EU urgently needs real energy union

By Tomas Prouza

The past few months have shown the world in which we live is more dynamic and the challenges we face are more complex and demanding than we had imagined.


EU energy policy is an area which perfectly illustrates this complexity – it is challenged from both outside the EU and from within.


We see a military conflict in our Eastern neighbourhood which may seriously compromise our energy security. We must also take part in global climate change mitigation efforts. Equally, there are challenges from within the EU, such as growing demand, massive build-up of intermittent resources and inadequate legal and physical energy market infrastructure.


These challenges threaten our competitiveness and hamper our efforts to sustain and develop the industrial potential of the EU.


EU energy policy must deal with three essential issues: enhancing energy security, making the internal energy market fully functional and implementing the 2030 climate and energy framework.


We must protect European competitiveness and keep energy prices low.


We have seen much discussion and some determination to address these challenges. But the holistic view is often lacking.


Given the complexity, we strongly welcome the determination of the European Commission to address the issue in a comprehensive and strategic manner.


The Energy Union seems to be an appropriate step forward. Expectations are high, as the Energy Union should address all dimensions and cover all key topics from geopolitics, practical and legal aspects of everyday operations on the EU internal energy market, through to energy infrastructure build-up, and consumer protection.


The Czech Republic would support an Energy Union that will lead us towards a competitive, integrated and resilient energy policy and increased energy security.


We have already shared some of our views in a non-paper presented together with Poland and Slovakia.


As the presentation of the Energy Union draws near, we focus on the two most important intimately related and mutually supportive expectations: energy security and fully functional Internal energy market.


Energy security: solidarity, responsibility


Firstly, on energy security: the Energy Union should be based on mutual respect and solidarity between the member states, strengthened by individual responsibility under the framework of efficient, fully integrated and liberalised internal energy market.


Transparency is key, with specific focus on diversification of supply of energy sources.


To foster energy security we must rely on a balanced and diversified energy mix based on an effective use of all indigenous energy sources, including nuclear.


These in turn must be supported by adequate infrastructure. Major national energy decisions should be shared among member states before they are taken.


Drafting joint preventive action plans and emergency plans at the regional level would appear most desirable. But a hasty approach to joint purchases of natural gas would probably not bring the results wanted.


Should these be considered, they should concern the relevant subjects purely on a voluntary basis and would have to fully comply with the rules of the internal energy market.


In such a scenario, the role of the European Commission should include the re-negotiation process of contracts with external gas suppliers only when necessary and upon a request of an individual member state.


The combination of these principles would maintain a balance between enhanced energy security and development of an efficient and liberalised energy market.


Energy market: no distortions, full compliance


Secondly, a functional internal energy market without distortions is a key prerequisite for the success of the whole Energy Union concept.


Recently, we have been witnessing discussions over a possible introduction of capacity markets – which means that electricity producers would be remunerated according to available capacity instead of electricity produced.


We do not consider capacity markets an ideal solution. If ever introduced, a market-based, non-discriminatory and technologically neutral approach involving all market participants must be a condition. To make this approach viable, full implementation of existing legislation is a must, and barriers and market distortions must be removed.


The internal energy market requires a coherent approach in all relevant areas: enforcement of internal market rules, construction of timely and adequate transmission systems and distribution grid development.


The internal energy market should be accompanied by functional reforms of the EU Emissions Trading Scheme complemented by an effective effort and burden sharing mechanism, as stated in the EU 2030 climate and energy framework.


Besides putting these systemic elements in place, stakeholders at the other end of the supply chain must not be left out. Specific measures should be explored to protect vulnerable customers, to address threats of energy poverty and to assess the social impact of high energy prices.


The bottom line is an effective implementation of the EU 2030 climate and energy framework.


Nevertheless, decarbonisation should not be the only focus – CO2 reduction efforts must not undercut either energy security or competitiveness, which are now at times jeopardised.


Further system integration of intermittent renewable energy sources must be based solely on market principles and must not threaten security of the grid as a whole.


Thus, mobilisation of investments in R&D and innovation projects of all kinds are highly desirable and should be supported by both national and European resources.


To address the challenges in the energy field, we must jointly sustain our energy security and make the market work.


Rising risks from beyond our borders and challenges from within can be tackled in a comprehensive approach in these two focal points.


They will also allow us to remain competitive, we will preserve the environment for the future generations and contribute to climate change mitigation.


The Czech Republic supports these steps from isolationism to complexity and we are eager to be a vocal participant in the debate.


Tomas Prouza is the Czech state secretary for EU affairs












April 2016