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Clean Energy Package - January & February update

Posted: Feb 22, 2017 by Instinctif Partners

As the Commission released its ‘Clean Energy for all Europeans’ package shortly before the EU institutions recessed for the winter holidays, we only started to see the intra-institutional preparatory works within the Parliament and the Council beginning to take shape in the New Year. About two and half month after the publication of a package, it is still early days to make any substantive predictions regarding the future course of the policy issues themselves, but the initial choice of priorities and actors within the co-legislative institutions offer stakeholders important insights that should be taken into account when attempting to engage with the policy-making process in the coming months.

As expected, the Council got to work first, since it didn’t have to go through the internal power struggle of deciding who gets to take the lead on which legislative dossiers as it is normally the case in the Parliament, especially with a legislative package of such magnitude and political sensitivity as this one. Malta took over the rotating presidency of the Council on 1 January 2017, thus taking charge of the legislative workload within the institution for the next six months. While energy is not one of the six priorities of the Maltese Presidency, the small island nation vowed to start the deliberations on the clean energy package by focusing on energy efficiency first.

Before its mandate is over, Malta will most likely aim to secure a “general approach” on the Energy Efficiency Directive (EED) and the Energy Performance of Buildings Directive (EPBD). In the Working Party on Energy, an article-by-article examination of these two directives are currently underway. Other issues, such as renewable energy, the European electricity market and the future of bioenergy (especially in transport) will likely to take the backseat for now due to their controversial nature, and may end up causing most of the headache for the Estonian Presidency in the second half of 2017. In comparison, dealing with the issue of energy efficiency will probably turn out to be a less bumpy road for Malta, as even though it is going to be under pressure from the Parliament to deliver a common position in the Council that plays ball with the Parliament’s ambitious approach, the Council will most likely enjoy the backing of the Commission during the inter-institutional negotiation stage vis-à-vis the Parliament.

In the legislative proposal of the EED, the Commission ended up proposing a 30% energy efficiency target – disappointing for the Parliament which called for 40%, but already higher than what the Council preferred at 27%. After the publication of the package, civil servants at the Commission’s energy efficiency unit repeatedly defended their 30% target as realistic, while dismissing the Parliament’s figure as unfeasible. This will likely make life difficult for Adam Gierek (S&D), the rapporteur on EED in the Parliament, whose political group firmly reiterated the 40% target during the initial exchange of views on the package in plenary, and who will lead the Parliament’s delegation in the trilogues negotiations where the Commission will predictably team up with the Council on the issue.

In the European Parliament, the battle among the political groups to divide up who gets to lead on each of the 8 legislative files have only ended recently, the rapporteurs and shadow rapporteurs being appointed in the first two weeks of February. Not that surprisingly, all eight files were assigned to the ITRE committee; more surprising is the fact that the S&D group managed to get thee rapporteurships, as many as the EPP, two of which is arguably on the most important legislative files, the Energy Efficiency Directive and the Renewables Energy Directive. After their unilateral attack on the EPP group to break up the Grand Coalition in the wake of the recent election for the Presidency of the European Parliament - a gambit that failed poorly - the EPP perhaps missed a chance to take a larger bite out for themselves from the share of the legislative work around the clean energy package. Or maybe they just cashed in their leverage elsewhere.

Nevertheless, it seems that the EPP is comfortable allowing those political groups that called for more ambitious measures to play a key role in determining the Parliament’s common position vis-vis the Council. From the 8 legislative files, 3 went to the S&D, one to ALDE, and one to the Greens, all of whom were energetic to criticise the Commission’s perceived lack of ambition in the legislative proposals, and who vowed to put up a tough fight against the Council in delivering on higher targets and more integrated, liberalised and decentralised energy markets.

On the other hand, the EPP secured for itself the leading role on 3 of the 4 legislative proposals on the electricity market, two of which, the Proposal for a Revised Electricity Regulation and the Proposal for a Revised Electricity Directive - which will be dealt with as one legislative dossiers in the EP - set out most of the key provisions regarding electricity trade and grid operation rules. Since some of the key provisions of these files, such as establishing so-called Regional Operational Centres to take over some of the powers from national transmission system operators to increase cross-border grid integration, or the planned creation of an EU-level body to coordinate the operation of distribution system operators are the most politically controversial aspects of the clean energy package, as they encroach on the territory of national competences, it is understandable why the EPP would prioritise securing leadership on these files rather than the others. They already expressed criticism against some of these measures, as well as the Commission’s intention to strengthen the competences of the Agency for the Cooperation of Energy Regulators (ACER). Consequently, the EPP group will wield a key influencing power in determining the rules around how far and deep the European electricity market is aimed to be integrated, much of which will fundamentally constrain the policy debates on energy efficiency and renewables.

We will be able to better grasp how these political manoeuvrings are intended to pan out in practise, when the content of the Rapporteurs’ draft reports on the policy issues at hand are beginning to take shape. At earliest, these can be expected in Q2 of 2017. First, the initial exchange of views for all of the legislative dossiers in the ITRE committee have to take place before the rapporteurs can even begin writing their reports, and for the moment, these are yet to surface on the agenda of the upcoming committee meetings. It can be argued though that the Parliament’s internal preparatory phase will likely to take longer than usual, not just because of the complexity and sensitivity of the issue, but also due to the introduction of new rules last year on when can the rapporteur start the trilogues with the Council and the Commission. In the context of the Corbett Report, which was adopted in plenary on 13 December, it is now possible for a sufficient number of MEPs to request delaying a committee’s decision to start the trilogues by requesting a vote on it first in plenary.

Whether this new rule will be made use of, and whether any other novel procedural factors will come into play is yet to be seen. For the time being, we only have an emerging idea of the relevant components at hand that will steer the course of the policy debates around the clean energy package in the forthcoming stages of policy-making. Being aware of the power play and relevant institutional dynamics among the political groups within the European Parliament, as well as between the European Parliament and the Council of the EU, is key to effectively anticipate business risks and opportunities in advance, and to successfully engage with key decision-makers. Therefore, companies who wish to stay ahead of the curve are advised to turn to seasoned European public affairs experts for assistance.

Almos Molnar - EU Energy team

To see how Instinctif Partners Brussels can help you and your business, please contact us at +32 2 626 95 00 or at EUenergy@instinctif.com.