The EU’s energy policy framework aims to ensure a sustainable, competitive, and secure energy supply. Since the EEA Agreement came into force in 1994, the EU’s regulatory framework for the internal energy market has evolved, becoming more comprehensive over time.
The framework directly affects Norwegian stakeholders through the EEA Agreement and indirectly impacts the European energy market – Norway’s primary export market for oil, gas, and electricity. Stable and predictable conditions are crucial for Norwegian energy producers. Therefore, monitoring the development of new directives, regulations, and decisions related to energy within the EU is of great importance for Norway.
The initial legislative packages from the EU concerning electricity and natural gas regulation primarily focused on opening national markets and applying competition policies to the energy sector. When negotiating the EEA Agreement in the early 1990s, nine legal acts (regulations and directives) related to energy were incorporated into the agreement. Article 24 of the EEA Agreement, located in the section on free movement of goods, specifically mentions energy. Directives and regulations related to energy are included in Annex IV of the EEA Agreement.
EU energy policy extends beyond the scope covered by the EEA Agreement. The Lisbon Treaty of 2009 introduced a dedicated provision on energy (Article 194). This article outlines objectives related to the functioning of the energy market, energy security, energy efficiency, renewable energy, and infrastructure. It also emphasizes that member states have the right to determine the national management of their energy resources and the national energy mix independently.
In 2015, the European Union’s Energy Union was launched by the European Commission. It can be described as a political framework for the goals and measures in the EU’s energy policy. The legal acts were framed as parts of the Clean Energy Package and adopted in 2018-2019. The Energy Union focuses on five areas, also known as dimensions: energy security, the internal energy market, demand-side management, decarbonization, and research, innovation, and development. Since then, regulations have been modified in the “Fit for 55” package and some internal energy market modifications.
The EU has set goals for emission reductions, increased use of renewable energy, and energy efficiency by 2030. In 2021, the EU legally committed to cutting at least 55% of its net greenhouse gas emissions by 2030 compared to 1990 levels. Later that year, the European Commission proposed a series of laws to help the EU achieve this target. This package is known as “Fit for 55.” Several measures in the package relate to the energy sector. For instance, the EU aims to increase the share of renewable energy by 2030 and ensure that most of the EU’s energy consumption is renewable by 2050. After Russia’s attack on Ukraine in February 2022, new initiatives were proposed to promote the green transition and reduce the EU member states’ dependence on gas imports, under the name REPowerEU.
Under the EEA Agreement, directives and regulations must be incorporated through separate decisions in the EEA Committee to apply to the EFTA countries. In this context, specific EFTA adaptations may be necessary.
Currently, Annex IV of the EEA Agreement covers over 80 legal acts related to energy. Several legal acts are still being considered for inclusion in the EEA Agreement. EU energy regulations are continually updated in response to the energy situation and policy objectives. Therefore, closely monitoring the regulatory developments in the EU is of importance and in the interest of EEA EFTA states.
As part of the EEA Agreement, Norway has implemented three of the EU’s energy market packages. The third package, introduced in 2009, further develops the internal market for electricity and gas. It was incorporated into the EEA Agreement in 2017. Subsequently, the regulatory framework was modified through the Clean Energy Package, adopted by the EU in 2018 and 2019. This package comprises eight different legal acts, including a revised Renewable Energy Directive and changes to the Energy Performance of Buildings Directive and the Energy Efficiency Directive. In 2020, the new Commission proposed the “Fit for 55” package with important revisions in the Clean Energy Package from 2018-2019.
The legal acts concerning the electricity market were replaced by a new Electricity Directive, a new Electricity Regulation, and a new ACER Regulation. As of February 2024, this regulatory framework has not yet been incorporated into the EFTA Agreement. These energy market revisions must also be submitted to the Norwegian Parliament (Stortinget) for consideration.
The EEA Agreement has provided Norwegian stakeholders with opportunities to participate in various research and cooperation programs. Norway is involved in energy programs such as Intelligent Energy Europe (IEE) and the Competitiveness and Innovation Framework Programme (CIP). Additionally, Norway has engaged in research-based collaboration through Horizon Europe.
Under the EEA Agreement, Norway has the right to participate in the decision-making process at an early stage. Our experts are involved in discussions on new regulations and initiatives within expert groups under the European Commission. The Norwegian Energy Regulatory Authority also participates in the Agency for the Cooperation of Energy Regulators (ACER). The early involvement in decision shaping is crucial for the EEA EFTA experts and government representatives.
When incorporating EU directives and regulations into the EEA Agreement, there is some flexibility for EEA adaptations to individual legal acts. For instance, when the EU’s Third Energy Package was integrated into the EEA Agreement, several such adaptations were made. It is common for proposals regarding necessary EEA adaptations to be developed in collaboration among the three EEA member states Norway, Iceland, and Liechtenstein, and discussed with the EU.
The EEA Agreement extends the Single Market of the European Union to three of the four EFTA member states – Iceland, Liechtenstein and Norway. The fourth member of EFTA, Switzerland, is not a party to the EEA Agreement.
The EFTA Secretariat reviews regulatory proposals adopted by the EU on a weekly basis. Proposals that fall within the scope of the EEA Agreement are sent to the EFTA member states for assessment.
In Norway, the Government’s Guidelines for Impact Assessments outline the framework for further processing of regulatory proposals from the European Commission. If a proposal is deemed to have significant implications for Norway, the relevant ministry must send it out for public consultation. An EEA memorandum is prepared for all legal acts under consideration for incorporation into the EEA Agreement. The relevant ministry evaluates whether the act is relevant to the EEA. Affected ministries must be involved. Important matters related to the EEA must also be discussed within the government. If a regulatory proposal is expected to have substantial benefits or costs, a socioeconomic analysis is conducted.
After the European Commission’s proposal has been adopted by the European Council and the European Parliament, collaboration with other EFTA countries and the EU is necessary to reach consensus on an EEA Joint Committee decision. If the decision is applicable to Norway, it may be relevant to request specific adaptations to EU regulations. Both the EFTA countries and the EU must agree to such adaptations, as stipulated in Article 93 of the EEA Agreement. Once an EEA Joint Committee decision is made, EU regulations become part of the cooperation under the EEA Agreement and are binding for EEA EFTA states.
According to Article 26, paragraph 2 of the Norwegian Constitution, the parliament must give consent for international agreements of particular importance, as well as agreements requiring legislative changes or other decisions by the parliament. A decision by the EEA Joint Committee to incorporate legal acts (both directives and regulations) into the EEA Agreement may fall into this category, necessitating constitutional reservations. In such cases, a consent proposal must be submitted to parliament before the decision takes effect, as outlined in Article 103 of the EEA Agreement.
In such cases, a consent proposal must be prepared and submitted to parliament. During the process, it may also be relevant to keep the parliament informed about work related to EU regulations intended for incorporation into the EEA Agreement, through the parliament’s European Consultative Committee.
Once the EEA Joint Committee decision comes into effect, Norwegian law must be aligned with both EU regulations and the EEA Joint Committee decision. Necessary changes to existing regulations must be identified, and a consultation memorandum must be drafted. Then, regulations and possible legislative amendments must be adopted.