Www.notre-europe.eu Sami Andoura Leigh Hancher Marc van der Woude Towards a European Energy Community: A Policy Proposal European Parliament – Brussels

www.notre-europe.eu

Sami Andoura Leigh HancherMarc van der Woude

Towards a European Energy Towards a European Energy CommunityCommunity: A Policy : A Policy

ProposalProposal

European Parliament – Brussels

07th June 2010

19/04/2319/04/23 2219/04/2319/04/23

www.notre-europe.euwww.notre-europe.eu

Presentation of the ProjectPresentation of the Project• Notre Europe published its report Notre Europe published its report “Towards a European “Towards a European

Energy Community: A Policy Proposal”Energy Community: A Policy Proposal”, Prefaced by Jacques , Prefaced by Jacques DelorsDelors

• Initiated by Jacques Delors, this report is the harvest of the work Initiated by Jacques Delors, this report is the harvest of the work of the Task Force of high-level European experts established by of the Task Force of high-level European experts established by Notre Europe to study the feasibility of a European Energy Notre Europe to study the feasibility of a European Energy CommunityCommunity

• The report was elaborated by Marc van der Woude and Leigh The report was elaborated by Marc van der Woude and Leigh Hancher as co-chairs and Sami Andoura as rapporteurHancher as co-chairs and Sami Andoura as rapporteur

• MethodologyMethodology: What is an energy policy?; Do we have one in : What is an energy policy?; Do we have one in Europe today?; If not, how should it look like and how can we Europe today?; If not, how should it look like and how can we achieve it?achieve it?

19/04/2319/04/23 3319/04/2319/04/23


Introduction (1)Introduction (1)

• Why a new proposal?Why a new proposal?

Society is changing in the wake of a new industrial revolutionSociety is changing in the wake of a new industrial revolution

Drivers behind this change are a series of crises Drivers behind this change are a series of crises (Environmental/Economic/Political)(Environmental/Economic/Political)

• What is at stake for Europe?What is at stake for Europe?

Question about our collective ambitionsQuestion about our collective ambitions

Will Europe be in the driving seat or at the back bench?Will Europe be in the driving seat or at the back bench?

19/04/2319/04/23 4419/04/2319/04/23


Introduction (2)Introduction (2)

• What is an energy policy ?What is an energy policy ?

Energy is at the basis of all economic activityEnergy is at the basis of all economic activity

Changing concept in time (coal, oil, gas, electricity)Changing concept in time (coal, oil, gas, electricity)

Three objectives:Three objectives:

o AccessibilityAccessibility

o SustainabilitySustainability

o ReliabilityReliability

19/04/2319/04/23 5519/04/2319/04/23


Do we have a European energy Do we have a European energy policy ? (1)policy ? (1)

• Yes, energy-specific Treaties, but:Yes, energy-specific Treaties, but:

ECSC: expired in 2002ECSC: expired in 2002

Euratom: only nuclearEuratom: only nuclear

• General Treaties remain general:General Treaties remain general:

EC/EUEC/EU Lisbon TreatyLisbon Treaty

19/04/2319/04/23 6619/04/2319/04/23



• Increased activity since mid-nineties, essentially Increased activity since mid-nineties, essentially

dealing with:dealing with:

Internal market (liberlisation packages)Internal market (liberlisation packages)

Environment (ETS, product requirements)Environment (ETS, product requirements)

19/04/2319/04/23 7719/04/2319/04/23



• Picture ?Picture ?

19/04/2319/04/23 8819/04/2319/04/23



• Regression rather than progression?Regression rather than progression?

Historical reasons/Strong internal market focusHistorical reasons/Strong internal market focus Heterogeneity in terms of availability of energy resources Heterogeneity in terms of availability of energy resources

for the member statesfor the member states National sovereignty over the energy mixNational sovereignty over the energy mix International cooperation outside EU structures: security of International cooperation outside EU structures: security of

supply and bilateral dealssupply and bilateral deals Lack of EU foreign policyLack of EU foreign policy

19/04/2319/04/23 9919/04/2319/04/23



• Have the 3 objectives for EU energy policy Have the 3 objectives for EU energy policy been achieved?been achieved?

Affordable accessAffordable access: Primarily liberalisation issue and viewed as : Primarily liberalisation issue and viewed as an end in itselfan end in itself

Sustainable developmentSustainable development: Not pursued as an energy-specific : Not pursued as an energy-specific issue but as an environmental matter only (climate change)issue but as an environmental matter only (climate change)

Security of supplySecurity of supply: Limited stocking requirements, studies and : Limited stocking requirements, studies and statementsstatements

19/04/2319/04/23 101019/04/2319/04/23


Do we have a European energy policy ? Do we have a European energy policy ? (6)(6)

• A fragmented energy policy:A fragmented energy policy:

In terms of consistencyIn terms of consistency: Energy-specific measures as side issues : Energy-specific measures as side issues of other policy measures (internal market rules, environmental of other policy measures (internal market rules, environmental policy)policy)

In terms of capabilityIn terms of capability: Slow and complex decision-making process; : Slow and complex decision-making process; lack of competence to set the direction of R&D and investments; lack of competence to set the direction of R&D and investments; no clear power of initiative on the external dimensionno clear power of initiative on the external dimension

In terms of credibilityIn terms of credibility: Ambivalent implementation of the policy; : Ambivalent implementation of the policy; limited enforcement powers of the Commission vis-à-vis member limited enforcement powers of the Commission vis-à-vis member states; lack of consensus among major stakeholdersstates; lack of consensus among major stakeholders

19/04/2319/04/23 111119/04/2319/04/23



• Overall conclusion:Overall conclusion:

High degree of fragmentation (no comprehensive and High degree of fragmentation (no comprehensive and consistent approach of energy issues)consistent approach of energy issues)

No common energy policy, but ineffective collection of No common energy policy, but ineffective collection of national policiesnational policies

No guarantee that Europe and its member states will be No guarantee that Europe and its member states will be leading players in the societal change resulting from new leading players in the societal change resulting from new industrial revolutionindustrial revolution

19/04/2319/04/23 121219/04/2319/04/23


Moving towards a European Energy Moving towards a European Energy Community (1)Community (1)

• Two choices:Two choices:

Do nothing and undergo crises?Do nothing and undergo crises?

Do something, but if so, how?Do something, but if so, how?

19/04/2319/04/23 131319/04/2319/04/23



• The Need for Energy-Specific Action: The Need for Energy-Specific Action:

Basic productBasic product: energy is at the basis of all societal activity: energy is at the basis of all societal activity

Inelastic demandInelastic demand: on short term customers expect to be : on short term customers expect to be servedserved

No growthNo growth: growth should be contained or steered: growth should be contained or steered

GridsGrids: new energies are network related: new energies are network related

19/04/2319/04/23 141419/04/2319/04/23



• The Need for Energy-Specific action at The Need for Energy-Specific action at European level:European level:

Objective requirementObjective requirement: no member state has the resources : no member state has the resources to face the challenges on its ownto face the challenges on its own

Legal requirementLegal requirement: to maintain the current level of : to maintain the current level of integration of internal marketintegration of internal market

Normative requirementNormative requirement: fostering cohesion and solidarity : fostering cohesion and solidarity between members statesbetween members states

Political requirementPolitical requirement: speaking with one voice on the : speaking with one voice on the international sceneinternational scene

19/04/2319/04/23 151519/04/2319/04/23



• The Need for Efficient Action:The Need for Efficient Action:

Decision-making power, internally and externally, leading to Decision-making power, internally and externally, leading to enforceable resultsenforceable results

Budget: power to fund own projectsBudget: power to fund own projects

Coordination and steering R&D, stocks, reserves, prices and Coordination and steering R&D, stocks, reserves, prices and portfoliosportfolios

Acceptability: democratic and supported by stakeholdersAcceptability: democratic and supported by stakeholders

19/04/2319/04/23 161619/04/2319/04/23



• What does this imply?What does this imply?

Substantive measuresSubstantive measures

Institutions that can deliverInstitutions that can deliver

19/04/2319/04/23 171719/04/2319/04/23



• Substance:Substance:

Well-functioning energy internal Well-functioning energy internal marketsmarkets (contestable and (contestable and liquid markets as primary source of innovation)liquid markets as primary source of innovation)

Integrated and smart Integrated and smart networksnetworks

Price stabilisationPrice stabilisation mechanisms mechanisms

Diversifying Europe’s Diversifying Europe’s energy portfolioenergy portfolio by R&D, allocation by R&D, allocation and poolingand pooling

Crisis managementCrisis management and strategic reserves and strategic reserves

19/04/2319/04/23 181819/04/2319/04/23



• Powers and institutions:Powers and institutions:

Stakeholder involvement in Stakeholder involvement in consultative committeeconsultative committee

European European regulator and agencyregulator and agency

FiscalFiscal powers powers

Energy FundEnergy Fund

External powersExternal powers to represent Europe on international to represent Europe on international scenescene

19/04/2319/04/23 191919/04/2319/04/23



• How to translate these requirements in adequate How to translate these requirements in adequate institutional framework?institutional framework?

All or Some member states? Not a requirement for all but All or Some member states? Not a requirement for all but open to allopen to all

In or Outside the Union Structures? Interaction but not In or Outside the Union Structures? Interaction but not necessarily locked innecessarily locked in

The Scope of the Policy? Not static (fuels/techno, etc.) The Scope of the Policy? Not static (fuels/techno, etc.) In/OutsIn/Outs

19/04/2319/04/23 202019/04/2319/04/23



• Four main options:Four main options:

Lisbon TreatyLisbon Treaty

Enhanced CooperationEnhanced Cooperation

New Energy TreatyNew Energy Treaty

Schengen ModelSchengen Model

19/04/2319/04/23 212119/04/2319/04/23



• Option 1 – The new energy policy under the Lisbon Option 1 – The new energy policy under the Lisbon TreatyTreaty

Codification of the current practiceCodification of the current practice

Carefully crafted compromise between national sovereignity over Carefully crafted compromise between national sovereignity over resources and taxation, and a shared Union competence for the resources and taxation, and a shared Union competence for the restrest

No definition of solidarityNo definition of solidarity

Foreign Policy (HR+EEAS): remain intergovernmental and no Foreign Policy (HR+EEAS): remain intergovernmental and no energy-specificenergy-specific

Assessment Assessment : No prospect of radical change, fragmentation will : No prospect of radical change, fragmentation will remain.remain.

19/04/2319/04/23 222219/04/2319/04/23



• Option 2 – Differentiated integration in the EU: Option 2 – Differentiated integration in the EU: Enhanced cooperationEnhanced cooperation

Art. 20 TFEU – Political reality: willingness to cooperate differs Art. 20 TFEU – Political reality: willingness to cooperate differs from one member state to otherfrom one member state to other

Pre-conditions: to achieve Treaty objectives / 9 countries / open Pre-conditions: to achieve Treaty objectives / 9 countries / open to all / Council decisionto all / Council decision

Condition of last resortCondition of last resort

Other option: micro-flexibility (derogations, options, etc.)Other option: micro-flexibility (derogations, options, etc.)

AssessmentAssessment: Art. 20 step in good direction but conditions hard to : Art. 20 step in good direction but conditions hard to meet.meet.

19/04/2319/04/23 232319/04/2319/04/23



• Option 3 – A New European Energy TreatyOption 3 – A New European Energy Treaty

Fully-fledged: all measures / powerful and supranational Fully-fledged: all measures / powerful and supranational approach / majority votingapproach / majority voting

Opt-in: open to all – like Monetary UnionOpt-in: open to all – like Monetary Union

Under the EU structure – take the place of ECSCUnder the EU structure – take the place of ECSC

AssessmentAssessment: best option available, all in one go.: best option available, all in one go.

19/04/2319/04/23 242419/04/2319/04/23



• Option 4 – Functional and/or regional arrangements: Option 4 – Functional and/or regional arrangements: the Schengen modelthe Schengen model

Cooperation in certain areas on a functional and/or regional Cooperation in certain areas on a functional and/or regional basis: trading platform, network treaty, pooling R&D projects basis: trading platform, network treaty, pooling R&D projects and resourcesand resources

Various degrees of intensity: pragmatic and voluntary / new Various degrees of intensity: pragmatic and voluntary / new partnerships and international arrangementspartnerships and international arrangements

Schengen Method: concluded outside then reintegrated insie EU Schengen Method: concluded outside then reintegrated insie EU structuresstructures

AssessmentAssessment: middle-of-the-road option, effective on some specific : middle-of-the-road option, effective on some specific policy items.policy items.

19/04/2319/04/23 252519/04/2319/04/23



• The Optimum Solution: Conclusion of a New Energy The Optimum Solution: Conclusion of a New Energy TreatyTreaty

To take efficient, European and energy-specific action on all items To take efficient, European and energy-specific action on all items on the menuon the menu

Inside EU / open to all / supranational / represented on the Inside EU / open to all / supranational / represented on the international stage / democraticinternational stage / democratic

Under EU structure ensures compatibility with Under EU structure ensures compatibility with acquisacquis

HoweverHowever: May take some time before a European Energy Community : May take some time before a European Energy Community is conceived, negotiated, concluded and ratifies; Necessity to develop is conceived, negotiated, concluded and ratifies; Necessity to develop interim measures.interim measures.

19/04/2319/04/23 262619/04/2319/04/23



• Pragmatic Start: Interim Solutions and Ingredients Pragmatic Start: Interim Solutions and Ingredients for the New Communityfor the New Community

Network CommunityNetwork Community

Energy FundEnergy Fund

Gas Purchasing Group(s)Gas Purchasing Group(s)

19/04/2319/04/23 272719/04/2319/04/23



• Strengthened Cooperation for Energy NetworksStrengthened Cooperation for Energy Networks

Creation of effective European Regional Energy Networks (ERENs): Creation of effective European Regional Energy Networks (ERENs): building block for a comprehensive single European energy marketbuilding block for a comprehensive single European energy market

Institutional model: South East European Energy Community TreatyInstitutional model: South East European Energy Community Treaty

Coordination between national regulators and with European institutionsCoordination between national regulators and with European institutions

Higher level of integration: creation of independent regional executive Higher level of integration: creation of independent regional executive agenciesagencies

19/04/2319/04/23 282819/04/2319/04/23



• A Common Energy Fund for Developing New TechnologiesA Common Energy Fund for Developing New Technologies

European-wide R&D programmes supported by adequate funding European-wide R&D programmes supported by adequate funding facilitiesfacilities

Various sources: energy levy on polluting forms of energy production, Various sources: energy levy on polluting forms of energy production, etc.etc.

Useful instrument: European Grouping of Territorial Cooperation (EGTC) Useful instrument: European Grouping of Territorial Cooperation (EGTC) to promote cross-border, transnational and interregional cooperationto promote cross-border, transnational and interregional cooperation

19/04/2319/04/23 292919/04/2319/04/23



• The Establishment of a European « Gas Purchasing The Establishment of a European « Gas Purchasing Group »Group »

By private operators and/or member statesBy private operators and/or member states

Based on existing EU legislation on competitionBased on existing EU legislation on competition

Offers a real negotiating power vis-à-vis external suppliersOffers a real negotiating power vis-à-vis external suppliers

Higher level of integration: creation of a Gas Supply AgencyHigher level of integration: creation of a Gas Supply Agency

19/04/2319/04/23 303019/04/2319/04/23


Conclusion – A Common Answer to Conclusion – A Common Answer to Common ChallengesCommon Challenges

• A two-pronged approach policy proposal:A two-pronged approach policy proposal:

Interim solutionsInterim solutions: : ad hocad hoc measures on specific issues adopted by the measures on specific issues adopted by the EU and some member statesEU and some member states

Long-term objectiveLong-term objective: creation of a : creation of a European Energy CommunityEuropean Energy Community under the present nion structure following the example of the under the present nion structure following the example of the Monetary Union (a fully-feldged and opt in treaty) Monetary Union (a fully-feldged and opt in treaty)


Thank you for yourThank you for your attention!attention!

Documents

Www.notre-europe.eu Sami Andoura Leigh Hancher Marc van der Woude Towards a European Energy Community: A Policy Proposal European Parliament – Brussels