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24th European Energy Law Seminar (11-12 April 2011) (Noordwijk, NL)

The 24th European Energy Law Seminar is organised on 11-12 April 2011 in Noordwijk, The Netherlands. The seminar reviews the key developments in EU energy law. The agenda of the seminar includes this year the following topics:

• Government Interference with Energy Prices in a Liberalised Market;
• Latest EU Case Law;
• Trade in Energy and CO2 Emission Rights and the Role of Financial Markets;
• Climate Change and Energy Efficiency;
• The Draft Convention on International Energy Security;
• Recent Developments in the Upstream Petroleum Sector;
• Energy Infrastructure - New Developments.

The European Energy Law Seminar is co-organised by the Dutch Energy Law Association (Nederlandse Vereniging voor Energirecht), the Scandinavian Institute of Maritime Law (Nordisk Institutt for Sjørett) of the University of Oslo, and the Groningen Centre of Energy Law of the University of Groningen.

References: programme, registration form and practical info available HERE.

International Energy Forum Charter Signed in Riyadh: Formalisation of an Informal Dialogue

The signature by 86 countries of the International Energy Forum (IEF) Charter took place yesterday, 22 February 2011, in Riyadh, along the Extraordinary IEF Ministerial Meeting. It is the concretisation of the process started in March 2010 at the 12th IEF Ministerial Meeting, the so-called Cancun Ministerial Declaration that was endorsed by 66 countries (see Declaration here). The Cancun Ministerial Declaration was mainly addressing two issues: the enhancement of the IEF framework to reinforce the producer-consumer dialogue, and the manner to reduce energy market volatility. The IEF Charter is the embodiment of the IEF framework called upon in the Cancun Ministerial Declaration. Energy market volatility is addressed within the IEA/IEF/OPEC cooperation programme, also referred to in the Cancun Ministerial Declaration. Among the activities of the cooperation programme count the organisation of joint events on physical and financial energy markets linkages that include energy market regulation, energy outlooks exercises, and market data transparency. Sum up of cooperation programme activities here)

The IEF Charter (full text here) sets on paper the purpose and functioning rules of the IEF, without being a legally binding instrument:

Purpose of the Forum (Section I):

• ...
• 2. The Forum is an intergovernmental arrangement that serves as a neutral facilitator of informal, open, informed and continuing global energy dialogue among its membership of energy producing and energy consuming States, including transit States.
• 3. The Charter does not create any legally binding rights or obligations between or among its members.
• 4. Each Member State is committed to the global energy dialogue and, consistently with its domestic law and international obligations, participates in the Forum and endeavours, in good faith, to implement the Charter's terms and realize its objectives.

Fundamental aims of the Forum (Section II):

• a. fostering greater mutual understanding and awareness of common energy interests among its Members;
• b. promoting a better understanding of the benefits of stable and transparent energy markets for the health of the worl economy, the security of energy supply and demand, and the expansion of global trade and investment in energy resources and technology;
• c. identifying and promoting principles and guidelines that enhance energy market transparency, stability and sustainability;
• d. narrowing the differences among energy producing, consuming and transit Member States on global energy issues and promoting a fuller understanding of their interdependency and the benefits to be gained from cooperation through dialogue among them, as well as between them and energy related industries;
• e. promoting the study and exchange of views on the inter-relationshipis among energy, technology, environmental issues, economic growth and development;
• f. building confidence and trust through improved information sharing among States; and
• g. facilitating the collection, compilation and dissemination of data, information and analyses that contribute to greater market transparency, stability and sustainability.

In the Concluding Statement of the Meeting, parties declared that: "The IEF Charter marks a new era of international energy cooperation built on greater mutual understanding and trust, with a significant reinforced political commitment to an informal, open, informed and continuing global energy dialogue in the framework of the IEF among energy producing and energy consuming countries, including transit States."

The IEF is celebrating in 2011 twenty years of "producer-consumer dialogue" since its inception in 1991 in Paris.

Reference: Webpage of the event, IEF Website.

What if it Goes Wrong in Libya ... The Role of the International Energy Agency in Case of Supply Disruption

Faced to the political instabilities in Libya, the International Energy Agency (IEA) expresses itslef today as ready to make available to the market necessary volumes of oil in case of major disruption of supply at the condition that 'alternative suppliers cannot readily be made available via normal market mechanisms', which is not the case as of 22 February (see note IEA).

It is timely to review the role of the IEA and the related international mechanisms in situation of major supply disruption, the so-called Response System.

The 28 IEA member parties have committed themselves in the Agreement on an International Energy Program (I.E.P. Agreement, Chapters I-IV) to take joint measures in case of oil supply emergencies. The I.E.P. Agreement has among these objectives to maintain and improve systems for coping with oil supply disruptions. In case of oil supply disruption, the following procedure will apply to the IEA:

• The IEA Directorate of Energy Markets and Security assessed the market impact and the potential need for an IEA co-ordinated response;
• The market assessment includes an estimate of the additional production oil producers can bring to the market quickly, based on consultation with producer governments;
• Based on this assessment, the IEA Executive Director consults with and advises the IEA Government Board (GB), which is comprised of senior energy officials from member countries who determine the major policy decisions of the IEA. This consultation process to determine the need for a IEA co-ordinated action can be accomplished within 24 hours, if necessary;
• Once a co-ordinated action has been agreed upon, each member country participates by making oil available to the market, according to natioanl circumstances. An individual member country's share of the total response is generally proportionate to its share of the IEA member countries' total consumption;
• Throughout this decision-making process and the implementation stage of a decision, industry experts, through the IEA Industry Advisory Board, provide advice and consultation on oil supply/demand and emergency response issues. (Source: IEA)

Then, IEA countries have different options in terms of response measures in order to meet emergency co-ordinated action (i.e. reach their part of the additional oil to be made available to the market), focused on either:

• increase in supply: stockdraw or production surge;
• reduce in demand: demand restraint or fuel switching.

Internal permanent measures at the IEA level as regards supply disruptions include: market monitoring; the emergency response reviews of the IEA countries on a regular basis; emergency response exercises, conducted every two years; IEA emergency stock levels, where IEA countries must maintain oil reserves up to a minimum of 90 days of net imports (information is made public).

Previous major oil supply disruptions include: Suez Crisis (Nov. 1956-March 1957); Six Day War (June-August 1967); Arab-Israeli war and Arab oil embargo (Oct.1973-March 1974); Iranian revolution (Nov. 1978-April 1979); Outbreak of Iran-Irak war (Oct. 1980-Jan. 1981); Iraqi invasion of Kuwait (Aug. 1990-Jan. 1991); Iraqi oil export suspension (June-July 2001); Venezuelan strike (Dec. 2002-March 2003); war in Iraq (March-Dec. 2003); Hurricanes Katrina/Rita (September 2005). (Data: IEA). The IEA intervened twice, during the 1991 Gulf War and the 2005 hurricanes.

The question of response in case of supply disruption is raised because of Libya's position in the oil and gas production industry. As reported by the IEA, Libya is a net-exporter of crude oil (crude and natural gas liquids): 85% of its exports go to Europe (Ireland, Italy, Austria, Switzerland, France top the imports; it exported 1.2 mb/d of crude oil to the IEA countries; Libyan exports count for 3% of the total Chinese crude imports. Libya exports natural gas by pipeline to Italy (Green Stream) (represents 13% of Italian gas imports) and to Spain in the form of LNG (1.5% of total Spanish gas imports). (Picture: Natural Gas export routes, IEA).

The EU has developed its own mechanisms in terms of supply disruption, in consistency with the IEA mechanisms: the strategic oil stocks. Council Directive 2009/119/EC of 14 September 2009 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products. This Directive will repeal Directive 2006/67/EC of 24 July 2006 on the same subject as of 31 December 2012, in order to put it in line with IEA mechanisms and update requirements. Both directives require Member States to establish and maintain a minimum reserve of petroleum products providing the EU with sufficient security of supply of petroleum resources (equal to at least 90 days of average daily internal consumption based on the previous calendar year).

References:

• IEA Factsheet, IEA Response System for Oil Supply Emergencies, 2010.
• IEA, Facts on Libya: oil and gas (as of 21 February 2011).

Picture: IEA.

10th Report on "The State of Renewable Energies in Europe" is Out

EurObserv'ER has just released its 10th edition of the "State of Renewable Energies in Europe" with consolidated data from the year 2009. The report is available HERE.

In its press release, EurObserv'ER notes that:

• It estimates th renewbale energy share of gross final energy consumption in 2009 to be 11.6% compared to 10.4% in 2008.
• "This increase of 1.2 percentage points results in a renewable energy consumption contribution of 131.7 million tonnes of oil equivalent (Mtoe) in 2009 (up to 6.3 Mtoe) of a total of 1136.4 Mtoe in real terms. One important element of this result is that over half the growth in the share observed in 2009, despite impressive growth in some renewable sectors such as PV, cannot be attributed to the rise in renewably-sourced final energy consumption alone but instead steams from the plunge in total gross final energy consumption based on the drop in gross inland energy consumption."
• "EurObserv'ER estimates that for the year 2009 the renewable energy share in total primary energy consumption has gained 1 percentage point with respect to 2008 (from 8.4% to 9.4% in 2009) and the renewable energy share in total electricity consumption has increased almost 2 percentage points (from 16.4% in 2008 to 18.2% in 2009)."

Commission Publishes Questionnaire to be Used by Member States for reporting on CCS Directive Implementation

Today was published in the Official Journal of the European Union (OJEU L 37, 11.02.2011, p.19), the Questionnaire on the implementation of Directive 2009/31/EC on the geological storage of carbon dioxide (CCS Directive). Member States have the obligation to send such questionnaire to the European Commission every three years, and for the first time by 30 June 2011 (Article 27.1, CCS Directive).

The Commission is responsible for drafting the questionnaire, based on the procedure requirements of Directive 91/692/EEC on standardising and rationalising reports on the implementation of certain directive relating to the environment. In the case of the CCS Directive, the Commission has chosen to draft a questionnaire as it "appears to be best suited to ensure that the information provided by the Member States in their reports is complete and comparable." Such questionnaire will facilitate the work of the Commission, both in controling implementation of the CCS Directive by Member States and in evaluating the nature of the implementation strategies and the possible gaps in the regulatory approach of the EU.

In their answers, Member States must provide information on the following:

• the general implementation measures, such as national legislation, licensing systems, competent authorities;
• coordination of the permitting procedure;
• transboundary cooperation;
• selection of storage sites and exploration permits;
• storage permit applications, conditions and contents, as well as alteration to permits due to update or withdrawal;
• CO2 stream acceptance criteria and procedure;
• monitoring and reporting by parties, in particular the operator;
• inspections of storage sites, related facilities and complexes;
• leakages or significant irregularities;
• closure and post-closure obligations;
• transfer of responsibility;
• Financial security and financial mechanism;
• third party access;
• dispute settlement;
• registers of storage permits, sites (in operation or closed);
• information and participation of the public;
• penalties.

References: Commission Decision of 10 February 2011 introducing the questionnaire to be used for the first report on the implementation of Directive 2009/31/EC of the European Parliament and of the Council on the geological storage of cabron dioxide, 2011/92/EU.

EFTA Surveillance Authority Backs State Aid in Favour of Energy Recovery

The Surveillance Authority of the European Free Trade Association (EFTA) (ESA) has adopted today a positive decision on the grant of a direct aid to Finnfjord AS in favour of the installation of energy recovery measures. The financing of the measure originates from the Norwegian Energy Fund. The latter has been previously validated by ESA in 2006 and prolonged once in 2010.

The present aid amounts to NOK 175 million (EUR 21.3 million) and was notified to ESA in October 2010. It was subject to a detailed assessment under the State Aid Guidelines for Environmental Protection.

While the text of the decision is not yet available, the press release from ESA sets the general reasoning of the decision as follows:

"Finnfjord is one of Europe's leading producers of ferrosilicon. Finnfjord also produces microsilica which is a by-product of the ferrosilicon production process. The production process generates a lot of heat. Currently, this heat is not used for energy production or any other useful purpose. The aid will enable Finnfjord to install an energy recovery system to generate 224 GWh of electricity and 125 GWh of steam per year. The electricity will be used in Finnfjord's production process, while the steam is to be sold.

...

The Authority has found that the positive effect of increasing energy savings outweighs the limited effect on trade and competition. The aid is proportional as it is limited to the amount necessary to trigger the investment. The aid also provides an incentive effect since the project would not be commercially viable without the aid. Finally, the structures of the ferrosilicon and microsilica markets are unlikely to be altered by the grant of aid."

Reference: Press release, EFTA Surveillance Authority, 09.02.2011.

Summer School in EU Energy Law & Policy (20-24 June, EUI, Italy)

The Florence School of Regulation (European University Institute, Florence, Italy) is organising from 20 to 24 June 2011 a Summer School in EU Energy Law & Policy. The programme is designed to develop a sound knowledge of recent developments in EU energy law for staff of energy regulatory authorities, international organisations, utilities and law firms. The course will be provided by prominent academics, practitioners, former and current regulators or official of the European Commission. Audience limited to 40 participants!

• Day 1: EU energy law under the Lisbon treaty - Market coupling and internal market- Public law, private law and economic perspectives.
• Day 2: Institutional Developments in energy - Boundaries between Competition and Regulatory Law - Boundaries between competition and sector specific regulation - ACER, ENTSOs & potential legal problems
• Day 3: National experiences with the implementation of the third package - The infrastructure package and the new gas security of supply regulation
• Day 4: EU antitrust and state aid law
• Day 5: EU renewbale energy and climate law - EU Renewable energy package - smart grid and distributed generation - The EU ETS

Website of the Summer School.

Full programme available HERE.

For those interested, I will see you on the morning of Day 5!

European Council Conclusions on Energy - Morceaux Choisis

The Conclusions on Energy of the European Council of 4 February are available HERE. Morceaux choisis reproduced hereafter.

The sustainable energy paradigm revisited

• "Safe, secure, sustainable and affordable energy contributing to European competitiveness remains a priority for Europe."

"Operational Conclusions" on the completion of the internal market

• "The EU needs a fully functioning, interconnected and integrated internal energy market. Legislation on the internal energy market must therefore be speedily and fully implemented. ..."
• "The internal market should be completed by 2014 so as to allow gas and electricity to flow freely. This requires in particular that in cooperation with ACER national regulators and transmission systems operators step up their work on market coupling and guidelines and on network codes applicable across European Networks. Member States, in liaison with European standardization bodies and industry, are invited to accelerate work with a view to adopting technical standards for electric vehicle charging systems by mid-2011 and for smart grids and meters by the end of 2012. ..."

Next legislative proposals to come

• The European Council calls upon the early adoption of Commission's proposal for a Regulation on energy markets integrity and transparency.
• "It is important to streamline and improve authorisation procedures, while respecting natioanl competences and procedures, for the building of new infrastructure; the European Council looks forward to the forthcoming proposal from the Commisison in that respect."

Financing: what and how?

• Regional initiatives in matter of integration of markets and networks "deserve support".
• "No EU Member State should remain isolated from the European gas and electricity networks after 2015 or see its energy security jeopardized by lack of the appropriate connections."
• "The bulk of the important financing costs for infrastructure investments will have to be delivered by the market, with costs recovered through tariffs. It is vital to promote a regulatory framework atrtactive to investment. Particular attention should be given to the setting of tariffs in a transparent and non-discriminatory manner at levels consistent with financing needs and to the appropriate cost allocation for cross-border investments, enhancing competition and competitiveness and taking account of the impact on consumers. However, some projects that would be justified from a security of supply/solidarity perspective, but are unable to attract enough market-based finance, may require some limited public finance to leverage private funding. Such projects should be selected on the basis of clear and transparent criteria. Teh Commission is invited to report by June 2011 to the COuncil on figures on the investments likely to be needed, in suggestions on how to respond to financing requirements and on how to address possible obstacles to infrastructure investment."

Shale gas or the "sustainable extraction" equation

• "In order to further enhance its security of supply, Europe's potential for sustainable extraction and use of conventional and unconventional (shale gas and oil shale) fossil fuel resources should be assessed."

Energy efficiency or the difficult equation

• Placed after shale gas and oil shale in the conclusions! "The 2020 20% energy efficiency target as agreed by the June 2010 European Council, which is presentaly not on track, must be delivered. ... As of 1 January 2012, all Member States should include energy efficiency standards taking account of the EU headline target in public procurement for relevant public buildings and services. The Council is invited to promptly examine the upcoming Commisison proposal for a new Energy Efficiency Plan, setting out in more detail a series of policies and measures across the full energy supply chain."

"Cooperation" for delivering renewables target

• "The Commission is invited to strengthen its work with Member States on the implementation of the Renewable Energy Directive, in particular as regards consistent national support schemes and cooperation mechanisms."

Consistency and coherence in the EU's external relations

• This should be an objective of the EU and Member States in their relationship to key producer, transit, and consumer countries.
• "The Commission is invited to submit by June 2011 a Communication on security of supply and international cooperation."
• "The Member States are invited to inform from 1 January 2012 the Commisison on all their new and existing bilateral energy agreements with third countries; the Commission will make this information available to all other Member states in an appropriate form, having regards to the need for protection of comemrcially sensitive information."

Picture: Family picture (c) Council of the EU.

Commodities and Raw Materials: Towards a Common Strategic Approach at EU level? (Texts)

The European Commission adopted on 2 February a Communication on commodity markets and raw materials. Here are the documents. Analysis to come shortly.

• Communication from the Commission "Tackling the Challenges in Commodity Markets and on Raw Materials," COM(2011)25 final;
• Press release, European Commission, IP/11/122;
• MEMO/11/62, European Commission.

Picture: (c) European Commission.

Agenda of the European Council of 4 February: Energy Items

Heads of state and government of EU Member States will meet in Brussels on Friday 4 February for the European Council. It has been flagged that energy will be a core topic of the meeting (in addition to innovation and political situation in North Africa). The Hungarian Presidency has published its official agenda, and the European Commission has completed with its own views:

• Completing the single energy market: by creating "the missing links" between energy networks, with a clear focus on infrastructures; by removing remaining market barriers and better integrate energy markets; both security of energy supply and deployment of renewable energies depends on a well working internal energy market, stresses in addition the Commission. The Commission is indeed much more precise as regards its expections for the forthcoming European Council. In particular, it sets itself a deadline in 2014 for making the internal energy market a reality, which calls for enforcement control of current legislation, concrete initiatives using notably ACER (European Agency for the Cooperation of Energy Regulators) and ENTSO (European Networks of Transmission System Operators) and eventually, while not mentioned, new legislation. Practical measures would include grid codes for transmission of electricity and gas, and the setting of tariffs at levels consistent with financing needs.
• energy efficiency (EE) and green technologies, with a European Action Plan on energy efficiency announced for 2 March, which "will include ideas for regulatory improvements as well as for innovative financial incentives". EE in buidlings and mobility will be prioritised. The Commission suggests Member States to use public procurement. Innovation and R&D are topics that the Commission would like to be followed by commitments by the Member States, as set in the SET Plan, in particular on: smart grids, new storage technologies, sustainable biofuels, energy savings soluations and smart cities.
• external relationships (see related Commission's public consultation) and import dependence. The Hungarian presidency mentions a discussion on "partnship mechanism that should be established with major energy producer and transit countries." The Commission stresses past efforts in terms of integration of energy markets and regulatory frameworks with international partners, via, inter alia, the Energy Community Treaty, but also the streamlining in negotiations of purchase agreements with producing countries and the extension of internal market rules to energy partners. It sets now the direction towards, on the one hand, "key hydrocarbon suppliers" based on a clear legal framework for new strategic routes of supply (Southern Corridor for gas, and Southern Mediterranean for solar energy and gas). The Commission has indeed precise expectations from the European Council, and is announcing a forthcoming Communication on EU's external energy policy.

As simply put by in a related MEMO: "Now is the time to further develop [the EU] toolbox to reach the objective of safe, secure, sustainable and affordable energy."

Official agenda of the meeting from the Council (dated 3 February): HERE

References:

• Background note, Hungarian presidency, 01.02.2011;
• MEMO/11/58, European Commission, Energy policy - key issues for the European Council, 01.02.2011.

Norway Publishes Official Views Before the European Council on Energy on 4 February

In preparation of the European Council on Energy to be hold on Friday 4 February, the Norwegian government has published on 26 January its views on the agenda of the meeting in a document entitled "EU Energy Policy Debate: Norwegian Views" (available HERE).

The document recalls the key interests Norway has to defend in the development of EU energy policy, taking into account the particular position the country helds with regards to the internal market and the energy sector through the EEA Agreement. The points raised in the document are well known, but the approach of an official communication from the government prior to the European Council demonstrates a relatively new standpoint vis-à-vis the EU, almost like a reminder. These interests are:

• Natural gas: Norway is the second largest supplier of natural gas to the EU (20% of EU consumption) and natural gas will continue to form part of a sustainable energy mix, including for environmental protection and security of energy supply reasons. Note: "A predictable and explicit political framework for the future of natural gas will facilitate investment in new production capacity."
• Internal energy market: while Norway is still discussing the implementation of the third energy package at national and EEA levels, it recalls its intention to "take an active part in the newly established European cooperation mechanisms ACER and ENTSO," including as regards the implementation of the internal energy market measures, the design of future network codes and guidelines. This efforts builds on the already close coordination of energy policies within the Nordic electricity market.
• Infrastructure: central issue for Norway ... and for the EU (see Commission Communication on Energy Infrastructures), both as regards natural gas and electricity, and as regards the different types of infrastructures (pipelines, transmission lines, interconnections, storage facilities, etc.). "New infrastructure will require significant commercial decisions", which is in line with the positions taken by the EU Energy Commissioner. There might be some questions of prioritisation in infrastructure investments to discuss here. With the increasing part of decentralised and intermittent energy within the fuel mix of the EU, Norway provides several advantages in terms of balancing power through its hydropower resources.
• Renewable Energy: While Norway is still negotiating the manner Directive 2009/28/EC will be incorporated into the EEA Agreement, it foresees close cooperations with EU Member States in terms of renewable energy: common green certificates market with Sweden (buidling on the Directive's provisions, see previous post); cooperation within the North Sea Countries Offshore Grid Initiative (see previous post).
• Energy efficiency and technology: "Norway has noted that the EU is placing more emphasis on energy efficiency." Here, Norway seems to look for best practices sharing more than leading the efforts, and wish to continue collaborating through the Strategic Energy Technology (SET) Plan, and the EU R&D programmes. CCS is mentioned here (while not being an energy efficiency technology per se) and the Norwegian interests are huge.
• External dimension: The paper remains quite vague here. Norway is both joining EU efforts and doing on its own, where several international partnerships have been concluded in the areas of climate change (e.g. deforestation), access to oil and gas, technology development and energy efficiency.

Picture: Visit of Jonas Gahr Støre, Norwegian Minister for Foreign Affairs, to Catherine Ashton, High Representative of the Union for Foreign Affairs and Security, Brussels, 26.01.2011. (c) European Commission.

More than 1,500 Views in January!

Thank you for your interest in the Sustainable Energy Law Notebook that will continue reporting and analysing legal and policy developments in the field.