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.

The Commission intends to publish its ‘Second Strategic European Energy Review’ in early November 2008, focusing on security of supply and developing the external aspect of Europe’s energy policy. This could lead to a new Action Plan for 2010-12.

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 European 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.

Second Strategic European Energy Review

The Commission is expected to publish its 'Second Strategic European Energy Review' (SEER2) in early November this year. It will focus on security of supply and developing the external aspect of Europe's energy policy, as agreed at the Spring European Council this year. France plans to take forward work on SEER2 during its Presidency. We expect a debate on energy security at the Energy Council in October and Council Conclusions on the Strategic European Energy Review at the December Energy Council.

Work Strands

Third Package of Legislation on the Internal Energy Market

Following the 2007 Spring Council mandate, in September 2007 the Commission presented its “Third Package” of measures to promote the internal energy market. Key elements were requirements for more effective unbundling, enhanced powers and independence of national regulators, the need to coordinate regulatory action at EU level and extensive transparency requirements. There was also a proposal to restrict third country control of transmission networks.

While there is broad support for these measures among Member States, there has been significant opposition to unbundling from eight Member States, led by France and Germany The Commission and Presidency therefore put forward a proposal for a third option on unbundling which required a lesser degree of separation than the original proposals.

The addition of the third option on unbundling was sufficient to allow Ministers to agree the measures at the Energy Council on 6 June. The texts will now need to be finalised within the Council and then agreed with the European Parliament. We hope this process can be completed and the legislation brought into force in early 2009.

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 would publish our full renewable energy strategy in spring 2009. The full text of the speech can be found on the 10 Downing Street: Speech on Climate Change (19 Nov 07) webpage. We launched a consultation on the new renewable energy strategy on 26th June 2008 – the consultation document, online response form and related documents can be found on the Renewable Energy Strategy Consultation website.

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 under every Presidency. Two Energy Councils are planned under the French Presidency – on 10 October and 8 December 2008. See the EU: French Presidency 2008 website for more details.

Recent Energy Councils

EU Ministers at the Energy Council in Brussels on 28 February 2008 discussed the Internal Energy Market legislative package, focusing in particular on the issue of energy unbundling; the climate and energy legislative package, and the Commission’s European Strategic Energy Technology (SET) Plan. Ministers agreed conclusions on the long-term perspective for the development of low carbon energy technologies in the SET Plan.

The Energy Council in Luxembourg on 6 June was dominated by discussions of the internal energy market, resulting in an agreement on a general approach on the third energy market that represents a significant step forward in developing the internal energy market. The agreement includes the measures needed for the internal market to function effectively: effective unbundling of transmission networks, powerful and independent regulators, greater transparency and an Agency to deal with cross-border issues. The Presidency now has a mandate to complete the negotiation on the legal texts with a view to reaching a common position as soon as possible.

Ministers also discussed the 2020 climate and energy package, focusing on the draft Renewables Directive. The UK circulated a proposal for an alternative to the Commission’s proposed renewables trading system. This was circulated jointly with Germany and Poland, following extensive co-ordination with other Member States. The proposal, which removes the legal risks and uncertainties associated with the Commission’s original certificate trading scheme has received very widespread support from other Member States and the European Parliament, and will form the basis for future discussions on this important aspect of the directive.

The Energy Council in Luxembourg on 10 October reached political agreement on the Commission’s Third energy package on the functioning of the internal energy market. This will allow the Council to prepare a common position, which will form the basis of negotiation with the European Parliament.

There was a wide-ranging debate on the 2020 climate and energy package. The Presidency’s objective is to reach agreement with the European Parliament on the package by the end of the year.

The Council agreed conclusions on energy efficiency, relating to the implementation of the Energy Labelling and Eco-design for Energy-Using Products Directive.

The Council held an exchange of views over lunch on energy security in Europe.

For further information on the Transport, Telecommunications and Energy (TTE) Council, see the Council of the European Union: Transport, Telecommunications and Energy Council (TTE) web pages.

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