Publications / McDermott Newsletters / Brussels Energy Brief - July 2008

Brussels Energy Brief - July 2008

July 2008

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Please note that due to the closure of the Commission and other European institutions over the summer period, the next Brussels Energy Brief will be sent on Friday 26 September 2008.

KEY DEVELOPMENTS

“Polluter Pays” Principle Applied to Oil Spill by ECJ

Mélanie Bruneau

In an action brought by the municipality of Mesquer under the European Union's Waste Directive for the pollution caused by the oil tanker Erika, which sank off the coast of Brittany in 1999, the French Supreme Court referred certain questions of EU law to the European Court of Justice (ECJ).  The ECJ considered that, pursuant to the Waste Directive, the heavy fuel oil carried by the ship did not constitute “waste” until it was mixed with water and sediment and washed up on the coast.  The ECJ also observed that the shipowner may be regarded as having produced the waste and is therefore responsible for paying for the clean up.  However, the ECJ also held that the French national court may, in the light of factors which it alone is in a position to assess, consider that the seller of the oil and/or the charterer of the ship carrying it produced the waste if they failed to take measures to ensure that the ship was safe. 

 

Commission's Draft Regulation on Standby Electric Power Consumption

Martino Sforza

The European Commission has proposed a draft regulation to implement measures to reduce electric power consumption deriving from standby functions (such as remote control activation of a television set) and off-mode losses (occurring when a product cannot be switched off completely when providing no service or function).  The draft regulation is one of the main priorities of the Commission’s Action Plan on Energy Efficiency.  Technical solutions are frequently not applied, mostly due to possible additional costs for the manufacturer.  Nonetheless, a slightly higher purchasing price ultimately benefits the user because the overall life cycle cost, namely the purchasing cost plus the costs involved in operating the product, is reduced.

 

Commission Welcomes Vote on Including Aviation in EU Emissions Trading System

Mélanie Bruneau

The European Commission has welcomed the European Parliament's second reading vote in favour of including aviation in the EU Emissions Trading System (EU ETS).  The vote confirms the agreement reached between the Parliament and the Council.  Under the new Directive, greenhouse gas emissions from flights to, from and within the European Union will be included in the EU ETS from 2012.  All airlines will be covered, regardless of nationality.  Like the industrial companies already covered by the EU ETS, airlines will be able to sell surplus allowances if they reduce their emissions and will need to buy additional allowances if their emissions increase.  Once the Decision is formally adopted, Member States will have 12 months to transpose it into their national legislation.

 

Commission Launches Consultation on Use of Biomass for Energy Purposes

Patricia Armesto

The European Commission has launched an online consultation to establish stakeholders’ views on the need for a biomass sustainability scheme and specific key principles and criteria to be developed at EU level to ensure that biomass for energy purposes comes from sustainable sources and avoids environmental risks.  The consultation will run until 30 September 2008.  The Commission has committed to report on this issue by 2010 in its proposal for a directive on the promotion of the use of energy from renewable sources.  All interested stakeholders have been invited to submit their comments.  Stakeholders include energy companies, project developers, equipment manufacturers, government services, agricultural and forest industry and environmental non-governmental organisations.

 

More Safety Features Required for Slovak Nuclear Reactor

Bróna Heenan

The European Commission has called on Slovenske Elektrárne, Slovakia’s main electricity producer, to step up safety at its planned extension of a Soviet-era nuclear power plant.  Under the Euratom Treaty, the Commission has to give a non-binding opinion on any new investment related to nuclear activities being carried out in individual Member States.  Following notification from and discussions with the Slovak Republic, the Commission has recommended an additional set of measures on the basis that the proposed nuclear reactors do not have “full containment structures” or their equivalent.  Such features are common in the most recent nuclear power plants in Europe.  The Commission is concerned that the current design would not withstand an external impact such as from a “malevolent small aircraft” and has therefore recommended the additional measures. 

 

European Parliament Calls for Reduction of Biofuels Target

Daniel Kelly

The European Parliament has called for the European Union to lower its target for developing biofuels, urging it to instead concentrate on leaner power sources for transport.  The European Union’s energy and climate plan, which was unveiled last year, aims to have no less than ten per cent of all fuel-powered vehicles running on renewable energy by 2020.  The Parliament’s Environment Committee has recommended that only half of this ten per cent share should consist of biofuels.  Furthermore, it has proposed a midway target be introduced, by which four per cent of transport energy sources would be renewable by 2015, with biofuels making up only a small fraction of those energy sources.

 

ECJ Rules Spanish Energy Merger Restrictions Illegal

Andrea Hamilton

The European Court of Justice (ECJ) has ruled that Spain infringed European Community law by requiring that mergers and acquisitions in Spain’s energy sector be approved in advance by the Spanish National Energy Commission (NEC).  The system of prior notification, introduced in 2006, was applied controversially when the NEC blocked a takeover bid for Spanish energy company Endesa by E.ON, a German energy group—a move widely viewed as protectionist.  Following the NEC’s decision to block E.ON’s bid, the European Commission brought infringement proceedings against Spain, alleging that the system of prior notification infringed EC Treaty rules.  The ECJ ruled in favour of the Commission, holding that Spain’s requirement of prior notification infringed EC Treaty rules on the free movement of capital and freedom of establishment because it is likely to deter investors located in Member States other than Spain from acquiring interests in Spanish energy entities.  Moreover, the ECJ concluded that the system of prior notification was not justified by—or proportionate to—any overriding public interest concerns, such as security of energy supply.

 

EU Must End Energy Dependence on Russia, Says Ex-IEA Chief

Patricia Armesto

At an informal meeting in July 2008 in Paris, Claude Mandil, the former head of the International Energy Agency, told EU Energy and Environmental Ministers that the European Union should free itself from its dependence on Russian gas by developing renewable and nuclear energy.  Reducing the European Union’s dependence on Russian gas has become a major focal point in EU foreign policy.  Since November 2006, the European Union has been working on an energy partnership with Azerbaijan, inking an accord with Kazakhstan, reviving relations with Libya and working on a deal with Algeria.  However, to date, most of these discussions remain stalled, according to energy analysts.

 

MERGER NOTIFICATIONS

End June – July 2008

M.5154 – Capacity Allocation Service Company (CASC) JV (9 July 2008)

M.4922 – European Market Coupling Company (EMCC) (16 July 2008)

 

MEETINGS

August – September 2008

Seminar on the Energy-Climate Package in the European Parliament (3 September 2008)

 

McDermott Will & Emery

McDermott Will and Emery