COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Decision of the European Parliament and of the Council on establishing an information exchange mechanism with regard to intergovernmental agreements and non-binding instruments between Member States and third countries in the field of energy and repealing Decision No 994/2012/EU
Date: 2016-02-16
Institutions: Directorate-General for Energy, European Commission
Subjects: EU Member State, energy cooperation, energy supply, exchange of information, international agreement, single market, third country

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   EUROPEAN COMMISSION  Brussels, 16.2.2016  SWD(2016) 28 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a Decision of the European Parliament and of the Council on establishing an information exchange mechanism with regard to intergovernmental agreements and non-binding instruments between Member States and third countries in the field of energy and repealing Decision No 994/2012/EU {COM(2016) 53 final} {SWD(2016) 27 final}  
 
 
Executive Summary Sheet 

Impact Assessment on the proposal to revise the Decision on the information exchange mechanism 
with regard to intergovernmental agreements (IGA) between Member States and third countries in the 
field of Energy 

(IGA Decision 994/2012/EU) 
A. Need for action 

Why? What is the problem being addressed? Maximum 11 lines 

The  IGA  Decision  of  25  October  2012  established  a  mechanism  for  the  exchange  of  information  between 
Member States and the Commission on intergovernmental agreements (IGAs) in the field of energy. As analysed 
in the evaluation report annexed to this Impact Assessment, experience shows that the current IGA Decision is 
not meeting one of its principal objectives, namely to ensure compliance of IGAs with EU law. Specifically, it has 
proved  ineffective  in  encouraging  the  transformation  of  IGAs  that  are  discovered ex-post  to  be  non-compliant 
with EU law into ones that are compliant. 3 main underlying drivers to this problem have been identified:  

  The  lack  of  any  ex-ante  notification  of  IGAs  to  the  Commission,  resulting  in  a  risk  of  IGAs  being 

developed that are non-compliant with EU law; 

  The lack of adequate legal mechanisms in some IGAs allowing for their amendment or termination; 

The lack of transparency in ongoing IGA negotiations / substitution effect. 

What is this initiative expected to achieve? Maximum 8 lines 

The review of the IGA Decision takes place in the context of the Energy Union Strategy, the objective of which is 
to  give  EU  consumers  -  households  and  businesses  -  secure,  sustainable,  competitive  and  affordable  energy 
supplies. The review has two main objectives: 

 

Increase  the  compliance  of  IGAs  with  EU  law,  thereby  ensuring  the  proper  functioning  of  the  internal 
energy market and enhancing competition; 

Increase the transparency of IGAs in order to increase the cost effectiveness of EU energy supply and increase 
solidarity between Member States. 

What is the value added of action at the EU level? Maximum 7 lines  

First,  under  EU  law  Member  States  are  obliged  to  avoid  or  eliminate  any  incompatibility  between  European 
Union law and any IGAs they conclude with third countries. It is an EU aim (under Article 194 TEU) to ensure 
the proper functioning of the internal energy market, and this  requires that energy imports into the European 
Union are in full compliance with the rules of the internal energy market. Second, the need for coordination at 
supranational level is increased by the progressive integration of energy infrastructure and markets at EU level, 
a shared reliance on external suppliers and the ambition on the part of the EU and its Member States to create 
an Energy Union. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why? Maximum 14 lines  
Option 1: Baseline: The IGA Decision remains unchanged but the infringement policy is strengthened. 
Option 2: Model clauses for inclusion in IGA which do not infringe EU law/guidelines: 
Model clauses could be developed and the consequences of their use in IGAs for the assessment process by the 
Commission be specified. 
Option 3:Ex-ante assessment of IGAs by the Commission could become obligatory: 
Member States  could be obliged to inform the Commission at an early stage of any ongoing IGA negotiations 
and to submit their draft IGAs to the Commission for an ex-ante assessment. 
Option 4: The Commission could have the right to participate as an observer in IGA negotiations: 
Under the current IGA Decision Member States "may request the assistance of the Commission". Member States 
could however be obliged to invite the Commission to participate in the negotiations as an observer. 
Option 5: The Commission could negotiate EU agreements in the field of energy: 
Compulsory  ex-ante  notification  would  allow  for  the  checking  and  discussion  in  advance  of  whether  an  EU-
agreement (exclusive or mixed) would be a more appropriate means of achieving a given objective. 

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This Impact Assessment concluded that the most cost effective, efficient and proportionate option was option 3. 

Who supports which option? Maximum 7 lines  
A Public Consultation on this initiative ran from 28/07  to 22/10 2015, the main results of which were as follows: 
  Public authorities: 6 Member States felt that the current system should be reinforced. 5 Member States 

were of the opinion that no revision of the current system was needed; 

  Business:  a  large  majority  of  the  responses  from  business  stakeholders  stressed  the  importance  of 

keeping commercial contracts outside of the scope of the IGA Decision. 

Those in favour of strengthening the IGA Decision generally believed that the introduction of a compulsory ex-
ante verification mechanism should be the main means of achieving that reinforcement. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)? Maximum 12 lines                                       

This IA relies on a qualitative evaluation of the proposed options. This is due to the fact that it is not possible 
fully  to  quantify  the  direct  and  indirect  macroeconomic  effects  of  changes  to the  IGA  Decision.  The  economic 
benefits of option 3 (compulsory ex-ante compatibility checks) would result from increased compliance of IGAs 
with EU law and would primarily be related to: 

 

Increased  legal  certainty,  which  favours  investment.  This  is  particularly  true  for  infrastructure-related 
IGAs that are intended to provide legal certainty for projects involving high levels of investment; 
  A well-functioning internal energy market without segmentation and with increased competition; 
 

Increased transparency as regards the security of supply situation in all Member States, which in turn 
could reduce the risk of duplication of investment and/or infrastructure gaps. 

The impacts of a revised IGA Decision on environmental and social areas would be indirect. To the extent that 
such  a  revision  increased  the  compliance  of  IGAs  with  EU  law  and  so  created  a  better  overall  business 
environment they would be positive. 

What are the costs of the preferred option (if any, otherwise main ones)? Maximum 12 lines                                       

The preferred option, option 3, could entail administrative costs both for the Commission and for MS 

At  EU  level,  the  first  level  of ex-ante  assessment  for  each  new  or  renewed  IGA  submitted  to  the  Commission 
would probably involve two officers in DG ENER for up to two full working days. The Commission's Legal Service 
and other relevant DGs would also need to be consulted, and would also need to invest the resources of one to 
two legal officers for an estimated one to two days. 

At  national  level,  the  main  legal  assessment  and  drafting  work  necessary  to  conclude  an  IGA  with  a  third 
country would be carried out whether or not there were an obligatory ex-ante notification provision. Therefore, 
the  additional  costs  of  this  option  at  a  national  level  would  be  linked  to  the  submission  of  documents  to  the 
Commission for ex-ante assessment. If issues of non-compliance with EU law were detected, more legal experts 
would  need  to  be  consulted.  Depending  on  the  complexity  of  the  IGA,  several  rounds  of  consultation  with 
national authorities might be necessary, which would also imply that more officers, at hierarchical levels in the 
national administration, would need to devote additional hours to the issue during the pre-signature phase. 

How will businesses, SMEs and micro-enterprises be affected? Maximum 8 lines 

As commercial contracts would stay out of the scope the revised IGA Decision, the proposed option, option 3, 
would have no additional direct impact on businesses relative to the current system. However, the mandatory 
ex-ante  assessment  of  draft  IGAs  by  the  Commission  could  delay  the  signature  of  the  IGA  and  could  thus 
indirectly  affect  the  planning  and  investment  decisions  of  commercial  entities  involved  in  energy  supply  or 
related  infrastructure.  However,  option  3  would  also  improve  the  overall  business  environment,  by  increasing 
legal  certainty  and therefore  saving  money  for  companies  involved  in  investments and  related  subcontracting, 
including SMEs. 

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Will there be significant impacts on national budgets and administrations? Maximum 4 lines 
Apart from the administrative costs mentioned above, the proposed option would not have additional impact on 
national budgets. 

Will there be other significant impacts? Max 6 lines  
The  introduction  of  compulsory  ex-ante  assessment  by  the  Commission  could  have  as  an  effect  that  an 
envisaged IGA with a third country would not be signed, or that it would be designed or modified in such a way 
as to comply with EU law. This could in turn affect the relationship with the third country concerned. Such ex-
ante assessment would, however, provide legal certainty and stability in the contractual relationships between 
Member States and third countries. A separate issue is that Members of the EEA or Contracting Parties of the 
Energy Community may also decide to apply the revised IGA Decision. 

D. Follow up 

When will the policy be reviewed? Maximum 4 lines  
The IGA Decision contains a review clause in Art. 8 requiring the Commission to prepare a report by 1st January 
2016  and  every  three  years  thereafter.  Thus,  in  addition  to  the  evaluation  report  in  annex  to  this  Impact 
Assessment, the Proposal for a review of the IGA Decision will be accompanied by a first report to the European 
Parliament and the Council. The Commission intends to produce a subsequent report by 1. January 2020. 

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