The Governance of the Energy Union
Mihnea Cătuți, EPG Affiliated Expert
On November 12 and 13, 2018, the European Parliament has debated and voted on the most recent version of the Regulation of the Governance of the Energy Union. This legislative act establishes the framework for cooperation and coordination on energy and climate change matters, having significant implications at both the national and EU levels. It also represents the umbrella piece of legislation that should ensure the achievement of the 2030 energy and climate targets.
The 2030 EU Climate and Energy Framework, endorsed by the European Council in 2014, set three highly ambitious targets to be achieved collectively by the EU before 2030: (1) a 40% reduction of greenhouse gas (GHG) emissions compared to 1990 levels, (2) a minimum share of 27% of renewable energy in the energy mix, and (3) a minimum of 27% increase in energy efficiency compared to a ‘business-as-usual’ scenario. A crucial aspect of this framework is that no binding targets for individual EU member states have or will be established. Therefore, in order to successfully meet the collective obligations, the European Council recognized the need for creating a robust, reliable and transparent governance system within the Energy Union framework.
In response, the European Commission presented in November 2016 the Clean Energy for All Europeans Package, consisting of eight legislative proposals, including a regulation on a new governance framework that establishes a series of coherent and coordinated actions to be taken at both national and EU levels. After two years of intense negotiations between the Commission, the Council and the European Parliament, an agreement was finally reached on June 20, 2018.
In its final form, the regulation directly responds to some of the main challenges of the current governance paradigm of the EU energy policy, while also enforcing the Commission’s commitment to Better Regulation. Therefore, this new framework aims to significantly reduce the administrative burden at both EU and national levels by:
▪ Streamlining a plethora of current planning, reporting and monitoring obligations. A study by the Commission2 has found a severe lack of policy coherence and consistency among the current obligations, which can lead to duplication and conflict. This regulation integrates 31 existing obligations and deletes another 23. The Climate Monitoring Mechanism is one of the most important such obligations that has been integrated in this framework;
▪ Updating the current energy and climate goals from the 2020 to the 2030 targets, while also incorporating the EU commitments under the UNFCCC 2015 Paris Climate Change Agreement;
▪ Responding to the insufficient capacity for cross-national planning, problem highlighted in the Commission’s impact assessment for this regulation.
One of the most important outcomes of this legislative act is the requirement for governments to produce Integrated National Energy and Climate Plans. These plans must elaborate on the main priorities, strategies and actions to be taken within a 10-year period, covering all the five main areas of the Energy Union (security of supply, the internal energy market, energy efficiency, decarbonisation, and research and innovation). According to an amendment by the European Parliament, the plans have to also include a 50-year perspective and must be aligned with the international climate goals. It should be noted that while the governance regulation also provides binding templates for these national plans, it simultaneously allows the member states a great deal of flexibility in deciding what measures and policies they want to adopt.
From 2021, each country will need to produce a progress report every two years, which will complement the Commission’s evaluation of the implementation of the national plans. Member states are obliged to take into account the recommendations of the Commission and must provide explanations in their subsequent progress reports on how these are being incorporated. This double monitoring process is designed to overcome the difficulties created by the absence of binding national targets. This framework must ensure not only that the collective EU objectives are met, but also that there are no instances of free-riding and that all member states are contributing to a shared effort. To further enable this process, the regulation also requires the creation of national and EU inventory systems for GHG emissions, policies and measures.
Overall, this regulation has two key consequences for the governance of energy policy in the EU:
(1) The Commission will have increased responsibilities for monitoring member states and issuing recommendations on both national plans and policies. Crucially, if the Commission considers that the progress is too slow and that the national measures are insufficient for meeting the 2030 targets, it can ask that member states contribute to a shared financial instrument. This fund would be managed by the Commission and it should be used to support cost-effective renewable energy projects across the Union;
(2) The necessity and scope of regional coordination will increase. Not only do the national plans have to include considerations on regional cooperation, but the regulation allows the unique opportunity for governments to issue their opinions on the plans of their neighbouring countries before these are finalised.