The EU is increasingly involved in energy matters. Historically the main developments have been:
- The coal industry was subject to much detailed supervision under the ECSC (the ECSC Treaty expired in 2002) and civil nuclear energy (especially with regard to R&D) has been under Euratom.
- In the wake of the 1973 oil shock, the Council of Ministers adopted a programme drawn up by the Commission called "Towards a new Energy Policy Strategy" (in 1974). This programme, adapted in 1980 and 1986, has formed the framework for most subsequent discussions on energy policy. The overriding policy was the importance of reducing dependence on imported oil supplies and the desirability of diversifying the sources of supply.
- Trans-European Networks (TENs) in transport, telecommunications, training and energy were announced by the Commission in 1990. They are intended to complement the single market. In 1994 the European Council decided on a priority list of 10 energy TENs.
- In 1994 a European Energy Charter was signed by the EU and other, mainly European, states (including twelve from the former USSR). Its aim was the guaranteeing of oil and gas supplies from the East in exchange for transfers of western technology and capital. The Charter had originally been agreed in 1991. The Treaty, which recognises the rights of signatory states over their energy resources, entered into force in April 1998.
- In December 1995 a White Paper entitled "An energy policy for the EU", defined the 3 pillars of energy policy as: overall competitiveness, security of energy supply and environmental protection. The first fruits of the White Paper were Directives aiming to secure the liberalisation and transparency of the markets for electricity and gas supply but with France consistently blocking moves to let foreign companies compete in national markets, the energy liberalisation plans have been held up. In Barcelona (March 2002), France came under pressure to open its energy market as part of the drive for developing the internal market in services.
- In November 2001 the Commission issued a Green Paper "Towards a European strategy for the security of energy supply", aimed at stimulating debate on the issue of security of supply against the background of increasing EU energy dependence. Among other things it proposed stronger demand management (using taxes and efficiency measures), promotion of renewable energy sources as ways to address the challenges of climate change and over-dependence on fossil fuels, and dialogue with, and promotion of, economic reform in supplier countries. It also underlined the benefits of a liberalised EU energy market and the importance for the single energy market of adequate infrastructure.
- In June 2003 the European Parliament backed the proposal for energy market liberalisation.
- In 2006 the need to ensure energy security was highlighted when Russia stopped the flow of gas into the Ukraine. The European Council reacted to this in April 2006, proposing a new Energy Plan for Europe (EPE), which is intended to eventually lead to a Common Energy Policy.
Creating a Common Energy Policy has been difficult for several reasons:
- Ensuring security and sustainability are two aspects of a potential Common Energy Policy. But each member state has different energy priorities and uses a different mix of energy sources to fulfil its needs - for example, some member states prefer nuclear power, others stress wind or wave power.
- Competition and liberalisation of the energy market is vital to making energy cheaper, but it is difficult to enforce when many member states resist. In 2006 France successfully blocked a bid by Italian company ENEL to buy Suez, their major power supplier.
- Environmental considerations, especially restricting CO2 emissions, have major implications for energy policy. Some member states are trying to move to "cleaner" fuels and set standards for lower carbon emissions. Environment policy is discussed in Section 10.
Nevertheless, the EU is making progress on developing a coherent energy policy. Its policy is based on a combination of:
- Energy savings through more efficient energy use.
- Alternative sources (particularly renewables within the EU) - to help diversify supplies.
- More use of biomass from organic matter in energy production and biofuels in transport - with the intention of minimising environmental damage (i.e. restricting CO2 emissions).
- Better integration, and liberalisation, of EU energy markets, and of integrating EU energy policy with other policies, such as agriculture and trade.
- More international cooperation.
The EU is developing a "single energy market", despite resistance and setbacks. Markets have been opened up to competition, albeit incompletely, and some national borders in energy markets are disappearing. The EU facilitates competition with funding to connect isolated networks and improve cross-border interconnections, both within the EU and with supplier countries. All businesses and many other consumers are already free to choose their own supplier of gas and electricity.
RL, February 2007