A group of leading NGOs active in the Balkan region are calling for urgent reform of the Energy Community Treaty, as its Ministerial Council prepares to meet in Kiev on September 23rd . The groups are calling for both the expansion of the environmental and climate component of the Treaty and measures to ensure that existing obligations are better enforced.
“Energy Community Treaty reform is a once in a decade opportunity to garner support for the EU’s neighbours to meet EU climate and energy targets”, said Garret Tankosić-Kelly, Principal of SEE Change Net Foundation.
“The New Climate Economy report demonstrates that sustainable development is only attainable through the joint action of countries at all income levels, particularly in the energy sector which is still the largest source of greenhouse gas emissions in the Balkans,” added Dragana Mileusnic of CAN Europe.
Recent changes in the European Commission structure, where high priority has been given to the concept of an Energy Union, under Vice-President Alenka Bratušek, are expected to lead to the EU strengthening its cooperation with the Energy Community in the following years, say the NGO’s.
“Governments in Contracting Parties must give EU environmental law as much importance as EU energy rules. Only with the stronger environmental rules can we ensure the creation of a fair common energy market for the EU and the Energy Community said Malgorzata Smolak of Client Earth.
Weak enforcement of Energy Community rules set forth in the Treaty remains one of the major obstacles for their full implementation, say the NGO’s. Strengthening enforcement must be the top priority of the reform, while more EU environmental legislation needs to be included in the Treaty, the NGO’s concluded. They also expect to be more effectively engaged in the work of the Energy Community to ensure better transparency and public participation.
Last week, the Energy Community, which represents Albania, Bosnia and Herzegovina, Kosovo, former Yugoslav Republic of Macedonia, Moldova, Montenegro, Serbia and Ukraine, published an Implementation Reportwhich assesses the progress achieved by the Energy Community Contracting Parties in implementing the Energy Community acquis communitaire in the period from September 2013 to August 2014.
This year’s report for the first time focuses on the performance of national regulatory authorities, in addition to providing a comprehensive overview of implementation of key EU energy legislation in the areas of electricity, gas, renewable energy, energy efficiency, oil, environment, competition and statistics.
“Strong and independent regulators is one of the crucial elements of the Third Energy Package, which will come into force on 1 January 2015 in the Energy Community. They are the backbone of well-functioning energy markets and act to ensure benefits for energy consumers and protect their rights,” explained Nina Grall, in charge of regulatory authorities at the Energy Community. “While the Energy Community landscape varies, all Contracting Parties will have to make substantial efforts to equip their regulators with the necessary tools foreseen under the Third Package.”
The independence of national energy regulators is subject to direct political intervention and is threatened by structural measures such as reduction in staff, budget and salaries concludes the Report. “Regulators which are not safe from political influence tend to be less proactive in liberalizing markets and thus fail to fulfil the role of motors of reforms assigned to them by the Energy Community Treaty,” explained Deputy Director Dirk Buschle. “In the Contracting Parties, the worst case observed so far concerns the head of the regulator of Moldova who was dismissed first on plain political grounds and then following dubious criminal proceedings. This case casts a bad light also on the national judiciary. But also the recent liquidation of the Ukrainian regulator by Presidential Decree and the dismissal of the Commissioners in office raises concerns.”
The same phenomenon applies to national competition and State aid authorities whose potential for market opening remains almost entirely unused under the given circumstances. In many Contracting Parties, national competition authorities have not opened a single case in the energy sector and state aid is frequently supervised by the same body that has granted it.
The Report also gives an indication of the progress achieved thus far in the implementation of the Third Energy Package. “This year we have witnessed an acceleration in the reform process related with the Third Package and I strongly welcome the opening of the electricity market in Serbia and partly in Macedonia. However, it remains to be seen whether all Contracting Parties will manage to stick to the deadline,” concluded the Director of the Secretariat, Janez Kopač. “Our monitoring shows strong signs that Serbia and Montenegro will implement the necessary legislation on time or only with slight delays, with Kosovo* not far behind. In Albania and the former Yugoslav Republic of Macedonia, draft legislation is only being discussed at this time. In Moldova and Ukraine, the discussions started only recently as both of them are still transposing the Second Energy Package. In Bosnia and Herzegovina, chances that the Third Energy Package will be transposed on time are small due to the fundamental opposition to state-level cooperation in parts of the country.”
“Energy efficiency is another area where we can see substantial progress this year,” added Director Kopač. “Countries are moving from merely adopting legislation to actual implementation of energy efficiency measures on the ground, including the roll-out of labels for energy related products in all Contracting Parties and the retrofitting of public buildings. The Secretariat is working hard with International Financial Institutions to channel funding into energy efficiency measures and create a sustainable market for energy efficiency. According to 2013 mapping, approximately EUR 1.1 billion is available for the Western Balkans from regional funds for energy efficiency and renewables projects in private and public sectors.”
The Secretariat supports the implementation of the Treaty through direct assistance provided to Contracting Parties but also through enforcement actions. Twenty-five individual cases against seven Contracting Parties for non-compliance with the Energy Community Treaty are currently pending. A case on the lack of unbundling of the Serbian gas companies Srbijagas and Yugorosgaz was referred to the Ministerial Council for decision at its meeting in Kyiv on 23 September 2014. The Secretariat also proposes sanctions against Bosnia and Herzegovina for its failure to adopt a state-level gas law.
The report can be downloaded here. As of October 2014, the Secretariat will for the first time provide monthly updates on the progress of implementation of the Energy Community acquis by the Contracting Parties on its website.
Editor’s Note
The NGO’s that support the call for reform are:
SEE Change Net Foundation, Bosnia and Herzegovina
Client Earth, Poland
Front 21/42, Macedonia
CAN Europe, Belgium
Analytica, Macedonia
Advocacy and Training Resource Center – ATRC, Kosovo
CEKOR, Serbia
Public Interest Advocacy Center – CPI, Bosnia and Herzegovina
Center for Environment, Bosnia and Herzegovina
DOOR, Croatia
Environmental Center for Development, Education and Networking – EDEN, Albania
Ekolevizja, Albania
Eko-Svest, Macedonia
Forum for Freedom of Education – FSO, Croatia
Fractal, Serbia
Green Home, Montenegro
MANS, Montenegro
World Wide Fund For Nature – Mediterranean Programme
CEE Bankwatch Network, Czech Republic