European Commission/IEA seminarwith support of the Czech Government

Rome 24 March 2003

Guidelines and Strategies for Energy Policies in Transition

Economies

Eugene D. Cross

ECN Policy Studiescross@ecn.nl

cross@energyinstitute.org

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Looking back - historical observations on energy policy in SE Europe

• At the World Power Conference in 1956, Prof. Stjepan Han (Yugoslavia) observed:- SE Europe is considerably less endowed in

energy than the rest of Europe, USSR, US- A policy of “close international collaboration” in

the electricity and gas sectors among the countries of SE Europe not only is economically justified, but is an “unavoidable necessity”

- Policy objectives should be: security of supply, energy efficiency, interconnection

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Energy Policy in the accession countries: 1990-2002

• Energy policy statements have become shorter, more decisive, and more focused on EU accession requirements.

• Examples of recent energy strategies in context of EU accession process:- Slovakia (40 pages) (January 2000)- Bulgaria (45 pages) (March 2002)- Lithuania (25 pages) (October 2002)

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Lessons from accession countries

• New energy policies reflect the EU policy pillars & seek full compatibility with EU’s energy acquis communautaire

• Use of public consultation process • Use of action plans/ implementation plans • Energy laws can be used to institute a

systematic, dynamic, and responsive policy-making process. (Polish Energy Act)

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Specific subsectoral policies:renewable energy sources (RES)

• EU Renewables Directive (2001): requires Member States to set targets, adopt new rules on grid access & connections, and evaluate regulatory framework on RES.

• Screening of Czech energy legislation & regulation on RES in 2002 provides model.

• Various Czech action plans to promote the use of RES have set the path for reform.

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Combined Heat and Power (CHP) and district heating

• In 1998-1999, an EU screening of law and policy relating to district heating and CHP was made for 13 countries in transition.

• National action plans for the promotion of CHP have been made, e.g., for the Czech and Slovak Republics in 1999.

• Multi-country action plans for CHP in border areas (Poland, Germany, Czech)

• EU Directive on CHP proposed July 2002.• IEA initiative on district heating in 2003.

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Lithuania: lessons on implementation of energy efficiency measures

• Extensive work on EE policy and law:- 1991 EE Programme- 1992 EE Programme- 1993 Energy Strategy- 1995 Energy Act- 1996 EE Housing Pilot - 1998 draft Energy

Conservation Act- 2001 EE Programme- 2002 abandonment of

draft Energy Conservation Act

• Better Focus would have been on implementation of programmes to meet EU SAVE directive.

• Low-cost solutions to improve EE in buildings: Energy certification of buildings; Use of heat cost allocators instead of heat meters.

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Security of Oil & Gas Supply

• Security of oil & gas supply is a major concern for SE Europe.

• European Commission proposed two new directives on security of oil & gas supply on 11 Sept 2002.

• Under gas proposal, MS must “define the general policies for security of supply …necessary [for internal gas market]”.

• MS would be required to adopt ‘output standards’ to ensure secure gas supply

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Institutional reforms in the accession countries

• New institutions: energy regulatory authorities, competition authorities, market operators, energy policy associations, consumer orgs., energy efficiency centres.

• Duties and powers (including reporting obligations) of government entities and industry are now defined in energy laws.

• Capacity building efforts are needed.• Energy Regulators’ Regional Association:

(www.erranet.org)

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The Way Forward:Southeast Europe

• EU energy law and policy now provides a thorough framework and specific rules for the development of energy law and policy in SE Europe: implementation is a priority

• Security of supply must be addressed as well as competition and environmental issues (the three pillars of EU policy).

• Institutional development and capacity building efforts are needed; some EU-funded projects are underway

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The Way Forward: Southeast Europe

• Energy policies should be transparent, updated regularly, and supported with distinct action plans to facilitate implementation in energy subsectors.

• Assessments of implementation of national energy policy should be systematic.

• Privatisation and legal reform processes can proceed in parallel to some extent through use of regulatory instruments that retain some flexibility for future adaptation.