The internal energy market: key to a successful Energy Union

By Rick Van Assel

The European Commission on 18 November held its first ever State of the Energy Union. The statement was meant to give an update on the progression of constructing a European Energy Union. On that occasion, viEUws, an independent media organization that provides exclusive interviews and policy analyses from within European institutions, organized a debate on 30 November regarding this progress. “It is my dream to trade energy between Portugal and Finland, or between Ireland and Greece”, said Jerzy Buzek, president of the Industry, Research and Energy commission in the European Parliament.

The internal market lies at the core of the European integration project. Creating a European market where goods and services would flow freely across borders was the cornerstone of the treaty establishing the European Economic Community, which was signed in 1957 in Rome. Boundaries that intervened with the functioning of the internal market (such as customs fees) had to be removed.

The internal market that exists today lacks a very important element: energy. Making a simple comparison: a Spanish banana from Gran Canaria, which is a regular good for example, can travel freely across the European Union (EU) and be sold without limitations. Spanish solar energy on the contrary cannot do the same as the banana. Because there are still boundaries, both physical and regulatory, that impede energy resources to cross European boarders. Physical boundaries, on the one hand, imply that there is a lack of transport infrastructure (such as pipelines). Regulatory issues refer to the lack of a European body that possesses legal power to enforce the plans for this single energy market. It is still the 28 national regulators that hold that power.

Today, this issue is more relevant than ever. With the Energy Union, the European Commission hopes to achieve a sustainable, secure and affordable energy system. Therefore it indicated five priorities: ensuring security of supply, creating an internal energy market, improving energy efficiency, reducing emissions and facilitating research and innovation. “But the internal energy market is the foundation of all these pillars”, Anders Marvik said in the viEUws debate. Marvik is head of the EU affairs department of Statoil, a multinational oil and gas company. “Without an internal market, it would be very hard to achieve energy security or efficiency”, he continued. An internal energy market implies that energy flows through the EU without any limitations. This would indeed reduce import dependency, which at the same time would improve energy security.

Maros Sefcovic, one of the vice-presidents of the European Commission and responsible for the Energy Union project, stated that the EU should improve its work on the regulatory issues: “We need to work on the rules of an internal energy market and enhance cooperation between regulators.” According to Marvik, this will prove a more difficult task than investing in transport infrastructure, because member states will have to give up national power in order to achieve this goal.

When it comes to transportation, steps in the right direction have already been taken, as Jerzy Buzek noted. “Regional cooperation is effective”, he confirmed. The State of the Energy Union summed up some of the developments in the transport infrastructure part, such as a new electricity interconnector between France and Spain for example, or an agreement on the installation of a gas interconnector between Poland and Lithuania. However, these are just small steps forward and come nowhere near Buzek’s dream of trading energy between Portugal and Finland.

“I hope that we have solid fundamentals for the Energy Union, of which the internal market is a strong element, by the end of the term of this European Commission”, Sefcovic stated. Let us hope that the EU member states take the path of European integration, so that Spanish solar energy can have the same future as the bananas from Gran Canaria.