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Internal market for natural gas

Outline of the Community (European Union) legislation about Internal market for natural gas

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Internal energy market

Internal market for natural gas

Document or Iniciative

Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC.

Summary

Directive 2003/55/EC provides for the complete opening of national gas markets to competition and therefore helps create a true internal gas market within the European Union (EU).

Completion of the internal gas market increases competitiveness and improves service quality, guarantees fair prices for consumers, establishes rules on public service obligations, improves interconnection and bolsters security of supply.

Market access

Directive 2003/55/EC lays down the right of third parties to non-discriminatory access to transmission and distribution systems and to liquefied natural gas (LNG) facilities. Consequently, new suppliers can now enter the market and consumers are free to choose their gas supplier.

For the internal gas market to operate properly, all the companies, even the smallest ones, such as those which invest in renewable energy sources, must be able to enter the market. Fair competition conditions must be put in place to prevent the risk of dominant positions, in particular of the traditional operators, and predatory behaviour.

A gradual approach has been adopted so that companies can adapt whilst guaranteeing the protection of consumers’ interests. Since 1 July 2004, industrial consumers have been able to choose their supplier. Domestic consumers have had had this opportunity since 1 July 2007.

Access to storage facilities is covered by specific provisions by virtue of which access may be either negotiated or regulated.

System operation: system operators

In each Member State, system operators are appointed for the transmission system on the one hand, storage, liquefied natural gas and the distribution system. Their mission is the operation, maintenance and development of transmission and distribution, storage and liquefied natural gas (LNG) facilities. They are obliged to ensure the safety, reliability, efficiency and interconnection of facilities with due regard for the environment.

System operators must guarantee non-discriminatory and transparent access to the system for all users. Access must therefore be based on fair tariffs that are applied objectively.

System operators may not favour certain companies, in particular any with which they are associated. In order to avoid any discrimination relating to network access and enable equal access for new entrants, when companies are vertically integrated, the transmission and distribution activities must be legally and functionally separate from other activities, such as production and supply. This separation does not, however, mean ownership unbundling.

System operators are also obliged to provide other operators with the information necessary for safe and effective running of the interconnected system.

Public service obligations and consumer protection

The internal gas market can only become a reality if consumers play an active role and actually exercise their right to free choice of their gas supplier. It is therefore essential for operation of the internal gas market to inform consumers of their rights and to ensure their effective protection.

Directive 2003/55/EC lays down common minimum standards to ensure a high level of consumer protection (the right to change supplier, transparent contract conditions, general information, dispute settlement mechanisms, etc.) and takes particular care to provide adequate protection of vulnerable consumers (for example, by taking the appropriate steps to avoid disconnection of the gas supply).

Gas supply is considered as a public interest service that citizens have the right to access in return for payment. Therefore, the Directive provides for the possibility for Member States to impose public service obligations to guarantee security of supply, economic and social cohesion objectives, regularity, quality and price of the gas supply and protection of the environment.

Regulatory authorities

As key elements in the smooth operation of the internal gas market, independent regulators, appointed in each Member State, are responsible, in particular, for monitoring respect of the non-discrimination principle, the level of transparency and competition, and the tariffs and methods for calculating them. These regulatory authorities also act as dispute settlement authorities.

A European group bringing together the national regulatory authorities to consolidate the development of the internal gas market and ensure coherent application in all the Member States of the provisions of Directive 2003/55/EC (the European Regulators Group for Electricity and Gas – ERGEG) has been established through Decision 2003/796/EC.

Derogations

The Directive lays down derogations or allows for their laying down according to the terms of the Directive in certain situations:

for isolated markets, i.e. when a Member State is not directly connected to the interconnected system of another Member State and has only one main external supplier;
for emergent markets, i.e. markets where the first commercial supply of a Member State from their first long-term natural gas supply contract was made not more than ten years earlier;
for geographically limited areas in Member States, for example depending on the size and maturity of the gas system in the area concerned, as well as the pay-back prospects of investments required for application of the Directive;
in the event of a lack of capacity;
during development of the infrastructure capacity or of new infrastructures;
if access to the system prevents delivery of public service obligations;
due to serious economic difficulties of a gas company, in particular due to its ‘take or pay’ commitments (clauses of a gas purchase contract obliging the supplier, on the one hand, to make defined quantities of gas available and the customer, on the other hand, to pay for the gas, whether he has taken it or not).

Furthermore, safeguard measures may be temporarily taken by a Member State in the event of a sudden crisis in the market, or the physical safety or security of persons, apparatus or installations or system integrity being threatened.

Monitoring and security of supply

The European Commission draws up an annual benchmarking report that evaluates the progress in the implementation of competitive electricity and gas markets, on the basis of information supplied by national governments and regulatory authorities.

It is also essential to improve security of supply by guaranteeing sufficient investment in the transmission systems, thus avoiding interruptions to the gas supply, by monitoring the supply and demand balance in the different Member States, the interconnection capacity and the quality and maintenance level of the systems. Such monitoring will enable appropriate measures to be prepared ahead of any supply problems.

Scope

Directive 2003/55/EC applies to the gas market, which must be taken to mean natural gas, as well as liquefied natural gas (LNG), biogas, gas from biomass and other types of gas that can technically be transported in the natural gas system.

As a consequence, and while taking into account quality requirements and technical and safety standards, Member States must make sure to guarantee non-discriminatory access to the gas system of biogas and gas from biomass, as well as other types of gas.

Background

The existence of an internal gas market, parallel to an internal market in electricity, is essential for completion of a true internal energy market within the EU. The internal gas market was put in place, firstly, by Directive 98/30/EC, which was then repealed and replaced by Directive 2003/55/EC.

References

Act	Entry into force – Date of expiry	Deadline for transposition in the Member States	Official Journal
Directive 2003/55/EC	4.8.2003	1.7.2004	OJ L 176, 15.7.2003

Related Acts

Communication from the Commission of 11 March 2009 to the Council and the European Parliament – Report on progress in creating the internal gas and electricity market [COM(2009) 115 final – Not published in the Official Journal].
The Report examines the transposition of the second package of measures on the internal energy market. Many efforts have been made to introduce true competition, particularly as part of regional initiatives.

However, gas prices increased considerably during the first half of 2008, and the functional unbundling of distribution system operators (compulsory since 1 July 2007) has not been applied systematically. Member States still make extensive use of derogations in this area.

Moreover, the Commission has few figures available concerning users changing gas suppliers, which makes the evaluation of competition on the market rather difficult.

The internal gas market is still too segmented. In order to remedy this segmentation priority should be given to action on the integration of markets, as well as the development of infrastructures and cross-border trade. Finally, it is highly recommended that price regulation be abandoned which hampers competition and dissuades other potential suppliers from entering the market.

Proposal for a Directive of the European Parliament and of the Council of 19 September 2007 amending Directive 2003/55/EC concerning common rules for the internal market in natural gas [COM(2007) 529 final – Not published in the Official Journal].
A third and final legislative package is proposed to complete opening of the European energy markets to competition and creation of the internal energy market.

The internal energy market demonstrates malfunctioning that cannot be corrected effectively by current rules, as stated by the Commission in its sector inquiry. The proposals of the third legislative package go in the same direction as the communication on the prospects for the internal gas and electricity market, and relate to:

the separation of production and supply activities from transmission system operation, either based on ownership unbundling (a single company could no longer own the transmission system at the same time as carrying out energy production or supply activities) or on an independent system operator (vertically integrated companies could retain ownership of the network on the condition that it is actually managed by a completely independent company or body), and provisions specify that non-European operators should meet these separation requirements if they wish to acquire a significant share in a European system;
the increased powers and the independence of national regulators as well as their cooperation through the setting up of a cooperation agency of the energy regulators authorised to make binding decisions and impose penalties;
formalisation of the European groups of transmission system operators for better coordination and, in particular, the drawing-up of joint market and technical codes;
improved market operation, notably greater transparency, effective access to storage facilities and LNG terminals.

The Commission proposes five drafts to amend Directives 2003/54/EC and 2003/55/EC relating to the electricity market and the gas market respectively, as well as Regulations (EC) No 1228/2003 and No 1775/2005 on access to the electricity networks and access to the gas networks respectively, and to set up an energy regulators cooperation agency.
Codecision procedure (COD/2007/0196)

Communication from the Commission to the Council and the European Parliament of 10 January 2007 entitled “Prospects for the internal gas and electricity market ” [COM(2006) 841 final – Not published in the Official Journal].

Communication from the Commission of 10 January 2007 entitled “Inquiry pursuant to Article 17 of Regulation (EC) No 1/2003 into the European gas and electricity sectors (final report)” [COM(2006) 851 final – Not published in the Official Journal].

Regulation (EC) No 1775/2005of the European Parliament and of the Council of 28 September 2005 on conditions for access to the natural gas transmission networks conditions for access to the natural gas transmission networks [Official Journal L 289, 3.11.2007].

Commission Decision 2003/796/EC of 11 November 2003 on establishing the European Regulators Group for Electricity and Gas [Official Journal L 296, 14.11.2003].

Green Paper – Towards a secure, sustainable and competitive European energy network

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Green Paper – Towards a secure, sustainable and competitive European energy network

Outline of the Community (European Union) legislation about Green Paper – Towards a secure, sustainable and competitive European energy network

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Internal energy market

Green Paper – Towards a secure, sustainable and competitive European energy network

Document or Iniciative

Green Paper – Towards a secure, sustainable and competitive European energy network. [ final – Not published in the Official Journal].

Summary

Through this Green Paper, the Commission launches a public consultation with a view to developing a new strategic approach to energy networks which aims to achieve the climate and energy objectives of the European Union.

Priorities

The main priority is to improve the Community framework with a view to developing the energy networks of the Member States of the Union and to integrate them better so as to enhance the operation of the internal energy market.

Energy transportation networks make up the keystone of energy policy. For this reason the(TEN-E) should correspond to the new requirements of energy policy with regard to sustainability, supply and competitiveness. Adopted in 1996, they should be amended so that they correspond to the objectives set out in the 2007 Energy Policy for Europe.

The external dimension is also a significant issue for the development of energy networks. The internal energy market depends strongly on imports. New import routes will need to be integrated into the network from:

Central Asia;
the Caspian Sea;
the Middle East;
Africa.

The coordination and management of the networks will be carried out by the future Agency for the Cooperation of Energy Regulators, and by two European Networks of Transmission System Operators. The infrastructure plans will be implemented for a duration of ten years.

There is also an urgent need (in addition to the investments necessary to modernise energy networks and to replace obsolete infrastructures) at European level, for new projects that allow all Member States to be integrated in the internal market and also integrate new technologies. New energy resources must therefore be developed and be accessible across the best interregional connections.

A new approach to energy network development

Energy network development should become a central issue when implementing energy policy.

The 20-20-20 objectives should be implemented effectively through programmes relating to both the public and private sectors. These objectives consist of:

the integration of renewable energy sources in the network;
the transport of energy from resource-rich areas to consumption centres;
the use of technologies for the decentralisation of energy production and intelligent networks;
the use of energy coming from offshore wind farms;
the development of technologies for the transport and storage of CO₂.

European scientific research should direct its work to developing technologies related to energy networks that are able to store and integrate various electricity production sources. The European industrial initiative on electricity grids, for example, forms part of the priorities of the European Strategic Energy Technology Plan. The latter targets the promotion of low-carbon energies in particular.

It also appears fundamental to improve the economic and legal framework for cooperation with supplier and transit third countries in order to guarantee stability of supply.

A fully interconnected European energy network

The third ‘internal energy market’ package will enhance cooperation between transmission system operators (TSOs) and the regulators of the energy sector so as to make the internal energy market more operational.

Cooperation is planned between ENTSO (the European Network of Transmission System Operators for Electricity) and the Agency for the Cooperation of Energy Regulators in order to optimise existing networks.

The New European Transmission System (NETS) project which integrates gas transmission operators across Central and South Eastern Europe is also a promising initiative and could represent a step towards the establishment of a European transmission system operator.

Putting TEN-E at the service of security and solidarity

The Commission is considering the following options to improve the functioning of TEN-E:

determining TEN-E objectives through European energy policy;
extending their scope to the full energy transportation network;
planning TEN-E so as to reflect market forces;
narrowing the focus of intervention of TEN-E to a limited number of strategic projects;
developing exchanges of good practices among Member States;
specifying a European coordinator for large-scale projects;
optimising the management of resources.

The objective will be to update the Community support network, towards a new policy framework for European energy infrastructures equipped with a new instrument for security and energy infrastructures.

Context

At the present time, European energy networks require significant modernisation as well as the development of east-west and north-south connections so as to ensure energy security in the European Union.

17 Consequently, this Green Paper opens a debate on the establishment of a clear and stable legal framework aimed at increasing solidarity and security in the supply of energy in the European Union.

Strategic oil stocks

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Strategic oil stocks

Outline of the Community (European Union) legislation about Strategic oil stocks

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Security of supply external dimension and enlargement

Strategic oil stocks

Document or Iniciative

Council Directive 2006/67/EC of 24 July 2006 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products.

Summary

In an unstable geopolitical environment where the balance between supply and demand is generally uneasy, particularly due to growing demand from new mass consumers such as China, the European Union’s dependency on imports of petroleum products is an increasing cause for concern for European economic prospects.

A supply crisis caused by our supply of petroleum products from third countries being unexpectedly interrupted would most likely have a serious impact on European economic activity. Breaks in supply could also occur within the EU.

It is in order to ensure the security of its oil supply that the EU obliges Member States to guarantee minimum stocks of petroleum products that can be used in the event of a supply crisis to replace all or part of the shortfall.

Strategic stock-holding requirement

Member States are required to build up and constantly maintain minimum stocks of petroleum products equal to at least 90 days of the average daily internal consumption during the previous calendar year.

The calculation of the daily internal consumption is based on motor spirit and aviation fuel, gas oil, diesel oil, kerosene and jet-fuel of the kerosene type, as well as fuel oils.

Amongst the petroleum resources accepted in the statistical summary of strategic stocks are supplies held in ports of discharge, or those on board oil tankers in port for the purpose of discharging, once the port formalities have been completed, supplies held in tanks at the entry to oil pipelines and also those held in refinery tanks. On the other hand, certain resources may not be included in the statistical summary, such as crude oil not yet extracted, supplies intended for the bunkers of sea-going vessels, supplies in pipelines, in road tankers or rail tank-wagons, in the storage tanks of retail outlets and those held by small consumers, as well as quantities held by or for the armed forces.

Member States who have their own petroleum production may deduct this proportionally from their stock-holding obligation. Such deduction may not, however, exceed 25 % of the Member State’s internal consumption.

Member States may include in their statistical summary of strategic stocks only quantities that are at their full disposal in the event of an oil supply crisis.

Stock-holding arrangements

Stock-holding arrangements must ensure that the stocks are available to and accessible by Member States so they can react immediately in the event of a supply crisis. In fact, Member States must be able to control allocation of the stocks and quickly make them available to the sectors where the need for supply is the most urgent.

Stock-holding may rely on a system of partial or total delegation to a stock-holding body or agency. Member States ensure transparency of the stock-holding arrangements and make sure that fair, non-discriminatory conditions are applied.

The stocks may be held outside national territory in another Member State. The Member State on whose territory the stocks are held has control of them and guarantees their actual availability. It does not include them in its statistical summary.

Member States have an obligation to ensure administrative monitoring of their stocks, in other words to ensure their control and supervision. Breaches of these control mechanisms are covered by a system of penalties.

Member States send the Commission a statistical summary of the stocks existing at the end of each month, stating the number of days of average consumption of the previous calendar year that they represent.

Coordination

In the event of a supply crisis, a coordinated operation is put in place and the Commission organises a consultation between the Member States, either on its own initiative or at the request of one of them.

Member States do not, in principle, make withdrawals from the stocks that would bring them below the compulsory minimum level before such a consultation, except in a particularly urgent situation.

Member States must therefore send the Commission information relating to any withdrawal from the stocks (date on which the stocks fell below the compulsory minimum, reason for withdrawal, steps taken to build the stocks back up, likely stock levels during the period in which they will remain below the compulsory minimum).

Background

Since the end of the 1960s, the European Union has been aware of the need to prevent potential oil supply shortages. Council Directive 68/414/EEC therefore laid down the obligation on Member States to build up and maintain strategic oil stocks. Subsequently, Council Directive 72/425/EEC raised the obligation for stocks initially set at the equivalent of at least 65 days of the daily internal consumption to an obligation for stocks equivalent to at least 90 days. Council Directive 98/93/EC developed and strengthened the provisions of Directive 68/414/EEC. In the interests of clarity and effectiveness, these Directives were consolidated in, and thus repealed by, Council Directive 2006/67/EC.

When anticipating or reacting to a supply crisis, replacement of the shortfall by putting onto the market stocks built up by the Member States can be effective only in tandem with certain complementary measures (to promote energy efficiency and thus reduce consumption of hydrocarbons, to improve dialogue with producer countries, carry out more in-depth market analysis for better forecasting, to diverse energy sources, in particular by promoting renewable forms of energy, etc.).

This Directive will be repealed by Directive 2009/119/EC from 31 December 2012.

References

Act	Entry into force – Date of expiry	Deadline for transposition in the Member States	Official Journal
Directive 2006/67/EC	28.8.2006	–	OJ L 217, 8.8.2006

Related Acts

Council Decision 77/706/EEC of 7 November 1977 on the setting of a Community target for a reduction in the consumption of primary sources of energy in the event of difficulties in the supply of crude oil and petroleum products [Official Journal L 292, 16.11.1977].

Amended by Decision79/639/EEC [Official Journal L 183 of 19.7.1979].
Member States may be bound to reduce their oil consumption. The Decision therefore provides that the Commission can set a target for reducing the consumption of petroleum products by up to 10 % of normal consumption.

An Energy Policy for Europe

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An Energy Policy for Europe

Outline of the Community (European Union) legislation about An Energy Policy for Europe

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Environment > Tackling climate change

An Energy Policy for Europe

Document or Iniciative

Communication from the Commission to the European Council and the European Parliament of 10 January 2007, “An energy policy for Europe” [COM(2007) 1 final – Not published in the Official Journal].

Summary

This Communication, a strategic review of the European energy situation, introduces a complete set of European Energy Policy measures (the ‘energy’ package).

JUSTIFICATIONS FOR A EUROPEAN ENERGY POLICY

The European Union (EU) faces serious energy challenges concerning sustainability and greenhouse gas emissions as well as security of supply, import dependence and the competitiveness and effective implementation of the internal energy market.

A European Energy Policy is acknowledged as the most effective response to these challenges, which are faced by all Member States.

The EU intends to lead a new industrial revolution and create a high efficiency energy economy with low CO2 emissions. To do so, it has set itself several important energy objectives.

ESTABLISH THE INTERNAL ENERGY MARKET

An internal energy market has been developed on a Community level to ensure that consumers have the opportunity to choose a supplier, at a fair and competitive price. Nevertheless, as highlighted by the Communication on prospects for the internal energy market and the inquiry into competition in the gas and electricity sectors, there are obstacles which continue to prevent both the economy and European consumers from fully benefiting from the advantages of opening up the gas and electricity markets. Ensuring the effective implementation of the internal energy market thus remains crucial.

A competitive market

There must be a clearer separation between the management of gas and electricity networks and production or sales activities.

If a company controls the management of networks as well as production or sales, there is a serious risk of discrimination and abuse. A vertically integrated company has little interest in increasing the capacity of the network and thereby exposing itself to increased competition on the market and a consequent fall in prices.

A separation between the management of networks and production or sales will encourage companies to invest more in networks, thereby promoting the entry onto the market of new arrivals and increasing security of supply.

This separation may either be achieved through the establishment of an Independent System Operator responsible for the maintenance, development and operation of the networks, which remain the property of the vertically integrated companies, or through full ownership unbundling.

An integrated and interconnected market

The internal energy market is essentially dependent on cross-border trade in energy. However, such trade is often difficult because of the disparity between national technical standards and differences in network capacity.

Effective regulation on a Community level is required. The competences and independence of energy regulators need to be harmonised, their collaboration must be reinforced and they must be obliged to take into account the Community objective of realising the internal energy market and defining regulatory and technical aspects and common security standards required for cross-border trade on a Community level.

With the goal of making the European energy network a reality, the Priority Interconnection Plan highlights the importance of financial and political support for implementing the infrastructures which have been identified as essential and of nominating European coordinators for monitoring the most problematic priority projects.

An energy public service

The EU is determined to persevere with its fight against energy poverty by developing an Energy Customers’ Charter. The charter will principally encourage the implementation of aid schemes for the most vulnerable citizens in the face of increasing energy prices and also the improvement of the level of information consumers receive concerning the different suppliers and supply options.

ENSURE A SECURE ENERGY SUPPLY

Minimising the EU’s vulnerability concerning imports, shortfalls in supply, possible energy crises and uncertainty with respect to future supply is a clear priority. This uncertainty is all the more problematic for Member States dependent on one single gas supplier.

The new energy policy emphasises the importance of measures which ensure solidarity between Member States and of the diversification of supply sources and transportation routes.

Measures supporting strategic oil stocks must be reinforced and the possibilities for improving the security of gas supply must be explored. Increased security of electricity supply, which remains crucial, must also be guaranteed.

REDUCE GREENHOUSE GAS EMISSIONS

Energy accounts for 80 % of all greenhouse gas emissions in the EU.

Determined to fight against climate change, the EU is committed to reducing its own emissions by at least 20 % by 2020. It also calls for the conclusion of an international agreement which will oblige developed countries to reduce their greenhouse gas emissions by 30 % by 2020. In the framework of this agreement, the EU would set itself a new objective of reducing its own emissions by 30 % compared with 1990 levels. These objectives are at the heart of the EU’s strategy for limiting climate change.

Of course, reducing greenhouse gas emissions involves using less energy and using more clean energy.

Energy efficiency

Reducing its energy consumption by 20 % by 2020 is the objective the EU has set itself in its Action Plan for Energy Efficiency (2007-2012).

Concrete effort needs to be made to achieve this objective, in particular with respect to energy saving in the transport sector, the development of minimum efficiency requirements for energy-using appliances, awareness-raising amongst consumers about sensible and economic energy use, improving the efficiency of the production, transport and distribution of heating and electricity and also developing energy technologies and improving the energy performance of buildings.

The EU also intends to achieve a common approach on a global scale for saving energy through the conclusion of an international agreement on energy efficiency.

Renewable energy

The use of renewable energies (wind power, solar and photovoltaic energy, biomass and biofuels, geothermal energy and heat-pump systems) undeniably contributes to limiting climate change. Furthermore, it plays a part in securing energy supply and creating employment in Europe, thanks to the increase in the production and consumption of local energy.

Renewable energies, however, remain on the fringe of the European energy mix as they still cost more than traditional energy sources.

To increase the use of renewable energy sources, in its Renewable Energies Roadmap the EU has set itself the objective of increasing the proportion of renewable energies in its energy mix by 20 % by 2020.

This objective requires progress to be made in the three main sectors where renewable energies are used: electricity (increasing the production of electricity from renewable sources and allowing the sustainable production of electricity from fossil fuels, principally through the implementation of CO2 capture and storage systems), biofuels, which should represent 10 % of vehicle fuels by 2020, and finally heating and cooling systems.

DEVELOP ENERGY TECHNOLOGIES

Energy technologies play a central role in offering both competitiveness and sustainability in the energy sector while increasing security of supply. They are likewise crucial for attaining the other energy objectives.

The EU, today a global leader in the renewable energy sector, intends to consolidate its position and play an equally leading role in the rapidly growing market for low carbon energy technologies.

The EU must therefore develop existing energy-efficient technologies as well as new technologies, in particular those devoted to energy efficiency and renewable energies.

Even if the EU considerably diversifies its energy mix, it will still be highly dependent on oil and coal and must thus also pay particular attention to low carbon-output fossil fuel technologies, especially carbon capture and storage systems.

Investment in these emerging technologies will directly contribute to the Community strategy for increasing employment.

The Commission proposes an outline for a European Strategic Energy Technology Plan which will cover the entire innovation process, from the initial research to entry onto the market. This strategic plan will support the Seventh Framework Programme for Research, which foresees a 50 % increase in spending on research in the energy sector, along with the Intelligent Energy for Europe programme.

CONSIDER THE FUTURE OF NUCLEAR ENERGY

Faced with increasing concerns with regard to security of supply and CO2 emissions, nuclear energy has the benefit of being one of the low-carbon energy sources offering the most stable costs and supply.

The decision whether or not to use nuclear energy is made by Member States. Nevertheless, the illustrative nuclear programme emphasises the need to have a common and coherent approach with respect to security, safety and non-proliferation as well as concerning the dismantling of installations and the management of waste.

IMPLEMENT A COMMON INTERNATIONAL ENERGY POLICY

The EU is not able to achieve the objective of secure, competitive and sustainable energy alone. To do so requires the involvement and cooperation of both developed and developing countries, energy consumers and producers and countries of transit. To ensure efficiency and coherence, it is crucial that Member States and the EU are able to speak with a single voice on international energy issues.

The EU will be a driving force in the development of international energy agreements, in particular by strengthening the European Energy Charter, taking the initiative in an agreement on energy efficiency and participating actively in the post-Kyoto climate change scheme.

EU relations with consumer countries (such as the United States, India, Brazil or China), producer countries (Russia, Norway, OPEC countries and Algeria, for example) and countries of transit (such as the Ukraine) are of prime importance from the perspective of geopolitical security and economic stability. The EU will thus strive to develop energy partnerships with these countries which are transparent, predictable and reciprocal, in particular with its neighbouring countries. The EU also proposes a new partnership with Africa which will deal with a large variety of energy issues.

The EU is committed to helping developing countries to implement decentralised energy services which are low-cost, reliable and sustainable. The EU encourages these countries, in particular Africa, to immediately invest in renewable energies and the new generation of clean energy technologies.

BACKGROUND

The development of a European energy policy was at the heart of the European project, with the ECSC Treaty (establishing the European Coal and Steel Community) in 1951 and the Euratom Treaty (establishing the European Atomic Energy Community) in 1957. Despite economic and geopolitical changes since, it remains essential today.

The Energy Package presented by the European Commission on 10 January 2007 is part of the movement begun by the Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy in March 2006 and once again places energy at the heart of European activities.

Based on the Energy Package, the Heads of State and Government at the spring European Council on 9 March 2007 adopted a comprehensive energy Action Plan for the period 2007-2009 .

Security of energy supply in the EU and international cooperation

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Security of energy supply in the EU and international cooperation

Outline of the Community (European Union) legislation about Security of energy supply in the EU and international cooperation

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Security of supply external dimension and enlargement

Security of energy supply in the EU and international cooperation

Document or Iniciative

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 7 September 2011 On security of energy supply and international cooperation – “The EU Energy Policy: Engaging with Partners beyond Our Borders” [COM(2011) 539 final – Not published in the Official Journal].

Summary

This Communication defines a strategy of cooperation beyond the borders of the European Union (EU) in order to ensure its energy supply and to promote its objectives in the field of energy. This strategy is based on four main objectives:

building up the external dimension of the EU’s internal energy market;
strengthening partnerships for secure, safe, sustainable and competitive energy;
improving access to sustainable energy for developing countries;
better promoting EU policies beyond its borders.

Objective 1: building up the EU’s internal energy market

Member States often favour the negotiation of bilateral agreements in the field of energy supply. For this reason the European Commission wishes to set up an information exchange mechanism on intergovernmental agreements between Member States and third countries in order to improve coordination within the internal energy market. Agreements could also be adopted with third countries at EU level.

It is essential for the EU to diversify its sources of energy in order to ensure continuity of supply. The EU therefore intends to put follow-up actions in place in order to:

ensure the continuity of the building of the infrastructure defined in the strategy Energy infrastructure priorities for 2020 and beyond;
promote supply from the Southern Corridor;
ensure a continuous supply of gas and oil from the East through cooperation with Russia and Ukraine, while supporting the rehabilitation of the Ukrainian transmission network;
develop renewable energy projects with the Southern Mediterranean countries.

The Commission considers it necessary to establish differentiated types of cooperation suited to each partner. It therefore intends to initiate several projects, with the main ones seeking to:

conclude negotiations with Switzerland aimed at full integration of electricity markets;
encourage cooperation with States wishing to join the EU;
develop an EU-Southern Mediterranean partnership to promote electricity and renewable energy by 2020.

Russia is an energy security partner of vital importance for the EU. The Commission therefore wishes to develop privileged relations with this country by stepping up the implementation of the EU-Russia partnership and by preparing an EU 2050 Energy Roadmap. An agreement is to be concluded between the EU, Russia and Belarus on the technical rules for the management of electricity networks in the Baltic region.

Objective 2: strengthening partnerships for secure, safe, sustainable and competitive energy

Besides Russia, the EU is obliged on the one hand to strengthen its partnerships with its hydrocarbon suppliers, such as Norway, Algeria, Saudi Arabia and Libya, and, on the other hand, to extend new dialogues with emerging producers. It is vital to emphasise good energy governance.

In the context of its cooperation activities, the EU must not lose sight of the objective of reducing carbon emissions at global level. It therefore proposes to invite industrialised and emerging countries to work on the creation of reliable and transparent global energy markets, on the promotion of energy efficiency and low carbon energy, and on research and innovation projects in this field.

The EU considers it essential to step up work on a comprehensive legal environment for EU relations with suppliers and transit countries. To do this, it actively supports the Energy Charter and, in particular, work on its core trade, transit and investment mandate.

The Commission also wishes to promote nuclear safety and security standards globally. To this end, it intends to extend the scope of the Euratom agreements and to advocate for international legally binding nuclear safety standards, particularly at the level of the International Atomic Energy Agency (IAEA). It also intends to address the safety of offshore operations, including with hydrocarbon producers within the Organization of Petroleum Exporting Countries (OPEC).

Objective 3: improving access to sustainable energy for developing countries

In its development policy, the Commission has set itself the aim of making sources of energy (particularly electricity) accessible to the regions with the fewest resources, while respecting environmental imperatives. To achieve these aims, it wishes to mainstream energy in all EU development policy instruments, and to facilitate access of least developed countries to climate financing.

Objective 4: better promoting EU policies beyond its borders

The Commission has defined four types of energy partner:

market integration partners;
key energy suppliers and transit countries;
key energy players worldwide;
developing countries.

For each of these partners, it proposes the use of appropriate instruments selected from among the existing legal and political instruments, such as the Energy Community Treaty, the strategic energy dialogues or other instruments.

The Commission also wishes to improve coordination between Member States in order to speak with a single voice beyond its borders. To do this, it intends to set up a Strategic Group for International Energy Cooperation.

To ensure the best possible follow-up of its projects, the Commission is to establish a database of energy projects in partner countries funded by the EU, EU Member States, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD).

Energy Security and Solidarity Action Plan

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Energy Security and Solidarity Action Plan

Outline of the Community (European Union) legislation about Energy Security and Solidarity Action Plan

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > European energy policy

Energy Security and Solidarity Action Plan

Document or Iniciative

Communication from the Commission to the European parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Second Strategic Energy Review: an EU energy security and solidarity action plan [COM (2008) 781 final – Not published in the Official Journal].

Summary

The European Commission proposes an Energy Security and Solidarity Action Plan. It is set out around five main points.

Infrastructure needs and the diversification of energy supplies

With a view to achieving the ‘20-20-20’ objectives, the European Union intends to introduce significant changes to the energy infrastructure. It proposes six priority actions:

connecting the remaining isolated energy markets in Europe;
developing a southern gas corridor for the supply of gas from Caspian region and Middle Eastern sources;
making use of liquefied natural gas to ensure the liquidity and diversity of the European Union markets;
linking Europe with the Southern Mediterranean through electricity and gas interconnections;
developing gas and electricity interconnections crossing Central and South-East Europe along a north-south axis;
developing interconnections between the electric networks of the North-West of Europe so as to optimise wind energy in the North Sea.

External energy relations

The interdependence between States is tending to increase. This is why energy supply must be considered as a priority in international relations.

The Energy Community is building an integrated energy market in Southern Europe. This market is subject to the rules of the European Union. It should be extended to countries such as the Ukraine, the Republic of Moldova and Turkey, which will contribute to the application of the Community acquis with regard to energy matters and energy security in these countries.

Russia represents a major strategic partner in the energy field. It is important to consolidate this partnership so to make it more stable. The new Partnership and Cooperation Agreement currently being negotiated should include legally binding provisions in the energy field.

It also appears important to step up energy relationships with North Africa, in view of its energy potential. In this context a Trans-Sahara Gas Pipeline is anticipated.

Oil and gas stocks and crisis response mechanisms

The Commission proposes to revise European legislation concerning emergency strategic oil stocks, as well as the directive on the security of supply of natural gas.

Energy efficiency

The European Union undertakes to achieve a 20 % improvement in energy efficiency by 2020 as part of the ‘20-20-20 objectives’. It proposes the following initiatives in order to achieve these objectives:

a revision of the Energy Performance of Buildings Directive;
a revision of the Energy Labelling Directive;
an intensification of the implementation of the Ecodesign Directive;
promotion of cogeneration;
promotion of good practices;
an increase in Cohesion Policy Funds;
the creation of a ‘Green Tax’.

Making the best use of the European Union’s indigenous energy resources

The EU produces 46% of its total energy consumption. 9% of the energy consumed within the EU comes from renewable sources. The EU intends to increase the share of these energy sources to 20% by 2020.

To better promote these energies, the Commission will table a Communication on overcoming barriers to their use. The Commission is working with the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and other financial institutions to set up the EU Sustainable Energy Financing Initiative.

Furthermore, the Commission intends to table new proposals:

a Communication on Financing Low Carbon Technologies;
a Communication on Refining Capacity and EU Oil Demand;
a revised proposal for a Directive setting up a Community framework for nuclear safety.

Context

The Union currently imports 54% of its energy. It intends therefore to conduct a new policy on energy and the environment. This policy was approved by the European Council in March 2007 During September of the same year. the third package of legislative measures on the internal energy market was presented. In the long term it will allow the objectives of sustainable development, competitiveness and security of supply to be attained.

Stocks of crude oil and petroleum products

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Stocks of crude oil and petroleum products

Outline of the Community (European Union) legislation about Stocks of crude oil and petroleum products

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Security of supply external dimension and enlargement

Stocks of crude oil and petroleum products (from 2012)

Document or Iniciative

Council Directive 2009/119/EC of 14 September 2009 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products.

Summary

The new Directive lays down rules aimed at:

making oil supply in the Community more secure through reliable and transparent mechanisms based on solidarity amongst Member States;
maintaining minimum stocks of crude oil and/or petroleum products;
putting in place emergency procedures to be used in the event of a shortage.

Main provisions concerning emergency stocks

Member States must maintain a total level of oil stocks corresponding, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption *, whichever of the two quantities is greater.

The average daily net imports are to be calculated on the basis of the method explained in Annex I of the Directive, whilst the procedure for calculating average daily inland consumption is given in Annex II. Annex III lays down the procedure for calculating stock levels.

Member States have an obligation to ensure that stocks are available and physically accessible. In this regard, they are responsible for putting in place arrangements for the identification, accounting and control of these stocks. A register containing information on emergency stocks (the location of the depot, refinery or storage facility, the quantities (involved, the owner of the stocks and their nature) should be established and continually updated. A summary copy of the register shall be sent to the European Commission once a year.

In order to maintain stocks, each Member State may set up a central stockholding entity (CSE)*in the Community, in the form of a non-profit making body or service. The CSE shall maintain oil stocks (including acquisition and management of these stocks). Under the conditions and limitations laid down by the Directive, CSEs and Member States may delegate part of the management of stocks to another Member State with stocks on its territory, to the CSE set up by the said Member State or to economic operators.

Under the conditions and limitations laid down by the Directive, Member States may authorise any economic operators upon whom they have imposed stockholding obligations to delegate part of these obligations to:

the CSE of the Member State in question;
one or several CSEs that have expressed a wish to maintain such stocks;
certain other economic operators which have surplus stocks.

Main provisions relating to specific stocks and other stocks of products

Each Member State is invited to commit to maintaining specific stocks. In this case, they must maintain a minimum level defined in terms of number of days of consumption. Specific stocks shall be owned by the Member State concerned or the CSE set up by it. Member States shall publish their decision to hold specific stocks in the Official Journal of the European Union.

Specific stocks shall be composed of one or several of the following products:

ethane;
LPG;
motor gasoline;
aviation gasoline;
gasoline-type jet fuel (naphtha-type jet fuel or JP4);
kerosene-type jet fuel;
other kerosene;
gas/diesel oil (distillate fuel oil);
fuel oil (high sulphur content and low sulphur content);
white spirit and SBP;
lubricants;
bitumen;
paraffin waxes;
petroleum coke.

Member States shall ensure that in total, for the reference year, the crude oil equivalent of the quantities consumed of products included in the categories used is at least equal to 75 % of inland consumption. If there is no commitment to maintain at least 30 days of specific stocks, Member States shall ensure that at least one third of their commitment is held in the form of products, under the conditions laid down by the Directive.

Biofuels*and additives*

When calculating stockholding obligations and stock levels actually maintained, biofuels and additives shall be taken into account only where they have been blended with the petroleum products concerned. Furthermore, under certain conditions, part of the biofuels and additives stored on the territory of the Member State in question may be taken into account when calculating stock levels actually maintained.

Emergency procedures

Member States must be able to release all or part of their emergency stocks and specific stocks if required. Contingency plans shall be developed. In the event of a major supply disruption, emergency procedures must be in place. Specific rules also apply according to whether or not there is an effective international decision to release stocks.

Context

Since the system for the management of oil stocks was flawed, the Commission considered it useful to revise Community stockholding mechanisms. Oil is now one of the European Union’s main energy resources and security of supply should be enhanced in order to avoid or mitigate a crisis in this sector.

The Directive repeals Directives 2006/67/EC and 73/238/EEC, as well as Decision 68/416/EEC.

Key terms of the Act
Inland consumption: means the total quantities, calculated according to Annex II, delivered within a country for both energy and non-energy use (see full definition in Article 2); Central stockholding entity: means the body or service upon which powers may be conferred to act to acquire, maintain or sell oil stocks, including emergency stocks and specific stocks;

REFERENCES

Act	Entry into force	Deadline for transposition in the Member States	Official Journal
Directive 2009/119/EC	29.10.2009	31.12.2012	OJ L 265 of 9.10.2009

The Global Energy Efficiency and Renewable Energy Fund

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The Global Energy Efficiency and Renewable Energy Fund

Outline of the Community (European Union) legislation about The Global Energy Efficiency and Renewable Energy Fund

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Development > Sectoral development policies

The Global Energy Efficiency and Renewable Energy Fund

Document or Iniciative

Communication from the Commission to the Council and the European Parliament of 6 October 2006: “Mobilising public and private finance towards global access to climate-friendly, affordable and secure energy services: The Global Energy Efficiency and Renewable Energy Fund” [COM(2006) 583 final – Not published in the Official Journal].

Summary

The Global Energy Efficiency and Renewable Energy Fund (GEEREF) proposed by the European Commission will help mobilise private investments in energy efficiency and renewable energy projects.

Boosting such projects will substantially contribute towards sustainable development. It will provide benefits in terms of the environment, climate change and air quality and will also have social and economic benefits in terms of business, job and income creation at local level. It will also help to stabilise energy supply in the poorest regions of the world.

Overcoming investment barriers

Boosting renewable energy and energy efficiency technology calls for investment, in particular in developing countries and emerging economies. Although the prospects are promising, several factors block the participation of private-sector investors and projects and businesses have major difficulties in raising risk capital, which provides vital collateral for lenders.

One of the key reasons causing this block to investments is the significantly higher cost of initial investment in renewable energy generation than for conventional energy. While these costs are compensated by much lower running costs, private-sector investors still regard the longer repayment periods as too risky.

The various risks in developing countries are another hurdle, which means that investors look for additional reassurances.

Moreover, renewable energy technologies are often suited to small and medium sized projects with less than 5-10 million in total capital, whilst international finance institutions and the private sector traditionally do not invest in such small-scale projects.

The GEEREF, a public-private partnership.

The GEEREF will establish a public-private partnership by offering ways of risk sharing and co-financing for projects investing in renewable energy and energy efficiency.

It will mainly target the raising of “patient” risk capital, in other words, capital invested with a long-term prospect of return on the investment. GEEREF participation will range from between 25 and 50 % for medium to high-risk operations to 15 % for low-risk operations. Provision will also be made for dedicated technical assistance funds.

Rather than providing finance directly to projects, GEEREF will help create and fund regional sub-funds or scale up similar existing initiatives. Sub-funds will accommodate the specific conditions and needs of each region.

Beneficiaries

The GEEREF will support projects and businesses engaged in improving energy efficiency and renewable energy. Priority will be given to deploying environmentally sound technologies with a proven technical track record. Special focus will be given to investments of less than 10 million since they are often ignored by commercial investors and international financial institutions.

Regional sub-funds will be set up for the African, Caribbean and Pacific (ACP) region, North Africa, non-EU Eastern Europe, Latin America and Asia.

Incentives to support and contribute to the Fund

The minimum funding target for the GEEREF was set at 100 million for it to have a meaningful impact at global level and to be sufficient to establish a public-private partnership that will be self-sustaining over time.

An initial budget of 100 million should be enough to harness additional risk capital, through the sub-fund structure, of 300 million and, in the long term, up to 1 billion.

The European Commission intends to contribute 80 million to the GEEREF for the period 2007-10 with an initial contribution of 15 million proposed for 2007. It hopes that other public and private sources will contribute towards meeting the 100 million target set for the GEEREF.

International financial institutions, such as the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), private-sector investors and other financial intermediaries have already expressed their intention to contribute to this initiative.

Member States, members of the European Economic Area (EEA) and other financial institutions are also invited to participate.

Background

The constant increase in demand for global energy has serious consequences, in particular in terms of air quality, resources and access to energy. The need to ensure sustainable development requires not only combating climate change but also eradicating energy poverty and securing energy supply. It is therefore essential to harness investments in energy efficiency and renewable energy.

The GEEREF initiative is an integral part of the approach put forward in the Green Paper ” A European Strategy for Sustainable, Competitive and Secure Energy “.

Energy efficiency for the 2020 goal

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Energy efficiency for the 2020 goal

Outline of the Community (European Union) legislation about Energy efficiency for the 2020 goal

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Environment > Tackling climate change

Energy efficiency for the 2020 goal

Document or Iniciative

Communication from the Commission of 13 November 2008 – Energy efficiency: delivering the 20% target [COM(2008) 772 – Not published in the Official Journal].

Summary

Energy efficiency represents a solution to:

tackle climate change;
improve energy security;
achieve the Lisbon objectives;
reduce costs within the European Union.

Different measures are proposed to improve energy efficiency.

Measure for energy efficiency in the building sector

Energy consumption in residential and commercial buildings represents around 40% of total final energy use. It is responsible for 36% of the European Union’s total CO2 emissions.

To reduce this type of consumption, steps should be taken to simplify Directive 2002/91/EC on the energy performance of buildings, which constitutes the current legal framework, whilst leaving some autonomy to Member States to act in this area.

The European Commission proposes that the 1000 m2 threshold for existing buildings when they undergo major renovation is eliminated and that the requirements concerning energy performance be applied to a larger number of buildings.

The launch of innovative, sustainable and energy-efficient actions is also planned in 2009 in this sector.

Measure for the energy efficiency of products

The Commission has presented a Proposal for a Directive establishing a framework for the setting of ecodesign requirements for energy related products aimed at extending the scope of the Ecodesign Directive. A proposal to revise the Energy Labelling Directive, Directive 92/75/EEC, is also planned. Another proposal for a labelling scheme for tyres is also part of this policy package.

Ecodesign measures will be adopted for lighting (bulbs, electrical appliances, external power supplies, etc).

Cogeneration

The existing Directive on cogeneration will be reinforced. Further possibilities will be proposed in a future Communication.

Financing

More and more urban development and renewal projects are related to energy efficiency. In order to encourage this type of project, a well-coordinated financing framework should be implemented.

In this regard, the Commission is collaborating with the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) in order to create an EU financing initiative for sustainable energy.

As part of the renewed Lisbon strategy, the Commission will also ensure that more public funds are devoted to projects aimed at combating climate change.

In this economic context of crisis that the Member States are currently experiencing, the Commission is working in close collaboration with the latter to develop new opportunities for the economy with a view to boosting technologies related in particular to energy efficiency and green technologies in buildings and clean cars. Reduced taxation with regard to energy is being considered.

Evaluation of theEuropean Action Plan for Energy Efficiency

The current 2007-2012 Plan will be evaluated in 2009 and a revised Action Plan will be presented. It will deal with energy saving potentials and the cost-effectiveness of policy tools.

The integration of energy efficiency into the broader energy policy and the Energy and Climate Package is planned. It is expected that by 2030, or even 2050, measures taken will be more ambitious.

The revised Plan will focus on energy supply, transmission and energy consumption sectors.

International relations

Energy efficiency forms part of the priorities in relations with third countries. It is also a priority in relations with enlargement countries, Neighbourhood Policy and Regional Policy.

Similarly, an International Partnership for Energy Efficiency Cooperation was established in June 2008 in which the G8 and the Community are participating.

Context

The need to increase energy efficiency is part of the triple goal of the ’20-20-20′ initiative for 2020, which means a saving of 20% of the Union’s primary energy consumption and greenhouse gas emissions, as well as the inclusion of 20% of renewable energies in energy consumption.

Iceland – Energy

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Iceland – Energy

Outline of the Community (European Union) legislation about Iceland – Energy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Security of supply external dimension and enlargement

Iceland – Energy

acquis) and, more specifically, the priorities identified jointly by the Commission and the candidate countries in the analytical assessment (or ‘screening’) of the EU’s political and legislative acquis. Each year, the Commission reviews the progress made by candidates and evaluates the efforts required before their accession. This monitoring is the subject of annual reports presented to the Council and the European Parliament.

Document or Iniciative

Commission Report [COM(2011) 666 final – SEC(2011) 1202 final – Not published in the Official Journal].

Summary

In its 2011 Report the Commission states that Iceland has achieved a high level of alignment which is largely due to the application of the European Economic Area (EEA) Agreement.

EUROPEAN UNION ACQUIS (according to the Commission’s words)

Community energy policy objectives include the improvement of competitiveness, security of energy supplies and the protection of the environment. The energy acquis consists of rules and policies, notably regarding competition and State aid (including in the coal sector), the internal energy market (for example, opening up of the electricity and gas markets, promotion of renewable energy sources, crisis management and oil stock security obligations), energy efficiency, nuclear energy and radiation protection.

EVALUATION (according to the Commission’s words)

Overall, Iceland’s level of alignment continues to be satisfactory in the field of energy. However, progress must still be achieved concerning oil stocks, the independence of the regulatory authority and energy efficiency.