Ed Davey says not thief-in-waiting

Davey DECC has replied to my 17 July question Is Ed Davey a thief in waiting? The letter says the UK is not advocating the confiscation of private property by way of cancelling ETS allowances already in market circulation. Full text herewith. Screenshot 2014-07-31 at 1.36.45 PMSome questions remain however.

First, why did the UK issue a vague policy paper when it could (or should) have issued a clearer one? Existing ETS allowances owners would have been reassured their property will retain its value. In turn, those in EU institutions could not be asked to vote against ETS reforms based allowance owners’ fears of being cheated.

Second, if the allocation of fewer ETS allowances needs new legislation (as most expect) wouldn’t it be helpful to say so now in clear terms so that different specific options can be compared?

  • For example, is the UK concept compatible with the EC proposal for a Market Stability Reserve (MSR)? (I suspect not.)
  • Is the EC MSR plan the right instrument with the wrong parameters? (I suspect so.)
  • How do the years up to and then after 2020 relate to each other?
  • Could the Linear Reduction Factor (Article 9) be adjusted in effect to soak-up the surplus in the market and if so from when?
  • Will UK table MSR amendments in the Council working group? If so saying what precisely?
  • What new legal provisions are best left for the main legislative proposal to be tabled in the new mandate?

Finally, if the UK reconsiders and changes its position, will it revise or replace its 16 July policy paper? I hope so.


At-a-glance: Italy Council agendas


Lasting until end 2014, the Italian presidency of the EU Council of Ministers follows a familiar pattern. The main meetings and main agenda points at each are listed below, based on a longer Council source document here.

Informal ENERGY Council, 6 October, Italy

  • Agendas for informal Council meetings are not published in advance. Italian presidency website here. The informal Environment Council was on 16-17 July.


  • 2030 framework

ENVIRONMENT Council, 28 October, Luxembourg

  • Climate UNFCCC COP21 Lima - conclusions
  • Greening European Semester & Europe 2020 strategy – Exchange views/conclusions
  • (AOB) 2030 framework – follow-up to EUCO 23-24 Oct

ENERGY Council, 9 December, Brussels

  • 2030 framework – policy debate
  • Internal Energy Market – conclusions
  • Europe 2020 – mid-term review
  • External relations – info from presidency & EC

ENVIRONMENT Council, 17 December, Brussels

  • Maritime MRV Regulation – political agreement
  • Waste Package – orientation debate
  • Post-2015 Development Agenda – public debate
  • (poss) Plastic Bags Directive – political agreement
  • (poss) Medium Combustion Plants Directive – general approval
  • AOB – NEC Directive – International – Incoming Presidency

Is Ed Davey a thief in waiting?


Copy email, 17 July 2014.

Dear Secretary of State,

I read with interest your new memorandum discussing ways forward on Europe’s greenhouse gas cap and trade regime (EU ETS).

While some UK positions are good ones, especially a more stringent annual linear reduction factor, nonetheless others require at least clarification.

In particular the call for “cancellation of an ambitious volume of allowances” already in the market is a particular concern since, without further explanation on how to do this, it suggests that the UK is proposing the confiscation of private property.

Once allocated, by auction or otherwise, ETS allowances are essentially assets owned by non-public undertakings. Under current law at least, such allowances can be ‘banked’ from year to year until such time as they are sold or surrendered.

Please could you provide an assurance that the UK is not in fact proposing the confiscation of private property by explaining alternatively how the EU legislator (Parliament and Council) could act to cancel allowances already circulating in the market?

Without such an explanation, maintaining an essentially unworkable policy proposal is I believe only a distraction from an otherwise important policy debate. More generally the UK’s climate strategy is weakened by playing a poor game at EU level.

Finally, since the rule of law and the potential confiscation of assets are important matters of public interest, I am also published this letter on my blog. In due course I will be pleased to publish alongside any reply you provide.

Thanks in advance for your attention to this enquiry.

Kind regards,
Mark Johnston
Brussels 1210

UPDATE 31 July: You can read DECC’s reply here.

EU energy law checklist

The following EU energy legislation (stricto sensu) as been adopted under Article 194 TFEU, which was introduced by the Lisbon Treaty and which entered into force on 1 December 2009. All links are links to EurLex database.







‘Health & safety’ laws under Chapter 3, Article 31, Euratom



IEM incomplete for sometime yet

Screenshot 2014-07-03 at 10.16.29 AM

It’s a safe bet to say that Europe’s internal energy market (IEM) will be ‘incomplete’ for sometime yet and that, to avoid further embarrassment, the stale rhetoric that it will be “completed by 2014” will, if not already, soon be consigned to the archives.

Good political leadership would have already clarified this a while back. But in the absence of that (and still in the presence of Oetti) a few notes here may be useful.

(Alternatively, you can read Oetti’s recent speech on the topic here, though he doesn’t defend any more the ‘by 2014‘ goal.)

Internal market is a given

First, while the internal market isn’t ‘complete’, it exists by virtue of the EU treaties, as well as by common rules and case law. This is not a facile point but a point of principle, since ensuring free movement of goods, services, people and money everywhere in EU territory must have a basic legal framework, which the treaties already provide. Derogations are generally temporary, but the four freedoms are permanent.

Therefore, in policy debates, saying that “there is no internal energy market” is at least lazy thinking and arguably is anti-European. To those doubting IEM progress in this way I say; wake-up guys, or you shoot yourself the foot and things really will start to fragment.

Second, under shared treaty competences, “common rules” in any sector are still only an “approximation” of the associated national laws. (Directives e.g. are directives to modify national rules.) In fields where the Union has not acted, national administrations remains free to do so.

The process of making common rules is often referred to “harmonisation”. Stop for a moment and think about the meaning of this word in its context. In the musical sphere, harmonise means not everyone is playing the same notes or even the same instrument but the combination of all notes and all instruments is still a pleasant and appealing one. The same concept applies in the internal market where common rules represent some but not all rules.

So who set that 2014 deadline?

Short answer; the European Council in February 2011 made a non-binding call (§4). What exactly did they mean? Primarily, it meant that full application of the 2009 (‘3rd’) legislative package (five laws) and especially new EU-wide Network Codes and Guidelines, i.e. the cross-border trading rules, were to be finished within four years.

In other words, EU heads of government, recognising the sluggishness of networked power and gas utility managers to deliver a complex collaborative project in good time, decided on putting a firm high-level behind the legislation already agreed.

This was the right thing to do at the time, for sure, but it only had a political effect and not a legal effect. If now we only finish the new network codes in five years and not four then that is not really a big issue.

3rd package was not end in itself

Of course the 3rd package is not an end in itself, only a means to an end, i.e. a more inter-operable Europe-wide market with all the benefits that brings (cost-effectiveness, reliability, etc.).

Neither was the 3rd package necessarily the last package. Indeed, it has already been followed (i.a.) by the 2013 infrastructure package, combining new rules and new money to help develop more inter-connections, and which is now being implemented.

The largest and most important questions in the new political mandates 2014-19 are what comes next, for example:

  • Might there be a fourth IEM package? If so, what would go in it?
  • Might there be a retail package? Would EC and ACER get more powers?
  • How will common trading rules fit with an emerging “2030” framework.
  • How will Energy Community countries integrate further with EU?

In short, the 2014 IEM “completion” deadline, even if only a high-level political push, was never in reality the end of the story. There’s lots more to do and the real work lies ahead of us.

Now, where’s a good Monnet quote when you need one?







Picking a president

looking back

Two terms and ten years of Kaiser José as Commission president are ending and so the time has come to pick his successor.

So far this debate has yielded more heat than light, with some political factions manoeuvring to shoe-horn in their own man. (So far it’s only men.)

Normally Europe works because the rule of law beats the rule of war. It’s hypocritical of Europeans to berate others for not respecting the rule of law (e.g. Russia) if we don’t first do so ourselves.

In appointing a new Commission president, the first question that matters is not a vague ‘who is a winner? but rather more precisely ‘what are the rules for doing so?

So, to help ensure clarity, here are the direct links in all EU languages to the procedure in Article 17(7) of the Treaty on European Union and its supporting declaration. The EN text is also shown in-line.

What is not written down is only imagined in the minds of men, which – as history often shows – is not without its dangers.

Article 17(7) TEU (= binding) - scroll down to paragraph (7)

BG български | ES español | CS čeština | DA dansk | DE Deutsch | ET eesti keel | EL ελληνικά | EN English | FR français | IT italiano | LV latviešu valoda | LT lietuvių kalba | HU magyar | MT Malti | NL Nederlands | PL polski | PT português | RO română | SK slovenčina | SL slovenščina | FI suomi | SV svenska

Screenshot 2014-06-07 at 11.22.34 AM

Declaration 11 (= additional guidance) - scroll down

BG български | ES español | CS čeština | DA dansk | DE Deutsch | ET eesti keel | EL ελληνικά | EN English | FR français | IT italiano | LV latviešu valoda | LT lietuvių kalba | HU magyar | MT Malti | NL Nederlands | PL polski | PT português | RO română | SK slovenčina | SL slovenščina | FI suomi | SV svenska

Screenshot 2014-06-07 at 11.29.15 AM




Ålands ruling due 1 July

ECJ outside

The Court of Justice (ECJ) has said it plans to deliver its judgement in C-573/12 Ålands Vindkraft on 1 July.

This is a significant case with potentially big implications for the internal energy market and ‘energy transition’, particularly if the Court follows the same line as a preparatory opinion issued earlier this year.

At the heart of the matter is the application of treaty rules on the free movement of goods inside the EU and if a part of the 2009 renewables framework law is consistent with these.

The initial dispute arose when a firm in Finland’s Åland Islands (see map) was refused access to a Swedish renewable energy support scheme, even though its output would have been grid-connected to Sweden.

Screenshot 2014-05-30 at 12.59.07 PM

Source: Wikipedia

Since the Swedish court felt it could not resolve the issue alone in 2012, it referred certain questions to the ECJ in Luxembourg. For earlier reporting, see Reuters 28 January and Reuters 17 March as well as the Court source documents linked above.

The case is more significant, I think, as the principles at stake apply also to other types of public intervention in EU energy markets. For example, some national administrations that are considering to expand system adequacy payment schemes must at least now ask themselves if they will permit generators in neighbouring territories to participate. Easier said than done. We see.