EUROPEAN COMMISSION ANNOUNCES ENERGY UNION PROPOSALS

The European Commission has announced its ‘Framework Strategy for a Resilient Energy Union.  It comes in the form of Communication to the Member States and other EU Institutions.  The  Commission’s vision is of “an integrated continent-wide energy system where energy flows freely across borders, based on competition and the best use of resources  and with effective regulation of energy markets at EU level.”  The Framework Strategy intends  to create an Energy Union as part of a “sustainable, low carbon and climate friendly economy that is designed to last.”

The Commission outlines five inter-related dimensions to the Energy Union:-

• Energy security, solidarity and trust.
• A fully integrated European energy market.
• Energy efficiency contributing to moderation of demand.
• Decarbonising the economy.
• Research, Innovation and Competition.

A Single Energy Market would be a sensible move.  The integration of gas and electricity markets would cut costs, reduce emissions and mean less dependency on external suppliers like Russia.  The Commission states that the EU imports 53% of its energy needs at a cost of €400 billion per year and that six Member States are dependent on a single external supplier for their total gas imports.  Wholesale electricity prices are 30% higher than in the USA and gas prices twice as high.   The Commission also stresses the savings from energy efficiency in buildings and transport.

In some respects, the Framework Strategy builds on existing work particularly in decarbonising the economy and energy efficiency.   However, Commission Vice President , Maros Sefcovic, said that the “the Energy Union will deliver the free flow of energy across Europe, as if it was the fifth freedom.”   With 28 national energy markets across Europe, this is highly ambitious.   The current EU competences in energy will make this goal extremely difficult and progress has been slow in the construction of inter-connectors and the development of projects like the North Sea Marine Grid Network.    Price, tax and regulatory energy structures differ widely across the EU.

The response of some Member States to the Framework Strategy could be highly critical.  Many EU States see the control of energy policy an important part of national policy.   This is reflected in different models of ownership with most countries favouring state owned energy companies.

The following dates are important for discussions by the Council of Ministers:-

5 March 2015
Energy Council, Brussels

6 March 2015
Environment Council, Brussels

19 -20 March 2015
European Council, Brief Discussion

14 – 16 April 2015
Informal Gathering, Latvian Presidency

11 – 12 June 2015
Energy Council, Brussels : adoption of formal position