I represented the UK at the Energy Council in Luxembourg on 6 June.

The Council was dominated by negotiations on the internal energy market, resulting in an agreement on a general approach on the third energy package that represents a significant step forward in developing the internal energy market. There was also a short policy debate on the renewables directive in the context of the 2020 climate and energy legislative package, and information from the presidency and Commission on international energy issues.

Discussions on the internal energy market were based on a compromise presidency report, which set out the essential elements of the third energy package. The issue of unbundling was discussed in a restricted session over lunch. Although not all member states were able to agree with all aspects of the report, and some member states argued that the agreement should only cover unbundling, the presidency finally concluded agreement on a general approach on all elements of the third energy package, including agreement on the detail of the unbundling provisions, based on amendments to the presidency report.

The agreement on unbundling is a significant advance on the current arrangements for legal unbundling. I secured agreement that the current grid arrangements in Scotland should be allowed to continue, provided that they guarantee more effective independence of the network operator than the legal unbundling agreed. There was also broad support for the provisions on regulators’ independence and the role of the agency. There will be further discussions of provisions relating to non-EU control of networks to address concerns about implications for protectionism, Commission competence and EU inward investment. The presidency and its successor now have a mandate to complete negotiations on the legal texts, with a view to reaching a common position as soon as possible.

There was a short policy debate on the 2020 climate and energy package, focusing on the draft renewables directive. Member states commented on targets, the trading regime and biofuels. For the UK, I tabled a joint paper with two other member states proposing a simplified intra-EU renewables trading system to help member states secure the EU renewables targets most cost effectively. On biofuels, some member states emphasised the importance of a sustainability framework reflecting the 2007 Spring European Council conclusions.

On international energy relations, the Commission reported on recent activity on a variety of initiatives, including the EU-OPEC dialogue, implementation of the Energy Community Treaty, the memorandum of understanding with Turkmenistan, and EU-Russia relations.