The Commission adopted (16 February 2016) the EU sustainable energy security package, with two energy union’s important legislative proposals aimed at “balancing power between the EU institutions and the member states”.

On one hand, the Commission wants to update existing laws on its inspection power over the so-called intergovernmental energy agreements, or IGAs. On the other hand, the Commission is set to revise a 2010 regulation on the security of gas supply. The implications of the latter are twofold: energy security will be thought at the regional level and a solidarity principle will apply in case of a gas supply crisis.

The Commission also issued a Liquefied Natural Gas (LNG) strategy destined to water down the effects of the decline in the EU gas production, making LNG the main backup plan for the Union in the event of a supply disruption.

Moreover, the heating and cooling strategy has been adopted by the Commission with the aim of making the new strategy to boost the efficiency of related equipment in EU households, stimulate the use of renewables and minimize the waste of heat in industrial processes.

See: http://www.vieuws.eu/energy/brussels-briefing-on-energy

Changing landscape of energy geopolitics

The new set of energy packages responds to the ever changing landscape of energy geopolitics by focusing on the three most important commitments in the energy field: security, solidarity and sustainability.

The energy security is one of the underlying planks of the Energy Union; never again the EU wants to repeat gas crises in 2006 and 2009, which left many millions out in the cold. The urgent measures include: Security of Supply Regulation (from 2010); increased interconnectivity and infrastructure; creating reverse gas flow options, and introducing rules for network to avoid cross-border infrastructure congestion.

However, the stress tests in 2014 showed that the member states are still far too vulnerable to major disruption of gas supplies. That is backed up by the latest figures on Europe's energy dependency: for the 10^th consecutive year the EU needed to import over half of the energy it consumed in 2014.

And with political tensions on the EU borders, it is a sharp reminder that this problem is not going to disappear.

Commitment to a clean energy transition

The reality is that it is impossible to “quick-fix the energy transition”,  getting 100% renewables overnight and immediately improve states’ energy efficiency; carefully managed energy transition is needed.

That is why the EU decided to make a “decarbonisation plan”, in which gas can be the bridge between coal and renewables. However, gas will still be an important part of the European energy system up to 2030 and the strategy is not to use more gas, but using it more intelligently.

In this context, energy efficiency has to be prioritised in order to improve the EU energy security and implement climate-energy Paris commitments.

The Commission has calculated that for every 1% increase of energy efficiency, gas imports fall by 2.6%.

Securing Europe's energy flow: two legislative proposals and two strategies

= Security of Supply Regulation. The principle of solidarity is one of the EU’s bedrocks: however with 28 countries, that solidarity can sometimes get strained or stretched, argued the Commission. However, in energy security, solidarity becomes essential; hence solidarity has become central to the EU proposal on a revised Security of Gas Supply Regulation.

It has been seen over last years that national policies do not always account for the security of supply situation of their neighbours; member states did not properly look at external threats during risk assessments. Besides, commercial gas supply contracts were not transparent enough to allow preventive measures to be put into place.

Therefore, the Commission –for the first- tried to enshrine in law solidarity and regional co-operation to prevent and mitigate a future crisis.

The Commission proposals include the following aspects:

·         all countries will have to ensure the supply of households and essential social service in case of a crisis;  

·         in this practice, the member states will have to give priority to protected consumers in neighbouring countries over non-protected customers at home;  

·         in the same way, Preventive Action and Emergency Plans will have to be done at a regional level. Those plans will be based on more accurate, regional assessment of common risks: in this way the member states will be much better prepared for an emergency situation;  

·         the principle of solidarity will also be extended to EU neighbours: energy union issues will now be included in preventing and tackling possible supply crisis in the member states.

Alongside, the Commission is also proposing an automatic notification of gas supply contracts of duration of more than 1 year if the markets share is big enough to be relevant for security of supply (it is considered that 40% market share would be an appropriate threshold).

The Commission wants to have greater transparency on the security of supply situation in a given region, which would help identify cases where risk assessment and prevention measures need to be updated or adapted.

= Proposed changes to the Intergovernmental Agreements (IGAs). The current system does not ensure that IGAs comply with EU law or policies. Once the IGAs are signed it is often too late for termination and never an IGA has been successfully renegotiated once already enacted.

The Commission is then left with little option but to pursue legal procedures that are "too little, too late" to rectify the damage.

There are about a third of the existing 124 IGAs, which contain provision that didn’t comply with EU law thus severely damaging the supply. Thus, the Commission is proposing a mandatory assessment of any IGA before it is signed.

The Commission will notify the EU states of any doubts within six weeks and then give a final opinion of compatibility with EU law within 12 weeks: it means that no country should sign an IGA until the Commission has given its opinion.

When concluding the proposed intergovernmental agreement or amendment, the EU states will have to take the utmost of the Commission's opinion. This is an important and unprecedented step to ensure a level playing field for all.

As EU markets continue to integrate, decisions taken by one member state can have a negative impact on the security of supply in neighbouring countries or on the functioning of the EU internal energy market. Thus the two legislative proposals are becoming an important part of reinforcing the EU energy security.

= New strategy on Liquefied Natural Gas and Storage. With global supply of LNG set to increase by up to 50% in the next few years, the EU intends to strengthen resilience, diversify supply sources and boost European competitiveness. To do that the member states have to be connected to the world’s LNG market by building the key infrastructure needed.

Half of the gas interconnectors in Europe now operate reverse flow: it means new supply routes and a more liquid, accessible and competitive market. But the import capacities are mainly in Western Europe; in other parts of the EU, under-developed gas markets and single supplier dependencies are still a reality.

To fix that the EU needs to proritise a number of LNG infrastructure projects in the Baltics, Central and South Eastern Europe and South West Europe. The goal is to remove bottlenecks, diversify supply sources and bring price competition to those regions. With the help of the regional co-operation groups in those areas the EU will now seek to accelerate final decisions on these priority projects. The projects will ensure full access to the financing options available through the Connecting Europe Facility and EFSI.

This will help ensure that those regions can reap the benefits that the international LNG markets can offer.

European LNG imports almost halved between 2011 and 2014: the EU has effectively become a residual market, getting what Asian countries did not need or could not afford. Recent decline in LNG prices has made Europe a more attractive proposal and there is a need to capitalise on that.

The EU wants to reinforce dialogue with international partners to promote free, liquid and transparent global LNG markets: in particular through developing a growing partnership with Australia, and engaging in high-level dialogues with key suppliers such as Algeria, Canada and the US amongst others.

= New strategy on heating and cooling. When it comes to energy security, there is no better long term antidote than focusing on sustainable energy. In this sector the consumers use half of the EU's energy, which on 75% powered by fossil fuels; it accounts for three quarters of the EU total gas consumption and 13% of oil consumption (most of that energy is used inefficiently).

Thus, about 90% of European buildings in the housing sector are energy inefficient and are mostly fitted with old boilers with low efficiency rates.

It is not, though, surprising as about half of European building stock was built before energy performance standards even existed; with renovation rates below 1% it becomes even more important. The point is that the heating and cooling sector can be one of the main drivers towards European climate and energy goals.

Thus the EU strategy focuses on removing the barriers to decarbonisation in buildings and industry. The following steps are envisaged:

·         better link up heating and cooling to electricity networks and to renewable energy. That will reduce costs for consumers and provide storage for cheaper variable renewables. Commission proposals for a new electricity market design (later in 2016) will provide the flexibility and demand response to make that happen;  

·         speed up renovation rates: Commission’s 2016 review of the Energy Performance of Buildings Directive will look at how to replace inefficient boilers and incentivise renovations in multi-apartment buildings.

But to do that the member states also need to make the right financing available: good news is that one the first projects under the European Fund for Structural Investments focuses on energy renovation of private residential buildings in France.

To build on that success, the Commission will launch Smart Finance for Smart Buildings initiative. It will facilitate access to new and innovative funding mechanisms for energy efficiency renovations, for example by aggregating small projects into investible packages.

Being ambitious on energy efficiency policy also means securing long-term security of supply strategy. That's why the Commission will review the whole range of energy efficiency laws later this year while looking forward to enforcing the current laws.

Reference: Speech by Commissioner Miguel Arias Cañete, Brussels, 16 February 2016, in:

http://europa.eu/rapid/press-release_SPEECH-16-326_en.htm?locale=en.