A large number of EU activities and proposals in the energy sector were announced during 2010, and the February meeting of the European Council suggests that this trend is set to continue.

Participants and investors in the European energy markets will need to keep track of the growing list of policy initiatives and legislative measures that have been proposed as European energy law is set to continue to change rapidly.

As the EU continues to prioritise safe, secure, sustainable and affordable energy within the EU and work on a long term strategy for the EU's energy policy, the European Council has outlined future action in five areas:

  • the internal energy market;
  • infrastructure;
  • energy efficiency;
  • renewables; and
  • external relations.

The internal energy market

The Council has reinforced the message that for a functioning internal market, interconnections are vital. In particular, the Council has called for:

  • Member States to fully implement legislation concerning the internal energy market by the agreed deadlines;
  • the European Parliament and the Council to work towards an early adoption of the Commission's proposal for a Regulation on integrity and transparency in the energy markets;
  • establishment of the internal energy market to be completed by 2014. The Council foresees a particular role for the Agency for the Co-operation of European Energy Regulators (ACER), national regulators and transmission system operators progressing their work on market coupling, guidelines and network codes across Europe; and
  • Member States to co-operate with standardisation bodies and the industry to adopt technical standards for electric vehicle charging systems by mid-2011 and for smart meters by the end of 2012.

This list of actions is likely to foreshadow an implementation and enforcement drive by the European Commission over the next year, particularly as the Third Energy Package is only slowly finding its way onto national statute books and that some Member States have yet to fully implement the Second Gas and Electricity Directives.

Infrastructure

The Council has noted that major investments are required to modernise and expand European energy infrastructure, and interconnect cross-border networks, in accordance with priorities identified in the Commission's communication on energy infrastructure.

Measures to:

  • enhance solidarity between Member States;
  • develop alternative supply/transit routes and sources of energy, including renewable forms of energy; and
  • ensure that Member States are not isolated from gas or electricity networks after 2015 and do not have their security of supply compromised through lack of access to the networks,

are given particular prominence by the Council.

Commission proposals for procedural streamlining and improving planning processes as well as criteria for infrastructure investments which may, in part, be eligible for public funding where private funding cannot be fully obtained, are expected by June 2011.

Energy efficiency

In order to meet the target of cutting energy consumption by 20% by 2020, the Council has called for Member States to introduce energy efficiency standards when procuring public buildings and services by 1 January 2012 to help to realise the energy saving potential of buildings, transport, products and processes. The Commission will propose a new Energy Efficiency Plan, and the Council will review the implementation of the current EU energy efficiency targets by 2013 and consider if further measures are necessary.

Renewables

Member States can expect the Commission to follow up closely with regard to their implementation of the Renewable Energy Directive, particularly in relation to national support schemes and co-operation mechanisms. As with the Third Energy Package, Member States' progress in implementing the 2009 Climate Change Package has been slow to date.

External relations

Over the next eighteen months, a flurry of activity is expected in relation to the EU's external energy relations. The Council has asked that:

  • the Commission submit a communication on security of supply and international co-operation by June 2011;
  • from 1 January 2012, all Member States are invited to inform the Commission of all new and existing bilateral energy agreements with third party countries, and the Commission will make this information available to all Member States in an appropriate form;
  • initiatives be adopted, in accordance with any relevant international Treaties, which establish mutually beneficial partnerships and cover a range of issues such as energy security, safe and sustainable low carbon technologies, energy efficiency, environmental investment and nuclear safety;
  • the EU extend the Energy Community Treaty and regional co-operation initiatives to promote the adoption of the internal energy market rules by neighbouring countries, and develop measures to create a level playing field for EU power producers and producers outside the EU, especially in light of the Energy Strategy 2020;
  • the Commission continue to facilitate the development of strategic corridors for transport of large volumes of gas;
  • the EU co-operate with third party countries to address the volatility of energy prices, and continue this work within the context of the G20; and
  • a reliable, transparent and rule-based partnership be established with Russia.

Long-term strategy

The Council notes that the development of a low carbon 2050 strategy with the aim of reducing greenhouse gas emissions by 80-89% compared with 1990 levels by 2050 will require a "revolution" in energy systems that should commence immediately. The Council proposes to set intermediary stages towards reaching the 2050 goal, and to review developments regularly.

"EER - The European Handbook"

To help industry stakeholders keep up to speed with European developments, the 2011 edition of “EER - The European Energy Handbook” contains an in-depth survey of current issues in the energy sector in 37 European jurisdictions.

The handbook includes a summary of the industry structure, legal and regulatory framework in each jurisdiction and analyses issues such as third party access, use of the system at both the transmission and distribution levels, market entry, nuclear power and cross border interconnection. Special attention is given to the status of transposition and implementation of the Third Energy Package and the Climate Change Package into national law.

The handbook is available here.