Opinion of the European Economic and Social Committee on ‘The EU’s new energy policy: application, effectiveness and solidarity’ (own-initiative opinion)
Date: 2010-09-16
Institutions: European Economic and Social Committee
Subjects: ESC opinion, award of contract, competition law, domestic market, energy grid, energy policy








C_2011048EN.01008101.xml










15.2.2011   


EN


Official Journal of the European Union


C 48/81





Opinion of the European Economic and Social Committee on ‘The EU’s new energy policy: application, effectiveness and solidarity’ (own-initiative opinion)
2011/C 48/15
Rapporteur: Mr HERNÁNDEZ BATALLER

On 18 March 2010 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on

‘The EU's new energy policy: application, effectiveness and solidarity’.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 6 September 2010.
At its 465th plenary session, held on 15 and 16 September 2010 (meeting of 16 September), the European Economic and Social Committee adopted the following opinion by 44 votes to two with two abstentions.
1.   Conclusions

1.1   It is necessary to boost all aspects of the operation of the internal energy market as regards infrastructure, the public procurement system, proper operation of the market and consumer protection. The EESC emphasises that the basic issue here is the need to develop energy infrastructure and the trans-European networks in order to establish the internal market in energy.
More specifically, mechanisms must be established for identifying price-formation criteria to prevent serious and unjustifiable disparities, often wrongly based on the type of energy being consumed, supply sources, or distribution facilities.
Similarly, criteria and methods must be created to rationalise energy production in the Member States, bearing in mind a sustainable use of resources and based on geographic and climatic aspects, such as identifying peak activity periods for photovoltaic, wind or tidal energy generation.
1.1.1   Properly functioning energy markets require transparency so that entrants can have access to energy networks and customers. To this end, the authorities must prevent exclusionary practices, wanton exploitation and business collusion. Competition policy should therefore also be geared to ensuring well-being and improving conditions for consumers, while taking specific factors into account such as the need to guarantee security of supply, energy transport and final distribution. The EESC refers back to its opinions on the universal service and services of general interest, where it has already taken a firm position on consumer protection, stressing the need for a clear definition of the universal service concept and for common rules to be fixed on the provision of services of general interest.
1.1.2   As regards the procedures for awarding contracts, the contracting authorities must be prevented from abusing their prerogatives by resorting to biased interpretations of the sovereign rights provided for under Article 194(2) of the TFEU (1) in the possible determination of more onerous or discriminatory conditions for access to natural gas transport networks (2) or access to the network for cross-border trade in electricity (3). In short, the EU should proceed with the maximum institutional commitment to strengthening and improving procedures that guarantee transparency of gas and electricity prices charged to industrial end-users (4).
1.1.3   In this context, it is likely that there will be a redefinition of the role of services of general economic interest in the internal market. In light of the Lisbon Treaty, these services should more effectively perform the tasks that may be assigned to them by national, regional or local authorities (5). This is especially relevant in the area of energy given the key role of services provided by major network industries.
1.1.4   It will be tricky therefore to establish a legal framework that balances the broad discretion granted to the national authorities (see Article 1 of Protocol 26 annexed to the TEU and TFEU in tandem with Article 194(2) TFEU) with the free play of competition in the internal market, especially as the case-law of the Court of Justice prior to the entry into force of the Lisbon Treaty, without prejudice to the power of Member States to guarantee access to services of general economic interest (6), underlined the need for this access to conform with the Treaties and that, in any case, possible exceptions to the Treaty provisions (7) based on the internal exercise of powers in this area should be interpreted restrictively (8).
2.   Introduction

2.1   Over the next forty years, the European energy sector will have to address a number of challenges that will call for fundamental changes in energy supply, transmission and consumption. To rise to these challenges at European level, the Commission is currently consulting on preparing a new energy strategy for the 2011-2020 period, and an action plan for 2050. The Committee is working on an opinion on both these initiatives.
2.2   To develop a full and comprehensive European strategy that can meet the upcoming challenges, it is clear that the European Union will have to make full use of the new competences in the energy sphere conferred upon it by the Lisbon Treaty and encourage the Member States to enter into a broad form of cooperation and collaboration over a range of questions that legally fall within the remit of national or shared competences. Some of the current approaches might call for further amendments to the Treaties or even a new Treaty (for example, Jacques Delors’ proposal for a new Treaty establishing a European Energy Community). In any event, for the purpose of this opinion, we shall limit ourselves to the Lisbon Treaty and those measures that prove necessary for guaranteeing that the shared competences set out in that Treaty are exercised in such a way as to ensure a total focus on and respect for both consumers’ rights and the various competences attributed to the Union and the Member States.
2.3   Article 194 of the Treaty on the Functioning of the European Union (TFEU) (9) introduces a new basis for supranational action in relation to energy, which is nevertheless subject to certain constraints imposed both by the regulatory framework, where they are explicitly fixed by the prevailing primary and institutional law, and by its future coherence with certain rights that are recognised in the EU Charter of Fundamental Rights.
2.4   Thus the objectives of the Union's energy policy – the functioning of the energy market, security of energy supply, efficiency, energy innovation and saving, interconnection of networks - can only be pursued insofar as they are fully consistent with the operation of the internal market and compatible with environmental protection (Article 194(1) TFEU). The Commission is therefore endeavouring to achieve in particular the objectives of ensuring security of supply, sustainable use of energy resources and access to energy at competitive prices that are affordable for consumers, since integration of the European energy market is not an objective per se but rather an essential means of realising these goals.
2.5   In addition, future measures to be adopted by the Union under the ordinary legislative procedure to achieve these objectives will not prejudice the right of a Member State to determine the terms on which it exploits its energy resources, chooses between different energy sources and the general structure of its energy supply (Article 194(2) TFEU).
2.6   This last provision, which explicitly reserves areas of sovereignty for the Member States, also guarantees them broad latitude, in accordance with Article 2(6) TFEU (10), without preventing their actions from being guided by a ‘spirit of solidarity’ as called for in Article 194(1) TFEU.
2.7   As energy is now included among shared competences (point (i) of Article 4(2) TFEU), and with a view to preventing possible future conflicts between the general interest of the Union, the national interests of its Member States (11), the specific interests of companies in the energy sector, citizens’ rights and the rights of consumers and users, it is appropriate for the European Economic and Social Committee to take a formal position on this matter.
2.8   The Commission has tabled a package of wide-ranging proposals intended to fulfil the commitments of the European Union up to 2020 with respect to combating climate change and promoting renewable energy sources. To this end, the Council and Parliament have undertaken to reduce greenhouse gas emissions by 20 %, introduce a 20 % quota for renewable energy and raise energy efficiency by 20 %. The Commission has therefore adopted a new general block exemption regulation under which state aid to support renewable energy and energy efficiency are exempt from notification if they meet certain criteria.
2.9   The key issues addressed in the Commission document ‘Towards a new Energy Strategy for Europe 2011-2020’ include, in addition to consumer protection, and access to energy services and jobs created by the low-carbon economy:






—


implementation of the policies already approved in the energy market liberalisation and climate change packages, and the Strategic Energy Technology Plan (SET);










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the roadmap for decarbonisation of the energy sector by 2050;










—


technological innovation;










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strengthening and coordination of external policy;










—


reducing energy needs (energy efficiency action plan), particularly the need to develop energy infrastructure to ensure supply and distribution in line with the internal energy market's demands.




2.10   These Commission measures, some of which are still pending adoption by the Council and the Parliament, and their future implementation by the Member States (e.g. distribution of natural gas, expanding the use of renewable energies and energy efficiency measures applied to transport, construction, etc.) reflect a rationale of pursuing the successful implementation of the 20/20 Strategy.
3.   General comments

3.1   It is nevertheless necessary to identify the measures that, in the absence of a sufficient legal base established in the Treaties, are required to create a real energy policy in the short term that is appropriate to the challenges facing the EU in the 21st century. Certain initiatives are advocated, such as Jacques Delors’ proposal for a new treaty establishing a European Energy Community, which would give the EU powers to stimulate for example the development of more and improved transnational energy infrastructure networks, joint resources and funding for R + D + i in the sphere of energy, or business tools for joint operations in international energy product markets (12).
3.2   At the same time, with reference to the above-mentioned Article 194 TFEU, a discussion should be opened on the scope of three spheres that will be affected by public policy at national and supranational level, namely safeguarding and development of EU citizens’ rights, reconciling the application of exceptions justified by national security with supranational energy security, and compatibility of national measures with the setting up and functioning of the internal energy market in respect especially of transport and distribution infrastructure, interconnection of networks, the public procurement system and consumer rights.
3.3   The core rights that are most relevant to future EU energy measures are recognised in the following sections of the Charter of Fundamental Rights: Chapter IV (Solidarity), Article 36 (Access to services of general economic interest), Article 37 (Environmental protection) and Article 38 (Consumer protection). The potential consequences should be considered of all the Member States ratifying Protocol 14 of the European Convention on Human Rights, which together with the Lisbon Treaty opens the way for EU accession to the Convention.
3.3.1   However, while these provisions establish principles for formal action by the EU institutions, they do not explicitly recognise subjective rights (13), even though in the case of environmental protection and protection of consumer rights there is a sound European legal framework for safeguarding individual interests and so-called diffuse interests. Nonetheless, the implementation of the Protocol on services of general interest, annexed to the TEU and the TFEU, will certainly help to ensure that Europeans have access to different sources of energy consumption, with particular attention for the circumstances of the most deprived sections of society.
3.3.2   For the reasons set out above, legal tensions can be expected between the EU and its Member States in view of the disjuncture between the supranational task of liberalising and/or harmonising key aspects of the functioning of the energy market in Europe and the national task of protecting social well-being (14). However, the Commission believes on the contrary that cooperation between the Member States will enhance national security.
3.3.3   This will happen above all because the Charter, as we know, sets only minimum levels of protection for the rights and freedoms that it recognises (15) and is also subject to restrictions on its application in the territories of certain Member States (16). Social cohesion must be maintained as far as possible, so as to safeguard solidarity rights as regards access to energy of both the economically weakest population groups and of vulnerable and disabled people.
3.3.4   This is above all because the devastating impact of the current global economic crisis - on employment in terms of job losses, on workers in terms of adjustment, and on the capacity of public authorities to maintain social services - threatens to exclude large sections of the population from access to energy, thereby creating ‘energy poverty’.
3.4   The second question that must be resolved is that of coherence between the national security strategies of the Member States and the need to guarantee energy security at supranational level.
3.4.1   Energy routes and sources for the European Union should promote the security of supply of the Union as a whole and its Member States individually. Security of supply will depend on how the fuel mix evolves, on production trends in the European Union and in third countries supplying it, and on investment in storage facilities and routes within and outside the European Union.
3.4.2   Given that the second paragraph of Article 4 TEU recognises safeguarding national security as an ‘essential function’ of the Member States, explicitly granting them exclusive competence in this area, it will be necessary to establish areas of political and legislative cooperation between the EU and its Member States in order to achieve the synergies and complementarities called for in Article 194(1) TFEU.
3.4.3   To this end, ways should be explored of strengthening the institutional basis of the Agency for the Cooperation of Energy Regulators (17), whose role includes promoting the exchange of best practices and cooperation between the regulatory authorities and economic stakeholders, issuing opinions on the conformity of any decision adopted by the national regulators with supranational obligations and, in certain cases, deciding on the procedures and conditions for access and operational security of the electricity and gas infrastructures connecting at least two Member States. There must be coordination and cooperation between Member States, supervised by the Agency. However, any increase or change in the responsibilities of the Agency should be within the general limits established in ECJ case law, particularly as set out in the Meroni judgment (18).
3.4.4   The aim must be to ensure implementation of the EU's body of rules on energy security - which were drawn up and adopted before the abovementioned Article 4(2) of the TEU and which include strictly supranational measures (19) as well as those coming under the Common Foreign and Security Policy and the ad hoc position of the 2010 Spring European Council on security of energy supply (20) – and their adherence to certain provisions of the European Energy Charter relating to use of energy transport infrastructure and transit of energy materials and products (21).
3.4.5   To strengthen security of supply and solidarity among Member States in the event of a Community emergency and, in particular, to support Member States which face to less favourable geographic or geological conditions, the Member States should establish joint preventative action or emergency plans at supranational or even transnational level. These plans should be updated regularly and published. In future, the Cohesion Fund and the Structural Funds could act as a source of financial support for these plans.
3.4.6   With a view to better securing the above-mentioned objectives, it would make sense to adopt measures under Article 122 or 194 TFEU as soon as possible to regulate the supply of certain energy products when Member States face severe difficulties, and to fix the procedure for determining financial aid to Member States facing natural disasters or exceptional events. The potential for Article 149 of the TFEU to be used as an additional tool to achieve the objectives mentioned above should also be considered, provided that this is appropriate in the specific circumstances which require supranational measures to be adopted.
3.4.7   Given the challenges and objectives facing the European Union with regard to energy, it seems necessary to call for a proper European public service in energy which, in compliance with the subsidiarity principle, would be responsible among other things for drawing up a public register of energy consumption patterns in the Member States, the types of energy consumed in each country, measures to prevent disasters resulting from the use and transport of energy, and coordination of civil protection to that end.

Brussels, 16 September 2010.


The President of the European Economic and Social Committee

Mario SEPI




(1)  The supranational legal framework is currently set by Directive 2004/17/EC of the EP and the Council, 31.3.2004 (OJ L 134), as amended by Directive 2005/51/EC (OJ L 257) and Regulation 2038/2005/EC (OJ L 333).

(2)  In the interests of facilitating competition, the conditions of Regulation 715/2009/EC of the European Parliament and of the Council, 13.7.2009 (OJ L 211) will be applicable from 2011 onwards.

(3)  The conditions of Regulation 714/2009/EC of the EP and of the Council (OJ L 211) will also be applicable from 2011 onwards.

(4)  In accordance with the objectives of Directives 90/377/EEC of the Council of 29.6.1990 (OJ L 185); 2003/54/EC and 2003/55/EC of the EP and the Council of 26.6.2003 (OJ L 176), and the proposed directive of the EP and the Council, of 29.11.2007 (COM (2007) 735 final).

(5)  Protocol No. 26 on services of general interest, annexed to the TEU and TFEU, fleshes out Article 14 TFEU and provides the Court of Justice with a new basis for interpreting Article 36 of the charter on this matter.

(6)  Consequently, the Court granted to Member States, among other things, the right to make the definition of economic services of general interest entrusted to certain businesses conditional on their national policy objectives. Judgment of 23 October 1997. C-159/94, Commission v France, Rec. ECR I-5815, Point 49.

(7)  CJ Judgment of 23 May 2000. C-209/98, Sydhavnens Stens, ECR. I-3743, Point 74.

(8)  CJ Judgment of 17 May 2001. C-340/99, TNT Traco, ECR I-4109, Points 56-58.

(9)  Published in OJ C 83, 30.3.2010, p. 47.

(10)  

‘The scope of and arrangements for exercising the Union's competences shall be determined by the provisions of the Treaties relating to each area.’


(11)  The relationship between regulatory systems and administrative practice may be particularly complicated given the provisions of Article 2(2)TFEU, which allows both the Union and its Member States to take binding decisions in this area and gives the Member States the right to exercise their competence if the Union does not exercise its, or if it has decided to cease exercising its competence. Moreover, the Sole Article of Protocol 25 (on the exercise of shared competence) annexed to the TEU and TFEU states: ‘when the Union has taken action in a certain area, the scope of this exercise of competence only covers those elements governed by the Union act in question and therefore does not cover the whole area’.

(12)  See exploratory opinion CESE 990/2010 on Energy poverty in the context of liberalisation and the economic crisis.

(13)  See Benoît Rohmer, F. et al.: Commentary of the Charter of Fundamental Rights of the European Union, Brussels 2006, p. 312 ff.; and Lucarelli, A. et al.: L'Europa dei diritti. Commento alla Carta dei diritti fondamentali del’Unione Europea, Bologna, p. 251 ff.

(14)  See Moreiro González, C.J.: ‘El objectivo del bienestar social en el contexto de crisis económica mundial’, Gaceta Jurídica de le UE y de la Competencia, Nueva Época, 11.5.2009, p. 7 ff.

(15)  See Articles 51 and 52 of the Charter and Declaration 1 of the Member States concerning the Charter, annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon, signed on 13 December 2007, OJ C 83, 30.3.2010, p. 337, as well as the explanations relating to the Charter of Fundamental Rights drawn up by the Praesidium of the Convention which drafted the Charter and updated by the Praesidium of the European Convention, OJ C 303/2, 14.12.2007, p. 17 ff.

(16)  As set out in Protocol No 30 on the application of the Charter to Poland and to the United Kingdom and in Declarations 61 and 62 of the Republic of Poland and Declaration 53 of the Czech Republic annexed to the Final Act of the IGC that adopted the Lisbon Treaty.

(17)  Established under Regulation (EC) No 713/2009 of the European Parliament and of the Council, 13.7.2009, OJ L 211, 14.8.2009.

(18)  ECJ case law does not allow the Commission to delegate regulatory or executive powers, unless these powers are explicitly established in the Treaty (Meroni judgment of 17 July 1959, ECR p.331).

(19)  See for example the Communication from the Commission on the Second Strategic Energy Review – An EU Energy Security and Solidarity Action Plan COM(2008) 781 final, which proposes, among other relevant measures, the modification of Directive 2006/67/EC on strategic oil reserves resulting in the adoption of Directive 2009/119/EC of the Council of 14.9.2009, OJ L 265, and Directive 2004/67/EC on security of natural gas supply; Green Paper ‘Towards a Secure, Sustainable and Competitive European Energy Network COM(2008)782 final.’ etc.

(20)  Brussels, 26.3.2010, doc. Co EUR 4, CONCL 1.

(21)  Decision 98/181/EC, ECSC and EURATOM of the Council and of the Commission, 23.9.1997 (OJ L 69) and Decision 2001/595/EC of the Council, 13.7.2001 (OJ L 209).


APPENDIX
to the Opinion of the European Economic and Social Committee
The following Section Opinion texts were rejected in favour of amendments adopted by the assembly but obtained at least one-quarter of the votes cast:

Point 1.1, 4th phrase:


‘It is necessary to boost all aspects of the operation of the internal energy market as regards infrastructure, the public procurement system, proper operation of the market and consumer protection. The EESC emphasises that the basic issue here is the need to develop energy infrastructure and the trans-European networks in order to establish the internal market in energy.


More specifically, mechanisms must be established for identifying price-formation criteria to prevent serious and unjustifiable disparities, often wrongly based on the type of energy being consumed, supply sources, or distribution facilities.


Similarly, supranational criteria and methods must be created to rationalise energy production in the Member States, bearing in mind a sustainable use of resources and based on geographic and climatic aspects, such as identifying peak activity periods for photovoltaic, wind or tidal energy generation.’


Outcome

27 votes for deleting the word ‘supranational’, 17 against and 2 abstentions.

Point 1.1.5

‘To this end, consideration should be given to a regulation that might include the rights enshrined in the European Charter on the Rights of Energy Consumers (COM(2007) 386 final, CESE 71/2008, rapporteur: Mr Iozia)
 (1)
, plus the specifics of the services of general interest which Member States might mention in this area, through minimum common rules on public service obligations, which will have to be defined clearly and be transparent, objective and non-discriminatory. It is thus understood that a distinction should be made between citizens’ rights and the scope for Member States to introduce or retain public service obligations deriving from the provision of economic services of general interest.


A regulation is a more appropriate instrument than a directive for the following reasons:







—



a regulation is directly applicable to the competent authorities in the Member States, to energy undertakings and to customers;











—



it does not require a lengthy transposition period;











—



it guarantees clarity and coherence of the rules and obligations throughout the Community and











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defines directly the participation of Community institutions.






Outcome

28 votes for deleting the paragraph, 16 against and 2 abstentions.

Point 3.4.5


‘To strengthen security of supply and solidarity among Member States in the event of a Community emergency and, in particular, to support Member States which face to less favourable geographic or geological conditions, the Member States should establish joint preventative action or emergency plans at supranational or even transnational level (trade agreements among businesses; increase in exports; compensation mechanisms, etc.). These plans should be updated regularly and published. In future, the Cohesion Fund and the Structural Funds could act as a source of financial support for these plans.’


Outcome

30 votes for deleting the words in brackets, 11 against and 3 abstentions.


(1)  Communication from the Commission: “Towards a European Charter on the Rights of Energy Consumers” (COM(2007) 386 final).’