EUROPEAN COMMISSION Brussels, 30.11.2016 SWD(2016) 394 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a Regulation of the European Parliament and the Council on the Governance of the Energy Union,



amending Directive 94/22/EC, Directive 98/70/EC, Directive 2009/31/EC, Regulation (EC) No 663/2009, Regulation (EC) No 715/2009, Directive 2009/73/EC, Council Directive 2009/119/EC, Directive 2010/31/EU, Directive 2012/27/EU, Directive 2013/30/EU and Council Directive (EU) 2015/652 and repealing Regulation (EU) No 525/2013 {COM(2016) 759 final}

{SWD(2016) 395 final}



Table of Contents Glossary 1. Introduction 2. Problem Description 2.1. Context of the problem 2.2. Nature and extent of the problem 2.2.1. Inconformity of existing planning, reporting and monitoring obligations with the principles of Better Regulation 2.2.2. Inadequacy of the current policy framework between Member States and the Commission to achieve the Energy Union objectives and implement the Paris Agreement 3. Subsidiarity and the varying situation of Member States 3.1. Legal basis 3.2. Necessity of EU action 3.3. EU added-value 4. Objectives 4.1. General objectives 4.2. Specific objectives 5. Policy options 5.1. Baseline scenario 5.2. Options for streamlining of planning, reporting and monitoring obligations (S) 5.3. Options for elements of the Governance process

5.3.1. Periodicity of National Plans (NP) 5.3.2. Periodicity of Progress Reports (PR) 5.3.3. Periodicity of Commission monitoring of collective progress made (M) 5.3.4. Iterative process with Member States including country-specific recommendations or decisions (IP) 5.3.5. Consultations of Member States on National Plans (C) 6. Assessment of the impacts of the various policy options 6.1. Impacts of the Baseline Scenario 6.2. Impacts of options for streamlining of planning, reporting and monitoring obligations (S) 6.3. Impacts of options for elements of the Governance process 6.3.1. Periodicity of National Plans (NP) 6.3.2. Periodicity of Progress Reports (PR) 6.3.3. Periodicity of Commission monitoring of collective progress made (M) 6.3.4. Iterative process with Member States including country-specific recommendations or decisions (IP) 6.3.5. Consultations of Member States on National Plans (C) 7. Comparison of the options 7.1. Comparing approaches to streamlining of planning, reporting and monitoring obligations 7.2. Comparing and combining options for elements of the Governance process 7.2.1. Comparing options for the periodicity of National Plans 7.2.2. Comparing options for the periodicity of Progress Reports 7.2.3. Comparing options for the periodicity of Commission monitoring of collective progress made

7.2.4. Comparing options for an iterative process with Member States including country-specific recommendations or decisions 7.2.5. Comparing options for consultations of Member States on National Plans 7.2.6. Overview of preferred policy options 8. Monitoring and evaluation Annexes Annex 1: procedural info 9. Procedure 9.1. Identification 9.2. Organisation and timing 9.3. Consultation and expertise 9.4. External expertise Annex 2: Stakeholder consultation Annex 3: Who is affected and how Annex 4: Analytical models Annex 5: Outcome of the evaluation Annex 6: Overview of classification of obligations in the energy acquis (Fitness Check) Annex 7: Overview of classification of obligations in the MMR Annex 8: Background on planning, reporting and monitoring obligations Annex 9: Policy options on streamlining planning, reporting and monitoring obligations: Annual costs for Member States and one-time implementation costs





List of Tables Table 1: Total cumulative costs for Member States in the period 2021-2030 in million EUR Table 2: Comparison of policy options for streamlining Table 3: Periodicity of National Plans – Overview of impacts with regard to objectives Table 4: Periodicity of National Plans – Comparison of policy options Table 5: Periodicity of national Progress Reports – Overview of impacts with regard to objectives Table 6: Periodicity of national Progress Reports – Comparison of policy options Table 7: Periodicity of Commission monitoring – Overview of impacts with regard to objectives Table 8: Periodicity of Commission monitoring – Comparison of policy options Table 9: Process for an iterative process with Member States including country-specific recommendations or decisions – Overview of impacts with regard to objectives Table 10: Iterative process with Member States including country-specific recommendations or decisions – Comparison of policy options Table 11: Consultations – Overview of impacts with regard to objectives Table 12: Consultations – Comparison of policy options Table 13: Overview of preferred options Table 14: Annual costs for Member States in million EUR Table 15: One-time implementation costs for Member States and the Commission in million EUR

List of Figures Figure 1: Overview of planning, reporting and monitoring in the governance system Figure 2: Flow-chart of the governance process



Glossary ACER Agency for the Cooperation of Energy Regulators EEA European Environment Agency ENTSO-E European Network of Transmission System Operators ENTSO-G European Network of Transmission System Operators for Gas ESD Effort Sharing Decision ETS Emissions Trading System GHG Greenhouse gas IEA International Energy Agency JRC Joint Research Centre LULUCF land use, land-use change and forestry MMR Monitoring Mechanism Regulation OECD Organisation for Economic Co-operation and Development PCI Project of Common Interest

REFIT Regulatory Fitness Check TSO Transmission System Operator UNFCCC United Nations Framework Convention on Climate Change



1.Introduction The objectives of the Energy Union Framework Strategy, adopted in February 2015, can only be achieved through a combination of EU and national policies and measures which are implemented in a coherent way and in line with the overarching EU energy and climate policy goals of ensuring energy security, sustainability and competitiveness. This approach is reflected by the five interrelated dimensions of the Energy Union Framework Strategy. After the endorsement of the European Parliament, the October 2014 European Council agreed to reduce domestically greenhouse gas (GHG) emissions by at least 40%, to be delivered collectively by the EU by 2030 in the most cost-effective manner possible. It asked for setting corresponding national reduction targets for the non-ETS sectors and for the land use, land-use change and forestry (LULUCF) sector to be included into the 2030 greenhouse gas mitigation framework. At the same time the European Council agreed on a target of at least 27% for the share of renewable energy consumed in the EU in 2030, binding at EU level, to be fulfilled through Member States contributions guided by the need to deliver collectively the EU target. It also set an indicative target at the EU level of at least 27% for improving energy efficiency in 2030 compared to projections of future energy consumption, which will be reviewed by 2020, having in mind an EU level of 30%. The European Council also called for all Member States to achieve interconnection of at least 10% of their installed electricity production capacity by 2020 and asked the Commission to report regularly to the European Council with the objective of arriving at a 15% target by 2030, as proposed by the Commission. All these targets are interrelated. Renewable energy and energy efficiency play a key role in the transition towards a more competitive, secure and sustainable energy system and will also help to achieve the GHG emission reduction target. The GHG emission reduction target should equally encourage a greater share of renewable energy as well as energy savings in the EU. Renewable energy and energy efficiency are vital in ensuring energy security and competitiveness together with the further integration of the internal energy market, which in turn provide the basis for implementing the 2030 targets in a cost-effective manner. The Energy Union governance system that essentially builds on Member States’ integrated energy and climate policies has a key role to play in achieving the interrelated Energy Union objectives and the EU 2030 energy and climate targets. By the end of 2016, the Commission aims to propose the main legislative and non-legislative initiatives to implement the Energy Union Strategy across its five mutually-reinforcing and closely interrelated dimensions. This goes beyond the energy and climate field in the narrow sense by addressing also other policies which support and enable the implementation of the Energy Union, including inter alia investments, transport, regional, competition, research, innovation and other policies. The purpose of these initiatives is to propose precise and ambitious measures at EU level while providing flexibility to Member States to implement the common objectives and EU legislation in a way that reflects national preferences and circumstances. At the same time, it is important to ensure that such flexibility is applied in a way that contributes to cost-effectiveness, is compatible with further market integration and increased competition, gives predictability and certainty for investment, and ensures the attainment of the Energy Union objectives. The transition towards a more secure and sustainable energy system will require major investments in generation, networks and energy efficiency, estimated at some €200 billion annually in the next decade. Coherent and reliable national policies complementing relevant EU legislation are crucial for ensuring investor certainty and transparency for consumers and citizens. This holds true notably with regard to the achievement of the EU 2030 targets for climate and energy, which include EU level targets for renewable energy and energy efficiency and therefore require collective efforts by Member States for their achievement. For these reasons, the October 2014 European Council also agreed that a reliable and transparent governance system without any unnecessary administrative burden will be developed. It further specified that such governance system will build on existing building blocks and that separate planning and reporting strands will be streamlined and brought together. In November 2015, the Energy Council provided detailed conclusions on the governance system of the Energy Union and called on the Commission to present, inter alia, proposals for streamlining existing planning and reporting obligations in order to reduce administrative burden and ensure coherence, simplification and consistency as well as prepare templates for Integrated National Energy and Climate Plans and respective progress reports. In November 2015, the Commission presented the Guidance to Member States on National Energy and Climate Plans in the context of the State of the Energy Union 2015. This guidance proposed key elements of the Integrated National Energy and Climate Plans and main steps for a gradual process from 2015 until the finalisation of these plans by 2018, including the main tasks for both the Member States and the Commission. In December 2015, the European Parliament adopted an own initiative report "Towards a European Energy Union" calling for the governance framework for the Energy Union to be ambitious, reliable, transparent, democratic and fully inclusive of the European Parliament and to ensure that the 2030 climate and energy targets are achieved. The report also asked the Commission to present swiftly to the European Parliament and the Council a legislative proposal taking into account the relevant Council conclusions and the Parliament’s views. Moreover, an effective implementation of the objectives of the Energy Union across its five dimensions needs robust reporting of progress made at national level and subsequent monitoring at EU level to evaluate progress made, steer further policy action, and to enable a structured dialogue between the EU and Member States as well as between the Commission and other EU institutions. The European Environment Agency (EEA) plays a prominent role in supporting the Commission in its current tasks relating to monitoring, reporting and verification. The EEA's as well as other relevant agencies' role could be enhanced in order to serve the purposes of the governance of the Energy Union. A transparent monitoring system is also important to ensure affordability and energy security for European consumers, safeguard the competiveness of European industries, and establish coherence with the Commission's agenda for jobs, growth and investment. Scope of the initiative

For the above goals to materialise, the Energy Union governance initiative as well as this Impact Assessment will therefore be based on two main pillars: Streamlining of planning, reporting and monitoring obligations: Integrated National Energy and Climate Plans (hereinafter: "National Plans"), subsequent Integrated National Energy and Climate Plans Progress Reports (hereinafter: "Progress Reports), as well as integrated Commission monitoring at EU level; A political governance process between the Commission and Member States on the establishment and implementation of National Plans in order ensure the collective achievement of the objectives of the Energy Union. The two main pillars are strongly connected and interrelated via the envisaged National Plans, Progress Reports and Commission monitoring. Streamlining of existing energy and climate planning, reporting and monitoring obligations is a key aim of the Governance initiative, reflecting Better Regulation principles and objectives. The streamlining pillar builds on a REFIT exercise that evaluated existing planning, reporting and monitoring obligations in the energy acquis as well as their interlinkages with the climate acquis (hereinafter "Fitness Check"), carried out during the first half of 2016. Defining the political process between Member States and the Commission is of equal importance in view of the need for a collective achievement of the Energy Union objectives, including the 2030 targets for climate and energy. The governance process pillar represents a new cooperation mechanism between Member States and the Commission aimed at ensuring the achievement of the Energy Union objectives. An overview of the planning, reporting and monitoring obligations of the energy acquis is provided in Annex 6, as are the requirements of the Monitoring Mechanism Regulation (MMR) in Annex 7. Further background on the planning, reporting and monitoring obligations is provided in Annex 8. Context of the Governance initiative The European Council has called in October 2014 and March 2015 for the establishment of a Governance system for the 2030 Climate and Energy Framework and the Energy Union. A strong Governance system will be decisive notably for the delivery of the Union's 2030 targets on renewables and energy efficiency. In the same vein, the European Parliament called for an ambitious Energy Union Governance framework to ensure that the 2030 climate and energy targets are achieved. There is therefore substantial political support for the initiative and its implementation. However, close engagement with the Council, European Parliament and stakeholders is instrumental in order to further enhance political buy-in and support. The Governance initiative builds on already existing building blocks and the lessons learnt from these, including from the European Semester: The Commission's Guidance to Member States on National Energy and Climate Plans of November 2015 sets out the main elements of the Governance system. It does this in a non-binding format that aims at a pragmatic approach to governance ensuring also an early start of the Governance process with Member States. Ongoing discussions with Member States in the Technical Working Group on National Plans since 2015 and in the Council formations have supported the emergence of a common view between Member States and the Commission on the way forward regarding the design of the Governance of the Energy Union. National Plans to be developed by Member States should ensure the involvement of stakeholders and contribute to public awareness. This will stimulate the public debate in the Member States on the five dimensions of the Energy Union, taking into consideration the relevant inter-linkages. To support administrative capacity building, the Commission is considering options for technical assistance to Member States for the development of National Plans before 2020.Also in the period from 2020 to 2030, technical support will continue to play and important role. With regard to the administrative set-up in the Member States, it is worth mentioning that under the MMR Member States are operating national inventory systems to estimate emissions and removals and national systems for reporting on policies and measures and projections of greenhouse gas emissions and removals. These systems include the relevant institutional, legal and procedural arrangements established for evaluating policy and making projections. Links with other policy areas and the European Semester Links of this initiative to competitiveness and private sector innovation capabilities mainly relate to energy prices and costs for EU industries, investor certainty until the year 2030, and Member States' support for research and development. While the first issue is monitored by a biennial report from the Commission on energy prices and costs in Europe, the latter two issues are aimed to be addressed by the future National Plans. Currently, very few Member States have integrated National Plans for energy and climate and very few cover a time horizon of 2030 or beyond. National Plans for 2030 would therefore significantly enhance investor certainty and also provide a framework for Member States' support for research and development in the context of the Energy Union. The Governance of the Energy Union should build on the European Semester and be complementary to it, such that the European Semester addresses macroeconomic and structural reform issues, whereas the Governance process would address energy and climate specific policy issues. Nevertheless, energy and climate issues could be addressed as part of the European Semester, if they have macroeconomic or structural reform relevance.

Interlinkages with other upcoming Energy Union initiatives This Impact Assessment was closely coordinated with other Energy Union related impact assessments carried out in 2016. Concerning the market design initiative, interlinkages mainly concern the streamlining of reporting and monitoring obligations relating to the internal energy market. In particular, the Energy Union Governance initiative aims at streamlining relevant reporting obligations by Member States and the Commission presently enshrined in the Third Package, thereby contributing to ensure policy coherence and reduce administrative burden. Concerning the initiatives on the revision of the Renewable Energy Directive and the Energy Efficiency Directive as well as the Energy Performance of Building Directive, the Governance initiative aims at streamlining planning (in terms of their integration into National Plans), reporting and monitoring obligations relating to renewable energy and energy efficiency. Furthermore, the governance process includes the assessment of National Plans and the monitoring of their implementation in view of the collective achievement of the renewable energy and energy efficiency targets for 2030. In case of insufficient collective action, necessary measures have to be taken. This could include the Commission proposing additional measures at EU-level or requesting Member States to take further actions to fill potential gaps to these targets. The process on how to detect and also prevent such gaps should be set out as part of the iterative process in the Governance initiative. The potential measures to be taken would also be anticipated in the Governance initiative, but would be set out in detail in the revised sectorial legislation. Therefore, the corresponding policy options are assessed in more detail in the impact assessments for the revisions of these Directives. Examples of the streamlining of the Commission's monitoring obligations include the Energy Efficiency Progress Report and the Renewable Energy Progress Report. The latter is published by the Commission every two years and provides an overview of renewable energy policy developments in EU countries based on national reports about progress towards the EU's 2020 renewable energy goals. The Governance initiative aims to incorporate this Commission report into an integrated monitoring instrument that would cover the five dimensions of the Energy Union and thereby assess the inter-linkages of renewable energy developments with other policy areas such as energy efficiency or greenhouse gas emission reductions. 2.Problem Description 2.1.Context of the problem The Energy Union Framework Strategy, and in particular the 2030 energy and climate targets, is based on the collective achievement of its objectives by the Member States. In order for the EU to be able to annually report to the European Parliament and the Council on the state of the Energy Union, an appropriate planning, reporting and monitoring framework needs to be in place, going beyond 2020. Member States currently do not have in place longer term planning frameworks. In their planning, Member States often do not look beyond their borders which can lead to conflicting energy policies with their neighbours and the non-achievement of EU-level targets as this has not been taken into account in the planning. As regards reporting, the existing reporting obligations can be found in almost every piece of EU legislation. These reporting obligations are often not coordinated as they have been adopted at different points in time, sometimes originating from (past) international obligations, and often also as part of a political compromise in the ordinary legislative procedure. This can lead to higher costs for the Member States or other reporting entities. This applies similarly to the Commission monitoring obligations. The varying periodicity across existing obligations that are suitable for integration into National Plans and Progress Reports is inconsistent with a governance process that aims to align the periodicity of integrated planning, reporting and monitoring obligations. In addition, many of the current obligations will end in 2020 as part of the existing energy and climate framework. However, the system in place is not sufficiently conducive to allow for a better coordination of these activities. Member States have to collectively deliver on the Energy Union objectives across the 5 dimensions, which requires a closer cooperation among the Member States but also with the Commission. The 2030 Energy and Climate Framework also necessitates that Member States pledge ambitiously towards the achievement of the related targets and in view of the achievement of the European Union's domestic long-term objective to cut emissions by at least 80% by 2050 and the long-term goal set by the Paris Agreement. The European Semester process, which is in place and could in theory provide such a framework, is targeted on fiscal and structural report policies of the Member States as well as at issues of macroeconomic relevance. 2.2.Nature and extent of the problem 2.2.1.Inconformity of existing planning, reporting and monitoring obligations with the principles of Better Regulation While appropriate requirements for planning, reporting and monitoring in the energy and climate fields should be ensured at the EU level, these should at the same time be proportionate and should not create an unnecessary administrative burden on Member States, the Commission and stakeholders (business and citizens). Such unwarranted administrative costs originate, inter alia, from redundancy, incoherence, differing periodicity and lack of coordination among the different obligations. Most of the current planning, reporting and monitoring obligations provide benefits in terms of useful information on a specific policy area and support the implementation of specific policy objectives set out in sectorial legislation. The obligations enable the preparation of policy strategies, the provision of information on policies and measures, provide investor certainty, enable assessing progress to targets and establish feedback mechanisms between Member States and the Commission. They aim to provide the Commission with the data and information needed to assess whether specific EU legislation has been implemented and whether it produced its intended effects. The current reporting obligations on the Commission ensure that the Commission informs the European Parliament, the Council and the general public about the results achieved by EU legislation. Furthermore, the obligations enable Member States and the Commission to share knowledge and learn about best practices. Some obligations stem from the EU's and its Member States' international treaty obligations. This is confirmed by the Fitness Check, in which the majority of current obligations were found to be effective and to make a positive contribution towards achieving their objectives. The relevance of current obligations is generally considered good (if EU-added value is not considered), with only a relatively small number of obligations found to be irrelevant or not providing information that is actually used. Most of the information collected or produced through current obligations would not be available from other sources and gives to Member States and the Commission the possibility to measure progress at EU and national level and benefit from best practice examples. Nevertheless, the Fitness Check showed that the current system of planning, reporting and monitoring obligations shows several shortcomings: Lack of suitability for 2030 targets and Energy Union objectives: Parts of the existing planning, reporting and monitoring obligations serve to implement and monitor progress towards the 2020 energy and climate targets, which were set for each Member State. In the climate field, targets for 2030 will continue to be set for each Member State. However, the 2030 targets for renewable energy and energy efficiency are set at EU level as part of the 2030 Framework for Climate and Energy and the Energy Union. Therefore, some existing planning, reporting and monitoring obligations in the energy field are no longer fully suitable for implementing and monitoring progress towards the 2030 targets. Furthermore, the current obligations linked to existing sectorial policy objectives are not fully relevant to the revised and new objectives of the broader Energy Union Strategy and its five dimensions and thus not able to effectively support the implementation and monitoring of progress towards these objectives (e.g. for research, innovation and competitiveness).

Lack of policy coherence among obligations in the energy field: The various sector-specific legal acts existing in the energy acquis do not adequately address the relevant interactions and interdependencies among different policy areas of the Energy Union in the respective planning, reporting and monitoring obligations. This is on the one hand due to the adoption of the legal acts independently from each other at different points in time, and on the other due to the sector-specific focus of the obligations. Policy coherence of the different obligations cannot fully be ensured through a sectorial approach. This means that all aspects of the Energy Union Strategy are currently not adequately covered or not subject to any planning, reporting and monitoring obligations at EU level. Concerning periodicity, some existing legal acts currently provide for regular review of the planning requirements, while others do not. Concerning stringency, some existing obligations are mandatory in terms of submission and format, while others are not. This is confirmed by the Fitness Check, which found potential for improving the planning, reporting and monitoring obligations with regards to coherence in particular. Lack of consistency between the energy and climate fields: The interactions, interdependencies and overlaps in planning, reporting and monitoring obligations between the energy and climate fields, as well as their heterogeneity, deserve particular attention. As illustrated by the Fitness Check, under the energy acquis and the MMR Member States report information with differing deadlines and periodicity, partly overlapping in substance (e.g. reports on policies and measures which contribute to decrease emissions under the MMR with reporting on policies and measures under the Energy Efficiency Directive, Energy Performance of Buildings Directive and Renewable Energy Directive). Furthermore, there are inconsistencies in the reports themselves (e.g. parameters related to renewable energy and energy efficiency used in national greenhouse gas emission projections are not consistent with parameters presented in energy reporting). Unnecessary administrative costs and inefficient energy regulation: As illustrated by the Fitness Check, a non-negligible share of the current obligations in the energy field is not cost-effective and thus leads to a disproportionately high, unnecessary administrative burden. The coexistence of a number of sector-specific legal acts has resulted in too extensive, heterogeneous and partly overlapping obligations both in timing and on substance. 2.2.2.Inadequacy of the current policy framework between Member States and the Commission to achieve the Energy Union objectives and implement the Paris Agreement Inadequacy of current policy framework to attain the EU 2030 energy targets: By setting the 2030 targets for renewable energy and energy efficiency at the EU level, the process of attaining these targets provides more flexibility to Member States in deciding on national objectives, policies and measures. At the same time, Member States need to plan their policies and measures in the energy and climate fields in full coherence with the delivery of the Energy Union objectives across its five dimensions and need to enhance coordination and cooperation with other Member States. In the absence of nationally binding energy targets until 2030, the Commission also needs to assess whether Member States are collectively on track to achieve the EU level targets and to intervene in the case of insufficient progress made. The current policy framework does not address these requirements, in particular due to the absence of a formalised process of coordinating energy policies across the EU in view of the Energy Union objectives, in particular the lack of policy recommendations from the Commission to Member States specific to energy and climate policies and the absence of a formalised process for Member States' consultations on national planning activities with a comprehensive regional scope along the five dimensions of the Energy Union Lack of synchronisation of planning and reporting obligations with the Paris Agreement: The Paris Climate Agreement sets out a 5-year review cycle, which includes review processes to ensure the achievement of its goals. Starting from 2023, every five years a global stocktake will take place, based on latest science and implementation progress, which is relevant for considering progressively more ambitious action by all Parties. All parties to the Paris Agreement are also invited to communicate by 2020 their mid-century, long-term low greenhouse gas emission development strategies. To make sure that the EU is ready to fully participate in the review processes under the Paris Agreement, planning and reporting obligations by Member States for the Energy Union should as far as possible be synchronised with the 5-year review cycle of the Paris Agreement. 3.Subsidiarity and the varying situation of Member States 3.1.Legal basis The Treaty on the Functioning of the European Union (TFEU) provides the EU with an explicit competence in the energy field through its Article 194. This article states that the EU policy in the area of energy shall aim to ensure the functioning of the internal market, ensure security of supply, promote energy efficiency and the development of new and renewable forms of energy, and promote the interconnection of energy networks. Articles 191 to 193 TFEU specify EU competences in the area of climate change. The EURATOM Treaty is a lex specialis in relation to the TFEU, which applies to the nuclear energy sector. This proposal pursues a legitimate objective within the scope of Article 191(1) TFEU, namely combating climate change, as well as the above mentioned energy policy objectives of Article 194 TFEU. The ordinary legislative procedure applies generally for the adoption of measures based in Article 192 (1) TFEU and in Article 194(2) of the TFEU. Nevertheless, each Member State maintains its right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply (Article 194(2) TFEU). The general division of responsibilities between the EU and Member States will not be affected by this proposal compared to the current situation. This Impact Assessment also assesses options for the Commission to provide recommendations to Member States. Articles 192 and 194 provide the legal basis for the Commission to adopt a legislative initiative which foresees the adoption of recommendations. As to the recommendations themselves, the legal basis for the recommendations is Articles 192 and 194 TFEU. According to Article 288 TFEU, to exercise the Union's competence, the institutions can adopt regulations, directives, decisions, recommendations and opinions. Recommendations have no binding force, but allow the Commission to make its views known and suggest a line of action without imposing any legal obligation on those to whom it is addressed. In case a legislative proposal is pursued, the possibility for the Commission to provide recommendations and the process governing these recommendations will be laid down in the proposal. Once entered into force, this will provide the framework for the recommendations as well as for the follow up process.

3.2.Necessity of EU action Against the background of the October 2014 European Council conclusions, the Commission's 2015 Energy Union Framework Strategy and the Commission's first State of the Energy Union 2015 the legislative initiative on Energy Union Governance aims at streamlining existing planning, reporting and monitoring obligations and defining the governance process between Member States and the Commission, while ensuring synchronisation with the reporting cycle from the Paris Agreement. In line with the subsidiarity principle, any proposal explored in the context of this initiative will have to respect Member States' competences. There is necessity for EU action in the following areas: First, having in mind that several elements of the Energy Union Strategy relate to objectives set at the EU level, action at EU level is needed to ensure the attainment of these objectives as well as coherence of energy and climate policies within the EU and across its Member States, while preserving flexibility for Member States. Moreover, the majority of the energy challenges facing the Union cannot be met through uncoordinated national action. The same holds true for climate change, which by its nature is a trans-boundary problem and cannot be solved by national or local action alone. Therefore, coordination of climate action at both European and global level is necessary. Consequently, EU action is justified to monitor the progress of implementation of energy and climate policies across the EU in line with the Energy Union objectives as well as the functioning of the internal energy market. Second, because of the cross-border relevance of each dimension of the Energy Union, EU action is needed to further promote enhanced cooperation among Member States. None of the Energy Union dimensions could be effectively implemented in the absence of an EU governance process between Member States and the Commission ensuring a more regional approach to energy and climate policy. It is also necessary to create the enabling framework to ensure that the EU is ready to participate fully in the review processes under the Paris Agreement, ensuring maximum synchronisation and synergies. Third, EU action is justified for the initiative's objective of streamlining existing planning, reporting and monitoring obligations, as existing EU legislation in the energy acquis as well as the Monitoring Mechanism Regulation can only be amended by means of legislative proposals in order to reduce the administrative burden for Member States and the Commission and enhance the coherence of planning and reporting as well as to ensure comparability of National Plans and Progress Reports. 3.3.EU added-value On the basis of the previous Section there are clear benefits from EU-level action over and above what could be achieved by the Member States acting alone. The establishment of a solid Energy Union governance system will help to ensure that the EU and its Member States collectively achieve the agreed objectives of the Energy Union and find coordinated and common solutions to common challenges in an effective and affordable manner. This is imperative in view of the considerable investment needs in the energy sector over the next decades. Addressing all dimensions of the Energy Union, including transport, regional policies, competition aspects, digital issues, innovation and others, in its governance system will also have a strong added value. Furthermore, a streamlined planning, reporting and monitoring framework together with functional governance process between the Member States and the Commission is expected to create administrative and broader economic, social and environmental benefits for the Member States and the stakeholders. Member States will benefit from a streamlined and simplified planning and reporting framework for their energy and climate policies. More efficient and coherent administrative procedures both within national authorities and between the Member States will enable a more efficient development and implementation of energy and climate policies. The private sector will benefit from more transparent national regulatory frameworks as basis for investment decisions in the energy and climate fields and citizens from better information on the implementation of the Energy Union and its associated policies. 4.Objectives In line with the agreement by the October 2014 European Council on a reliable and transparent governance system without any unnecessary administrative burden, which helps to ensure that the EU meets its energy policy goals and streamlines and integrates separate planning and reporting strands, the objectives of the initiative are presented below. 4.1.General objectives The general objectives of the initiative are the following: To ensure a coordinated and coherent implementation of the Energy Union Strategy across its five dimensions as well as the collective achievement of the Energy Union objectives through a combination of EU and national measures; To set up a functional (dynamic, reliable and transparent) governance process between the Commission and Member States; To minimise administrative burden and achieve a simplification and integration of planning, reporting and monitoring obligations for Member States and the Commission, while maintaining benefits of such obligations including their quality of information and transparency;

To ensure the compliance of the EU with its international climate obligations, especially those deriving from the UNFCCC and the Paris Agreement. 4.2.Specific objectives The specific objectives of the initiative are the following: To provide for a timely implementation and monitoring of the Energy Union objectives; To streamline existing planning, reporting and monitoring obligations of Member States and of the Commission in line with the Better Regulation principles of effectiveness, efficiency, EU added value, relevance and coherence; To specify the governance process in terms of the content and adequate periodicity of National Plans, Progress Reports and the monitoring by the Commission as well as the related iterative process between the Member States and the Commission and the relevant framework for regional coordination. 5.Policy options 5.1.Baseline scenario The starting point for defining options is to define a baseline as "no policy change" scenario. A baseline serves according to the Better Regulation Guidelines to assess all relevant advantages and disadvantages of the retained policy options against it in a meaningful way. The baseline scenario is defined as to represent the current legislative framework for planning, reporting and monitoring in the EU energy and climate acquis as well as the current governance process between the Commission and Member States. A strictly legal interpretation of the "no policy change" scenario with regard to planning, reporting and monitoring obligations in place in the current EU energy and climate acquis would imply that some of these obligations expire (notably relating to the 2020 energy targets), while others continue post 2020 (most of the obligations contained in the Monitoring Mechanism Regulation). Such a scenario would, however, be inconsistent with the policy context of this Impact Assessment: the new energy and climate policy targets for the period from 2021 to 2030 included in the Energy Union strategy, which build on the respective 2020 targets and are linked to continued EU energy and climate policies post 2020. These policies require for their implementation the continuation of the corresponding planning, reporting and monitoring obligations beyond 2020. By neglecting the existing planning, reporting and monitoring obligations that would be needed to implement these policy objectives, such a baseline scenario would not represent a suitable reference for the comparison of policy options for streamlining the existing planning, reporting and monitoring obligations post 2020. Against this background, this Impact Assessment adopts a political interpretation of the "no policy change" scenario by assuming an unchanged continuation of existing planning, reporting and monitoring obligations in the energy and climate field post 2020, without the introduction of any new obligations, when assessing alternative options for streamlining. Consistently, the baseline scenario does not assume the availability of any formalised governance process between the Commission and Member States – including an iterative process on ambition or implementation of National Plans leading to specific recommendations from the Commission on national energy and climate policy planning across the Union, or Member States' consultations on national policy planning. However, it has to take into account the pragmatic approach which was established in 2015 and will continue until the current legislative proposal is in force. This includes a voluntary process mirroring elements of the European Semester, including bilateral discussions with Member States based on specific country factsheets or the annual Semester country reports, the provision of policy conclusions or recommendations in the State of the Energy Union as an existing monitoring tool (together with the key indicators report for the five dimensions of the Energy Union), the cooperation with Member States through the Technical Expert Group as well as the involvement of all Commission services and agencies in the provision of information. The Guidance to Member States on National Energy and Climate Plans provides further information on these elements. As regards planning, reporting and monitoring obligations for the governance process, the existing obligations in sectorial legislation are part of the baseline scenario. 5.2.Options for streamlining of planning, reporting and monitoring obligations (S) In principle, streamlining of the existing planning, reporting and monitoring obligations in the EU energy and climate acquis post 2020 could be pursued by different levels of stringency, from a better alignment of the existing separate obligations (e.g. in terms of periodicity) to their full alignment (e.g. also in terms of content) and integration in one aggregate obligation.

For each of the existing planning, reporting and monitoring obligations in the energy acquis and the MMR, the Fitness Check assessed whether the obligation is suitable for: being integrated in National Plans, Progress Reports and integrated Commission monitoring (and at the same time being amended in or repealed from current sectorial legislation); or remaining a separate obligation in sectorial legislation, which will however be reflected in the National Plans, Progress Reports and integrated Commission monitoring; or remaining an entirely separate obligation in sectorial legislation (with possible amendments) without reflection in the National Plans and/or Progress Reports; or remaining a separate obligation from National Plans, Progress Reports and integrated Commission monitoring but, given its relation to obligations to be integrated in National Plans, Progress Reports and integrated Commission monitoring, linked to those obligations and to follow the legal destination of those obligations; or being fully repealed from current sectorial legislation and thus removed from the EU energy and climate acquis. All obligations under the Fitness Check were classified accordingly (see Annexes 6 and 7 for an overview of obligations and their classification). The incorporation of the relevant obligations in National Plans and Progress Reports would be supported by means of templates for these plans and reports that cover the five dimensions of the Energy Union. Building on these conclusions of the Fitness Check, the following sub-sections present policy options on both non-legislative and legislative approaches to streamline existing planning, reporting and monitoring obligations with the aim of achieving the above classification of obligations. A. Streamlining obligations by soft guidance (1)Soft comprehensive guidance to Member States on planning, reporting and monitoring (S1) Member States would be invited to streamline and improve their planning, reporting and monitoring obligations on the basis of comprehensive non-binding Commission guidance, which would complement the already existing Guidance to Member States on National Energy and Climate Plans (which focussed on policy planning) by guidance related to reporting and monitoring. Any streamlining of existing planning, reporting and monitoring obligations would be undertaken by Member States and the Commission on a voluntary basis. The soft Commission guidance to Member States would mean an unchanged continuation of existing planning, reporting and monitoring obligations without the introduction of new obligations. Templates for the content of National Plans and respective Progress Reports would be provided by soft guidance. B. Streamlining obligations by several legislative acts (2)Regulating planning, reporting and monitoring obligations in the energy and climate field through sector-specific EU energy and climate legislation (S2) The current planning, reporting and monitoring obligations for Member States and the Commission in the energy acquis identified in the Fitness Check as being relevant to the implementation of the Energy Union would be streamlined through revisions of the existing sectorial legislation. The relevant provisions would remain in the existing sectorial legislation but they would be amended in order to be brought in line with the Energy Union objectives by being integrated, revised or fully repealed. The MMR would also be amended separately to replace the articles needing to be either repealed, revised in order to ensure consistency with the Paris Agreement or integrated with the energy parts. Templates for the content of National Plans and respective Progress Reports would be provided by soft Commission guidance.

(3)Regulating planning, reporting, monitoring and compliance obligations in the energy and climate field through two separate legislative acts for the energy and climate fields (S3) The current planning, reporting and monitoring obligations for Member States and the Commission identified in the Fitness Check as being relevant to the implementation of the Energy Union would be streamlined through two separate legislative acts: a new act on governance for the energy field that replaces the relevant parts of existing legislation in the energy acquis and a separately amended MMR for the climate field that replaces the Articles needing to be repealed, revise the articles in order to ensure consistency with the Paris Agreement or to be integrated and streamlined with the energy parts. Templates for the content of National Plans and respective Progress Reports would be provided by soft Commission guidance. C. Streamlining obligations by a single legislative act (4)Regulating planning, reporting, monitoring and compliance obligations in the energy and climate field by a single legislative act on Energy Union governance that replaces the relevant parts of existing legislation (S4) A single legislative act on Energy Union governance would be adopted that replaces the relevant existing obligations in the energy and climate acquis, while a "light" MMR would remain in force. All planning, reporting and monitoring obligations for Member States and the Commission that are relevant to the Energy Union implementation and have been identified in the Fitness Check as suitable for being integrated will become part of one new single legislative act. The single act will also repeal all obligations that have been identified as being suitable for being fully repealed, and amend other obligations as identified in the Fitness Check for the energy acquis and in the MMR. However, those provisions that relate primarily to the UNFCCC and do not have a direct link with the National Plans would remain in the MMR. Templates for the content of National Plans and respective Progress Reports would be provided as part of the single legislative act. (5)Regulating planning, reporting, monitoring and compliance obligations in the energy and climate field by a single legislative act on Energy Union governance (S5) A single legislative act on Energy Union governance would be adopted that replaces the relevant parts of existing legislation in the energy acquis and fully replaces the MMR. All planning, reporting and monitoring obligations for Member States and the Commission that are relevant to the Energy Union implementation and have been identified in the Fitness Check as suitable for being integrated will become part of one new single legislative act. The single act will also repeal all obligations that have been identified as being suitable for being fully repealed, including the MMR in its entirety, and amend other obligations as identified in the Fitness Check for the energy acquis. Templates for the content of National Plans and respective Progress Reports would be provided as part of the single legislative act. (6)Regulating planning, reporting, monitoring and compliance obligations in the energy and climate field by a single legislative act that amends or replaces existing legislation for all actors and stakeholders (S6) A single legislative act would be adopted that integrates, repeals or amends existing planning, reporting and monitoring obligations for all actors and stakeholders (not only Member States and the Commission). In the energy field, this would imply that also obligations for the following other actors and stakeholders would be regulated in the single act: obligations performed by the Agency for the Cooperation of Energy Regulators (ACER, two obligations), the European Network of Transmission System Operators for Electricity (ENTSO-E, one obligation), the European Network of Transmission System Operators for Gas (ENTSO-G, one obligation) and the national Transmission System Operators (TSOs, four obligations). In addition, further obligations that were outside the scope of the Fitness Check would be included in the single act, such as planning and reporting obligations for project promoters set out in Article 5(1) and 5(4) of Regulation (EU) No 347/2013 on guidelines for trans-European energy infrastructure (the TEN-E Regulation) as well as obligations for energy market participants set out in Article 8 of Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (the Wholesale Energy Markets Regulation). As to the climate acquis, in this option the MMR is entirely included in the single legislative act and repealed from the existing climate acquis. Templates for the content of National Plans and respective Progress Reports would be provided as part of the single legislative act.

5.3.Options for elements of the Governance process This section presents policy options for the Governance process between Member States and the Commission as well as between Member States. 5.3.1.Periodicity of National Plans (NP) (1)No update of National Plans in the period from 2021 to 2030 (NP1) After submission of the final National Plans by Member States to the Commission by 2018, no update of National Plans by Member States is foreseen in the period from 2021 to 2030, so that final National Plans would remain valid until 2030. (2)One update of National Plans in the period from 2021 to 2030 (NP2) After submission of the final National Plans by Member States to the Commission by 2018, Member States would be required to update the plans once, e.g. in 2023. The update would cover objectives, policies and measures and projections of the plans. (3)Biennial updates of National Plans (NP3) After submission of the final National Plans by Member States to the Commission by 2018, Member States would be required to biennially update the plans. The updates would cover objectives, policies and measures and projections of the plans. (4)Biennial updates of National Plans limited to policies and measures and projections (NP4) After submission of the final National Plans by Member States to the Commission by 2018, Member States would be required to biennially update the plans. However, the updates would be limited to policies and measures and projections of the plans. (5)Updates of National Plans every five years, and at Member States' discretion with regard to policies and measures and projections (NP5) After submission of the final National Plans by Member States to the Commission by 2018, Member States would be required to update the plans every five years, i.e in 2023 and 2028, but going beyond that date in view of the 2050 horizon. National plans should also be informed by long-term strategies, e.g. the existing 2050 road maps or mid-century strategies. If, in addition, Member States wish to update the National Plans with regard to their policies and measures and projections more frequently than the required updates every 5 years Member States would be required to report to the Commission the updated plan. Note that for all of the options above, the timing and content of the updates of National Plans would have to be consistent with the timing and content of Progress Reports. 5.3.2.Periodicity of Progress Reports (PR) (1)Annual Progress Reports (PR1) Member States would submit annual Progress Reports on the implementation of National Plans, including on updates of policies and measures and updated projections. The first Progress Reports would be submitted in the early 2020s.

(2)Biennial Progress Reports (PR2) Member States would submit biennial Progress Reports on the implementation of National Plans, including on updates of policies and measures and updated projections. The first Progress Reports would be submitted in the early 2020s. (3)Biennial comprehensive Progress Reports and limited Progress Reports every other two years (PR3) Member States would submit annual Progress Reports, of which every two years a comprehensive report on the implementation of National Plans, including on updates of policies and measures and updated projections, and every other two years a limited report containing the information required on an annual basis (for example GHG inventories and approximated inventories). The limited report could also contain updates of other information in case of substantial changes occurring as compared to the information submitted in the comprehensive report. The first comprehensive Progress Reports would be submitted in the early 2020s. 5.3.3.Periodicity of Commission monitoring of collective progress made (M) (1)Annual monitoring reports (M1) Annual integrated monitoring report by the Commission on EU-wide progress made towards the Energy Union objectives based on Member States Progress Reports and key energy and climate indicators as well as country-specific assessments. (2)Biennial monitoring reports (M2) Biennial integrated monitoring report by the Commission on EU-wide progress made towards the Energy Union objectives based on Member States Progress Reports and key energy and climate indicators as well as country-specific assessments. 5.3.4.Iterative process with Member States including country-specific recommendations or decisions (IP) The achievement of the Energy Union objectives and in particular of the 2030 Energy and Climate Framework assumes an iterative process between the Member States and the Commission. This process should include country-specific recommendations as part of the State of the Energy Union. Such recommendations would be based on, inter alia, Member States' National Plans, their Progress Reports, and the assessment of key energy and climate indicators to monitor progress towards meeting the Energy Union objectives. They may also concern more general or short-term energy and climate policy developments than those covered by National Plans or Progress Reports and could draw on complementary country analyses inter alia under the European Semester. The geographical scope of the overall Governance process as well as of the possibility to provide recommendations has to be further considered as regards non-EU countries, which are however participating e.g. in the achievement of the climate targets or which are closely linked, e.g. through the Energy Community Treaty. This process would enable the Commission to evaluate whether the National Plans are ambitious enough to allow for the collective achievement of the Energy Union objectives, and in particular the 2030 targets, and to detect at an early stage whether the implementation of the National Plans is delivering on these objectives. Should this not be the case, the Commission should propose additional measures at EU-level or request from Member States further measures in order to fill potential gaps to these targets and thereby ensure the achievement of these Energy Union objectives, in particular the 2030 targets for renewable energy and energy efficiency (thereby addressing the "What if" question"). In the policy options presented below, Member States would be asked to take recommendations or decisions into account (either as part of updates of National Plans or as part of their Progress Reports) and to report to the Commission on the consideration of these recommendations or decisions. The options below on the iterative process on the one hand, and on the nature of subsequent country-specific recommendations or decisions on the other, are complementary. (1)Iterative process on ambition of draft National Plans including country-specific recommendations (IP1) Should the Commission's assessment of Member States' draft National Plans show insufficient ambition of National Plans, the Commission issues recommendations for potential revisions of the draft National Plans (see options IP5 to IP8). These recommendations concern the entire National Plans, including their national objectives (ambition), in view of collectively achieving the Energy Union objectives and in particular the 2030 targets for renewable energy and energy efficiency. Taking into account the Commission recommendations, Member States revise their draft National Plans before their finalisation.

(2) Iterative process on the implementation of the National Plans including country-specific recommendations (IP2) Following the submission of final National Plans and based on an assessment of Member States' national Progress Reports, in case of insufficient delivery of the National Plans, the Commission issues recommendations for potential revisions of final National Plans (see options IP5 to IP8). These recommendations refer to the policies and measures of the National Plans in view of fully implementing (delivering) their national objectives. Taking into account these Commission recommendations, Member States revise policies and measures of their plans in the implementation phase. (3)Iterative process on ambition and implementation of the National Plans including country-specific recommendations (IP3) The iterative process would take place based on the ambition of the draft National Plans and the implementation of the National Plans (combination of the 2 previous options). Taking into account the Commission recommendations on the ambition of draft National Plans, Member States revise their National Plans in the drafting phase before their finalisation. Taking into account the Commission recommendations on the implementation of the National Plans, Member States revise National Plans in the implementation phase. (4)Iterative process on ambition and implementation of the National Plans including country-specific recommendations and measures (IP4) This option applies if, despite of the iterative process of the Commission on the ambition of draft National Plans and the implementation of final National Plans (option IP3), aggregate national objectives presented by Member States' in final National Plans persist to be insufficient to achieve the Energy Union objectives or if Member States collectively do not sufficiently deliver on their national objectives for renewable energy and energy efficiency (and in particular for the case of binding targets at EU level). In this case the Commission could propose additional measures at EU-level or request from Member States further national measures in order to fill potential gaps to these targets and thereby ensure the achievement of these Energy Union objectives. The process on how to detect and prevent such gaps should be set out as part of the iterative process in the Governance initiative. Potential measures to be taken would be anticipated in the Governance initiative but would be set out in detail in the revised sectorial legislation. For this reason, the corresponding policy options are assessed in more detail in the impact assessments for the revisions of these Directives. (5)Commission recommendations not set in legislation (IP5) The Commission provides recommendations specifically to energy and climate policy to Member States on their draft National Plans and the implementation of the National Plans as part of the State of the Energy Union, when appropriate, and without a process specified in a legal act. (6)Commission recommendations set in legislation (IP6) The Commission provides recommendations to Member States on their draft National Plans and the implementation of the National Plans on the basis of a process specified in a legal act. (7)Council recommendations set in legislation (IP7) The Commission proposes recommendations to Member States to be adopted by the Council on draft National Plans and the implementation of the National Plans on the basis of a process specified in a legal act. (8)Binding Commission Decisions (IP8) The Commission issues legally binding decisions addressed to the Member States on their draft National Plans and the implementation of the National Plans on the basis of a process specified in a legal act.

5.3.5.Consultations of Member States on National Plans (C) Consultations with neighbouring and other relevant Member States on National Plans refer to an exchange of a Member State's plan with other Member States, publication of the draft plan as part of the consultation, comments by other Member States on the plan as well as consideration of such comments in the finalisation of the plan and subsequent revisions of the final plan. The options below address in particular the consultation process. To establish coherent National Plans across Member States, draft National Plans would outline the initial objectives for the plans, the envisaged policies and measures to reach these objectives, and assess the anticipated impacts of these policies and measures on neighbouring and other relevant Member States. Subsequently, neighbouring and other relevant Member States would jointly assess options on where and how a coordinated approach would best contribute towards achieving the Energy Union objectives in the implementation of their National Plans. Against this background, regional cooperation can lead to enhanced energy market integration, strengthened security of supply, and a more cost-effective implementation of the Energy Union. The consultations on National Plans can be undertaken within existing structures for regional cooperation or new regional structures to be created for such consultations or a new EU-wide coordination structure to be created for such consultations as part of the Governance initiative (or a combination of these structures). These alternative structures concern the institutional design of regional cooperation and are not further explored in this Impact Assessment. (1)Voluntary consultations on draft and final National Plans (C1) Member States undertake voluntary consultations with neighbouring and other Member States on objectives, policies and measures presented in the draft National Plans as well as the implementation of the National Plans, inter alia based on the Commission's Guidance to Member States on National Energy and Climate Plans as well as the forthcoming Commission Guidance on regional cooperation. (2)Mandatory consultations on draft National Plans only with regard to policies and measures (C2) Member States undertake legally mandatory consultations with neighbouring and other Member States only on policies and measures presented in draft National Plans. (3)Mandatory consultations on draft National Plans (C3) Member States undertake legally mandatory consultations with neighbouring and other Member States on objectives, policies and measures presented in draft National Plans. (4)Mandatory consultations on draft and final National Plans (C4) Member States undertake legally mandatory consultations with neighbouring and other Member States on objectives, policies and measures presented in draft National Plans as well as the implementation of the National Plans. Following the presentation of policy options in section 5.3, the figure below illustrates the main elements of the governance process.

6.Assessment of the impacts of the various policy options In this section, the impacts of the policy options set out in section 5 will be assessed with regard to the extent to which the policy options meet the specific objectives defined in section 4. In principle, all options are assessed with respect to three categories of impacts: economic, social and environmental impacts. However, as different options can trigger different changes and have different kind of impacts the specific assessment of policy options will be consistent with the nature of the proposed policy options. Streamlining of obligations The impacts of policy options on alternative approaches to streamlining are based on two studies supporting this Impact Assessment: the Trinomics study and the Amec Foster Wheeler study (see section 9.4 for references). The methodology of the Trinomics study and the Amec Foster Wheeler study for assessing the policy options followed the Standard Cost Model defined by the Better Regulation toolbox. The underlying data on each indicator was derived from a comprehensive stakeholder survey as well as interviews with national and EU-level stakeholders. The analysis of each policy option examined several categories of direct impacts based on quantitative indicators (such as costs of implementation, administrative and reporting costs, service outsourcing costs, and ICT/equipment costs for existing electronic reporting systems) and qualitative indicators (such as efficiency of planning, reporting and monitoring system, information quality, simplicity and coherence of planning, reporting and monitoring procedures, and specific costs and benefits for companies). Furthermore, indirect impacts on policy processes were examined by qualitative indicators (such as transparency of national and EU policies, quality of statistics, and quality of national energy and climate policy) to the extent possible, as were indirect impacts on the Energy Union objectives. The main cost categories assessed are annual costs from planning, reporting and monitoring obligations and one-time implementation costs from legislative changes as well as their transposition and implementation. In particular, annual costs originate from administrative and reporting costs, ICT/equipment costs and service outsourcing costs. One-time implementation costs for the Commission relate to the legislative changes (revision or renewal of legislation, provision of templates, introduction of a new legislative act) that are needed to implement each option as well as the preparation of guidance. One-time implementation costs for Member States originate in particular from transposition and implementation of legislation and the adoption of National Plans. Further one-time implementation costs include ICT/ equipment costs as well as service outsourcing costs. Against this background, the following impacts are assessed: Economic impacts: For policy options on alternative non-legislative and legislative approaches to streamlining of planning, reporting and monitoring obligations, the most relevant economic impacts are impacts in terms of the associated administrative costs (in terms of ongoing costs from obligations and implementation costs) and benefits (in terms of simplification of obligations, a more coordinated and coherent implementation of the Energy Union strategy and compliance with international climate obligations) for Member States and the Commission relating to these options. Based on the mapping of obligations in the Fitness Check, the administrative costs and benefits of the policy options to be assessed will show variations depending on the corresponding prospects of arriving at such streamlining as well as the legislative processes involved. Furthermore, due to the focus on planning, reporting and monitoring obligations for Member States and the Commission, the initiative will not affect the nature of information obligations placed on industry in general and SMEs in particular, and will not impose direct or indirect planning, reporting and monitoring requirements on business in general and SMEs in particular. Likewise, significant direct impacts on the competitiveness of traditional industrial sectors are not expected. However, positive impacts on industry in general and SMEs in particular are expected in terms of enhanced investor certainty by means of streamlined obligations. Social impacts are relevant in terms of better informing citizens about the Energy Union implementation by means of streamlined and thus more transparent planning, reporting and monitoring obligations for Member States and the Commission. Environmental impacts: The Fitness Check identified a lack of coherence between planning, reporting and evaluation obligations in the energy field with the climate field. Correcting such incoherencies will increase the EU's performance regarding climate change, improve quality and completeness of data and compliance with international commitments under the UNFCCC and Paris Agreement which are intrinsically linked with the EU system. Governance process For policy options on the governance process between Member States and the Commission the assessment of impacts will primarily relate to the general implications of these options for a functional (dynamic, reliable and transparent) governance system that will be essential to implement the objectives of the Energy Union. Besides, there are more specific impacts that will be assessed in a qualitative manner: Economic impacts are relevant with regard to general economic impacts of a functional governance process; the associated administrative costs and benefits for Member States and the Commission; and impacts on SMEs and industry in terms of investor certainty by means of a transparent governance process. Social impacts are relevant in terms of better informing citizens in the Energy Union implementation as well as in terms of jobs and growth by means of a functional governance process. Environmental impacts are relevant in terms of increasing the EU's performance regarding climate change as well as compliance with international commitments. In line with the procedural nature of policy options on the governance process, the assessment is undertaken in relation to and structured along the objectives that are relevant to all categories of options: achieving a dynamic, reliable and transparent governance process; facilitating a timely implementation and monitoring of Energy Union objectives; minimising administrative burden; and enabling the EU to comply with international climate obligations.

In the following sub-sections, impacts will be quantified and monetised as far as possible (notably for policy options on alternative non-legislative and legislative approaches to streamlining of planning, reporting and monitoring obligations). For those policy options where quantification is not possible due to the procedural nature of options (notably for options on the governance process) the impacts of policy options will be assessed qualitatively in comparison to the baseline scenario. Results of the public consultation have also been used in the assessment. As a conclusion of the assessment of impacts, the extent that the policy options contribute to meeting the relevant objectives presented in section 4 will be identified. Broader benefits of the Energy Union Governance Not all aspects of the Energy Union Strategy are currently adequately covered or subject to planning, reporting and monitoring obligations at EU level. This is due to the broad nature of the Energy Union Strategy and its five dimensions. As regards some elements of the Energy Union Strategy, for example research, innovation and competitiveness, existing legislation does not provide for any planning, reporting and monitoring obligations and these components are therefore insufficiently covered to effectively support the implementation and monitoring of progress towards the Energy Union objectives,. Besides the streamlining and simplification of existing planning and reporting obligations (which is expected to generate cost savings), the initiative also aims at the establishment of planning and reporting obligations on some of these issues as part of the integrated National Plans and the integrated progress reports. This will make the planning, reporting and monitoring framework fit for the post-2020 period, covering the Energy Union's five dimensions. Such additional planning obligations might limit the cost savings from streamlining, but will at the same time generate substantial benefits of integrated policy planning and ensuring investor certainty until the year 2030. National Plans are instrumental for the implementation of the Energy Union. The same holds true for the new integrated monitoring system by the Commission, which will be key to assess the Union's progress towards the implementation of the Energy Union. Greater coherence between various planning, reporting and monitoring obligations will enhance transparency. Consistency between the energy and climate fields is expected to be improved. This will bring benefits as Member States will not report information that is partly overlapping in substance or containing inconsistencies. For example, under the MMR Member States currently report on policies and measures which contribute to decreasing emissions, which overlap with reporting on policies and measures under the Energy Efficiency Directive, Energy Performance of Buildings Directive and Renewable Energy Directive. Through the submission of an integrated Progress Report covering all five dimensions, the information currently reported under several different channels would be streamlined and only submitted once, thus contributing to cutting administrative costs in Member States. Another example is that parameters related to renewable energy and energy efficiency used in national greenhouse gas emission projections are not consistent with parameters reported in the energy sector. Improved consistency will lead to better data quality, transparency, and an integrated approach to energy and climate policy planning. Improved data availability is expected to bring wider benefits as Member States and stakeholders will have access to the data and information. A better picture will be available of policy developments in the Member States. Furthermore, research institutions will be able to use the data and information for their research. Experience in the climate field where for instance data on greenhouse gas emissions and removals is available to all has shown that this information can be a valuable source. The broader perspective should also be kept in mind. The transition towards a more secure and sustainable energy system is estimated to require some EUR 200 billion annual investments in the next decade. Therefore, general environmental, economic and social benefits from the implementation of the Energy Union can be expected from a more streamlined energy and climate acquis and in particular from a functional, reliable and transparent Governance process that supports the achievement of the Energy Union objectives including the 2030 climate and energy targets. The Energy Union Governance will allow for the necessary certainty and predictability to facilitate such investments as part of the implementation of the Energy Union and make them more efficient. In summary, the initiative is expected to generate substantial new benefits. These include an integrated approach to energy and climate policy planning, the reduction of policy overlaps and interactions, improved transparency and availability of information, improvements in the quality of information, enhanced predictability and investor certainty until the year 2030. Put together, this is expected to lead to a substantially more cost-effective planning and reporting system. 6.1.Impacts of the Baseline Scenario The baseline scenario will serve as a reference for the assessment of the impacts of the proposed policy options in both areas of this Impact Assessment. Impacts of the baseline for streamlining obligations For the area of streamlining obligations, impacts of the baseline scenario reflect implications of an unchanged continuation of existing planning, reporting and monitoring obligations post 2020. The following impacts are derived for the baseline scenario. Economic impacts for Member States and the Commission are expected as follows: Total cumulative costs for Member States in the period 2021-2030 of 222.7 million EUR. This includes both one-time implementation cost and annual costs (the latter multiplied by 10, to cover the 10 years period). One time implementation costs are due to legislative changes ensuring the continuation of existing obligations beyond 2020. Implementation costs occur in the baseline scenario due to the legislative procedure of prolonging the respective legal provisions that would otherwise expire in 2020. Implementation costs include costs for transposition and implementation by Member States. An overview of one time implementation costs in the baseline scenario is presented in Annex 9. The relevant legislation that would be affected by prolongation due to expiry in 2020 includes: oDirective 2009/28/EC (Renewable Energy Directive)

oDirective 2010/31/EU (Energy Performance of Buildings Directive) oDirective 2012/27/EU (Energy Efficiency Directive) oDirective 2013/30/EU (Safety of Offshore Oil and Gas Operations Directive) oRegulation (EU) No 1316/2013 (Establishing the Connecting Europe Facility) The total figure also includes annual administrative and reporting costs (for planning and reporting activities), ICT/equipment costs (for equipment and ICT system installation, maintenance and use) and service outsourcing costs (for outsourcing of planning and reporting services to external consultants) for Member States. This represents an unchanged administrative burden from existing planning and reporting obligations (except for inflation correction). An overview of annual costs for Member States in the baseline scenario is presented in Annex 9. No administrative benefits in terms of simplification as well as in terms of a more coordinated and coherent implementation of Energy Union strategy across its five dimensions from more streamlined and integrated planning, reporting and monitoring due to an unchanged continuation of existing obligations post 2020. No impacts on SMEs and industry are expected due to unchanged specific costs and benefits for companies from an unchanged continuation of existing planning, reporting and monitoring obligations post 2020. No general economic impacts are expected from the unchanged continuation of the existing planning, reporting and monitoring obligations relevant for the achievement of the Energy Union objectives. No environmental impacts are expected in terms of achieving the Energy Union objectives due to unchanged efficiency of planning, reporting and monitoring system, information quality, simplicity and coherence of planning, reporting and monitoring procedures. The single framework approach established by the MMR incorporates planning and reporting requirements from EU law (ESD, ETS and LULUCF) and international origin (UNFCCC, Paris Agreement) in one act, thereby helping to ensure compliance by the Union with its international climate obligations and to enable the EU to monitor consistency and progress of its international and EU obligations in an integrated way. No social impacts are expected in terms of informing citizens about the Energy Union implementation due to unchanged information quality from an unchanged continuation of existing planning, reporting and monitoring obligations post 2020. Impacts of the baseline for the governance process For the area of the governance process impacts of the baseline scenario correspond to implications of the absence of a formalised process between Member States and the Commission. It however takes into account the pragmatic approach established in 2015. With regard to the periodicity of existing planning, reporting and monitoring obligations the baseline scenario is based on the existing obligations in the sectorial legislation, which either do not include an explicit requirement to update plans or foresee different periodicity. The same applies for reporting and monitoring obligations, where the majority of legislative provisions, however, provide for annual or biennial reporting and monitoring. Therefore, the Impact Assessment assumes that planning obligations for Member States are either updated every three years or can be updated when necessary and that reporting obligations for Member States are either annual or biennial. Such varying periodicity across existing obligations that are suitable for integration into National Plans and Progress Reports is inconsistent with a governance process that aims to align the periodicity of integrated planning, reporting and monitoring obligations. As regards the monitoring obligations, the State of the Energy Union is intended to be an annual report assessing progress made and steering the further policy debate. This is part of the baseline. The pragmatic approach established in 2015 provides for a voluntary process mirroring elements of the European Semester. In 2015, bilateral meetings were held with all Member States based on sector-specific factsheets. The interaction with the Member States provided the basis for the evaluation of progress made which fed into the 2015 State of the Energy Union. As this was the first edition, policy conclusions were made on European, regional and national level, but not yet country-specific. This process should be developed further in a pragmatic way until the Energy Union governance legislation is in force. This includes bilateral discussions with Member States based on specific country factsheets or – in the absence of such factsheets in a given year (like in 2016) – the annual Semester country reports. These bilateral discussions form the basis of developing, as of 2016, country-specific policy conclusions or recommendations. However, the baseline scenario does not include formalised country-specific recommendations on energy and climate policies across the Union. These are aimed to be included into the Commission's integrated monitoring report and should be developed further over time to more detailed country-specific recommendations once the Governance system is in place and/or the draft National Plans are available to the Commission. This procedure does not foresee a role for the Council and the European Parliament on the European level. However, the specific recommendations on energy and climate policies included in the State of the Energy Union would feed into the European Semester process. They could also become a Commission recommendation with a role for the Council in the context of the European Semester if they are linked to fiscal and structural policies or issues of macroeconomic relevance. Nevertheless, a lack of a formalised political process between the EU institutions and Member States, including on the finalisation of the draft plans and their subsequent implementation, is expected to result in collective national efforts that are insufficient for achieving the Energy Union objectives, in particular with regard to the 2030 targets for renewable energy and energy efficiency, together with an uncertain implementation of the National Plans over time. For Member States' consultations on national policy planning, the baseline scenario provides for no formalised consultations on National Plans. However, the baseline scenario includes the cooperation with Member States through the existing Technical Working Group on National Energy and Climate Plans, where Member States are already encouraged to exchange information. Existing regional initiatives and fora, which could also be used for consulting the draft National Plans, are also part of the baseline scenario. However, such informal process might put at risk the achievement of the objectives of the Energy Union (in particular the 2030 targets for renewable energy and the energy efficiency) due to the non-coordinated approach and the fact that the process is based on voluntary participation. Investor certainty for SMEs and industry or information for citizens would not be enhanced by the absence of a transparent governance process. The impacts of policy options will subsequently be assessed qualitatively in comparison to this baseline. 6.2.Impacts of options for streamlining of planning, reporting and monitoring obligations (S)

In this section, the impacts of policy options for streamlining obligations will be assessed against the reference of the baseline scenario, which assumed an unchanged continuation of existing planning, reporting and monitoring obligations post 2020. For this area of policy options, in the Public Consultation supporting this Impact Assessment (see section 9.3) a broad consensus emerged among respondents on the need to better streamline, align and integrate existing planning and reporting obligations to avoid gaps, duplications and inconsistencies. This view is notably also shared by all Member States that replied to the Public Consultation. Concerning the approach to streamlining, a vast majority of respondents considered a single legislative act as the preferred option for streamlining of planning and reporting obligations in the energy and climate field post 2020. Total cumulative costs for Member States in the period 2021-2030 Table 1 below presents the total cumulative costs for Member States in the period 2021-2030. The figures include both one time implementation cost and annual administrative costs (the latter multiplied by 10, to cover the 10 years of the period). One-time implementation costs for Member States originate in particular from transposition and implementation of legislation and the adoption of National Plans. Further one-time implementation costs include ICT/ equipment costs as well as service outsourcing costs. Annual costs include administrative and reporting costs, annual ICT/equipment costs and annual service outsourcing costs. An overview of one-time implementation costs and annual administrative costs for Member States across policy scenarios is presented in Annex 9. Policy option Total cumulative costs Baseline 222.7 Option S1 (soft guidance) 244.5 Option S2 (sector-specific legislation) 330.1 Option S3 (two legislative acts replacing relevant parts of energy acquis and MMR) n.a. Option S4 (single act replacing relevant parts of energy acquis and MMR) 219.3 Option S5 (single act replacing relevant parts of energy acquis and fully replacing MMR) 219.3 Option S6 (single act for all actors and stakeholders) 243.6 n.a. = not available as this policy option was not evaluated by the external expertise; impacts for this option are therefore assessed qualitatively. NB: As regards option S4, as a partial MMR remains, some of the complexity related to implementation of separate acts remains which may increase costs and decrease the savings under this option. As regards option S5, due to cost savings of fully integrating the MMR, the total costs for Member States of this option are expected to be lower. As regards policy options for streamlining of obligations, the studies supporting this Impact Assessment (see section 9.4 for references) assumed an unchanged periodicity of planning, reporting and monitoring obligations in relation to existing legislation. Actual annual administrative cost savings from streamlining of these obligations are expected to be higher due to an alignment of the periodicity of planning, reporting and monitoring obligations which will reduce administrative costs (see also sections 6.3 and 7.2 for an assessment and comparison of options on the Governance process). Ongoing administrative and reporting costs for the European Commission (all obligations related monitoring costs) have not been monetised by the Trinomics study. However, as for Member States these administrative and reporting costs are expected to be lower as regards annual monitoring than in the baseline scenario for all options, reflecting cost savings from streamlined obligations. At the same time, the integrated Commission monitoring of the National Plans and Progress Reports will also incur new administrative costs (mainly in terms of human resources and external technical support). In total, annual monitoring costs for the Commission are expected to decrease compared to the baseline for policy options S4 and S5. Administrative benefits Overall, all options will lead to higher administrative benefits in terms of simplification of planning, reporting and monitoring – in particular between the energy and climate fields – and therefore a more coordinated and coherent implementation of the Energy Union Strategy across its five dimensions. The closer an option gets to the streamlining into a single legislative act without creating unnecessary complexity, the higher the administrative benefits are. Therefore, the highest administrative benefits can be expected from option S5 followed by option S4, with the lowest benefits for option S1. The following additional considerations have to be taken into account when looking into the administrative benefits of some of the options: As regards option S1, there is a risk that the benefits might not be achieved as the guidance is voluntary and may not be followed. As regards option S2, the complex legislative process of revising the various sector-specific acts and the risk of inconsistent interpretations leads to a corresponding risk that the streamlining and integration would not be fully achieved and that these benefits would not materialise. As regards option S3, the two separate legislative process of introducing a new legislative act for the energy field and revising the MMR for the climate field and the risk of inconsistent interpretations leads to a corresponding risk that these benefits – in particular from the integration between the energy and climate field – would not be fully achieved and would not materialise.

As regards option S6, this option risks introducing unnecessary complexity in the overall reporting system given the large scope of stakeholders that would be covered. The level of integration and efficiency would be affected. Impacts on SMEs and industry The streamlining of planning, reporting and monitoring obligations is intended only for Member States and the Commission, except for option S6 which also foresees the streamlining of obligations of other actors and stakeholders (ACER, ENTSO-E, ENTSO-G and TSOs). Therefore, the impact on industry and in particular on SMEs is – compared to the baseline scenario – positive but minor. Potential benefits for companies in terms of investor certainty could result from potentially more integrated energy and climate policies (especially by the use of templates by Member States). However, option S4 might have mixed impacts as the discontinuation of a single framework related to planning, reporting and monitoring in the climate field might entail negative impacts in this regard. Integration between energy and climate policies The integrated planning, reporting and monitoring would lead to more integrated energy and climate policies and improvements of quality and completeness of reported data because of the introduction of harmonised templates for National Plans and Progress Reports. The most optimal integration and increased coherence would be achieved mainly by option S5 through a single legislative act covering planning, reporting and monitoring obligations for Member States and the Commission in the energy and climate field. However, the benefit is different based on the applied option: As regards option S1, this benefit is considered as only potential as there is a risk that the voluntary guidance will not be followed. As regards option S2, the complex legislative process of revising the various sector-specific acts and the risk of inconsistent interpretations leads to the risk that the streamlining and integration would not be fully achieved and that these benefits would not materialise. As regards option S3, this entails a risk of inconsistent interpretations of provisions that should be read together. The fact that two acts would have to be adopted leads to a corresponding risk that the streamlining – in particular the integration between the energy and climate field – will not be fully achieved and that these benefits would not materialise. As regards option S4, obligations that are part of the plans linking the international context with the EU would be lacking in the single legislative act (for example low carbon development strategies or reports on national adaptation actions with which the plans should be coherent and consistent) due to the light MMR remaining. On the other hand, option S4 would result in a shorter legislative act by integrating only those planning, reporting and monitoring obligations from the energy and climate field that are most relevant for the Energy Union. As regards option S5, it should be mentioned that it would lead to higher quality of national energy and climate policy (as the new legislative act would be a strong push factor for this), much higher efficiency of the reporting system (as it would lead to a more integrated vision and reduce risks of overlaps, duplications and redundancies), improved information quality (due to improved requirements and streamlined coherence across Member States), simpler and more coherent reporting procedures (as all changes are devoted to streamlining, improving comparability and congruence of requirements) It would ensure the highest consistency in planning, reporting and monitoring between EU and international climate policies due to integration of all obligations from the MMR. As regards option S6, due to the creation of complexities and the risk of time consuming data collection, the overall reporting system may become less efficient which would also have negative impacts on the level of integration and the quality of the information. There are also risks related to the quality of statistics as it might be hard to provide comparable statistics for all obligations due to specific circumstances and data collection methodologies applicable. Ensuring the compliance by the Union with its international climate obligations All options contribute to ensuring compliance with the Union and Member States' commitments and obligations under international climate change agreements to a different extent. They ensure easy access to climate data and consistency and credibility of information reported to the Commission and internationally. They (except for option S4) enable the EU to continue its approach on monitoring progress on the implementation of its international commitments in a single integrated monitoring report which could be used to demonstrate internationally what climate action the EU is taking and to show progress towards the commitments the EU has made internationally at UNFCCC Climate Conferences. Option S1, S2, S3 and S4 contribute in the same way as the baseline to this objective. Option S5, due to the single legislative act, contributes best to this objective. Option S4 would contribute less to this objective due to the split of obligations from EU or international origin into two different legislative acts and subsequently two different monitoring procedures. Social impacts Option S1 has similar social impacts to the baseline since it is expected that the citizens would be informed about the Energy Union implementation in the same way. Potential social benefits could result from higher information quality due to the more integrated energy and climate policies introduces by the voluntary templates for National Plans and Progress Reports.

Positive social impacts are expected from options S2, S3 and S5 in terms of informing citizens about the Energy Union implementation due to higher information quality from improvements of data qual