Newsletter 23/2012 - From Brussels angle

INTERVIEW with Fabrizio Barbaso, Deputy Director General, Directorate General Energy, European Commission

Energy Strategy aims to put the energy sector in South East Europe on a sustainable path

The Ministerial Council has adopted the Energy Strategy of the Energy Community at its session in October 2012. What is the aim and which are the main objectives of the Strategy?

The idea of compiling a strategy for the Energy Community arose in 2010, first suggested by Serbia. The two main reasons for considering such a policy paper included security of supply concerns and the slow progress in infrastructure development. These issues are still valid today but they are complemented by additional challenges, such as the need to put the energy sector on a sustainable path and to have a coherent overview of the national aspirations and plans.

For this reason, all the national strategies, which are in place, were collected and summed up, so that it is visible where the region is heading. This bottom-up practice was coupled with a top-down approach, where all the legal commitments that are part of the Energy Community acquis were listed. For preparing the strategy a dedicated Task Force was set up, which took a bottom-up approach building on the data and projections enshrined in the national strategies of Contracting Parties[1], which underwent local public consultations.

The main questions related to the Strategy were put on public consultation on the website of the Energy Community Secretariat with a background document in April 2012.

The objectives of the Energy strategy of the Energy Community are very similar to that of the EU, such as creating a competitive integrated energy market, attracting investments in energy and providing a secure and sustainable energy supply to customers.

How would you compare principles of the Energy Strategy and the European Union’s “Energy 2020”?

The European Union and the Energy Community are facing similar challenges; consequently the principles to tackle these are also similar.

We both strive to create a liquid and interconnected energy market where consumers are able to choose from a wide range of suppliers and services that are offered on a competitive price in a secure way. The ultimate aim is to connect the EU and the Energy Community and to create an integrated pan-European market where customers of Albania can buy gas from Denmark and where power generators from Ukraine can sell electricity in Portugal. In order to achieve this aim, all legal, regulatory and institutional barriers to energy trade and market opening should be removed both inside and at the borders of the Contacting parties.

The cleanest and cheapest energy is which we do not consume. This is why energy efficiency – which has a major role in both documents – has a massively positive effect ensuring both security of supply and sustainability.

A "green" transformation of the Energy Community's energy sector is essential. The extensive Energy Community acquis on energy efficiency, renewables and environmental protection provides a good basis to further build on. The Ministerial Council's decision on the implementation of Directive 2009/28/EC on the promotion of the use of energy from renewable sources shows the devotion of Contracting Parties to further strengthen the sustainability pillar of the acquis.

The Strategy takes stock of all these legal cornerstones in place when defining the actions to reach the objectives. It does not set new targets or commitments because that is the task for the Ministerial Council. However, the legal framework is not enough for the success. Contracting Parties will have to work hard to implement all the provisions, and the market participants as well as the citizens and non-governmental organisations (NGOs) will have to assist the authorities in this process.

How will the investment in energy production be ensured for regional projects?

We have witnessed in the last years that various projects are stalled in different phases of the development and few of them are fully implemented. This happens because of regulatory and administrative barriers that exist inside and between the Contracting Parties but also because of the increasing competition for investments and financing tools in the current economic crisis.

Regulatory stability and a favourable investment climate are key to ensure the necessary financing. The Strategy – by summing up all the legal obligations in one place and by synthetising the national plans – aims to send a positive signal to the investors' community showing the development potential in the region.

Another element of the Strategy is to initiate a process where Projects of Energy Community Interest (PECIs) are identified. This would cover projects, which have significant benefits on two or more Contracting Parties and therefore the invested resources have the biggest possible impact. It is clear that without a coordinated approach, the Energy Community will have major difficulties in obtaining the necessary financing. The identification of the PECIs shall be accompanied by the development of appropriate regulatory tools that will help the implementation of the priority projects. Such tools may include accelerated permit granting procedures, advance cost-allocation and licensing with the coordination of national regulatory authorities and certain grants.

Where do you see a role of the Regional Cooperation Council when it comes to firmer commitment of the countries in the region to identifying and implementing common projects?

For the Regional Cooperation Council, I see a political role in the incentivising the countries of the region to cooperate closer to promote projects of a wider, regional character and create an appropriate political climate susceptible to their implementation.

Fabrizio Barbaso has been coordinating the external dimension of the energy policy and the development of new financial instruments at the European Commission’s Directorate General (DG) Energy since January 2011. He joined the Commission back in 1976. His latest positions include: Deputy Director General of DG Transport and Energy in charge of coordination of the energy policy (2006-2010); acting Director General of DG Enlargement (September 2003- December 2005) and Deputy Director General in the Directorate-General for Agriculture. He was born in Torino (Italy) and has a background education in law.

[1] Contracting Parties are: Albania, Bosnia and Herzegovina, Croatia, The Former Yugoslav Republic of Macedonia, Montenegro, Serbia and Kosovo*, whilst Moldova became a full fledged member as of 1 May 2010 and Ukraine officially acceded the Energy Community on 1 Feb 2011 from



Fabrizio Barbaso, Deputy Director General, Directorate General Energy, European Commission (Photo: courtesy of Mr. Barbaso)

Fabrizio Barbaso, Deputy Director General, Directorate General Energy, European Commission (Photo: courtesy of Mr. Barbaso)