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Clean Energy Package - March & April update

Posted: May 03, 2017 by Instinctif Partners

In the course of March and April, the preparatory works on the ‘Clean Energy for all European’ package continued within the European Parliament and the Council of the EU (see below for where we are in the institutional timeline). In the Parliament, the ITRE committee had its first exchange of views on the Governance of the Energy Union (RGEU) and on Energy Efficiency (EED) at its 22-23 March hearing, and on the Risk-Preparedness in the Electricity Sector (RPES), on Regulation on ACER (RACER) and the two Electricity Market proposals (ER & ED) at its 24-25 April session. In the meantime in the Council, the Maltese Presidency put forward its revised proposals to the Member States on Energy Efficiency (EED) and Energy Performance of Buildings (EPBD), and made good progress on the Governance of the Energy Union (RGEU).

Recent Developments in the Parliament

At the ITRE committee hearing of 22-23 March, the political groups predictably lined up into two issue coalitions on the RGEU file - with the S&D, Greens/EFA, ALDE, GUE, EFDD groups generally wishing to increase the ambition of the legislative dossier, while the EPP, ECR and ENF taking a more cautious approach. Not surprising, the ECR and ENF were keen on repeating that Member States (MS) have the right to determine their own energy mix, and thus the governance rules should kept to the minimal and be non-binding. The EPP was more ready to play ball with the former issue coalition, but stressing that the legislation’s aim should be to simplify and streamline common planning and reporting practices of the MS and to cut red tape. Thus we can expect that the main challenge for the rapporteur Claude Turmes (Greens/EFA, LU) in the coming months will be to reach a compromise with the EPP’S shadow-rapporteur in order to get a majority in committee for his (upcoming) report.

The same division of opinion over ambition is present between the groups on the EED file as well, for which the rapporteur is also from the more aspiring bunch - Adam Gierek from the S&D group. His main hardship will also be with the EPP group, convincing them to budge towards the more ambitious targets, but this will be much more difficult if not impossible than Turmes’ task in the case of the RGEU. The EPP is firm on the 30% indicative target (as opposed to the S&D led coalition’s 40% binding target), and they enjoy the Commission and the Council’s backing on this. Moreover, EPP shadow-rapporteur Markus Pieper also wishes to establish a sunset clause for the 1.5% increase in energy savings per year obligation (as outlined by Article 7 of the legislative proposal). However, here Gierek has a lot more chance in getting the EPP to compromise, as it seems the Council is going to go the other way on this (see below).

A month later, at the 24-25 April ITRE committee hearing, the MEPs discussed the RPEM, RACER, ER & ED files. With regards to the RPEM, there was largely an agreement between the S&D and EPP groups in that only some technical details are needed to be hammered out. The rapporteur Flavio Zanonanto (S&D, IT) suggested that a technical stakeholder meeting with the Transmission System Operators (TSOs) and Distribution System Operators (DSOs) should be organised, which was welcomed by the EPP shadow-rapporteur Ludik Niedermayer, but raised the suspicion of Xabier Benito Ziluaga (GUE/NGL), ES) who warned against the power of the TSO lobby in the area. Questions remain to be settled between the groups on the provision that obliges MS to draw up national crisis-response plans (in particular to the specific measures & format of the plans, and to what extent flexibility will be allowed for national specificities).

Bigger disagreements surfaced between the political groups in cases of the RACER file. Here the line of division is the same we have seen in case of the other Clean Energy Package legislation as well - between the S&D, ALDE & Greens on the hand, whom in this case are supporting the idea that ACER should get greater regulatory oversight competences and its own resources (by charging for reporting mechanisms), and the EPP and ECR on the other, who argued that the physical energy infrastructure, such a grid interconnectivity needs to be built up first, before granting ACER or any other EU institutions more powers. The only surprise in the story is that GUE/NGL shadow-rapporteur Jaromir Kohlicek lined up with the latter group instead of the former during the hearing, which will certainly make the work of ALDE rapporteur Morten Helveg Peteresen harder.

The most contentious legislative files at the hearing were promised to be the Electricity Market Regulation & Directive, which are dealt with together as one in the Parliament. However, rapporteur Krisjanis Karins (EPP, LT) surprisingly didn’t get much of a fight. Karins defended keeping capacity mechanisms, but argued that they only to be used as measures of last resort. While the Greens/EFA, GUE/NGL and EFFD groups voiced their strong opposition, unexpectedly, the S&D lightened its stance on the subject at the hearing compared to its unwavering criticism of capacity mechanisms at plenary last December. ALDE shadow-rapporteur Kaja Kallas was even more timid on the topic, only suggesting that “perhaps” more far-reaching safeguards are “worth considering” in the cases of capacity mechanism. The unwillingness of the S&D and ALDE to put up a stronger fight at this point on the most controversial aspect of the legislations is puzzling, but of course the race is far from over.

Recent Developments in the Council

A 9 March version of the Presidency’s revised proposals on EED and EPBD have been leaked. From this compromise text we learned that the Council will accept the Commission’s proposed 30% energy efficiency target, however it asks for the target to be indicative instead of binding, setting the basis for intense conflict with the Parliament’s S&D led delegation when the inter-institutional work will eventually kick off. However, the Council did not water down the obligations with regards to the 1.5% annual energy saving obligation continuing after 2020 as some feared. In this regard, the Council aligned itself with the S&D, Greens, ALDE, GUE, EFDD “issue coalition” of the Parliament, as opposed to the EPP & ECR & ENF bunch).

On the EPBD front, the Presidency proposed a section in the legislative text that obliges MS to establish a long-term strategy for mobilising investment in the renovation of the national stock of residential and commercial buildings. The revised version also proposes the deadline for the requirement for non-residential buildings with more than ten parking spaces inside or adjacent to the building to have at least one for every ten parking spaces a recharging point for E-vehicles to be moved back from 1 January 2025 to 1 January 2030. It is expected that the Parliament will even go further than this in trying to put provisions in the proposals that promotes e-vehicles & related infrastructure.

Our forecast for May and June is that besides the EED and EPBD, the Maltese Presidency will aim to make the most progress on the RGEU file An article-by-article examination (which so far only took place on the previous two dossiers) took place on RGEU at the 17 March, the 29 March and the 7 April meetings of the Working Party on Energy, the latest of which was also attended by the climate attaches of the Permanent Representation. Since then, the Working Party has not featured the file in the rest of its April sessions (nor they are flagged on the agendas of its early May meetings), which suggests that the Presidency is currently preparing the first version of its compromise proposal. It would certainly be an impressive show from the Maltese if they were to be able to deliver a common approach on not just two, but three of the Clean Energy Package proposals before their mandate is over in the end of June.