Source: http://keepontrack.eu/virtual-legal-helpdesk/faq/lorem-ipsum-dolor-sit-amet-2/
Timestamp: 2018-09-25 19:32:59
Document Index: 740097976

Matched Legal Cases: ['Art 3', 'Art. 4', 'Art.6', 'Art. 113', 'Art. 194', 'Art. 194', 'Art. 30', 'art. 110', 'Art.4', 'Art. 194', 'art=0']

Energy law in the EU - the wider framework for renewables
Rules on grid access and priority dispatch for renewable energy in Europe
I. Introduction1. What does guaranteed transmission and distribution mean?
Guaranteed transmission safeguards that generated electricity is fed from a power plant into the grid system and transferred on the extra high-voltage and high-voltage interconnected system with a view to its delivery to final consumer or to the Distribution System Operator (DSO). Transmission does not include supply of the electricity. Managing of the transmission is one of the responsibilities of the Transmission System Operator (TSO). Furthermore, the TSO is also obliged to ensure long-term ability of the system to meet demands for electricity transmission and to manage energy flows of the system. The TSO is thus responsible for keeping the system secure, reliable and efficient. Similarly, guaranteed distribution secures that the electricity is transported on high-voltage, medium-voltage and low-voltage systems with a view to its delivery to final customers. Distribution neither includes supply of the electricity.
2. What is grid access?
Grid access means the admittance of an electricity generating installation to the transmission and distribution systems, i.e. the installation gets the permission to build a connection to the grid allowing to actually feed the electricity produced into it. In terms of priority access, an assurance is given to connected generators that they will be able to sell and transmit their electricity in accordance with connection rules at all times, whenever the source becomes available. Furthermore, in the event that the electricity from renewable energy sources is integrated into the spot market, guaranteed access ensures that all electricity sold and supported obtains access to the grid, allowing the use of a maximum amount of electricity from renewable energy sources from installations connected to the grid.
3. What is meant by priority dispatch?Electricity dispatch means that the electricity produced is actually used by the TSO and DSO to guarantee the grid and system stability, i.e. the electricity used as a result of balancing of supply and demand. If there is too little electricity, the TSO or DSO will have to signal to producers to increase production, if there is too much, some producers may be deregulated. Priority dispatch in this regard means not being deregulated in case this becomes necessary, i.e. the TSO and DSO will have to consider those installations with priority dispatch first when doing the balancing exercise of supply and demand. The rules on dispatch thus relate to the core of system stability and shall guarantee the secure operation of the electricity system.. However, such rules, including the rules on the use of interconnectors, shall be determined on the basis of non-discriminatory criteria.
I. The Renewable Energy Directive
The Renewable Energy Directive, Directive 2009/28/EC, aims at the promotion of energy from renewable energy sources. Among others, it sets mandatory national targets to be fulfilled by Member States, rules regulating statistical transfers and joint projects between Member States, guarantees of origin, and also access to and use of the electricity grid for energy from renewable sources.
In terms of access to and use of the electricity grid, the Renewable Energy Directive lays down that Member States shall ensure that , priority access or guaranteed access to the grid-system of electricity produced from renewable energy sources shall be safeguarded. In terms of dispatching to the system, Member States shall require system operators to ensure that when dispatching renewable energy electricity installation to the system, they have priority over other installations. Similarly, Member States may also require the system operator to give priority when dispatching generating installations producing combined heat and power. Moreover, TSOs and DSOs shall guarantee the transmission and distribution of renewable electricity in their area.
It should be stressed that when dispatching renewable electricity installations, under the Renewable Energy Directive, the priority is subject to the secure operation of the national electricity system permits, as described by the Internal Electricity Market Directive. Thus the safety of the system needs to be guaranteed under all circumstances and even if that may detriment the priority for electricity from renewable sources.
II. The Internal Electricity Market Directive
The Internal Electricity Market Directive, Directive 2009/72/EC, lays down common rules for generation, transmission, distribution and supply of electricity on the Internal Market. It establishes rules related to the organization and functioning of the electricity sector, open access to the market, dispatching to the grid etc.
The Internal Electricity Market Directive, as regards dispatch of renewable electricity mirrors the Renewable Energy Directive: In terms of dispatching an installation to the grid system, the TSO, where it has such a function, is responsible for dispatching the electricity generating installations in its area and for determining the use of interconnectors with other systems. When dispatching generating installations using renewable energy sources, TSOs shall follow the rules laid by the Renewable Energy Directive, as described above, subject to the guarantee of the system security. Member States may also require TSOs to give priority when dispatching generating installations producing combined heat and power. The same applies for DSOs, i.e. a Member State may require the DSO, when dispatching generating installations, to give priority to generating installations using renewable energy sources or waste or producing combined heat and power.
In terms of security of supply, it needs to be underlined that, a Member State may direct that priority is given to the dispatch of generating installations using indigenous primary energy fuel sources. This may reach up 15 % in any calendar year of the overall primary energy necessary to generate the electricity consumed in the Member State concerned. What counts as “indigenous resource” differs from Member State to Member State, though, based on the availability of the source in each area. Thus, as the term is not defined on EU level, it could be solid fuels, gas, oil and also renewable energy sources. Some Member States even seem to consider uranium as an indigenous resource.
III. The Energy Efficiency Directive
The Energy Efficiency Directive, Directive 2004/8/EC, targets to increased energy efficiency by establishing a framework for promotion and development of cogeneration of heat and power.
In terms of rules on transmission and distribution and access and dispatch to the grid, the Energy Efficiency Directive refers to the rules laid in the Renewable Energy Directive and Internal Electricity Market Directive. In Article 15(5) of the Energy Directive, a complex system is described:
“Without prejudice to Article 16(2) of Directive 2009/28/EC and taking into account Article 15 of Directive 2009/72/EC and the need to ensure continuity in heat supply, Member States shall ensure that, subject to requirements relating to the maintenance of the reliability and safety of the grid, based on transparent and non-discriminatory criteria set by the competent national authorities, transmission system operators and distribution system operators when they are in charge of dispatching the generating installations in their territory:
Member States shall ensure that rules relating to the ranking of the different access and dispatch priorities granted in their electricity systems are clearly explained in detail and published. When providing priority access or dispatch for high-efficiency cogeneration, Member States may set rankings as between, and within different types of, renewable energy and high-efficiency cogeneration and shall in any case ensure that priority access or dispatch for energy from variable renewable energy sources is not hampered.”
Thus, Member States must ensure that TSOs and DSOs guarantee transmission and distribution, provide priority or guaranteed access and priority dispatch to electricity produced in cogeneration plants. However, this is subject to the priority created by the Renewable Energy Directive for renewable energy, which again is subject to the stability of the system. Still, in case of problems with ensuring the continuity of heat supply (as the cogeneration plants in question also produce heat, and may be driven based on the demand for such heat), cogeneration may prevail over renewable energy even. For heat driven cogeneration plants, thus those which are operated to respond to a current heat demand, this therefore means that they will have the “first” priority, followed by renewable energy, followed by all other cogeneration plants, provided the stability of the system remains ensured.
The last paragraph then makes it the task of the Member States to rank the different technologies, which however may be very difficult task, as it may not only depend on the technology but also on the occasion (i.e. time, availability etc.). This is even more the case as the last part of the last sentence asks that “priority access or dispatch for energy from variable renewable energy sources is not hampered”, thus seems to create another “super” priority.
Based on the applied rules, the electricity generated from renewable energy sources has guaranteed access and dispatch to the grid and guaranteed transmission and distribution. Hence, the power generators are ensured that all electricity sold and supported obtains access to the grid, allowing the use of a maximum amount of electricity from renewable energy sources from installations connected to the grid, as set by the Renewable Energy Directive.
However, in certain circumstances it is not possible fully to ensure transmission and distribution of electricity produced from renewable energy sources without affecting the reliability or safety of the grid system. Due to the dependence on the environmental conditions of some renewable energy sources, which may vary from one day to another, system operators may sometimes have difficulties in relying that a certain amount of renewable electricity is generated every day. Too much as well as too little generation threaten the stability, so that thus, the “volatile” nature of some renewable energy sources may indeed pose an obstacle to ensuring system security. As a result, the electricity from renewable energy sources may be rejected. This poses an immense problem to the renewable energy producers who need to be able to sell when they produce and who – for the financing of the projects – need some guarantee of a stable income.
According to the Renewable Energy Directive, requirements relating to the maintenance of the reliability and safety of the grid and to the dispatching may differ according to the characteristics of the national grid and its secure operation. Thus, for examples, in the Czech Republic, the renewable electricity producers get a compensation for the electricity generated from solar and wind energy which was not dispatched by the system operator. In Germany, similar rules apply. However, implementation of such provision is not required by the Renewable Energy Directive. Therefore, the issue of dispatching renewable electricity installations to the grid system and the guarantee of the profit remains uncertain as the dispatch is subject to security of the system.
Every time we drive our cars, we talk on the phone, or stare at the bright screens of our computers we consume energy. While a single kWh is only worth around 3.4 cent[1] the price that can be found on the bill later is much higher. Part of these additional costs is made up of taxes. The energy taxation in the EU is based on the Energy Taxation Directive, Directive 2003/96/EC. In the following the competences of the EU to legislate on this topic, recent proposals for amendments to the existing energy taxation legislation and the opinions of the different institutions towards those proposals will be discussed.
[1] http://www.eex.com/en/market-data/power/derivatives-market/phelix-futures#!/2014/10/03
I. EU Competence
There are three different kinds of competences: Exclusive competence (Art 3 Treaty on the Functioning of the European Union, TFEU), shared competence (Art. 4 TFEU) and competence only to take supporting, coordinating or supplementary action (Art.6 TFEU).
Taxation generally falls within the competence of Member States. The EU can only act where such taxes pose an obstacle to the internal market, and in such case, the Council under Art. 113 TFEU has to act unanimously. Energy taxation may, in the context of the objectives of the European energy policy, fall within the shared competence of Art. 194 TFEU. However, in primarily fiscal matters the Council has again – as generally on taxation - to decide unanimously (Art. 194(3) TFEU), which makes the process of adopting new legislation more difficult and lengthier, as all different interests of Member States need to be considered.
The goal of the internal market is the free movement of goods, services, labour, and capital. However, such free movement can be hindered inter alia by taxation, for example if a business in one Member State is set at a disadvantage due to taxes as opposed to a similar business which has its seat in another Member State. Within the EU such obstacles to free movement through certain taxes are generally prohibited (compare e.g. Art. 30 TFEU, art. 110 TFEU), but can under certain conditions be justified, if they are necessary and proportionate to reach some well-defined objectives.
This is even more important, as taxation may often be used in order to influence consumer behaviour, and certain objectives may be aimed at with certain tax models . If a Member State e.g. wants to increase the used amount of energy from renewable resources in the course of the 20-20-20 strategy, one possibility is to increase the taxes on energy generated from non-renewable resources.
II. Current Energy Taxation Directive 2003/96/EC
The current Energy Taxation Directive came into force in 2003 and sets a minimum level of taxation for energy products (Art.4). At the time alternative energy resources were not yet as far developed as they are today and, according to the European Commission (Commission), the Energy Taxation Directive does not consider their importance. The Energy Taxation Directive does provide for the possibility of a total or partial exemption for electricity and fuels from renewable energy. However, according to the Commission the battle against climate change is not incorporated enough into the Energy Taxation Directive and the taxation system needs to be clearly structured in order to avoid overlap and gaps between the Energy Taxation Directive and the Emission Trading Scheme (ETS).
III. European Commission Proposal
As mentioned, the Energy Taxation Directive is in force since 2003, but since then there have been developments in the area of energy and climate change and new goals have been introduced. The 20-20-20 strategy of the EU encompasses the goals to decrease the CO2 emission by at least 20%, increase the used amount of renewable energy up to at least 20% and increase energy efficiency by at least 20% by the year 2020.[1] On the background of these developments in the past years the Commission is of the opinion that the Energy Taxation Directive does not correspond to the set goals and has developed a proposal to amend it. This first proposal was presented in April 2011.
One major change the proposal introduces is the distinction between an energy taxation linked to CO2 emissions of a certain product and energy taxation based on the energy content of the product. These two different taxes should be clearly distinguished by the Member States.[2] The CO2 related taxation will be linked to the CO2 emission each energy resource produces. A minimum tax rate for CO2 emissions for sectors not already covered by ETS will be set, so there will be no overlap between the two instruments.[3] Energy from renewable resources will escape this tax.
The general energy consumption tax is based on the energy content of the product.[4] The Commission plans to adjust the minimum prices for energy resources set in the current Energy Taxation Directive so they will correspond with the energy that can be generated from it and no longer with the volume consumed.
Furthermore, the proposal requires Member States to observe certain minimum taxation levels when setting national levels of taxation, according to the so-called proportionality principle. Where the set minimum levels for two or more energy resources are equal the national taxation level should accordingly also be equal.[5]
Consequently, for renewable energy resources this would mean that they will only be taxed once on the basis of the general energy consumption tax, while other energy resources such as coal or oil will be taxed according to both taxes. Thus, renewable energy will generally be taxed less and the incentive to produce and use it will increase, which may be considered a step forward as regards the use of taxation for environmental protection.
IV. Parliament Position
The European Parliament has dealt with the Commission’s proposal. The responsible committee in Parliament deciding on the proposal is the Committee on Economic and Monetary Affairs. The rapporteur, Astrid Lulling, recognizes the problems the Commission wants to address and agrees that a distinction between a CO2 related tax and a general energy consumption tax would contribute to the realization of the EU 20-20-20 strategy. However, she states that the aims of energy policy and industrial policy should be balanced further and that the Energy Taxation Directive should be kept in line with all aspects of energy taxation, meaning in particular the Energy Efficiency Directive, Directive 2012/27/EU, and the European energy policy in general.
Moreover, the rapporteur is of the opinion that the proportionality between the tax levels as proposed by the Commission would result in a substantial increase in the price of diesel. Consequently, she submits that more problems would arise, since diesel engines were more efficient than petrol engines. The rapporteur further states that in order to reach the goals set for 2020 the use of diesel engines should even be increased and not decreased. According to Lulling, the risk of inflation would rise if there is a big increase in the price of a certain fuel. Despite several lengthy discussions, the Parliament adopted its position based on the report, and submitted the result of the first reading to the Council in April 2012.
V. Council Position
The Council has had several debates on the topic since 2012 but has not yet released an official position on the matter. Since the discussed proposal is a fiscal matter the Council has to decide by unanimity (Art. 194 TFEU), which lengthens the process.
In general, the Council agrees on the differentiation between the kinds of taxes, however, it is working on minimum levels and exceptions However, there seems to be a tendency to provide Member States with the right to choose how to express the national tax levels, either as one single rate or as separate components.[6] Also, the Council is discussing the possibility to lower the overall minimum levels of taxation for LPG, natural gas and the sustainable biofuels used as propellants, a step by step approach for heating fuels, specific minimum rates for installations falling within the ETS and specific minimum rates for energy intensive business and business that enter into environmental agreements.[7]
In the beginning of 2015, the Commission ultimately withdrew the proposal. It seems, the Member States are not (yet) ready for such ambitions and there are too many differing national interests. Whether there will be a new proposal in the future at the moment is not clear. Thus for the time being, the current Energy Taxation Directive 2003/96/EC remains in force.
[2] Proposed Directive Preamble (5)
[3] Proposed Directive Preamble (7)
[4] Proposed Directive Preamble (6)
[5] Proposed Directive Article 1(4)(b), amendment of Article 4 of Directive 2003/96/EC
[6] Council Progress Report, 10417/14, 3.June 2014, p.3
[7] Council Progress Report, 10417/14, 3.June 2014, p.4
Harmful emissions from industry have a huge impact on human health, as they e.g. can cause cancer and cardiovascular and respiratory diseases. According to the estimations of the World Health Organization and European Commission, more than 400 000 premature deaths were attributable to ambient air pollution in Europe in 2010 and 2012. Moreover, the air pollution has a significant influence on the environmental (effects on the quality of fresh water and soil etc.) and it can also cause damage of materials and buildings. All these factors have in the end a massive economic impact.[1]
There are several actions that may help to reduce air pollution. In December 2013, the European Commission adopted a package that comprises of three main elements: Clean Air Programme for Europe, a revised National Emission Ceilings (NEC) Directive and a proposal for a new Directive on Medium Combustion Plants.[2] A proposal for a Council Decision on the acceptance of the Amendment to the 1999 Protocol to the 1979 Convention on Long-Range Transboundary Air Pollution to Abate Acidification, Eutrophication and Ground-level Ozone is also a part of the package. The main aim of the adopted measures is to update existing legislation and further lower the air pollution in the European Union (EU). Among others, the package sets new emission limits for some of the major pollutants. The package targets to number of sectors, including traffic, power plants and agriculture.
[1] European Environmental Agency: Air Quality in Europe - 2014 Report. Available here: http://www.eea.europa.eu/publications#c14=&c12=&c7=en&c9=all&c11=5&b_start=0
[2] See: DG Environment: http://ec.europa.eu/environment/air/clean_air_policy.htm
I. The Clean Air Policy Package
1. Clean Air Programme for Europe The Clean Air Programme for Europe sets out new interim objectives for reducing health and environmental impacts. For the period up to 2030 (relative to 2005), the Programme aims to achieve a 52% reduction of the impacts of air pollution on health and a 35% on environment. It also introduces support measures that should help to cut air pollution, with a focus on improving air quality in cities, supporting research and innovation, and promoting international cooperation.
2. National Emission Ceiling Directive[1]
The proposal of the Directive is the main tool to achieve the new air policy target for 2030. It establishes new national emission reduction commitments applicable from 2020. Furthermore, it also sets intermediate emission levels for the year 2025 applicable to the same pollutants to maintain the trajectory towards 2030. The limit needs to be reached by each Member State.
The proposal sets the upper limit for total emission of six main pollutants (SO2, NOx, VOC, NH3, PM2,5 and CH4).
An overview of the most dangerous pollutants:
Sulphur dioxide (SO2) - emitted by power generation, industry, shipping and households. Nitrogen oxides (NOx)- emitted by road vehicles, shipping, power generation, industry and households.
Volatile organic compounds (VOC) - emitted from solvents in products and industry, road vehicles, household heating and power generation. VOCs are the key component in the formation of ground-level ozone.
Ammonia (NH3) - emitted by activities linked to manure and fertilizers management in agriculture and the use of fertilisers in agriculture. Particulate matter (PM) - fine dust, emitted by road vehicles, shipping, power generation and households, and from natural sources such as sea salt, wind-blown soil and sand. Health concerns focus on particles of less than 10 micrometres in diameter (PM10) – especially those of less than 2.5 micrometres across (PM2.5). In implementing the PM2.5 reductions, particular emphasis shall be placed on reduction of black carbon. Black carbon is the sooty part of particulates emitted from combustion. Methane (CH4) - emitted by natural sources such as wetlands, as well as human activities such as leakage from natural gas systems and the raising of livestock. Methane is a key building block in the formation of ozone, as well as a powerful greenhouse gas.[2] Ground-level ozone (O3)- secondary pollutant produced by complex chemical reactions of NOx and VOCs (including methane) in sunlight.
The Directive also introduces enhanced provisions on inventories, projections, and ecosystem monitoring. It repeals the current Union regime on the annual capping of national emissions of air pollutants. However, national emission ceilings (NECs) set for 2010 onwards for SO2, NOx, NMVOC and NH3 shall apply until 2020.
3. Directive on Medium Combustion Plants[3]
The proposal for a new Directive targets to smaller power plants and industry installations. It introduces minimum requirements to control emissions of NOx, SO2 and PM into the air for both new and existing installations with thermal capacity between 1 MW and 50 MW.
A simple registration scheme, based on notification by the operator, shall be implemented. The notification shall at least contain the information indicating the rated thermal input of the medium combustion plant, type of the plant and type and share of fuel, date of the start of the operation, sector of activity, the expected number of operating hours and the average load in use, the applicable emission limit value, together with a declaration to operate the plant in accordance with those rules and the name and the restarted office of the operator.[4] The competent authority shall register the plant within one month after receiving the notification. Existing medium combustion plants may be exempted from the notification obligation upon the condition that all relevant information has been made available to the authority.
The annex contains emission limit values for both existing and new installations applying to individual medium combustion plants. However, Member States may exempt existing and new medium combustion plants which do not operate more than 500 operating hours per year. Furthermore, periodic measurements of SO2, NOx and PM shall be required at least every three years for medium combustion plants of a capacity between 1 MW to 20 MW and at least once a year for plants with the capacity between 20 MW to 50 MW. The Directive is presumed to help deliver a significant part of Member States' emission reduction obligations. The Directive is also considered to be helpful regarding the achievement of the required reduction in emissions in the potential trade-off with biomass combustion.
II. State of play and progress in Parliament and Council
Originally, the legislative procedure for adoption of both proposals was scheduled for 2015. Regarding the Directive on Medium Combustion Plants, the vote on the document shall take place at the plenary session of the European Parliament in spring 2015. The European Council hopes for 1st reading adoption in fall 2015. However, concerning the National Emission Ceiling Directive, the Council has asked the Commission for a new impact assessment. Number of Member States still struggle to fulfil the nowadays applicable air quality standards. Therefore, the proceeding of adoption of the Directive in the Council has been slowed down and since the European Commission seems as of November 2014 not have submitted the new impact assessment – it is unclear when there will be any progress on the proposal. Certainly, a delay behind the Directive on Medium Combustion Plants is to be expected.
[1] Proposal for a Directive of the European Parliament and of the Council COM(2013) 920 final on the reduction of national emissions of certain atmospheric pollutants and amending Directive 2003/35/EC. Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52013PC0920&from=EN.
[2] See: DG Environment – Clean Air Policy Package: Questions and Answers. Available at: http://europa.eu/rapid/press-release_MEMO-13-1169_en.htm
[3] Proposal for a Directive of the European Parliament and of the Council COM(2013) 919 final
on the limitation of emissions of certain pollutants into the air from medium combustion
plants. Available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52013PC0919&from=EN
[4] Annex I to the Proposal for a Directive on the limitation of emissions of certain pollutants into the air from medium combustion plants. Available at: http://ec.europa.eu/environment/air/pdf/com2013_919/COM_2013_919_F1_ANNEX_EN.pdf