EEP:
HISTORICAL DEVELOPMENT AND
LEVEL OF INTEGRATION
Filip Černoch
cernoch@mail.muni.cz
Energy Policy of the EU
FSS MU
26.2.2014
Periods of development
1) The end of the WWII – 70s: first EC/EU institutions
2) 70s – first half of 80s: external difficulties
3) 84 – 95: common market started
4) 1995 – ...: new areas of communitarization – external dimension
and environmental issues. Completition of the (legaly based) EEP
2
Post-war period - ECSC
 51, resp. 52. De jure common market with
coal and steel.
 Coal represents approximatelly 80% of
TPER in Europe.
 R. Schuman and J. Monnet
 High Authority, Common Assembly,
Special Council of Ministers, Court of
Justice, Consultative Committee.
 Since 1958, the share of coal is decreasing
in favour of oil.
3
OECD – Europe: The overall energy
consumption, in %
1950 1955 1960 1965 1973
Solid
fuels
83 75 61 45 23
Liquid
fuel
14 21 30 59 55
Natura
l gas
Less
than 1
Less
than 1
2 3 10
Hydro
electri
city
2 3 3 3 6
Nuclea
r
0 0 Less
than 1
Less
than 1
1
Post-war period - EURATOM
 27. 10. 1957
 Weakened by the disputes between France
on one side and Germany and Italy on the
other
 Ended with a limited role of Euratom,
aspiration to create the common market
with nuclear materials died away.
4
"Our children will enjoy in their homes
electrical energy too cheap to meter... It is not
too much to expect that our children will know
of great periodic regional famines in the world
only as matters of history, will travel
effortlessly over the seas and under them and
through the air with a minimum of danger
and at great speeds, and will experience a
lifespan far longer than ours, as disease yields
and man comes to understand what causes him
to age.„
LL. Strauss - Chairman of the US Atomic Energy
Commission
European Economic Community
 „…to promote throughout the Community a harmonious, balanced and sustainable development of economic
activities, a high level of employment and of social protection, equality between men and women, sustainable
and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high
level of protection and improvement of the quality of the environment, the raising of the standard of living
and quality of life, and economic and social cohesion and solidarity among Member States.
 Articles 30 – 37 – removing of kvantitative restricions on import and
export, regulation of state monopolies.
 Articles 85-94 – regulates the relations between companies, state aid to
business, limitation of monopoly behavior
5
Legal arrangements
 First guidelines for a Community energy policy (1968)
 Common (energy) market
 Rules of competition, freedom of movement and establishment,
taxation..
 Security of supply
 Financing of investments, production capacities, research, reserves,
comercial policies
 Directive 68/414/EEC imposing an obligation on Member
States of the EEC to maintain minimum stocks of crude oil
and/or petroleum products
6
Periods of development
The end of the WWII – 70s: first EC/EU institutions
= The development facilitated and controled by governments, limited
powers and autonomy of supranational bodies.
= no agreement on serious tools to build common energy policy just
declarations
2) 70s – first half of 80s: external difficulties
3) 84 – 95: common market started
4) 1995 – ...: new areas of communitarization – external dimension
and environmental issues. Completition of the (legaly based) EEP
7
70s and 80s– Eve of the oil crisis
The dramatic rise of the West dependency on imported oil since 1955
 M. Gaddafi– he led other producers with an effort to limit the power of MNOCs.
 Raising the prices in 70, 71 a 73.
 Changing the existing system of setting the prices.
 Impact of OPEC - 70 Tripoli, 71 Teheran (40 cents).
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The „Old“
Seven
Sisters
Anglo-Persian Oil
Company (now
BP)
Gulf
Oil
Standard
oil of
California
Texaco Royal Dutch
Shell
Standard oil of
New Jersey
Standard Oil
Company of New
York
The
„New“
Seven
Sisters
CHINOPEC Gazpro
m
National
Iranian Oil
Company
Petrobras
(Brazil)
PDVSA
(Venezuela)
Petronas
(Malaysia)
Saudi Aramco
(Saudi Arabia)
Nationalization in period of 1970 - 1974
Saudi Arabia 0 % - 58,5 %
Kuwait 1,2 % - 55,1 %
Algeria 14,6 % - 76,9 %
Quatar 0 % - 60 %
UAE 0 % - 49,5 %
70s and 80s– Eve of the oil crisis
 Collapse of the Bretton-Wood system, stagflation, decreasing competitiveness.
 In 1971, R. Nixon basically canceled the convertibility of gold for dollars, it led to the
devaluation of currency and in 1973 the B-W system was terminated.
9
70s and 80s - First oil crisis
 23.8.73 A. Sadat + King Faisal considering the use of
oil weapon
 16.10. the producers raised the price of oil for 70%,
then limiting the export
 Following Nixon´s decision to support Israel, Libya
and S.A. introduced total embargo on export
 23.12.1973 the price rose again for 128%
 The promise of a negotiated settlement between
Israel and Syria was sufficient to convince Arab oil
producers to cancel the embargo in March 1974
 Results
 Stagflation and damaged economies
 Serious impact on the developing countries
 Physical shortage of fuels
 EC very limited role during the crisis
10
Legal assesment
 72/425 directive amending the Council Directive of 20
December 1968 imposing an obligation on Member States
of the EEC to maintain minimum stocks of crude oil
and/or petroleum products
 In 1975 attempt to restrict oil and gas use in power
generation
 In 1986 attempt to place a ceiling on EC oil imports and on
oil and gas use in power generation, and to promote energy
conservation and indigenous coal.
 = not legally binding, no discernible effect on decision
making.

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Periods of development
1) The end of the WWII – 70s: first EC/EU institutions
2) 70s – first half of 80s: external difficulties
= failure of spill-over, no integration to the other energy
sectors
= EC´s effort thwarted by MS. Bilateral policy at the expense
of common possition.
3) 84 – 95: common market started
4) 1995 – ...: new areas of communitarization – external dimension
and environmental issues. Completition of the (legaly based) EEP
12
Period between 1985-94
 New incentives for energy on the EC level
 Weak competitiveness of European industry
 Environmental concerns
 Disintegration of Soviet block
 First proposals to create the single energy market
 Not included in SEA 87, but some proposals introduced later
(The Internal Energy Market (COM88))
 Competition and transparency vs. national monopolies and closed
markets.
 The aappearance of environmental concerns (carbon tax)
 Long-term supply security – Gulf War, collapse of the Soviet
Union (Energy Charter Treaty)
13
90s: beginning of EEP
 Maastricht Treaty (The Treaty on the EU) – article 130s
and 129.
 Article 130s
 By way of derogation from the decision-making procedure provided for in paragraph 1 and
without prejudice to Article 100a, the Council, acting unanimously … shall adopt:
 - …
 - …
 - measures significantly affecting a Member State's choice between different energy sources
and the general structure of its energy supply.
 The Council may, under the conditions laid down in the preceding subparagraph, define those
matters referred to in this paragraph on which decisions are to be taken by a qualified majority.
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90s: beginning of legaly formalised EEP
 White Paper: An Energy Policy for the European Union, 1995
 „The Commission thus feels that it is essential for the effectiveness of the policies conducted at
national level, that the responsibilities deriving from energy policy should form part of common
aims that have been defined at Community level. The Commission is thus prepared to use all of
the provisions of the Reaties to that end in order to establish..a framework for discussion of energy
policy…“
 Green Paper - Towards a European strategy for the security of
energy supply, 2000
 Treaty of Amsterdam (97), Nice (01) – no changes
15
Legaly formalised EEP
 Green Paper 2006 – A European Strategy for Sustainable,
Competitive and Secure Energy.
 Completing the internal European electricity and gas markets
 An internal energy market that guarantees security of supply through solidarity
between MS
 Raising security and competitiveness of energy supply
through more sustainable, efficient and diverse energy mix
 An integrated approach to tackling climate change
 Encouraging innovation
 An external energy policy.
2007 An Energy Policy for Europe (Communication)
16
Fourth period – a new millennium
 An Energy for Europe: COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN COUNCIL:
 Energy and climate package
 A 20% reduction in EU greenhouse gas emissions from 1990 levels;
 Raising the share of EU energy consumption produced from renewable resources to
20%;
 A 20% improvement in the EU's energy efficiency.
 + EU ETS (2009/29/ES) + CCS (2009/31/ES)
 Third liberalization package
 Unbundling
 Promotion of an internal energy market and the removal of restrictions to trade between
MS
 Agency for Cooperation of Energy Regulators (ACER) + European Networks for
Transmission System Operators
 The protection of the consumers have to be strenghtened
17
Ongoing activities
 Treaty of Lisbon (2007)
 Head XXI: Energy:
 (a) ensure the functioning of the energy market;
 (b) ensure security of energy supply in the Union; and
 (c) promote energy efficiency and energy saving and the development of new
and renewable
 forms of energy; and
 (d) promote the interconnection of energy networks.
 article 122 (former 100) : Without prejudice to any other procedures provided for in the Treaties, the
Council, on a proposal from the Commission, may decide, in a spirit of solidarity between Member States,
upon the measures appropriate to the economic situation, in particular if severe difficulties arise in the
supply of certain products, notably in the area of energy.’
18
Latest development
 Energy 2020 - A strategy for competitive, sustainable and
secure energy
 The EU´s Energy Roadmap 2050
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Periods of development
1) The end of the WWII – 70s: first EC/EU institutions
2) 70s – first half of 80s: external difficulties
3) 84 – 95: common market started
4) 1995 – ....: new areas of communitarization – external dimension
and environmental issues. Completition of the (legaly based) EEP
EC prevails over MS, esp. in the area of common energy market and later on in
environmental issues. Strong autonomy regarding the legislative proposals.
20