Iceland's Minister of Foreign Affairs, Gudlaugur Thor Thórdarson, and the European Commissioner for Climate Action and Energy, Miguel Arias Cañete, reached a joint understanding, on 20 March, on the application of the EU's Third Energy Package, taking into account the unique situation in Iceland as concerns renewable energy and energy markets.
They noted that Iceland's participation in the European Economic Area (EEA) has been highly beneficial for Icelandic citizens and for the EU. Iceland and the other EEA partners have been successfully applying EU energy rules by adapting them to the specific situation in the EEA.
Special regime. Concerning the incorporation of the Third Energy Package, the situation in Iceland is markedly different from countries with a cross-border energy network. Therefore, the special regime for Iceland that was agreed within the EEA Joint Commission is the best fit for Iceland’s circumstances, the Commission explains.
The Icelandic electricity system is an isolated system and it is not connected with an interconnector between Iceland and the EU's internal energy market. In this regard, large parts of the provisions of the Third Energy Package (cross-border exchanges and infrastructure in electricity) do not apply to Iceland: - as a result, the provisions on the Agency for the Cooperation of Energy Regulators (ACER) and the Regulation on cross-border electricity exchanges will not have any tangible impact on Iceland's sovereign decision-making on energy matters.
If cross-border infrastructure were to be put in place in the future, the European Free Trade Association (EFTA) Surveillance Authority (ESA) would be responsible to decide on cross-border issues concerning Iceland and not ACER. This has been agreed in the relevant adaptation text of the EEA Joint Committee Decision from 5 May 2017, which reflects the autonomy of the EFTA institutions under the “two-pillar system”.
The applicable provisions of the EU's Third Energy Package affect in no way the Government of Iceland's full sovereign control over the country's energy resources. Decisions on electricity interconnectors between Iceland and the EU’s internal electricity market lie entirely within the competence of Icelandic authorities. The provisions of the Third Energy Package applicable to Iceland do not change the current legal situation in this regard. (Original version in French by Lionel Changeur)