Brexit: energy security Contents

Chapter 2: EU energy policy

Development of EU energy policy

9.European energy cooperation has moved beyond the foundations initially laid out in the European Coal and Steel Community of 1951 and the European Atomic Energy Community of 1957.

10.The oil crisis in 1973–74 heightened concerns over energy security, leading to the then European Community adopting two Directives in 1975 designed to reduce the risk of supply interruptions.8 Three subsequent legislative packages—in 1990, 2003 and 2009—aimed to liberalise and integrate European energy markets, providing the basis for the Internal Energy Market (IEM). The 2009 ‘Third Package’ included provisions on access to markets, networks and cross-border exchange for gas and electricity.9 It also established the Agency for the Cooperation of Energy Regulators (ACER).10

11.Over the same period legislation was enacted to decarbonise the energy system. For example, in 2005 the EU Emissions Trading Scheme (EU ETS) was launched to reduce emissions from industry,11 and the 2009 Renewable Energy Directive set renewable energy targets for each Member State.12

12.In 2015 the European Commission renewed its focus on consumers and the need for affordable, secure energy, as part of the major Energy Union strategy. The 2015 Energy Union Package had five key ‘dimensions’: energy security, solidarity and trust; a fully integrated European energy market; energy efficiency contributing to a moderation of demand; decarbonising the economy; and research, innovation and competitiveness.13 The UK Government has been a strong advocate of the Energy Union agenda.14

13.Most recently, in December 2016 the European Commission presented a set of eight legislative proposals, known as the Clean Energy Package, to enable the EU to deliver its Paris Agreement commitments.15 The proposals cover energy efficiency, energy performance of buildings, renewable energy, energy governance, electricity market design and ACER.16 At the time of writing these proposals were making their way through the EU legislative system. Some are progressing more quickly than others, and it is unlikely that they will all be implemented by the time the UK leaves the EU in March 2019.

14.According to Joseph Dutton, Policy Adviser at E3G, this evolution of policy alignment has ensured that “there is a functioning marketplace that delivers security of supply, investment security and the correct price signals for the UK energy sector”.17 SSE agreed: “The IEM has been beneficial for efforts toward delivering clean, secure and affordable energy in the UK.”18

Energy competence

15.By virtue of Article 4(2)(i) of the Treaty on the Functioning of the European Union (TFEU) Member States and the European Union share competence in the field of energy.19 The details of this competence are set out in Title XXI Article 194 TFEU, as detailed in Box 1.

Box 1: EU and Member State energy competence

According to Article 194 of the TFEU, the EU has the competence to:

(a)Ensure the functioning of the energy market;

(b)Ensure security of energy supply in the Union;

(c)Promote energy efficiency and energy saving and the development of new and renewable forms of energy; and

(d)Promote the interconnection of energy networks.

Member States, however, retain competence to determine their own energy mix and the structure of their energy supply. Article 194 goes on to state: “Such measures shall not affect a Member State’s right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply”.

Source: Treaty on the Functioning of the European Union OJ C 326, (consolidated version of 26 October 2012)

16.Furthermore, the EU has agreed a large number of energy measures in the field of environment and climate change, notably in the areas of renewable energy and energy efficiency.20 According to the TFEU, EU environmental policy should contribute to preserving, protecting and improving the quality of the environment; protecting human health; prudent and rational utilisation of natural resources; and promoting measures at international level to deal with regional or worldwide environmental problems, in particular combating climate change.21

17.In addition, there is a separate legal and regulatory framework governing nuclear energy. This is covered in more detail in Chapter 9.

Post-Brexit policy opportunities

18.Despite the UK’s leading role in developing the EU’s energy policy, witnesses highlighted changes that they would like to make to domestic energy policy once the UK is no longer constrained by EU membership. These included:

These options for changing domestic energy policy in the long term are outside the scope of this inquiry, but we draw them to the Government’s attention.

Conclusions: EU energy policy

19.UK and EU energy policies have become closely aligned over time, with the UK often leading the way in terms of market liberalisation. This alignment facilitates the efficient trade of energy, with benefits for energy security, affordability and decarbonisation.

20.Brexit presents opportunities to develop energy policies that support market conditions that are particular to the UK, after the initial transfer of legislation through the EU (Withdrawal) Bill.

8 Council Directive 75/339/EEC of 20 May 1975 on maintenance of minimum stocks of crude oil and/or petroleum products at power stations (OJ L 153/35, 13 June 1975) and Council Directive 75/404/EEC of 13 February 1975 on the restriction of use of natural gas in power stations (OJ L 178/24, 9 July 1975)

9 Council Directive 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L 211/94, 14 August 2009); Council Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (OJ L 211/55, 14 August 2009); Council Regulation (EC) No 715/2009 of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005 (OJ L 211/36, 14 August 2009); Council Regulation (EC) No 714/2009 of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 (OJ L 211/15, 14 August 2009)

10 Council Regulation (EC) No 713/2009 of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators (OJ L 211/1, 14 August 2009)

11 Council Directive 2003/87/EC of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275/32, 25 October 2003). The EU ETS sets a progressively-reducing cap on the total amount of greenhouse gases that can be emitted by the sectors covered by the system. Within the cap, companies receive or buy emission allowances, and each year a company must surrender enough allowances to cover all its emissions.

12 Council Directive 2009/28/EC of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (OJ L 140/16, 5 June 2009)

13 European Commission Communication ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’ 2015, p 3 COM(2015) 80 final

14 Antony Froggatt et al, UK Unplugged? The Impacts of Brexit on Energy and Climate Policy, Chatham House, Royal Institute of International Affairs, Research Paper, May 2016, p 10:–05-26-uk-unplugged-brexit-energy-froggatt-raines-tomlinson.pdf [accessed 13 December 2017]

15 The Paris Agreement is the first ever legally-binding global climate deal. It was agreed at the Paris climate conference (COP21) in December 2015.

16 European Commission, ‘Clean Energy for All Europeans’: [accessed 28 November 2017]

18 Written evidence from SSE (BES0012)

19 HM Government, Review of the Balance of Competences between the United Kingdom and the European Union: Energy Report, (2014) p 25: [accessed 28 November 2017]

20 EU competence over the environment is provided for by Articles 191–193, Treaty on the Functioning of the European Union

22 Written evidence from Interconnector UK (BES0007)

23 Written evidence from EEF and UK Steel (BES0027)

24 Written evidence from Which? (BES0016)

25 Written evidence from InterGen (BES0017) and NNWE (BES0018)

26 Written evidence from SSE (BES0012), RWE (BES0029), ENGIE (BES0040) and E.ON UK plc (BES0046)

27 Written evidence from NEA (BES0058)

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