The dark side of Brussels' energy regime (Part 1)

Member States can therefore continue to grant aid for "crisis management", especially in the energy sector (e.g. measures to reduce demand for electricity, aid to compensate for higher energy prices). The Commission reiterates that Russian, Belarusian and Iranian entities subject to sanctions for actions undermining or jeopardising the territorial integrity, sovereignty and independence of Ukraine are excluded from the scope of these measures.

Intervention in the energy market

The Commission assures that these measures should help to stabilise the situation on the energy markets (particularly regarding gas and average electricity prices). However, the ongoing military conflict in Ukraine continues to harbour risks and the vulnerability of the energy markets has not yet been overcome.

This Temporary Credit Framework was adopted by the Member States on 23 March 2022 and has been amended and adapted several times since then. The following provisions in the area of emergency measures are of particular importance for the energy sector:

- Council Regulation (EU) 2022/1369 of 5 August 2022 [2] on coordinated measures to reduce demand for gas. Among other things, this regulates a voluntary 15% reduction in gas consumption and the possibility for the Council of the EU to declare a "Union alert", which entails an obligation to reduce demand across the Union.

- Council Regulation (EU) 2022/1854 of 6 October 2022 [3] on emergency measures in response to high energy prices. For example, the regulation provides for a 10% reduction in gross electricity consumption in the member states, and a 5% reduction at peak times.

- Council Regulation (EU) 2922/2576 of 19 December 2022 [4] on greater solidarity through better coordination of gas procurement, reliable price benchmarks and the cross-border exchange of gas with rules on demand aggregation and joint procurement of gas.

- Council Regulation (EU) 2022/2577 of 22 December 2022 [5] establishing a framework for the accelerated deployment of renewable energy sources with rules on priority for the planning, construction and operation of installations and facilities to produce energy from renewable sources, their connection to the grid, the grid itself and storage facilities.

- Council Regulation (EU) 2022/2578 of 22 December 2022 [6] on the introduction of a market correction mechanism to protect Union citizens and the economy from excessive prices with rules on price monitoring and the introduction of a market correction mechanism.

At the end of March 2023, Regulation (EU) 2023/706 [7] amended Regulation (EU) 2022/1369 to the effect that the period for reducing demand was extended until the end of March 2024.

Elimination of the Member States' reservations of sovereignty

From the perspective of EU law, these regulations are based on a weak foundation. This is because the EU's legal basis for the adoption of measures in the energy sector consists, on the one hand of the so-called "internal market competence" (Art. 114 TFEU), provisions from the Euratom Treaty, Art. 170 et seq. TFEU for trans-European networks and Art. 191 f. TFEU for environmental policy.

Secondly, the Treaty of Lisbon introduced a separate competence basis for the EU's energy policy (Art. 194 TFEU). This energy policy is intended to ensure, among other things, the security of energy supply in the Union "in a spirit of solidarity between Member States".

Measures in this context are to be adopted by the European Parliament and the Council "in accordance with the ordinary legislative procedure"; the Economic and Social Committee and the Committee of the Regions are to be consulted.

The Member States' reservations of sovereignty here concern their right to determine the conditions for the utilisation of their energy resources themselves, as well as their choice between different energy sources and the general structure of their energy supply.

This combination of an ordinary legislative procedure and the granting of reservations of sovereignty to the Member States is essential for compliance with the principles of the rule of law and democratic accountability.

Now, however, these basic principles of the rule of law are being thrown overboard. The Commission, together with the Council, has been intervening massively in the European energy market for almost two years - without a proper legislative procedure, without involving the European Parliament and disregarding the Member States' reservations of sovereignty.

This was possible because the cited emergency measures were not based on Art. 194 TFEU, but on Art. 122 (1) TFEU, which provides for the following:

In contrast to the ordinary legislative procedure, the European Parliament is not involved at all in the application of Art. 122 para. 1 TFEU - not even in the form of a right to be heard or a right to information. The Committee of the Regions and the Economic and Social Committee are also not involved. In addition, neither the Member States' reservation of sovereignty nor the principle of unanimity in the Council apply to measures of a fiscal nature - a qualified majority is sufficient.

In fact, five of the six emergency measures regulations mentioned above were not adopted unanimously: Poland voted against Regulation (EU) 2022/1369, Regulation (EU) 2022/1854 and Regulation (EU) 2023/706; Slovakia voted against Regulation (EU) 2022/1854; Hungary voted against Regulation (EU) 2022/2577, Regulation (EU) 2022/2578 and Regulation (EU) 2023/706; the Netherlands and Austria abstained from the vote on Regulation (EU) 2022/2578; Italy abstained from the vote on Regulation (EU) 2023/706.

Rule of law concerns

The EU's energy policy competence and the associated objectives are clearly defined in Art. 194 (1) TFEU. These include the functioning of the energy market, the security of energy supply, the promotion of energy efficiency and the development of renewable energies as well as the promotion of the interconnection of energy networks. According to Art. 194 para. 2 TFEU, the EU is authorised to take measures to achieve these objectives. However, such measures must not infringe the sovereign right of the Member States to determine their own national energy sources and the structure of their energy supply. This so-called reservation of sovereignty prevents the EU from intervening directly in the aforementioned areas of energy policy.

However, this is exactly what has been happening for almost two years now. The Commission and Council are systematically and abusively applying Art. 122 (1) TFEU, even though

- the democratic link to the sovereign (the community of the peoples of the Member States) is interrupted.

- fundamental principles of the rule of law are being undermined, including a proper legislative procedure and appropriate control mechanisms.

- the Member States' reservations of sovereignty in their own energy supply are eliminated.

- the "spirit of solidarity" is limited to a qualified majority [8] in Council votes; and

- the Commission can perpetuate this institutionalised abuse by extending the measures.

The energy crisis is artificially created

If emergency measures are based on Art. 122 (1) TFEU, it must be justified that the conditions for the choice of this basis of competence exist; there must therefore be a precarious economic situation or a threat thereof, which is why the intervention of the EU is necessary; and there must be a connection between the cause of the precarious economic situation and the objective to be achieved by the measure.[9]

However, the Commission and the Council are making a significant contribution to ensuring that the conditions for this "precarious economic situation" (energy crisis) do not change:

In June, for example, the Council banned the purchase, import or transfer of crude oil and certain petroleum products by sea from Russia to the EU as part of the 6th sanctions package. This is based on the argument that most of the Russian oil delivered to the EU is transported by sea, meaning that this embargo should affect almost 90% of Russian oil imports to Europe.

The member states have also set an oil price cap. This has applied to crude oil since December 2022 and to petroleum products since February 2023 and can be adjusted over time.[10]

However, the home-made extension of the energy crisis in the Union also includes the import ban on all types of Russian coal, the ban on new EU investments in the Russian mining sector, the ban on the export of certain oil refining technologies or the termination of the possibility for Germany and Poland to import Russian pipeline oil.[11]

Further measures that the Commission and the Council have been taking for some time to implement this form of "energy dictatorship", and the interests that are being served, are the subject of the second part of this analysis.