VZCZCXRO6407
RR RUEHIK
DE RUEHBS #1675/01 3491156
ZNR UUUUU ZZH
R 151156Z DEC 09
FM USEU BRUSSELS
TO RHEHNSC/NSC WASHDC
RUEHC/SECSTATE WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNMEU/EU INTEREST COLLECTIVE

UNCLAS SECTION 01 OF 02 BRUSSELS 001675 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG PREL EPET KGHG EU
SUBJECT: RIFT OVER EU'S AUTHORITY TO REGULATE GAS SUPPLY 
 
REF: BRUSSELS 1644 
 
BRUSSELS 00001675  001.2 OF 002 
 
 
This cable is sensitive but unclassified. 
 
¶1. (U) SUMMARY:  At the December 7 Energy Council in Brussels, 
Energy Ministers of the twenty-seven EU member states debated the 
European Commission's authority to regulate security of supply in 
member states.  Discussions on security of gas supply revealed a 
split by a number of member states (The Netherlands, the UK, Germany 
and Italy) which contended the European Commission is encroaching on 
their national sovereignty over domestic energy resources.  The 
incoming Spanish Presidency aims for final agreement on the 
legislation by June 2010.  Other items addressed by the Council 
included energy efficiency legislation, the energy projects funded 
by the EU's 2008 stimulus plan, gas relations between Ukraine and 
Russia and the seat of the new Agency for the Cooperation of Energy 
Regulators (ACER).  END SUMMARY. 
 
Security of Gas Supply 
---------------------- 
 
¶2. (U) Discussions among the member states on the draft Regulation 
on Security of Gas Supply revealed a fundamental difference between 
a number of member states (notably The Netherlands, the UK, Germany 
and Italy) and the Commission on over the latter's mandate to impose 
measures on national energy authorities.  Dutch Minister for 
Economic Affairs Maria van der Hoeven said: "There can be no doubt 
whatsoever about the sovereignty of member states when it comes to 
natural resources.  That is why this regulation needs to be adapted 
in line with the Lisbon Treaty to guarantee this absolute 
sovereignty." She continued: "too much responsibility is given to 
the Commission, because it will get the final authority on plans and 
measures.  That, I cannot accept."  UK Minister of State for Energy 
and Climate Change Lord Hunt noted: 
 
Begin quote: The question of energy security goes to the heart of a 
member state's responsibility.  The UK's major concern is the extent 
and widely drawn powers of the Commission.  We need a better 
understanding of the requirements the Commission is looking to 
impose on the member states and the criteria it would use in doing 
this.  We remain to be convinced that such powers are required.  End 
quote. 
 
The German and Italian ministers made similar -albeit more nuanced - 
points, noting that national energy companies and national 
authorities are best placed to resolve energy supply issues. 
 
¶3. (U) In addition to the powers of the Commission, Ministers 
discussed the "N-1" standard requirement, reverse flow, 
cost-sharing, emergency definitions and the definition of the 
"protected customer."  Spain -- which will hold the Council 
Presidency during the first half of 2010 - announced a final 
agreement on the gas security legislation to be a goal of its 
presidency. 
 
¶4. (SBU) Comment:  Growing member state opposition to a strong role 
of the Commission in addressing the EU's energy supply emergencies 
will not be good news to Commission President Barroso, who is 
seeking to centralize energy policy in Brussels.  In a letter to 
Energy Commissioner-designate Oettinger on November 27 (reftel), 
Barroso wrote that "a single market for energy and EU energy 
security policy" is one of new Commission's top priorities in energy 
policy.  To make things more complicated, the new Regulation would 
also need to be approved by the European Parliament (EP), which has 
gained considerable power with the entry into force of the Lisbon 
Treaty on December 1, 2009.  The EP's Rapporteur for the 
legislation, Spanish Christian-Democrat Alejo Vidal Quadras, has 
already introduced draft amendments to the Commission proposals. 
End Comment. 
 
Energy Efficiency Package 
------------------------- 
 
¶5. (U) Ministers held a brief discussion on the so-called Energy 
Efficiency Package, which contains new measures on energy 
performance of buildings, labeling of energy-using products and fuel 
efficiency labeling of tires.  With regard to the first two of these 
measures, the Council has already concluded an informal agreement 
with the European Parliament, but both institutions need to resolve 
procedural and legal issues before the legislation can be 
implemented.  At a press conference following the Council meeting, 
Energy Commissioner Piebalgs called the agreement on the Energy 
Performance of Buildings Directive "the most important pont on 
today's agenda" and "a big victory for the Swedish Presidency."  The 
Commissioner saidthe EU was the first region in the world to agre 
on binding energy performance requirements or the building sector. 
 
BRUSSELS 00001675  002.2 OF 002 
 
 
The Regulation on the labeling of tires with respect to fuel 
efficiency has already been adopted by Council and Parliament and is 
awaiting publication in the EU's Official Journal.  The new law aims 
to promote fuel-efficient and safe tires with low noise levels. 
 
European Energy Recovery Plan (EERP) 
----------------------------------- 
 
¶6. (U) Commissioner Piebalgs updated Ministers on progress on the 
3.98 billion of the EU's economic recovery plan that the EU has 
earmarked for energy infrastructure and clean energy projects. 
(Note:  On December 9, the Commission approved funding for 6 CCS 
projects (1 billion) and 9 offshore-wind projects (565 million). 
A decision on the final selection of the interconnection projects is 
foreseen for February 2010.  The list of approved projects can be 
found at (http://europa.eu/rapid/pressReleasesAction.d o? 
reference=MEMO/09/542&format=HTML&aged=0&lang uage= 
EN&guiLanguage=en)  The Commissioner expected that 97% of the EERP 
budget, including almost 2.4 billion euros for energy 
infrastructure, would be committed by spring 2010. 
 
¶7. (U) Luxembourg Economic Affairs Minister Jeannot Krecke 
criticized the Commission's rejection of an off-shore wind project 
in which Luxembourg was participating:  "I am shocked that we are 
the only country to have been refused inclusion in the list," he 
said. (Comment:  Someone in the Commission apparently discovered 
that Luxembourg is a landlocked country.  End comment.) 
 
Russia/Ukraine 
-------------- 
 
¶8. (U) During a closed-door lunch meeting, ministers discussed the 
status of gas relations between Ukraine and the Russian Federation. 
In the subsequent press conference, Swedish Minister Maud Olofsson 
said that thanks to the extensive discussions between the EU, Russia 
and the Ukraine, the level of tensions and misunderstandings had 
been reduced significantly.  a much greater 
levele member states now tha"I hope veryppen, but I have always  agree on a solution.  I addition, it will 
participate in the creation of European network rules.  The cities 
of ucharest, Bratislava and Ljubljana also sought o host the 
agency.  (Note:  Romania lobbied tQe USG to support its bid to host 
ACER.  End note.) 
 
¶10. (U) Commissioner Piebalgs praised management of the Swedish 
Presidency on this issue.  He said the open discussions and 
transparent procedures were a departure from the previous methods of 
allocating seats for EU agencies.  He explained that member states 
had agreed beforehand that the city with the most votes would get 
the agency.  "None of the ministers left the room with bitterness in 
his heart," he said. 
 
Electricity Market Integration 
------------------------------ 
 
¶11. (U) On the fringes of the Council meeting, seven Central 
European and Eastern European member states signed a memorandum of 
understanding to establish the Central Eastern Forum for Electricity 
Market Integration.  The forum will convene at the ministerial level 
forum to support further integration of the electricity markets in 
Central and Eastern Europe. 
 
DAVIS