On February 25, 2015 the European Commission published its’ Energy Union Package. It includes the following documents:
- ENERGY UNION
In this Communication the Commission sets out, in five interrelated policy dimensions, the goals of an Energy Union – and the detailed steps the European Commission will take to achieve it, including new legislation to redesign and overhaul the electricity market, ensuring more transparency in gas contracts, substantially developing regional cooperation as an important step towards an integrated market, with a stronger regulated framework, new legislation to ensure the supply for electricity and gas, increased EU funding for energy efficiency or a new renewables energy package, focusing European R&I energy strategy, reporting annually on the 'State of the Energy Union', just to name a few.
- PARIS PROTOCOL
A Communication setting out a vision for a global climate agreement in Paris in December 2015. The vision is for a transparent, dynamic and legally binding global agreement with fair and ambitious commitments from all parties. The Communication also translates the decisions taken at the European Summit in October 2014 into the EU's proposed emissions reduction target (the so-called Intended Nationally Determined Contribution, or INDC) for the new agreement.
- ELECTRICITY INTERCONNECTIONS
An Interconnection Communication, setting out the measures needed to achieve the target of 10% electricity interconnection by 2020, which is the minimum necessary for the electricity to flow and be traded between Member States. It shows which Member States currently meet the target - and which projects are necessary to close the gap by 2020.
The Energy Union Strategy is built around five mutually-reinforcing dimensions:
- energy security;
- a fully-integrated European energy market;
- energy efficiency;
- decarbonising the economy;
- research, innovation and competitiveness.
The Energy Union in fifteen action points:
- Full implementation and strict enforcement of existing energy and related legislation is the first priority to establish the Energy Union in particular the 3rd Internal Energy Market Package, and it will strictly enforce the Treaty's competition rules.
- The EU needs to diversify its supply of gas and make it more resilient to supply disruptions. The Commission will:
- propose a resilience and diversification package for gas in 2015-2016 by revising the existing security of gas supply Regulation;
- prepare a comprehensive strategy for liquid natural gas (LNG) and its storage;
- work with Member States to develop access to alternative suppliers, including from the Southern Gas Corridor route, the Mediterranean and Algeria, in order to decrease existing dependencies on individual suppliers.
- Intergovernmental agreements should comply fully with EU legislation and be more transparent. The Commission will propose a revision of the Decision on Intergovernmental Agreements in 2016 to ensure compatibility with EU legislation before agreements are negotiated, involve the Commission in such negotiations, develop standard contract clauses covering EU rules and make commercial gas supply contracts more transparent.
- The right infrastructure is a precondition for completing the energy market, integrating renewables and security of supply. The Commission will:
- support the implementation of major infrastructure projects, particularly the Projects of Common Interest, through the available financial means, e.g. the Connecting Europe Facility, the European Structural and Investment Funds and the future European Fund for Strategic Investments to leverage the necessary private and public funding;
- bring together information on EU-funded infrastructure projects to bring more coherence and to maximise their impact;
- create a dedicated Energy Infrastructure Forum to discuss progress on major infrastructure projects with Member States, regional cooperation groups and EU institutions. It will meet for the first time in late 2015.
- Creating a seamless internal energy market that benefits citizens, ensuring security of supply, integrating renewables in the market and remedying the currently uncoordinated development of capacity mechanisms in Member States call for a review of the current market design. The Commission will propose:
- legislation on security of supply for electricity in 2016.
- a new European electricity market design in 2015, which will be followed by legislative proposals in 2016.
- The regulatory framework set-up by the 3rd Internal Energy Market Package has to be further developed to deliver a seamless internal energy market to citizens and companies. The Commission will review the regulatory framework, in particular the functioning of ACER and the ENTSOs, in 2015-2016 and will propose appropriate actions to reinforce the European regulatory framework.
- Regional approaches to market integration are an important part of the move towards a fully integrated EU-wide energy market. The Commission will develop guidance on regional cooperation and engage actively in regional cooperation bodies with Member States and stakeholders.
- Greater transparency on energy costs and prices as well as on the level of public support will enhance market integration and identify actions that distort the internal market. The Commission will produce biennial reports on energy prices, analyse in depth the role of taxes, levies and subsidies and seek the phasing out of regulated prices below cost. At the national and local levels, action should be taken to protect vulnerable consumers through social policies.
- The EU has set itself the target of reaching at least 27% energy savings by 2030.
- In 2015 and 2016, the Commission will review all relevant energy efficiency legislation and will propose revisions, where needed, to underpin the 2030 target.
- Member States and regions should make more use of European funds for renovation of housing.
- Buildings have huge potential for energy efficiency gains. Retrofitting existing buildings to make them energy efficient and making full use of sustainable space heating and cooling will reduce the EU's energy import bills, reinforce energy security and cut energy costs for households and businesses. The Commission will:
- develop a ‘Smart Financing for Smart Buildings’-initiative to make existing buildings more energy-efficient, facilitating access to existing funding instruments;
- propose a strategy to facilitate investment in heating and cooling.
- The EU needs to speed up energy efficiency and decarbonisation in the transport sector, its progressive switch to alternative fuels and the integration of the energy and transport systems. The Commission will:
- Propose a comprehensive road transport package promoting more efficient pricing of infrastructure, the roll-out of intelligent transport solutions and enhancing energy efficiency.
- take further action to create the right market conditions for an increased deployment of alternative fuels and to further promote procurement of clean vehicles. This will be delivered through a mix of national, regional and local measures, supported by the EU.
- The EU agreed a climate and energy framework for 2030 at the October European Council. This now needs to be implemented. The EU will provide an ambitious contribution to the international climate negotiations. The Commission will propose legislation to achieve the greenhouse gas reduction target agreed at the October 2014 European Council both in the Emissions Trading System and in the sectors outside the Emissions Trading System.
- The EU has agreed the target of at least 27% at EU level for renewable energy by 2030. The Commission will propose a new Renewable Energy Package in 2016-2017. This will include a new policy for sustainable biomass and biofuels as well as legislation to ensure that the 2030 EU target is met cost-effectively.
- The EU needs to develop a forward-looking, energy and climate-related R&I strategy to maintain European technological leadership and expand export opportunities. The Commission will:
- propose a European energy R&I approach, comprising an upgraded Strategic Energy Technology Plan and a strategic transport R&I agenda, with a limited number of essential priorities and clear objectives, in 2015-2016.
- develop an initiative on global technology and innovation leadership on energy and climate to boost jobs and growth.
- The EU will use all external policy instruments to ensure that a strong, united EU engages constructively with its partners and speaks with one voice on energy and climate.
- The Commission, with the HR/VP, and the Member States will revitalise the EU's energy and climate diplomacy.
- The Commission, with the HR/VP, will develop an active agenda to strengthen EU energy cooperation with third countries, including on renewable energy and energy efficiency.
- The Commission will make full use of the EU's external trade policy to promote access to energy resources and to foreign markets for European energy technology and services.
WHEN IS THE PROPOSAL LIKELY TO COME INTO EFFECT?
So far as for the facts. And now some early thoughts on my side.
Proposals by the European Commission to bring together the energy systems of Member States into a single Energy Union represent the most ambitious attempt to date at harmonising energy networks across borders. An Energy Union has been under discussion for more than a decade, with successive national governments and European Commissioners debating how such a system could be made to work in practice. On the face of it, the signs are good. But we all have to be clear: this is only a first step in the right direction. The Energy Package adopted by the Commission offers a comprehensive view of the energy challenges to be addressed by the EU. Current events only help highlight even further the urgency for Europe to increase its energy security, its diversification of resources, the need to unite a fragmented market and speak with a stronger voice in energy and trade negotiations with third countries.
An Energy Union would involve sweeping changes to the way energy systems currently work and it makes sense from a political, security and economic perspective. But as well as being a practical and technological project, energy union has a huge political dimension. As the European Commission sets out its plans to harmonise the energy systems of Member States, despite the potential benefits, there remain huge barriers to success. Without doubt - governance will be a sticking point. Striking the right balance between granting the EU powers while respecting subsidiarity - the allocation of powers and responsibilities - will be a challenge.
The proposals look notably centralising at a time when the European project is not universally popular, and may therefore require considerable political capital, if it is to be achieved. There is a number of things here which have been said before (such as the need for greater interconnectivity), and there are not many indications yet, as to how previous obstacles will be overcome. The Energy Union Package sets out a strong vision for Europe’s energy transition. This vision is the right one for safeguarding Europe’s energy and climate security. Central Europe Energy Partners supports the European Commission’s commitment to revitalise energy policy and to strengthen the EU’s ability to act in this field.
The proposed holistic approach is a good foundation to balance the EU’s energy, climate and industrial challenges better than in the past. But important trade-offs will have to be addressed in the implementation of the strategy. We will attentively watch future developments and decisions. What we expect is concrete action - among other things - on the challenge of high energy prices, which is undermining the competitiveness of the energy and energy-intensive sectors – CEEP Members. Europe is emerging from a deep financial and economic crisis and it is widely agreed that stronger European industrial competitiveness is vital as a driver for economic growth and job creation.
In this regard, while ensuring the achievement of essential climate and environmental objectives, it is now imperative to recognise and to ensure that an Energy Union is shaped in such a way as to guarantee, not only diversity and security of supply for all consumers, but also stable and affordable energy prices for all European businesses. The biggest contribution Energy Union can make is to move Europe further along the path towards a single energy market. Progress towards a more connected and competitive natural gas market is producing clear benefits but much more can be done.
As I see it, the focus on implementation of internal market rules is also proving to be Europe’s most influential lever in external energy security. We appreciate the fact, that the concept of regional markets and regional cooperation is high on the agenda – infrastructure/interconnector included. CEEP has been founded on and stands for regional cooperation principle, in support of European energy and energy security policy. In our CEEP Position Paper on an Energy Union we have stressed the importance of working out a concept of a single EU gas buyer. The Commissions’ proposals are different in this regard. But CEEP still holds to its’ opinion, that the Commissions’ approach provides a good working platform for further deliberations. At the same time – it is with regret – that we notice no reference made to oil and oil-products. A reform of the EU ETS by introducing a market stability reserve is high on the Commissions’ agenda. CEEP upholds its’ different opinion and position in this regard and we will again be presenting it in due time.
The cards are on the table, and further discussion on the Energy Union will put the flesh on the bones. At the moment, nothing is etched in stone but vision has been presented. Next months (or years) will tell the future of the Energy Union, and the European Union.
The Energy Union Package marks only the start of a deeper debate. CEEP wants to be active throughout it and make sure our Members’ voice is heard and considered. The issue will be of utmost importance to the Commission and I have no doubt that COMM’s ultimate success would finally be judged on the progress it makes with Energy Union project.