Explanatory Memorandum to COM(2003)742 - Guidelines for trans-European energy networks and repealing Decisions No 96/391/EC and No 1229/2003/EC [ SEC (2003) 1369 ] - Main contents
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| dossier | COM(2003)742 - Guidelines for trans-European energy networks and repealing Decisions No 96/391/EC and No 1229/2003/EC [ SEC (2003) 1369 ]. |
|---|---|
| source | COM(2003)742  |
| date | 10-12-2003 |
With the accession of ten new Member States it is necessary to adapt the trans-European network (TEN) guidelines in particular addressing the position of Accession countries and allow funding for projects of common interest to the enlarged Union. This revision of the TEN guidelines includes the projects necessary to link the Accession countries to be a part of the internal market of electricity and gas.
Many projects connecting the Community with Accession countries already qualify for trans-European network funding. However, it is necessary, in the light of the speed with which the creation of a wider European electricity and gas market is being realised, to finalise the list of projects presently qualifying.
In addition to this revision made to include the projects of common interest for Accession countries, a similar approach is required with respect to neighbouring countries. The Commission Communication on Energy Policy and Neighbouring EU countries i addresses this need and proposes concrete actions and projects to be included in the TEN Guidelines. The progressive creation of a real European electricity and gas market, including potentially more than 35 countries with a population exceeding 600 million, should be a clear medium-term objective of the European Union. This market should be established on the basis of common standards regarding market opening, environmental protection and safety.
The Commission adopted in 2001 a Communication on European Energy Infrastructure i. In order for the wider European electricity and gas market to function effectively it is not sufficient that common rules and standards apply; it is equally necessary that adequate infrastructure exists linking the Member countries. In the 2001 Communication, a number of measures were put forward, including a 10% interconnection target for electricity and the priority for trans-European network funding to certain projects identified as being Priority Projects of European interest.
This Communication was welcomed by the Barcelona Council, which in particular endorsed the 10 % target. The Commission also proposed an increase in the existing 10% ceiling on contribution to the development stage of a project to 20% for Priority projects. This remains under discussion at the Council.
To permit such an enlarged European market to function effectively and to ensure the future supply of gas to the EU, construction of new infrastructure is necessary. It requires close collaboration between the Community and supply countries, as well as those involved as transit regions. The commitment, in financial and political terms of the EU to new development, reinforcing and diversifying Community gas supplies is vital in this respect.Gas is transported to Europe often from a long distance. The gas pipelines will separate more and more to two different categories: supply pipelines to bring gas to EU and internal pipelines to transport the imported gas inside the EU. Due to steeply increasing gas demand there is a constant need to build new supply pipelines. There has been little co-ordination and optimisation of the use of these internal networks until these days. With the accession and with the full implementation of the internal gas market, the meshed gas networks inside EU can be used in a more flexible way. Investments in internal pipelines in the EU will, however, still remain necessary.
Control of the critical energy infrastructures is, in turn, highly dependent on the security and reliability of the monitoring and controlling ICT infrastructures.
With respect to priority projects, it is considered appropriate to give the Commission the possibility to designate a coordinator for a priority axis or a priority project and to attribute a Declaration of European Interest to cross-border priority projects. These new tools are necessary in order to accelerate the preparation of projects and ease their way through the lengthy authorisation procedures.
It is also considered appropriate to integrate in this decision Decision 96/391/EC on a more favourable context for the development of trans-European Energy networks, as both decisions are defining guidelines for the same networks.
Contents
- 2. Accession states / Candidate countries
- Gas
- B. Baltic states
- Gas
- C. Islands: Cyprus - Malta
- 3. South-East Europe
- 4. Mediterranean countries
- 5. Russia
- 6. Ukraine and Belarus
- 7. Financing
- 8. Further promoting the priority projects
- 9. Declaration of European Interest
- 10. European Co-ordinator for specific projects
- 11. Simplification of legislation
- 12. Overview of the impact assessment
A. Central and Eastern Europe
Electricity
In electricity interconnections the EU has already a rather long history in connecting to the Central Eastern European countries. In the 80s connections with the East-European system was made through back to back converter stations. In 1995 the synchronous border of the UCTE i system was moved to the eastern border of Poland and Slovakia, integrating also the Czech Republic, Hungary and Slovenia.
The electricity market in the Central Eastern European countries (Poland, Czech Republic, Slovakia, Hungary and Slovenia) is in rapid development. The electricity consumption has decreased after the changes in Eastern Europe in the 90s but is supposed to increase in the future. Poland and Czech Republic have already for some time exported electricity to Germany and to Italy (through Slovenia) after the synchronisation of the UCTE and CENTREL i networks in 1995. The interconnectors towards Germany and Italy are currently saturated. This means that the full integration of Central Eastern European countries to the internal market of electricity can only marginally increase the flows at these interconnectors without capacity increase.
Increased capacity or new interconnectors between Germany and Poland/Czech Republic influences also considerably the internal German network. Increased wind power capacity in the Northern Germany needs to be transmitted towards south partly using the same lines as the imports from Poland and Czech Republic.
Austria has relatively weak transmission capacity due to alpine conditions and due to severe local resistance against new transmission lines. This has also prevented building new interconnectors to neighbouring countries. As a consequence, the internal network would become overloaded.
The major supply pipelines from Russia to Europe are routed through Accession countries (especially Poland, Slovakia and Czech Republic). The European meshed gas network reaches these transit countries. When they become now fully part of the Internal Gas Market, the network can be operated more efficiently. The need for reinforcements in the meshed part of the network requires a careful analysis taking into account the new market situation.
Electricity
The Baltic states (Estonia, Latvia and Lithuania) are electrically connected to Russia and there is no connection yet to any other present EU Member State or Accession country. The Baltic States have agreed to create a Common Baltic Electricity Market (CBEM). Successful technical tests have been made to separate the electricity system from the Russian system and run it in independent operation. This is, however, not currently economically feasible as it would require considerable amounts of control, reserve and back-up power which is currently provided by the Russian system.
Any future decisions on the possible interconnection of the EU and Russian electricity systems should fully take account of the interests of the enlarged Union, in particular those of the Baltic States. The Baltic States are preparing for integration into the internal electricity market. Two projects are the most advanced: Estonia-Finland undersea cable (Estlink) and Lithuania-Poland link (under the conditions highlighted by a recent feasibility study by European Bank for Reconstruction and Development (EBRD)).
Baltic States are at the moment supplied, mainly by one supplier, Russia. To have an alternative supply for gas in the Baltic market, a pipeline from Denmark through Poland to bring gas from the North Sea has been studied.
Latvia has large gas storage resources, which could be exploited by all Baltic States having thus strategic importance for the gas supply in the whole area. Lithuania has planned to build gas storage capacity to secure national supply. Contracting capacity from the Latvian storage could be an alternative.
Main gas pipelines from Russia towards Central Europe are not passing through the Baltic States. New pipeline projects might influence the supply situation in the Baltic area. The so-called North Transgas pipeline project from St Petersburg to Germany has possible branches to the Baltic States. This pipeline could provide a second source through reverse flow, when linked to gas resources in North-West Europe. A synergy between more gas transiting through the Baltic States and the upgrading of the Yamal pipeline could also be envisaged.
The electricity networks of Cyprus and Malta are not connected to the continental systems.
Natural gas is not available in Cyprus and in Malta. However there are plans to introduce natural gas in both Accession countries.
For Cyprus, new investment in Liquefied Natural Gas (LNG) receiving terminal or a connection to the Arabian gas pipeline will be needed in order to supply gas on the island.
For Malta, two projects have been considered so far: a dedicated gas pipeline from Sicily or a connection to the Libya - Italy gas pipeline.
The following projects have been identified in the Communication on Energy Policy and Neighbouring EU countries as being the most important that should attract Community political and possibly financial support the coming years to meet the objectives of creation of a regional electricity market and ensuring security of supply for gas:
Electricity projects to integrate the South-East Europe into the European internal market:
* Adriatic line through Mostar (Bosnia-Herzegovina) substation and through Elbasan (Albania)
* second line through Ernestinovo (Croatia) substation
Gas projects to improve the security of European gas supply:
* Turkey-Greece-Italy gas pipeline: interconnection via South-East Europe in order to bring gas from the Caspian Sea and Iran to the markets of the enlarged EU and Balkan countries. In addition reverse flow from Italy to Greece allows supply of Maghreb gas to the Balkan countries.
* Turkey - Bulgaria - Romania - Hungary - Austria gas pipeline.
The following projects have been identified in the Communication on Energy Policy and Neighbouring EU countries as being the most important that should attract Community political and possibly financial support the coming years to meet the objectives of creation of a regional electricity market and ensuring security of supply for gas:
Electricity projects to integrate the Mediterranean countries into the European internal market:
* reinforcement of the capacity between Morocco and Spain ;
* interconnection between Greece and Turkey ;
* interconnection between Algeria and Spain ;
* interconnection between Italy and Tunisia ;
* interconnection between Italy and Libya
Gas projects to improve the security of European gas supply:
* Supply of Spain and France from Algeria (Medgaz-pipeline),
* Pipeline from Algeria through Sardinia and possibly through Corsica to supply gas to Italy and France,
* The East Mediterranean Gas Ring, comprising 6 sections: Egypt - Libya, Egypt - Jordan, Syria, Lebanon, Cyprus, Turkey
* LNG export terminal in Egypt to supply the enlarged EU
The following projects have been identified in the Communication on Energy Policy and Neighbouring EU countries as being the most important that should attract Community political and possibly financial support the coming years to meet the objectives of integration to the internal electricity market and ensuring security of supply for gas:
Electricity projects to integrate Russia and other CIS countries of Europe to the European internal market:
* In the interconnection of the EU and the Russian electricity systems two options exist, non-synchronous connection and a synchronous connection. A non-synchronous connection, which permits a greater level of control over flows, allows a stepwise increase of capacity without major changes in the control systems of either of the networks. However, the interconnection equipment itself is rather expensive. The synchronous connection gives rise to a greater level of difficulty in terms of harmonisation of operational and safety standards than the non-synchronous one. However, the synchronous connection allows a substantially larger interconnection capacity to be created. A clear pre-condition to full interconnection between the EU electricity networks and those of the neighbouring countries is the determination that this would be subject to the respect of environmental and nuclear safety requirements and that this would in no way compromise the safety and reliability of both networks and electricity systems i. In 2003, a Conference of the Energy Regulators was held in Moscow and a Working Group has been established by Eurelectric and the Russian electricity operator to further study how the systems could be interconnected.
Gas projects to improve the security of European gas supply:
* The Northern trans-European gas pipeline project, approximately 1,295 kilometres long, which would transport Russian gas from the Russian coast north of St. Petersburg under the Baltic Sea to northern Germany and then onwards via the Netherlands to the United Kingdom. The ultimate gas source for this pipeline will be the new Stokman field, when developed.
* A second Yamal-Europe gas pipeline network through Belarus and Poland to run parallel to the first.
The Russian electricity system is synchronously connected to that of the other CIS countries. Thus, effective connection with Russia, and agreement on the trade, environmental and safety related issues mentioned above, would provide a sound basis for pursuing a similar approach with other CIS countries, and notably with Ukraine and Belarus, subject to the respect of environmental and nuclear safety requirements by these countries.
Regarding gas, an increase of the overall performance, safety and security of the Ukrainian gas transit network is an important task for Ukraine but also from the point of view of security of supply to the EU and should become eligible under the trans-European network mechanism.
The construction of new gas pipelines to supply the Community's future needs will necessarily originate from, or will transit, areas where political risk insurance is a precondition for attracting finance. Such insurance can be expensive. The participation of the Community in such costs, for projects clearly in the EU's interest, can be a real catalyst and incentive to the development of these networks. It is therefore appropriate to revise the TEN-Energy guidelines to make eligible all related projects. For those projects, the participation in the costs of such insurance should be possible under the Community financial regulation for TEN projects (EC No 2236/95) which should be exploited to its maximum possibilities as appropriate.
With respect to the mechanisms foreseen by the TEN-Energy Guidelines for boosting the preparation and implementation of priority projects, two further steps are put forward, namely the possibility for the Commission:
(i) to attribute the highest level of priority through a Declaration of European Interest to cross-border priority projects having significant impact on the integration of the networks concerned;
(ii) to appoint a coordinator for a given priority axis or for an individual priority project.
These new steps are proposed in order to tackle difficulties related to differences in timing, priorities and methodologies for analysing cross-border projects.
The presently observed lack of progress on a series of priority projects of energy infrastructure is correlated to obstacles in the authorisation procedures relating to the routing and the environmental consequences of the projects. Indeed, rising public objections to building of overhead high voltage transmission lines and substations considerably delay construction of much needed transmission infrastructure in the electric sector. The observed time span for the permit process including Environmental Impact Assessment (EIA) and appeals and for licensing varies between 5 to 10 years. This time span tends even to increase as a result of stronger public and political interest in projects.
Specific practices in authorisation procedures of various countries, such as Environmental impact studies, Public consultation meetings, Compensation to landowners, Right of Way, Special solutions i.e. compact designs etc., exhibit considerable differences and interrelated complexities. The actions to be tackled, their status and progress made can be represented only in quite involved logistic-type flow charts of the permit procedure.
In consequence, there is the need to streamline as appropriate the authorisation procedures for cross-border priority projects of high European interest, when several Member States are involved. To help to solve this problem, a Declaration of European Interest is introduced in this Decision.
Steps must be also taken to ensure that the Community puts into action the priorities which it chooses, through the use of its financial instruments. Naturally, therefore, the aid granted to the trans-European networks, notably from the Structural Funds and from the instruments for pre-accession, must give a priority to these projects, while complying with the specific rules and criteria for each of these instruments. The parallel proposal amending the TEN financial support Regulation No 2236/95 opens up the possibility for the priority projects, including their cross-border sections, of Community co-financing at a rate of up to 20% of the cost of projects.
Finally, given the adverse impact which delays or abandonment of certain stretches can have on the profitability of the work undertaken in other Member States on the same axis and on the financial interests of the Community, a mechanism should be introduced to give an incentive to keep to the timetables agreed. Therefore, this Decision introduces the possibility that the Commission could decide to withdraw the Declaration as a project of European interest in the event of long delays and absence of perspectives for implementing the project, after hearing the views of the Member States concerned on the reasons for the delays.
For some projects declared to be of European interest, or groups of projects, located on the priority axis, it should be possible to improve their preparation and implementation by creating a coordination team, in which the Community would take part, for the duration of the priority projects concerned. Such an approach, to be decided on a case-by-case basis, will require the cooperation of the Member States concerned.
Article 155 of the EC Treaty gives the Commission the role of taking any useful initiatives to promote coordination between Member States. It should therefore be in the remit of the Commission to designate a personality, in agreement with the Member States concerned, to be responsible for this coordination.
This European coordinator, designated for a project or group of projects, would encourage cooperation with users and operators, promote the projects amongst private investors and financial institutions, including the Community, and ensure that the necessary monitoring is carried out in order to keep the Community informed of progress so that, if necessary, measures can be taken to overcome any possible difficulties. The European coordinators will act in the name and on behalf of the Commission.
The European coordinators will be designated by decisions adopted by the Commission, after consulting the Member States concerned. These individual decisions will specify how the coordinator is to operate. These arrangements will be decided case by case and will therefore vary, depending on the circumstances. Designation of a coordinator remains only one possibility and will be reserved only for certain projects or groups of projects, depending on the coordination problems encountered.
Since their adoption in 1996, the TEN-Energy Guidelines have been split into two decisions, one taken by the Council and the European Parliament (Decision No 1254/96/EC now replaced by Decision No 1229/2003/EC) and an other by the Council (Decision no 96/391/EC). The reasons for such splitting do not exist anymore, since all the field of TEN is now governed by co-decision, although initially only the identification of the projects of common interest needed to be co-decided.
It is now appropriate to have only one decision on these guidelines, integrating in this single decision Council Decision No 96/391/EC of 28 March 1996 on laying down a series of measures aimed at creating a more favourable context for the development of trans-European networks in the energy sector.
The estimated amount of investment required in the period 2007-2013 for the construction of the priority projects for electricity and gas networks is around 28 billion (20 billion in the EU; 8 billion in third countries). An additional amount will be required in order to complete the other projects of common interest. These amounts of investment will be mainly provided by the energy networks operators and other private funds supplemented, where appropriate, by the European Community aid and loan mechanisms.
According to a initial examination of the priority and other projects of common interest included in this proposal, there will be socio-economic advantages in term of continuity and security of energy supply, lower costs (resulting from increased competition), regional development, integration of the Accession countries and other neighbouring countries (cohesion for wider Europe), protection of the environment (resulting from increased use of natural gas as a primary fuel). In consideration of the long life-time of energy network investments (from 20 up to 40 years), these advantages will remain for many years bringing key benefits to the European economy and society.
The Commission published extensive information and data on the envisaged revision of the TEN-Energy Guidelines and invited interested parties to make their point of view known.
In addition to the opinion given by the Infrastructure Working Group of the Energy and Transport Forum on 8 September 2003 (in favour of the integration of the Accession countries in the TEN-Energy guidelines), and to the request by CEFIC (the European Union Federation of Chemical Industries) to take account in the TEN policies of the need to establish pipeline networks for the transmission of Olefins (derived oil products), the Commission received 17 contributions from Electricity Transmission System Operators, European organisations (of electricity transmission; of gas/oil companies), energy companies, regional and local authorities and environmental groups.
To sum up, the contributions show significant support for the following:
* Security of supply is seen as the most important issue. In consequence, projects contributing to this objective should be given the highest importance.
* Projects declared of 'common European interest' should also receive top priority at national level. Furthermore, the effective realisation of these projects should be monitored and supported more strongly.
* There is a strong need to speed up the authorisation procedure for cross-border projects and to initiate a single authorisation procedure for TEN-E projects of European-wide interest.
* Stability and transparency of the legal framework are essential. There is the need to provide the right regulatory environment, with uncontroversial criteria, thereby minimising the risks for the investor.
However, contributions received from regional and local authorities and environmental groups strongly contested the implementation of an individual electricity interconnection priority project on the grounds of different energy priorities at regional level and risks for health and for economic and other activities in the area.