Since the founding treaties (Treaty of Paris 1951 establishing the European Coal and Steel Community (ECSC) and the EURATOM Treaty of 1957 establishing the European Atomic Energy Community (EAEC), the European Union (EU) has been concerned with energy especially from the point of view of competition and yet it has never devoted a treaty to the subject.

In the period 1950-1970, countries of the Union saw their oil requirements increase considerably while their coal requirements receded. But only after the 1973 oil crisis, when the Organisation of the Petroleum Exporting Countries (OPEC) decided to quadruple the price of crude oil, did the EU really became aware of the need for a common energy policy.

Since the 1990s, community action in the energy area has mainly been built on the aim of liberalising the markets, which is still an ongoing process today.

In 2000 however, a European Commission Green Paper outlined the priorities with a view to developing a European energy policy that aimed to control demand, diversify supply sources, develop a more integrated internal market and control external supply by promoting dialogue with producing countries.

With the Lisbon Treaty, energy policy has finally got an independent legal basis (article 194 of the TFEU). Previously, the European Union dealt with this area on the basis of the flexibility clause of article 308 TCE, and thus unanimously. Energy is now part of the shared competences.

According to a report by the Council of the European Union published in 2008, reduced European production means that in 2030, up to 75% of oil and gas will have to be imported. And yet the need for energy, as well as being a permanent one, is felt in all sectors of the economy. If no steps are taken to improve energy competitiveness in Europe in the next 20 or 30 years, the dependence on energy imports could reach 70% compared to the 50% imported today

The Lisbon Treaty (article 194) established the emergence, at European level, of an autonomous energy policy. While the European Union previously got involved in this area through the flexibility clause provided by article 308 TCE (thus unanimously), energy now is wholly considered a shared competence between the EU and the Member States (article 4).

In the energy domain, the Member States only get involved insofar as the Union has not exercised its competence or when it has decided not to exercise it (article 2 TFEU).

The addition of this clarification in the Lisbon Treaty was much debated, particularly due to reticence on the part of Germany. So, paragraph 2 of article 194 of the treaty states that European legislation does not affect the “right of a Member State to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply".

This clarification is explained by the great disparity in energy resources among the 27 Member States, and especially, by the debate about the nuclear energy alternative.

European measures in the area of energy policy come under ordinary legislative procedure (ex-codecision). They are established by the European Parliament and the Council after consultation with the Economic and Social Committee and the Committee of the Regions.

However, paragraph 3 of Article 194 makes the provision that the Council of the European Union can, by derogation and in certain cases particularly in the area of taxation, give a unanimous ruling after consultation with the European Parliament.

Lastly, an additional declaration in the Lisbon Treaty means that the new competences of the Union in the energy domain do not affect the “right of Member States to take the necessary measures to ensure their energy supply under the conditions provided for in article 347”, i.e. particularly in case of war or internal problems.

The financing of energy policy is mainly made up of loans granted by the European Investment Bank (EIB) and Structural Funds. .

The energy objective involves the following domains: renewable energies, energy efficiency, innovation, research and development, as well as the security of internal and external supply. In 2008, within the European Union, the EIB provided funds of 8.6 billion euros for projects meeting this objective.  Outside the EU, energy sector financing was 1.6 billion euros.  Projects in the renewable energy sector, including production equipment, reached 2.2 billion euros.

Financing transeuropean energy networks in the EU cost 2.7 billion euros, and energy supply projects cost 50 million euros.

In practice, ‘A Europe of Energy’ relates mainly to:

• progressive opening of national electricity and gas markets to all energy producers. Since July 1st 2004, all large-scale energy consumers (professionals, companies and local authorities) are free to choose their electricity and gas operator (1996 and 1998 directives). Since July 1st 2007, individuals can also choose their provider in a competitive marketplace (2003 directives). Common rules also enable better consumer protection (information, transparency of contractual conditions, treatment of complaints etc.).
  
  

• the multiannual programme, “Intelligent Energy Europe 2007-2013”. In order to address the objectives of the renewed Lisbon Strategy and to stimulate growth and employment in Europe, the Union has a Competitiveness and Innovation Framework Programme (CIP) for the period 2007-2013. The framework programme supports actions that encourage competitiveness and innovation capacity, particularly the use of renewable energy sources. Thus, this framework programme also contains a sub-programme entitled “Intelligent Energy Europe” which supports the improvement of energy efficiency, the adoption of new and renewable sources of energy, the diversification of energy and fuel and a reduction in energy consumption. 730 million euros will be given to the “Intelligent Energy Europe” programme..
  
  

• a global fiscal regime for the taxation of energy products. Since 2003, a directive has defined a global fiscal regime for the taxation of energy products, with the main aim of improving the functioning of the internal market and encouraging initiatives that benefit environmental protection.
  
  

• the development of transeuropean energy networks. With regard to electricity, two networks have been connected to the main European electricity network (UCPTE network): the CENTREL electricity network which Poland, the Czech Republic, Slovakia and Hungary are part of, and the NORDEL network which the Scandinavian countries are part of.  Projects to extend the UCPTE network to the Balkan countries, the Baltic States, CEI countries and to the countries of the Mediterranean basin are currently being studied.
  
  

• the Energy Charter Treaty.  In 1991, a European Energy Charter was adopted aiming to promote cooperation between EU countries and Eastern European countries. The Energy Charter Treaty and the Protocol on Energy Efficiency and Related Environmental Aspects, which entered into force in 1998, transformed the principles of the Energy Charter into legally binding agreements. These principles include the protection of investments, free transit and defined procedures for settling disputes.
  
  
• the climate and energy package. The action plan must enable the EU to achieve by 2020 the triple objectives set in 2007: reduce greenhouse gas emissions by 20% from their 1990 levels, increase the share of renewable energies to 20% of consumption and to achieve energy savings of 20%.

The Green Paper, published by the European Commission on March 8 2006, contains the broad guidelines divided into six priority areas with the aim of reviving European energy policy:

• completion of the internal market for gas and electricity for growth and employment in Europe;
  
  

• improvement of security of supply by strengthened solidarity between Member States: the Commission has plans, in particular, for “the establishment of a European Energy Supply Observatory as soon as possible to monitor the demand and supply patterns on EU energy markets, identifying likely shortfalls in infrastructure and supply”;
  
  

• a strategic analysis of the EU’s energy policy in its entirety: the Commission particularly affirms that it would be worthwhile to come to an agreement on a global strategic objective ensuring balance between the aims of sustainable use of energy, competitiveness and security of supply;
  
  

• the fight against climate change by improving energy efficiency, support for renewable energy and carbon capture and storage;
  
  

• development of a strategic European plan for new energy technologies;
  
  

• creation of a coherent common external energy policy.

With the effective implementation of the climate and energy package, the European Union hopes, by 2050, to get more than half of the energy it consumes – for electricity production, industry, transport, domestic activities – from sources that do not produce CO2 emissions, i.e. from sources other than fossil fuels such as wind power, biomass, hydropower, solar power, biofuels from organic matter and hydrogen fuel.

Research programmes financed by the Union are contributing to the progress in these areas and are supporting the development of technologies enabling a more efficient use of energy.

Sources

F.X. Priollaud et D. Siritzky : Le Traité de Lisbonne, La Documentation française, Paris, 2008

Summaries of EU legislation - European Commission: Energy

Green Paper “A European Strategy for Sustainable, Competitive and Secure Energy” - [pdf] - European Commission – Directorate-General for Energy and Transport

European Commission Communication, Towards a European charter of the rights of energy consumers (05/07/07) - [pdf]

The Energy Sector in Europe - [pdf] - Eurostat - 2009

Energy Security: proposals for Europe (FR) - French Government Portal

To find out more:

Directorate-General for Energy and Transport: Energy - European Commission


European Energy Forum

Mise à jour : 19/01/10