Energy Community reform: What will the EU push for ?

Europe in transition

Ahead of the ministerial meeting in the Western Balkans on the EU energy reform, Dragana Mileusnic calls for the adoption and the implementation of the new energy rules as soon as possible. A clear and speedy EU message will benefit not only the people but it will also ensure security of energy supply in the whole region.

This Op-Ed was published on on 26.8.2014

By Dragana Mileusnic, Energy Policy Coordinator for South East Europe at Climate Action Network Europe

In 2006, the EU fostered the establishment of the Energy Community, an intergovernmental organization aimed at extending the EU’s internal energy market to non-EU Member States in Southeast Europe. In doing so, it was supposed to bring investments in the energy sector, contribute to security of supply and enhance environmental conditions. So where do we stand eight years into the process and what can we expect from the upcoming reform?

As the Energy Community developed over the years, with continuous support from the EU, it brought some progressive energy policies to southeastern Europe, such as the obligation to increase the share of renewable energy sources and improve energy efficiency. However, it failed to deliver on some of its key objectives: investments in the energy sector are still largely lacking while corruption is thriving across the region.

Implementation of Energy Community Treaty legislation has also been problematic. The institutional set up and enforcement mechanisms need to be improved, as acknowledged by the Council of the European Union. Moreover, about half of the region’s energy supply still comes from heavily polluting coal power plants. We have recently witnessed how vulnerable these plants are when several in Serbia were affected by floods, while the one in Kosovo exploded.

In light of these challenges, the Energy Community launched a revision process last October, when a group of experts was tasked to propose necessary improvements. The analysis, led by Polish MEP Jerzy Buzek, culminated with a report calling for all new energy projects to comply with the EU’s long-term climate goals, similar to the policy the European Investment Bank has in place. Together with proposed legislation on air quality, industrial emissions and greenhouse gas emissions, this should finally deal with some of the deficiencies in the current legal framework of the Energy Community. The report also suggested that EU state aid and public procurement rules be transposed to the Energy Community, which should help address corruption and governance problems in the region.

Civil society is calling for the EU to strongly push for these measures to be accepted in the Ministerial Council of the Energy Community, to be held in Ukraine this September. Given that the report was already endorsed by the Permanent High Level Group (the other main decision-making body of the Energy Community), in which the European Commission is actively involved, the EU can make full adoption of the report happen. Bearing in mind that most of the countries of the Energy Community wish to accede to the EU, they will have to comply with EU laws in any case.

Still, recent developments cast doubt on what the EU might actually be promoting in some of these countries. For instance, after recent major floods in the Balkans, the energy and mining sectors in Serbia are estimated to have suffered loss and damage amounting to 488 million euros, according to the Floods report which was supported by the EU. The same document calls for flooded coal mines to be recovered and over 400 million euros to be spent on recovery and reconstruction in the energy and mining sectors. Little attention has been given to potential investments in energy efficiency measures or small-scale renewables, which could deliver results before winter while simultaneously contributing to the wider goals that Serbia has with regard to the Energy Community and the EU. Quite surprising, as it seems that reconstruction money will largely come from European funds so should prioritize sustainable solutions over coal, especially when renewables and energy efficiency potential is abundant.

Nonetheless, we expect the EU message to Energy Ministers in Southeast Europe to be clear: they need to accept the new rules and speed up the implementation. They should hear the same at the ministerial Western Balkans conference, being held this week in Berlin. Ultimately, the citizens of the region deserve nothing less.