Energy Community acquis

The internal market in electricity, which has been progressively implemented throughout the Community since 1999, aims to deliver real choice for all consumers of the European Union, be they citizens or businesses, new business opportunities and more cross-border trade, so as to achieve efficiency gains, competitive prices, and higher standards of service, and to contribute to security of supply and sustainability.

As part of the Third Energy Package, Directive 2009/72 

• seeks to introduce common rules for the generation, transmission, distribution and supply of electricity.
• lays down universal service obligations and consumer rights, and clarifies competition requirements. 
   

Directive 2009/72 introduces the obligation to unbundle where energy supply and generation are separated from the operation of transmission networks. If a single company operates a transmission network and generates or sells energy at the same time, it may have an incentive to obstruct competitors' access to infrastructure. This prevents fair competition in the market and can lead to higher prices for consumers. Unbundling must take place in one of three ways, depending on the preferences of individual EU countries.

This Regulation aims to set fair rules for cross-border exchanges in electricity, thus enhancing competition within the internal market in electricity, taking into account the particular characteristics of national and regional markets. This will involve the establishment of a compensation mechanism for cross-border flows of electricity and the setting of harmonised principles on cross-border transmission charges.
 

Transmission system operators shall receive compensation for costs incurred as a result of hosting cross-border flows of electricity on their networks on the basis of the guidelines set out in Regulation (EU) 838/2010 Annex, Part A: Guidelines on the Inter-Transmission System Operator Compensation Mechanism.

Compared to the Second or Third Packages’ transparency provisions, Regulation (EU) 543/2013 provides a much more comprehensive set of definitions of the data to be published, prescribes roles and responsibilities and establishes a central platform for the publication of that data. It lays down the minimum common set of data relating to generation, transportation and consumption of electricity to be made available to market participants. 

This Directive aims at introducing common rules for the transmission, distribution, supply and storage of natural gas. It concerns mainly natural gas, liquefied natural gas (LNG), biogas and gas from biomass. It seeks to bring about effective unbundling of energy production and supply interests from the network. This should eliminate any conflict of interests between these activities. Unbundling should prevent network operators from favouring their own energy production and supply companies.

This Regulation aims at laying down rules for natural gas transmission networks, gas storage and liquefied natural gas (LNG) facilities. It concerns access to infrastructures, particularly by determining the establishment of tariffs (solely for access to networks), services to be offered, allocation of capacity, transparency and balancing of the network.

This Directive establishes measures aimed at safeguarding security of electricity supply so as to ensure the proper functioning of the EU internal market for electricity, an adequate level of interconnection between Contracting Parties, an adequate level of generation capacity and balance between supply and demand.

Contracting Partie must define general, transparent and non-discriminatory policies on security of electricity supply compatible with the requirements of a competitive single market for electricity. They must define and publish the role and responsibilities of competent authorities and different players in the market.

This Directive establishes a common framework within which Contracting Parties can define general security-of-supply policies that are transparent, solidarity-based, non-discriminatory and consistent with the requirements of a single market in gas.

Pursuant to the PA 2008/02/MC-EnC, the Energy Community Security of Supply Coordination Group was established to facilitate the implementation of the acquis. Since Spring 2014, the Group has been discussing the options how to incorporate the main elements of the  Regulation (EU) 994/2010 on measures to safeguard security of gas supply into the Energy Community framework. A decision on a mandatory implementation is not yet foreseen. Instead in March 2016, the Commission presented its proposal on a new security of gas supply regulation that would incorporate the Contracting Parties and repeal Regulation (EU) 994/2010.

With the Ministerial Council Decision of December 2008, “network energy" as defined in Article 2 of the Treaty is understood to include the oil sector. This comprises supply, trade, processing and transmission of crude oil and petroleum products falling within the scope of Directive 2006/67/EC and the related pipelines, storage, refineries and import/export facilities. 

The main objective of Directive 2009/119 is to maintain a high level of security of oil supply in the participating countries through reliable and transparent mechanisms based on solidarity. In more concrete terms, the Directive requires stockholding for 90 days of net imports or 61 days of inland consumption in the preceding year, whichever is greater. It also requires enabling the competent authorities to release quickly, effectively and transparently some or all of their stocks in the event of a major supply disruption.

In the EU context, the huge need for investment in energy infrastructure was a key reason for proposing the Regulation on the Guidelines for trans-European energy infrastructure (TEN-E Guidelines) in 2011. The TEN-E Guidelines provide a strategic framework for the long-term energy infrastructure vision of the EU and introduce the concept of projects of common interest. They identify nine strategic infrastructure priority corridors in the domains of electricity, gas and oil, and three EU-wide infrastructure priority areas for electricity highways, smart grids and carbon dioxide transportation networks.

The Energy Community Ministerial Council adopted the Regulation (EU) 347/2013 with certain adaptations in October 2015. The purpose of the Regulation is to streamline the permitting procedure and facilitate investments in the energy infrastructure in order to achieve the Energy Community’s energy and environment policy objectives. 

A year later, the ministers  adopted a list of Projects of Energy Community Interest based on Regulation (EU) 347/2013. The selected projects may benefit from streamlined permitting, regulatory incentives, cross-border cost allocation procedures and funding under the EU’s Instrument for Pre-Accession Assistance (IPA)  and the Neighbourhood Investment Facility (NIF). The Ministerial Council also issued a Recommendation 2016/01/MC-EnC to extend these benefits to Projects of Mutual Interest, which cover infrastructure of significant regional importance. 

The Environmental Impact Assessment (EIA) Directive aims at identifying and assessing environmental consequences of projects before a building or operation permit is granted. Annexes I and II to the Directive cover projects both in energy generation and transmission/distribution as well as storage of gas and petrochemical products. The key document within the assessment procedure is the environmental impact study to be compiled and submitted by the developer to the competent authorities for review. 

The first EIA Directive 85/337/EEC of 27 June 1985 was substantially amended several times. In the interests of clarity and rationality there was a need to codify the said Directive. Directive 2011/92/EU harmonises the principles for the environmental impact assessment of projects by introducing minimum requirements, with regard to the type of projects subject to assessment, the main obligations of developers, the content of the assessment and the participation of the competent authorities and the public, and it contributes to a high level of protection of the environment and human health. Member States are free to lay down more stringent protective measures in accordance with the Treaty on the Functioning of the European Union (TFEU).
 

^* The Accession Protocol of Georgia to the Energy Community Treaty refers to Directive 85/337/EEC and sets deadlines thereto. Directive 85/337/EEC was repealed by Decision 2016/12/MC-EnC adapting and implementing Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment. 

The 14th Ministerial Council adopted four decisions expanding the current scope of the environmental acquis and adapting existing pieces of it in October 2016. The decisions update the Environmental Impact Assessment  and the Sulphur in Fuels Directives to ensure their application in the Energy Community in their latest versions.

The key objective of the Sulphur in Fuels Directive is to ensure effective protection from the risks resulting from SO2 emissions, by imposing thresholds meant to prevent sulphur deposition exceeding critical loads and levels. In doing so, the Directive covers two kinds of fuel oil, i.e. refined oil used for combustion with the purpose of generating heat or power. It sets the maximum sulphur content for heavy fuel oil and gas oil. 
 

^* The Accession Protocol of Georgia to the Energy Community Treaty refers to Directive 1999/32/EC and sets deadlines thereto. Directive 1999/32/EC was repealed by Decision 2016/15/MC-EnC adapting and implementing Directive (EU) 2016/802 relating to a reduction in the sulphur content of certain liquid fuels.  

Directive (EU) 2016/802 sets the requirement to sample and analyse fuel in order to determine its sulphur content. The scope of Directive focuses on fuels used for land applications. Therefore while there is experience on national monitoring of sulphur content in fuel in the Contracting Parties of the Energy Community, the implementation time-limit and percentages for the obligation of yearly sampling frequencies of marine fuels Decision (EU) 2015/253, have been set in this Decision in order to give the competent authorities sufficient time to plan resources in view of the increased volume of fuel inspection by sampling to be carried out in ports.

With their signatures of the Treaty, the Contracting Parties agreed to limit the air pollutant emissions originating from large combustion plants (LCP). Directive 2001/80/EC determines the type of applicable combustion plans, the measures to reduce the emissions, including the respective deadlines. 

With Decision 2013/05/MC-EnC, the ministers provided the Contracting Parties the possibility to use, until 31 December 2027, the option of national emission reduction plans (NERPs).  NERPS stand for an implementation alternative to the emission limit values, where compliance is not verified at individual, plant-by-plant level. Instead of it, the Party can choose to set an overall emission ceiling at national level. Such a emission ceiling is calculated on the basis of the Directive’s emission limit values. As a result, the Contracting Parties have more flexibility in deciding on the sequence of investments that are necessary to be made in their respective energy sectors. 

Another instrument that was also adapted for the Energy Community needs is the “opt-out” (limited lifetime derogation) possibility. The Ministerial Council agreed that the opt-out would be applicable between 1 January 2018 and 31 December 2023, for a total number of 20 000 operational hours. This equals to approx. 2,3 years.That means that if a plant is run at full load, it would already reach the end of its opt-out period by early 2020.

Based on Ministerial Council Decision 2013/06/MC-EnC, only Chapter lll, Annex V, and Article 72(3)-(4) of Directive 2010/75/EU are applicable in the Energy Community.   The ministers also agreed that in the case of new plants, Contracting Parties have to implement the provisions of the Industrial Emissions Directive as of 1 January 2018. This applies for completely new constructions or for existing plants where a complete retrofit is carried out. In order to avoid possible “regret investments”, the Contracting Parties are encouraged to carry out projects that would be in line with the requirements of that Directive prior to the deadline.

In the case of existing plants, the Contracting Parties were initiatelly invited to endeavour the implementation of the Directive. Based on the review clause in Decision 2013/06/MC-EnC, the Ministerial Council set an implementation deadline of the Industrial Emissions Directive for existing plants at its 2015 meeting. Contracting Parties shall implement the provisions of Chapter III and Annex V of the Directive in the case of existing plants by 1 January 2028 at the latest. Prior to that date, they shall endeavour to implement the provisions of Chapter III and Annex V within the shortest possible timeframe, in particular in the case of retrofitting existing plants.

The main aim of the Wild Birds Directive is the long-term conservation of naturally occurring wild birds in Europe. Article 4 of the Directive is a central element in that respect. It requires the adoption of special conservation measures concerning the habitat of certain endangered species, and in particular the classification of suitable territories as special protection areas.

The aim of Directive 2004/35/EC is to establish a framework of environmental liability based on the ‘polluter-pays’ principle, to prevent and remedy
environmental damage. The Ministerial Council Decision adapts the scope of Directive in order to limit the liability of operators to the extent they relate to the energy sector.

The aim of Directive 2001/42/EC is to provide for a high level of protection of the environment and to contribute to the integration of environmental considerations into the preparation and adoption of plans and programmes with a view to promoting sustainable development, by ensuring that an environmental assessment is carried out of certain plans and programmes which are likely to have significant effects on the environment. 

Directive 2009/28/EC determines the Contracting Parties’ binding national targets to be achieved through the use of renewable energy in the electricity, heating and cooling, and transport sectors by 2020.  For determining the targets, a similar methodology as for the EU Member States was applied.

Energy Community Renewable Energy 2020 Targets

Cooperation mechanisms framework between EU Member States and Contracting Parties was subject to several adaptations. With the acceptance of binding targets, the Contracting Parties can per se participate in all cooperation mechanisms. Statistical transfers for the purposes of target achievement are possible independently from the physical flow of electricity. However, joint projects between EU Member States and Contracting Parties require physical transfer of electricity when the electricity is to count towards the EU Member State’s target.

Statistical transfers or joint support schemes are subject to certain preconditions and prior agreement by the Ministerial Council. In order to qualify, the Contracting Parties must implement the Directive 2009/28/EC as adapted by the Ministerial Council, exceed the indicative trajectory and compile energy statistics in compliance to the acquis.

The Directive also foresees that renewable energy, such as biofuels, electricity and hydrogen produced from renewable sources, accounts for at least 10% of the total fuel consumption in all forms of transport by 2020. The Energy Community Contracting Parties overtook the same obligation.

Directive 2012/27/EU was incorporated into the acquis on 16 October 2015. Whilst subject to some adaptations, the Directive brings about binding energy efficiency targets. Under the Directive,countries are required to use energy more efficiently at all stages of the energy chain, from production to final consumption. The Contracting Parties have two years to transpose the new Directive. 

Buildings account for 40% of the European Union’s (EU) total energy consumption. The sector is expanding and so too are its energy demands. By limiting them, the EU will reduce its energy dependency and greenhouse gas emissions and advance towards its goal of cutting overall energy consumption by 20% by 2020. Directive 2010/31/EU (EPBD) provides the legal framework for setting minimum energy performance requirements for new and existing buildings.  

EPBD transposition in the Energy Community is characterized by an incomplete and insufficient legal and institutional framework. The certification of buildings is one of the most advanced areas of transposition. The most common problems include the development of a proper scheme for cost optimal calculation for energy performance of buildings, the software for energy performance certification, preparation of national building stock inventories, of the climatic database as well as training of energy assessors, education and information campaigns directed fowards the general public

Directive 2010/30/EU and the corresponding implementing legislation establish the legal framework for labelling and consumer information regarding energy consumption for energy-related products.

Labelling Directive has reached the highest level of transposition out of the three energy efficiency Directives. Solely Bosnia and Herzegovina needs to catch up and transpose its Labelling Directive and the Delegated Regulations regarding energy related products. The main outstanding issue with the implementation is market surveillance, i.e. ensuring that the suppliers of the products are properly respecting the law and by-laws.

The Treaty establishing the Energy Community regulates the legal framework on competition in Chapter IV Title II. The acquis on competition rests on three pillars:

1. The prohibition of anti-competitive agreements established by Article 101 Treaty on the Functioning of the European Union (TFEU);
2. The prohibition of abuse of a dominant position provided for in Article 102 TFEU; and
3. The prohibition of State aid granted in violation of Article 107 TFEU and the principles of the Treaty.

With reference to Article 106 TFEU, public undertakings, including undertakings providing services of general economic interest, must also comply with the above rules.

Contracting Parties are under an obligation to introduce, to the extent the trade of network energy between the Contracting Parties may be affected, rules prohibiting cartels (agreements between undertakings, decisions by associations of undertakings and concerted practices), abuses of a dominant position, and rules prohibiting State aid. The respective prohibitions are to be applied to public undertakings and undertakings to which special or exclusive rights have been granted by virtue of Article 19 of the Treaty.

While the Treaty does not contain specific rules on mergers, the case law of the Court of Justice of the European Union applying what is now Article 101 and Article 102 TFEU to concentrations is applicable to the Contracting Parties through Articles 18(2) and 94 of the Treaty.

While the Contracting Parties, pursuant to Article 6 of the Treaty, are obliged to ensure efficient implementation of their obligations under the Treaty, of which efficient enforcement of the rules in substance is an important aspect, specific Energy Community acquis on competition and State aid law enforcement (procedures, institutions, sanctions, remedies etc.) are currently lacking.

The growing complexity of the internal energy market makes it increasingly difficult to obtain reliable and up-to-date price data on natural gas and electricity. Data on prices charged to final customers of natural gas and electricity should enable comparisons with the prices of other energy commodities. Price analysis can be carried out only if high-quality official statistics are available regarding the different components and sub-components of natural gas and electricity prices.

This Regulation aims to provide for a common framework to ensure greater transparency on energy costs and prices, as well as on the level of public support, including the legally binding obligations to provide data on the household sector. A good understanding of the taxes, fees, levies and charges in each Contracting Party is essential for ensuring price transparency. The importance of a breakdown of the data on network costs, taxes, fees, levies and charges has been identified. This breakdown extends to natural gas prices charged to industrial and household end users as well.  

A revised methodology for generating a detailed breakdown of the various components and sub-components of the prices of natural gas and electricity charged to final customers will make it possible to analyse the impact of different aspects on the final prices. To improve data reliability, quality reports should be prepared regularly and assessments of the quality of price data should be carried out regularly.

Regulation (EC) 1099/2008 stands for the main legislation covering data collections of energy quantities. Since its adoption, the Regulation has been amended three times. It  establishes a common framework for the production, transmission, evaluation and dissemination of comparable energy statistics in the Community. 

This Recommendation aims at preparing the analytical, institutional and regulatory preconditions for the development of integrated National Energy and Climate Plans (NECPs) by the Energy Community Contracting Parties. NECPs are meant to streamline multiple monitoring and reporting obligations on climate and energy, reduce the administrative burden and enhance transparency for all energy actors, while promoting investor certainty. The Recommendation is not legally binding and does not impose any obligation on Contracting Parties. There are not established deadlines, as indicated in Article 5, the preparation of national plans should be an iterative and dynamic process starting in 2018.

The Secretariat and the Commission support Contracting Parties in this endeavour. If necessary, guidelines for the preparations of the plans are to be adapted to fit the purposes and specificities of the Contracting Parties. They may draw upon the experience and best practices of EU Member States, which have already started preparing their NECPs, while recognizing the particular situation of Contracting Parties. The development of integrated NECPs by the Contracting Parties supports the attainment of the long-term energy and climate policy objectives of decarbonisation, encourage regional cooperation and consultation of NECPs between neighbouring Contracting Parties.