A vision for the future of EU energy policy

08.05.06 Share


The European Commission adopted its strategy paper for the future of European Union (EU) energy policy, entitled 'Green Paper: a European Strategy for Secure, Competitive and Sustainable Energy'. The Green Paper should be seen not only as a strategy to lay the foundations of the EU's internal energy policy for the future but equally as the consolidated position which will in future be pursued by all 25 Member States at international level.

This note considers the factors that contributed to the Commission's decision to publish the Green Paper, and looks at the principal proposals and aims.

The adoption by the Commission of the Green Paper for a future European energy policy starts the legislative process for a raft of initiatives; preparing the EU for the changing situation of global energy supply and consumption.

Heads of State and Government discussed the Green Paper when they met on 23-24 March, and a public consultation was launched with stakeholders, the general public, NGO's and the media being invited to comment. The European Parliament is to play an active role in both the public consultation and legislative process for the adoption of future laws. Once the public consultation closes on 24 September the Commission will put together a White Paper (intended for December) setting out the series of concrete legislative initiatives that will form part of the future European Energy Policy.

Political momentum promises effectiveness

While there was a drive to develop a common energy policy at European level after the Second World War, since the 1973 oil crisis Member States have effectively pursued their own national energy goals.

The political momentum for the development of a common, coherent energy policy has been building in recent years. The costs of oil and energy have soared and energy prices have become increasingly volatile and unpredictable. Pressing concerns include global energy production no longer keeping pace with growing demand; together with the EU, as the world's largest energy importer, needing to secure its energy supplies from some of the most unstable regions of the world.

The changing face of the global energy market prompted the EU Heads of State and Government to make energy a new priority in July 2005 - to call for a 'common energy' policy (October 2005) and an 'integrated approach' to energy (December 2005). The political backing for this new strategy is an indication of the strength of the EU's ambitions to push ahead with the strategy both at national and international levels.

Two main axes for action

The strategy paper has two main axes for action. In the first instance, a variety of initiatives will be launched, building on existing initiatives in order to frame European Energy Policy around three integrated goals:

  • sustainable development;
  • competitiveness; and
  • security of supply.

In parallel, the Strategic EU Energy Review will be put in place to identify hurdles. The first review is to be carried out by the Commission and presented to the Council and the Parliament in spring 2007. It will also cover:

  • external energy policy;
  • how the EU can limit its dependence on imports of oil and gas;
  • the future of the internal gas and electricity markets;
  • diversity in EU energy; and
  • a Road Map for renewable energy.

Possible European Energy Policy initiatives in brief

The areas where the Commission is proposing actions are:

  • energy for jobs and growth in Europe;
  • tackling security and competitiveness of energy supply;
  • solidarity among Member States;
  • tackling climate change;
  • encouraging innovation; and
  • relations with third countries.

While all the initiatives are interdependent and work towards the three integrated goals, it is useful to break them down into categories.

Initiatives to complete the Internal Market

Completion of the Internal Market in Energy is a priority component of the Commission's strategy paper. Wragge & Co reported on the various market initiatives undertaken by the Commission to introduce a level-playing field in gas and electricity markets in February.

New EU-level representative bodies

Other initiatives to improve competitiveness as well as security of supply may involve the creation of various new EU-level organisations or agencies. In particular, the Commission suggests establishing a European Energy Regulator and a European Centre for the Energy Networks to deal with cross-border exchanges.

To improve network security, the Commission is considering ways of increasing co-operation between network operators or through a formal EU-level grouping. This could be developed in future into a European Centre for Energy Networks.

Ensuring security of supply

To facilitate security of supply, the Commission has proposed a new mechanism be set up to foster solidarity between member states, and provide assistance to countries following any physical damage to energy infrastructure.

The Commission envisages a system that will effectively coordinate Community and national instruments. In order to better tackle potential supply disruptions, a review will be undertaken of policies to stock oil and gas. Attention will also be given to establish priority lists for new infrastructure, co-ordinating reaction to emergency situations arising in external supply and setting common security standards to protect essential energy infrastructure.

Sustainable development

An integrated approach to energy policy together with other EU actions such as on climate change, would better serve the EU's purposes at both international and domestic levels. A Community-wide debate will explore how different energy sources can be mixed in order to reach the most effective energy policy.

The Commission proposes launching an action plan on energy efficiency with commonly agreed objectives together with international agreements on energy efficiency. Alongside these initiatives, the long-term development of renewable energy sources would also be pursued so as to help reduce EU dependence on imported oil. So-called 'technology platforms' and joint technology initiatives would be used to foster markets in energy innovation.

EU energy policy in a global environment

As for the EU's role at international level, the Green Paper considers a range of measures, the key one being the Strategic EU Energy Review referred to above. Thus, in the priorities for the construction of new infrastructure as part of the solidarity measures, it might be logical to include infrastructure in third countries, such as an independent pipeline for gas supplies from the Caspian Sea or North Africa into the heart of Europe, or new liquefied natural gas terminals.

Also at international level, a number of initiatives are proposed to remodel or introduce international agreements. The Commission points to the need for Russia (as the EU's most important energy supplier) to ratify the Energy Charter Treaty.

On a regional level, the Commission proposes a Pan-European Energy Charter Treaty with Mediterranean and Caspian partner countries and a South East European Energy Community of the Balkans countries.

Key Contact

Derek Goodban, partner, +44 (0)121 685 2710, derek_goodban@wragge.com

This alert may contain information of general interest about current legal issues, but does not give legal advice.

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