EU energy ministers met on Monday (18 December) in an attempt to find a common position on three crucial energy laws, ahead of fierce negotiations with the European Parliament expected early next year. Here is how EURACTIV reported on the latest developments.
Member states agreed on four so-called “general approach” before the beginning of negotiations with the European Commission and Parliament behind closed doors next year.
Talks kicked off Monday morning, when ministers tried to agree on two electricity market design laws. Estonia, entering the final days of its EU Presidency, hoped for a strong position here, as it is somewhat of a passion project for the Baltic state.
Later in the afternoon, two laws on renewable energy and governance were on the table. Ministers managed to agree on positions on all four texts but the content of the general approaches will be up for debate immediately.
To sign off 2017, here are two post-mortem analyses of what occurred at Monday’s Council meeting. The first is an in-depth look at how ministers brokered a controversial agreement on market design, which managed to divide member states thanks to its stance on coal subsidies. The second looks at how the Council is failing to promote the potential of energy communities and small-scale producers.
Join us again in the new year as the energy news will keep coming. The second week of January in particular will see MEPs in Strasbourg formalise their joint position on three clean energy laws.
UPDATE. The final text on the market design regulation is still yet to be published but we’ve managed to secure a copy. Click on the link in the tweet to download.
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On the electricity market design regulation, here are the key points in the agreement, as provided by the Council (keywords in bold, personal comments in italics):
In line with the Commission’s proposal, there are new rules to ensure appropriate conditions for electricity trading within different timeframes, but with a definite aim to bring trading closer to the real-time. This will allow higher share of renewables production in the energy systems. The new rules on dispatching and balancing responsibility will limit the distortions on the market allowing less exemptions compared to now. (On exemptions, the devil will be in the detail)
The principles for establishing ‘bidding zones’, in other words electricity trading areas, are more clearly defined. The rules on capacity allocation as specified in the Commission’s proposal require maximum capacity to be allocated to the market participants on the border of a bidding zone. In the Council text, a benchmark level of maximum capacity is established on the border and must be respected. Countries below the benchmark level will need to start implementing remedial actions or reconfigure the bidding zones. A deadline has been introduced for the entire process, and the Commission is given the opportunity to intervene if the benchmark has not been met by then. (This is definitely a step forward in the creation of an internal market for electricity).
Installations will continue to be rewarded for making electricity generation capacity available through capacity mechanisms to cope with peak demands. To ensure the smooth functioning of the internal market, the rules for these mechanisms must be harmonised. The Council position sets out the design principles for capacity mechanisms as well as arrangements for their implementation. An important element is that new installations will be eligible to participate after 2025 only if their emissions are below 550gr CO2/kWh or below 700 kg CO2 on average per year per installed kW. Also there is a limit for participation for existing power plants which cannot receive payments after 2030 and the payments need to decrease after 2025. (The CO2 limit was a major bone of contention, between Poland and those pushing for a coal phase out. The final compromise reflects give and take on both sides. The 700kg average introduces an extra flexibility and seems to recognise the fact that power plants receiving capacity payments remain idle most of the time).
A European adequacy resource assessment will be created and used as a basis for decisions on capacity mechanisms along with the national ones.
According to the general approach, by 2025 the Commission will draw up a report evaluating which elements of existing network codes could be included in EU acts concerning the internal electricity market. Amendments to the network codes will be possible up to the end of 2027.
Additionally, the general approach supports the establishment of a European entity of distribution system operators and strengthens the role of regional security coordinators, defining their geographical scope and concrete tasks. (The creation of a DSO entity was widely expected but still significant. Read our interview here with the secretary general of ENTSO-E).
On the governance of the energy union, here are the key points of the agreement, as provided by the Council (keywords in bold)
Member states will submit integrated national energy and climate plans, presenting their objectives, policies and measures in all five areas of the Energy Union, including greenhouse gas emissions reduction targets. These plans would cover the period 2021-2030 and would be renewed every 10 years.
They are also required to submit integrated national energy and climate progress reports every two years. The Commission will monitor progress and assess the need for recommendations, which may trigger additional measures to be taken at national or EU level.
Three benchmarks were adopted to the indicative renewables trajectory for member states to ensure the EU achieves its renewables’ target of 27% by 2030. These milestones are 24% in 2023, 40% in 2025 and 60% in 2027 applicable at both EU and member state levels. These values are calculated on the basis of the 20% renewables target set for 2020 as the starting point (“0%”) and the 27% 2030 target as the end point (“100%”). This will guarantee that all EU countries make a constant and incremental contribution towards the final goal.
An ‘iterative process’ between member states and the Commission forms the cornerstone of the governance process. In this process, member states submit draft plans, final plans and progress reports, and the Commission can react to them. Namely, the ‘gap-filler mechanism’, proposed by the Commission, is retained in the Council text as the way to address and close possible gaps of delivery in member states. The cause of these gaps could either be that planned national renewable energy contributions of EU countries do not add up to the planned EU targets, or inadequate achievement of the contributions that the member states have planned.
A list of objective criteria is included to assess the initial level of ambition of member states in their planned contribution for 2030. The Commission will use these criteria to identify which EU countries are facing an ambition gap and, on the basis of that analysis, can issue non-binding recommendations to increase their voluntary contribution of the member states to meet the EU-level target.
Member states must continue to meet and maintain their binding 2020 renewable energy target by and beyond 2020. If a country was to drop below its 2020 baseline, it would be obliged to take additional measures within one year to close that gap.
That’s it folks! Member states, for better or worse, have their negotiating positions. The first quarter of next year will be full of trilogue talks when the Commission’s clean energy package, published in 2016, will perhaps become law. EURACTIV will bring you all the news that matters so check back with the site and follow @SamJamesMorgan @FredSimonEU and @eaEnergyEU to get all the developments.
The Council has released its press release on the governance regulation, which was agreed earlier in the evening. Read the full text here.
The Commissioner also points out how the general approach on capacity mechanisms was not unanimous and that trilateral talks will allow for more clarity. He hopes that trilogues will also allow the EU to eliminate regulated prices fully.
Canete acknowledges that modelling used for the Commission’s initial proposal is outdated and that a 27% renewables target is no longer the maximum that could be achieved.
On the events of the summit, Canete praises ministers for “significant progress” made on finalising the laws of the clean energy package, adding that a political agreement will be on the table at one final trilogue on the energy performance of buildings directive.
Commissioner Canete highlights what happened in the sidelines. A decision on the synchronisation of the Baltic electricity grid will be taken by May 2018 at the latest, while a financing agreement was reached on a LNG terminal on the Croatian island of Krk.
Estonia’s Kadri Simson kicks off the presser by thanking the Commission for its involvement and the numerous ministers that stayed with the marathon 15-hour-long talks. She also goes through the key points agreed in the four general approaches.
Press conference with Kadri Simson and Miguel Arias Canete is due to begin within the next five minutes. Stay tuned to EURACTIV tomorrow for reaction on all the decisions made today.
Due to the divisive nature of capacity mechanisms and the 550g proposal, the Estonians proposed a deliberately ambiguous compromise, which is “open to interpretation” and “the only solution” according to chair Kadri Simson. She, probably correctly, says it will lead to “interesting debate” going forward.
Despite serious concerns raised, the Estonian presidency insists that there is enough support to adopt a general approach on the market design regulation. Ministers offer a feeble round of applause and the agenda is brought to a close.