Green Paper - Towards a secure, sustainable and competitive european energy network {SEC(2008)2869}
Date: 2008-11-13
Institutions: European Commission
Subjects: energy grid, energy policy, energy supply, environmental protection, security of supply, trans-European network

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.11.2008 
COM(2008) 782 final 

GREEN PAPER 

TOWARDS A SECURE, SUSTAINABLE AND COMPETITIVE EUROPEAN 
ENERGY NETWORK 

{SEC(2008)2869} 

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GREEN PAPER 

TOWARDS A SECURE, SUSTAINABLE AND COMPETITIVE EUROPEAN 
ENERGY NETWORK 

1 

2 

2.1 

2.2 

2.3 

Introduction .................................................................................................................. 3 

Future priorities for European network development ........................................................ 4 

A new focus for EU energy network policy................................................................. 4 

EU support to energy network development................................................................ 4 

Administrative and regulatory barriers to energy network projects............................. 5 

2.3.1 

Planning and authorisation procedures....................................................................... 5 

2.3.2 

Regulatory framework.................................................................................................. 5 

2.4 

2.5 

Moving towards a fully integrated and flexible European energy network................. 5 

Identifying new priorities............................................................................................. 7 

3  A new EU approach to energy network development........................................................ 7 

3.1 

EU energy policy goals and objectives ........................................................................ 7 

3.1.1 

Promoting public understanding and solidarity .......................................................... 7 

3.1.2 

Achieving the "20-20-20" objectives by 2020 .............................................................. 7 

3.1.3 

Innovation and new technologies................................................................................. 8 

3.1.4 

International energy networks ..................................................................................... 9 

3.2 

A fully interconnected European energy network ....................................................... 9 

3.2.1 

An effective internal energy market ............................................................................. 9 

3.2.2 

The inter-regional dimension..................................................................................... 10 

3.2.3 

A new approach to planning ...................................................................................... 10 

3.3 

Putting TEN-E at the service of security and solidarity............................................. 11 

3.3.1 

Revised TEN-E guidelines.......................................................................................... 11 

3.3.2  Other options for enhancing TEN-E .......................................................................... 12 

3.3.3  Coordination between TEN-E and other EU financial instruments .......................... 12 

4  Conclusions ...................................................................................................................... 13 

Questions 

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1. 

INTRODUCTION 

Europe's energy networks are the arteries on which we all depend for the energy to fuel our 
homes, businesses and leisure. The EU's energy policy1 sets out clear goals and objectives2 for 
sustainable,  competitive  and  secure  energy.  The  renewable  energy  and  climate  change 
package  of  January  20083  will  commit  Member  States  to  ambitious  renewable  energy  and 
emissions reductions targets. However, the EU will not achieve its ambitions unless its energy 
networks change considerably, and fast.  

Today, Europe's energy networks – that is, the infrastructure to transport electricity, gas, oil 
and other fuels from producers to consumers – are aging. They are based on traditional fossil 
fuel supplies, and large, centralised production, with cheap and plentiful energy. The lack of 
suitable  network  links  is  a  barrier  to  investment  in  renewable  energy  and  decentralised 
generation. The enlarged EU has inherited poor east-west and south-north connections. This 
makes  it  more  difficult  for  energy  to  move  freely  around  the  EU  and  makes  some  regions 
more  vulnerable  to  supply  disruption.  With  energy  imports  set  to  rise  under  almost  all 
scenarios,  new  import  routes  are  urgently  needed  to  give  the  EU  greater  flexibility  in  its 
supplies. 

Reflecting  widespread  concern  about  the  ability  of  Europe's  energy  networks  to  deliver  the 
energy which Europe's citizens need, on 16 October 2008 the European Council called on the 
Commission to "reinforce and complete critical infrastructures"4. 

Recent events in Georgia have also shown that this is a critical time for energy security and 
that the EU needs to intensify its efforts with regard to the security of energy supply. 

It has always been assumed that energy networks would be self-financing. To achieve this a 
clear  and  stable  legal  framework  is  the  main  precondition  for  stimulating  private  sector 
investment  in  generation  and  transmission/transport.  Creating  this  framework  is  one  of  the 
principal  aims  of  the  energy  and  climate  package  and  the  third  internal  energy  market 
package5 on the completion of the internal gas and electricity market.  

The  third  internal  energy  market  package,  once  implemented,  will  introduce  significant 
changes in network planning, including rules on unbundling, regulatory coordination and new 
collaborative  networks  bringing  together  transmissions  system  operators.  These  should 
stimulate investments, synergies, efficiencies and innovation in energy networks.  

However, in view of challenges to security of supply and the scale of the investments which 
Europe's  energy  networks  need6,  the  EU  needs  to  reinforce  its  policy  on  energy  network 
development. It should for example be able to intervene or mediate where public and private 
parties  are  unable  to  move  forward  on  key  projects  with  a  European  impact.  It  should  also 
review  its  funding  framework,  notably  Trans-European  Networks  for  Energy  (TEN-E),  to 

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Energy Policy for Europe, COM(2007)1 final 
20%  reduction  in  greenhouse  gas  emissions,  20%  share  of  renewable  energy  in  EU  final  energy 
consumption and 20% improvement in energy efficiency by 2020 
http://ec.europa.eu/energy/climate_actions/index_en.htm 
http://www.consilium.europa.eu/cms3_applications/Applications/newsRoom/related.asp?BID 
=76&GRP=14127&LANG=1&cmsId=339 
http://ec.europa.eu/energy/electricity/package_2007/index_en.htm 
€17 billions in electricity networks in the comi ng 5 years according to a report issued by UCTE (May 
2008  Transmission  Development  Plan)  and  something  like  €300  billions  for  electricity  and  gas 
networks in the next 25 years 

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direct  it  better  towards  policy  goals.  Planning  and  authorisation  difficulties  must  also  be 
addressed.  

This Green Paper seeks views on how the EU  can better  promote the new energy networks 
which Europe needs, using all the instruments at its disposal, notably but not only TEN-E. It 
also suggests a number of major strategic projects which the EU could promote to strengthen 
solidarity and security of supply in a truly European energy network.  

2. 

FUTURE PRIORITIES FOR EUROPEAN NETWORK DEVELOPMENT 

2.1. 

A new focus for EU energy network policy  

Network development is an important element of energy policy. The emphasis of EU network 
policy has been to "plug gaps" in networks or deal with "bottlenecks", for internal security of 
supply  reasons.  This  is  important,  but  not  enough  to  deal  with  global  security  of  supply 
challenges,  to  benefit  from  new  technologies,  to  diversify  energy  sources  and  to  assure 
solidarity  in  an  energy  crisis.  EU  network  policy  needs  to  be  fully  aligned  with  EU  energy 
policy.  
As shown in personal reports from the EU appointed European Coordinators7, the EU needs a 
more  pro-active  role  in  promoting  strategic  projects.  TEN-E  needs  to  be  updated  and  made 
more effective in service of the new energy policy and its goals of sustainability, security of 
supply and competitiveness.  

Energy networks are also important to the EU's external relations. The EU's internal energy 
market would not work without energy import networks. Several international initiatives, such 
as the strategic EU-Africa Partnership, also cover energy network investments. 

2.2. 

EU support to energy network development  

The  EC  Treaty  states  that  the  Community  shall  contribute  to  the  establishment  and 
development  of  trans-European  network  and  that  action  by  the  Community  shall  aim  at 
promoting the interconnection and interoperability of national networks, as well as access to 
such  networks"  (Article  154).  Trans-European  Networks  for  Energy  (TEN-E)  is  the  main 
energy  policy  instrument  for  EU  support  to  energy  network  development.  TEN's  were 
originally  an  internal  market  instrument.  In  the  energy  sector,  the  assumption  was  that 
investments would be borne by the market players who pass the costs to consumers.  

The  first  TEN-E  guidelines  were  adopted  in  1996  and  have  had  successive  revisions,  most 
recently  in  2006.  Under  the  TEN-E  guidelines8  and  TEN  Regulation9,  the  EU  funds  mainly 
pre-investment feasibility studies for a specified list of projects, identified by Member States. 

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Appointed in September 2007 to four particularly complex projects: Spain-France Interconnector (Prof 
Monti,  Polish-Lithuanian  Power  Link  (Prof  Mielczarski),  Offshore  wind  network  in  North  and  Baltic 
Seas (Mr Adamowitsch), Southern Gas transit corridor (Mr Van Aartsen). Their reports are available on 
http://ec.europa.eu/ten/energy/coordinators/index_en.htm  
Decision  No 1364/2006/EC of  the  European  Parliament  and  the  Council  of  6  September  2006  laying 
down guidelines for trans-European energy networks and repealing Decision 96/391/EC and Decision 
No 1229/2003/EC, OJ L 262, 22.9.2006 
Regulation (EC) No 680/2007 of the European Parliament and of the Council of 20 June 2007 laying 
down  general  rules  for  the  granting  of  Community  financial  aid  in  the  field  of  the  trans-European 
transport and energy networks, OJ L162/1, 22.6.2007 

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A report for 2002-2006 accompanies this paper10. It is clear that the impact and visibility of 
TEN-E needs improving.  

This means bringing TEN-E fully into line with EU energy objective as defined in the 2007 
Energy  Policy  for  Europe.  Major  changes  in  the  guidelines  are  also  needed  to  make  the 
programme  more  effective.  The  question  of  budgets  is  crucial.  A  number  of  issues  for 
possible revisions to TEN-E are set out below.  

The EU also needs to improve coherence between different network actions and increase the 
leverage of the various funding possibilities for infrastructure investments, including TEN-E, 
Structural Funds and the EIB.  

2.3. 

Administrative and Regulatory barriers to energy network projects 

2.3.1.  Planning and authorisation procedures 

Planning  and  administrative  authorisation  procedures  are  a  common  source  of  delays  to 
energy  projects  due  to  differences  in  local  and  national  planning  rules.  It  is  likely  that 
approvals and permits for large infrastructure projects would benefit from a more harmonised 
approach. However, the EU has no competence in land use planning.  

Another  difficulty  is  the  "not  in  my  backyard"  (NIMBY)  reaction,  where  the  European 
interest is not shared at the local level. Placing cables underground is one way around this, but 
cost is a major barrier to this.  

Lack of information and poor coordination also causes local resistance to worthwhile projects.  

A  special  approach  to  a  special  project  :  EU  appoints  a  European  Coordinator  to  the 
project for an electricity interconnection between France and Spain 

Alerted to the slow progress in plans to expand links between the French and Spain electricity 
grids, the EU appointed in September 2007 a special coordinator to help mediate between the 
interested parties. This project is a priority interconnection for the Member States concerned 
and  EU  as  a  whole.  The  coordinator  succeeded  in  negotiating  a  compromise  solution 
acceptable to all sides, and endorsed by the heads of government/state of Spain and France. 
This case demonstrates that the EU can help promote progress towards a European network 
by  enabling  the  parties  to  find  a  compromise  solution  which  takes  account  of  the  local 
population's requests, as well as satisfy security of supply and environmental concerns, and at 
a cost that could be borne by the transmission system operators.  

2.3.2.  Regulatory framework  

The  foreseen  Agency  for  the  Cooperation  of  Energy  Regulators  (ACER),  together  with  the 
two new European Networks of Transmission System Operators (ENTSO's), as set up by the 
third internal energy market package, will help ensure greater coordination and transparency 
in network planning, operation, research and innovation(see below).  

However,  a  specific  problem  arises  in  the  case  of  cross-border  or  regional  projects, 
particularly those which bring together a number of different energy systems.  

Priority projects for energy priorities: developing an offshore wind network 

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Report on the implementation of the Trans-European Energy Networks Programme in the period 2002-
2006, COM (2008) 743 

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The EU also appointed a European coordinator to oversee progress on the development of the 
grid connections between the wind turbines in the North and Baltic Seas and the main onshore 
grid.  Nevertheless,  the  wind  power  which  consumers  demand  cannot  be  delivered  without 
new networks. There is little strategic planning across Member States and inadequate dialogue 
with  the  public.  The  experience  of  the  coordinator  has  shown  that  the  development  of  the 
offshore grid to connect the windfarms to the onshore grid has also to allow trade and to help 
balancing. But it can only be done if it involves all the Member States concerned, the TSO's 
and  the  regulatory  authorities  and  the  other  stakeholders  including  NGO's.  The  coordinator 
launched in July 2008 a working group gathering all of them with a view to steer the process 
which is truly multinational.  

2.4.  Moving towards a fully integrated and flexible European energy network  

The first aim of the network is to link all the Member States of the European Union, enabling 
them to benefit fully of the internal energy market. This is particularly the case since the two 
recent  enlargements,  where  the  new  Member  States  appear  not  to  be  connected  or 
insufficiently connected between themselves and with the old Member States. 

Bridging gaps in the network: the Polish-Lithuanian Power Link 

Establishing  common  structures  between  TSO's  and  administrations  have  helped  resolve 
project  difficulties  in  the  Powerlink  project  designed  to  link  up  the  power  transmission 
systems of Poland and Lithuania. The European Coordinator in this case helped the respective 
TSO's establish a joint venture, LITPOL, to carry out the preparatory work for the link. The 
link could have dual benefits for security of supply in the region, bridging the gap between the 
network  of  the  three  Baltic  States  and  the  rest  of  the  EU,  as  well  as  opening  up  the 
possibilities for power exports from the planned nuclear plant in Lithuania. 

The  task  of  modernising  the  power  grid  to  integrate  more  distributed  generation  units  and 
"smart"  technologies  to  allow  better  demand  management  and  to  absorb  large  amounts  of 
renewable energy generation, going beyond 2020, must become a top priority for the EU11.  

It is also essential to ensure that all parts of the EU are able to benefit from the new energy 
resources  being  developed  in  the  EU,  such  as  offshore  wind  and  photovoltaic/concentrated 
solar power, through more inter-regional links.  

Security  of  imports  also  requires  attention.  Some  of  the  main  pipelines  serving  Europe's 
customers  are  overstretched  or  in  need  for  maintenance.  New  import  routes,  notably  from 
Central Asia and the Caspian as well as from the Middle East and Africa, will also be needed.  

Security  of  supply:  public  interest  may  warrant  public  intervention  where  the  market 
does not deliver  

The  EU  coordinator  for  the  Southern  gas  corridor  including  the  Nabucco  project  has 
highlighted a fundamental difficulty for network planning and implementation. The political, 
security  and  non-commercial  risks  associated  with  new  infrastructure  projects  are  a  huge 
disincentive to commercial companies who are not prepared to take the "first mover" risk. In a 

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"Smart" grid technologies and their contribution to the 20-20-20 targets are discussed in the ELECTRA 
report. http://ec.europa.eu/enterprise/electr_equipment/electra.htm. See also Addressing the challenge o 
energy  efficiency  through  Information  and  Communication  Technologies  (COM(2008)241.  For  future 
publication:  The  Contribution  of  the  European  Electrical  Engineering  Industry  to  the  Community's 
Climate Action Plan and Agenda for Growth and Jobs 

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competitive market, public authorities must continue to play a role in creating incentives for 
private companies to invest in new, "greenfield" projects.  

2.5. 

Identifying new priorities  

The European Council of 15-16 October 2008 gave some orientations for network priorities 
for  the  EU.  The  Commission  has  outlined  more  specific  examples  in  its  second  Strategic 
Energy  Review  An  EU  energy  security  and  solidarity  action  plan12.  These  are  elaborated 
below  (Conclusions).  However,  to  take  these  priorities  forward  will  need  a  realignment  of 
policy and instruments. The issues raised below identify a number of options which the EU 
may develop as part of a more coherent energy network policy which is fully consistent with 
its energy and climate goals and which will help deliver the priority projects to serve all EU 
citizens.  

************ 

3. 

A NEW EU APPROACH TO ENERGY NETWORK DEVELOPMENT 

3.1. 

EU energy policy goals and objectives 

3.1.1.  Promoting public understanding and solidarity 

The  European  Commission  and  Member  States  must 
information  and 
communication with citizens on energy network issues, including the aims and objectives of 
TEN-E,  how  solidarity  in  energy  supply  works,  and  how  new  networks  can  deliver 
sustainable,  secure  and  competitive  energy.  The  public  and  the  private  sectors  should  be 
involved in this task.  

improve 

Access to information must be improved. Regular discussions are needed with Member States 
and  others  on  investment  issues,  notably  in  electricity  generation.  The  Commission  will  re-
examine  the  contribution  which  could  be  made  by  Council  Regulation  (EC)  736/96  on 
notifying the Commission of investment projects in the petroleum, gas and electricity sectors. 
The Commission’s Market Observatory for Energy can complement such information.  
3.1.2.  Achieving the "20-20-20" targets by 202013 

The  new  renewable  energy  and  climate  change  legislation,  including  the  "20-20-20"  goals, 
urgently needs to be reflected in network planning and programmes in the public and private 
sectors.  

The EU must develop a comprehensive strategy on integrating renewable energy sources into 
the  grid,  in  full  cooperation  with  national  and  regional  authorities  and  market  actors.  This 
should  address  such  issues  as  cost  allocation  along  the  supply  chain,  back-up  costs, 
transmission  technologies,  the  link  between  local  and  European  grids  and  regulatory 
coherence. The EU, Member States, and local and regional authorities should also encourage 
and facilitate decentralised energy production, which contributes to energy security and offers 
an important opportunity for regional development, creating growth and jobs. 

The EU needs to promote projects which can carry power from resource-rich areas (e.g. wind 
in  coastal  areas,  and  solar  in  the  Mediterranean)  to  where  consumers  need  it.  At  the  same 
time, new grid technologies must be promoted for a more efficient and flexible use of local 

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Second Strategic Energy Review, COM(2008)744 
See footnote 2 

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energy  sources,  for  example  power  generation  in  individual  households  and  combined  heat 
and power.  

Energy  from  offshore  wind  could  play  a  significant  role  in  delivering  renewable  energy 
targets, as well as improving security of supply and solidarity. Europe-wide offshore grids and 
trans-European  overlay  grids  are  required  to  integrate  wind  energy  fully  into  the  European 
grid.  The  Commission  is  publishing  a  Communication  on  offshore  wind14  with  this  Green 
Paper. 

The  promotion  of  CO2  capture,  transport  and  storage  (CCS)  has  implications  for  networks. 
Extensive CO2 pipelines connecting CO2 emission sources and storage sites are needed. The 
EU  needs  to  consider  what  role  it  can  play  in  promoting  the  necessary  investments  in  this 
area, including TEN-E. 

Related to this, the implications of climate change for Europe's energy networks, for example, 
the positioning of plants, power lines and pipelines, need to be taken into account.  

3.1.3. 

Innovation and new technologies  

A  better  focus  on  energy  network  technologies  is  needed  in  research  and  technology 
demonstration  programmes.  Europe's  science  community  must  be  motivated  to  cooperate 
fully  with  the  private  sector  in  developing  solutions.  Putting  into  place  a  flexible  European 
grid  with  ample  storage  capacities,  incorporating  different  sources  of  electricity  production 
from  renewable  energies  and  conventional  sources,  is  a  key  technology  challenge  for  the 
years up to 2020.  

The  European  industrial  initiative  on  electricity  grids  is  a  priority  of  the  Strategic  Energy 
Technology Plan15 and will receive initial support from the 7th EU Framework Programme for 
Research and Development. A few large-scale RTD and demonstration projects, proving the 
feasibility  of  "intelligent"  network  technologies,  could  give  the  necessary  impetus  to  rapid 
deployment  of  better,  more  flexible  and  robust  systems  and  pre-empt  the  need  for  less 
efficient infrastructure investment. 

The Strategic Energy Technology Plan also includes  measures  important  for  future  network 
development,  such  as  the  action  on  transition  planning  towards  low-carbon  energy  systems. 
Another issue which should be further researched is the impact of electric and plug-in hybrid 
vehicles on electricity networks.  

The EU must aim at the dissemination of vital experience across the EU. EU instruments need 
to  be  used  more  efficiently,  including  the  EU  Structural  and  Cohesion  Funds  and  RTD 
Framework  Programmes,  but  also 
the  Competitiveness  and  Innovation  Programme 
(Intelligent  Energy  Europe)  and  the  proposed  Energy  Research  Alliance16  to  foster  and 
develop new energy technologies and innovative solutions. Moreover, the European Institute 
of  Innovation  and  Technology  (EIT)  will  launch  in  2009  its  first  call  for  Knowledge  and 
Innovation Communities (KICs) concerning notably climate change and sustainable energy.. 
Collaboration with European Standards Organisations (ESO's) also needs to be deepened, as 
these produce necessary standards for the market take-up of new technologies. 

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Offshore wind energy, COM(2008)736 
Strategic Energy Technology Plan, COM(2007)0723 endorsed by the Council and Parliament 
See Strategic Energy Technology Plan 

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3.1.4. 

International energy networks  

International  energy  networks  projects  serving  EU  security  of  energy  supply  necessarily 
involve  the  agreement  of  third  country  governments.  It  is  important  that  the  EU´s 
international cooperation framework encourage the development of such projects, notably by 
providing  a  long-term  political  framework  for  commitments  by  the  private  companies 
involved  in  the  investments,  and  for  possible  guarantees  by  European  banks  such  as  EIB, 
EBRD. 

Existing  EU  groupings,  such  as  the  Network  of  Energy  Security  Correspondents,  Gas 
Coordination  Group  and  Oil  Supply  Group,  could  be  exploited  to  discuss  proposed 
international  energy  projects  at  an  early  stage.  This  will  help  build  up  solidarity  among 
Member States and anticipate political sensitivities.  

Final decisions about import pipelines are a commercial matter to be taken together with the 
countries  concerned.  For  some  projects,  it  might  be  appropriate  to  provide  a  political 
reassurance  to  third  countries  that  the  EU  is  prepared  to  enter  into  a  long  term  energy 
relationship. A special emphasis may also be put on the support to investment projects when 
the private investor perceives the non-commercial risks as too significant.  

The  EU  should  continue  to  work  on  bridging  differences  in  regulatory  frameworks  in  third 
countries  and  consider  how  to  be  involved  early  enough  in  the  design  of  international 
agreements relating to strategic projects to ensure they are compatible with the EU acquis. 

Such  concerns  should  also  be  reflected  in  the  EU's  external  instruments.  International 
agreements  could  be  used  to  prepare  the  ground  for  energy  interconnections  with  the  EU 
market, early information on market and policy development. International trade agreements 
could also be used to offer clear conditions of access to the EU market, and vice versa, and 
dispute-resolving procedures.  

An  improved  economic  and  legal  framework  for  EU  relations  with  supplier  and  transit 
countries  will  help  promote  more  stable  and  predictable  investment  conditions  for  private 
investments in energy infrastructure.  

3.2. 

A fully interconnected European energy network  

3.2.1.  An effective internal energy market  

The  third  internal  energy  market  package,  when  implemented,  will  enhance  cooperation 
among transmission system operators (TSO's) and among energy regulators, enabling them to 
identify  the  necessary  interconnections  on  the  basis  of  a  transparent,  coherent  10-year 
investment plan. Some progress has been made in the power sector. For gas, plans needs to 
progress more quickly. 

The ENTSO's and ACER could broaden their cooperation beyond enhancing competition, as 
now,  to  other  issues,  including  security  of  supply,  research  and  innovation,  and  the 
achievement of the 20-20-20 targets.  

The ENTSO's and ACER cooperation must help assure the optimum use of existing networks, 
e.g. reducing losses in power lines and stimulating more efficient demand patterns. It should 
foster  a  more  flexible  approach  to  tariffs  for  new  grid  infrastructure  (e.g.  offshore  wind  or 
"smart" grids). It must also help resolve other obstacles to investment, such as equitable return 
on investments for national TSO's.  

Coordinated  planning  needs  to  take  account  of  the  implications  of  integrating  local  "smart" 
grids,  and  their  effect  on  the  respective  responsibilities  of  the  TSO's  (high  voltage)  and 
Distribution System Operators (low voltage). 

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3.2.2.  The inter-regional dimension 

Within  the  EU  internal  market,  regional  (cross-border  and  multi-country)  networks  are 
important  for  security  of  supply  and  solidarity  and  are  a  first  step  towards  a  fully 
interconnected internal energy market. 

Bringing networks together – the gas sector 

The  New  Europe  Transmission  System  (NETS)  project,  advocated  by  several  TSO's,  is  a 
highly  promising  initiative  to  integrate  gas  transmission  operators  across  Central  and  South 
Eastern  Europe.  This  has  the  possibility  to  create  the  framework  for  a  regional  gas  market. 
Such a market would have sufficient size to attract new investments, which is not the case for 
the  individual  national  markets,  and  could  significantly  reduce  operating  and  investment 
costs. 

Another  forward-looking  initiative  which  could  also  improve  the  integration  of  assets  and 
management of networks is the European Transmission  System Operator idea, promoted by 
some major gas players. The aim is to build progressively an independent company to manage 
a  unified  gas  transport  network  throughout  the  EU.  A  progressive  unification  of  networks, 
provided  that  it  is  organised  in  a  manner  compatible  with  competition  law,  would  enhance 
incentives for gas companies to invest in new network projects 

Specific initiatives are needed to help interlink more isolated parts of the EU or incorporate 
new  energy  forms  into  the  network.  Areas  which  could  be  given  political  priority  are:  the 
Baltic Sea region, the Mediterranean, and south-eastern Europe. 

3.2.3.  A new approach to planning 

The  European  Council  has  called  for  the  Commission  to  "table  proposals  aiming  at 
streamlining  approval  procedures"  for  network  projects17.  With  this  in  mind,  European 
priority projects could be included in national strategic plans, as well as the future priorities of 
regulators and TSO's. Member States would then need to take the necessary steps to ensure 
that agreed timetables are met. This could become a condition of TEN-E support.  

More  uniform  procedures  and  criteria  would  assist  the  completion  of  strategic  cross-border 
projects,  including  indicative  timetables.  In  the  absence  of  a  specific  EU  competence,  a 
reflection  is  needed  on  how  the  EU  can  help  simplify  planning  procedures  in  the  case  of 
major cross-border energy projects. 

The European Commission should promote exchange of information and best practice among 
Member States on these issues. A number of Member States are reviewing or have reformed 
their planning regulations to speed up important infrastructure projects. 

EU environmental rules should be correctly interpreted and applied, in the light of guidelines 
issued by the Commission. Complying with EU environmental legislation and meeting energy 
policy goals can and should be mutually supportive.  
Based on the experience of the EU coordinators18, there needs to be an option, within existing 
rules,  for  an  appeal  to  be  made  to  public  authorities  where  an  EU-relevant  project  faces 
planning delays. If no national solution is found, the Commission might carry out an analysis, 
or appoint a mediator.  

17 
18 

Presidency Conclusions, European Council, 8-9 March 2007 
See DG TREN webpage: http://ec.europa.eu/ten/energy/coordinators/index_en.htm  

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3.3. 

Putting TEN-E at the service of security and solidarity 

3.3.1.  Revised TEN-E guidelines  

TEN-E needs to be made more effective as an instrument to facilitate important EU projects 
which serve security of supply, competition, environmental or solidarity goals.  

Subject to the response to this Green Paper, the Commission would like to revise the TEN-E 
guidelines in the following ways:  

1)  TEN-E  objectives  should  be  driven  by  the  European  energy  policy  (the  20-20-20 
objectives,  and  the  complementary  goals  of  security  of  supply  and  solidarity,  sustainability 
and competitiveness).  

2) The scope of TEN-E should be the full energy transportation network. Gas, including LNG 
terminals and underground storage, and electricity transmission networks must remain at the 
forefront of the programme. However, urgent consideration should be given to extending the 
scope  to  oil  pipelines.  Rising  volumes  of  maritime  oil  transport  presents  serious  risks  to 
supply  and  maritime  security.  A  Commission  staff  working  paper  on  oil  infrastructures19 
accompanies this Green Paper.  

TEN-E  scope  could  be  extended  to  transportation  infrastructures  associated  with  new 
technologies,  starting  with  carbon  dioxide  for  CCS  projects.  Other  options  could  include 
adapting networks for biogas for combined heat and power or compressed natural gas vehicle 
applications.  

The programme also needs to be more flexible in the light of grid developments which affect 
both transmission and distribution networks, including "smart" grids. 

3) TEN-E planning should be market-driven, with a clear remit for ENTSO's and ACER. The 
EU should have an active facilitating and mediatory role.  
4)  The  Commission  proposed  in  its  Priority  Interconnection  Plan20  to  narrow  the  focus  of 
TEN-E  on  a  limited  number  of  strategic  projects.  Accordingly,  the  number  of  priority 
projects  should  therefore  be  small,  involving  cross-border  projects,  projects  connecting 
isolated  Member  States  to  the  European  grid  or  those  serving  several  Member  States  (in 
practice an amalgamation of several individual projects). The five priority areas identified in 
the conclusions  below are examples of the priority projects which an updated TEN-E could 
support. 

TEN-E  projects  should  also  be  incorporated  into  national  infrastructure  plans  and,  where 
relevant,  into  the  priorities  of  the  European  Investment  Bank  or  European  Bank  for 
Reconstruction  and  Development.  Member  States  who  benefit  may  also  be  expected  to 
contribute. 

5)  Accompanying  measures  should  be  built  up  to  disseminate  information  and  exchange 
good practice among projects and Member States.  

6)  In  exceptional  cases,  such  as  large-scale  regional  projects  or  projects  involving  a  third 
country, a European coordinator may be appointed. Any new appointment should take into 
account the experience gained until now.  

19 

20 

Oil infrastructures: An assessment of the existing and planned oil infrastructures within and towards the 
EU, SEC(2008)2799 
Priority Interconnection Plan, COM(2006)846 

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7)  The  issue  of  resources  is  important.  The  budget  for  TEN-E  has  remained  more  or  less 
stable, with a budget of €155 m for 2007-2013 (compared to €148m for 2000-2006) for some 
300  eligible  projects.  This  limits  the  impact  of  the  programme.  It  is  debatable  whether  the 
market  will  make  the  necessary  investments  serving  public  interests  without  serious  public 
intervention.  While  seeking  ways  of  improving  the  effectiveness  of  the  programme  within 
existing means, the EU should nevertheless consider  ways of increasing the TEN-E budget, 
not  least  in  order  to  facilitate  some  investments  serving  non-commercial  goals,  such  as 
security of supply.  

Regarding  projects  external  to  the  EU,  ways  needs  to  be  found  to  exploit  fully  available 
financial  instruments  in  full  coherence  with  internal  instruments  including  in  particular  the 
TEN-E  funds.  For  the  future,  there  should  be  a  reflection  on  how  the  existing  TEN-E 
instrument  could  be  replaced  by  a  new  instrument,  the  EU  Energy  Security  and 
Infrastructure  Instrument  and  how  best  to  articulate  it  with  the  EU's  external  financial 
instruments. Responses to the Green Paper are invited on the scope of such an instrument as 
well as on how best it could contribute to ensuring coherence between internal and external 
spending.  

3.3.2.  Other options for enhancing TEN-E 

Non-financial  support  needs  to  be  developed  as  a  means  of  leveraging  support  from  other 
sources,  for  example  the  award  of  a  recognised  "EU"  label.  More  efforts  are  needed  to  use 
TEN  as  a  leverage  for  other  sources  of  funding,  particularly  from  International  financing 
institutions. 

Synergies  should  be  sought  with  other  EU  network  activities  in  e.g.  telecommunications, 
transport  and  environmental  infrastructures  (e.g.  combining  power  lines  with  land  transport 
infrastructures such as railways or roads).  

A further question is whether the EU should offer support to projects which incur extra cost 
for contributing to public (non-commercial) goals, for example spare gas or power capacity 
which would help EU security of supply, links to bring new renewable generation to the grid, 
or  cable  under-grounding  for  environmental  reasons.  This  might  lead  to  an  expectation  that 
the extra costs would be compensated by the EU, which would not be possible. 

Security of supply: where the public interest may warrant public intervention  

A striking example of public financing of a pipeline for security of supply, when the market 
did not see the need, is the Czech decision to build the IKL (Ingolstadt-Kralupy-Litvínov) oil 
pipeline in the  nineties  to open a western route besides the eastern route. It is now  Mero, a 
fully state owned company, which is operating this pipeline, with revenues covering the loans 
interest and reimbursement. This pipeline has been very useful since July 2008 as commercial 
entities  supplying  Russian  crude  oil  through  the  eastern  route  unexpectedly  reduced  their 
supplies to their Czech customers.  

A  further  option  is  to  move  away  from  specific  projects  to  general  studies  aimed  at 
developing  solutions  to  current  challenges  facing  network  developers,  e.g.  how  to  resolve 
network issues associated with the large scale connection of offshore wind or solar or the use 
of "smart" grids.  

3.3.3.  Coordination between TEN-E and other EU financial instruments 

Potential investors in energy networks must have access to a wide range of different finance 
sources.  Therefore,  TEN-E  needs  to  be  fully  aligned  and  coordinated  with  other  major  EU 

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programmes which have an impact on infrastructure development – notably the Structural and 
Cohesion Funds and RTD Framework Programmes. For example, the Cohesion policy invests 
€675  M  in  TEN-E  projects  for  the  peri od  2007-2013.  Another  example  is  the  7th  RTD 
Framework Programme invests € 100m in electricity networks (2007-2009). Their results must 
be widely publicised and lead to further research and demonstration and market investment.  

Increased  coordination  between  external  policy  instruments,  such  as  the  European 
Neighbourhood and Partnership Instrument (ENPI) and TEN-E should be explored especially 
for infrastructures in transit countries.  

Existing  coordination  between  TEN-E  and  the  European  Investment  Bank  (EIB)  and 
European  Bank  for  Reconstruction  and  Development  (EBRD)  needs  to  be  built  up  at  all 
levels. A link between TEN-E support and the intervention of the EIB could be considered. 
Moreover  a  fund  under  the  aegis  of  the  EIB  could  be  envisaged,  providing  equity,  quasi-
equity, guarantees and similar financial instruments for individual projects.  

Another potential partner is the World Bank Accelerated Programmatic Loan which provides 
funding to reform programmes in approved countries. 

CONCLUSIONS 

4. 
As set out in the Commission's second Strategic Energy Review21 and elaborated here, the EU 
will  be  unable  to  deliver  its  climate  and  energy  goals  without  new  and  improved  networks. 
Energy  networks  must  take  a  more  prominent  place  in  energy  policy  development  and 
implementation. At the same time, energy network planning needs to be better coordinated at 
the political level.  

The  internal  energy  market,  with  benefits  of  the  third  package  currently  under  discussion, 
must  be  the  main  driver  of  investment  in  energy  networks,  but  the  EU  must  also  have  an 
active  facilitator  role  on  projects  of  clear  relevance  to  European  energy  security,  including 
international projects.  

The  main  EU  instrument  for  European  energy  network  development,  TEN-E,  was  not 
designed  to  deal  with  today's  energy  challenges  and  is  not  properly  aligned  with  the  new 
energy  policy  for  Europe.  It  also  lacks  coherence  with  internal  market  and  other 
developments, e.g. research and external policies. Its budget is seriously inadequate.  

The  EU  needs  to  develop  a  new  strategic  approach,  incorporating  available  instruments, 
including launching a reflection on how the existing TEN-E instrument could be replaced by a 
new instrument, the EU Energy Security and Infrastructure Instrument with the possible 
objectives of (i) completing the Internal Energy Market, (ii) ensuring the development of the 
grid to permit the achievement of the EU's renewable energy objectives and (iii) guaranteeing 
EU  security  of  energy  supply,  through  assistance  for  key  infrastructure  projects  within  and 
outside the EU.  

As part of this strategy, the Commission has identified the following projects , as set out in its 
second Strategic Energy Review An EU energy security and solidarity action plan  

•  A  Baltic  Interconnection  Plan:  Connecting  the  remaining  isolated  energy  markets  in 
Europe is a priority. As clearly recognised by the European Council in its conclusions of 
16 October 2008, interconnecting the Baltic Sea region is necessary to enhance security of 

21 

See footnote 13 

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supply for all countries bordering the Baltic and for wider security of supply and solidarity 
in the EU. Together with the Member States concerned, the Commission will develop this 
Plan as part of a Baltic Sea Regional Strategy, covering gas, electricity (including offshore 
wind  and  potentially  tidal  power)  and  storage.  This  will  bring  together  existing  projects 
into  a  cohesive  system  benefiting  the  whole  region.  The  efficient  development  of  the 
market  as  well  as  the  contribution  of  energy  efficiency  and  renewables  to  increased 
security of supply will need to be duly taken into account in developing the Plan.  

•  A  new  Southern  Gas  Corridor:  With  the  high  possibility  that  the  role  of  the  Caspian 
region and Middle East in global oil and gas supplies will grow in the future, and with the 
need  to  avoid  increasing  the  already  high  risks  associated  with  maritime  transport  of  oil 
and  LNG,  this  appears  more  necessary  than  ever.  The  Commission  will  work  with  the 
countries concerned to secure no later than one year from now firm commitments for the 
construction of the Nabucco pipeline. A block purchasing mechanism for Caspian gas will 
be explored, in full respect of competition rules. Transit must be agreed with Turkey in a 
way  that  respects  both  the  basic  principles  of  the  EU  acquis  and  Turkey's  legitimate 
concern for its own energy security. 

•  Liquefied natural gas (LNG): LNG benefits security of supply by making the gas market 
a  more  liquid  global  market  comparable  to  the  oil  market.  An  appropriate  LNG  capacity 
consisting of LNG terminals and ship-based regasification should be made available to all 
Member States, either directly or through other Member States on the basis of a security-
sharing  arrangement.  The  Energy  Community  may  also  be  involved,  with  the  option  of 
extending the network to the Adriatic Coast. Sufficient gas storage capacity must be built. 

•  A Mediterranean Energy Ring: The Mediterranean area and Africa also need to be better 
connected not  only for fossil fuels but  also for renewables. A Mediterranean energy ring 
will  enable  Europe  and  North  Africa  to  better  exploit  natural  resources  available  there. 
This  initiative  will  build  on  the  proposal  made  within  the  context  of  the  Union  for  the 
Mediterranean - Barcelona Process, of a Mediterranean grid feeding electricity from solar 
energy  (PV  and  concentrated  solar  power)  and  also  wind  into  the  EU.  Interconnection 
projects with the European mainland would also significantly enhance the energy security 
of the most isolated European countries. 

•  North-South  gas  and  electricity  interconnections  within  Central  and  South-East 
Europe  need  to  be  developed  as  a  priority,  building  notably  on  the  New  European 
Transmission  System  (NETS)  initiative  to  create  a  common  gas  transmission  system 
operator22, the Energy Community Gas Ring, the priority interconnections identified by the 
Energy Community ministerial in December 200723, and the Pan-European Oil Pipeline24 
The new Internal Energy Market package envisages the establishment of a regular 10-year 
Network  Development  Plan  outlining  missing  links and the action  necessary to complete 
them. 

•  A Blueprint for a North Sea offshore grid should be developed to interconnect national 
electricity grids in North-West Europe together and plug-in the numerous planned offshore 
wind  projects.  It  should  become,  together  with  the  Mediterranean  Ring  and  the  Baltic 
Interconnection project, one of the building blocks of a future European supergrid. 

***** 

22 
23 
24 

www.molgroup.hu/en/press_centre/press_releases/european_energy_infrastructure__ndash__nets_project/ 
www.energy-community.org/ 
www.ens-newswire.com/ens/apr2007/2007-04-03-03.asp 

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The  Commission  invites  views  on  this  Green  Paper,  which  may  follow  the  structure  of  the 
following questions:  

Network Policy 

(1)  What do you consider to be the main barriers to the development of a European grid 
and gas network? How far can they be addressed at national/regional level, and when 
should the EU act?  

(2)  What  circumstances  justify  an  EU  intervention  in  local  planning  disputes  related  to 

energy infrastructure? In those circumstances, what should the EU do? 

(3) 

Is a more focussed and structured approach to research and demonstration relating to 
European networks needed? How should it look?  

(4)  What do you think is the most important activity for the EU in network development?  

(5) 

Should  the  EU  be  more  involved  in  facilitating  infrastructure  projects  in  third 
countries? If so, in what way? 

TEN-E 

(6)  What sort of support should the EU provide to developers of new energy networks to 
have  the  greatest  impact,  considering  that  resources  are  limited?  Is  the  approach  of 
TEN-E still relevant? How can the EU help improve the conditions for investment? 

(7) 

(8) 

(9) 

In view of the proposed revision to the TEN-E guidelines, how can the EU improve 
the focus, effectiveness and impact of the TEN-E policy within its existing budget?  

Should  TEN-E  be  extended  to  oil  infrastructure?  Should  it  also  be  extended  to  new 
networks for CO2, biogas or other networks? 

Do you have views on, or suggestions for new priority projects which the EU should 
give backing to?  

(10)  Would  it  help  TEN-E/EU  to  gain  more  impact  and  visibility  if  it  was  turned  into  an 

operational security of supply and solidarity instrument? 

(11)  What additional EU measures beyond those mentioned in this Green Paper would help 

secure a sustainable infrastructure for the EU?  

For  more  information  see:  http://ec.europa.eu/energy/index_en.html  You  are  invited  to  send 
your response to the European Commission by 31 March 2009 addressed to 

Christine Jenkins 

European Commission 

DG Energy and Transport 

DM 24 – 6/127 

1049 Brussels 

Belgium 

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