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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
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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?
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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?
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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
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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
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Do we have a European energy Do we have a European energy policy ? (2)policy ? (2)
• 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)
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Do we have a European energy Do we have a European energy policy ? (3)policy ? (3)
• Picture ?Picture ?
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Do we have a European energy Do we have a European energy policy ? (4)policy ? (4)
• 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
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Do we have a European energy Do we have a European energy policy ? (5)policy ? (5)
• 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
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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
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Do we have a European energy Do we have a European energy policy ? (7)policy ? (7)
• 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
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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?
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Moving towards a European Energy Moving towards a European Energy Community (2)Community (2)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (3)Community (3)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (4)Community (4)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (5)Community (5)
• What does this imply?What does this imply?
Substantive measuresSubstantive measures
Institutions that can deliverInstitutions that can deliver
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Moving towards a European Energy Moving towards a European Energy Community (6)Community (6)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (7)Community (7)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (8)Community (8)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (9)Community (9)
• Four main options:Four main options:
Lisbon TreatyLisbon Treaty
Enhanced CooperationEnhanced Cooperation
New Energy TreatyNew Energy Treaty
Schengen ModelSchengen Model
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Moving towards a European Energy Moving towards a European Energy Community (10)Community (10)
• 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.
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Moving towards a European Energy Moving towards a European Energy Community (11)Community (11)
• 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.
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Moving towards a European Energy Moving towards a European Energy Community (12)Community (12)
• 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.
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Moving towards a European Energy Moving towards a European Energy Community (13)Community (13)
• 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.
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Moving towards a European Energy Moving towards a European Energy Community (14)Community (14)
• 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.
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Moving towards a European Energy Moving towards a European Energy Community (15)Community (15)
• 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)
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Moving towards a European Energy Moving towards a European Energy Community (16)Community (16)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (17)Community (17)
• 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
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Moving towards a European Energy Moving towards a European Energy Community (18)Community (18)
• 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
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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)
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Thank you for yourThank you for your attention!attention!