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EU Energy Council

Volume 447: debated on Thursday 15 June 2006

Anne Lambert, Deputy Permanent Representative, UKREP, represented the UK at the Energy Council in Luxembourg on 8 June. Discussion focused on the EU's international relations, the internal energy market and sustainable energy.

On international relations, Commissioner Piebalgs summarised the EU's external energy priorities as a comprehensive energy agreement with Russia and coherent, systematic dialogues with key supplier, transit and consumer countries. He said that multilateral action would be most effective, citing the need for working together within the International Energy Agency and on an international agreement on energy efficiency. He provided updates on the energy community treaty for south-east Europe, on the EU-OPEC dialogue and on EU relations with Russia. On Russia, he said that the EU should develop a partnership of mutual self-interest covering investment, diversification, a reliability of supply and demand, third party access and non-discrimination; and that the Commission was considering a comprehensive energy agreement as part of the post-PCA—partnership and co-operation agreedment-relationship.

In welcoming the Commission's work, some member states emphasised that energy remained a national competence and that Energy Ministers should be informed and involved in agreeing Commission activity in advance. One member state emphasised that progress with Russia depended on establishing a relationship based on trust. Another member state stated that the relationship must be reciprocal and based on the energy charter treaty principles, ensuring that EU companies can operate freely in Russia.

The Council adopted conclusions on the internal market. The internal market had been on the agenda at the informal dinner on the eve of the Council, during which Commissioner Piebalgs detailed the next steps on the Green Paper:

A hearing on 21 September prior to consultation closing on 24 September.

A meeting of member states' Energy Directors General in September.

A document summarising the consultation to be issued in October for discussion at the November Energy Council; and

on 13 December, consideration by the Commission of the strategic energy review, the DG TREN Internal Market report and the final results of the DG COMP enquiry.

Other documents to issue between now and then would be the energy efficient action plan, communications on clean coal and nuclear, and the renewables action plan.

Discussion of the internal market during the formal Council focused on the role of regional markets, on steps needed to complete the market and on diversification. The Commission supported regional initiatives, while warning that these should not undermine the overall objective of a single energy market. The Commission said that it would continue to monitor and assess progress, reporting at the end of the year. Co-ordinated diversification of supply sources, relevant infrastructure and new technologies were also crucial. The strategic energy review would bring all this together.

All Ministers supported regional markets as a building block to developing a single market. Two Ministers said that existing regional markets could be extended to other member states and explicitly invited the UK to join the north-west market, which now involves Germany, France, Netherlands, Belgium and Luxembourg. Many Ministers emphasised the need to harmonise regional markets to ensure the development of the main objective of a fully functioning internal market.

The UK advocated political engagement in the development of regional markets and in effective unbundling and market transparency. Several member states supported the UK, though one viewed further unbundling requirements as unnecessary.

On diversification, many member states identified increased interconnection, development of renewables and energy efficiency technologies as the key drivers. Some member states pressed for the development of indigenous sources of supply, including nuclear power. Others wanted a common approach to diversification, but some noted that responses related to member states' individual circumstances.

One member state questioned the effectiveness of the EU emissions trading scheme carbon pricing policy, noting its significant impact on electricity prices. The Commission thought that the ETS fundamentally worked, though it needed refining before the next stage. Another member state thought security of supply more important than liberalisation, while another noted that it was developing security of supply indicators with the UK and the Commission.

On sustainable energy, the Council adopted conclusions on a biomass action plan. The Commission said that, in implementing this, priority would be given to a proposal on renewable heating and cooling and to the strengthening of the biofuels directive. The energy efficiency action plan would emphasise implementation and enforcement of existing legislation, measures to address energy consumption and financial incentives. The energy star negotiation with the US had concluded with agreement on significant improvements in standards and coverage. The Commission hoped other key consumer countries would join. Some member states emphasised the importance of updating labelling legislation.

In conclusion, Finland, the incoming presidency, identified its energy priorities as:

Developing European energy policy, particularly renewables and energy efficiency;

the Internal Market; and

Russia.

The next Energy Council is scheduled for 23 November 2006.