Energy Policy and EU Enlargement
EU Energy Policy
The European Union is a key actor on the international energy market as the largest importer and as the second largest consumer in the world. The European Union is, however, dependent on imports for half of its supplies, while this dependence could even reach 70% by the year 2030, under current projections and policy.
Originally the Community's energy policy concentrated on only two forms of energy: coal and nuclear power. In the 1970s there was also the need to alleviate the problems which had arisen as a result of the oil crisis. In the 1980s various limited initiatives were undertaken in conjunction with renewable sources of energy and energy efficiency.
Reserves are concentrated in a few countries. Today, roughly half of the EU’s gas consumption comes from only three countries (Russia, Norway, Algeria). On current trends, gas imports would increase to 80 % over the next 25 years. Global demand for energy is increasing. World energy demand – and CO2 emissions – is expected to rise by some 60% by 2030. Global oil consumption has increased by 20% since 1994, and global oil demand is projected to grow by 1.6% per year. Oil prices have increased within the EU, they have nearly doubled in the past two years.
These are just a few examples to see that the situation calls for various measures in the energy sector which should aim at a more stable flow of energy, ultimately underpinning the Union’s efforts to ensure peace, stability, security and prosperity.
In recent years the following areas have been of particular importance for EU energy policy:
- the WHITE PAPER on energy and the energy framework programme
- completion of the internal market for energy (electricity and gas)
- promotion of the role of renewable sources of energy as well as energy efficiency within the Community's energy strategy
- security of EU energy supply.
Further Reading
Recently Issued Consultation Papers
Energy Policy for Europe 2007
On 10 January 2007, the EU Commission released its energy policy package 'Energy for a Changing World' based on the following documents:
- Communication ‘An Energy Policy for Europe’
- ‘Renewable Energy Roadmap’
- Progress Report on renewable electricity
- Progress Report on biofuels for transport
- Report on the implementation of the regulation of the internal electricity and gas markets
- Priority Interconnection Plan for electricity and gas
- Communication on carbon capture and storage
- Communication of a Strategic Energy Technology Plan
- Nuclear power illustrative program with potential future scenarios for nuclear power
In March 2007, the EU Prime Ministers agreed upon an Energy Policy for Europea (for EU-27) including a firm commitment to increase renewable energy to 20% of primary energy supply in 2020 for the 27 EU-countries combined, increase energy efficiency with 20% by 2020 and increase biofuel in transport fuels to 10% by 2020.
Action Plan for Energy Efficiency
The Energy Efficiency Action Plan was adopted on 19 October 2006. The action plan resulted from the GREEN PAPER on Energy Efficiency or Doing More With Less. The main objectives of the Action Plan are:
- To put in place policies and measures with a view to realising the over 20% estimated savings potential in EU annual primary energy consumption by 2020
- To provide EU citizens with the globally most energy-efficient infrastructure, buildings, appliances, processes, transport means and energy system
The priority actions of the Action Plan are:
- Transport: fuel efficient cars; better use of public transport; introduction of biofuels
- Appliances: tougher standards and better labelling
- Buildings: improving the energy performance of the EU’s building stock
- Improving the efficiency of heat and electricity generation, transmission and distribution
- Facilitating investments and financial incentives for energy efficiency in cooperation with financial institutions, including Member States
- Structural Funds and the EIB/EBRD to support energy efficiency
- International dimension: propose a new international agreement on energy efficiency (improved, internationally agreed minimum energy efficiency standards for a wide range of products and equipment) with at least IEA countries, Russia, China and India
Further Reading
The GREEN PAPER on Energy Efficiency or Doing More With Less
On 22 June 2005 the European Commission adopted a GREEN PAPER on Energy efficiency that seeks to put energy savings higher on the agenda. The GREEN PAPER lists a number of options to save 20% of energy consumption by 2020. The consultation process ended in 2006. It is foreseen that the Commission adopts an Energy Efficiency Action Plan identifying concrete measures in November 2006.
Further Reading
Biomass Action Plan
In 2004, the Commission assessed the progress of renewable energy. It concluded that if the Union’s target of a 12% renewable energy share in 2010 is to be achieved, the contribution of bio-energy will need to more than double. In December 2005, the European Union released an Action Plan designed to increase the use of energy from forestry, agriculture and waste materials. The Plan outlines measures in three sectors:
- Heating
- Electricity
- Transport
The plan announces more than 20 actions and most of them will be implemented from 2006 onwards. The plan includes reviews of how fuel standards could be improved to encourage the use of biomass for transport, heating and electricity and also covers financial aspects. The commission estimates that the measures in the plan will increase the use of biomass to about 150 Mtoe by 2010 with unchanging agricultural agricultural intensity.
Demandable side effects:
- Reduction of greenhouse gas emissions by 209 million tons
- Creating of 205- 300.000 jobs
- Reduce reliance on imported energy from 48% to 42%
The member states are encouraged to establish national Biomass Action Plans.
Further Reading
The GREEN PAPER on "A European Strategy for Sustainable, Competitive and Secure Energy"
The problems in the energy landscape of the 21st century call for a common response of the EU. On March 8 2005 the Commission released the GREEN PAPER calling for a number of initiatives to reduce the combined environmental and security of supply problems of the large fossil fuel consumption in the EU countries. A public consultation process to develop more concrete ideas was concluded in September 2006.
The proposed ideas set out in the paper fall within 6 key areas:
- Complete the internal electricity and gas markets
- Security of supply in the internal market
- Tackling security and competitiveness of energy supply: towards a more sustainable, efficient and diverse energy mix
- An integrated approach to tackle climate change in line with the Lisbon strategy
- A Strategic European energy technology plan
- A common external energy policy
Further Reading
- GREEN PAPER A European Strategy for Sustainable, Competitive and Secure Energy- full document
- Press release of the European Commission
- Sustainable Energy Campaign 2005-2008
Recently Issued Directives
Related to Energy Efficiency:
- Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services and repealing Council Directive 93/76/EEC
- Directive 2002/91/EC of the European Parliament and of the Council of 16 December 2002 on the energy performance of buildings
- Directive 2005/32/EC of the European Parliament and of the Council of 6 July 2005 establishing a framework for the setting of ecodesign requirements for energy-using products and amending Council Directive 92/42/EEC and Directives 96/57/EC and 2000/55/EC of the European Parliament and of the Council
Related to Renewable Energy Sources:
- Directive 2003/30/EC of the European Parliament and of the Council of 8 May 2003 on the promotion of the use of biofuels and other renewable fuels for transport (OJEU L123 of 17 May 2003)
- Directive 2001/77/EC on the promotion of the electricity produced from renewable energy source in the internal electricity market (legislation in force)
See also: Electricity from Renewables in CEE: Support Mechanisms and Conditions for Feed-in
A Public Consultation regarding the "Promotion of Heating and Cooling from Renewable Energies" was carried out in autumn 2006.
Energy Policy and Enlargement
Historical Steps in the EU Enlargement Process
In the beginning, six countries, Belgium, Germany, France, Italy, Luxembourg and the Netherlands founded the European Coal and Steel Community in 1951, followed by the European Economic Community and the European Atomic Energy Community in 1957.
Since then 6 successful enlargements have followed:
- In 1973, Denmark, Ireland and the United Kingdom joined the European Union.
- In 1981, Greece became a Member State.
- In 1986, Spain and Portugal became members.
- In 1995, Austria, Finland and Sweden joined the EU.
- In 2004, the EU underwent a historic enlargement to 10 countries of Central and Eastern Europe and the Mediterranean: Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia and Slovenia.
- In 2007, Romania and Bulgaria became members.
In October 2005, the Union opened accession negotiations with Turkey and Croatia. In December 2005 the EU formally accepted the application for membership of the Former Yugoslav Republic of Macedonia but accession negotiations have not started yet. The European Council granted the Former Yugoslav Republic of Macedonia the status of a candidate country.
Albania, Bosnia and Herzegovina, Montenegro, and Serbia including Kosovo (under United Nations Security Council Resolution 1244 of 10 June 1999) are potential candidate countries. Their progress towards being recognised as candidates depends on their engagement in the Stabilisation and Association Process.
Negotiations on a Stabilisation and Association Agreement (SAA) with then Serbia and Montenegro were opened in 2005. In July 2006, Montenegro resumed SAA talks with the EU as an independent country and the technical part of talks with the EU was completed on 1 December 2006. On 15 March 2007, the SAA between the EU and Montenegro was initialed (it will have to be officially signed and transmitted to the parliaments of Montenegro and the EU member states for ratification). The conclusion of the SAA with Albania received the support of the European Parliament in September 2006.
Iceland applied for EU membership in July 2009 and is thus not yet included in this years annual review by the EU.
Further Reading
Status of Accession by Country
The European Commission reports regularly to the Council and the Parliament on progress made by the candidate states in preparing for EU membership.
In a special Chapter the progress concerning the Energy sector is listed.
Following you find a summary of the Commission Reports of 2006 in the Energy sector of Croatia, Turkey as well as for the Former Yugoslav Republic of Macedonia.
Croatia
The European Council of 16/17 December 2004 decided that accession negotiations would be opened on 17 March 2005 provided that there was full cooperation with the UN International Criminal Tribunal for the former Yugoslavia in The Hague (ICTY). Negotiations actually started on June 12, 2006.
In February 2005 the Stabilisation and Association Agreement (SAA) between the European Union and Croatia which provides the legal framework for relations with the European Union entered into force.
The priorities in the Energy sector:
- Fulfill obligations arising from the Energy Community Treaty,
- Strenghten administrative capacity and complete alignment with the EU acquis in the fields of security of supply, energy efficiency and renewable energy sources, the internal energy market (electricity and gas) and nuclear energy, as well as ensure a high level of nuclear safety and radiation protection.
In the Report of 2009 of the Commission, Progress in the adoption of the Community Acquis is reached in following areas of the Energy Chapter:
- Security and supply: In this area some progress was made by taking important steps towards achieving the mandatory 90 days of emergency oil stocks. Under the new Mining Act (adopted in June 2009) authorisations for prospecting, exploration and production of hydrocarbons will be granted on the basis of a non-discriminatory principle in line with the acquis. In this area Croatia partially meets its targets.
- Internal energy market: Progress in this area has been good. Implementing legislation relating to the gas market and network rules for gas transport and distribution have been enacted. The Energy Law and the Electricity Market Law have been amended. The legal framework in Croatia complies with the acquis of the second internal energy market package. However, single suppliers continue to dominate the electricity and gas markets. Croatia has to focus on the transposition of the recently adopted third internal energy market package. The regulator is fully functional. However, no progress has been made towards a clear distinction and separation of tasks between the regulator and the Ministry.
- Renewable energy sources: Alignment with the acquis in this area is advanced but substantial efforts will be required if Croatia is to achieve the necessary concrete results. Amendments have been made to implementing legislation on incentive fees for the production of electricity from renewable sources. The Act on Biofuels for Transport was adopted in May 2009 and aims to fully align Croatian energy legislation with the previous Biofuels Directive. It also takes into account some elements of the recently adopted Renewables Directive. However, Croatia will not be able to achieve its 2010 target for electricity production from incentivised renewable energy sources.
- Energy Efficiency: Alignment with the acquis is advanced. Legislation on energy end-use efficiency has been enacted. A National Energy Efficiency Action Plan has been prepared. Progress has been made in the transposition of the acquis relating to the energy performance of buildings with the adoption of implementing legislation on auditing the energy certification of buildings. Croatia still needs to ensure compliance in the area of high-efficiency cogeneration (CHP) and energy services. Administrative capacity in both energy efficiency and RES needs significant strengthening.
- Nuclear safety and radiation protection: Good progress has been made in the field of nuclear safety and radiation protection. Implementing legislation relating to the provision of funds to cover Croatia’s liabilities concerning the decommissioning of the Krško Nuclear Power Plant, including the disposal of radioactive waste and spent nuclear fuel, has been adopted. Croatia adopted in July 2009 a Nuclear Waste Management Strategy 2009-2019 covering the management of operational waste, decommissioning waste and spent fuel. The licensing of a new facility for the storage of institutional radioactive waste remains a key safety issue that needs to be addressed by the Croatian authorities.
Further reading
Turkey
On 3 October 2005 the EU opened accession negotiations with Turkey. The priorities in the Energy sector of the Accession Partnership 2008 are as follows:
- Continue alignment with, and implementation of, the acquis on the internal gas and electricity market and on cross-border exchanges in electricity, also with a view to possible membership of the Energy Community Treaty. Ensure the implementation of fair and non-discriminatory rules for the transmission of gas;
- Continue to develop the capacities of the different regulatory authorities and ensure their independence;
- Strengthen administrative capacity and continue alignment in the energy efficiency field, promote high-efficiency cogeneration, and develop renewable energy in transport, electricity and heating/cooling, including the setting of appropriate and ambitious targets and incentives;
- Accede to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management.
In the report of 2009 of the Commission, Progress in the adoption of the Community Acquis is reached in following areas of the Energy Chapter:
- Security of supply: Turkey has already introduced major measures and its oil reserves are more or less at the level of the 90 days required by the acquis. Turkey also has an important role to play in the EU's security of supply since it is a transit country for oil and gas from the Caspian Sea, the Black Sea and Central Asia. An intergovernmental agreement on the Nabucco pipeline project was signed in July 2009. However, the agency which would facilitate oil stockholding arrangements has not been established.
- Internal energy market: Significant progress can be reported on electricity. Turkey has successfully engaged in a comprehensive reform of its electricity market and in gradually opening it to competition. Limited progress can be reported on the natural gas sector. Positive developments took place, in the form of concession of gas distribution to private companies in several regions. However, most issues concerning the market structure, the unbundling of the transmission activities from supply activities and the rules for access to the network remain pending. Negotiations started in September 2009 on Turkey's accession to the Energy Community Treaty. Both for the internal market in electricity and gas, renewable energy sources and energy efficiency, but also as regards energy related environmental issues, the accession of Turkey to Energy Community will be of particular relevance.
- Renewable energies: Good progress can be reported. Implementing regulations were adopted on wind energy and on use of geothermal resources. In the reporting period, six geothermal fields suitable for electricity generation were privatised. By the end of 2008 Turkey was producing 17% of its electricity from renewable energy sources. The revised strategy paper for the electricity sector set a target of producing 25% of the country’s electricity from renewable sources by the end of 2020 and installing 20,000 MW of wind power capacity by the same year. Considering that electricity consumption is expected to double by the same date, this objective will require significant efforts.
- Energy efficiency: Some progress can be reported. Implementing regulations on the energy performance and insulation of buildings were adopted. Further implementing regulations were also adopted on efficient use of energy and energy resources and on the energy efficiency of small and medium-sized enterprises. Efforts to raise public awareness of energy efficiency as a means to enhance energy security and combat climate change need to be continued and framework legislation must still be brought into line with acquis requirements.
- Nuclear energy, nuclear safety and radiation protection: Limited progress can be reported. Turkey has not finalised the tender procedure for selection of the contractor to build its first nuclear power plant, which will have an installed capacity of 4,800 MW. Implementing regulations on special principles and design principles for the safety of nuclear power plants were adopted. Regarding research reactors, implementing regulations on special principles for safety, notification and reporting of extraordinary incidents, registration and reporting were adopted. Based on Turkish declarations, it is supposed that the acquis on control of high-activity sealed radioactive sources and orphan sources has been transposed. An implementing regulation on nuclear power plant sites was also adopted. However, the Turkish Atomic Energy Agency (TAEK) continues to perform both the regulatory functions and its operational tasks. Turkey is not participating in the Community programme on nuclear safety and radiation protection. Nor has it acceded to the Joint Convention on the Safety of Spent Fuel Management and Radioactive Waste Management.
Further reading
Former Yugoslav Republic of Macedonia
The Former Yugoslav Republic of Macedonia submitted an application for EU membership on 22 March 2004 and the Commission was tasked by the European Council to prepare an Opinion on this application. On 17 December 2005, the European Council granted the status of candidate country to the former Yugoslav Republic of Macedonia.
In the Council Decision of 2008 on the principles, priorities and conditions contained in the European Partnership with the former Yugoslav Republic of Macedonia the Energy sector is listed with following priorities:
- Continue to align the legislation on the internal electricity and gas markets, energy efficiency and renewable energy sources with the acquis in order gradually to open up the energy market to competition.
- Continue to strengthen the independence of the Energy Regulatory Commission.
- Fulfill the obligations arising from the Energy Community Treaty as regards the full implementation of the acquis on the internal gas and electricity market and on cross border exchanges in electricity.
- Enhance administrative capacity in all energy sectors. including the Energy Agency in the area of energy efficiency and renewable energy resources.
- Construct an appropriate storage facility for radioactive materials.
- Ensure the proper and independent functioning of the Radiation Safety Directorate.
In the Report of 2009 of the Commission, Progress in the adoption of the Community Acquis is reached in the following areas of the Energy Chapter:
- Security and supply: The country has partly met its objectives, and there has been some further progress in this period. The government adopted a regulation that defines the criteria and conditions for declaring an electricity crisis. In September 2009, oil stocks were equivalent to 42 days of average consumption (fluctuating considerably). The legislation is not yet fully aligned with the directives on security of electricity and natural gas supply. The strategy for long-term development of the energy sector has not been adopted yet.
- Internal energy market: Little progress has been made with regard to the internal energy market, and is not yet sufficiently prepared. The country advanced further towards implementing some of the obligations stemming from the Energy Community Treaty, notably by adopting the Gas Transmission Code in line with the Regulation on access to the natural gas transmission networks. The Government adopted an Energy Poverty Action Plan that envisages the introduction of a social protection package for the most vulnerable consumers from mid-2010 onwards. The Energy Regulatory Commission(ERC) adopted rulebooks on electricity prices, the issuing of licences, district heating, natural gas and geothermal energy. Certain electricity and gas tariffs do not reflect costs and vary significantly between different categories of customer, while collection rates are insufficient to secure the viability of the system. The dispute-settlement procedure, opened in September 2008 by the Secretariat of the Energy Community, on the compliance of the recent amendments to the Law on Energy with the obligations stemming from the Energy Community Treaty is still in progress. The Secretariat issued a reasoned opinion for noncompliance of the country with the Energy Community Treaty pointing in particular at the position and structure of the state-owned generating company that discriminates against nondomestic electricity and forecloses the regulated market to the detriment of consumers, and the fact that regulated distribution tariffs breach the principle of cost-reflectivity. Natural gas supply has not been unbundled from natural gas transmission, as required by the Natural Gas Directive. ERC adopted an amended rulebook on gas prices, extending the 2008 regulated tariffs by one year. The independence of ERC has not always been respected. The Energy Department of the Ministry of Economy remains understaffed.
- Renewable energy sources: In this area, the country is moderately advanced, and has made some progress. The rulebook for obtaining the status of preferential producer was adopted in February 2009. The first photovoltaic solar power plant was put into operation. The Government signed a concession agreement for the construction of 16 small hydro power plants. However, none of the tenders for the construction of large hydroelectricity power plants succeeded. Further efforts to reinforce the administrative capacity for developing renewable energy sources are important
- Energy efficiency: In this area, the country is at an early stage, and limited progress has been made. A rulebook on the energy performance of buildings, aimed at partial alignment with the acquis, was adopted in November 2008. It will serve as the framework for developing energy-efficiency standards for buildings. The administrative capacity of the Energy Agency is still insufficient to effectively promote EE and RES; its role and interaction with other Government institutions needs to be clarified. An energy-efficiency action plan in line with the commitments of the Energy Efficiency Task Force of the Energy Community remains to be adopted. The Energy Agency still lacks adequate premises.
- Nuclear energy, nuclear safety and radiation protection: In this area, preparations are moderately advanced and some further progress has been made. The Radiation Safety Directorate (RSD) prepared several implementing regulations. The RSD has started a process for licensing use of radioactive materials in medical practices. Cooperation between the customs administration and the police to prevent trafficking in radiation sources has been intensified. The country has acceded to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management. The financial independence of the RSD is not secured. The existence of hundreds of radioactive lightning rods spread all over the country still constitutes a radiological thread that needs to be addressed.
Further Reading
The Energy Acquis
The "Acquis Communautaire" (the body of common rights and obligations which binds all the Member States together) must be adopted by the applicant countries.
The energy acquis consists of:
- rules and policies
- notably regarding competition
- state aids (including in the coal sector)
- the internal energy market (opening up of the electricity and gas markets, promotion of renewable energy sources)
- energy efficiency
- nuclear energy and nuclear safety
- radiation protection
Implementing the acquis requires not only adequate legislation but also well functioning institutions (for example a regulatory body as required in the electricity and gas directives, a nuclear safety authority etc). Key elements of the acquis in the energy sector cover both primary and secondary legislation in the topics of EU energy policy listed above.
In view of the energy acquis, candidate countries need notably to:
- decide on an overall energy policy with clear timetables for restructuring the sector;
- prepare for the internal energy market (the Gas and Electricity directives; the Directive on electricity produced from renewable energy sources);
- improve energy networks in order to create a real European market;
- prepare for crisis situations, particularly through the constitution of 90 days of oil stocks;
- address the social, regional and environmental consequences of the restructuring of mines;
- waste less energy and increase the use of renewable energies such as wind, hydro, solar and biomass in their energy balance;
- improve the safety of nuclear power plants in order to ensure that electricity is produced according to a high level of nuclear safety;
- ensure that nuclear waste is handled in a responsible manner; and prepare for the implementation of Euratom Safeguards on nuclear materials.
The Energy Community - Extending the EU Internal Energy Market
The Energy Community is a process that aims to extend the EU internal energy market to the South East Europe region. For this purpose the TREATY ESTABLISHING THE ENERGY COMMUNITY was signed on the 25th of October in Athens.
Energy Community Treaty is the first multilateral treaty concerning south-east Europe and involves the European Union and eight partners in this part of Europe: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Former Yugoslav Republic of Macedonia, Romania, Serbia and Montenegro, and the United Nations Interim Administration Mission in Kosovo (UNMIK). Negotiations are under way with Turkey with a view to its acceding to the Treaty at a later date. This treaty was the first legally-binding treaty between these countries after the wars of the 1990s and was the result of the so-called Athens process that began in 2001. The signatory states committed themselves to establish the legal framework for an integrated and liberalized energy market in their countries and to adopt the relevant EU acquis communautaire on energy, environment, renewables and competition.
For the purpose of assisting the European Commission in its tasks to assure the Energy Community process of creating an energy community co-ordination on a daily basis and to serve as a monitoring institution, the Energy Community Secretariat (ECS) was established. It is based in Vienna.
The objectives of the Treaty are:
- to create a single stable regulatory and market framework throughout Europe; this should enhance the attractiveness of SEE for investments in the energy sector;
- to enhance security of supply;
- to improve the environment situation; and
- to develop competition on a broader geographic scale and to exploit economies of scale.
More practically the activities of the Energy Community will include:
- Implementation of the EU "Acquis Communautaire"
- Creation of a single mechanism for the cross-border transmission and/or operation of energy markets; and
- Creation of an energy market without internal frontiers.
