Tuesday

28th Mar 2017

Brussels drafts controversial energy 'unbundling' law

EU energy giants are coming one step closer to losing full control over their assets, with the European Commission pressing ahead with legal moves to break up major concerns into smaller pieces and saying it has the backing of member states.

Senior EU officials, speaking on condition of anonymity, confirmed that Brussels will table a piece of legislation which would force large energy companies to sell off part of their business in order to fully separate production and distribution.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

  • The European Commission is pushing EU energy giants to a full break-up from 2009 (Photo: gazprom.ru)

The so-called "ownership unbundling" is seen by Brussels as key to boosting competition and bringing down consumer prices.

The draft legislation is to be presented in July or September, EU officials said, arguing they had received a green light from EU leaders at the spring summit (8-9 March), which outlined new targets in the field of energy.

According to the summit conclusions, EU leaders approved "effective separation of supply and production activities from network operations, based on independently run and adequately regulated network operation systems which guarantee equal and open access to transport infrastructures and independence of decisions on investment in infrastructure."

They also agreed that any move towards unbundling should take account of the specific characteristics of the gas and electricity sectors and of national and regional markets.

The vague wording has once again proved right the old saying "the devil lies in the detail" however, as some EU capitals argue they have not committed themselves to any specific legal model yet.

"The summit did not call for ownership unbundling," one diplomat told EUobserver in response to the commission's legal plans, but added "it was not a surprising move," given that the EU's executive arm has been clear about its preference all along.

Member states themselves have been split into two camps on the issue, with, for example, the UK, Ireland and the Netherlands favouring the asset break up idea, but with France and Germany, home to energy giants EDF and E.ON, opposed.

During the summit, Austrian Chancellor Alfred Gusenbauer said that "property-oriented unbundling would not be a step in the right direction, given the current dependence on outside energy sources," adding "there is a danger of EU companies getting under control of extra-European forces."

Meanwhile, the commission seems to be taking full advantage of the EU states' wrangling, with its officials saying Brussels "is not going to give up the idea [of ownership unbundling] just because discussion has not finished yet."

Long legislative list

However, the proposal to unbundle EU energy companies is only one aspect, as Brussels foresees a long list of legislative steps following the adoption earlier this month of the energy-climate change package.

This year, for example, will see eleven different initiatives in the area of environment, eight in the energy field, two in competition and 13 initiatives falling under the external relations umbrella.

One of the most hotly awaited pieces of law - a directive on the use of renewable energy – is to be tabled in the third quarter of this year and will contain three chapters: on biofuels, on heating and cooling and on renewable electricity.

"The commission has a fair idea what is the renewable potential of each member state," EU officials said, but added the main task - how to get from six to a 20 percent share of green energies in overall EU energy consumption by 2020 – still needs to be figured out.

According to the commission, member states would not be given any medium term target but only one to be fulfilled by 2020. If they fail, the commission would start a regular infringement procedure.

Analysis

Lukashenka: End of an era?

The political spring in Belarus ended just as the actual season began, but greater changes loom after 23 years of dictatorship.

News in Brief

  1. Uber pulls out of Denmark over new taxi-regulation
  2. EU court validates sanctions on Russia's Rosneft
  3. Luxembourg to team up with Ireland in Apple tax appeal
  4. EU majority against GM crops, but not enough to block them
  5. Turkish referendum voting starts in Europe
  6. Le Pen says she lacks election funds
  7. UN dinner for Cyprus leaders to restart stalled peace talks
  8. Nato moves summit forward so US can attend

Stakeholders' Highlights

  1. ACCAG20 Citizens Want 'Big Picture' Tax Policymaking, According to Global Survey
  2. Belgrade Security ForumCall for Papers: European Union as a Global Crisis Manager - Deadline 30 April
  3. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  4. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved
  5. European Jewish Congress"Extremists Still Have Ability and Motivation to Murder in Europe" Says EJC President
  6. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  7. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  8. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  9. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  10. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy
  11. Party of European SocialistsWe Must Renew Europe for All Europeans
  12. MEP Tomáš ZdechovskýThe European Commission Has Failed in Its Fight Against Food Waste