This document discusses the history and development of EU energy policy. It notes that while the idea of a common European energy market was initially based on coal and nuclear energy cooperation in the 1950s-60s, a single energy policy has been slow to develop. Recent conflicts have highlighted the need for energy independence and diversification. The document outlines key steps in EU energy policy over time, including the establishment of emissions trading schemes and renewable energy targets. It also discusses the need for greater physical interconnectivity between some EU member states' energy infrastructure and common energy sector regulations to fully achieve a single energy market.

1. Eastern Macedonia and Thrace
Institute of Technology
School of Engineering Technology
Department of Petroleum & Natural
Gas Technology
MSc in Oil and Gas Technology
Course Assignment: EU Energy Policy
Course Leader: Kalampouka Popi
Team:
Banou Kristi-Monika
Kastidou Despina
Koumoulidis Nikos
Trevezas Simon

2. Introduction
One of the most important issues all over the world is energy. Especially in Europe
because is lucking the volume of demand. What Europe produces is only a small
percentage of the hall demand. This makes Europe the biggest importer-customer all
over the world. But to be a consumer has it risks. Suppliers can have various demands
and instability on their loyalty of their trades. This is a main reason why EU feels that
is obliged and logical to act as an individual. To secure contracts, to bring alternative
solutions and to become strengthen – up to demand – costumer. Despite the Single
European Act in1987 when we had the opening of internal borders, for free movement
of people-money-goods and services, EU energy policy is still to be developed. Main
idea is to achieve a single European energy market.
To this principle drives the Treaty of Lisbon. All countries will have to switch and
follow new market rules like CO2 emissions trading scheme, renewable technological
development and sustainability reports to achieve the decrease EU’s damage to global
warming and to the environment (Article 194 of the Treaty on the Functioning of the
European Union – TFEU).
From the 18th
century – industrial revolution – Europe demand in energy was vital
under the solution of coal. Today oil and (in some years) gas are overlapping coal.
But all these three products are not environmental friendly – under today’s technology
of exploration, exploitation and production – and combined to the mandatory reduce
of the CO2 emissions, EU developing of a single energy market in community seems
the best reaction despite the lack of interconnection between some members.

3. History
The idea of European Union was basically based on energy issues although
sometimes like in the borders opening in 1987 this idea was somehow lost till today.
Last years the problem of energy demand (increased and prediction saws further
increase) and energy suppliers (high instability with Russia – Middle East) has
brought back in political agenda the energy issue.
All started in 1951 with the Paris treaty, where European coal and steel Community
was established.
Few years later in 1957 in Rome treaties came the European atomic energy
Community establishment.
Later in 1970s we had the birth of the idea in developing alternative energy resources.
This need came from the oil crisis at that time that the world was facing.
Today, with the latest conflicts between Russia and Ukraine, EU is focusing to solve
the dangers from having a single energy supplier. Is trying its independency by
increasing the volume of suppliers, by connecting its members to achieve better and
more stable contracts with existing suppliers and to develop and start producing its
own wells. Also to increase the alternative energy sources.
First recognized effort, made in 2000, with the issue of Green Paper entitled Towards
a European Strategy for the Security of Energy Supply. This Green Paper was a try for
energy security strategy.
Second Green Paper named A European Strategy for Sustainable, Competitive and
Secure Energy came in 2006. Despite the fact that the first Green Paper was
something like vision of EU’s external energy policy the second seems to becoming
the foundation for this future policy. The 2000 Green Paper had three main objectives:
 Security of energy suppliers
 Competitiveness of energy market and
 Sustainability in energy resources
On the other hand 2006 Green Paper had six main objectives:
 Security of energy suppliers – external policy
 Competitiveness of energy market and the internal energy market
 Sustainable development
 Innovation and technology
 Solidarity and
 Diversification of energy mix

4. 1. Europeanization
Europeanization is a vision and a mission for its members. Some grounds reached on
this connection like: borders opening for free people movement, common security
immigration and agricultural policy, euro but not a common energy policy yet. Some
steps are recognized on this direction like Green Papers but actually the most
developed aim is the sustainability under the climate change issue. By this EU
member states have committed a 20% reduction of CO2 emissions by 2020 compared
with 1990 (The European Commission, 2007). The most important step of acting
based on this commission was the establishment of Emissions Trading Scheme
(European Commission, 2009). By this all EU country-members have to monitor CO2
emissions on the EU level. Can trade between them greenhouse gas emissions
(Directive 2003/87/EC) in order, for members and EU, to meet the commitments of
Kyoto Protocol.
In addition to that, the EU has agreed on the aim to expand its renewable energy
sector and reach 20% of total energy consumption; 21% in electricity and 10% in
fuels by 2020 (European Commission, 2009).
The Commission has adopted Regulation (EU) No 920/2010 for the establishment of
a system of standardised registries in the form of electronic databases for monitoring
the issue, holding, transfer and cancellation of allowances. These registries will also
guarantee public access to information, confidentiality and conformity with the
provisions of the Kyoto Protocol.
The Commission will nominate a Central Administrator to maintain an independent
transaction log recording the issue, transfer and cancellation of allowances at
Community level. The Central Administrator will conduct an automated check on
each transaction relating to allowances. If irregularities are identified, the transactions
in question will be suspended until the irregularities have been corrected.
Each year, the Member States will submit to the Commission a report on the
application of this Directive.

5. Agreements may be made to provide for the recognition of allowances between the
European scheme and compatible mandatory greenhouse gas emissions trading
systems with absolute emissions caps established in any other country or in sub-
federal or regional entities. Non-binding arrangements may be made with third
countries or with sub-federal or regional entities to provide for administrative and
technical coordination in relation to allowances in the European scheme or other
mandatory greenhouse gas emissions trading systems with absolute emissions caps.
2. Two levels of interconnection between members
On the physical level of energy interconnectedness it is interesting to note, that there
still exist energy islands in the community such as the Baltic State, Ireland and Malta,
that are either linked only with energy sources outside of community borders or lack
these links at all (European Commission, 2006a). In addition to that, there is still
limited consent on energy sector laws and regulations as all the member states pursue
individual energy policies. Without shared legislative ground and physical
interconnectedness of energy links it is extremely hard and even impossible for a
single energy market to work (Wyciszkiewicz, 2007).
2.1 International interconnections (Examples for Greece and Spain)
The examples are about electricity and transportation.
The Interconnected System Transmission is responsible for:
 Ensuring the long term ability of the system to meet reasonable demands for
electricity transmission.
 Contributing to security of the country's supply through adequate systems of
transport capacity and reliability.
 Managing energy flows on the system taking into account exchanges with
other interconnected systems.

6.  Ensuring non-discrimination between system users.
In Greece the Interconnected System Transmission connected with the system of
transmission of Albania, Bulgaria, FYROM, Italy and Turkey.
The interconnection with the Bulgaria consists from a line of 400KV while the
interconnection with the FYROM becomes with the two lines of 400KV after the
recent upgrade of line of 150 KW in 400KV. The interconnection with Albania
consists from a line of 150 KV and a line of 400KV.
The overall rated capacity these of interconnection is about 4.400MW
The interconnection with Italy consists from submarine cable and Transmission Line,
DC (HVDC) power 500MW. The interconnection with the Turkey completed the June
of 2008 with the construction Transmission Line 400 KW single circuit with triplet
duct (2000MVA).
From October 2004 the Greek System Transmission reunited and operates modern
and while with the Interconnected European System of UCTE (Union for
Coordination Transmission of Electricity).
The more interconnections in combination with the implication of interconnections of
neighboring countries to north of Greece contribute significantly to security operating
of system Transmission and to development of commercial exchange electricity
energy with this countries and the wider region of N.D. Europe.
Spain has interconnections with France, the Portugal, Morocco and Andorra
(negligible). In France, the Spanish electrical system is connected to four point’s as
along the natural border between the two countries. Tree of the four lines are in the
Basque Country, in the province of Gerona. The fourth interconnection constructed
recently with a line total length 64.5 Km joining cities Baixas in France to Santa
LIogaia in Spain. As a result they had the doubling volume of the power deal overall.
So from 1400 MW 2012 transactions totaled 2800 MW. With the new interconnection
there is greater stability and certainty to provide electricity throughout Europe.
This new manufacturing line is a special case both because of the morphology of the
area and because of the technology used. Of the 64.5 Km total length 8.5Km cross the

7. Pyrenees Mountains through tunnel. It is also the first world wide transmission line
where direct current rather than alternating in 320KV.
On the other side of the country, the situation with Portugal is more favorable. There
are seven interconnections with the Portuguese electrical system spread from north to
south with an average trading volume at 2500 MW.
Finally Spain interconnected with Morocco with two undersea cables with a total
power of 800MW. This is the first European liaison effort with the countries of North
Africa
3. Vision of interconnection between members (supporters and black
sheep)
Still in 2014 the vision of interconnection between EU member states is extremely
hard. There are supporters that do open their energy sector for single market. This
means vertical disintegration of single energy company, controlling whole sector,
being separated into distributing, transmitting and energy producing companies. Like
this UK and Denmark lead such disintegration and even privatization of their national
energy companies.
On the other hand we have France that state still remains the owner of its energy
companies. Also Germany, which is still continue to increase its coal generation.
Even though these two are both major industrial powers of Europe, they keep
continue to resist and overpass the pressure of the European Commission.
An important factor of this pessimistic, about interconnection, situation is the fact that
energy base varies among members. Although most are using oil and gas, there is
France with nuclear power, Sweden with renewable energy sources and Poland and
Czech that are extracting energy from coal.
4. Security supply ensurance
Europe in general is, globalised, the biggest importer of energy products. In times of
energy crises and to avoid uncertainty future suppliers EU members, under the Union
umbrella, must act like one major consumer. That means to follow, all its members,
same energy policies in order to create or strengthen partnerships with energy
suppliers.
For example Natural gas is an essential component of the energy mix of the European
Union (EU), constituting one quarter of primary energy supply and contributing
mainly to electricity generation, heating, feedstock for industry and fuel for
transportation.

8. Gas consumption in Europe has rapidly increased during the last 10 years. With
decreasing domestic production, gas imports have increased even more rapidly, thus
creating higher import dependence and the need to address security of gas supply
aspects.
Regulation (EU) No 994/2010 concerning measures to safeguard security of gas
supply and repealing Council Directive 2004/67/EC
4.1 Why ensurance is needed
The prediction of EU’s dependency on imported energy from the suppliers is that by
2020 the imports will rise to 70%.
Also to consider that there are only three gas suppliers for EU, Russia-Norway and
Algeria. At the moment Russia is the greatest supplier by covering 42% of EU’s gas
imports.
Since gas can be transferred only via pipelines Russia’s main gas export destination is
EU. But with the latest conflicts between Russia and Ukraine the whole import-export
relationship signifies uncertainty. So EU’s- Russia relationship titles as mutual.
That’s why future energy supply is needed to be secured by EU energy policy.

9. 4.2 Energy diversification: The Nabucco project
Since voices for possible dangers with Russia are getting stronger members act in
order to diversify energy supply sources. That’s why most of the members are
supporting the new pipeline project that will bring gas from central Asia and Middle
East, the Nabucco project.
This new pipeline will pass through Turkey and Southeast EU’s states.
On the other hand, a recognized EU’s black sheep, Germany is acting on its own. Is
developing, in corporate with Russia, the Nord Stream project. Like this Germany will get gas
directly from Russia with a new pipeline system that will pass under Baltic Sea.
Its easy to understand that, acting like this, EU’s energy security policy against suppliers will
remain a vision for years or decades, despite the fact that many Baltic members are against
the project providing environmental dangers.
4.3 LNG Ensurance
An alternative for EU’s energy security situation comes from Liquefied Natural Gas
(LNG). The transportation of this product – similar to oil – in combination with
terminals constructions provides alternatives for country-members to diversify from
the main suppliers.
This provides new strategy following the EU’s security energy.

10. 5. Regulations and legislations
Despite these facts EU is still trying to unite, especially the supporters, under energy
policies-laws and to pressure black sheep’s to follow. Concluding EU is establishing,
mostly sustainability, rules and obligations. Some examples of the last year (2014):
 The European Commission (EC) is responsible for ensuring EU law on
energy matters is correctly applied. It has the power to take legal action
against any EU country that fails to comply and can refer them to the
European Court of Justice.
 The Commission has formally requested Romania to ensure full
compliance with EU rules on security of gas supply. The EU Security
of Gas Supply Regulation (EU) No 994/2010 aims to ensure that
Member States are well prepared to deal with possible supply
disruptions.
 The Commission has today formally requested Bulgaria and Hungary
to ensure the full transposition of the Energy Efficiency Directive
(Directive 2012/27/EU). Under this Directive Member States must
achieve certain energy savings over the period from 1 January 2014 till
31 December 2020. They have to do this by using energy efficiency
obligations schemes or other targeted policy measures to drive energy
efficiency improvements in households, industry and transport sectors.
 The Commission has today formally requested Greece to take action to
fully comply with its obligations under the Energy Performance of
Buildings Directive (Directive 2010/31/EU). Under this Directive
Member States must define the minimum energy performance
requirement for buildings and building elements, calculate the cost-
optimal level how to get there and notify this information to the
Commission.
 Today the Commission has formally requested Belgium, Luxembourg,
Latvia, The Netherlands and Slovenia to take action to ensure full
compliance with their obligations under EU legislation on oil stocks.
The Oil Stocks Directive (2009/119/EC) requires Member States to
maintain stocks of crude oil and/or petroleum products equivalent to at
least 90 days of average daily net imports or 61 days of average daily
inland consumption, whichever of the two quantities is greater.
 Energy efficiency in buildings: Commission refers Poland and Austria
to Court and proposes fines [IP/14/813]
 Energy efficiency in buildings: Commission refers Belgium and
Finland to Court for failing to fully transpose EU rules
 The Commission has today formally requested Lithuania to bring its
national law in line with the EU Energy Services Directive
(2006/32/EC) as regards heat and hot-water metering and billing.

11.  Security of supply: Commission is referring Cyprus to the Court for
failing to transpose the EU rules on minimum oil reserves [IP/14/156]
 Internal energy market: Commission refers Ireland to Court for failing
to transpose EU rules [IP/14/155]
The European Commission had set out the plans in the document ‘Guidelines for
trans-European energy infrastructure’ published in October 2011, aimed at ensuring
energy networks and storage facilities are completed by 2020 and provide necessary
EU financial support for projects.
6. Renewable Energy
A decrease to imported fuel costs has taken place & is translated to at least 30
billion/year of Euro. In 2012, energy from renewable sources was estimated to
have contributed 14.1% of EU final energy consumption and the future goal for
2020 is to reach the objective of 20%. For the long future of 2030, the
Commission has proposed an increasing to the percentage of renewable energy
to the minimum of 27%.
The remarkable issue is that there is a plan of reducing the natural gas usage by
a replacing it with a cost-effective potential on renewable electricity and heating.
For example between 2012 and 2020 by a fuel-switch to indigenous renewable
heating sources significant amounts of imported fuels could be displaced.
Renewable energy is a really promising option but the cost matters are under
concern as like the impact on the functioning of the internal market. Having
reduced the technology costs, many renewable energy sources seem to be very
competitive & ready to enter the market (e.g. onshore wind power).
Their large scale integration will require smarter energy grids and new energy
storage solutions but a there is a need of consideration of the capacity
mechanisms at regional level. The new Guidelines for environmental protection
and energy 2014-2020 are promoting a more cost-effective achievement of the
2020 national renewable energy targets.
What are the most common renewable technologies?
 Wind
 Solar photovoltaic

12.  Biomass
 Geothermal
 Hydro
 Concentrated solar &
 Solar thermal
In order to achieve a stable and sustained diffusion of renewable energy technologies
must be underlined the importance of a clear and reliable policy framework in order
all the factors to work effectively. For example important factors that represent the
maximum possible number of attributable points for renewable are political
framework, economic framework & less relevant like market structure, grid regulation
and administrative processes.
7. Performance of EU support policies for renewable &
evaluation of EU renewable policy
The effectiveness and economic efficiency are indicators that measuring with great
succeeds the policy performance. On one hand the effectiveness indicator compares
the first round of renewable sources existed with the overall amount of renewable that
are able to achieved until 2030 & also in what level the support policies causes
involvement. On the other hand the economic efficiency indicator compares the
support payments to the actual generation costs, as a high level on profits might mean
an overcompensation so to be actually economically inefficient, in the exception of
the support payments being above moderation costs so a supported policy on that way
is considered as an efficient one.
European Commission and the International Energy Agency are using regularly the
generation costs, including the initial capital, as well as the costs of operation and
maintenance as indicator.
The following points are evaluating, the actual deployment of renewable for the
period 2007 to 2014, the technology costs & the development for the potential of

13. sponsorships. The upper mentioned indicators have been calculated for 28 member
states and 14 technologies in the electricity, heat and transport sector, but as well as in
solar PV and wind onshore.
• For solar PV, the policy effectiveness increased until 2011 and has since remained
at a stable level
• The trend for economic efficiency is less clear: technology costs have decreased
significantly since 2007 (-59%). However, the adjustment of support payments was
not fully synchronised with this decrease between 2010 and 2012. This changed again
after 2012, suggesting an improving economic efficiency in recent years.
• For onshore wind power, the policy effectiveness has been rather constant over the
years with a slight decrease during the economic crisis in 2009-10, which is contrary
to the often-stated view that the deployment of renewable was unaffected by the
economic crisis
• Technology costs slightly increased between 2007 and 2009, primarily due to the
fact that material costs were on the rise in that period (e.g. steel). Since 2010,
decreasing technology costs can be observed.
• Overall, payment levels have been adjusted to follow the cost trend.
However, falling onshore wind power costs after 2010 have not been reflected
adequately in all EU member states. This suggests a period of decreasing efficiency
which was, however, preceded by a period of low profit levels in 2008-09 caused by
increasing material prices.
A need for constant monitoring technology costs and frequent adaption support
payments in rapid response to changes in costs seems to be necessary. This is a solid
measure to avoid overcompensation with the help of a stable and reliable support
scheme for ensuring high effectiveness.
Furthermore the automatic payment cuts based on transparent criteria are more
effective than payment cuts that have to be adopted in a parliamentary process, but to
notice that high level on profit do not recommend and a strong market growth.

14. CONCLUSIONS
Energy Policy is one of the most important issues for the European Union because is
the key factor that influences the social-economic environment of the countries.
Industries and citizens are deeply affected financially by energy. Industries are highly
independent from energy cost because it determines the raw material, the final
products prices and finally the sales. On the other hand, citizens are in a constant
demand for energy to cover their needs. Moreover, energy consumption increases the
environmental impacts which are caused by our emissions (industrial or urban). For
that reason, it is necessary to reinsure that energy supplies are uninterrupted and
energy prices remain stable in order to create a sustainable future for Europe and also
for the world.
Europe is the biggest energy importer because it has not the ability to produce the
energy required. Specifically, it imports 53% of the total energy that is consumed
daily and mostly rely 83% in oil and 64% in gas by other suppliers. This perspective
sets Europe into a vulnerable position due to its dependant to non European countries
and especially to Russia. The recent conflict between Russia and Ukraine triggered a
geo political scene around gas supply. Natural gas is transferred through underground
pipelines which connect directly all states. These routes are susceptible to risk if
unstable situation occurs.
The European commission admitted in 2007 that energy policy is a long term goal but
some progress has been seen already concerning the Europeanise of energy sector and
environmental sustainability. European state members actually intent to create a
common strategy concerning the above mentioned issues and analysis have shown
that EU has spend lots of effort to achieve that. Much work still needs to be done on
the single market issue to enhance the interconnectedness between the member states.
The aim is to ensure the security of energy supplies which can be accomplished by the
diversity of the energy mix and the diversity of energy suppliers. Significant progress
has been made on the energy mix with usage of local energy forms on natural energy
resources, renewable energy or nuclear power, which might bring about the risks of
higher cost of energy or higher environmental pollution. Moreover the Nabucco
project reflects the need for diversification of energy supply and it is supported by all

15. member states by illustrating a new gas pipeline which will not be under Russian
authority. The main obstacle on developing a common policy is the differences
between members’ states. Powerful states such as France and Germany pursue
individual goals in energy sector in comparison with others who seek a common
policy. As a result, the implementation of Europeanization will be accomplished only
if the members overcome their differences.
New perspectives must be given in order to proceed on developing an internal energy
market and constructing infrastructure links that will re-direct energy sources, such as
gas and electricity, across EU. Furthermore, Europe must proceed on decisive
commitments and help investment decisions which will generate a commercial
interest of the industries for alternative energy sources. Renewable energy, boost a
sustainable production and improves the negotiation ability with major energy
suppliers. In addition, a new network must be produced in order to protect the new
energy links with a more affective cooperation between states.
Finally, there is still a long way to go in order Europe to establish a common
procedure about energy policy but some actions already has been made either by
single states or by whole union. It is important to realise that European Union is about
cooperation between states, as soon as the members start to think as a team and act as
one country the better will be in every aspect.

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