© Shutterstock

After the 2015 Paris Agreement, sustainability has become the foremost consideration and a driver of any future energy policy. Its importance has also significantly increased in the Energy Community. When the Energy Community was created back in 2005, the main purpose and approach – the export of European energy acquis to non-EU countries – was still built on an “old-school” understanding of energy policy, based essentially on market liberalization and security of supply. Yet, the improvement of the environmental situation in the Contracting Parties was included as one of the objectives in Article 2 of the Treaty establishing the Energy Community. As regards climate change, however, the original Treaty in Article 13 only includes a rather lukewarm “recognition of the importance of the Kyoto Protocol” without any binding consequences. The Secretariat of the Energy Community proposed to update this provision as we believe that otherwise there is serious risk for the Energy Community to be decoupled from the global commitment to fight climate change. Upgrading the Energy Community in that respect is even more important as all Contracting Parties are signatories to the Paris Agreement

To be fair, even the Energy Community as it currently stands does not turn a blind eye to the fight against climate change. Besides an increasing amount of pieces of environmental acquis (with a strong focus on air quality), the Energy Community Contracting Parties are already under an obligation to implement the EU’s rules on energy efficiency and renewables with a similar level of ambition and binding effects as EU Member States. Moreover, some of the internal market rules such as the State aid prohibition have turned into tools with a considerable impact on the promotion of fossil fuels, which is reflected in the Secretariat’s infringement practice. The Regional Energy Community Strategy 2011-2021 also reaffirms the paramount importance of developing a competitive, secure and sustainable energy market, by increasing the uptake of low-carbon technologies and providing a transparent regulatory and market framework for attracting national, regional and international investments. More recently, on 14 October 2016, the Ministerial Council of the Energy Community adopted a Recommendation for Contracting Parties also to implement and align their legislation to the Monitoring Mechanism Regulation (MMR) Regulation (EU) No 525/2013. This may be considered a small yet very important step of the Energy Community into the domain of tackling climate change and assuming a role in the implementation of the Paris Agreement. 

© Shutterstock

Inside the Contracting Parties, progress in terms of transposition has been achieved already.  This includes, for example, the market for energy services in Serbia, or the adoption of the “Law on Promotion of the Use of Energy from Renewable Sources” in Albania, introducing for the first time a competition-oriented auction procedure for the allocation of future renewable energy capacities (supported by contracts for difference). Draft legislation on climate change is under preparation in a number of countries. A final draft of the climate change law has already gone through public consultation in Albania and is expected to be adopted by the end of this year.

At the same time, urgent catching-up is required in other areas. Most notably, renewable energy development in the Contracting Parties is still at an early stage, apart from large hydropower capacity. This stands in stark contrast to the vast untapped renewable energy potential in the Energy Community region, including about 98 GW of wind energy and 5.2 GW of solar PV, which could be deployed cost-competitively already today (IRENA, 2017)¹. Increased investments in renewable energy deployment and clean technologies could also boost the transition to a more sustainable economic development in the Energy Community region. Falling costs of renewable energy technology, large availability of natural resources like sun and wind and the interest of investors could be the perfect match for a succesful low-carbon energy transition and a real opportunity for sustainable job creation in the region. Still, many Contracting Parties perceive the low-carbon transition as a threat rather than an opportunity, in particular because of the energy-intensive industries and the conventional business and societal model they promote. Environmental and climate change consequences and costs are usually not internalized and the limited human resources capacity assigned to climate action in the relevant ministries remains a barrier to further progress.

© Shutterstock

More in general, the obstacle to be overcome in the first place is the absence of a holistic approach to the challenges posed by climate change; this is what the Energy Community is lacking on an institutional level as well as in its Contracting Parties. As the European Union, the Energy Community is part of a transition in which energy, environment and climate change policies are intrinsically linked and need to be addressed in a coordinated manner. The European Commission’s attempt to achieve this is the Clean Energy Package for all Europeans (November 2015), and in particular the proposed Regulation on Governance which follows a process-based approach. This package will be essential in fostering the pan-European energy transition and should be extended to the Energy Community immediately upon its adoption in the EU.

Given the challenges of implementing the Paris Agreement and the risk of regret investments, the Energy Community cannot sit back and without acting in the meantime. To start the action, during the Western Balkan 6 Summit in Paris (July 2016) and in the framework of the so-called Berlin Process, the Secretariat proposed a Sustainability Charter, including a set of regulatory, policy and practical measures on low-carbon development and climate resilience. Moreover, the first edition of the Sustainability Forum was launched by the Energy Community Secretariat and the Balkan Green Foundation on 9 June 2017 in Vienna, as a platform to discuss and brainstorm on how to better shift towards a more sustainable development in the Energy Community region. More importantly, the first Joint Meeting of Ministers responsible for energy, environment and climate change on 9-10 June in Dürnstein established the Climate Action Group (CAG), whose core objective is to coordinate the integration of energy and climate policies at national, regional and international level. The first meeting of the Energy Community Climate Action Group took place at the premises of the Energy Community Secretariat on 5 September 2017.

Summing up, it is fair to admit that until today, sustainability has been peripheral to most governments and institutions in the Energy Community. At the same time, a process of market reform, integration of and support to clean power sources and mainstreaming of energy and climate obligations is underway. Transition has been the Energy Community’s leitmotif throughout the past ten years. It is now about time to let sustainability and climate action take center stage in that transition.

“Transition has been the Energy Community’s leitmotif throughout the past ten years. It is now about time to let sustainability and climate action take center stage in that transition.”

“This package will be essential in fostering the pan-European energy transition and should be extended to the Energy Community immediately upon its adoption in the EU”

“Given the challenges of implementing the Paris Agreement and the risk of regret investments, the Energy Community cannot sit back”

Co-Author

Dirk BUSCHLE

Dirk Buschle is Deputy Director of the Energy Community Secretariat since 2011 and has led its legal unit since 2007. In this position, he is in charge of ensuring implementation of European energy law in the countries of the Energy Community. As Chairman of the Energy Community Dispute Resolution and Negotiation Center, he is also responsible for dispute resolution and negotiations and has acted as mediator in high-profile investor-state conflicts in the energy sector. He is a certified negotiation facilitator. Professor Buschle is also Dean of the Energy Community Summer School.

He is also Professor and Chairholder of the European Energy Policy Chair at the College of Europe in Bruges. He teaches the annual course “European and International Energy Policy and Governance” and organizes regular high-profile conferences on energy policy and law.

Prior to his current position, he was Head of Cabinet of the President of the Court of Justice of the European Free Trade Association (EFTA) in Luxembourg. The EFTA Court is the supreme judicial body for the EFTA States parties to the EEA agreement.

Co-Author

Irina Lazzerini    

Irina Lazzerini is an sustainable energy expert at the Energy Community Secretariat in Vienna. A sinologist, she has over 10 years of working and research experience in the field of international green policies, with a focus on Europe and Asia. Before joining the Energy Community, she was a research fellow on sustainable development at Tsinghua University (Beijing), policy officer within the European Commission Environment Directorate General (Brussels) and energy analyst at Enel Foundation (Italy).  She has managed projects on European and Asian emerging energy markets, climate change, access to energy, sustainable urbanization and energy security. She worked with UNIDO on green industry policy and co-authored several publications on energy transitions in cities with the European Institute of Comparative Urban Research. She cooperated with the Global Shapers of the World Economic Forum to a number of projects evaluating the impact of renewable energy solutions on off-grid households in emerging economies.