European Commission/IEA seminar with support of the Czech Government Rome 24 March 2003 Guidelines and Strategies for Energy Policies in Transition Economies Eugene D. Cross ECN Policy Studies

2 Looking back - historical observations on energy policy in SE Europe At the World Power Conference in 1956, Prof. Stjepan Han (Yugoslavia) observed: -SE Europe is considerably less endowed in energy than the rest of Europe, USSR, US -A policy of close international collaboration in the electricity and gas sectors among the countries of SE Europe not only is economically justified, but is an unavoidable necessity -Policy objectives should be: security of supply, energy efficiency, interconnection

3 Energy Policy in the accession countries: Energy policy statements have become shorter, more decisive, and more focused on EU accession requirements. Examples of recent energy strategies in context of EU accession process: -Slovakia (40 pages) (January 2000) -Bulgaria (45 pages) (March 2002) -Lithuania (25 pages) (October 2002)

4 Lessons from accession countries New energy policies reflect the EU policy pillars & seek full compatibility with EUs energy acquis communautaire Use of public consultation process Use of action plans/ implementation plans Energy laws can be used to institute a systematic, dynamic, and responsive policy-making process. (Polish Energy Act)

5 Specific subsectoral policies: renewable energy sources (RES) EU Renewables Directive (2001): requires Member States to set targets, adopt new rules on grid access & connections, and evaluate regulatory framework on RES. Screening of Czech energy legislation & regulation on RES in 2002 provides model. Various Czech action plans to promote the use of RES have set the path for reform.

6 Combined Heat and Power (CHP) and district heating In , an EU screening of law and policy relating to district heating and CHP was made for 13 countries in transition. National action plans for the promotion of CHP have been made, e.g., for the Czech and Slovak Republics in Multi-country action plans for CHP in border areas (Poland, Germany, Czech) EU Directive on CHP proposed July IEA initiative on district heating in 2003.

7 Lithuania: lessons on implementation of energy efficiency measures Extensive work on EE policy and law: EE Programme EE Programme Energy Strategy Energy Act EE Housing Pilot draft Energy Conservation Act EE Programme abandonment of draft Energy Conservation Act Better Focus would have been on implementation of programmes to meet EU SAVE directive. Low-cost solutions to improve EE in buildings: Energy certification of buildings; Use of heat cost allocators instead of heat meters.

8 Security of Oil & Gas Supply Security of oil & gas supply is a major concern for SE Europe. European Commission proposed two new directives on security of oil & gas supply on 11 Sept Under gas proposal, MS must define the general policies for security of supply …necessary [for internal gas market]. MS would be required to adopt output standards to ensure secure gas supply

9 Institutional reforms in the accession countries New institutions: energy regulatory authorities, competition authorities, market operators, energy policy associations, consumer orgs., energy efficiency centres. Duties and powers (including reporting obligations) of government entities and industry are now defined in energy laws. Capacity building efforts are needed. Energy Regulators Regional Association: (

10 The Way Forward: Southeast Europe EU energy law and policy now provides a thorough framework and specific rules for the development of energy law and policy in SE Europe: implementation is a priority Security of supply must be addressed as well as competition and environmental issues (the three pillars of EU policy). Institutional development and capacity building efforts are needed; some EU- funded projects are underway

11 The Way Forward: Southeast Europe Energy policies should be transparent, updated regularly, and supported with distinct action plans to facilitate implementation in energy subsectors. Assessments of implementation of national energy policy should be systematic. Privatisation and legal reform processes can proceed in parallel to some extent through use of regulatory instruments that retain some flexibility for future adaptation.