The Energy Union in the Next Decade
Article from: OGEL 3 (2019), in Editorial
by Giuseppe Bellantuono* and Kaisa Huhta§
1. Introduction to the Special Issue
(Minor revisions 17/06/2019) Since its launch in 2015,[1] the Energy Union strategy has significantly transformed EU energy and climate law. At least from a quantitative point of view, the measures aimed at implementing the five Energy Union dimensions dwarf the energy and climate packages of the previous two decades.[2] Figure 1 shows that in the 2015-2019 period 2 Regulations have been devoted to the energy security dimension,[3] 2 Directives and 3 Regulations to the energy markets dimension,[4] 2 Directives and 1 Regulation to the energy efficiency dimension,[5] 3 Directives, 4 Regulations and 1 Decision to the decarbonisation dimension,[6] 20 actions on clean technologies for the research dimension.[7] The Governance Regulation provides the horizontal framework for the five dimensions.[8] Finally, the Decision on intergovernmental agreements and the Regulation on the screening of foreign direct investments in the EU affect the external dimension of the Energy Union.[9] Although many legislative provisions introduced in previous years have been maintained, each dimension has been provided a new legal framework.
The intense legislative activity of the last four years has been prompted by the need to revise what did not work in the past. However, the Energy Union strategy is not about minor improvements of EU energy and climate law. It is about engineering the largest and fastest energy transition ever seen. The articles we present in this Special Issue deal with several aspects of such a transition. Above all, they provide the authors' viewpoint on what to expect from the Energy Union strategy in the next decade.
A focus on the next decade should help go beyond the analysis of specific provisions and put in a broader perspective the legal developments taking place in EU energy and climate law. It has been rightly pointed out that the main goal of the Energy Union Strategy is to ensure policy coherence across the five dimensions.[10] Coherence should be understood as the exploitation of synergies and the avoidance of conflicts among policy areas. It cannot be excluded that this kind of coherence is an unattainable ideal: the low-carbon transition could exacerbate conflicts instead of eliminating them. The crucial question is whether the Energy Union strategy is able to pull out the most blatant incompatibilities across the five dimensions and pay attention to all the interests involved. This is less than perfect policy coherence, but already a tall order.
From a scientific point of view, the challenges of the next decade are clear: global greenhouse gas (GHG) emissions should peak and start to decline.[11] Should the peak happen much later, the Earth system could cross a planetary threshold and enter a phase of irreversible and uncontrollable biophysical changes. The threshold could be as low as a 2°C increase of the global temperature above pre-industrial levels.[12] As far as the EU is concerned, it is not clear whether GHG emissions are on a trajectory compatible with the above mentioned targets.[13] The 2020 targets for renewable energy and energy efficiency should be barely achieved.[14] And at least since 2011, investments in renewable energy are much lower than required by decarbonisation scenarios.[15] This means that the legal framework of the Energy Union must prove to be highly effective for the higher 2030 targets to remain within reach. Moreover, the choice of a long-term target of zero net emissions by 2050 might require to further increase the 2030 targets.[16]
Whether or not the new Energy Union governance system will deliver the desired degree of effectiveness is one of the most debated topics. Compared with the legal framework put in place in the previous decade, the new legal framework relies less on nationally binding targets. Though, effectiveness will have to be assessed along a continuum and not in a binary fashion.[17] We are entering a phase of experimentation in which the target-and-review system inaugurated in previous years is embedded in a broader framework of reporting, monitoring and planning obligations. Much more than traditional infringement proceedings, these obligations could drive Member States to converge on a shared understanding of the low-carbon transition. Further support could come from synergies with the implementation processes of the Paris Agreement and of the 2030 Sustainable Development Agenda. Both reflect the same approach to planning and reporting now placed at the centre of the Energy Union governance system. All these processes offer several opportunities to innovate legal concepts and legal reasoning. In order to exploit them, legal scholars are expected to go beyond business as usual, to overcome disciplinary fences and to identify plausible paths to a low-carbon future. This is the task we begin to accomplish in this Special Issue.
Figure 1. Main measures on the five dimensions of the Energy Union 2015-2019.
2. Overview of the Articles
With the exception of the research dimension, this Special Issue deals with all the Energy Union dimensions. The first two articles address the governance system. Laura Ammannati critically evaluates the role of the National Energy and Climate Plans and the follow-up procedures put in place by Reg. 2018/1999. She argues that Commission's recommendations are unlikely to ensure compliance with the 2030 targets. In her view, the Energy Union should rely on EU-wide and regional cooperation mechanisms. The latter would shift the main thrust of the governance system from the vertical relationship between the Commission and the Member States toward a horizontal dialogue fostering communication and the joint selection of national targets and implementation tools.
Mariavittoria Zaccaria tackles the governance issues from the perspective of EU constitutional law. She maintains that the sphere of exclusive competence on the national energy mix in Art. 194(2) TFEU came to exert a dominant influence on EU energy and climate policy. The author detects clear signs of such influence in the measures adopted with the Clean Energy Package. Both Reg. 2018/1999 and Reg. 2018/2001 confer more flexibility to Member States, place much trust in voluntary cross-border cooperation and expand the role of market mechanisms. If this approach will not prompt an adequate level of compliance with EU targets, the introduction of a specific EU competence on energy matters might lead to the paradoxical result of weakening EU energy and climate policy.
The next group of four articles deals with the decarbonisation dimension. Leon Lieblang focuses on the central role of tenders for renewable energy in the current and future legal framework. Through the analysis of tender results for onshore wind in eight Member States, the author shows that these market mechanisms do not automatically ensure actor variety, do not allow to control the volume of subsidized capacity, and might not prompt cost reductions. Given that the achievement of the 2030 targets strongly relies on the incentives provided by tenders, more attention should be paid to their design.
Anita Ho-Tieng et al. focus on the General Court's judgment related to the State aid scheme for the controversial UK nuclear plant Hinkley Point C. The authors argue that, by giving the green light to the UK aid scheme, the General Court opened up a Pandora box deepening the divide between the conflicting objectives of the Energy Union. The article discusses the impact that the judgment could have on the interplay between State aid law and the new provisions of Directive 2018/2001.
Naomi Luhde-Thompson reflects on the role that national infrastructure planning regulations could play in supporting the low-carbon transition. Authorization procedures are of crucial importance both to overcome local resistance to clean energy infrastructures and to prevent additional investments in high-carbon infrastructures. The author argues that the current UK legal framework on development consent for power generation infrastructures favours gas-fired power plants and hinders onshore wind farms. An explicit link between planning and climate policies in the National Energy and Climate Plans could significantly increase the probability of fully decarbonising the energy sector.
Giuseppe Bellantuono's article turns to another type of carbon lock-in, i.e. the continued reliance on coal-fired power plants in 21 Member States. The author assesses the impact of the new provisions on CO2 emission limits for capacity mechanisms in the recast Electricity Regulation, of the emission limits for air pollutants and of the national measures for voluntary coal phase-out. The main argument is that each of the above mentioned interventions interacts with a broader legal context. Such interaction can be understood as a legal pathway that directly affects the pace and direction of decarbonisation processes. According to the author, the identification of legal pathways is useful both to select the right type of climate tool and to avoid the many kinds of lock-in the low-carbon transition will have to face in the coming decades.
Two articles deal with the energy markets and energy efficiency dimensions. Lucila de Almeida argues that the implementation of the Energy Union strategy is increasingly reliant on obligations imposed on market players and on the private remedies rightholders can activate. Several provisions in the network codes, in the recast Electricity Directive and the recast Electricity Regulation make visible the role that a private law approach is going to play in EU energy policy. The author critically assesses the implications of this shift from traditional Member States' obligations to private rights and remedies.
Kaisa Huhta examines the consumer's role in the energy transition. She analyses the key legal approaches adopted to transform the role of the consumer from a passive recipient of energy to an active market participant. This legal analysis focuses on how the new provisions address the trade-offs between encouraging the consumer to participate in the markets on the one hand and protecting the consumer from the risks associated with such participation on the other. The analysis demonstrates that, despite legal efforts, the increasing consumer opportunities lead to more responsibilities for the EU electricity consumer.
The article by Martin Svec deals with the energy security dimension. The author assesses the extent to which the new provisions in this field have enhanced energy security of Member States. More specifically, the article discusses the implementation of the solidarity principle in the natural gas and electricity sectors, the information exchange mechanism on intergovernmental agreements in the field of energy and the framework for screening foreign investments. Energy security is also analysed from the perspective of the external dimension of the Energy Union, with specific reference to the EU's engagement in various international organizations (e.g. the Energy Community) and international treaties ratified by the EU (e.g. the Energy Charter Treaty).
The external dimension of the Energy Union is also the focus of Ha Nguyen and Umut Turksen's article. They assess the impact the provisions in the EU-Vietnam Free Trade Agreement could have on energy trade and investment flows, particularly with regard to renewable energy. The Agreement is a good example of the EU's attempt to support climate goals and sustainable development with bilateral or regional initiatives. However, the authors warn that significant changes are needed in Vietnamese energy and climate law before the Agreement starts to produce the intended results.
The topics and issues covered in this Special Issue demonstrate the extent of the approaches that must be pieced together in order to achieve the objectives of the Energy Union. Based on these analyses, it is clear that the institutional, constitutional and governance structures can either facilitate or hinder the success of the Energy Union Strategy. The irrefutable need to address climate change on several levels of the legal framework is also demonstrated: ensuring an appropriate energy mix, design and timing of State intervention, facilitation of well-functioning and clean infrastructures, ensuring energy security. Moreover, the analyses show that the careful design of the market and the role of the consumer are emphasised in this context. Finally, the articles collected in this Special Issue demonstrate that all of the analysed topics and issues - from constitutional foundations to the detailed design of a tender - are inherently interconnected on the path to achieving the Energy Union objectives.
* Professor of Comparative Law, Faculty of Law, University of Trento, Italy. Contact: giuseppe.bellantuono@unitn.it .
§ Senior lecturer in EU law at UEF Law School, University of Eastern Finland. Contact: kaisa.huhta@uef.fi .
[1] European Commission, A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy (COM(2015)80 of 25.2.2015).
[2] An overview of the legislative processes related to the Energy Union is provided by European Parliament Research Service, The Juncker's Commission Ten Priorities: An End-of-Term Assessment (May 2019) pp. 9-11.
[3] Regulation (EU) 2018/1937 concerning measures to safeguard the security of gas supply, OJ L280/1 of 28.10.2017; Regulation (EU) 2019/941 on risk-preparedness in the electricity sector, OJ L158/1 of 14.6.2019.
[4] Regulation (EU) 2016/1952 on European statistics on natural gas and electricity prices, OJ L311/1 of 17.11.2016; Directive 2019/944/EU on common rules for the internal market in electricity (recast), OJ L158/125 of 14.6.2019; Directive 2019/692/EU amending Directive 2009/73/EC concerning common rules for the internal market in natural gas, OJ L117/1 of 3.5.2019; Regulation (EU) 2019/943 on the internal market for electricity (recast), OJ L158/54 of 14.6.2019; Regulation (EU) 2019/942 establishing a European Union Agency for the Cooperation of Energy Regulators (recast), OJ L158/22 of 14.6.2019.
[5] Directive 2018/2002/EU amending Directive 2012/27/EU on energy efficiency, OJ L328/210 of 21.12.2018; Directive 2018/844/EU amending Directive 2010/31/EU on the energy performance of buildings and Directive 2012/27/EU on energy efficiency, OJ L156/75 of 19.6.2018; Regulation (EU) 2017/1369 on setting a framework for energy labelling, OJ L198/1 of 28.7.2017.
[6] Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse emission trading scheme, OJ L264/1 of 9.10.2015; Directive 2018/410/EU amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, OJ L76/3 of 19.3.2018; Directive 2018/2001/EU on the promotion of the use of energy from renewable sources (recast), OJ L328/82 of 21.12.2018; Regulation (EU) 2019/631 setting CO2 emission performance standards for new passenger cars and for new light commercial vehicles, OJ L111/13 of 25.4.2019; Directive on the promotion of clean and energy-efficient road transport vehicles, not yet published in the OJ; Regulation (EU) setting CO2 emission performance standards for new heavy-duty vehicles, not yet published in the OJ. Proposals were submitted for a Directive on combined transport of goods between Member States (COM(2017)648 of 8.11.2017, voted at first reading by the European Parliament in March 2019, no agreement in Council), a Directive on charging of heavy goods vehicles for infrastructure use (COM(2017)275 of 31.5.2017, voted at first reading by the European Parliament in October 2018, no agreement in Council) and a Directive on heavy goods vehicle taxation (COM(2017)276 of 31.5.2017, voted at first reading by the European Parliament in July 2017, no agreement in Council). Directly linked to Energy Union strategy are the proposed Regulations adopted within the Commission's Action Plan on Financing Sustainable Growth (COM(2018)97 of 8.3.2018): the Regulation (EU) on the framework to facilitate sustainable investment (COM(2018)353 of 24.5.2018, voted at first reading by the European Parliament in March 2019, no agreement in Council); the Regulation (EU) on disclosures relating to sustainable investments and sustainability risks (COM(2018)354 of 24.5.2018, final text not yet published in the OJ); the Regulation on low carbon and positive impact benchmarks (COM(2018)355 of 24.5.2018, final text not yet published in the OJ). Furthermore, many of the 54 actions implementing the Circular Economy Action Plan concern the energy sector: see European Commission, Report on the Implementation of the Circular Economy Action Plan (COM(2019)190 of 4.3.2019).
[7] European Commission, Accelerating Clean Energy Innovation COM(2016)763 of 30.11.2016; European Commission, Progress in Accelerating Clean Energy Innovation SWD(2019)157 of 9.4.2019.
[8] Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action, OJ L328/1 of 21.12.2018.
[9] Decision 2017/684 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, OJ L99/1 of 12.4.2017; Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union, OJ L79 I/1 of 21.3.2019.
[10] C. Strambo and M. Nilsson 'The Energy Union: a coherent policy package?' in A. Goldthau et al. (eds.), Handbook of the International Political Economy of Energy and Natural Resources(Cheltenham: Elgar Publishing, 2017) 107-122. Also see the contributions in S.S. Andersen et al. (eds.), Energy Union: Europe's New Mercantilism?(London: Palgrave Macmillan, 2018).
[11] See, e.g., J. Rockström et al. 'A roadmap for rapid decarbonization' 355(6331) Science(2017) 1269-71, 1269 ("a 50% chance of limiting warming to 1.5°C by 2100 and a >66% probability of meeting the 2°C target imply that global CO2emissions peak no later than 2020"); Intergovernmental Panel on Climate Change, Global Warming of 1.5°C - Summary for Policymakers, 2018, par. D.1.1 ("Pathways that limit global warming to 1.5°C with no or limited overshoot show clear emission reductions by 2030").
[12] W. Steffen et al. 'Trajectories of the Earth System in the Anthropocene' 115(33) PNAS 8252-59 (2018).
[13] See European Environment Agency, Recent Trends and Projections in EU Greenhouse Gas Emissions, Briefing no. 12/2018, 28 October 2018 (GHG emissions stable since 2014, increased by 0.6% in 2017).
[14] European Commission, Fourth Report on the State of the Energy Union COM(2019)175 of 9.4.2019) pp. 4-7.
[15] See Frankfurt School-UNEP Collaborating Centre, Global Trends in Renewable Energy Investments 2018(in 2017 Europe's share of world investments fell to just 15%, the lowest record since 2004); BloombergNEF, Clean Energy Investment Trends 2018, January 2019 (in 2018 27% increase in the European area, including some non-EU countries); International Energy Agency, World Energy Investment 2019 (IEA: May 2019) (total energy investments declining by 7% in 2015-2018).
[16] No change to the 2030 climate targets was envisaged by European Commission, A Clean Planet for All: A European Strategic Long-term Vision for a Prosperous, Modern, Competitive and Climate Neutral Economy (COM(2018)773 of 28.11.2018) p. 3. However, the net-zero GHG emissions scenarios it presented suggest steeper emission reductions in the next decade. If the target of climate neutrality by 2050 is endorsed, it will be difficult to maintain the current targets. The European Parliament, Resolution on Climate Change, 14 March 2019, P8_TA-PROV(2019)0217, par. 23asked to decrease GHG emissions by 55% by 2030.
[17] See S. Oberthür, 'Hard or Soft Governance? The EU's climate and energy policy framework for 2030', 7(1) Politics and Gov. 17-27 (2019) (proposing to assess effectiveness according to four criteria).