Energy Policy

Main aims

One of the objectives of the single market in energy, as set out in a Commission's 1988 working document is to introduce competition between the suppliers of energy products, in particular to bring down production costs.

The need to take account of the distinctive nature of the energy sector (to ensure security of supply, to protect the environment and to defend consumer interests) means that this is more complex than in other sectors.

The direct application of the Treaties of Paris and Rome have made it possible to create a single market in coal and petroleum products. However, the situation is more complex for gas and electricity which have to be transported and distributed in networks.

Implementation

In order to do this, the Commission has opted for an approach in stages.

The first stage consisted of improving the transparency of gas and electricity prices charged to end-users and arrangements for the transit of gas and electricity between the main networks of the European Union.

The second stage, which began in 1992, consisted of eliminating a number of restrictions on equal access for undertakings in the area of hydrocarbons prospecting, exploration and production and laying down common rules for the gas and electricity markets which recommend, among other things, third-party access to the network.

The third stage, which has not yet begun, should enable the internal market to be completed in all of its component parts.

The implementation of the second stage regarding third-party access to the electricity network has given rise to a lively debate. Even though the Member States were not opposed to the principle of liberalising the transport and distribution system, two conflicting concepts persisted: the argument in favour of a single buyer and the argument extolling negotiated third-party access.

Finally, in December 1996, a compromise was reached which resulted in the adoption of the Directive laying down common rules for the production, transport and distribution of electricity. As for the discussions on gas, which had been bogged down since 1994 pending the outcome of the electricity deliberations, these were resumed recently. An agreement on liberalisation in the gas supply sector, which is one of several objectives under the Action Plan on the single market, was reached on 8 December 1997.

Trans-European Energy Networks

The completion of the internal market for energy is accompanied by measures aimed as strengthening economic and social cohesion such as the creation of trans-European energy networks.

Legislation on Community guidelines in this area and on measures to create a favourable context for the trans-European networks was adopted during 1996. The decisions on the guidelines contain the list of projects of common interest in the trans-European electricity and natural gas networks.

The introduction of the trans-European energy networks also has an impact on relations with third countries. Interconnections have been made with certain Mediterranean countries, the

In its White Paper of 13 December 1995 on an energy policy for the European Union, the Commission put forward an energy framework based on the common objectives on which energy policies must be focused.

Similarly, on 8 December 1997, the Commission presented to the Council a proposal for a multi-annual framework programme grouping together all the various actions and the means whereby they are financed in the context of an overall Community energy policy.

With a view to achieving these strategic objectives, the Commission has taken a series of initiatives in the following areas:

• promotion of renewable energy sources,
• improvement of energy efficiency,
• promotion of the production of combined heat and power (CHP),
• the restructuring of the Community framework with regard to the taxation of energy products.