EU Common Energy Policy

The EU’s energy priorities, agreed by all EU members at the Spring European Council in March 2007, over the next few years are set out in the European Energy Action Plan. The Action Plan sets us on the path to serious action in tackling the 3 cornerstones of EU energy policy – addressing climate change, in conjunction with international partners; improving our energy security; and realising the goal of a truly liberalised electricity and gas market as a means to enhance security of supply and increase business competitiveness in the EU.

The background to this Action Plan is a continually changing energy landscape in Europe, with the challenges now facing us very different to those of even 5 years ago. These challenges are considerable: how to ensure that our energy policy is flexible enough to respond to the global environment, whilst ensuring there is a stable regulatory framework that gives sufficient certainty to the market; how to achieve our climate change and carbon reduction goals; how to ensure security of supply against a backdrop of potential instability and political manipulation in some key supplier countries; and how to deliver competitive energy prices.

Background to the European Energy Action Plan: Hampton Court and the EU Energy Green Paper

Work by the Commission and Member States on addressing these challenges has particularly intensified since October 2005 when, at the Hampton Court summit under the UK's EU Presidency, EU Heads of State recognised the need for a more coherent EU energy policy.

The UK further contributed to this process by submitting an influential paper in January 2006, on "A European Approach to Energy Policy" setting out the UK's broad vision for a European approach to energy policy to secure reliable, affordable and sustainable energy for Europe.

The Commission responded to the mandate given it at Hampton Court with a Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy, published on 8th March 2006. The Green Paper identified six areas where Europe could work together on energy. These are:

Completing the internal energy market
Security of supply in the internal energy market
A Sustainable, efficient and diverse energy mix
A common external energy policy
An integrated approach to tackling climate change
A Strategic Energy Technology Plan

The Commission consulted extensively on the Green Paper over a period of six months after its release.

Strategic Energy Review

One of the key proposals in the Green Paper was for a regular EU Strategic Energy Review, covering the issues identified in the Green Paper and constituting a stock-take and a flexible action plan on European Energy. Member States immediately agreed to this recommendation at the 2006 Spring European Council and asked the Commission to put forward an Energy Action Plan for discussion at the 2007 Spring European Council.

Accordingly, on 10 January 2007, the Commission published its first Strategic Energy Review (SER) along with a number of supporting documents underpinning some of the proposals in the SER. It was published alongside the Commission’s Communication on Climate Change, ‘Limiting Global Climate Change to 2 degrees Celsius - The way ahead for 2020 and beyond’. The SER takes forward a number of the proposals outlined in the Green Paper to help the EU address the challenges of climate change, vulnerability to imported hydrocarbons and promoting growth and jobs.

The main proposals in the SER include objectives to reduce greenhouse gas emissions within the EU and internationally; targets for renewable energy and biofuels; ways to improve the functioning of the internal electricity and gas market; the need to strengthen the EU's Emissions Trading Scheme; priorities for action to improve energy efficiency based on the EU's Energy Efficiency Action Plan of October 2006; a commitment to increase by 50% EU spending on energy-related research; and plans to encourage construction of 12 demonstration plants for carbon capture and storage.

Recent Energy Councils

Key elements of the SER were discussed by EU Ministers at the Energy Council in Brussels on 15 February 2007 when discussion focused on effective unbundling of gas and electricity network operators, in the context of the single gas and electricity market, and on targets for renewable energy and biofuels. The Council adopted Conclusions on an Energy Policy for Europe, highlighting priorities for the period 2007-2009. These conclusions formed the basis of the European Energy Action Plan agreed by Heads of State and Government at the Spring European Council of 8-9 March, referred to above.

Subsequently, discussion at the Energy Council in Luxembourg on 6 June focussed on the specific area of the internal energy market and particularly on the issue of unbundling. The Commission published a new legislative package on the internal market in September 2007. There was a first exchange of views on this at the December Energy Council.

Third package of legislation on the internal energy market

The legislation proposed by the Commission comprises two draft Directives and three draft Regulations. It requires Member States to adopt either ownership unbundling or independent system operation for transmission which must meet strict criteria; greater independence and powers for national regulators and consistency in their duties; a European regulatory agency comprising national regulators intended to complement at EU level the regulatory tasks performed at national level and to coordinate their action; a mechanism for greater cooperation between transmission system operators; and measures to increase transparency in EU markets. We support all these measures, although we will be seeking to achieve in negotiations greater powers for the regulatory agency.

Climate Change and Energy Package

At the 2007 Spring Energy Council, the EU Heads of Government agreed a package of energy measures including targets for 2020. This included a commitment to source 20% of the EU’s energy from renewables by 2020 (covering electricity, heat and transport) and a 20%/30% GHG emissions reduction depending on wider international effort.

The agreement reinforces the EU’s leadership role in global efforts to tackle climate change, allowing the EU to demonstrate to the wider international community that we can take ambitious action to reduce carbon emissions and achieve our GHG targets at reasonable cost without damaging economic growth or undermining our competitiveness.

On 23rd January 2008 the European Commission published a draft Directive including how the 20% renewables target will be shared amongst Member States. This is an ambitious target – not only for the UK, but for other Member States too. A link to the draft directive can be found on the EU: Promotion of the Use of Energy from Renewable Sources webpage.

On 19th November 2007, in a speech on climate change, the PM announced that the Government will launch a consultation next year on how we are to achieve our renewables targets and then in spring 2009, we will publish our full renewable energy strategy. The full text of the speech can be found on the 10 Downing Street: Speech on Climate Change (19 Nov 07) webpage.

EU Energy Councils

In the European Union, energy policy is discussed at Ministerial level at the Transport, Telecommunications and Energy Council (also known as the TTE Council). There is usually at least one meeting of this Council relating to energy every Presidency. The next Energy Council, under the Slovenian Presidency, will take place on Thursday 28th February 2008.

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