The Netherlands wants to scrap mandatory gas storage targets after spending nearly €1 billion ($1.1 billion) this year to fill its reserves, arguing that the current EU system forces governments to do a job that the market should be doing. EU rules require member states to fill storage sites to fixed levels ahead of winter, with obligations based largely on storage capacity rather than domestic gas consumption. That leaves the Netherlands, which has a relatively large storage system but shrinking demand, with an outsized filling requirement.

The rules also increasingly clash with market economics. Falling consumption and “large-scale purchases by other European governments” have skewed the economics of storing gas, Climate Minister Stientje van Veldhoven said in a letter to parliament Friday. Gas stockpiling has been particularly difficult this year throughout Europe because the Middle East conflict has driven up near-term prices relative to winter contracts, making summer injections unprofitable.

European gas contracts have more than doubled since the start of the war reaching their highest level since late 2022 earlier this month. The result is that the Dutch government has increasingly had to subsidize storage filling to meet its EU obligations. This filling season alone, it committed close to €1 billion to ensure reserves were replenished.

Europe’s storage facilities are currently 70% full, below the seasonal norm of 86%. The situation is even more acute in the Netherlands, where the sites are just over 56% full. The Dutch instead want more responsibility for ensuring adequate winter supplies to fall on the market.

One option would be to require suppliers serving protected customers, such as households, to hold some of the gas needed to meet their obligations in storage, Van Veldhoven said. The Netherlands argues the current system also fails to account for its role as a regional gas hub. Its storage sites help provide security of supply to neighboring countries, yet the government cannot charge other EU member states for the cost of ensuring those facilities are filled.

The Dutch have already lowered their stockpiling target to ease upward pressure on wholesale prices, following a call by the Commission amid ongoing fighting in the Middle East. The government is also considering a much bigger strategic gas reserve as a backstop against severe supply disruptions. The Netherlands currently holds national reserves equivalent to about 5 terawatt-hours, but officials are studying options that could increase the buffer to as much as 72 terawatt-hours.

Unlike commercial inventories, that gas would be reserved strictly for emergencies and could not be released simply to influence market prices, similar to the rules governing strategic oil stocks. The Netherlands is a relatively small gas consumer but remains a major European trading hub and is home to the region’s benchmark gas price.