Brussels, 20/03/2015 (Agence Europe) - During the Spring European Council on Thursday 19 and Friday 20 March, EU heads of state and government approved the strategic framework presented by the European Commission on 25 February to develop the Energy Union project. They focused on certain key aspects of the five interdependent dimensions of this framework: energy security, internal market, modernising demand, decarbonising the economy and research and development.
Tenuous approval for increased transparency and gas contracts. In the area of energy security, the aspect upon which they focused all their attention on Thursday, European leaders agreed on the European Commission drawing up legislation to enhance gas contract transparency.
The President of the European Council, Donald Tusk, one of the driving forces behind the Energy Union project when he was Prime Minister, stated in April 2014 (see EUROPE 11065), “The EU depends more and more on gas from external suppliers. Where gas is imported from different sources and contracts are flexible, things are fine. But most bilateral contracts with our dominant supplier, Russia, are concluded on a long-term basis, sometimes more than 20 years. That can be unhealthy. Both for our security, and for our market. Gas contracts should be about the economy, about business. They should not be used as political weapons”.
Tusk explained: “EU leaders have decided that all gas contracts - between governments or businesses - must be in line with EU law, must be more transparent and should not negatively impact Europe's energy security. The exact details will be set out by the Commission very swiftly in draft legislation”.
The EU28 finally managed to reach an agreement after tough discussions on the following: the European Council would seek to ensure “compliance with EU law of all agreements related to the buying of gas from external suppliers, notably by reinforcing transparency of such agreements and compatibility with EU energy security provisions. As regards commercial gas supply contracts, the confidentiality of commercially sensitive information needs to be guaranteed”.
In its strategic framework presented on 25 February, the Commission proposed reforming the existing information mechanism on gas contracts and introduce a compulsory pre-consultation mechanism from the Commission for the member states before signing intergovernmental agreements with third countries. This suggestion did not go down well with a number of member states.
Ultimately, the European Council conclusions do not make any explicit reference to ex ante Commission control of these agreements. Given the level of consensus reached in the proposal, the question still needs to be decided as to what extent the Commission can intervene.
The debate on this controversial question was heated. According to diplomatic sources, the German Chancellor, Angela Merkel and the British Prime Minister, David Cameron, brought things to the fore. Cyprus and Malta had been opposed to the demand for greater transparency in gas contracts but finally relented. The Hungarian Prime Minister, Viktor Orban was the last to speak. At the end of February, he was very hostile to the Commission proposals but finally agreed to accept a compromise from the Visegrad group of countries. As a whole, the Council was very divided. Some member states wanted to exclude the demand for increased transparency in private sector contracts, whilst others wanted private contracts to be subject to control only in cases where Community rules had been breached. In Chancellor Merkel's final summing up, she said, “We opted for more transparency, but still maintaining the necessary confidentiality”.
The option of group gas purchasing is still on the table. In the field of energy security, European leaders also reached an agreement on Thursday to explore the way in which European companies could make group purchases of gas from non-EU suppliers, on the basis of voluntary mechanisms in compliance with WTO and EU rules on competition and examining how to develop strategic partnerships with increasingly important producer and transit countries.
On the question of the internal market, the European Council repeated its call to speed up the electricity and gas infrastructure projects and welcomed the agreement on 4 March between France, Spain and Portugal to strengthen their interconnections. It also highlighted the need to connect the outermost regions. The European Council also called for full implementation of internal market legislation and the strengthening of the legislative framework on the security of electricity and gas supplies, whilst underlining the role played by domestic sources and low carbon technologies, such as nuclear power.
The EU 28 also gave the go-ahead to the Commission developing a “more flexible and efficient” electricity market organisation at the same time as enhanced regional cooperation with neighbouring countries and facilitating the incorporation of renewable energies into the grid by ensuring compatibility of public intervention in the internal market.
Energy savings relegated to second place. The third key dimension in the Energy Union project, energy efficiency as a means of moderating demand and the Commission's strategic framework calling for this to be treated as a source of energy in itself, however, is relegated to second place by European leaders. In its conclusions, the European Council simply clarifies the re-examination and strengthening of legislation on emissions reduction as energy efficiency and renewable energies that help attain the targets agreed for 2030.
The European Council, however, does advocate the elaboration of a comprehensive strategy for innovation and energy technologies that particularly focus on the next generation of renewables, electricity storage and the capture and storage of CO2, improving energy efficiency in the housings and sustainable transport sectors. Finally, the leaders also agreed to strengthen the EU's climate diplomacy and “make a big effort” to make the UN Climate Conference (COP21) in December in Paris, a success.
The European Council will be returning to the subject of the Energy Union before the end of the year. (Emmanuel Hagry)