EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 17.10.2010 
SEC(2010) 1396 final 
  
COMMISSION STAFF WORKING DOCUMENT 
  
SUMMARY OF THE IMPACT ASSESSMENT  
 
Accompanying document to the 
  
COMMUNICATION FROM THE CO MMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMI TTEE OF THE REGIONS 
  
Energy infrastructure priori ties for 2020 and beyond -  
A Blueprint for an integrated European energy network 
     
{COM(2010) 677 final} 
{SEC(2010) 1395 final} 
 
EN 2   EN 1. PROBLEM DEFINITION  
The EU Energy Policy1 and its implementing legislati on set ambitious goals and binding 
targets for 2020 on greenhouse gas emissions2 (-20%), energy from renewable sources3 (20% 
of final energy consumption) and energy effi ciency (20%). Adequate, reliable energy 
networks are needed to enable meeting all these objectives. At the same time, Europe's 
networks are aging and urgently need refurbis hment and modernisation. The enlarged EU has 
inherited poor east-west and south-north conne ctions, as the focus was on national markets, 
and interconnections were serving only li mited security of supply purpose without 
considering the possibilities of balancing and tr ade across a truly internal energy market or 
security of supply needs from a European perspe ctive. This makes it more difficult for energy 
to move freely around the EU and makes some regions more vulnerable to supply disruption. 
The TEN-E policy  has been developed and shaped in  the 1990’s through the successive TEN-
E Guidelines and the corresponding financing Regulation4. The objectives of the TEN-E 
policy are to (1) support the completion of th e EU internal energy market, (2) reduce the 
isolation of less-favoured and island regions, (3) secure and diversify the EU's energy supplies 
also through co-operation with third countries, (4) c ontribute to sustainable development and 
protection of the environment (including a grea ter use of renewable energy sources and the 
reduction of environmental risks associated wi th the transportation of  energy). It includes 
electricity, gas and olefin transmission networks. While the original objectives are still mostly 
valid, it is not effective enough in delivering the sufficient infrastructure needed to achieve the 
EU's ambitious energy policy and climate goals. 
Obstacles to the adequate development of in frastructure can be detailed as follows:  
1)-Huge uncertainties  concerning future technologies in terms of availability, possible risks 
and cost competitiveness, standards (notably for renewables and grid technologies, but also for CCS), energy mix and geographical distributi on of future plants (electricity), and new 
sources (unconventional gas, green gas, LNG/ CNG, new import infrastructure and upstream 
development in third countries) can  lead to sub-optimal market so lutions (from an EU point of 
view). 
2)-Imperfect internal market : there is weak or no competi tion in some Member States 
where national markets are still dominated by in cumbents. Lack of market development does 
not allow TSOs to have sufficient firm capacity  contracts to invest in an interconnector 
between two markets. At the same time, the market  is unlikely to be able to develop as long as 
there is no interconnector. 
                                                
 
1 COM(2007) 1 endorsed by the Council on 15 February 2007 (C/07/24). 
2 Directive 2009/29/EC amending Directive 2003/87/EC so as to improve and extend the greenhouse gas 
emission allowance trading scheme of the Community, Decision No 406/2009/EC on the effort of 
Member States to reduce their greenhouse gas em issions to meet the Community’s greenhouse gas 
emission reduction commitments up to 2020. 
3 Directive 2009/28/EC on the promotion of the use of energy from renewable sources. 
4 Decision No 1364/2006/EC laying down a series of guidelines for trans-European energy networks and 
repealing Decision 96/391/EC and Decision No 1229/2003/EC; Regulation (EC) No 680/2007 laying 
down general rules for the granting of Community financial aid in the field of the trans-European 
transport and energy networks. 
 
EN 3   EN 3)-Tariff regulation and financing: Transmission is a regulated business and cost allocation 
to final beneficiaries is difficu lt or impossible for large trans-Eu ropean infrastructure. In order 
to keep transmission tariffs as low as possible,  tariff regulation in most Member States has 
been based on the principle of cost-efficiency, allowing recovery of costs only for projects 
based on real market needs or cheapest availabl e solutions. There are in particular three types 
of projects, whose realisation may be hindered through this approach: 
(a) Projects with higher regi onal than national benefit:  The higher the regional or 
EU benefit of a project, i.e. the more  Member States are involved, the more 
complex it is likely to be (cross-border issues, different regulatory regimes and permitting procedures etc.) and the more difficult the fair allocation of the costs to the final beneficiaries becomes.  
(b) Projects using innovative technologies
 (e.g. DC VSC offshore grid technology, 
storage, smart grid applic ations; carbon capture and storage) usually involve 
higher risks, as indus trial-scale business case experien ces are rare or inexistent. 
This risk is often not reflected in  the regulated rate of return.  
(c) Infrastructure with the objective to enhance security of supply  are often not 
justified by market demand and transported volumes, as they may be used only 
in case of supply disruptions (low proba bility / high impact events), but not 
under normal market conditions. In ma ny Member States, there is no 
regulatory solution on how to recover the costs of these investments. 
Finally, as a result of the financial crisis, an d the current rapid evolution of rules in the 
financial sector, access to capitals has become more difficult since 2008. 
4)-Permitting and social acceptance: Long and uncertain permitting procedures were 
indicated by industry as one of the main r easons for delays in the implementation of 
infrastructure projects. In several Member States, public opinion is turning progressively 
against new projects and in pa rticular overhead electricity lin es, further slowing down already 
inappropriate authorisation proce dures. Thus, certain projects can take up to 20 years to be 
completed.  
5)-Infrastructures external to the EU.  For energy infrastructures outside the EU that will be 
required to meet the EU’s growing need for im ported gas or to import  "green electricity", 
there are additional political risks.  Beside the need to engage polit ically with thir d countries to 
identify and ensure a mutual benefit from new energy infrastructures, ri sks may range from an 
unattractive or non-transparent investment framew ork in the third countr ies through to the risk 
of changes in the fiscal/tax or legal envi ronment once the investment has been made. 
6)-Inadequacy of the current TEN-E framework 
There are certain geographic areas in Europe where several of these obstacles converge, 
resulting in particular infrastructure bottlen ecks. These areas are notably the Baltic Region, 
the off-shore grid in the Northern Seas, renewables in Southern Europe and the 
Mediterranean, the development of the Sout hern Corridor for gas and oil, better 
interconnectivity and diversification in Central and South-East Europe (electricity, gas and 
oil), and concerning whole Europe the de sign and development of an EU wide CO 2 transport 
network and the implementation and ro ll-out of smart grid technologies. 
 
EN 4   EN 2. ANALYSIS OF SUBSIDIARITY  
The energy transmission infrastruc ture (including an interconnected off-shore grid) has Trans-
European, regional or at leas t cross-border nature or im pacts. Individual national 
administrations and Member State level regula tion are not suited or have no competence to 
deal with those infrastructures as a whole. Under Article 194  of the Treaty on the Functioning 
of the European Union, Union policy on energy sh all aim at: (a) ensure the functioning of the 
energy market; (b) ensure security of ener gy supply in the Unio n; (c) promote energy 
efficiency and energy saving and the developmen t of new and renewable forms of energy; and 
(d) promote the interconnection of energy networks. Article 170 of the Treaty on the 
Functioning of the European Union says “the Un ion shall contribute to the establishment and 
development of trans-European networks in th e areas of transport, telecommunications and 
energy infrastructures”. Article 171 sets the obliga tion that “the Union sh all establish a series 
of guidelines covering the objectiv es, priorities and broad lines of  measures envisaged in the 
sphere of trans-European networks; these gu idelines shall identify projects of common 
interest”. 
3. OBJECTIVES OF EU INITIATIVE  
The general objective is to ensure sufficient and timely infrastructure development  across 
the EU and beyond in order to develop the intern al energy market, ensure security of supply 
and meet the EU’s energy and climate targets. 
In order to sustain infrastructure developmen t, its main hindrances are to be tackled. The 
planned Communication on infrastructure prioritie s hence has the objectives to propose clear 
priorities and improve focus of EU action for all relevant energy infrastructure, reinforce 
regional co-operation and coordination, high light the difficulties linked to permitting 
procedures and build public acceptance to help reducing planning and permitting 
uncertainties. Clear infrastructure  priorities will also provide a political message towards third 
countries.  
4. POLICY OPTIONS  
In order to better analyse solutions for a broad range of identified obstacles, the analysis was 
split in policy areas with separate options fo r each area. The options have been evaluated 
against the criteria of effectiveness, subsid iarity and proportionality. The main criterion for 
effectiveness is how much infrastructure investment the single options are likely to deliver. All the listed options are coherent with overarc hing EU objectives, strategies and priorities. 
The combination of preferred options from each  policy area constitutes the preferred policy 
choice. 
Policy area A: Scope of the policy instrument 
Option 1: Business as usual (electricity and gas)  
Option 2: Enlarged electricity and gas Option 3: Enlarged electricity  and gas, inclusion of CO
2 networks and oil pipelines  
Policy area B: Design of policy instrument  
Option 1: Business as usual (project lists as today) 
Option 2: Updated project list Option 3: Limited number of pr iority projects/regional corridors and smart selection criteria 
Policy area C: Coordination  
 
EN 5   EN Option 1: Business as usual (national appro ach, EU coordinators), voluntary regional 
structures Option 2: EU coordinators and mandatory re gional or thematic priority structures 
Option 3: EU TSO (discarded, see explanation below) 
Policy area D: Permitting 
Option 1: Business as usual (national co mpetence), exchange of best practices  
Option 2: Inclusion of projects of European inte rest in national priori ties and application of 
fastest national proce dure (where existing) 
Option 3: National one-stop-shop approvals with streamlined time limits (5 years) 
Option 4: New harmonised permitting scheme at the EU level (discarded, see explanation below) 
Options C3 EU TSO and D4 harmonised permitting scheme at EU level were excluded from further analysis as they are not respecting the proportionality and subsidiarity principles.  
5. A
SSESSMENT OF IMPACTS  
The baseline scenario  (option business as usual from each policy area) is likely to result in 
insufficient infrastructure development taking place. The worst social and economic impacts 
are deriving from insufficient infrastructure are electricity black-outs,  gas supply disruptions 
and energy shortages causing price spikes. Concerning CO 2 transportation, the BAU scenario 
would prevent any significant investment in netw orks and give rise to piecemeal development 
(at project or national level) with a high risk of future re dundancy or bottlenecks in through-
flow capacity (similarly to the el ectricity and gas grids) and lim ited market integration with a 
risk of higher energy prices in the long term.  
The main environmental impact of lack of infr astructure may be the non-achievement of the 
EU's energy and climate targets and thus higher greenhouse gas emissions. Construction 
works may cause temporary environmental impa cts, are however limited through the respect 
of relevant environmental legislation. A longer than 90 days oil supply disruption to Eastern 
Europe would involve higher environmental imp acts in terms of increased tanker traffic in 
environmentally sensitive areas as alternative transport to pipelines. 
Policy area A: Scope of policy instrument 
Major positive impacts are expected at the economic and social level from extending the 
scope of the policy instrument to new sectors in electricity (Smart Grids including storage) 
and gas (CNG), but also to CO 2 transportation, fostering furt her innovation in these fields. 
The extension to oil would also provide positive environmental impacts, by ensuring diversified oil supply r outes to the Eastern EU to reduce the environmental risk related to 
increased tanker traffic on the Baltic Sea and in the Bosporus. Including all these new sectors in the scope of the policy instrument (op tion A3) is therefore the preferred option. 
Policy area B: Design of policy instrument 
Compared to BAU with a fixed and rigid proj ect list defined in 2006, the update of this list 
(option B2) based on an enlarged  scope (option A3) would allow taking into account new or 
changed priorities in terms of infrastructure development. This improved focus would have an 
overall positive impact, but would maintain the rigidity of a project list, which might again 
need adaptation in the future up to 2020 and beyond.  
 
EN 6   EN By contrast, a complete reform of the curren t approach (option B3), with a very limited 
number of broad priorities of European interest, no ex ante list of priority projects and smart 
and transparent selection criteria instead of the current three-tiered categorisation of projects, would yield far bigger positive economic, social and environmental impacts. Indeed, this option would allow focussing all attention on thos e priorities, which are of major European 
interest and for which EU intervention will be most beneficial, or on  areas with strong 
innovation and high positive environmental impacts such as renewables’ integration into the grid, Smart Grids, storage or CO
2 transport. More generally, th is approach based on European 
priorities would draw attention on economic and environmental trans-boundary and regional 
effects, while option B2 would be influenced more by national or even local level effects. 
Establishing smart and transparent selection criteria would minimise possible distorting 
effects on the internal market, by  designing rules that are in lin e with current legislation and 
regulation. It would also allow evolution over tim e of the concrete support given to projects, 
optimising the use of the policy in strument even in th e longer term. It is therefore considered 
to be the preferred option. 
Policy area C: Coordination 
Option C2 with mandatory regional structures and, where necessary, EU coordinators, would 
have significant positive impacts in terms of infrastructure development and is therefore 
considered as the preferred option compared to  BAU. These regional structures would be 
particularly positive for projects with a clear re gional delimitation such as the offshore grid in 
Northern Europe or the development of a gas corridor in South-Eastern Europe. They would 
also contribute positively to market integrat ion and better functioni ng of regional markets. 
The use of existing regional structures (such as the revised Regional Initiatives) would 
minimise the impacts in terms of administrative burden. 
Policy area D: Permitting 
Both options D2 and D3 would introduce more e fficiency in the decision making process by 
clarifying existing rules and ways  or recourse, optimising the number of steps needed for a 
given decision to be taken and reducing as much  as possible delays for each of these steps. 
Option D2 would allow an accelerated treatment for European priority projects in those 
countries where priorities have been defined or where fast-tra ck procedures exist. It is 
considered that this would allow improving infrastructure delivery significantly especially in the electricity sector, therefore increase in frastructure investment  over the period 2010-2020. 
The one-stop-shop approach (option D3) would fu rther facilitate admi nistrative procedures 
and, combined with a set timeframe, acceler ate permitting and increase project delivery 
compared to the investment needs. 
A more in-depth analysis of a wider range of options for the policy area of permitting will be 
carried out in a separate impact assessment (sch eduled for 2011) in or der to bette r assess the 
compliance with national legal systems, their effectiveness and to estimate how much the 
options would reduce administrative burdens. 
6. C
OMPARISON OF OPTIONS  
The impacts of each maintained po licy option have been assessed in terms of economic, social 
and environmental impacts. 
 
EN 7   EN The combination of options with the largest positive impacts would be A3, B3, C2 and D3, 
noting that the policy area of permitting will still have to be analysed more in depth. This new policy set would significantly rais e infrastructure delivery eff ectiveness and entail positive 
economic, social and environmental impacts. It must however be noted that even this policy 
set is assumed to deliver 62.5 bn € less than the identified estimated investment need of 215.5 
bn €. Indeed, the mere enlargement of the sc ope, as well as the proposed reforms on the 
design of the policy instrument, regional coop eration structures and permitting, will not, 
ceteris paribus, close the remaining huge invest ment gap and will not make those projects 
bankable, which are commercially non viable under BAU market, regulatory and nationally 
focussed tariff conditions. One could expect significantly higher positive impacts under a 
policy set using public funding or dedicated regul atory measures to enable the implementation 
of all projects of European in terest, including those, which are – currently – not commercially 
viable. The Commission plans to put forward, in 2011, a proposal or guidelines to address 
cost allocation of major technol ogically complex or cross-bord er projects, through tariff and 
investment rules. Where a higher rate of return  would be required to match the project risks 
and thus make them bankable, a regulatory appr oach could also be e nvisaged. Public funding 
could be explored for those areas, where the above-mentioned measures would fail. However, 
this needs detailed further analysis, which w ill be included in the Impact Assessment to be 
prepared for the legal proposal scheduled in 2011. 
7. M
ONITORING AND EVALUATION  
For the monitoring and evaluation it is proposed that, like in the past, the Commission would 
assess the evolution via an implementation re port on a bi-annual basis, including specific 
indicators, such as the number of projects cons tructed or under construction, diversification of 
gas imports, share of electricity produced fr om renewable sources, interconnection levels 
between Member States, share of electricity grid equipped with smart technologies and the 
average duration of authoris ation procedures for projec ts of European Interest.