OPP Meeting Summary: EP ITRE Committee – Common rules for the internal market in natural gas (11 January 2018)

A summary of the committee’s consideration of the draft report is now available.

EP ITRE Committee – 11 January 2018
Common rules for the internal market in natural gas
·Consideration of draft report
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Rapporteur Jerzy Buzek (EPP, PL) presented the draft report

  • the aim of the Commission was to extend the scope of application of the gas directive to pipelines to and from third countries, including existing and future pipelines;
  • the ITRE coordinators decided to proceed on the basis of the ordinary legislative procedure;
  • it was already possible to table amendments since 8 January;
  • the most important goal of this legislation was a clear and consistent legal framework;
  • the original law had to be amended since there were diverging interpretations and a selective approach in applying the third energy package;
  • it was important to have a level playing field in view of the EU’s growing gas imports;
  • he wanted to underline four key issues
    1. in order to increase legal clarity, he specified territorial applicability of the directive by mirroring the exact wording of the preamble;
    2. the national regulatory authorities (‘NRAs’) should be entitled to fix or approve tariffs or methodologies which fully took into account all costs related to the operation of the infrastructure;
    3. the Commission should be duly involved in the process of granting any derogations from the provisions of the directive. It was necessary to ensure that such derogations would not be detrimental to the functioning of the Union’s internal energy market. Any derogation should also not exceed 10 years from the date of the entry into force from the new directive;
    4. given the limited scope and the technical character of the Commission’s proposal, he proposed that a three month transition period was sufficient.

Interventions by shadow rapporteurs followed

Patrizia Toia (S&D, IT) read out a statement by Dan Nica (S&D, RO)

  • the S&D was in favour of he proposal since it should guarantee the functioning of the gas market in Europe through the implementation of standards and strengthening solidarity;
  • the scope of the proposal should be limited to the implementation of the directive on gas, and for pipelines to and from third countries;
  • he urged for a clarification of the derogation for infrastructure and its limitation to 10 years;
  • it was of great importance to adapt a case-by-case-approach;
  • the provisions in the text related to NRAs and their communication with other authorities without receiving replies needed to be strengthened. They should still be able to take the decisions so a consistent legal framework, clarity and efficiency could be maintained.

Zdzisław Krasnodębski (ECR, PL)

  • the proposal went along with the expectations expressed by the ECR group in the plenary;
  • the rapporteur’s report went in a very good direction overall;
  • as far as derogations were concerned, he wanted to see a stronger role for the European Commission, including impact assessments for installations where a derogation might be granted with regard to the security of the single market, as well as with criteria such as analyses whether certain abusive market practices were used;
  • he concluded by noting that the situation in the Council was difficult. Another impact assessment was requested, which seemed unnecessary. The Nord Stream 2 pipeline was of symbolic importance: this project infringed the European values. Due to the coalition talks in Germany, there was a risk that the project would be continued. He appealed to all colleagues, especially those from the SPD (Social Democratic Party of Germany) to keep in mind those values and to do whatever they could to prevent Nord Stream 2 from happening. He hoped the developments in the Council would not delay the work on this file.

Fredrick Federley (ALDE, SE) read out a statement on behalf of Morten Helveg Petersen (ALDE, DK)

  • there were two key problems with the Commission’s proposal
    1. the current framework allowed member states (‘MS’) to grant derogations to new infrastructure projects (cf. article 36 of the existing directive). This loophole threatened to undermine the achievements of the winter package;
    2. the definition of interconnectors remained too weak;
  • he welcomed the rapporteur’s amendments, but thought they needed to go further to prevent MS from circumventing rules. They would table amendments to enhance this issue.

Claude Turmes (Greens/EFA, LU)

  • energy solidarity and security was an important aspect of energy policy too. There were two reports on that already, on intergovernmental agreements, and on ensuring Europe’s security of gas supply;
  • they were trying to correct historical mistakes;
  • the Greens supported the Commission and thanked it for having the political courage. The EP had the obligation to support the Commission and improve the text;
  • the Greens found the proposals by the rapporteur important. There was going to be a broad majority in the EP, but the Council would be tough.

Sofia Sakorafa (GUE/NGL, EL) read out a statement on behalf of Neoklis Sylikiotis (GUE/NGL, CY)

  • it was an important proposal. Time needed to be taken to evaluate it. Given the calendar, there was a dangerous situation. Despite the fact that the Commission had committed to carry out an impact assessment, there was not one. The GUE / NGL group urged for an impact assessment, especially with regard to the compatibility with international law. It was about removing the sovereign rights of third countries;
  • the specific features of each country had to be taken into account too;
  • he wanted to draw attention to the fact that the directive bore some problems for future pipelines and in relation to energy security;
  • the Commission had not made a convincing proposal;
  • the issue of consumer rights had not been taken into account either;
  • they would table amendments to try to remedy their issues.

Interventions by other members followed

Werner Langen (EPP, DE)

  • the Commission made a proposal which regulated a specific case;
  • he  understood the issue of maintaining the internal market in natural gas, but the Commission’s proposal impinged on the decision-making power of MS;
  • secondly, there had been no legal examination or impact assessment. With such an import change to legislation these steps could not be skipped. This did not correspond with democratic norms;
  • he would say the Commission had not listened to economic actors, the Bulgarian Presidency had given the task to the secretariat to present a report. The MEPs would have a deadline in the middle of January, but did not have time to have a hearing, or relate with experts;
  • he urged for a postponement of the deadline for amendments.

Reinhard Bütikofer (Greens/EFA, DE)

  • this was a German problem, since the government (not only the social democrats) ignored the impact on energy diversification and security of supply;
  • unfortunately, the Chancellor always stated that this was an economic project. He believed this was a highly political project. If the values of energy solidarity and security were not only paid lip service too, then ways had to be found via EU law to deal with those MS who ignored those values;
  • he knew that the leader of the EPP group shared the concerns regarding the project;
  • he wished that the EP would send a clear political signal.

Martina Werner (S&D, DE)

  • she did not think it was a German problem, but an interior Polish problem which was left to be solved at European level;
  • she did not understand why a whole directive had to be changed because of a few derogations. Such an important issue, which affected 65% of the EU’s gas supply, should not be dealt with so quickly in the committee. It could not be that amendments had to be tabled before there was a hearing with experts;
  • she also said it was unacceptable that there was no impact assessment;
  • time was needed to debate the issue and not to make political games with the Energy Union.

Paul Rübig (EPP, AT)

  • the energy charter was an important foundation for the cooperation with third countries. They wanted to create a system that ensured equality among MS;
  • the criticism related to impact assessments were justified;
  • comitology would play an important role in solving the issues.

Sean Kelly (EPP, IE)

  • it was important to state that in an ideal world, they would not rely on fossil fuels. But this was not an ideal world, and there were more gas imports to come in the future;
  • to ensure investor and regulatory certainty the framework had to be consistent;
  • the limit for derogations made sense. A level playing field had to be ensured, and working with the rapporteur and the Commission a balanced view could be found, which would contribute to the overall targets of the Energy Union.

Massimiliano Sailini (EPP, IT)

  • in the Commission’s proposal there was reference to the applicability of it to existing pipelines. This subject was complicated. Interconnection with third countries was a crucial issue, and politically very important. Today, there were existing pipelines, which connected the EU with third countries, that worked well. Some of those were in countries with low political stability. If the proposal was applied to interconnectors which worked well, there was a risk that the EU would create difficulties with regard to gas supply.

Krišjānis Kariņš (EPP, LV)

  • the EU was a bloc of about 500 million consumers. Goods sold into the EU had to abide by the European standards on health and safety. With services, it was a bit more complicated. Service provisions among MS even ran into problems, since there were different wealth and wage standards;
  • in creating the gas market, the aspect of third country provision of energy into the EU was never considered. The EU had fought against monopolisation and unbundled its gas markets. There should not be a monopoly on infrastructure, but there was a loophole in the current legislation with regard to infrastructure which starts in a third country but came into the EU. It was clear that at the border of the EU the infrastructure had to abide by EU rules. This is what this debate should be focussed on. Of course, the legislation was affected by monetary interest, but at that point one had to ask what was the thing they wanted to do, which was to create a coherent Energy Union.

Hans-Olaf Henkel (ECR, DE)

  • he did not recognise that this was a domestic Polish matter or conflict;
  • at the beginning of this story, there was a German scandal, that a former Federal Chancellor made a deal with the Russian government and was paid by them after he stepped down;
  • he agreed with Krišjānis Kariņš (EPP, LV) and thanked him for stating it so clearly. The internal gas market was a success of the EU.

Fredrick Federley (ALDE, SE)

  • he wanted to add to what Krišjānis Kariņš (EPP, LV) was saying: another reason for creating the market was to create energy security. After Nord Stream 1, his MS was threatened by Russian interests. They were creating a reason for Russian interests to protect their pipeline. This was creating an unstable situation on the Baltic sea. Russia would make sure that the integrity of their pipeline was protected, which had an impact on nation states around the Baltic sea. This was not a domestic Polish or German issue, but affected European security;
  • the electricity market was rather well-functioning in the Nordic areas, and this would be affected by an increased supply of gas to Germany. The perspective of the Energy Union had to be taken into account.

Werner Langen (EPP, DE)

  • he reiterated his request for a hearing on the development of the gas market, legal problems, international aspects once again, and to delay the deadline for amendments;
  • the reductions in the UK and the Netherlands and Norway would take place in 2030. Then, the reductions would be twice as large as the current Russian imports;
  • if all existing pipelines were adjusted to EU law, a hearing was needed;
  • he did not want to create a conflict, but rather have a factual discussion.

Klaus-Dieter Borchardt, Director of Directorate B ‘Internal Energy Market’ of DG Energy, European Commission made the following remarks

  • the Commission appreciated the support for the proposal in the draft report, and could support to a large extent the provisions which strengthened some aspects of the proposal, in particular with regard to the explicit reference to the territorial applicability, the alignment of the two cut off dates (date for determining what was an existing pipeline, and the determination of what was the ownership unbundling rules), and the role for the Commission when it came to derogations MS could apply to existing pipelines, as well as underlining that the decision-making power lied with the MS;
  • he was reminded of the debate in the Council working group, where some MS where fiercely fighting against the proposal. He had a problem with the intervention by Werner Langen (EPP, DE): just because there were many pipelines with other countries and there was dependency, the EU should not be expected to have to give away their right to expect that foreign pipelines abided by EU law. He thought that the laws should be enforced also in those areas where there was a dependency;
  • he could hear from many interventions, that the scope of the proposal was extended. What the Commission wanted to achieve was legal certainty regarding the operational rules of pipelines, which was to the benefit of all stakeholders, including the promoters of new pipelines. The Commission did not understand why they should privilege pipelines which started in a third country, whereas internal EU pipelines had to abide by the guiding principles of the third energy package. When transparency and third-party access was applied, security of supply and the competition in the upstream market was enhanced;
  • the Commission could explicitly say that whenever NRAs in the consultation period approached third countries and did not get a reply, they could go ahead. The Commission believed that a lot of existing pipelines already complied with the rules. The well-functioning of established gas routes should not be hampered; 
  • he agreed that if the existing derogations would be unravelled, this would have a negative impact. He insisted that it was important that MS remained in full power for derogations;
  • the proposal was about operational rules for pipelines, not about the construction of pipelines. Nord Stream 2 could be constructed, and this did not affect MS’ sovereignty to decide the energy mix, but if it was constructed, it had to abide by the rules;
  • he did not understand how this proposal could cause problems for future pipelines. He did not see any problems, since legal certainty was created;
  • regarding impact assessments, this was a specific case. The Commission had always taken the view that the guiding principles of the third energy package were general principles of law. The Commission was clarifying a legal situation, instead of creating new rules. That was why the impact assessments were not needed. This was not a fundamental change in the EU energy framework;
  • he recommended that Werner Langen (EPP, DE) read article 79(4) of the UN Convention on the Law of the Seas (‘UNCLOS’). That provision stated that it was the right of the coastal states to “to establish conditions for cables or pipelines entering its territory or territorial sea.” It was in the remit of the Council if it wanted a second legal opinion on this issue;
  • he welcomed the support the proposal had received. The Commission was prepared to give answers to questions.

Rapporteur Jerzy Buzek (EPP, PL) made the following closing remarks

  • it was an important, technical, and politically sensitive topic;
  • he underlined that the discussion on the Energy Union was also political. Its first pillar was security, not only of supply. No one should intervene in or influence the internal energy market;
  • the common market was the second pillar of the Energy Union and had been discussed since 2013. Some national competence would obviously be lost, if they relied on the Commission to help them with this issue. It should be taken into account, that if there was a common approach, some national competence would be lost;
  • each gas pipeline could be built on the basis of this directive. They just wanted to implement rules on third-party access, unbundling, tariffs, transparency and so on;
  • he underlined that the exclusive economic zone was an important issue to address. The compatibility with UNCLOS was important, since the EU was an independent party to the convention and as such was subject to rights and obligations. The proposal was fully compliant with this convention and its articles 56 and 79. Additionally, the Court of Justice decided in 2012 that the exclusive economic zone was part of the EU’s jurisdiction. There was strong legal certainty in this case;
  • he noted that there was no slot for a hearing.

Source: One Policy Place

The simultaneous interpretation of debates provided by the European Parliament serves only to facilitate communication amongst the participants in the meeting. It does not constitute an authentic record of proceedings. One Policy Place uses these translations so this text is only a guide and should not be relied on as an official account of the meeting. Only the original speech or the revised written translation of that speech is authentic.

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