of clean and new technology markets through the transfer of knowledge, and a high level of environmental protection, sustainability and mitigation of climate change, while avoiding negative social or environmental effects. In that context, the Union could play a leading role in developing global standards for the certification of low-carbon fuels and strengthen its role as a global climate leader, using its climate diplomacy to develop mutually beneficial cooperation with exporting partners.(17)The freedoms which the Treaty on the Functioning of the European Union (TFEU) guarantees the citizens of the Union – inter alia, the free movement of goods, the freedom of establishment and the freedom to provide services – are achievable only in a fully open market, which enables all consumers to be free to choose their suppliers and all suppliers to be free to deliver to their customers.(18)In order to achieve the objective of the Union to become climate neutral by 2050, efforts to decarbonise the market for gas should go hand-in-hand with the deployment of renewable energy sources in the framework of Union targets set by Directive (EU) 2018/2001 and complementary decarbonisation efforts based on other non-fossil sources. Member States should, in respect of a fully open market, still be able to plan their energy mix, including the combined use of renewable fuels and low-carbon fuels, in the context of their specific national circumstances. To that end, in designing support schemes, including financial support, for renewable fuels or low-carbon fuels, the Union should support the achievement of Union targets while Member States retain their right to choose which source of renewable fuels or of low-carbon fuels they support, if any, provided that such fuels comply with the criteria set out in Directive (EU) 2018/2001 and this Directive and that such support schemes are in line with the applicable State aid legal framework based on Articles 107 and 108 TFEU. In addition, Member States may decide to set additional requirements on the greenhouse gas emissions reduction, in line with their national decarbonisation strategy.(19)Consumer interests should be at the heart of this Directive and quality of service should be a central responsibility of natural gas and hydrogen undertakings. Existing rights of consumers and rights for access to essential services, including energy, and tackling energy poverty, as stated in the communication of the Commission of 26 April 2017 establishing a European Pillar of Social Rights, proclaimed and signed on 17 November 2017 by the European Parliament, the Council and the Commission at the Gothenburg Social Summit, need to be strengthened and guaranteed, and should include greater transparency. In that respect, cross-subsidisation of hydrogen networks through natural gas or electricity network tariffs should be avoided. Consumer protection should ensure that all consumers in the wider remit of the Union benefit from a competitive market for natural gas. Consumer rights should be enforced by Member States or, where Member States have so provided, the regulatory authorities.(20)The European Pillar of Social Rights places energy among the essential services everyone is to have access to and calls for support measures for those in need (principle 20). UN Sustainable Development Goal number 7 also calls for ensuring access to affordable, reliable, sustainable and modern energy for all.(21)Public service requirements and the common minimum standards that follow from them need to be further strengthened to make sure that all consumers, especially vulnerable ones, can benefit from competition and fair prices. The public service requirements should be defined at national level, taking into account national circumstances. Union law should, however, be respected by the Member States.(22)To facilitate heat decarbonisation that is built on inclusiveness, consumers need to be informed about sustainable alternatives they can switch to and have access to suitable financing options and subsidies. Member States should take all measures necessary to minimise the adverse effect that fuel switches or district heating connections implemented pursuant to this Directive have on final customers including those affected by energy poverty and vulnerable customers. Where applicable, Member States should make the best possible use of funding, including public funding and funding facilities established at Union level, with the aim of minimising adverse effects and ensuring a just and inclusive energy transition.(23)Member States should have a wide discretion to impose public service obligations on natural gas undertakings in pursuing objectives of general economic interest without hampering the transition to an integrated, highly energy efficient and renewables-based energy system in accordance with the relevant Union targets, law and strategies. However, public service obligations in the form of price setting for the supply of natural gas constitute a fundamentally distortive measure that often leads to the accumulation of tariff deficits, the limitation of consumer choice, poorer incentives for energy saving and energy efficiency investments, lower standards of service, lower levels of consumer engagement and satisfaction, and the restriction of competition, as well as to there being fewer innovative products and services on the market. Consequently, Member States should apply other policy tools, in particular targeted social policy measures, to safeguard the affordability of natural gas supply to their citizens. Public interventions in price setting for the supply of natural gas would constitute, in principle, a market-distortive measure. Such interventions should therefore be carried out only where appropriate and as public service obligations and should be subject to specific conditions. A fully liberalised, properly functioning retail market for natural gas would stimulate price and non-price competition among existing suppliers and provide incentives to new entrants on the market, thereby improving consumer choice and satisfaction. Under this Directive, regulated prices, including below cost, should be possible for customers affected by energy poverty, vulnerable household customers and, in specific cases, household customers and microenterprises. During a natural gas price crisis, when wholesale and retail natural gas prices increase significantly, Member States should be allowed to extend the application of regulated prices temporarily to essential social services as defined in Article 2, point (4), of Regulation (EU) 2017/1938 of the European Parliament and of the CouncilRegulation (EU) 2017/1938 of the European Parliament and of the Council of 25 October 2017 concerning measures to safeguard the security of gas supply and repealing Regulation (EU) No 994/2010 (OJ L 280, 28.10.2017, p. 1)., and to small and medium-sized enterprises (SMEs). As regards household customers, essential social services and SMEs, Member States should, exceptionally and temporarily, be allowed to set regulated prices below cost during a natural gas price crisis provided that this does not create distortions between suppliers and that suppliers are compensated for the costs of supplying below cost. However, it is necessary to ensure that such price regulation is targeted and does not create incentives to increase consumption. Therefore, such exceptional and temporary extension of price regulation should be limited to 80 % of median household consumption for household customers, and to 70 % of the previous year’s consumption for essential social services and SMEs. The Council should be able, acting on a proposal from the Commission, by means of an implementing decision, to declare a regional or Union-wide natural gas price crisis. The assessment of whether such a natural gas price crisis exists should be based on a comparison with prices in times of normal market operation and therefore should exclude the impact of previous natural gas price crises declared pursuant to this Directive. Such implementing decision should also specify the period of validity of the declaration of a natural gas price crisis, during which the temporary extension of regulated prices applies. That period should not be longer than one year. Where the conditions for that natural gas price crisis declaration continue to be fulfilled, it should be possible for the Council, acting on a proposal from the Commission, to extend the period of validity of the implementing decision. The conferral of implementing powers on the Council is justified given the significant horizontal implications for Member States of a decision declaring a natural gas price crisis and thereby to trigger the extended possibilities for public interventions in price setting for the supply of natural gas. Such implications are significant in terms both of the number of customers concerned and of the importance of the categories of such customers. The conferral of implementing powers on the Council also adequately takes into account the political nature of such a decision declaring a natural gas price crisis, which requires a delicate balancing of different policy considerations central to Member States’ decision to implement price-setting for energy. In any event, the declaration of a regional or Union-wide natural gas price crisis should ensure a level playing field across all Member States affected by the decision so that the internal market is not unduly distorted.(24)Public service obligations in the form of price setting for the supply of natural gas should be used without overriding the principle of open markets in clearly defined circumstances and for clearly defined beneficiaries and should be limited in duration. Such circumstances might occur where supply is severely constrained, causing significantly higher natural gas prices than normal, or in the event of a market failure where interventions by regulatory authorities and competition authorities have proven to be ineffective. Such circumstances would disproportionately affect household customers and, in particular, vulnerable customers who typically expend a higher share of their disposable income on energy bills compared to high-income consumers. In order to mitigate the distortive effects of public service obligations in price setting for the supply of natural gas, Member States applying such interventions should put in place additional measures, including measures to prevent distortions of price setting in the wholesale market or measures to support energy efficiency, in particular for vulnerable customers and customers affected by energy poverty. Member States should ensure that all beneficiaries of regulated prices are able to benefit fully from the offers available on the competitive market when they choose to do so. To that end, they should be directly and regularly informed of the offers and savings available on the competitive market and should be provided with assistance to respond to and benefit from market-based offers.(25)Public interventions in price setting for the supply of natural gas should not lead to direct cross-subsidisation between different categories of customer. In accordance with that principle, price systems must not explicitly make certain categories of customer bear the cost of price interventions that affect other categories of customer. Public service obligations in price setting should only concern the supply of natural gas, as household customers are not expected to use hydrogen for heating purposes on a wide scale. The market for hydrogen is expected to concern mostly industry, which does not require such public interventions.(26)Clear and comprehensible information should be made available to consumers concerning their rights in relation to the energy sector. The Commission has established, after consulting the relevant stakeholders including Member States, regulatory authorities, consumer bodies and natural gas undertakings, an accessible, user-friendly energy consumer checklist providing consumers with practical information about their rights. That energy consumer checklist should be kept up to date, provided to all consumers and made publicly available.(27)Member States should take into account the fact that successful energy transition requires enhanced investment in education, training and skills for workers in the natural gas and hydrogen sectors, including in relation to infrastructure development, energy efficiency and end-user applications that employ more cost-effective and decarbonised alternatives. Such investment would be in line with Directive (EU) 2023/1791.(28)Market rules should protect and empower customers to make the most energy efficient choices, in order for new renewable gas and hydrogen and low-carbon gas and hydrogen to be fully embedded in the energy transition.(29)Natural gas still plays a key role in energy supply, as household energy consumption from natural gas is still higher than from electricity. Although electrification is a key element of the green transition, household natural gas consumption, including increasing volumes of renewable gas, in particular biomethane, will continue to exist in the future.(30)In the natural gas sector, including the retail market for natural gas, provisions on consumer engagement and protection have not been adapted to the needs of the energy transition.(31)The market for natural gas is subject to poor customer satisfaction and engagement as well as the slow uptake of new renewable gas and low-carbon gas, which reflects limited competition in many Member States. Natural gas prices for household customers have risen in the last decade resulting in household customers paying two or three times more than industrial customers for their natural gas consumption.(32)As in the electricity sector, market flexibilities and an adequate Union legal framework on consumer rights in the natural gas sector are essential to ensure that consumers are able to participate in the energy transition and benefit from affordable prices, good standards of service, and effective choice of offers mirroring technological developments.(33)The switch from fossil gas to renewable alternatives is expected to be realised if energy from renewable sources becomes an attractive, non-discriminatory choice for consumers based on truly transparent information where the transition costs are fairly distributed among different groups of consumers and market participants. However, switching from natural gas to other technologies is usually not easy due to the lock-in effect related to the underpinning equipment. Where natural gas infrastructure is decommissioned, it should be accompanied by measures that address the adverse effects on final customers, in particular vulnerable customers and household customers affected by energy poverty, as well as measures that address inequalities resulting from the energy transition. Natural gas consumers should be protected from rising tariffs when natural gas assets have to be depreciated, from cross subsidisation between gas and hydrogen users and from rising natural gas tariffs resulting from a shrinking customer base.(34)To address the current gaps in the retail market for natural gas, it is necessary to tackle the existing competition and technical barriers to the emergence of alternative, renewables-based energy supply, new services, better levels of service and lower consumer prices, while ensuring the protection of vulnerable customers and customers affected by energy poverty.(35)In order to ensure a high level of consumer protection and empowerment consistently across energy sectors, the legislative framework in the decarbonised market for natural gas should reflect customer protection on the market for electricity and, where relevant, its empowerment provisions, and should take into account the energy system efficiency, as well as the Union’s objectives on security of supply, energy efficiency and renewable energy.(36)To be coherent and effective, the approach of mirroring certain aspects of the market for electricity should encompass all consumer protection and empowerment provisions, wherever feasible and adaptable to the market for natural gas. It should encompass from basic contractual rights to rules for billing information, switching energy provider, making available reliable comparison tools, protecting vulnerable customers and customers affected by energy poverty, ensuring adequate data protection for smart meters and data management, and efficient alternative dispute resolution.(37)In pursuing the consistency of provisions across sectors, burdens for national administrations and businesses should remain limited and proportionate, including by building on the experience with Union legal acts included in the "Clean Energy for All Europeans Package", such as Regulations (EU) 2018/1999Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1)., (EU) 2019/941Regulation (EU) 2019/941 of the European Parliament and of the Council of 5 June 2019 on risk-preparedness in the electricity sector and repealing Directive 2005/89/EC (OJ L 158, 14.6.2019, p. 1)., (EU) 2019/942Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (OJ L 158, 14.6.2019, p. 22)., (EU) 2019/943 and Directives (EU) 2018/844Directive (EU) 2018/844 of the European Parliament and of the Council of 30 May 2018 amending Directive 2010/31/EU on the energy performance of buildings and Directive 2012/27/EU on energy efficiency (OJ L 156, 19.6.2018, p. 75)., (EU) 2018/2001, (EU) 2018/2002Directive (EU) 2018/2002 of the European Parliament and of the Council of 11 December 2018 amending Directive 2012/27/EU on energy efficiency (OJ L 328, 21.12.2018, p. 210). and (EU) 2019/944 of the European Parliament and of the Council.(38)The modernisation of the natural gas sector is expected to lead to substantial economic and environmental benefits in terms of both improved retail competition and social and distributional benefits and customer empowerment, including strengthened contractual rights and better available information on consumption and energy sources leading to greener choices, as well as the implementation of energy efficiency measures and reducing the use of fossil gas or switching from fossil gas to more sustainable energy sources. Energy communities-of-interest should contribute to the uptake of renewable gas.(39)Switching is an important indicator of customer engagement as well as an important tool to boost competition on markets for natural gas and hydrogen and should therefore be guaranteed as a basic right to customers. However, switching rates remain inconsistent among Member States and consumers are discouraged from switching both energy source and supplier by exit and termination fees. Although removing such fees might limit customer choice by eliminating products based on rewarding customer loyalty, restricting their use further should improve consumer welfare, consumer engagement and competition in the market.(40)Shorter switching times are likely to encourage customers to search for better energy deals and switch supplier. With the increased deployment of information technology, by 2026 the technical switching process of registering a new supplier in a metering point at the market operator should typically be possible to complete within 24 hours on any working day. Ensuring that it is possible by 2026 for the technical process of switching to take place within 24 hours would minimise switching times, helping to increase consumer engagement and retail competition.(41)24-hour switching times in the markets for natural gas and hydrogen would mirror what already applies in the market for electricity, which has similar back-end functionalities and IT database requirements. Harmonising switching times between sectors would benefit all consumers, in particular those on dual fuel contracts. Shorter switching times for consumers should not affect a supplier’s balancing obligations.(42)Several factors impede customers from accessing, understanding and acting upon the various sources of market information available to them. It follows that the comparability of offers should be improved, through adequate customer information on the basis of comparison tools for customers, and unjustified barriers to switching should be removed without unduly limiting customer choice. It is also vital that suppliers provide customers with clear and understandable pre-contractual information, so that customers are fully aware of the details and consequences of the contract.(43)Independent comparison tools, including websites, are an effective means for smaller customers to assess the merits of the different energy offers that are available on the market. They should aim to include the broadest possible range of available offers, and to cover the market as completely as is feasible so as to give the customer a representative overview. Where environmental performance is promoted as an essential feature of the offer, comparison tools should also include a description of that environmental performance. It is crucial that smaller customers have access to at least one comparison tool and that the information given on such tools be trustworthy, impartial, transparent and easy to understand. To that end, Member States could provide for a comparison tool that is operated by a national authority or a private company and consult criteria for comparison tools with the relevant stakeholders, including organisations representing consumer interests.(44)Final customers should also be able to consume, to store and to sell self-generated renewable gas while complying with the law applicable to renewable gas production, in particular in relation to greenhouse gas emissions, and to participate in all markets for natural gas by providing ancillary services to the system, for instance through energy storage, while maintaining their rights as final customers under this Directive. Collective arrangements between active customers provide opportunities for service providers and local businesses, in particular SMEs, to contribute to system balancing and flexibility. Member States should be able to have different provisions in their national law with respect to taxes and levies for individual and jointly acting active customers.(45)Bills and billing information are an important means to inform and empower final customers. Energy bills remain the most common consumer concern and source of consumer complaints, a factor that contributes to the persistently low levels of consumer satisfaction and engagement in the natural gas sector. Provisions for billing information in the gas sector also lag behind rights granted to consumers in the electricity sector. It is therefore necessary to align them and to set minimum requirements for bills and billing information in the gas sector, so that consumers have access to transparent, complete and easy to understand information. Bills should convey information to the final customers on their consumption and costs, on carbon dioxide emissions, and on the share of renewable gas and low-carbon gas, thus facilitating comparison between offers when switching supplier or energy source, as well as information on their consumer rights, such as on alternative dispute resolution. In addition, bills should be a tool to actively engage consumers in the market, so that consumers can manage their consumption patterns and make greener choices. It is important to provide comprehensive and accurate information to consumers to ensure they are aware of their environmental impact and can therefore express their preference for the most sustainable energy carriers. Directive (EU) 2023/1791 should therefore be amended accordingly.(46)The regular provision of accurate billing information based on actual natural gas consumption is important to help customers to control their natural gas consumption and costs. Nevertheless, customers, in particular household customers, should have access to flexible arrangements for the actual payment of their bills.(47)A key aspect in supplying customers is access to objective and transparent consumption data. Thus, consumers should have access to their consumption data and associated prices and services costs, including the price of additional services such as insurances and energy efficiency services, where relevant, so that they can invite competitors to make an offer based on that information. Consumers should also have the right to be properly informed about their energy consumption. Prepayments should not place a disproportionate disadvantage on their users, while different payment systems should be non-discriminatory. Information on energy costs provided to consumers frequently enough should create incentives for energy savings because it will give customers direct feedback on the effects of investment in energy efficiency and change of behaviour.(48)Any national decisions on the deployment of natural gas smart metering systems should be made after carrying out cost-benefit assessments. Such assessments should take into account the long-term benefits of the deployment of smart metering systems to consumers and the whole value chain. If that assessment concludes that the introduction of such metering systems is economically reasonable and cost-effective only for consumers with a certain amount of natural gas consumption, Member States should be able to take that into account when proceeding with deployment. Such assessments should be reviewed regularly in response to significant changes in the underlying assumptions and in any event at least every four years, given the fast pace of technological developments. Limited implementations of smart metering systems, such as pilot projects and testing phases, are not considered as deployments of such systems within the meaning of this Directive.(49)In order to assist final customers’ active participation in the market, when deploying smart metering systems they should have due regard to the use of relevant available standards, including those enabling interoperability on the level of the data model and the application layer, to best practices and the importance of the development of data exchange, and to future and innovative energy services. Moreover, the smart metering systems that are deployed should not represent a barrier to switching supplier in the case of natural gas consumers and should be equipped with fit-for-purpose functionalities that allow final customers to have timely access to their consumption data, to modulate their energy behaviour, be rewarded for it, and obtain savings in their bills. Consumer groups should be provided with advice on how to use smart meters in a manner to improve their energy efficiency.(50)Member States that do not systematically deploy smart metering in the natural gas system should allow consumers to benefit from the installation of a smart meter, upon request, under fair and reasonable conditions while bearing the associated costs, and should provide them with all the relevant information.(51)Currently, different models for the management of data have been developed or are under development in Member States following deployment of smart metering systems. Independently of the data management model, it is important that Member States put in place transparent rules that data can be accessed under non-discriminatory conditions and ensure the highest level of cybersecurity and data protection as well as the impartiality of the entities which process data.(52)Greater consumer protection is guaranteed by the availability of effective means of dispute settlement for all consumers. Member States should provide for swift and effective complaint-handling procedures. Information on complaint handling should be provided in customer contracts and billing information.(53)When assessing the functioning of their out-of-court dispute settlement mechanisms, Member States should take into account the participation and compliance of natural gas undertakings.(54)Member States should take appropriate measures, such as providing benefits by means of their social security systems, to ensure the necessary supply to vulnerable customers, and providing support for energy efficiency improvements and renewable energy deployment, to sustainably address energy poverty, including in the broader context of poverty. Such measures could differ according to particular circumstances in the Member States in question and could include social or energy policy measures relating to the payment of any bills for natural gas and hydrogen, to investment in the energy efficiency of residential buildings, or to consumer protection such as safeguards against disconnection.(55)The Commission Recommendations (EU) 2020/1563Commission Recommendation (EU) 2020/1563 of 14 October 2020 on energy poverty (OJ L 357, 27.10.2020, p. 35). of 14 October 2020 and (EU) 2023/2407Commission Recommendation (EU) 2023/2407 of 20 October 2023 on energy poverty (OJ L, 2023/2407, 23.10.2023, ELI: http://data.europa.eu/eli/reco/2023/2407/oj). of 20 October 2023 on energy poverty set out good practices for defining energy poverty at national level, including appropriate indicators for measuring energy poverty, and for structural measures and improvements that Member States are able to take to address the root causes of energy poverty. Investments into structural measures to tackle the low energy performance of homes and appliances and decarbonisation and deployment of renewable sources are highlighted as well as other measures with the aim to provide information on how to decrease energy bills and introduce energy-saving practices, support citizens to join energy communities or encourage a shift towards renewable energy solutions.(56)Disconnection significantly affects customers’ access to the natural gas supply which they need, in particular, to heat their homes. Customers affected by energy poverty and vulnerable customers are particularly adversely affected by natural gas disconnections and Member States should take measures to prevent the disconnection of those customers for economic or commercial reasons. There are multiple tools and good practices available to Member States which include, but are not limited to, year-round or seasonal prohibitions of disconnection, debt prevention and sustainable solutions to support customers in hardship paying for their energy bills. Member States should identify the most appropriate tools based on their national circumstances. Such measures should not affect the temporary disconnection of customers by network operators in an emergency, without prior notice where that disconnection is for safety reasons, and with prior notice where feasible where it is for maintenance reasons.(57)Customers have the right to use complaint procedures managed by their suppliers, as well as out-of-court dispute resolution procedures, in order to see their rights enforced effectively and not be disadvantaged in the case of disagreement with suppliers, in particular regarding bills or the amount due. Where customers use those procedures, suppliers should not terminate contracts on the basis of facts which are still in dispute. Both suppliers and customers should continue to meet their contractual rights and obligations, in particular to supply natural gas and to pay for that natural gas, and complaint procedures should not become the ground for abuses allowing customers not to honour their contractual obligations, including paying their bills. Member States should put in place appropriate measures to avoid those complaint or dispute resolution procedures from being used in a distorted way.(58)To ensure continuity of supply for consumers, particularly in cases of supplier failure, Member States should establish a supplier of last resort regime or take equivalent measures. It should be possible to appoint the supplier of last resort either before or at the moment of supplier failure. A supplier of last resort might be the sales division of a vertically integrated undertaking which also performs distribution functions, provided that it meets the unbundling requirements of this Directive. However, this should not imply an obligation of Member States to supply at a certain fixed minimum price. Where a Member State obliges a supplier of last resort to supply natural gas to a customer who does not receive market-based offers, the conditions set out in Article 4 of this Directive should apply and the obligation can involve a regulated price only to the extent that the customer is entitled to benefit from regulated prices. When assessing whether offers received by non-household customers are market-based, Member States should take into account the individual commercial and technical circumstances. Where, before the date of entry into force of this Directive, a Member State has already appointed a supplier of last resort for natural gas through a fair, transparent and non-discriminatory procedure, it is not necessary to launch a new procedure for appointing the supplier of last resort.(59)The simplification and streamlining of administrative permit granting processes and clear time limits for decisions to be taken by the authorities competent for issuing an authorisation should ensure that the deployment of hydrogen production facilities and hydrogen system infrastructure can occur at an adequate pace without hampering public consultations. Member States should be requested to report on progress made. Grandfathering of authorisations, such as licences, permissions, concessions or approvals, granted under national law for the construction and operation of existing natural gas pipelines and other network assets is needed once the transported gaseous energy carrier in a natural gas pipeline changes from natural gas to (pure) hydrogen. That grandfathering of authorisations should not affect the validity of technical safety requirements for hydrogen infrastructure, nor the possibility for competent authorities to monitor compliance with such requirements and to take appropriate and proportionate enforcement measures, including a possible revocation of the grandfathered authorisations, if justified. This should prevent undue delay in repurposing existing natural gas pipelines and other networks assets for hydrogen transport. It should be avoided that conditions for granting authorisations for hydrogen system infrastructure are materially different unless sufficiently justified. Technical safety considerations might justify a differentiated approach in grandfathering existing or issuing new authorisations. The provisions on authorisation procedures should apply without prejudice to international and Union law, including provisions to protect the environment and human health. Where duly justified on the grounds of extraordinary circumstances, it should be possible to extend the time limits for authorisation procedures by up to one year.(60)Providing guidance to applicants throughout their administrative permit application and granting processes by means of an administrative contact point is intended to reduce complexity for project developers and increase efficiency and transparency. The availability for applicants to submit relevant documents in digital form and the availability of a manual of procedures for applicants could contribute to efficiency. Member States should ensure that the authorities implementing authorisation procedures are actively involved in the tackling of remaining barriers, including non-financial ones such as insufficient knowledge, digital and human resources that hinder their processing of a growing number of authorisation procedures. Permitting procedures for the connections to the transmission or distribution network should not be hampered by a lack of administrative capacity. Furthermore, such permitting procedures should not establish hurdles in relation to the achievement of the national renewable energy target.(61)Without effective separation of networks from activities of production and supply (effective unbundling), there is a risk of discrimination not only in the operation of the network but also in the incentives for vertically integrated undertakings to invest adequately in their networks.(62)Only the removal of the incentive for vertically integrated undertakings to discriminate against competitors as regards network access and investment can ensure effective unbundling. Ownership unbundling, which implies the appointment of the network owner as the system operator and its independence from any supply and production interests, is clearly an effective and stable manner to solve the inherent conflict of interests and to ensure security of supply. For that reason, the European Parliament, in its resolution of 10 July 2007 on prospects for the internal markets for gas and electricity referred to ownership unbundling at transmission level as the most effective tool to promote investments in infrastructure in a non-discriminatory way, fair access to the network for new entrants and transparency in the market. Under ownership unbundling, Member States should therefore be required to ensure that the same person is not entitled to exercise control over a production or supply undertaking and, at the same time, exercise control or any right over a transmission system operator or transmission system. Conversely, control over a transmission system or transmission system operator should preclude the possibility of exercising control or any right over a production or supply undertaking. Within those limits, a production or supply undertaking should be able to have a minority shareholding in a transmission system operator or transmission system.(63)Any system for unbundling should be effective in removing any conflict of interests between producers, suppliers and transmission system operators, in order to create incentives for the necessary investments and guarantee the access of new entrants on the market under a transparent and efficient regulatory regime and should not create an overly onerous regulatory regime for regulatory authorities.(64)The definition of the term "control" in this Directive is aligned to the provisions of Council Regulation (EC) No 139/2004Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (OJ L 24, 29.1.2004, p. 1)..(65)In view of the vertical links between the electricity and natural gas sectors, the unbundling provisions should apply across the sectors for natural gas, hydrogen and electricity as detailed in this Directive.(66)With regard to the hydrogen sector, rules on vertical unbundling should be applied without delay. This is preferable to costly ex post unbundling that could be necessary in the event that the sector develops strong vertical integration.(67)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.(68)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 while 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.(69)Where, on 3 September 2009, an undertaking owning a transmission system was part of a vertically integrated undertaking, Member States should be given a choice between ownership unbundling and setting up a system operator or transmission operator which is independent from supply and production interests.(70)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.(71)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 entrants on the market and the integration of the markets for natural gas and hydrogen. 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.(72)In order to develop competition in the internal markets for natural gas and hydrogen, 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 natural gas and hydrogen requirements. Such customers should be protected against exclusivity clauses, the effect of which is to exclude competing or complementary offers.(73)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, unless otherwise provided by this Directive. 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.(74)Different types of market organisation exist in the internal market for 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 other relevant Union law.(75)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.(76)Fully effective separation of network activities from supply and production activities should apply throughout the Union to both Union and third-country 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 from a third country. In making that assessment, the Commission should take into account commercial relationships that could negatively affect the incentives and ability of the operator to perform its tasks, as well as the international obligations of the Union and any other specific facts and circumstances of the case. Such facts and circumstances should include the weaponised reductions of natural gas supplies and manipulation of the markets through intentional disruptions of natural gas flows with the clear potential of a direct and serious impact on the essential international security interests of the Union and Member States.(77)Pipeline networks for hydrogen should constitute an important means of efficient and sustainable transport for hydrogen, both onshore and offshore. As a result of the high capital expenditure required for their construction, hydrogen pipeline networks could constitute natural monopolies. Experience with the regulation of markets for natural gas 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.(78)The definitions of "hydrogen transmission" and "hydrogen distribution" in this Directive should be based on the functions of the relevant network categories and on the types of connected infrastructure.(79)Hydrogen interconnectors, as hydrogen networks which serve the important purpose of connecting the national hydrogen networks of Member States, should be operated by hydrogen transmission network operators. In very limited cases and where a hydrogen distribution network is set out in the relevant network development plan, it is possible for it to be connected to a hydrogen transmission network in another Member State. Provided that that distribution network is not additionally connected to a hydrogen transmission or distribution network in the Member State where the hydrogen distribution network is located, it should be operated as hydrogen distribution network.(80)Hydrogen distribution networks, which mainly serve the purpose of supplying directly connected customers, should benefit from a lighter regulatory regime in relation to vertical unbundling and network planning. Such networks should not include hydrogen interconnectors or feature connections to major infrastructure, such as terminals or large-scale underground storage facilities – unless the network in question is a repurposed natural gas network – or to hydrogen interconnectors. In the connection between a large-scale underground storage and distribution system, both of which have been repurposed for the use of hydrogen, a new short-distance connection pipeline for the transport of hydrogen between them may be built as an extension of the existing distribution system. However, the connection of smaller underground or aboveground hydrogen storage installations, including easily replicable hydrogen storage tanks, to hydrogen distribution networks should not be restricted as they are expected to play a key role in balancing those networks.(81)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 transmission networks and participation 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 for transmission system operators for natural gas subject to the independent transmission operator unbundling model and for existing vertically integrated hydrogen networks. Transmission system operators for natural gas which benefit from a derogation pursuant to this Directive should be considered as certified for the purpose of determining their eligibility to use the integrated hydrogen transmission network operator model. Member States should also be able to allow the use of the independent hydrogen transmission 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.(82)Whereas the joint operation of hydrogen networks and natural gas or electricity grids can create synergies and should thus be allowed, activities of hydrogen transmission network operation should be organised in a separate legal entity in order to ensure transparency regarding financing and the use of access tariffs. Derogations to that requirement of legal horizontal unbundling should be granted only on a temporary basis, subject to a positive cost-benefit analysis and an impact assessment by regulatory authorities. In view of their remote location and limited market size, such derogations should be automatically granted for Estonia, Latvia and Lithuania until 2031. In any case, 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 undertaking 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.(83)In order to ensure transparency with regard to the costs and financing of regulated activities, activities of hydrogen transmission network operation should be separated from other network operation activities for other energy carriers at least in relation to the legal form and accounts of network operators. For the purpose of legal unbundling of hydrogen transmission network operators, the creation of a subsidiary or a separate legal entity within the group structure of the natural gas transmission or distribution system operator should be considered to be sufficient, without the need for a functional unbundling of governance or separation of management or staff. Transparency with regard to the costs and financing of regulated activities should thus be achieved without losing the synergies and cost advantages that operating several networks could bring.(84)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 market for hydrogen, Member States should have the option to allow the use of negotiated third-party access until 31 December 2032.(85)Only parts of the naturally occurring underground storage used for natural gas, such as salt caverns, aquifers and depleted natural gas fields, can also be used for hydrogen. The availability of those 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 for hydrogen, the access to such large-scale underground storage facilities should ultimately be subject to regulated third-party access in order to ensure a level playing field for market participants. However, in the ramp-up phase of markets for hydrogen, there should be flexibility for Member States to use also negotiated access regimes until 31 December 2032.(86)It is to be expected that hydrogen and hydrogen derivatives, such as ammonia, or liquid organic hydrogen carriers will be imported into and transported within the Union. However, it is as yet uncertain by what means and in what form hydrogen will be transported while various means and forms are likely to coexist and compete with each other. This Directive provides a regulatory framework for infrastructure and markets for gaseous hydrogen. Consequently, only where other forms of hydrogen or derivatives and the facilities that handle them are relevant to ensure the emergence of a competitive market for gaseous hydrogen should their role and the rules applicable to them be defined in this Directive.(87)Terminals for the offloading and conversion of liquid hydrogen or liquid ammonia transported via ship 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 provide for a system of negotiated third-party access with a view to reducing administrative costs for operators and regulatory authorities. The storage associated with the terminal and to which third-party access is granted should stand in proportion to the capacity of the terminal to convert and inject hydrogen into the network. However, implementation of third-party access to truck loading services may not be necessary, provided that such operation is not an ancillary service linked to the subsequent conversion and injection of hydrogen into the network.(88)Member States may choose to phase out natural gas in order to reach the climate-neutrality objective set out in Regulation (EU) 2021/1119 or for other technical reasons. It is important to provide a clear regulatory framework allowing for the refusal of access and the possible disconnection of network users to attain those policy objectives. It should be possible to refuse access to or disconnect network users in relation to infrastructure that will be decommissioned in line with the network development plan at transmission level or where decommissioning is provided for at distribution level. At the same time, adequate measures should be undertaken to protect network users in such circumstances and it is also important that the refusal of access and disconnection decisions are subject to objective, transparent and non-discriminatory criteria developed by regulatory authorities.(89)Existing vertically integrated hydrogen networks should be eligible to request derogations from the requirements of this Directive provided that those networks are not expanded significantly and that such derogation does not have a detrimental effect on competition or hydrogen infrastructure or market development, which should be verified on a regular basis.(90)Localised hydrogen clusters should be an important building block of the Union’s hydrogen economy. Such clusters could benefit from simplified regulatory requirements during the ramp-up phase of the market for hydrogen, in particular as regards the application of ownership unbundling to networks supplying market participants in such clusters. The corresponding simplified regulatory requirements should also address the need for regulatory flexibility of direct pipeline connections between hydrogen producers and individual customers.(91)Pipeline interconnectors with third countries can serve as a means of transport for imports or exports of hydrogen. The applicability of this Directive to hydrogen pipelines to and from third countries should be confined to the territory of the Member States. The operating rules for hydrogen interconnectors with third countries should be enshrined in an international agreement between the Union and the connected third countries. Such international agreement should not be considered necessary where the Member State connected or intending to be connected by the hydrogen interconnector negotiates and concludes an intergovernmental agreement with the third countries concerned in accordance with the empowerment procedure provided for in this Directive, in order to ensure a coherent regulatory framework and its consistent application for the entire infrastructure.(92)To ensure the efficient operation of Union 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, including to facilitate energy system integration.(93)Hydrogen transmission network operators should build sufficient cross-border capacity for the transport of hydrogen accommodating all economically reasonable and technically feasible demands for such capacity, thereby enabling market integration.(94)In line with the EU Hydrogen Strategy, it is important that there is a focus on the transport and use of hydrogen in its pure form. In that sense, it is important for the hydrogen system to transport, store and handle hydrogen of a high grade of purity taking into account hydrogen end-users’ quality requirements, as opposed to hydrogen blended into the natural gas system. It is also important that hydrogen quality standards provide further criteria to determine the commonly acceptable hydrogen purity levels. It is necessary for a bandwidth of acceptable hydrogen purity levels and other relevant hydrogen quality parameters, for example contaminants, to be defined by means of a technical standardisation process by European standardisation bodies.(95)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 (for example, purification). Therefore, regulatory authorities should task hydrogen network operators with ensuring efficient hydrogen quality management in their networks where necessary for system management. When undertaking such activities, hydrogen network operators should ensure stable hydrogen quality for end-users, including in hard-to-decarbonise sectors, by complying with applicable hydrogen quality standards.(96)Where system operators for natural gas or hydrogen network operators refuse requests for access or connection due to a lack of capacity, they should duly substantiate such refusal and should be required to enhance their system in order to enable the requested connections or access where it is economic to do so and in line with the relevant planning exercise.(97)Obstacles to the completion of the internal market for natural gas which result from the non-application of Union market rules to natural gas transmission lines to and from third countries should also be addressed. It is necessary to ensure that the rules applicable to natural gas transmission lines connecting two or more Member States are also applicable, within the Union, to natural 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 market for energy in the Union and negative impact on the security of supply. It should also enhance transparency and provide legal certainty to market participants, in particular investors in natural gas infrastructure and system users, as regards the applicable legal regime.(98)Member States and the Contracting Parties to the Treaty establishing the Energy CommunityOJ L 198, 20.7.2006, p. 18. should cooperate closely on all matters concerning the development of an integrated and decarbonised market for natural gas and should take no measures that endanger the further integration of markets for natural gas or the security of supply of Member States and Contracting Parties. That could include cooperation on natural gas storage capacities and invitation of experts to relevant regional natural gas risk groups.(99)Pipelines connecting a third-country oil or natural gas production project to a processing plant or to a final coastal landing terminal within a Member State should be considered to be upstream pipeline networks. Pipelines connecting an oil or natural gas production project in a Member State to a processing plant or to a final coastal landing terminal within a third country should not be considered to be upstream pipeline networks for the purpose of this Directive, since such pipelines are unlikely to have a significant impact on the internal energy market.(100)Transmission system operators should be free to conclude technical agreements with transmission system operators or other entities in third countries on issues concerning the operation and interconnection of transmission systems, provided that the content of such agreements is compatible with Union law.(101)Technical agreements regarding the operation of transmission lines between transmission system operators or other entities should remain in force provided that they comply with Union law and the relevant decisions of the regulatory authority.(102)When such technical agreements are in place, the conclusion of an international agreement between a Member State and a third country or of an agreement between the Union and a third country regarding the operation of the natural gas transmission line concerned is not required by this Directive.(103)The applicability of this Directive to natural gas transmission lines to and from third countries should be confined to the territory of the Member States. As regards offshore natural gas transmission lines, this Directive should be applicable in the territorial sea of the Member State where the first interconnection point with the Member States’ network is located.(104)It should be possible for existing agreements concluded between a Member State and a third country on the operation of transmission lines to remain in force, in accordance with this Directive.(105)With regard to agreements or parts of agreements with third countries which may affect common rules of the Union, a coherent and transparent procedure should be established by which to authorise a Member State, upon its request, to amend, extend, adapt, renew or conclude an agreement with a third country on the operation of a transmission line or an upstream pipeline network between the Member State and a third country. The procedure should not delay the implementation of this Directive, should be without prejudice to the allocation of competence between the Union and the Member States, and should apply to existing and new agreements.(106)Where it is apparent that the subject matter of an agreement falls partly within the competence of the Union and partly within that of a Member State, it is essential to ensure close cooperation between that Member State and the Union institutions.(107)In order to ensure uniform conditions for the implementation of this Directive, implementing powers should be conferred on the Commission to adopt decisions authorising or refusing to authorise a Member State to amend, extend, adapt, renew or conclude an agreement with a third country. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the CouncilRegulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13)..(108)The security of energy supply is an essential element of public security and is therefore inherently connected to the efficient functioning of the internal market for natural gas and the integration of the isolated markets for natural gas of Member States. Natural gas can reach the citizens of the Union only through the network. Functioning open markets for natural gas and, in particular, networks and other assets associated with natural gas supply are essential for public security, for the competitiveness of the economy and for the well-being of the citizens of the Union. Persons from third countries should therefore only be allowed to control a transmission system or a transmission system operator if they comply with the requirements of effective separation that apply inside the Union. Without prejudice to the international obligations of the Union, the Union considers that the natural gas transmission system sector is of high importance to the Union and therefore additional safeguards are necessary regarding the preservation of the security of supply of energy to the Union to avoid any threats to public order and public security in the Union and the welfare of the citizens of the Union. The security of supply of energy to the Union requires, in particular, an assessment of the independence of network operation, the level of the Union’s and individual Member States’ dependence on energy supply from third countries, and the treatment of both domestic and foreign trade and investment in energy in a particular third country. Security of supply should therefore be assessed in the light of the factual circumstances of each case as well as the rights and obligations arising under international law, in particular the international agreements between the Union and the third country concerned. Where appropriate the Commission should submit recommendations to negotiate relevant agreements with third countries addressing the security of supply of energy to the Union or to include the necessary issues in other negotiations with those third countries.(109)Further measures should be taken in order to ensure transparent and non-discriminatory tariffs for access to transport. Those tariffs should be applicable to all users on a non-discriminatory basis. Where a natural gas storage facility, linepack or ancillary service operates in a sufficiently competitive market, access could be allowed on the basis of transparent and non-discriminatory market-based mechanisms.(110)It is necessary to ensure the independence of natural gas storage system operators in order to improve third-party access to natural gas storage facilities that are technically or economically necessary for providing efficient access to the system for the supply of customers. It is therefore appropriate that natural gas storage facilities are operated through legally separate entities that have effective decision-making rights with respect to assets necessary to maintain, operate and develop natural gas storage facilities. It is also necessary to increase transparency in respect of the natural gas storage capacity that is offered to third parties, by obliging Member States to establish and publish a non-discriminatory, clear framework that determines the appropriate regulatory regime applicable to natural gas storage facilities. That obligation should not require a new decision on access regimes but should improve the transparency regarding the access regime to natural gas storage. Confidentiality requirements for commercially sensitive information are particularly important where data of a strategic nature are concerned or where there is only a single user of a natural gas storage facility.(111)Non-discriminatory access to the distribution network determines downstream access to customers at retail level. The scope for discrimination as regards third-party access and investment, however, is less significant at distribution level than at transmission level where congestion and the influence of production interests are generally greater than at distribution level. To lay down a level playing field at retail level, the activities of distribution system operators should be monitored so that they are prevented from taking advantage of their vertical integration as regards their competitive position on the market, in particular in relation to household customers and small non-household customers.(112)Member States should take concrete measures to assist the wider use of sustainable biomethane, or other types of gas, that can technically and safely be injected into, and transported through, the natural gas system, the producers of which should be granted non-discriminatory access to that system, provided that such access is compatible with the relevant technical rules and safety standards on an ongoing basis and unless otherwise provided for in this Directive.(113)Producers of renewable gas and low-carbon gas are often connected to the distribution grid. To facilitate their uptake and market integration, it is essential that they obtain unhindered access to the wholesale market and the relevant virtual trading points. The access of renewable gas and low-carbon gas to the wholesale market should be facilitated by providing a definition of an entry-exit system that allows for the inclusion of distribution systems and ultimately ensures that all production facilities have access to the market, irrespective of whether they are connected to the distribution or transmission system. In addition, Regulation (EU) 2024/1789 provides that distribution system operators and transmission system operators are to work together to enable reverse flows from the distribution to the transmission network or alternative means to facilitate the market integration of renewable gas and low-carbon gas.(114)To avoid imposing a disproportionate financial and administrative burden on small distribution system operators, Member States should be able, where necessary, to exempt the undertakings concerned from the legal unbundling requirements.(115)Where a closed distribution system is used to ensure the optimal efficiency of an integrated energy supply requiring specific operational standards, or a closed distribution system is maintained primarily for the use of the owner of the system, it should be possible to exempt the distribution system operator from obligations which would constitute an unnecessary administrative burden because of the particular nature of the relationship between the distribution system operator and the users of the system. Industrial, commercial or shared services sites such as train station buildings, airports, hospitals, large camping sites with integrated facilities or chemical industry sites could include closed distribution systems because of the specialised nature of their operations.(116)With the integration of growing volumes of renewable gas and low-carbon gas in the natural gas system, the quality of gas transported and consumed in the Union is changing. To ensure the efficient operation of the natural gas system, transmission system operators should be responsible for gas quality management in their facilities. Where the injection of renewable gas and low-carbon gas takes place at distribution level and where necessary to manage their impact on gas quality, regulatory authorities can task distribution system operators with ensuring the efficient gas quality management in their facilities. When undertaking gas quality management tasks, transmission and distribution system operators should comply with applicable gas quality standards.(117)Regulatory authorities need to be able to take decisions in relation to all relevant regulatory issues if the internal market for natural gas is to function properly, and to be fully independent from any other public or private interests. The provisions relating to autonomy in the implementation of the allocated budget of the regulatory authority should be implemented within the framework established by national budgetary law and rules. While contributing to the independence of the regulatory authority from any political or economic interest or interference through an appropriate rotation scheme, it should be possible for Member States to take due account of the availability of human resources and of the size of the board.(118)In order to ensure effective market access for all market participants, including new entrants, non-discriminatory and cost-reflective balancing mechanisms are necessary. This should be achieved through the setting up of transparent market-based mechanisms for the supply and purchase of natural gas, needed in the framework of balancing requirements. Regulatory authorities should play an active role to ensure that balancing prices are non-discriminatory and cost-reflective. At the same time, appropriate incentives should be provided to balance the in-put and off-take of gas and not to endanger the system.(119)Regulatory authorities should be able to fix or approve tariffs, or the methodologies underlying the calculation of the tariffs, on the basis of a proposal by the transmission system operator, distribution system operator or liquefied natural gas system operator, or on the basis of a proposal agreed between those operators and the users of the network. In carrying out those tasks, regulatory authorities should ensure that transmission and distribution tariffs are non-discriminatory and cost-reflective, and should take account of the long-term, marginal, avoided network costs from demand-side management measures.(120)Regulatory authorities should promote, in close cooperation with the Agency for the Cooperation of Energy Regulators (ACER), established by Regulation (EU) 2019/942, an open, competitive, secure and environmentally sustainable internal market for hydrogen with unhindered cross-border flows. Regulatory authorities need to be able to take decisions in relation to all relevant regulatory issues if the internal market for hydrogen is to function properly.(121)Regulatory authorities should have the power to issue binding decisions in relation to natural gas or hydrogen undertakings and to impose effective, proportionate and dissuasive penalties on natural gas undertakings or hydrogen undertakings which fail to comply with their obligations or to propose that a competent court impose such penalties on them. Regulatory authorities should also be granted the power to decide, irrespective of the application of competition rules, on appropriate measures ensuring customer benefits through the promotion of effective competition necessary for the proper functioning of the internal markets for natural gas and for hydrogen. The establishment of gas-release programmes is one of the possible measures that can be used to promote effective competition and ensure the proper functioning of the market.(122)Regulatory authorities should also be granted the powers to contribute to ensuring high standards of public service in compliance with market opening, to the protection of vulnerable customers, and to the full effectiveness of consumer protection measures. Those provisions should be without prejudice to both the Commission’s powers concerning the application of competition rules including the examination of mergers with a Union dimension, and the rules on the internal market such as the free movement of capital. The independent body to which a party affected by the decision of a regulatory authority has a right to appeal could be a court or other tribunal empowered to conduct a judicial review.(123)Any harmonisation of the powers of regulatory authorities should include the powers to provide incentives to undertakings and to impose effective, proportionate and dissuasive penalties on undertakings or to propose that a competent court impose such penalties. Moreover, regulatory authorities should have the power to request relevant information from undertakings, make appropriate and sufficient investigations and settle disputes.(124)The regulatory authorities and ACER should provide information on the market for hydrogen to ensure transparency, including aspects such as supply and demand, transport infrastructure, quality of service, cross-border trade, investments, wholesale and consumer prices, as well as market liquidity.(125)Transmission system operators play an important role in ensuring cost effective investments in natural gas and hydrogen networks. For an optimised planning across energy carriers and to bridge the gap between the diverse national and Union-wide network planning approaches, additional requirements for consistent planning should be introduced. To ensure a cost-effective infrastructure rollout and to avoid stranded assets, the network planning should also take account of the increased interlinkages between natural gas and electricity, as well as hydrogen and, where applicable, district heating. Apart from power-to-natural gas assets, interlinkages between hydrogen and electricity may include as well hydrogen power plants. The network planning should be transparent and allow the relevant stakeholders to participate. To that end, the operators should be required to conduct an extensive stakeholder consultation. The European Scientific Advisory Board on Climate Change established pursuant to Regulation (EC) No 401/2009 of the European Parliament and of the CouncilRegulation (EC) No 401/2009 of the European Parliament and of the Council of 23 April 2009 on the European Environment Agency and the European Environment Information and Observation Network (OJ L 126, 21.5.2009, p. 13). may provide its opinion on the joint scenarios. The network development plan for hydrogen should target the use of hydrogen in hard-to-decarbonise sectors where no more energy and cost-efficient alternatives are available.(126)By co-location, hydrogen production and consumption take place in the same location or are located as close as possible, thus ensuring stable hydrogen quality as per end-use and minimising costs and environmental impact as well as hydrogen leaks related to the transport. Hydrogen network operators should cooperate with connected and neighbouring hydrogen network operators to ensure the most efficient connection possible.(127)When developing the network development plan, it is important that infrastructure operators take into account the energy efficiency first and system efficiency principles established in the Commission Recommendation of 28 September 2021 entitled "Energy Efficiency First: from principles to practice. Guidelines and examples for its implementation in decision-making in the energy sector and beyond", in particular the expected consumption used for the joint scenario development. Demand-side solutions should be prioritised whenever they are more cost-effective than investments in infrastructure.(128)The EU Energy System Integration Strategy points out the importance of the coordinated planning and operation of the energy system in achieving the decarbonisation objectives. Therefore, it is necessary to draw up network development plans based on a joint scenario developed on a cross-sectoral basis. While still being able to identify separate sectorial network models and separate chapters in the case of a joint network development plan, infrastructure operators should work towards a higher level of integration taking into account system needs beyond specific energy carriers.(129)Network development plans are an important element to identify infrastructure gaps and provide information on infrastructure that either needs to be built or that can be decommissioned and could be used for other purposes, such as hydrogen transport. This is true irrespective of the unbundling model chosen for the network operators.(130)Providing information on infrastructure that can be decommissioned within the network development plan may mean permanently taking out of service the infrastructure by either leaving it unused, dismantling it or making it available for use for other purposes, such as hydrogen transport. The objective of the increased transparency on infrastructure takes into account that repurposed infrastructure is comparatively cheaper than newly built infrastructure and hence should enable a cost-effective transition.(131)In Member States where a hydrogen distribution network is to be developed, the development of hydrogen infrastructure should be based on a realistic and forward-looking demand projection including potential needs from the perspective of the electricity system and the hard-to-decarbonise sectors. If Member States decide to allow for dedicated charges as a means of co-funding new hydrogen infrastructure, the plan should support the regulatory authority in its assessment of those charges. The plan should be submitted every four years. Submissions made before 31 December 2032 should be made to the regulatory authority or to another competent authority. Submissions made after that date should be made only to the regulatory authority.(132)Information contained in the network development plan should enable a forecast on the impact on tariffs based on planning, decommissioning or repurposing affecting the regulatory asset base.(133)Instead of providing a national network development plan on individual Member State level, Member States should be allowed to choose to draw up a network development plan on regional level including more than one Member State and in line with voluntary regional integration of the market for natural gas.(134)In contrast to electricity, the role of natural gas will progressively decline in the future, which also affects the demand for infrastructure investments. The network development plan therefore needs to balance competition concerns and avoid stranded assets.(135)Member States should be able to choose to strategically close and adjust part of their distribution system in order to phase out the supply of natural gas to household customers to ensure the transition into a sustainable and effective system.(136)Member States should require hydrogen distribution network operators to present the hydrogen network infrastructure they aim to develop and repurpose in hydrogen distribution network plans. Natural gas distribution system operators should be required to develop network decommissioning plans when a reduction in natural gas demand is expected that requires the decommissioning of natural gas distribution systems or parts of such systems. Natural gas distribution system operators and hydrogen distribution network operators can be allowed to develop joint plans if operating in the same area and parts of the network are to be repurposed. Those plans should be in line with the ten-year network development plans. The distribution network development plans and the decommissioning plans for natural gas should promote the energy efficiency and energy system integration taking into account the local heating and cooling plans. Those plans should contribute to the achievement of the Union’s energy and climate targets and be based on reasonable assumptions about demand and production of natural gas and hydrogen. When preparing the plan, the operators should be required to conduct a consultation process involving the relevant stakeholders and make the draft plans publicly available. Member States should ensure guidance from the regulatory authorities where parts of the distribution system might require decommissioning, in particular before the end of their originally projected depreciation time.(137)The framework governing the calculation and charging of connection costs and fees to biomethane producers plays an important role in enabling the integration of sustainable biomethane into Union natural gas networks. Member States should provide a regulatory framework for facilitating an efficient connection of biomethane production facilities to the transmission or distribution systems. When setting or approving tariffs or the methodologies to be used by the transmission and distribution system operators, regulatory authorities, without prejudice to their independence in performing those tasks, should remain able to take into account the costs incurred and investments made by those system operators.(138)It is necessary to progress towards interconnected markets for hydrogen in the Union and thereby facilitate investment in cross-border hydrogen infrastructure.(139)Trust in the market, its liquidity and the number of market participants needs to increase, and, therefore, regulatory oversight of undertakings active in the supply of natural gas needs to be increased. Such requirements should be without prejudice to, and compatible with, existing Union law in relation to the financial markets. Regulatory authorities and financial market regulators need to cooperate in order to enable each other to have an overview of the markets concerned. Member States should be able to set the financial solidity of natural gas supply undertakings as criteria for granting an authorisation for the sale, including resale, of natural gas. Such criteria should be fully transparent and non-discriminatory.(140)Natural gas is mainly, and increasingly, imported into the Union from third countries. Union law should take account of the characteristics of natural gas, such as certain structural rigidities arising from the concentration of suppliers, the long-term contracts or the lack of downstream liquidity. Therefore, more transparency is needed, including in regard to the formation of prices.(141)Prior to the adoption by the Commission of guidelines defining further the record-keeping requirements, ACER and the European Securities and Markets Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the CouncilRegulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84). (ESMA), should confer and advise the Commission in regard to their content. ACER and ESMA should also cooperate to investigate further and advise on whether transactions in gas supply contracts and natural gas derivatives should be subject to pre-trade or post-trade transparency requirements and, if so, what the content of those requirements should be.(142)Member States or, where Member States have so provided, the regulatory authorities should encourage the development of interruptible supply contracts.(143)Member States should ensure that, taking into account the necessary quality requirements, biomethane or other types of gas are granted non-discriminatory access to the natural gas system, provided that such access is permanently compatible with the relevant technical rules and safety standards. Those rules and standards should ensure that biomethane or other types of gas can be technically and safely injected into and transported through the natural gas system and should also address their chemical characteristics.(144)Long-term contracts are an important part of the natural gas supply of Member States. However, they should not constitute a barrier to the entry of renewable gas and low-carbon gas, which is why the duration of contracts for the supply of unabated fossil gas should not run after 31 December 2049. Such contracts should always comply with the objectives of this Directive and be compatible with the TFEU, including the competition rules. It is necessary to take into account long-term contracts in the planning of supply and transport capacity of undertakings. While unabated fossil gas is still playing an important role, its relevance for securing the Union’s energy supply will progressively decline. Members States should ensure the phase-out of fossil gas, taking into account the availability of alternatives. Where provided for in their integrated national energy and climate plans, Member States should be able to set an end-date for the duration of long-term contracts for unabated fossil gas that is earlier than 31 December 2049.(145)In order to ensure the maintenance of high standards of public service in the Union, all measures taken by Member States to achieve the objectives of this Directive should be regularly notified to the Commission. The Commission should regularly publish a report analysing measures taken at national level to achieve public service objectives and comparing their effectiveness, with a view to making recommendations as regards measures to be taken at national level to achieve high public service standards.(146)Respect for the public service requirements is a fundamental requirement of this Directive, and it is important that common minimum standards, respected by all Member States, are specified in this Directive, which take into account the objectives of common protection, tackling energy poverty, price monitoring, security of supply, environmental protection and equivalent levels of competition in all Member States. It is important that the public service requirements can be interpreted on a national basis, taking into account national circumstances and subject to respect for Union law.(147)It should be possible for measures implemented by Member States to achieve the objectives of social and economic cohesion to include, in particular, the provision of adequate economic incentives, using, where appropriate, all existing Union and national tools. It should be possible for such tools to include liability mechanisms to guarantee the necessary investment.(148)To the extent that measures taken by Member States to fulfil public service obligations constitute State aid under Article 107(1) TFEU, there is an obligation under Article 108(3) TFEU to notify them to the Commission.(149)Market prices should give the right incentives for the development of the network.(150)Certain Member States, due to the historical features and levels of maturity of their markets for natural gas, should have the possibility to derogate from specific rules established in this Directive to prevent unjustified penalisation, and to favour an efficient development of markets for natural gas in those Member States. This applies in particular to Luxembourg, due to its specific market characteristics, and to all those Member States that are not yet connected to the interconnected system of any other Member State or that have not yet received the first commercial supply of their first long-term natural gas supply contract. In order to ensure a uniform application of Union law, derogations for Member States that are not yet connected to the interconnected system of any other Member State or that have not yet received the first commercial supply of their first long-term natural gas supply contract should be temporary and apply only until those Member States are able to meet higher standards in terms of market opening and interconnectivity with the integrated natural gas system of the Union. Where such a derogation applies, it should also cover any provisions in this Directive that are ancillary to, or that require the prior application of, any of the provisions from which a derogation has been granted.(151)Promoting fair competition and easy access for different suppliers should be of the utmost importance for Member States in order to allow consumers to take full advantage of the opportunities of a liberalised internal market for natural gas.(152)With a view to creating an internal market for natural gas, Member States should foster the integration of their national markets and the cooperation of system operators at Union and regional level, also incorporating the isolated systems forming gas islands that persist in the Union.(153)Voluntary regional markets integration, in particular market mergers, can provide various benefits, depending on the specificities of the markets. Market integration may be an opportunity to make best use of infrastructure provided it does not negatively impact neighbouring markets, for instance by increased cross-border tariffs. It is also a chance to increase competition, liquidity and trade to the benefit of the end-consumers in the region, by attracting suppliers which otherwise would not come due to the small market size. Market integration allows also to create bigger zones accessing more supply sources. Such diversification could have an impact on the wholesale market prices, thanks to improved competition between sources, but may also improve security of supply if there is no remaining internal congestion in the new merged zone. Market integration could be a basis to further support the transformation of the market for natural gas, including the deployment of renewable gas and low-carbon gas. Member States, regulatory authorities and transmission system operators should cooperate to facilitate regional integration.(154)The development of a true internal market for natural gas, through a network connected across the Union, should be one of the main goals of this Directive and dealing with regulatory issues on cross-border interconnections and regional markets should, therefore, be one of the main tasks of the regulatory authorities, in close cooperation with ACER where relevant.(155)Securing common rules for a true internal market and a broad supply of natural gas should also be one of the main goals of this Directive. To that end, undistorted market prices would provide an incentive for cross-border trade while leading to price convergence.(156)The regulatory authorities should also provide information on the market to permit the Commission to exercise its role of observing and monitoring the internal market for natural gas and its short-, medium- and long-term evolution, including aspects such as supply and demand, transmission and distribution infrastructure, quality of service, cross-border trade, congestion management, investments, wholesale and consumer prices, market liquidity as well as environmental and efficiency improvements. Regulatory authorities should report to the national competition authorities and the Commission those Member States in which prices impair competition and proper functioning of the market.(157)Since the objective of this Directive, namely the creation of fully operational internal markets for natural gas and hydrogen, cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects of such an action, 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 Directive does not go beyond what is necessary in order to achieve that objective.(158)Pursuant to Regulation (EU) 2024/1789, the Commission may adopt guidelines or network codes to achieve the necessary degree of harmonisation. Such guidelines or network codes, which constitute binding rules adopted as Commission implementing regulations, are, also with regard to certain provisions of this Directive, a useful tool which can be adapted quickly where necessary.(159)In particular, the Commission should be empowered to adopt the guidelines necessary for providing the minimum degree of harmonisation required to achieve the aim of this Directive.(160)In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents, Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified, in particular following the judgment of the Court of Justice of the European Union in Case C-543/17Judgment of the Court of Justice of 8 July 2019, European Commission v Kingdom of Belgium, C-543/17, ECLI:EU:C:2019:573..(161)This Directive respects the fundamental rights, and observes the principles, recognised in particular by the Charter of Fundamental Rights of the European Union (the "Charter"). Accordingly, this Directive should be interpreted and applied in accordance with those rights and principles, in particular the right to the protection of personal data guaranteed by Article 8 of the Charter. It is essential that any processing of personal data under this Directive comply with Regulation (EU) 2016/679 of the European Parliament and of the CouncilRegulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1)..(162)In order to amend non-essential elements of this Directive or to supplement it in respect of certain specific areas which are fundamental for achieving the objectives of this Directive, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of providing guidelines on the minimum criteria to ensure independence of the transmission system or hydrogen transmission network owner and natural gas storage system or hydrogen storage operator, guidelines setting out the details of the procedure on the certification of a transmission system operator or hydrogen transmission network operator, guidelines on the extent of the duties of the regulatory authorities to cooperate with each other and with ACER, guidelines setting out the details on the procedure concerning the compliance of a decision taken by a regulatory authority with network codes and guidelines adopted pursuant to this Directive and Regulation (EU) 2024/1789 and guidelines defining the methods and arrangements for record keeping, and the form and content of data on transactions in natural gas and hydrogen supply contracts and natural gas and hydrogen derivatives provided by supply undertakings. It is of particular importance that the Commission carries out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-MakingOJ L 123, 12.5.2016, p. 1.. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of the delegated acts.(163)In order to ensure uniform conditions for the implementation of this Directive, implementing powers should be conferred on the Commission to determine interoperability requirements and non-discriminatory and transparent procedures for access to data. Those powers should be exercised in accordance with Regulation (EU) No 182/2011.(164)In order to ensure a smooth and effective implementation of this Directive, the Commission supports Member States through the Technical Support Instrument established by Regulation (EU) 2021/240 of the European Parliament and of the CouncilRegulation (EU) 2021/240 of the European Parliament and of the Council of 10 February 2021 establishing a Technical Support Instrument (OJ L 57, 18.2.2021, p. 1). and providing tailor-made technical expertise to design and implement reforms, including those promoting competitive internal markets for natural gas and hydrogen, enabling the integration of renewable gas and low-carbon gas, and increasing cooperation and coordination among transmission and distribution system operators. The technical support involves, for example, strengthening of administrative capacity, harmonisation of legislative frameworks, and sharing of relevant best practices.(165)Directive 2009/73/EC should therefore be repealed and the obligation to transpose this Directive into national law should be confined to those provisions which represent a substantive amendment as compared to Directive 2009/73/EC. The obligation to transpose the provisions which are unchanged arises under that Directive.(166)This Directive should be without prejudice to the obligations of the Member States relating to the time-limits for the transposition into national law and the dates of application of the Directives set out in Annex III, Part B, to this Directive,HAVE ADOPTED THIS DIRECTIVE: