Documents considered by the Committee on 13 December 2017 Contents

5Energy Union Governance

Committee’s assessment

Legally and politically important

Committee’s decision

Not cleared from scrutiny; scrutiny waiver granted; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

Proposal for a Regulation on the Governance of the Energy Union, amending Directive 94/22/EC, Directive 98/70/EC, Directive 2009/31/EC, Regulation (EC) No 663/2009, Regulation (EC) No 715/2009, Directive 2009/73/EC, Council Directive 2009/119/EC, Directive 2010/31/EU, Directive 2012/27/EU, Directive 2013/30/EU and Council Directive (EU) 2015/652 and repealing Regulation (EU) No 525/2013

Legal base

Articles 192(1) and 194(2) TFEU

Department

Business, Energy and Industrial Strategy

Document Number

(38352), 15090/16 + ADDs 1–5, COM(16) 759

Summary and Committee’s conclusions

5.1The October 2014 European Council agreed that a reliable and transparent energy governance system without any unnecessary administrative burden would be developed to help ensure that the EU meets its energy policy goals, with the necessary flexibility for Member States and fully respecting their freedom to determine their energy mix.

5.2On that basis, the Commission proposed—as part of its “Clean Energy for all Europeans” package—to streamline existing planning, reporting and monitoring obligations and require Member States to submit plans and reports to the Commission.

5.3The previous Committee last considered this proposal at its meeting of 25 April, when it reviewed a letter from the Government in which the Government clarified its concerns over possible expansion of Commission competence. It was clear that the need for Commission involvement was not disputed but that the issue was the degree of involvement. The previous Committee expected the Government’s next update to address this core concern.

5.4The Government had also stated its intention to engage actively to defend the UK’s interests and to support the EU to meet its decarbonisation objectives. Any UK access to the internal energy market and/or engagement in any governance mechanism post-Brexit would depend on the outcome of the Brexit negotiations.

5.5The Minister for Energy and Industry (Richard Harrington) reports that negotiations have accelerated and that the Estonian Presidency will seek to agree a General Approach on this, and other elements of the Clean Energy Package, at the 18 December Energy Council.

5.6On Brexit, the Minister notes that it is still too early to assess whether and how the EU exit negotiations will affect the Clean Energy Package. While the Government expects the legislation to have been agreed before Brexit, the transposition deadline of at least some of the legislation, including the Renewable Energy Directive, might fall during any implementation period.

5.7In terms of the ongoing negotiations, the Minister strikes a positive tone, noting effective UK engagement. Details are set out below but, in summary, the changes have reduced the powers of the Commission and some of the more bureaucratic requirements.

5.8The Minister sets out the principles on which he will continue to negotiate and seeks a scrutiny waiver on that basis. On both this Regulation and the linked Renewable Energy Directive, the approach to be followed will be to continue focussing on seeking maximum flexibility for Member States to be able to develop their most cost-effective pathway for delivering their ambitious emissions reductions commitments, including deciding what contribution renewable energy should make to meet that commitment, whilst recognising the need for mechanisms to give the EU assurance over the delivery of its objectives on renewables. The Government will also seek to ensure that any nationally-binding targets or endeavours do not impose significant costs on the UK and to minimise any administrative burden or implementation costs as far as possible, as well as the degree to which the Commission can issue recommendations or intervene in domestic policy.

5.9On the implications of the UK’s exit from the European Union, we take note of the Minister’s view that it is still too early to assess whether and how the EU exit negotiations will affect the Clean Energy Package. While we accept that there can be no certainty as yet over the future relationship in the energy sector, we signal our continued interest in the matter and our expectation that the Government continues to negotiate with EU exit in mind.

5.10We note that the final shape of any agreement is far from clear, but we are grateful that the Minister has set out the direction of travel and the principles that the Government will be following. We can support the proposed approach.

5.11The proposal remains under scrutiny, but we are content to waive the scrutiny reserve in order that the Government is able to lend its support to the General Approach at the 18 December Council meeting based on the principles set out in the Minister’s letter. We look forward to an update from the Minister on the outcome of the Council meeting and an assessment of the prospects for agreement with the European Parliament. We are drawing this chapter to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents

Proposal for a Regulation on the Governance of the Energy Union, amending Directive 94/22/EC, Directive 98/70/EC, Directive 2009/31/EC, Regulation (EC) No 663/2009, Regulation (EC) No 715/2009, Directive 2009/73/EC, Council Directive 2009/119/EC, Directive 2010/31/EU, Directive 2012/27/EU, Directive 2013/30/EU and Council Directive (EU) 2015/652 and repealing Regulation (EU) No 525/2013: (38352), 15090/16 + ADDs 1–5, COM(16) 759.

Background

5.12The Commission’s proposal envisages the establishment of a reporting system focussed on the five aspects of the Energy Union: decarbonisation; renewables and energy efficiency; energy security; internal energy market; and research, innovation and competitiveness. Under the proposal, each Member State would set out a ten year national plan as to how it will meet the identified goals in those five areas. The Commission would review the plans and would have the right to make recommendations either to the EU as a whole or to individual Member States. Full details on the content of the proposal were set out in our Report of 25 January 2017.22

5.13At its meeting reported on 25 January, the previous Committee noted that the most contentious aspect of the proposal related to action that the Commission might recommend should it identify matters that, in its view, required action on the part of Member States. This was at the heart of the Government’s concern about possible expansion of the Commission’s competence. Recalling that all 28 Member States had agreed that some form of energy governance system was required, the previous Committee asked the Government what assessment it took, when it agreed to the October 2014 European Council Conclusions, of the possible form of a new governance system and its impact. The Committee asked how any governance system could function without giving the Commission some form of role in assessing Member State policies and making recommendations.

5.14The previous Committee also asked on what basis the UK would be approaching the negotiations in the light of the UK’s withdrawal from the EU.

5.15In response, the Minister indicated the UK’s intention to engage actively to defend the UK’s interests and to support the EU to meet its decarbonisation objectives. Any UK access to the internal energy market and/or engagement in any governance mechanism post-Brexit would depend on the outcome of the Brexit negotiations.

5.16On concerns about Commission competence, our predecessors understood from the Government response that the need for Commission involvement was not disputed but that the issue was the degree of involvement. They expected the Government’s next update to address discussions that had taken place on the Government’s core concern about Commission competence.

The Minister’s letter of 30 November 2017

5.17The Minister writes to update the Committee on negotiations and to request a scrutiny waiver in order for the UK to be able to support a potential General Approach at the 18 December Energy Council.

5.18On the UK’s exit from the EU, the Minister says that it is too early to assess whether and how the EU exit negotiations will have an impact on the various dossiers included within the Clean Energy Package. He notes that the transposition deadline for some of the legislation might fall during any implementation period and confirms that the UK’s negotiating position is taking account of these factors.

Progress of negotiations

5.19The Minister reports that negotiations on the Governance Regulation have seen significant progress at official-level meetings in Council, and through a series of non-papers presented by various Member States on the “backfill mechanism” (see below) in particular. The Minister believes that the UK has engaged effectively with its allies in Council and has seen a number of its suggestions reflected in the text. A number of key points of consensus amongst Member States have emerged through the various discussions, as set out below.

5.20On the “backfill mechanism”, the Minister says that additional clarity has been introduced about how the EU might seek to make up any gap to the binding EU-level renewable energy target. The current proposals call for a two-step system, under which Member States would submit their proposed contribution to the EU-level renewable energy target as part of their national plans, and would then be responsible for making up any gap in their performance against the EU trajectory. If the total sum of Member States’ contributions did not add up to the EU renewable energy target, then the Commission would make non-binding recommendations to Member States in order to seek an increase in ambition (and consequently their contributions). If a gap then emerged in the overall trajectory to the EU-level renewable energy target, those Member States who were beneath their national trajectories would be required to make up such gap.

5.21Regarding the baseline mechanism, the Minister says that the proposal for automatic financial payments by Member States who drop below their 2020 target level at any time during the 2020s has been removed. However, there has been broad support for the principle that Member States should not fall beneath that level between 2021 and 2030; so this principle is maintained as a legal obligation in the Renewable Energy Directive (RED). The Governance Regulation includes a provision, however, to the effect that Member States who fall beneath their baseline are deemed to be in compliance with the RED so long as they cover the gap by the end of the year following the year in which they fell below their 2020 target.

5.22On the proposed National Energy and Climate Plans, the Minister reports that many of the “most burdensome” new reporting requirements on both energy efficiency and renewable energy have been removed; as have some “unnecessarily detailed” aspects of the national plans. The timelines for initial submission have been deferred on grounds of practicality, whilst the timescales for submission of later plans aligned with the UNFCCC (UN Framework Convention on Climate Change) framework have been retained.

5.23Concerning climate reporting, the Minister says that these elements have largely been maintained or brought closer to those of the existing greenhouse gas Monitoring Mechanism Regulation (MMR) which will be superseded by this Regulation.

5.24On the Commission’s powers, the Minister explains that the Commission’s powers to amend the template for the national plans have been restricted to those necessary to reflect agreements at the UNFCCC level.

Possible General Approach

5.25The Minister explains that the Presidency will be seeking to reach a General Approach on various elements of the Clean Energy Package at the 18 December Council. He judges this to be an ambitious objective overall, although progress on the Governance Regulation has been such that a General Approach is feasible. The Minister is requesting a scrutiny waiver on the basis of a clear indication of priorities, and thus providing the Minister with the flexibility to engage effectively. The Minister apologises for having to request a waiver under urgent circumstances, noting that progress has been unexpectedly rapid.

5.26He sets out the approach to both the Renewable Energy Directive and Governance Regulation in the following terms:

“The approach to be followed at the December Council will be to continue focussing on seeking maximum flexibility for Member States to be able to develop their most cost-effective pathway for delivering their ambitious emissions reductions commitments, including deciding what contribution renewable energy should make to meet that commitment, whilst recognising the need for mechanisms to give the EU assurance over the delivery of its objectives on renewables. I will also seek to ensure that any nationally-binding targets or endeavours do not impose significant costs on the UK.

“Our position is to seek to be part of the qualified majority that supports the Presidency’s General Approach on these dossiers, so long as the outcome reached is satisfactory to the UK.”

5.27In addition, the Government will seek to minimise any administrative burden or implementation costs as far as possible, as well as the degree to which the Commission can issue recommendations or intervene in domestic policy. The Government will also seek to align EU and UK policy where possible to minimise policy changes or costs, as well as focus the Governance framework to achieve the aims of the Paris Agreement and set timescales in line with those in the UN Framework Convention on Climate Change framework.

Previous Committee Reports

Fortieth Report HC 71–xxxvii (2016–17), chapter 7 (25 April 2017); Twenty-ninth Report HC 71–xxvii (2016–17), chapter 5 (25 January 2017).


22 Twenty-ninth Report HC 71–xxvii (2016–17), chapter 5 (25 January 2017).




15 December 2017