Competitiveness

Contents

Introduction

Energy has always been a major point of the European construction. The treaty of Paris signed in 1951, establish European Coal and Steel Community (ECSC). The aim was to create a common market for coal and steel among Belgium, France, West Germany, Italy and the Netherland, in order to neutralise competition between European nations over natural resources and ensure a good energy supply within those countries.

The implementation of the Energy Union strategy with a forward looking climate change policy was launched as one of the political priorities of the Juncker Commission in February 2015. The goal of the union is to make energy more secure, affordable and sustainable. It will allow a free flow of energy across borders and a secure supply in every EU country through one unique internal energy market.

The three phases in the deregulation of the market:

The first two phases, so-called free market, are following the adoption of Directive 96/9 2 of 19 December 1996 which established the principle of opening up sites of over 100 GW / year in national energy markets. Due to the limited success of this first Directive, it was repealed in 2003 and replaced by Directive 2003/54 / EC that aimed at speeding up liberalization. This is commonly referred to as "the second energy-climate package". In France, these two Directives have been included in National law through law 2000-108 of 10 February 2000 and 2004-803 of 9 August 2004, amended by Law No. 2003-8 of 3 January 2003 and Law No 2006-1537 of 7 December 2006.

EU Energy Markets Legislation : the 3rd package

The third package of energy market liberalisation rests on 5 pillars:

1. Unbundling
2. Independent regulators
3. Co-operation of National regulators
4. Cross-border cooperation of transmission operators
5. Open and fair retail markets

1. Unbundling:

Requires an ownership separation for electricity generation and transmission networks. Companies active in both generation and transmission are therefore required to split up. This forced split aims at increasing competition.

2. Independent regulators

Fostering a competitive energy market requires independent regulators. Among other aspects, regulators are required by law to run independent budgets and be able to impose binding decisions and penalties upon non-compliance.

3. Co-operation of National regulators

A new Agency, the Agency for the Cooperation of Energy Regulators (ACER), was formed to help national regulators coordinate the smooth functioning of an integrated energy market. The agency is independet of the European Commission, national governments, and energy companies. Areas of work for the agency include: deciding on cross-border issues in case of disagreement and monitoring e.g. retail prices.

4. Cross-border cooperation of transmission operators

National transmission system operators are responsible for ensuring electricity and natural gas is effectively transported through pipelines and grids.

Due to the cross-border nature of Europe's energy market, they must work together to ensure the optimal management of EU networks. This is done through the European Network for Transmission System Operators for Electricity (ENTSO-E) and the European Network for Transmission System Operators for Gas (ENTSOG). (Taken from: https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation)

5. Open and fair retail markets

Consumer protection is at the heart of the third package. Consumers should be enabled to freely choose or change their suppliers and be make decisions based on accurate information on what they consume.

Government intervention within the market

Governments and international accords intervene with structure of the energy market in Europe. Examples include the 2020-2030 Strategy or the Paris Agreement of 2015, as the first legally-binding climate change mitigation agreement.