Construction of a Regional Energy Market Within a Multilateral Regulatory Framework: Interactions Between the European Union and the Energy Charter Treaty

Summary

ABSTRACT

The European Union (EU) has a recognised international legal personality and it has signed the Energy Charter Treaty (ECT) as a Regional Economic Integration Organisation (REIO). As a result, the ECT, the EU and national legislation together establish different regulatory layers governing energy markets. Although those layers are in principle complementary, rules adopted in different periods and frameworks may cause inconsistencies at national, regional and international levels.

In this chapter we will look into some of the dynamics and tensions between the EU internal energy market and policy and the ECT. We will endeavour to shed light on the developments of the EU internal energy market from the perspective of the transit regime, which was at the origins of the EU internal energy market and is part of the ECT core business. In subsequent sections we will review the different approaches to long-term energy contracts under the EU and ECT contexts. We will also identify existing and open difficulties concerning the implementation of legislation regarding renewable energy sources and, on the other hand, the EU decision-making process in external energy relations concerning hydrocarbons.

The review of selected measures and case law will reveal the existence of tensions at regional and international levels and the way they are addressed to simultaneously accommodate regional and international legal orders. This chapter will help to understand what kind of interactions are happening today between the EU and ECT legal systems and will offer a particular view to explain those relations.

INTRODUCTION

The European Union (EU) (formerly European Community) is a Regional Economic Integration Organisation (REIO) to whom its 28 Member States have ceded sovereignty by way of delegation of some decision-making powers in many policy areas to tailor-made institutions shared at the EU level. The EU we know today is the result of an ongoing gradual integration process, starting with the 1951 the European Coal and Steel Community, the Rome Treaties of 1957 establishing the European Economic Community and the European Atomic Energy Community, and with its most recent transformation under the Lisbon Treaty in 2009. The initial focus of the EU in the energy sector was on achieving economic integration, hence the creation of a single energy market.