| Author (Person) | Bower, Helen | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Publisher | ProQuest Information and Learning | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series Title | In Focus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series Details | 6.4.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Publication Date | 06/04/2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Content Type | News, Overview, Topic Guide | In Focus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Plans to open up Europe's electricity and gas markets to competition were re-energised at the European Council in Barcelona on 15 and 16 March 2002 but only businesses can be sure of reaping any benefits, domestic consumers will have to wait. Heads of governments at the European Council summit reached a compromise deal after a lengthy period of negotiations since the European Commission produced new proposals in a Communication on completing the internal energy market [COM(2001)125] on 13 March 2001. The compromise was one of the key results of the Barcelona European Council and although the agreement falls short of full liberalisation of the two markets it does herald another important step forward in the EU's efforts towards economic liberalisation. It is also seen as important part of achieving the Lisbon goal of becoming the most competitive economy in the world by 2010. Background Efforts by the European Union to deregulate the EU's energy markets began in 1995 with the issuing of a Green Paper entitled "For a European Union energy policy" [COM(1994)659 final] and subsequently, a White Paper named "An energy policy for the European Union" [COM(1995)682 final] which listed "overall competitiveness" as one of three strategic objectives for future EU energy policy. In pursuit of this objective, two directives were adopted, one in 1996 and one in 1998, which established common rules for electricity (Directive/96/92/EC) and gas (Directive/98/30/EC) respectively. These envisaged a series of measures to provide for a fully liberalised and competitive market in both sectors by 2008. Following the Lisbon European Council in March 2000 and the decision to aim for a "complete and fully operational internal market" the European Commission intensified its efforts to liberalise the energy market. In May 2000, it produced a Communication on "Recent progress with building the internal electricity market" [COM (2000)297 final], which was followed by a Green Paper [COM (2000)769 final] in November 2000 on energy supply security. While the latter clearly addressed a different area of energy policy and another of the three objectives outlined in 1995, it did refer to the issue of the internal market, arguing that a fully liberalised market would contribute to the security of the EU's energy supply. The culmination of these efforts was the publication of a new set of proposals on 13 March 2001 under the banner "Completing the internal energy market" with the key aim that of accelerating the process of liberalising both market sectors so that all consumers (both business and domestic) would be able to choose their suppliers by 2005. The Communication also suggested measures for ensuring security of supply and a range of initiatives to establish a genuine pan-EU market in gas and electricity. A more detailed discussion of this Communication and the background to the EU's efforts to liberalise the gas and electricity sectors can be found in an earlier European Sources Online: In Focus: Stockholm to Barcelona Soon after the European Commission published these proposals, the Member States of the European Union met for the European Council in Stockholm on 23 and 24 March 2001. The proposals for liberalising the electricity and gas markets were discussed at the summit but little progress was made. Member States were unable to reach a deal on the proposals and even a decision on the timeframe could not be achieved. Instead, the Member States endorsed the proposals but put off taking any decisions until the Spring European Council in 2002 following a further report from the European Commission on the situation in these sectors, thereby ensuring that the implementation of any means of liberalisation would create no distortions of competition. The key opponents to the proposals were France and Germany. France is the only EU Member State which still has a major state-owned power utility, Electricité de France (EDF), - a major business operating not only in France but across Europe too - and a state owned gas company, Gaz de France. Even by the end of 2001, despite mounting pressure from fellow EU governments and the European Commission, France continued to resist selling off Gaz de France removing mention of gas privatisation from next year's budget. Clearly, the French government feel they cannot risk such a sensitive move in election year. Meanwhile, Germany has edged towards supporting the deregulation of the EU's energy markets with Germany's partners agreeing to the use of its cartel office to supervise the new regime rather than having to set up a different national energy regulator as the other Member States are doing. With Germany's backing looking more likely and the Spanish Presidency keen to inject some momentum into the liberalisation process the European Commission stepped up the pace at the beginning of 2002, increasing the emphasis through a series of speeches by Frits Bolkestein, Mario Monti, and Loyola de Palacio who stated,
As Barcelona approached, it was clear that the energy liberalisation proposals would be high on the agenda, but there remained the question of what progress could be made with France clearly still opposed to the idea. Compromise deal: Internal market for businesses but not for domestic consumers At the European Council meeting it was, as is frequently the case, a series of trade-offs which led to an agreement on a deal for completing the internal markets for electricity and gas. The Member States supporting the deregulation were able to win over France by agreeing to delay a decision on the liberalisation of the domestic consumer market until next year and committing themselves to produce EU laws which would protect "public interest services". Germany's support was won by agreeing that the creation of an independent national regulator was not needed. As a result, the pending proposals for fully opening up the electricity and gas markets should be adopted "as early as possible in 2002". The key aspects of the agreement, as stated in the Presidency Conclusions were:
In addition, the European Council called on the European Commission to update its report on the effective opening of the internal market annually before every Spring European Council so that effective progress can be assessed. It also urged for the adoption by December 2002 of the revision of the guidelines and accompanying financial rules on Trans-European Energy Networks (TEN). Finally, it suggested that the Spring European Council in 2006 would provide the opportunity to analyse the global performance of the European internal energy market and specifically:
Speaking at the summit, Spanish Prime Minister, Jose Maria Aznar, presiding over the European Council, called the agreement a significant and fundamental step, saying,
Indeed, while it may appear to many that the compromise deal is just a halfway measure because domestic consumers are yet to be included, the business market accounts for at least sixty per cent of the total market. Moreover, the move is likely to generate at least €250 billion a year in business through greater cross border competition because of the current price differential between countries with electricity in Portugal and Italy two or three times more than in Germany. Aside from the practical implications, the agreement is also important in terms of the European Union's greater goals of completing the internal market and achieving Lisbon's goal of becoming the world's most competitive economy by 2010. Although much will depend on the success of liberalisation in the business sector as well as domestic politics, such as the results of the 2002 French elections, before Europe's household users are able to benefit, full liberalisation of the electricity and gas markets certainly moved a step closer in Barcelona. Further information within European Sources Online:
Further information can be seen in these external links: EU Institutions National Organisations
Non-governmental Organisations
News Organisations
Further and subsequent information on the subject of this In Focus can be found by an 'Advanced Search' in European Sources Online by inserting 'energy liberalisation in the EU', 'gas liberalisation', 'electricity liberalisation' etc in the keyword field. Helen Bower EU leaders agreed at the Barcelona European Council on proposals from the European Commission to complete the internal energy market for electricity and gas. |
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| Subject Categories | Energy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
