Article 194 TFEU on Energy Angus Johnston University College & Faculty of Law, Oxford Martin School Programme on Integrating Renewable Energy University of Oxford ‘The EU and Energy Law’ Oslo, 26 April 2016

2 Article 194 TFEU on Energy: Outline 1.Introduction 2.Article 194 TFEU: the text 3.Key points from the arrival of the new Energy provision 4.Remaining difficulties in understanding Article Conclusions and implications Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016)

3 1. Introduction Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) Conferred / attributed competence and an EU legal base; EU Energy legislation and EU competence before 2009; The ‘consensus’ on Member States’ energy competence; The genesis of the new EU Energy provision.

4 2. Article 194 TFEU: the text (1) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 1. In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States, to: (a) ensure the functioning of the energy market; (b) ensure security of energy supply in the Union; and (c) promote energy efficiency and energy saving and the development of new and renewable forms of energy; and (d) promote the interconnection of energy networks.

5 2. Article 194 TFEU: the text (2) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 2. Without prejudice to the application of other provisions of the Treaties, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish the measures necessary to achieve the objectives in paragraph 1. Such measures shall be adopted after consultation of the Committee of the Regions and the Economic and Social Committee. Such measures shall not affect a Member State’s right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply, without prejudice to Article 192(2)(c). 3. By way of derogation from paragraph 2, the Council, acting in accordance with a special legislative procedure, shall unanimously and after consulting the European Parliament, establish the measures referred to therein when they are primarily of a fiscal nature.

6 Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) → Unpacking the text: 3.1 EU energy objectives [Article 194(1) TFEU] 3.2 Shared competence [Articles 4(2)(i) and 194(2) TFEU] 3.3 Ordinary legislative procedure (co-decision EP-Council) [Article 194(2) TFEU] 3. Key points (1)

7 3. Key points (2) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 3.4 Special procedure for fiscal measures (Council unanimity, EP only consulted) [Article 194(3) TFEU] 3.5 ‘[I]n a spirit of solidarity between Member States’ [Article 194(1) TFEU] 3.6 EU external competence implications?

8 3. Key points (3) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 3.7 Article 194(2)’s wording and scope (joint legal bases?): (a) ‘Without prejudice to the application of other provisions of the Treaties …’: - subsidiary/residual competence only; and/or - a question of it being an Energy lex specialis? [Case C-490/10 EP v. Council (6 Sep 2012)] (b) The Member State ‘energy rights’ caveat and the link to Article 192(2)(c) TFEU – introduction …

9 4. Remaining difficulties (1) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 4.1 The Member State ‘energy rights’ caveat in Article 194(2): what does it (not) mean and how might it work? ‘MS energy rights’ to determine: - the conditions for exploiting its energy resources [N.B. no parallel in Article 192(2)(c)]; - its choice between different energy sources; and - the general structure of its energy supply. N.B. No alternative legislative procedure provided where an EU measure affects such ‘energy rights’ [contrast: - Article 194(3); and - Article 192(2)(c)]. Both in Art. 192(2)(c) and there they lead to EP consultation only and Council unanimity vote

10 4. Remaining difficulties (2) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 4.1 MS ‘energy rights’ (continued) Prior threshold? → Significant/Appreciable effect required? [Compare Article 192(2)(c); see free movement & competition law.] Possible meanings of the caveat: -an absolute competence block; -a requirement for MS unanimity in Council voting; - an ex post derogation possibility for a MS from an EU measure; a generator of opt-out clause(s) in any EU measure.

11 4. Remaining difficulties (3) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 4.1 MS ‘energy rights’ (continued) Choosing between the possible interpretations; Posing challenges for measures using joint legal bases (pressure to use non-energy legal bases or prevented by lex specialis status?): - Environmental objectives - Trans-European (Energy) Networks - Consumer protection goals All have clear potential for overlaps with EU Energy objectives

12 4. Remaining difficulties (4) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 4.1 MS ‘energy rights’ (continued) Causing legal and political/diplomatic problems for future EU- level energy law-making? Pressure to achieve EU energy objectives by other EU-level means, mechanisms and actors?

13 4. Remaining difficulties (5) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 4.2 Other EU-level competence overlaps and ‘separation of powers’ / legitimacy issues Pursuit of EU Energy objectives via the enforcement of directly effective TFEU provisions (rather than via EU legislation): - Commission enforcement of free movement and competition law in individual cases; - Commission policy-making, guidance, etc., in performing its competition law role; - Private enforcement, national courts and the judgments of the CJEU.

14 4. Remaining difficulties (6) 4.2 Other EU-level competence overlaps (continued) A thorny example? The Commission’s State Aid General Block Exemption Regulation (GBER) and the Energy and Environmental Aid Guidelines (EEAG): - clear EU-level competence for the Commission on State aid; - extensive experience developed via MS notification to Commission of national RES-promotion schemes; - yet prescriptive nature of GBER and EEAG seem to have legislative- style effects upon MS energy choices/rights: consistent with Article 194(2) TFEU? [Compare Case T-370/11 Commission v. Poland (7 March 2013).] Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016)

15 4. Remaining difficulties (7) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) 4.3 Possible EEA issues? ‘EEA relevance’ of EU energy law measures? - internal market and/or environmental rationales; - other goals/objectives (security of supply, solidarity, etc.); - same legal measure, but pursuing a range of different objectives (thanks to broad basis offered by Article 194 TFEU)?

16 5. Conclusions and implications (1) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) Diplomatic negotiations and deal-making need great(er) care to be translated into legally workable Treaty wording: - This is especially true of EU law given the legal character of its Treaties. Until tested, the uncertainties surrounding Article 194(2) could cast long shadows over legislative proposals and the EU energy law-making process: - Some of the suggested interpretations above (significance threshold; opt- out/derogation) are designed to let more light into these places …

17 5. Conclusions and implications (2) Johnston, ‘Article 194 TFEU’ (Oslo, 26 April 2016) The relationship between EU legislative competence in the energy sphere and other parts of the TFEU raises delicate questions, in light of Member State autonomy (etc.) concerns. The internal EU uncertainties in this area may have wider implications: -EU external energy competence and policy (institutional roles, etc.); - possible EEA implications as a result of issues of legal basis and substance … ?

Article 194 TFEU on Energy Angus Johnston University College & Faculty of Law, Oxford Martin School Programme on Integrating Renewable Energy University of Oxford ‘The EU and Energy Law’ Oslo, 26 April 2016