ENTSOG GRIP BEMIP 2014-2023 / Main Report

1.1 The Latest Changes in the EU Regulations and Procedures on Energy Sector

The key priorities of the EU energy policy are associated with its three pillars related to competition, security of supply and sustainability. The actions aimed at achieving these objectives in the gas sector were largely intensified over the last two years, so since the release of the first edition of the BEMIP GRIP in March 2012. In this peri- od a number of new legal acts and tools were made available to authorities, project promoters and other market participants in the Baltic Sea region. Most importantly, their main purpose is to complete the internal market in gas (mostly bridge the gap between the energy islands and gas markets in other EU countries), ensure the ad- equate level of security of supply and finally to foster competition. The paragraphs below provide a brief summary of the main developments in this area. First and foremost, the Regulation No. 347 / 2013 on guidelines on trans-European energy infrastructure (TEN-E Regulation), which entered into force in mid-2013, aims at accelerating the development of energy infrastructure (PCIs) in the priority corridors. This is achieved by providing a set of enhanced rules governing the permit granting process, cross-border allocation of costs and by delivering the criteria of financial assistance from the EU towards the PCIs. PCIs are selected in 12 Regional Groups, including 4 in the gas sector. It is worth noting that all countries of the BEMIP GRIP region are part of the BEMIP gas group which is focused on ending the isolation of the three Baltic states and Finland and their dependency on a single supplier, reinforcing internal grid infrastructures and increasing diversification and security of supplies in the whole Baltic Sea region. Additionally, Poland contributes to North-South gas interconnections in Central Eastern and South Eastern Europe (NSI East Gas) and Southern Gas Corridor (SGC), while Denmark is a part of North-South gas interconnections in Western Europe (NSI West Gas). The first list of PCIs was adopted by the Commission on 14 October 2013. The list contains 248 energy infrastructure projects, including 15 in the BEMIP gas region 1) , which can benefit from best practices in the permit granting process, cross-border cost allocation, investment incentives and financial assistance under the Regulation No. 1316 / 2013 establishing the Connecting Europe Facility (CEF). In subsequent years the projects applying for PCI status will be selected based on the methodology for the cost-benefit analysis (CBA methodology) which will allow for objective evaluation of costs and benefits of candidate projects. The aforementioned provisions envisaged in the TEN-E and CEF Regulations are of primary importance for the development of gas infrastructure in the Baltic Sea region which has large investment needs resulting from the current infrastructure and market limitations (lack of interconnections between all networks in the region and high supply dependence from a single source). In particular, the possibility to make use of best practices in the permit granting process can considerably support implementation of projects at the pre-investment stage as it is often responsible for many delays in project implementation. A similar effect might have the introduction of cross-border cost allocation and financial assistance under the CEF Regulation. These both tools might have an impact on securing the financial structure of projects, especially given that on one hand a number of projects in the Baltic Sea re- gion are driven by security of supply considerations, and on other hand the region’s

1) More information on the PCI selection process and the PCIs in the BEMIP region is provided in chapter 1.2

Baltic Energy Market Interconnection Plan GRIP 2014–2023 | 7