13th BES Seminar-La Spezia
EU gas networks and the decarbonisation challenge: insights from the 13th BES Seminar
The 13th BES Seminar, held in La Spezia on 8–9 October 2025, is part of a two-year cycle of discussions on the functioning of gas markets, under several perspectives: market trends, infrastructure regulation, role of gas networks in the European Union’s energy transition and security of supply.
Co-financed by the Central European Initiative (CEI) Fund at the European Bank for Reconstruction and Development (EBRD), the event brought together regulatory authorities, institutions, and experts to discuss how gas infrastructures and its regulation remain essential for ensuring energy security, market integration, and affordability for consumers.
In an evolving and complex context, regulatory authorities play a fundamental role in establishing transparent frameworks, rules for access, efficiency requirements, whilst promoting sustainability across Europe.
The European regulatory framework
EU regulation of gas networks is based on directives, regulations (such as the Gas & hydrogen package, the Renewable energy directive, and the TEN-E regulation), network codes, and guidelines.
Key principles include:
Access rules. Non-discriminatory access to networks is a cornerstone of the internal gas market. Third-party access (TPA) must be granted on equal terms to all eligible users, although exemptions may apply where projects demonstrably enhance competition.
Market integration. Network codes, such as the Capacity allocation mechanisms network code (CAM NC) and the Harmonised transmission tariff structures network code (TAR NC), aim to harmonise rules across the EU. The Gas target model (GTM) promotes competition by shifting transmission from point-to-point to an entry-exit system, fostering the creation of trading hubs.
Transparency. Tariffs must be transparent, cost-reflective and non-discriminatory to support efficient cross-border gas trade.
Balancing revenue and efficiency: The Italian approach
One of the main regulatory challenges is defining allowed revenues and tariffs that balance network operators’ fair return with customers’ interest in cost-efficiency. Regulators often face information asymmetries in relation to network operators, posing significant challenges when assessing the efficient level of system costs.
From cost-plus to incentives. Traditional cost-plus methods offer little incentive for efficiency and can lead to over-investment. Incentive-based models, such as price caps, reward productivity but require rigorous quality monitoring.
The Italian case. ARERA, the Italian NRA, has long applied a hybrid model – cost-plus for CAPEX and incentive regulation for OPEX – which have proved to be effective in ensuring adequate investments, but has led to concern of “CAPEX bias”, i.e. the operators’ preference to opt for CAPEX-based solutions regardless of the respective efficiency in comparison with OPEX-based alternatives. In 2024, ARERA introduced the TOTEX (ROSS) approach (“Regulatory adjustment for expenditure and service targets”), treating capital and operating expenditures symmetrically to encourage the adoption of the most efficient solutions from a system perspective.
Tariff structure. In Italy, the regulatory framework specifies that capital expenditures (CAPEX) should be primarily covered by capacity-based charges, while operational expenditures (OPEX) and variable costs should be recovered through commodity-based charges, resulting in an approximate 75/25 split. The capacity-weighted distance (CWD) methodology is used for determining reference prices, which aims to allocate the allowed revenues collected from each entry or exit point proportionally based on their cost drivers of both capacity and distance.
Managing aging assets. With around 30% of Italy’s gas network fully or almost fully depreciated, ARERA has introduced incentives to extend its operation where possible, avoiding premature decommissioning in the context of the transition to decarbonisation.
Planning for decarbonisation and hydrogen
The path towards decarbonisation requires rigorous infrastructure planning to avoid over-investment in fossil assets.
Development plans. National ten-year network development plans at both national (NDP) and EU-level (TYNDP) are central to ensuring visibility over planned investments, and cross-border consistency. The Decarbonisation package (2024) mandates biennial NDP updates, including decommissioning projects, aligned with national climate neutrality targets (NECPs).
Investment efficiency. Project efficiency can be assessed with cost-benefit analyses (CBAs) for major projects, evaluating economic, environmental, and resilience impacts. Under the Italian framework, investments with negative CBAs receive tariff recognition only for monetizable benefits.
Hydrogen integration. The revised TEN-E Regulation (EU 2022/869) refocuses infrastructure priorities, excluding most fossil gas projects from Projects of Common/Mutual Interest eligibility, and adding specific categories for hydrogen and electrolysers. It also requires a more cross-sectoral approach to planning between gas, electricity, and hydrogen operators, a step towards an integrated EU energy system.
Service quality and cooperation
Regulation must ensure a minimum service quality across four dimensions: security, gas quality, continuity, and commercial quality. In Italy, performance standards are backed by automatic compensations for non-compliance.
The seminar provided a comprehensive overview of these complex regulatory instruments, designed to support competition, efficiency, and a just energy transition. Participants also visited Snam’s Panigaglia LNG regasification terminal, a strategic asset for Italy’s security of supply.
By facilitating the exchange of experience, the BES seminar continues to strengthen regional cooperation and regulatory capacity, contributing to a more resilient, efficient, and integrated gas market across the Euro-Balkan region.
