This publication was prepared with the support of the European Union. The contents of this publication are the sole responsibility of NGO “DIXI GROUP”, as well as Civil Network “OPORA”, All-Ukrainian NGO “Energy Association of Ukraine”, Resource & Analysis Center “Society and Environment”, Association “European-Ukrainian Energy Agency”, and can under no circumstances be regarded as reflecting the position of the European Union.
The project “Enhancing impact of civil society in monitoring and policy dialogue on energy and related sectors’ reforms in line with the Association Agreement implementation” aims at strengthening the role of civil society in advocating reforms in the energy and related sectors. The key objectives of the project are:
monitoring of the implementation of the energy provisions of the Association Agreement, including relevant environmental and trade-related commitments; strengthening the civic experts’ and local actors’ capacity to track actual implementation of the reforms; facilitation of public dialog to lead in proper implementation of the European energy and environmental reforms; informing stakeholders and the Ukrainian society about the meaning and potential benefits of European reforms in energy and related sectors in order to empower them to keep the government accountable for pursuing these reforms.
www.enref.org
Executive Summary In November, the natural gas sector demonstrated progress in the implementation of changes. Activity on opening the domestic market made it possible to sign agreements with three European gas suppliers. Despite certain delays, there is also progress in legislative activity in the sector, and already approved decisions (e.g., in respect of the reserve stocks) are being implemented. Common vision of the reform, priorities and objectives was presented in the updated Memorandum of Understanding on a Strategic Energy Partnership between the EU and Ukraine. In the electricity sector, the key factors of progress were international events and legislative activity. The arch-shaped New Safe Confinement was slid over the unsafe unit of the Chornobyl NPP. Moreover, the major areas of co-operation with the EU were laid down in the mentioned Memorandum. In this context, the work on the draft Electricity Market Law with the view of preparing it for the second reading went on, and there was a discussion of the further action for its direct implementation. Experts acknowledged the lack of substantial progress in the energy efficiency sector during November. The reasons were protracted bureaucratic procedures of aligning draft regulatory acts among the executive bodies, and slow process of approval and adoption of laws. For that matter, one of the most important draft laws — on Energy Performance of Buildings — was returned for finalization. Progress in the area of environment can hardly be characterized as substantial, given the lack of proper communication as regards policy and legislative decision-making in the sector. On the other hand, publishing of the draft acts developed to settle the issues that have already long been discussed seems quite optimistic. In the experts’ opinion, as a result of a low priority attached by the government to the commitments in the oil and oil products’ sector, achieving of the objectives set for 2016 is hardly possible. Apart from the negative signal it sends to the international partners, this means it would be necessary to fulfil more commitments while the resources for such purposes will not be allocated. Progress in the area of business climate has showed the reason for moderate optimism. In no small measure it was influenced by the positive decisions of the legislators and the President in the sector, which set more clear and up-to-date rules. However, further implementation of the novations approved will show whether this optimism is justified.
Abbreviations: VRU — Verkhovna Rada of Ukraine Commission — European Commission FES — fuel and energy sector GTS — gas transportation system CMU — Cabinet of Ministers of Ukraine OPP — Odessa Port Plant LNG — liquefied natural gas DHP — district heating provider SSTC NRS — State Scientific and Technical Centre for Nuclear and Radiation Safety WANO — World Association of Nuclear Operators TPP — thermal power plant
AA — Association Agreement GDN — gas distribution network SNRIU — State Nuclear Regulatory Inspectorate of Ukraine МЕCI — Ministry of Energy and Coal Industry of Ukraine NEPURC — National Energy and Public Utilities Regulatory Commission CSNFSF — centralized spent nuclear fuel storage facility UES — Unified Energy System of Ukraine SNF — spent nuclear fuel ICF — Shelter International Chernobyl Fund SNFSF — spent nuclear fuel storage facility DCSSNF — dry cask storage of spent nuclear fuel
Gas In November, situation in the Ukrainian gas sector changed primarily as a result of previously adopted legal acts that have become effective. In particular, it concerns the amendments introduced into the Law "On the Natural Gas Market” in terms of decreasing the requirements to creation of the reserve stocks by gas suppliers, as well as the law on the NEPURC. Along with that, where it concerns modifications to the secondary legislation, no substantial progress was observed. The process of Naftogaz restructuring initiated by the governmental working group went on. In pursuance of the previously adopted unbundling plan, the government established a new operator of the Ukrainian GTS, Mahistralni hazoprovody Ukrainy PJSC (Main Gas Pipelines of Ukraine), and approved its Articles of Association. At the same time, a number of amendments were introduced into the plan of Naftogaz restructuring. The Parliament asked support from the EU Member States’ authorities in view of the challenges Ukraine faces on its way towards integration of its gas market into the common European market, and existing risks related to the implementation of the projects of building gas pipelines to Europe to bypass Ukraine. With the view to strengthening the strategic partnership in the energy sector, the Memorandum of Understanding on a Strategic Energy Partnership between the EU and Ukraine was signed on the 18th EU– Ukraine summit. Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (AA: Articles 338, 341, Annex XXVII) pursuant to Article 278 of the AA The approved amendments to the Law of Ukraine "On the Natural Gas Market”1 insofar as they concern relaxation in the requirements to the creation of the reserve stock by gas suppliers in the underground gas storage facilities as effective from November 1 were ultimately implemented by the Government by way of adoption of the resolution2 setting a zero reserve stock for 2016–2017 subject to absence of emergencies on the market. A new law on the NEPURC3 has entered into force which, being a trade-off alternative, is all the same a step forward towards a really independent gas market regulator, which ensures positive changes, especially those in the field of financing and appointment and rotation of commissioners. The draft law No. 5289 on bringing 13 other legal acts in line with the Law of Ukraine "On the Natural Gas Market” registered in October received positive conclusions of all parliamentary committees including the relevant committee4 but still was not considered during the current session5. The draft resolution (No. 5289/П6) on its adoption in the first reading has already been registered. Meanwhile, in pursuance of the law, the MECI published a draft order which cancels the order of 2 December 2013 No. 882 “On Assigning Functions of the Unified Gas Transport System of Ukraine”7. Legislative uncertainty as to the issue of use of the state-owned gas distribution networks (GDN) remained8 — consideration of the draft law on renting GDNs (No. 42639) on November 2 during the meeting of the 1
http://zakon5.rada.gov.ua/laws/show/1541-19/paran2#n2 http://economics.unian.ua/energetics/1626803-kabmin-shvaliv-zmenshennya-strahovogo-zapasu-gazu-dlyakompaniy-postachalnikiv-u-5-raziv.html 3 Law No. 1540-VIII of 22.09.2016 was officially published on 25.11.2016 in the Holos Ukrainy newspaper, No. 225 4 Record No. 39 of 16.11.2016 5 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=60296 6 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=60586 7 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245156850&cat_id=35082 8 http://www.epravda.com.ua/columns/2016/11/10/610632/ 9 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=58443 2
Gas relevant parliamentary committee ended up with the issue of the conclusion on the above and establishment of a special working group under the aegis of the committee, with the view to the organisation of discussion of fundamental issues around the problem. Meanwhile, two draft laws on amending the Tax Code of Ukraine were registered in November with the Parliament as regards the natural gas rent. The first of them (No. 5459 of 25.11.201610) set a 12% rent for extracting gas from the new boreholes (whose boring will start on 1 January 2017 irrespective of the depth of the deposit). The second one sets a special rent for extracting gas for the purposes of satisfying the needs of Ukraine’s households (No. 5459-1 of 29.11.201611) in the amount of 12% (from up to 5,000-meter deep deposits) and 6% (where the depth of deposit exceeds 5,000 m). A draft resolution of the Verkhovna Rada of Ukraine on imposing of a moratorium on privatisation of stateowned and municipal enterprises up to 1 January 2018 (No. 534812) has also been registered; its adoption may have a negative impact on Naftogaz’s activities (in particular, as regards repaying OPP’s debt in its favour). The fact that the Cabinet of Ministers adopted resolutions on establishment of Main Gas Pipelines of Ukraine PJSC (No. 801 of 09.11.2016), approved its Articles of Association and arranged its state registration (No. 837 of 16.11.2016), which was supported by the decision of the National Securities and Stock Market Commission on registration of stock issue of the above PJSC 13, gave way to actually commence Naftogaz unbundling. According to the MECI, shares issued totally amounted to
UAH 3.786 billion14 and MGPU PJSC was given premises to establish its authorized capital 15. At the same time, the Government moved deadlines of some phases of the process (Resolution No. 800 of 09.11.2016) — introduction of the structure and the corporate management of the new GTS operator as well as creation of Pidzemni hazoskhovyshcha Ukrainy PJSC (Underground Gas Storage Facilities of Ukraine) have been postponed until a later time in 2017. Alongside with that, the Cabinet of Ministers has completely rejected an idea of establishing a supervisory board with two independent directors (which was expected to have been formed by 1 October 2016) at Ukrtrasgaz PJSC. According to the new price list of Naftogaz16, the gas price has risen from December 1 by 4,8% — up to UAH 8,577.6 for 1,000 cubic metres compared with the price in November. Industrial customers and other customers who are not covered by the provision on imposition special obligations and have no debt to Naftogaz and purchase 50,000 or more cubic metres on a pre-paid basis17 are an exception — they are offered a price of UAH 7,780.8 for 1,000 cubic metres (5,4% rise). Regulation (EU) No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005 (AA: Articles 338, 341, Annex XXVII) pursuant to Article 278 of the AA, trade-related issues (Articles 269–274 of the AA): For the purpose of further reformation of the natural gas market and implementation of Regulation (EU) No. 312/2014,, on November 16, the NEPURC held a meeting on the introduction of the daily balancing regime in the market18 as provided for by the above-mentioned Regulation. In the presence of GTS operator’s representatives, GTS operators, suppliers, extractive companies, other stakeholders, the Concept of the implementation of the daily balancing regime submitted by Naftogaz and plan of the implementation thereof were discussed. 10
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=60594 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=60612 12 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=60405 13 http://www.nssmc.gov.ua/press/news/nkcpfr_informueh_pro_rezultati_svogo_chergovogo_zasidannya119 14 http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=245162044 15 http://mpe.kmu.gov.ua/minugol/doccatalog/document?id=245158645 16 http://www.naftogaz.com/files/Information/Naftogaz-gas-prices-December-2016.pdf 17 Payments during the calendar month preceding the month when gas is supplied. 18 http://www.nerc.gov.ua/index.php?news=5520 11
Gas 24 November 2016 may be considered the day of opening the domestic gas market of Ukraine for European suppliers. On that day, Ukrtransgaz signed three contracts on gas transportation and storage in Ukrainian underground storage facilities19. French ENGIE, Swiss DufEnergy Trading SA and TrailStone Energy LLC (which has an office in Ukraine) that had sold gas to Ukrainian traders on the Ukrainian border before the conclusion of those contracts, were among the contractors. According to the contracts concluded, test supplies to Ukrainian traders and end-customers are expected to start in December. Directive 2004/67/EC concerning measures to safeguard security of natural gas supply (Articles 338, 341, Annex XXVII to the AA), functioning of an 'Early Warning Mechanism' (Annex XXVI to the AA), reacting to an emergency situation (Articles 275–276, 309, 314) Average current payments to Naftogaz for gas consumed for heating has amounted to 80% by the end of November20. For the last week of the month the debt reduced by UAH 515 million (2.6%), and as of November 30, past-due debt of DHPs and CHPPs for 2016 totalled UAH 3.7 billion. The problem with ensuring that heat generating companies and heat suppliers live through the heating season has been solved: MPs adopted the law on restructuring of DHPs’ debts 21 for the energy resources (including natural gas) consumed, which makes it possible to unlock the frozen accounts of about 100 companies and restore their normal operation22. The President signed the relevant law on November 2523. The MECI, in its turn, published a draft joint order (with the Ministry of Finance) to amend the Procedure of making settlements for natural gas, heat and electricity supply 24. Further, on its meeting on November З0, the Cabinet of Ministers approved Naftogaz’s (as a separate legal entity) financial plan for 2016 25 and gave a sovereign guarantee to the World Bank vis-a-vis Nafrogaz’s loan obligations for the amount of 500 million US dollars for purchasing natural gas (Resolution No. 876)26. Naftogaz itself is ready to resume gas supplies from the RF at an acceptable price 27 and supports an initiative for negotiations on the matter in Brussels in the EU–Ukraine–Russia format. Naftogaz expressed its gratitude to Mr. Šefčovič, the Vice President of the Commission, for bringing Ukraine’ position to the notice of the Russian authorities during the meeting with the Russian Energy Minister Mr. Novak on November 25. The President of Ukraine28 and the MFA29 disapproved of the decision of the European Commission took in October to permit Gazprom to maximise its use of the OPAL pipeline (German land extension of the Nord Stream 1) up to 90%. The MFA noted that approval of such decisions without previous consultations with the Ukrainian side is a violation of Article 274 of AA which provides for mutual taking into account of the energy infrastructure and capacities of the other Party, coordination of plans and projects, as well as cooperation on matters related to security of supply. Moreover, when preparing such decisions, the EU
19
http://utg.ua/utg/media/news/2016/11/ukrana-vdkrila-svj-gazovij-rinok-vropejskim-postachalnikam-ukladeno-3dogovori.html 20 http://www.naftogaz.com/www/3/nakweb.nsf/0/F84BF17312E9C6ADC225807B003DAC99?OpenDocument&year= 2016&month=11&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 21 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=60275 22 http://uacrisis.org/ua/48906-borgi-tke 23 http://www.president.gov.ua/news/prezident-pidpisav-zakon-shodo-vregulyuvannya-zaborgovanosti-38842 24 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245157595&cat_id=35082 25 http://www.epravda.com.ua/news/2016/11/30/612788/ 26 http://ukranews.com/ua/news/463038-kabmin-nadav-derzhgarantiyu-po-kredytu-naftogazu-v-500-mln-pidzakupivli-gazu 27 http://www.naftogaz.com/www/3/nakweb.nsf/0/121139BE1AC955EBC2258076004D7275?OpenDocument&year= 2016&month=11&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 28 http://www.president.gov.ua/news/prezident-proviv-telefonnu-rozmovu-z-komisarom-yes-z-pitan-y-38716 29 http://mfa.gov.ua/ua/press-center/news/52288-podalyshe-vidkladennya-rishennya-jes-pro-zaprovadzhennyabezvizovogo-rezhimu-dlya-gromadyan-ukrajini-je-nepripustimim
Gas must comply with the obligation it undertook under the Treaty establishing the Energy Community 30, and particularly, with the solidarity principle, and avoid taking decisions that fail to go in line with the EU antitrust acquis. Implementation of the above Commission’s decision may potentially jeopardise stable gas transits to the EU. Indeed, where Gazprom no more uses Ukrainian transit route and uses Nord Stream 1 – OPAL networks in its stead, Ukrainian GTS may find itself in a regime of unstable functioning as Gazprom won’t maintain proper pressure — this is what happened in summer31 when Ukrtransgaz covered low pressure at the output of the Russian pipeline with its own gas in order to meet transit technical conditions and ensure gas flow to the European customers through the exit points. This sometimes happens even now32. Likewise negative was Polish assessment of the Commission’s decision on OPAL; Polish foreign minister Mr. Waszczykowski stated33 that Poland intended to block the above decision by filing complaints with the European Commission and with the EU Court of Justice to prevent negative impact of using additional OPAL capacities by Gazprom on gas supplies in Poland and through its LNG-terminal and future supplies from Norway. On November 15, the Verkhovna Rada approved the letter to the EU Member States’ parliaments and executive bodies in respect to strengthening co-operation in the area of energy security and managing potential risks arising out of the implementation of projects on construction of transit gas pipelines bypassing Ukraine (Resolution No. 1733-VIII of 15.11.1634). The letter emphasises that despite all circumstances (including military aggression on the part of Russia) Ukraine remains a reliable partner supplying natural gas to the EU and reaffirms its readiness to further coordinated actions aiming at implementing reforms and improving cohesion of the energy policy with the EU policy. At the same time, the Parliament expressed its deep concern with the intentions to build transit pipelines bypassing Ukraine and considers that implementation of such projects and providing Gazprom with the opportunity to pump more gas through the existing pipelines not only brings transit routes through Ukraine and Poland (Yamal – Europe) to naught and jeopardises energy security of the CEE countries but also casts doubt on creation of liquid interconnected gas market within the Energy Community in particular. During the conference held on November 18 in Vienna under the auspices of the Energy Community Secretariat and the Polish Embassy35, various assessments of potential impact of Nord Stream II pipeline on Europe were expressed by experts and managers of member companies. On a par with possible positive impact on liquidity of gas hubs, new risks for the effective gas contracts and relating to strengthening of the EU’s dependence on Russian gas were aired. Ukrtransgaz which secures stability of gas supplies to the EU, despite the failure to maintain the contractual pressure on the part of the Russian side (on 15.11.2016 the pressure on the cross-border GMS Sudzha (RF) was 57.7 atm, against the contractual 60.0 atm 36), aims at further maintaining of reliability of transits and for that purpose it proceeded with the new phase of modernisation of the Ukrainian GTS37. On November 14-15, the electronic public procurement system ProZorro accepted the tendering results in the amount over UAH 4 billion for the reconstruction of gas compressor stations Zadniprovska, Ananiv and 30
COM (2015) 80 final, 25 February 2015; COM(2016) 52 final, 16 February 2016. http://www.naftogaz.com/www/3/nakweb.nsf/0/1A828DDEEF80631BC2258017005F4781?OpenDocument&year=2 016&month=08&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 32 http://www.epravda.com.ua/news/2016/11/15/611241/ 33 http://wiadomosci.onet.pl/tylko-w-onecie/witold-waszczykowski-nie-bedzie-nord-stream-ii-wywiad/c7lpjm 34 http://zakon2.rada.gov.ua/laws/show/1733-viii 35 https://www.energy-community.org/portal/page/portal/ENC_HOME/CALENDAR/Other_Meetings/2016/18_Nov 36 http://utg.ua/utg/media/news/2016/11/ukrana-zabezpechu-tranzit-gazu-nezvazhayuchi-na-porushennya-rosyukontraktnix-tiskv.html 37 https://www.rbc.ua/ukr/news/ukrtransgaz-nachal-novyy-etap-modernizatsii-1478628975.html 31
Gas Pivdennobuzka38. As result of the open tendering, Ukrtransgaz purchased works at a favourable price, having saved half a billion UAH. For the period from 1 January to 1 December 2016 the Ukrainian GTS has transmitted 73.5 billion cubic metres of gas for the European customers39, which is by 22% more than in 2015. The tendency of growth in transits was also distinctive in November when they reached 8.5 billion cubic metres (by 46% more compared to November 2015). According to Ukrtransgaz’s director Mr. Prokopiv, the transits made this year will total 80 billion cubic metres. During the joint summit in Brussels on November 24, Ukraine and the EU agreed on the updating strategic tasks and ways of co-operation in the energy sector that became a necessity in the course of the reform of the energy sector in pursuance of the commitments Ukraine had undertaken. To make the approved objectives binding, the Energy Minister Ihor Nasalyk and Commission’s Vice President for the Energy Union Maroš Šefčovič, in the presence of the President of Ukraine, President of the European Council and President of the European Commission, signed the Memorandum of Understanding on a Strategic Energy Partnership between Ukraine and the European Union40. The aim of the updated Memorandum is complete integration of energy markets of Ukraine and the EU. The signed document provides, first of all, for enhanced co-operation between the parties on strengthening the energy security based on the principles of solidarity and trust, and improving efficiency of energy consumption, reduction of emissions, and fostering development of the renewable energy sources. At the same time, according to the Deputy Head of Presidential Administration Mr. Yeliseiev41, Ukraine and the EU agreed on additional consultations on providing Gazprom with the enhanced access to the OPAL pipeline and Ukraine believes that a trade-off alternative would be found where Ukrainian interests would be taken into account. According to Ukrtransgaz, gas reserves in the UGSs reduced by 0.9 billion cubic metres in November (last 3 days of the month 50 million cubic metres were evacuated daily) 42. In total, since the start of the 2016/2017 heating season until December 1, Ukraine had used 1.14 billion cubic metres of gas from the UGSs, which is by 35% more than the last year 43. As of 1 December 2016, Ukrtransgaz’s underground storage facilities had 13.6 billion cubic metres, which is the lowest rate in the recent years 44. The above shows that if temperature goes down, as early as in the beginning of 2017 gas supplies in Ukraine could become a problem and additional procurement will be necessary. That is why the Government gave sovereign guarantees to Naftogaz as a credit in the amount of 500 million US dollars.
38
http://economics.unian.ua/energetics/1626917-prozorro-pidtverdila-rezultati-tenderiv-schodo-modernizatsiji-gtsna-bilsh-nij-4-milyardi.html 39 http://utg.ua/utg/media/news/2016/11/tranzit-gazu-v-vropu-zrs-na-22.html 40 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article;jsessionid=36B7BABE011C6949779CCE3D044A6922.ap p1?art_id=245160000&cat_id=35109 41 http://biz.liga.net/ekonomika/tek/novosti/3546613-es-i-ukraina-provedut-konsultatsii-po-dostupu-gazproma-kopal.htm 42 http://utg.ua/utg/media/news/2016/11/opalyuvalnij-sezon-vdbrano-z-gazosxovishh-na-tretinu-blshe-nzh-tork.html 43 Ibid. 44 The 2016/2017 heating season started with the reserves in the UGSs amounting to 14.7 bcm against 17.1 bcm last year.
Gas DEVELOPMENTS IN THE EU LEGAL FRAMEWORK SECURITY OF SUPPLIES On September 8–9, a meeting of the CESEC group was held, which was dedicated to development of the gas transmission infrastructure in Central and South-Eastern Europe45. It resulted, among other, in signing of the Action Plan on regulatory issues and grant agreement on development of the corridor Bulgaria–Romania, Hungary, Austria, statements on the Vertical Corridor (with participation of Greece, Bulgaria, Romania, Hungary) and the memorandum between Ukrtransgaz and TSOs of Greece, Bulgaria and Romania. Meanwhile, the European Commission awarded 9.2 million Euros for the development of gas interconnectors between Germany and Poland46, and in October it signed an agreement for 187 million Euros of investment in the Balticconnector, the gas pipeline connecting Finland and Estonia47. On 13 October, the relevant committee of the European Parliament supported the proposal from the European Commission on implementation of the verification mechanism with regard to intergovernmental agreements between Member States and third countries in the field of energy (repealing Decision 994/2012/EU)48. The amendments also provide for a “regional solidarity mechanism”, the measures on gas supplies from neighbouring countries in emergency cases (where the security and health of “protected customers” is at risk). On October 25, the European Parliament approved the Commission communication “EU strategy for liquefied natural gas and gas storage”49 which provides for improvement of the security of supply by means of the better access to the LNG imports and development of the effective cross-border gas storage market. On November 24, consultations started on the assessment of the Connecting Europe Facility (CEF) programme50. The purpose of the consultations to be held till 27 February 2017 is collecting proposals on possible ways of efficiency assessment of the CEF programme in terms of its objective which lies in development of highly productive and interconnected energy networks. OPAL On 28 October, following the submission from the German regulator, Bundesnetzagentur, the European Commission decided on a new regime of access to the OPAL pipeline51. In accordance with the Commission communication, with the view of strengthening of the security of gas supply in Germany and Czech Republic, the following conditions are to be applicable until 203352: Use of 50% of OPAL’s capacity will be exempt from TPA53; Third party undertakings may bid for the amount of up to 20% (give there is demand) of OPAL’s capacity at the Gaspool hub; Gazprom and other companies with a dominant position in the Czech Republic may bid for that capacity only at the base price54. Where higher demand has been proved based on relevant documents, the share of the third party undertakings may be increased. The rest 30% (at least) of OPAL’s capacity may be purchased through the auctions without any additional conditions or limitations, which means that Gazprom may reserve that share and thus increase its control over OPAL’s capacity up to 80%.
45
https://ec.europa.eu/energy/en/news/commission-and-energy-ministers-sign-important-infrastructure-andregional-cooperation 46 https://ec.europa.eu/energy/en/news/esi-funds-improve-energy-connections-between-germany-and-poland 47 https://ec.europa.eu/energy/en/news/investing-infrastructure-unites-first-gas-interconnector-between-finlandand-estonia-ends 48 http://www.europarl.europa.eu/news/en/news-room/20161010IPR46492/gas-energy-meps-back-draft-law-onemergency-supply-links-between-eu-countries 49 http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-20160406+0+DOC+XML+V0//EN&language=EN 50 https://ec.europa.eu/energy/en/consultations/mid-term-evaluation-connecting-europe-facility-cef 51 http://europa.eu/rapid/press-release_IP-16-3562_en.htm 52 http://ngbi.com.ua/files/OPAL.pdf 53 Third Party Access 54 I.e. Gazprom may take part in bidding only where no other auction participants offer a price higher than a starting price.
Gas NEW ENERGY PACKAGE On November 30, the European Commission presented a package of measures55 aimed at EU’s achieving global leadership in transition of world energy markets to “clean energy”. Legislative proposals of the package cover, in particular, the areas of: energy efficiency, use of renewable energy, ensuring security of electricity supply and governance rules for the Energy Union56 — all which is able to make a fair deal for consumers.
55 56
http://europa.eu/rapid/press-release_IP-16-4009_en.htm http://ec.europa.eu/energy/sites/ener/files/documents/1_en_act_part1_v9_759.pdf
Electricity and Nuclear Security The major events of November included signing of the Law “On the National Energy and Public Utilities Regulatory Commission” by the President of Ukraine. The full composition of the Commission will be freshened on a competitive basis within the next two years. The Law on Energy Ombudsman is expected to be drafted and submitted to the Verkhovna Rada in 2017. The significant development was signing of the Memorandum of Understanding between the European Union (together with the European Atomic Energy Community) and Ukraine on a Strategic Energy Partnership in the Field of Energy. An important EU project aiming at the effective progress of reform in the energy sector “Assistance to Ukraine in the process of implementation of energy sector reform in line with Ukraine's international commitments” has also been launched. Great attention was turned to the historical event — completion of pulling a unique arch-shaped structure over the Shelter facility of Chernobyl NPP. In November, the MECI outlined its vision of development of Ukrainian coal industry more clearly. In particular, the action plan for the Ukrainian coal industry reform was presented and a concept of structure of state-owned coal industry enterprises following their reorganisation was submitted for public discussion. The Cabinet of Ministers also approved the Concept of the State Target Economic Programme of Development of the Nuclear Industrial Complex for the Period until 2020. Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (Article 269, Chapter 11, Title IV of the Association Agreement between the EU and Ukraine) The Law of Ukraine “On the National Energy and Public Utilities Regulatory Commission” was signed by the President of Ukraine on November 26 and has entered into force 57. During 2017–2018, the Commission’s composition will be freshened on a competitive basis. Further, the Law on the Energy Ombudsman is expected to be submitted to the CMU by July 2017. The Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety continues its work on preparing the draft Law “On the Electricity Market of Ukraine” (No. 4493) to the second reading. MPs have submitted as many as 1,126 alternation proposals in total, all of them have been considered by the special working group. Minister Ihor Nasalyk emphasised on the major issues relevant to the introduction of a new market model, and particularly, development of draft regulatory acts aimed at implementation of the law following the adoption thereof, purchase of software for SE NEC Ukrenergo, feasibility study for drawing up tender documents, corporatisation of SE NEC Ukrenergo and reorganisation of SE Energorynok. The Minister said that to accelerate the introduction of market relations, the legal framework (including market rules and methodology of setting tariffs for operations control etc.) has to be prepared in a timely manner58. Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (Article 273, Chapter 11, Title IV of the Association Agreement between the EU and Ukraine) On November 11, the NEPURC published the draft Resolution “On Approval of Amendments to the Methodology for Calculation of Payment for Connecting Electrical Installations to Power Networks” (finalised)59. The current Methodology for Calculation of Payment for Connecting Electrical Installations to Power Networks (where non-typical connection is concerned) does not make it possible for the customers ordering connection services to calculate and foresee their approximate expenditures neither at the stage of launching business not at the stage of receiving technical specifications of connection and/or agreeing on design documentation with a power transmission organisation. The amendments as proposed by the draft resolution will make it possible for any customers ordering connection services (electricity consumers who want to increase power of their own electrical installations) to evaluate in a timely 57
http://zakon5.rada.gov.ua/laws/show/1540-19 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245157188&cat_id=35109 59 http://www.nerc.gov.ua/?id=22027 58
Electricity and Nuclear Security manner — prior to applying to the power transmission organisation — the final cost of connection services, so knowing the connection cost the customers would not bear additional financial load since they will order only capacities they really need, which, in its turn, will allow unloading of the existing electricity networks. On November 23, Vadym Horiushko, the Deputy Director of the Information Technology Centre, a separated unit of SE NEC Ukrenergo, presented a concept of a Smart Grid which Ukrenergo is planning to introduce shortly in Ukraine, named Smart Electricity Consumption60. Acting Director of SE NEC Ukrenergo Vsevolod Kovalchuk said that from 1 January 2017, Ukrenergo will introduce a one-stop-shop system for all corporate customers who intend to connect to the company’s transmission network. First of all, it concerns conditions of connection to the main transmission networks of electricity producers with the power of 10 mW and above, that is small power plants.61 On November 25, the Co-ordination Group for the introduction of a new electricity market model had a meeting chaired by the NEPURC member Volodymyr Yevdokimov. Representatives of the NEPURC, MECI, SE Energorynok, SE NEC Ukrenergo and those of the specialised NGOs took part in the meeting of the Coordination Group. The discussed the progress in the execution of the Timetable of the implementation of the new electricity market model , current progress in drafting regulatory acts on the new market model, organisation of further work on preparation and implementation of the new market model.62 Regulation (EC) No. 714/2009/EC of 13 July 2009 on conditions for access to the network for crossborder exchanges in electricity and repealing Regulation (EC) No. 1228/2003 (Article 270, Chapter 11, Title IV of the Association Agreement between the EU and Ukraine) On November 11, the NEPURC set a price of electricity for SE Energorynok to be transmitted between the power transmission systems of Ukraine and Poland within the framework of provision of emergency aid from the UES of Ukraine to Polish power transmission system in the amount of EUR 0.075 for 1 kWh (Resolution of the NEPURC No. 1987 of 11.11.2016). 63 Article 338, Chapter 1, Title V of the Association Agreement between the EU and Ukraine Cooperation Agreements with IFIs One of the most significant events in November was signing on November 24 of the Memorandum of Understanding on a Strategic Energy Partnership in the Field of Energy between Ukraine and the European Union together with the European Atomic Energy Community.64 The document’s validity is 10 years and it may be revised in 5 years. On one hand, this EU document clearly provides for a full integration of energy markets of Ukraine and the EU, and the Energy Union is viewed only in the context of “joint realisation of principles” but no possible format of Ukraine’s membership is described therein.65 On November 8, a new EU technical assistance programme “Assistance to Ukraine in the process of implementation of energy sector reform in line with Ukraine's international commitments” was launched. The objectives of the above project are: support of further reform in the energy sector; assistance to the MECI in preparation to transposition and implementation of certain provisions of the EU–Ukraine Association Agreement and the Treaty establishing the Energy Community; assistance to Ukraine in developing an effective regulatory framework which will facilitate the increase in competition and ensure efficiency of the markets, create favourable conditions for the investors and facilitate sustainable development of the sector. The project with the budget of EUR 2.3 million for an estimated period of 30
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Electricity and Nuclear Security months66 will also be able to assist the MECI in improving the process of development of the sectoral policy. On 11 October 2016, Minister Ihor Nasalyk and Vice President of the European Investment Bank (EIB) Vazil Hudák discussed further co-operation. EUR 675 million have already been allocated for the implementation of investment projects in the FES, and in view of a positive assessment of the cooperation and energy’s being a priority for the EIB’s activities in Ukraine, the bank expressed its readiness to allocate additional funds for the projects in the area of hydropower industry and electricity transmission.67 On November 29, a ceremony of completion of pulling a unique arch-shaped structure over the Shelter facility of ChNPP took place, with the participation of President of Ukraine Petro Poroshenko and the EBRD management, delegates of the donor countries of the Chernobyl Shelter Fund (CSF) and the countries contributing to the Nuclear Safety Account. 68 28 donor countries helped Ukraine in constructing the Shelter facility and collected over EUR 1.417 billion. In total, 40 countries took part in that construction project. The EBRD acted as the administrator of CSFfunds.69 On the same day, a regular CSF Donor-Countries Assembly and the Assembly of the Nuclear Safety Account discussed putting the Arch in the design position over the ruined 4th power unit of Chernobyl NPP and implementation of the project of construction of SFSF-2.70 Article 339, Chapter 1, Title V of the Association Agreement between the EU and Ukraine, coal market On November 1, the MECI presented the action plan for the reform of the coal industry of Ukraine to the trade union leaders, heads of oblast state administrations and directors of the coal-mining companies. The Minister assured that prior to January 1, the backdated salaries will be repaid in full, meanwhile turning attention to such problems as inappropriate expenditures, significant expenditures relating to maintenance of the administrative apparatus, losses in tendering procedures, sale of coal via mid persons etc. of which the settling, in his opinion, may additionally release over UAH 1 billion. 71 On November 2, during the meeting of the Verkhovna Rada Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, Ihor Nasalyk presented a concept of post-reorganisation structure of state-owned coal industry enterprises72. The MECI already has UAH 300 million and plans to raise another UAH 1 billion of state support. The plan is to switch the CHPPs from the anthracite coal over to gas coal. As result of reorganisation, it is planned to reuse materials of the existing mines, optimise administrative personnel and receive annual savings of around UAH 150 million. Due to poor state of design institutes, it is proposed to establish a new enterprise.73 It is expected that following implementation of necessary measures, gas coal mining output will double in 1.5 years. Speaking of coal supply from the uncontrolled territory, Ihor Nasalyk observed that Ukraine consumes 24.5 million tons of coal per year, of which 9.2 million tons of anthracite coal is mined outside the territory controlled by Ukrainian authorities. The Minister assured that coal is supplied from those mines that were re-registered in the territory under control and pay their taxes to the State budget. According to his information, over 560 thousand tons of anthracite coal have been chartered. Zmiiv CHP plant plans to launch power units burning gas coal, which will contribute to reduction of use of anthracite coal.74
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Electricity and Nuclear Security In November, there was a discussion of an issue of the budget75 and of the adjusted construction plan76 for Novovolynska mine No. 10 where energy-intensive gas coal will be extracted. According to the Energy Minister, in order to complete construction and put the mine into production, UAH 250–300 million are necessary. Prime Minister Volodymyr Groysman, in his turn, stated that he was ready to support completion of the mine No. 10 in Novovolynsk and putting it into production, as it would make it possible to create jobs, on one hand, and, on the other hand, it will make it possible to close down those mines that are unprofitable.77 Article 342, Chapter 1, Title V of the EU–Ukraine Association Agreement, Cooperation in the nuclear safety sector, Council Directive 2014/87/Euratom, Council Directive 2013/59/Euratom, Council Directive 2006/117/Euratom On November 9, the Cabinet of Ministers adopted the Concept of the State Target Economic Programme of Development of the Nuclear Industrial Complex for the Period until 2020 78 which provides for establishing of nuclear fuel production as well as production of its components in Ukraine with the view to ensure diversification of its supply and import substitution to fully satisfy needs of the national NPPs in domestic fuel.79 Under the programme for diversification of sources of nuclear fuel for Ukrainian nuclear power plants, the share of Russian fuel in procurements reduced to 64% during the last 9-month period, and 35.9% were imported from Sweden.80 In November, modernisation of South Ukraine and Zaporizhia NPPs went on; as a result, its completion will make it possible to increase the share of nuclear fuel produced by Westinghouse in the structure of supplies.81 In November, NJSC Energoatom and China National Nuclear Power (CNNP) agreed to develop mutually beneficial co-operation at all stages of the NPP life cycle.82 Further, NJSC Energoatom ans Spain-based IDOM Nuclear Services reached an agreement on the search of prospective areas of co-operation and possible involvement of IDOM NS’s experience in the implementation of future Energoatom’s projects as well as on conclusion of the Memorandum of Understanding in the field of nuclear energy.83 In the area of nuclear safety, and particularly, in the context of issues of safe transportation of nuclear materials, on October 31 – November 4, on the basis of South Ukraine NPP, members of military units specialising in escorting nuclear materials transportation underwent a training course “Securing protection under the scheme of physical safe-keeping of transportation of nuclear materials”. The following representatives took part therein.84 On October 31 – November 385 and on November 22–25,86 under the international Agreement between Ukraine and the IAEA on application of safeguards in relation to the Treaty on the Non-Proliferation of Nuclear Weapons, the IAEA inspectors conducted scheduled inspections of the power unit 6 and DCSSNF at Zaporizhia NPP. The inspections were successful and no observations were reported. Further, in 75
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Electricity and Nuclear Security November, under the IAEA programme of technical assistance to SE NJSC Energoatom, its representatives together with representatives of Zaporizhia NPP visited Romanian Cernavodă NPP.87 In November, in the framework of safety inspection of Ukrainian NPPs, the first mutual peer review in WANO history was completed by experts from the WANO Paris Centre at Rivne NPP. The review confirmed high safety level of the nuclear power plant.88 On November 22-25, WANO technical support mission worked at Khmelnytskyi NPP (KhNPP)89 which, upon completion of its work, provided recommendations on error prevention on the part of the personnel. On November 29, at KhNPP, the SNRIU and SSTC NRS representatives commenced comprehensive review of compliance of operation of the power units with the requirements, norms, rules and standards on nuclear and radiation safety.90 On November 3, the SNRIU Board confirmed that the CSNFSF project conforms to the nuclear and radiation safety requirements91, and approved the conclusion of state nuclear and radiation safety assessment of the Preliminary report as regards safety analysis of the CSNFSF.92 Article 342, Chapter 1, Title V of the EU–Ukraine Association Agreement, Cooperation in the nuclear safety sector. Cooperation aims at resolving problems caused by the Chernobyl accident and putting Chernobyl NPP out of operation On October 31 – November 4, SNRIU, together with SSTC NRS, conducted a planned review of SSE Chernobyl NPP as regards construction of the new safe confinement (NSC) of the Shelter facility.93 On November 29, the new safe confinement (the Arch) was pulled over the Shelter facility built around the ruined 4th power unit of Chernobyl NPP.94 The next phase following the completion of the Arch positioning is going to start next year. Pulling the Arch into the design position over the Shelter facility is the most important part of works of the second phase of the Strategy of Shelter Transformation into an Environmentally Safe System. During the second phase it is planned to develop, until 2023, the infrastructure for dismantling of unstable structures of the Shelter facility and carry out dismantling thereof. The third phase provides for removal of fuel-capacious materials and long-living radioactive wastes from the power unit ruined as a result of explosion, with their subsequent conditioning and storage in the radioactive waste storage facilities.95 The final objective of the project is minimisation of negative impact of the ruined power unit on the environment not only during the lifespan of the NSC (100 years) but also for generations to come.96 As for the exclusion zone, it will become yet another step towards positive transformations and an opportunity to become the area of special industrial purpose to the state’s benefit. At the moment, construction of a solar power plant is planned within the exclusion zone.97 According to Minister of Ecology and Natural Resources of Ukraine Ostap Semerak, the available infrastructure makes it possible to construct a solar power plant in Chernobyl whose power may be 1/4 of
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Electricity and Nuclear Security ChNPP’s power. Account taken of the above, it is planned that the development of renewable energy in the Chernobyl zone will become a key direction of using thereof.98 Financing of the operation of the new safe confinement will cost Ukraine about UAH 500 million a year. The Shelter facility is planned to be put onto Ukraine’s balance in November 2017. 99 From that moment on, Ukraine will cease contributing to the international funds financing the construction. 100 Further, during November, two IAEA missions were held on the basis of a SSE Chornobyl NPP’s training centre “Reuse and changing the purpose of the emptied facilities for decommissioning purposes”101 where the IAEA experts shared the international experience of changing the intended function of the emptied facilities for the decommissioning purposes; and a mission on assessment of the reviewed Chernobyl NPP Decommissioning Programme (under IAEA Technical Cooperation Project UKR9035).102
DEVELOPMENTS IN THE EU LEGAL FRAMEWORK On November 30, the European Commission approved a package of new legislative initiatives in the energy sector — Clean Energy for All Europeans. The package, among the other things, includes the legislative proposals on: • a new model of the electricity market — in fact, the Fourth Energy Package — revision of Directive 2003/54/EC and revision of Regulation No. 714/2009; • decision on sector inquiries on application of capacity mechanisms by Member States; • revision of the Energy Efficiency Directive; • revision of the Renewables Directive; • draft Regulation on implementation mechanism (implementation management) of the Energy Union Strategy; • report on the prices of energy resources in the EU. The Commission wants the EU not simply to adapt “green technologies” but to become a global leader in that area. For this reason, the EU undertook to reduce CO2 emissions at least by 40% until 2030 and start a global modernisation of the EU economy. The adopted provisions pursue three major objectives: – energy efficiency, first of all; – achieving global leadership in the area of renewables; – striking a fair deal for consumers. Consumers are active and main players in the future energy markets. Consumers all over the EU will have the better choice in future, access to reliable instruments of energy price comparison and will also have an opportunity to generate and sell energy of their own. Enhancement of transparency and improvement of regulation give more opportunities for the civil society to more actively participate in the energy system and respond to price signals. The proposed package of legislative amendments also contains a number of measures aimed at protection of the most vulnerable consumers. As to the further procedure, part of the documents as, for example, new directives, is to be agreed on with the EU Council and the European Parliament. Part of the documents is within the scope of exclusive competence of the European Commission, for example, those pertaining to capacity mechanisms. While implementing the Memorandum of Understanding on a Strategic Energy Partnership in the Field of Energy between Ukraine and the European Union together with the European Atomic Energy Community, the parties will have to take those new changes into account.
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Energy Efficiency and Social Issues November was not marked by any significant achievements in the reform of energy efficiency sector. Most regulatory acts to be developed in pursuance to the adopted laws or direct requirements of respective Directives, such as Action Plan for the introduction of the energy management systems or certain Technical Regulations on energy labelling, so far have are either being agreed upon or even being drafted yet. At the same time, delayed adoption of framework laws, such as the laws on energy performance of buildings or on the Energy Efficiency Fund, narrows down potentialities for drafting necessary secondary legislation. An especially unpleasant surprise was failure of the vote on the law on energy performance of buildings when the number of MPs who voted for, haven’t even approached 226. At the same time, the Government, again, took a number of unexpected decisions being out of the reform paradigm based on the market principles, which, instead, slows down the resolution of urgent problems, such as optimisation of a system of granting subsidies or increase in financing of state programmes supporting energy modernisation of residential buildings. Directive 2012/27/EU on energy efficiency Energy audits and energy management systems (Article 8) The CMU’s draft Ordinance “On Approval of the Action Plan for the Introduction of the Energy Management Systems in the State-financed Organisations” is pending repeated approval by the Ministry of Finance based on the results of the co-ordination meeting with the representatives of the civil society held on 6 September 2016. In accordance with the regulatory requirements, after haven been agreed upon by the Ministry of Finance, the said draft document is to be submitted to the Ministry of Justice for legal assessment and then to the Government for consideration. Adoption of the respective regulatory act and implementation of measures provided for therein will make it possible to ensure efficient use of energy resources by state-financed institutions by way of introduction of the energy management system with the systemic approach to energy consumption management taken into account. Metering (Article 9) The draft Law “On Commercial Metering of Utility Services” (reg. No. 4901 of 06.07.2016) registered by MPs and adopted in the first reading on 18.10.2016, is being prepared for a final vote; its consideration is planned for the first half of December. The draft Law proposes to set the principles ensuring commercial metering of the services relating to the heat power supply, hot water supply, centralised water supply and provision of consumers with relevant metering information. Both the above information as well as information about active work on related draft laws was communicated by the participants of the multilateral meeting held on November 29 by the Verkhovna Rada Committee on Fuel and Energy Complex with the participation of Vice Prime Minister Hennadii Zubko and Head of the State Agency on Energy Efficiency and Energy Saving of Ukraine Serhii Savchuk.103 “Draft laws on commercial metering of utility services, on energy performance of buildings and energy services procurement mechanism are vital for finding a solution to the problem of improvement of energy efficiency both in residential and budgetary sectors. Their consideration and adoption by the Parliament are a priority at the moment”, said Mr. Savchuk. 104 Besides, in view of incomplete equipping of apartment buildings with metering devices the Government took a disputable decision by ordering that, absent such devices, bills for centralised heating services must be charged based on the averages of consumed heat for the relevant location during the current accounting period as invoiced to the consumers of neighbouring buildings based on the readings of their metering devices.105 Such decision is likely to result in substantial discrepancies in amounts of heating energy consumption with the bills invoiced to such buildings, which will cause additional losses for
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Energy Efficiency and Social Issues suppliers. Moreover, it may demotivate such buildings not equipped with meters to reduce their consumption. National Energy Efficiency Fund, Financing and Technical Support (Article 20) According to officials of the Ministry of Regional Development, the draft Law on the Energy Efficiency Fund drawn up by the above Ministry was agreed upon by all interested executive bodies and prepared for submission to the Government for consideration, which is expected to happen in the first half of December. It is worth mentioning that the Ministry of Finance submitted a number of observations revealing corruptogenic provisions contained therein, in particular, those pertaining to misuse of public funds. Unfortunately, any information about the progress in development of and agreeing upon the above draft law comes only from unofficial sources because neither information to that end nor the text of the draft law were published on the website of the Ministry of Regional Development. For the purpose of continuing the “warm crediting” programme insofar it concerns “encouraging purchase of non-gas/non-electric boilers” with all the allocated funds already taken out, the Government, again, reallocated funds for that purpose at the expense of “support to condominiums and house development cooperatives”, this time, in the amount of UAH 20 million.106 Moreover, as the draft Law on the 2017 State Budget provides no expenditures for the “warm crediting” programme in 2017, it gave rise to concern on the part of the public, experts and condominiums. After a number of awareness-raising events, the most important among which was a round table “How to stop “burning” money?” organised by the working group “Energy efficiency and social issues” under the project “Increase of the civil society’s influence in monitoring and political dialogue on the reform in the energy sector and in related sectors in pursuing implementation of the Association Agreement”, and following the public call of the civil society based on the results of the above round table, the Government decided to allocate UAH 400 million from the State budget to finance the Programme.107 However, according to the calculations of the State Agency on Energy Efficiency and Energy Saving of Ukraine, the minimal amount necessary for the implementation of the Programme is about UAH 2 billion.108 In view thereof, the Civil Network “OPORA” published a petition on the Cabinet of Ministers’ website for continuing the “warm crediting” state programme and allocating UAH 1.9 billion for financing thereof”. 109 Directive 2010/31/EU on the energy performance of buildings The draft Law “On Energy Performance of Buildings” (reg. No. 4941 of 11.07.2016) as submitted by the Government110 was considered by the Verkhovna Rada on November 17 but failed to muster enough votes to be adopted even in the first reading and was returned by the Verkhovna Rada to the relevant committee to be finalised and prepared for another first reading. Besides, the Committee’s member Mr. Riabchun registered an alternative draft Law “On Energy Characteristics of Buildings” (No. 4941-1)111 on November 25 developed by the deputy’s team in cooperation with the civil society. While the original draft Law received support from the Energy Community Secretariat as such that generally implements respective Ukraine’s commitments under Directive 2010/31/EU, it may be reasonably expected that an alternative draft document won’t pass such a test that easily. Basic provisions of the alternative document provide for mandatory certification of energy characteristics of buildings only for the buildings under construction, premises occupied by bodies of central authorities and local governments (with the area of over 500 sq. m) and in cases where individuals want to take part in 106
http://www.kmu.gov.ua/control/uk/publish/article?art_id=249518536&cat_id=244274160 https://www.slovoidilo.ua/2016/11/18/novyna/finansy/uryad-hotovyj-vydilyty-na-tepli-kredyty-shhe-400-mln-hrn 108 https://www.oporaua.org/biblioteka/statti/43325-tepli-kredyty-vs-fond-enerhoefektyvnosti-realii-reformy 109 https://petition.kmu.gov.ua/kmu/Petition/View/728 110 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59631 111 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=60595 107
Energy Efficiency and Social Issues the state programmes for energy efficiency support. In this context, the core commitment for compliance with the Directive’s requirements in respect of certification of houses and premises owned by natural persons in cases of alienation or lease thereof is proposed to be made optional. At the same time, the draft law authors used more correct terminology approach and removed all irrational provisions from their text (as, for example, principles of establishing the Energy Efficiency Fund) for which special legislative instruments need to be developed.112 In general, one cannot help agreeing with the authors that the draft Law that failed to pass the Verkhovna Rada’s debating chamber even in the first reading, has little chance of becoming an law in force without fundamental improvements; however, in order to fully meet requirements of Directive 2010/31/EU, the draft law as proposed by MP Riabchun, in case it has been passed by the Verkhovna Rada, will apparently require further amendments. Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products According to unofficial information, governmental draft resolutions on approval of a number of technical regulations being agreed upon by the executive authorities concerned for already about a year, still remain unapproved. Because of the series of bureaucratic procedures of agreeing upon the regulatory acts, the following documents remain unapproved until now:
Technical regulation on energy labelling of air-conditioners; Technical regulation on energy labelling of TV-sets; Technical regulation on energy labelling of domestic ovens and exhaust hoods; Technical regulation on energy labelling of domestic cylinder dryers; Technical regulation on energy labelling of domestic combo washer-dryers; Technical regulation on energy labelling of vacuum cleaners.
Social issues The pressing problem in the area of social protection is delayed revision of a system of granting subsidies by the Cabinet of Ministers; the amount of the above subsidies in 2017 is expected to be 59 times as big as funding of state energy efficiency programmes in 2016. 113 During the discussion of the progress of improving verification of subsidy recipients and expected introduction of monetisation of social protection means, organised by DiXi Group think tank on 29.11.2016, the head of the NEPURC supported the scheme which would help remove budgetary bilateral clearing at the company level and spoke in favour of speedy monetisation of the subsidy idle balances. Representatives of the Ministry of Finance and the Ministry of Social Policy, however, said that any kind of monetisation in 2017 is unlikely.114 In view of the considerable amounts of subsidies involved (UAH 47 billion have been allocated for the next year) and extraordinarily low requirements for granting them, it may be concluded that a substantial part of the funds may be used for the social protection of population in a totally ineffective way. Moreover, inadequacy of the system will not only deprive the population of any incentives to make savings — on the contrary, it will result in more consumption.
112
http://zhytlo.in.ua/ua/novini/zhkp1/u_derzhenergoefektivnost_proveli_naradu_shhodo_zakonv_u_sfer_energoefe ktivnost_ta_vdnovlyuvalnih_dzherel_energ.html 113 https://www.facebook.com/dixiUA/photos/a.284904464897783.66181.124384030949828/1163964116991809/?t ype=3&theater 114 http://dixigroup.org/news/monetizaciya-subsidiy-potriben-pokrokoviy-plan/
Energy Efficiency and Social Issues
DEVELOPMENTS IN THE EU LEGAL FRAMEWORK On the last day of November 2016, the European Commission published, with the substantial delay, the Ecodesign Working Plan 2016–2019.115 As a part of the EU Action Plan on a Circular Economy, the Working Plan builds on the work of European institutions that has been done since 2005 and provides for revising of the existing rules of design and labelling and then goes on supplementing the subject of regulation with 7 new categories of electric products. A special attention of the specialists was paid to information and communications technology (ICT). In general, the Commission will focus efforts on 6 directions, including continuation of the existing studies and starting new ones, strengthening of the market control, and strengthening cooperation with international partners. While the comprehensive package of new measures in the area of energy efficiency, RES and electricity market is being prepared for completion in December, during COP22 held in Marrakesh, Morocco, a new EuroMediterranean renewable energy and energy efficiency platform has been launched under the facilitation of Miguel Arias Caùete, the European Commissioner for Climate Action and Energy. The above platform which supplements other existing gas and electricity platforms will aim at co-ordination of joint effort in improving energy efficiency and introduction of RES in the region in a most economically and socially-oriented way.
115
http://ec.europa.eu/energy/sites/ener/files/documents/com_2016_773.en_.pdf
Environment and Renewable Energy Sources During the EU–Ukraine summit on 24 November 2016, the Memorandum of Understanding on a Strategic Energy Partnership in the Field of Energy between Ukraine and the European Union was signed, which, among other things, raises issues of environmental safety in the context of energy and importance of such instruments as environmental impact assessment and compliance with the environmental standards. Apart from the published conclusions of the Chief Scientific Expert Department as regards the draft laws on environmental impact assessment and strategic environmental assessment vetoed by the President, any other information which could help to understand what is going on with these European integration draft laws is unavailable at the moment. In November, work went on on a number of draft laws adopted in the first reading on the Environment Day in the Parliament (4 October 2016); in particular, the draft Law of Ukraine “On Amending the Law of Ukraine “On the Nature Conservation Fund of Ukraine” (as to the powers in the area of environmental protection” and the draft Law of Ukraine “On Amending Certain Legislative Acts of Ukraine Regulating Relations in respect of Obtaining Permits (as Regards Special Water Use)” were prepared for the second reading. Publishing of the CMU’s draft Resolution “On amending the Cabinet of Ministers’ resolutions of 1 June 2011 No. 573 and of 1 August 2013 No. 927” which takes into account requirements of Directive 1999/32/EC was important in the context of solution of the problem with the proceedings under the Energy Community in respect of Ukraine’s failure to comply with its commitments to reduce the sulphur content in fuels. Moreover, two vital draft laws in the field of the alternative energy were adopted in November: the draft Law “On Amending Article 8 of the Law of Ukraine “On Alternative Fuels” simplifying business rules in the field of biofuels production, and the Draft Law No. 4555-1 expanding the list of renewable energy sources in Ukraine. In is worth mentioning that the latter draft law has been developed pursuant to Directive 2009/28/EC. Gradual approximation of Ukrainian “green” legislation to European acquis increases the interest of foreign investors in the implementation of alternative energy projects in Ukraine. Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (codification) (Article 363 of the AA) Chief Scientific Expert Department drew up and published the Conclusion on the President's proposals relating to vetoing the draft Law “On Environmental Impact Assessment”.116 Chief Scientific Expert Department generally supports the proposals which aim at improvement of the law’s key provisions, and particularly, those pertaining to failure to take into account specific types of economic activities, and in particular, projects vital for restoring the economic potential; those pertaining to complication of licensing procedures; those relating to lack of criteria and procedure of defining ecological conditions in the decision on environmental impact assessment. That Department also agrees with the President’s observation as to the lack of clear and comprehensible mechanisms of consideration and taking into account of proposals by the civil society. During the EU–Ukraine summit on 24 November 2016, the Memorandum of Understanding on a Strategic Energy Partnership in the Field of Energy between Ukraine and the EU was signed.117 The Memorandum, among other things, raises an issue of environmental safety in the context of energy and the importance of such instruments as environmental impact assessment. “The Sides envisage co-operating closely to ensure that Ukraine is addressing environmental concerns in the energy sector with a view to meeting the Sustainable Development Goals, including those having a cross-border or global character, and on the implementation of relevant multilateral environmental agreements. Environmental impact assessments, applied in line with EU legislation and relevant international obligations will be used as an important tool to meet environmental standards”, reads the Memorandum. 116 117
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=58257 https://ec.europa.eu/energy/sites/ener/files/documents/mou_strategic_energy_partnership_en.pdf
Environment and Renewable Energy Sources Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment Chief Scientific Expert Department drew up and published the Conclusion on the President’s proposals relating to vetoing the Draft Law “On Strategic Environmental Assessment”.118 In particular, the Department supports the President’s observations as to different approaches to determining the scope and subject of regulation, failure to apply clear criteria define the state planning documents as such that do not require SEA, lack of effective mechanisms of taking into account the proposals by the civil society. The Department also agrees with the President’s observations on a declarative character and vagueness of certain provisions of the draft law and insufficient taking into account of the Protocol on Strategic Environmental Assessment. Directive 1999/32/ЕС relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC, as amended by the Regulation (EC) No. 1882/2003 and Directive 2005/33/EC (Article 363 of the Association Agreement) On November 2, the Ministry of Energy and Coal Industry of Ukraine, with the view to hold public consultations, published the CMU’s draft Resolution “On amending the Cabinet of Ministers’ resolutions of 1 June 2011 No. 573 and of 1 August 2013 No. 927” on its official website.119 The draft resolution was developed in order to implement basic requirements of Directive 1999/32/EC and terminate the proceedings under the Energy Community in respect of Ukraine’s failure to comply with its commitments under the above Directive to reduce, in due time, the sulphur content in fuels. Directive 2009/147/EC on the conservation of wild birds (Article 4.2) (Article 363 of the Association Agreement) On the Environment Day (4 October 2016) in the Verkhovna Rada of Ukraine, MPs adopted in the first reading a number of draft laws on various issues of flora and fauna protection and the Nature Conservation Fund. At the moment, those draft laws are being prepared for the second reading. In particular, the Committee on Environmental Policy, Nature Resources Utilization and Elimination of the Consequences of Chornobyl Catastrophe decided to support the draft Law “On the Introduction of Amendments to the Law of Ukraine “On the Nature Conservation Fund of Ukraine” (as to the powers in the area of environmental protection” (No. 4551)120 in the second reading and as a whole121. The key objective of the draft Law “On the Introduction of Amendments to the Law of Ukraine “On the Nature Conservation Fund of Ukraine” is settling the issue of delegation of powers from local bodies of the central executive authority in the sphere of environmental protection to the regional (oblast) state administrations and to Kyiv and Sevastopol city state administrations. In accordance with the decision of the Standing Committee under the Convention on the Conservation of European Wildlife and Natural Habitats, 271 Ukrainian environmental areas were included in the so called European Emerald Network.122 Inclusion of Ukrainian areas comprising about 10% of Ukraine’s total territory in that list assigns an international status of special protected environmental zones to these territories. Further on, a system must be developed to allow management and monitoring over vulnerable and endangered animal and plant species and natural habitats requiring taking measures for their preservation pursuant to the Bern Convention’s requirements. Such solution will contribute to protection of
118
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56730 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245160191&cat_id=35082 120 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=58936 121 http://komekolog.rada.gov.ua/komekolog/control/uk/publish/article?art_id=61176&cat_id=48830 122 http://menr.gov.ua/press-center/news/123-news1/5491-ponad-271-pryrodookhoronnyi-ob-iekt-ukrainyvkliucheno-do-skladu-smarahdovoi-merezhi-yevropy 119
Environment and Renewable Energy Sources wild birds in Ukraine but cannot be viewed as an alternative to creation of special protection areas to be established pursuant to Directive on the conservation of wild birds. Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) (Article 363 of the Association Agreement) On 4 October 2016, the Verkhovna Rada of Ukraine adopted in the first reading the draft Law of Ukraine “On Amending Certain Legislative Acts of Ukraine Regulating Relations in Respect of Obtaining Permits (as Regards Special Water Use)” (No. 3323).123 Introduction of integrated permits in the field of water use is one of the commitments under Directive 2010/75/EU on industrial emissions. Presently, that draft law is being prepared for the second reading. In particular, the Committee on Environmental Policy, Nature Resources Utilization and Elimination of the Consequences of Chornobyl Catastrophe on its meeting decided to recommend to the Verkhovna Rada to adopt the draft law in the second reading and as a whole.124 On November 8, within the framework of ХIV International forum “Fuel and Energy Complex of Ukraine: Present and Future”, a round table was held on the issue of adoption of the National plan for reduction of emissions from large combustion plants in Ukraine. During the event, it was noted that the Ukrainian side had took account of all observations from the Energy Community. Moreover, the MECI underlined that the Energy Community Secretariat’s director Janez Kopač had confirmed that the presented version of the National Plan was in conformity with the organisation’s methodology. Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Article 338 of the Association Agreement) On November 1, the Verkhovna Rada adopted the draft Law “On the Introduction of Amendments to Article 8 of the Law of Ukraine “On Alternative Fuels” in the second reading.125 The major idea of the draft law is simplifying doing business in the field of biofuels production by elimination of the norm requiring keeping a national register of rare biofuels and biogases producers, and putting such producers on that register. At the same time, the Parliament adopted the draft Law No. 4555-1126 providing for supplementing the list of renewable energy sources with such energy types as aerothermal and hydrothermal energy. Moreover, according to that document, thermal energy generated by heat pumps from aerothermal and hydrothermal or geothermal energy is to be considered the energy generated from RES. It is worth mentioning that adoption of the draft law drawn up jointly with the State Agency on Energy Efficiency and Energy Saving of Ukraine in pursuance of Directive 2009/28/EC will contribute to the implementation of the National Renewable Energy Action Plan for the period up to 2020. Adaptation of the national legislation in the area of alternative energy to the European standards will encourage investors to support the implementation of “green” projects in Ukraine: in particular, according to Mr. Savchuk, the Head of the State Agency on Energy Efficiency and Energy Saving of Ukraine, Lithuanian investors are interested in implementing projects relating to wind, solar energy plants and projects of generation of heat power from local types of fuels127. Moreover, as a result of last year’s adoption of the law on raising “green” tariffs for RES projects, a Spanish company is interested in investments in the national “green” projects 128. In early November, the Memorandum of Understanding in the fields of energy efficiency, renewable energy and alternative fuels was also signed between the State Agency on Energy
123
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56820 http://komekolog.rada.gov.ua/komekolog/control/uk/publish/article?art_id=61170&cat_id=48830 125 http://zakon2.rada.gov.ua/laws/show/1713-19 126 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59202 127 http://saee.gov.ua/uk/news/1449 128 http://saee.gov.ua/uk/news/1427 124
Environment and Renewable Energy Sources Efficiency and Energy Saving of Ukraine and the Ministry of Infrastructure of the Republic of Slovenia129. It is planned that due to that co-operation, the State Agency on Energy Efficiency and Energy Saving of Ukraine and the Ministry of Infrastructure of the Republic of Slovenia will work out possibilities of implementation of joint projects in the field of energy efficiency and renewable energy. The parties will also exchange information on the efficient mechanisms of state support to implementation of projects in those areas. It is worth mentioning that foreign investors still seek opportunities for the implementation of “green” projects in the exclusion zone of around Chernobyl NPP. In particular, in November a Danish company Nordic Power Partners (NPP) was interested in participating in the project of construction of a solar power plant array with the capacity of no less than 100 mW in Chornobyl exclusion zone 130. NPP’s Director E. Christensen underlined that the project is promising not only because of being supported by the Ukrainian government, its scale and innovations but also because it significantly influences the renewable energy sector and will become a positive signal for investors all around the world. In light of growing interest in the sector on the part of investors, the State Agency on Energy Efficiency and Energy Saving of Ukraine has established a special unit to provide technical assistance in development of “green” projects131, and, for better understanding of the renewable energy market for businesses, consumers, investors, experts who are interested in development of sustainable energy in Ukraine, an Interactive map of energy efficiency and renewable energy projects — UAMAP — was introduced132. That map presents information on energy efficiency and renewable energy projects in Ukraine and aims at ensuring communication between project initiators and investors, in order to facilitate investments in the sector. Meanwhile, statistics show that following the adoption of the Law of Ukraine “On Amending Certain Laws of Ukraine as Regards Competitive Conditions of Power Generation from Alternate Sources” No. 514 (which introduced “green” tariffs for households installing solar cell arrays) a number of those willing to switch to renewable energy sources increased by 40.4%, and by 84.8% again another quarter later133. It demonstrates that the law is really effective and ensures that there is interest in RES not only on the part of investors but also on the part of households.
129
http://saee.gov.ua/uk/news/1417 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249526865&cat_id=244277212 131 http://saee.gov.ua/uk/news/1424 132 http://www.uamap.org.ua/ 133 http://saee.gov.ua/uk/news/1411 130
Oil Despite the clearly set objectives, developed plans and support on the part of the European partners, the Government does not consider Ukraine’s international commitments in the oil sector as their priority. As a result of lack of insistence and low discipline, having 2016 targets achieved by the set deadlines is not likely to happen. It is primarily about adoption of regulatory acts for minimal reserves of crude oil and/or oil products; laying down the harmonised requirements to storage, transportation and reloading of oil products in the refuelling stations and oil storage depots; ensuring equal conditions of granting and use of permits for surveillance, development and extraction of hydrocarbons; and creation of a system of monitoring of quality and safety of oil products. Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products (Article 338 of the AA) In accordance with paragraph 1.1.2 of the Implementation Plan for Directive 2009/119/EC, the Ministry of Energy and Coal Industry of Ukraine must draw up a draft law on support of minimal reserves of oil and oil products134, and the Verkhovna Rada is to pass that act as a whole in December 2016. However, as of 5 December 2016, no information about the progress with that document had been published. Another Cabinet of Ministers’ act concerning the model of minimal reserves hasn’t been adopted by the present moment (activity 1.1.1, deadline — December 2015). However, on 8 November 2016, during the presentation of the project “Assistance to Ukraine in the process of implementation of energy sector reform in line with Ukraine's international commitments”, Oleksandra Kozlovska, the Head of the MECI International Cooperation and European Integration Department said, in particular, that “within the framework of this project, we will be able to implement such initiatives as creation of minimal reserves in oil and oil products”. Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC On 1 November 2016, the Law No. 1713-VIII “On Amending Article 8 of the Law of Ukraine “On Alternative Fuels” which simplifies doing business in the field of biofuels production by elimination of requirement as to keeping a national register of rare biofuels and biogases producers by an authority empowered by the Cabinet of Ministers, and putting on that register the undertakings doing business in the field of production, storage of rare biofuels and biogases and putting them into circulation 135. The Law was adopted in pursuance of paragraph 103 of the Action Plan for deregulation of economic activities as approved by the Cabinet of Ministers’ Ordinance of 18 March 2015 No. 357-р136. Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity (Annex XXVIII, Article 353 of the AA) The Ministry of Finance plans to unify the excise tax for middle distillates on 1 January 2017 at the level of EUR 125 for 1,000 litres (irrespective of sulphur content), thus approximating it to a minimal amount as provided for by the Directive (EUR 330 for 1,000 litres). But in case this proposal has been adopted, the retail price for diesel fuels will rise by UAH 1 per litre, which will affect the economic situation in the country137. On 9 November 2016, by its Resolution No. 785, the Government brought in line with the legislation the procedure of calculation of the adjustment factor applied to the rent charge, in case if tariffs for transportation of oil, oil products and ammonium change. Adoption of that resolution will make it possible to reduce tax burden on undertakings operating in the area of transportation of oil and oil products. In particular, the provision on application of the adjustment factor to the rent charge, in case of change of tariffs for the transit of ammonium or transportation of oil for Ukrainian customers via main pipelines, has been removed from the respective procedure138. 134
http://www.kmu.gov.ua/document/248091904/Dir_2009_119.pdf http://zakon2.rada.gov.ua/laws/show/1713-viii 136 http://zakon3.rada.gov.ua/laws/show/357-2015-%D1%80 137 http://interfax.com.ua/news/economic/386400.html 138 http://www.kmu.gov.ua/control/uk/cardnpd?docid=249476246 135
Oil Directive 99/32/EC relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC as amended and supplemented by Regulation (EC) No. 1882/2003 and Directive 2005/33/EC The Ministry of Finance proposed to increase the excise tax for middle distillates of environmentallyfriendly classes Euro IV and V, as from 1 January 2017, up to the level corresponding to Euro III (from 95 to 125 euros for 1,000 litres). It is going to increase consumption of cheaper diesel fuels of less environmentally-safe classes, thus delaying Ukraine’s achieving compliance with the requirements of Directive 99/32/EC. Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Council Directive 93/12/EEC as amended by the Directives 2000/71/EC, 2003/17/EC and 2009/30/EC and Regulation (EC) 1882/2003 (Annex ХХХ, Article 360–363, 365, 366 of the AA) In accordance with the Implementation Plan for Directive 98/70/EC (Articles 7 and 8, paragraph 1.3), the Ministry of Energy and Coal Industry of Ukraine was bound, as from December 2015, to submit reports on functioning of the system of monitoring over quality and safety of oil products 139. As of 5 December 2016, no such document has been published. At the same time, following the liquidation of the State Company “Scientific-Research Institute of Petrochemical Industry “MASMA”, the chief contractor responsible for achieving all objectives under the plan, further work on the implementation of Directive 98/70/EC in Ukraine has been suspended. Directive 94/63/EC on the control of volatile organic compound (VOC) emissions resulting from the storage of petrol and its distribution from terminals to service stations, as amended and supplemented by Regulation (EC) No. 1882/2003 (Annex XXX, Articles 360–363, 365, 366 of the AA) In November 2016, there was a deadline for activities provided for by paragraphs 1.1.1, 1.1.2 і 1.2.1 of Directive 94/63/EC Implementation Plan140. Despite that, as of 5 December 2016, the Cabinet of Ministers failed to adopt the Resolution “On approval of the Technical regulation on the requirements to storage, transportation and reloading of fuels, respective equipment and service stations”, and the Ministry of Ecology and Natural Resources of Ukraine failed to approve recommendations on control over fuelling station and failed to conduct inventory of oil depots. Even errors which occurred as a result of an incorrect translation of Directive 94/63/EC into Ukrainian have not been rectified. In particular, oil products (and namely motor petrol, diesel fuel, kerosene, liquefied petroleum gas) were named petrol, storage installations were named terminals, storages of petrol were named mobile containers, loading installations were names service stations, and gantries were named cargo cranes. The translation of the Directive itself published on the website of the Parliament repeats the same mistakes141. In addition, the words “storage of petrol” in the title of the Directive have been interpreted in a wrong way. Directive 94/22/EC on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons (Annex XXVII, Articles 279, 280, 341 of the AA) According to the Implementation Plan for Directive 94/22/EC, a new wording of the Natural Resources Code of Ukraine is to be adopted before the end of 2016 142. It, in particular, provides for defining the notions “operator’s functions”, “contractual joint venture”, “mechanism or special permit transfer”, “concept of a minimal working programme and a minimal working obligation”, “binding character of regulation of specific features of non-conventional hydrocarbons extraction”; it also provided for settling the issue of publishing of geology-related information on strategic resources, and particularly concerning oil and gas, to the extent permitted by the legislation. According to the Cabinet of Ministers, as of 20 139
http://www.kmu.gov.ua/document/248091869/Dir_98_70.pdf http://www.kmu.gov.ua/document/248091862/Dir_94_63.pdf 141 http://zakon.rada.gov.ua/laws/show/ru/994_439 142 http://www.kmu.gov.ua/document/248102926/Dir_94_22.pdf 140
Oil November 2016, “the draft Code of Natural Resources of Ukraine is being elaborated by the stakeholder authorities”143. Introduction of a simplified procedure of using land parcels during geological prospecting is slowed down as the Ministry of Agrarian Policy and Food of Ukraine thinks that the matter at issue “has been regulated in law and doesn’t require any further simplification”. As of 5 December 2016, rules of development activities relating to oil-and-gas fields harmonised with the EU standards have not approved as the Ministry of Ecology and Natural Resources of Ukraine had failed to timely work out the draft document prepared by the State Geological and Mineral Resources Survey of Ukraine and submitted with the letter of 29 August 2016 No. 15254/13/04-16144. Information about the start of public debates on the draft order of the Ministry of Ecology and Natural Resources of Ukraine “On approval of the Rules of development activities relating to oil-and-gas fields” was posted on the Ministry’s official website only on 10 November 2016 145. On 2 November 2016, the Cabinet of Ministers of Ukraine, by its Resolution No. 775, approved amendments to the procedures of holding auctions for selling special permits for use of mineral resources and granting special permits for use of mineral resources. These amendments, in particular, will make it possible for users of mineral resources to avoid additional expenditures and cancelling permits when needed to be re-registered, for example, when a company is reorganised146. On 3 November 2016, the draft Law No. 3096 “On Amending Certain Legislative Acts of Ukraine Relating to Simplification of Certain Aspects of the Oil and Gas Industry” 147 was received by the Verkhovna Rada Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety. That draft law, in particular, provides for the improvement of the procedure of granting lots of land for prospecting, construction, technical maintenance, repair and reconstruction of pipeline facilities, construction of oil and gas boreholes and facilities and production structures, and service roads, electricity lines and communications relating to their operation. Adoption of the respective law will make it possible to improve the procedure of borehole registration to meet the requirements of paragraph 68 of the Action Plan for deregulation of economic activities as approved by the Cabinet of Ministers’ Ordinance of 23 August 2016 No. 615-р148. Article 279 of the AA in terms of providing equal access to and exercise of the activities of prospecting, extraction and producing hydrocarbons In pursuance of Article 274(4) requiring that all undertakings having a permit to explore, extract and produce hydrocarbons pay a certain fee under a duly established procedure, on 1 November 2016, the Verkhovna Rada, in its session, approved in principle the draft Law No. 3038 “On Amending the Budget Code of Ukraine (in terms of streamlining a system of receipt and use of proceeds from rent for using the subsoil for oil, gas and gas condensates extraction)”, and it was prepared for the second reading on November 17. The drafters propose to set the allocation of proceeds from rent for using the subsoil for oil, gas and gas condensates extraction as from 1 January 2018 at the following rate: 2% — to raion budgets, 3% — to budgets of united territorial communities at locations (extraction spots) of respective natural resources, 95% — to the general fund of the State budget. Article 280 of the Association Agreement in terms of ensuring transparent licensing for prospecting for, exploration or extraction of hydrocarbons In November 2016, the Interactive Map was published on the website of the State Informational Geology Fund “Geoinform of Ukraine” showing sites of subsoil resources for which special permits for use of mineral resources have been issued. The map is an element of the simplified real-time access to the public geological information to the extent and in a quality necessary to attract commercial interest on the part of 143
http://www.drs.gov.ua/deregulation/plan-deregulyatsiyi-2016-2017-rr/ http://www.drs.gov.ua/deregulation/plan-deregulyatsiyi-2016-2017-rr/ 145 http://www.menr.gov.ua/press-center/news/132-news10/5450-minpryrody-zaproshuye-hromadskistdoluchatysya-do-obhovorennya-proektu-nakazu-pro-zatverdzhennya-pravyl-rozrobky-naftovykh-i-hazovykhrodovyshch 146 http://www.kmu.gov.ua/control/uk/cardnpd?docid=249466393 147 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56470 148 http://zakon3.rada.gov.ua/laws/show/615-2016-%D1%80 144
Oil private users of mineral resources149. Despite that, the Ministry of Ecology and Natural Resources of Ukraine delays finalisation, by the end of 2016, of the Cabinet of Ministers’ draft Resolution “On amending Cabinet of Ministers’ Resolution of 13 June 1995 No. 423” which implements a simplified real-time digital access to secondary geological information. On 16 November 2016, by its Resolution No. 814, the Cabinet of Ministers of Ukraine set up an Interdepartmental Working Group for financing of the market of oil and oil products and development of refinery industry. The key objectives of the Group include: identifying ways and mechanisms and tools for dealing with problems relating to the market operation; contributing to ensuring co-ordination of action between the central and local executive authorities on the development and taking of the respective measures; improvement of regulatory framework to ensure stable operation of the market of oil and oil products, development of refinery industry. Article 338 of the Association Agreement in terms of continuing and enhancing cooperation in the energy sector In pursuance of Article 338(е) on co-operation under the Treaty establishing Energy Community, on 24 November 2016, the Minister of Energy and Coal Industry Іhor Nasalyk and Vice President of the European Commission for Energy Union Maroš Šefčovič signed the Memorandum of Understanding on a Strategic Energy Partnership in the Field of Energy between Ukraine and the European Union together with the European Atomic Energy Community.
DEVELOPMENTS IN THE EU LEGAL FRAMEWORK Consultations150 on Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or oil products. The aim of the consultations was identifying the existing problems relating to maintaining minimum stocks of crude oil and/or oil products by the EU Member States and obtaining the recommendations on improvement of the mechanisms of Directive implementation from the stakeholders151.
149
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Business Climate The results of the Government’s work in November showed significant progress in improvement of investment and business climate. It was demonstrated by the Deregulation Day when a number of restrictive regulatory acts were cancelled. In particular, a number of brand new rules have been introduced in the energy sector, regulating development of the oil and gas fields. Some of the previous rules hadn’t changed since 1984. We expect that that initiative will further become regular and reduce over-regulation of the sector. President Petro Poroshenko supported the positive progress of the reform and signed the Law of Ukraine “On the National Energy and Public Utilities Regulatory Commission” which sets up clear scope of the energy markets regulation. We expect that the process of freshening the Commission’s composition and formation of new budget for its functioning will go on in accordance with the law and — which is just as important — without delays, and activities of the NEPURC itself will become transparent and foreseeable for business. This month, the NEPURC, by its resolution, significantly simplified conditions of connecting electric installations of 160 kW – 5 mW to electricity networks. This decision will make it possible to improve Ukraine’s rating in the Index of Doing Business (+13 points) in terms of Getting electricity indicator. It is also worth to point out to the improvement of the public procurement process. For example, a pilot project on procurement outsourcing via a centralised procurement organisation was launched in November and a number of technical corrections were introduced into the legislation on public procurement. The MEDT proposed a number of amendments to be introduced into the Tax Code and certain legal acts in order to improve the investment climate. Among other benefits, those amendments aim to reduce risks relating to investment and crediting; the procedure of registration of VAT payers and an choosing a simplified taxation scheme will be improved. Article 277 Regulatory authority Directives 2009/72/EC and 2009/73/EC concerning common rules for the internal markets in natural gas and electricity (insofar as it concerns the regulatory authority) The President signed the Law of Ukraine “On the National Energy and Public Utilities Regulatory Commission” earlier adopted by the Verkhovna Rada152. The Ministry of Justice has registered the NEPURC’s Resolution No. 1946153 amending the Methodology of calculation of a fee for connection of electric installations with power 160 kW – 5 mW to electricity networks. The new methodology of the fee calculation allows transparent pricing, which is a basis for clear and foreseeable conditions for doing business in the respective sector. The NEPURC’s Resolution No. 1418154 introduced a number of amendments into some NEPURC’s resolutions on streamlining relations between the customers and GTS operators. The amendments concern payments for the services of replacement of commercial metering units, terms of replacement thereof, improvement of the procedure of moving of commercial gas metering unit, identifying the connected load of the customer facility etc. On November 23, the Cabinet of Ministers cancelled over 360 obsolete regulatory acts which had complicated doing business in a number of sectors155. Energy sector got new Oil and Gas Fields Development Rules. The order to that effect 156 was drawn up by the Ministry of Ecology and Natural Resources. The order to that effect157 was drawn up by the Ministry of Ecology and Natural Resources. In the new wording of the document, the procedures of obtaining permits by companies have been simplified, 152
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=58234 http://www.nerc.gov.ua/?news=5528 154 http://www.nerc.gov.ua/?news=5540 155 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249517588&cat_id=244274160 156 http://www.menr.gov.ua/press-center/news/132-news10/5450-minpryrody-zaproshuye-hromadskistdoluchatysya-do-obhovorennya-proektu-nakazu-pro-zatverdzhennya-pravyl-rozrobky-naftovykh-i-hazovykhrodovyshch 157 http://www.menr.gov.ua/press-center/news/132-news10/5450-minpryrody-zaproshuye-hromadskistdoluchatysya-do-obhovorennya-proektu-nakazu-pro-zatverdzhennya-pravyl-rozrobky-naftovykh-i-hazovykhrodovyshch 153
Business Climate all the rules concerning development of deposits have been laid down in a single document and harmonised with the current needs of the market. Provisions causing legal uncertainty have been removed, which will help reduce corruption risks. Chapter 8 Public Procurement. Title IV Trade and trade-related matters Directive 2014/25/EU on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts The MEDT initiated the draft Law “On Amendments to Certain Legislative Acts of Ukraine Concerning Procurements by Procuring Entities Carrying out Activities in Certain Sectors of Economy” 158. That draft Law expands the definition of “procuring entities” and “activities in certain sectors of economy” by taking into account provisions of the legislation in force, and particularly the law of Ukraine “On the Natural Gas Market”. Moreover, that Law will make it possible to establish the procedure of filing complaints in respect of particular procurement items (bids); to settle the issue of payment terms and filing complaints with the respective authority; and to introduce a number of technical corrections to specify the existing provisions of the Law in order to avoid ambiguity in the interpretation thereof. In accordance with the earlier approved Public Procurement Reform Strategy for the period up to 2022 159, the CMU approved the ordinance launching the pilot centralised procurement organisation (CPO)160. That organisation will enable outsourcing of procurements under framework agreements, for the benefit of procuring entities. Chapter 7 Current payments and movement of capital (Articles 144–147). Title IV Trade and trade-related matters The MEDT initiated the draft Law “On Amending Certain Legislative Acts of Ukraine for the Purpose of Improvement of the Investment Climate in Ukraine”161. The objectives of that draft Law include:
reduction of risks relating to investment in the minority shareholding in joint stock companies; creation of an opportunity to use electronic communication systems in economic court proceedings; reduction of risks relating to crediting; increase in the number of persons who can protect their rights by opting for an alternative way of dispute resolution — arbitration proceedings.
Moreover, the draft Law provides for the customer’s right, at any moment, to suspend the consideration of the claim about protection of the customer’s rights in arbitration and apply to the public court for protection of the violated right. Further, the document envisages reduction of the proceedings’ duration in the case of bankruptcy and simplification of the respective procedure in cases where there is a majority lender or a decisive influence of the creditors whose claims are secured by a mortgage etc. Besides, the respective amendments are planned to be introduced into the Tax Code 162. That draft Law improves the procedure of registration of VAT payers and opting for the simplified taxation scheme, which will reduce 158
http://me.gov.ua/Documents/Detail?lang=uk-UA&id=54d82a6d-5801-4cdc-abbb036ce08ca442&title=ProektZakonuUkrainiproVnesenniaZminDoDeiakikhZakonodavchikhAktivUkrainiSchodoZdiisnenn iaZakupivelZamovnikami-SchoZdiisniuiutDiialnistVOkremikhSferakhGospodariuvannia http://me.gov.ua/Documents/Detail?lang=uk-UA&id=54d82a6d-5801-4cdc-abbb036ce08ca442&title=ProektZakonuUkrainiproVnesenniaZminDoDeiakikhZakonodavchikhAktivUkrainiSchodoZdiisnenn iaZakupivelZamovnikami-SchoZdiisniuiutDiialnistVOkremikhSferakhGospodariuvannia 159 http://zakon3.rada.gov.ua/laws/show/175-2016-%D1%80/print1477417620946890 160 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249518675&cat_id=244274160 161 http://me.gov.ua/Documents/Detail?lang=uk-UA&id=39e87d3b-6d8f-4485-9d3f64f3edf2cf7d&title=ProektZakonuUkrainiproVnesenniaZminDoDeiakikhZakonodavchikhAktivUkrainiSchodoPolipshenn iaInvestitsiinogoKlimatuVUkraini 162 http://me.gov.ua/Documents/Detail?lang=uk-UA&id=dd166c9b-55fc-489c-b64c5a0564c5384c&title=ProektZakonuproVnesenniaZminDoPodatkovogoKodeksuUkrainiSchodoPolipshenniaInvestitsiino goKlimatuVUkraini
Business Climate expenditures of undertakings and limit possibilities of violation of rights and legitimate interests thereof. As a result of adoption of that draft Law, a number of vital objectives will be achieved:
a simplified and transparent system of registration of VAT payers and opting for a simplified taxation scheme will be introduced; undertakings will get a real opportunity to do business without using seals; preconditions for using trust property as a way of securing fulfilment of obligations will be put in place.
Article 256 Approximation of law and enforcement practice. Section 1 Anticompetitive practices and mergers Chapter 10 Competition. Title IV Trade and trade-related matters On November 14–16, a seminar within the framework of Twinning technical assistance project took place 163 where the EU experts shared their experience on merger control with their colleagues from the Antimonopoly Committee of Ukraine. In particular, the participants discussed the scope of information the companies will have to submit to enable the AMCU to start consideration of the applications for merger under a simplified or full procedure. There was also the discussion as regards the procedure of consideration of applications for concentrations under a simplified procedure and ways of notification and approval of a merger.
DEVELOPMENTS IN THE EU LEGAL FRAMEWORK On 10 October 2016, the Decision (EU) 2016/1804 164 on the detailed rules for the application of Articles 34 and 35 of Directive 2014/25/EU on procurement by entities operating in the energy sector entered into force. Those Articles identify activities that may restrict competition, and procedure for establishing violation. In particular, the Decision lays down the standard form of requests to be submitted by companies suffering a breach of the competition law by other companies, to the Commission to bring the fact of the violation to its attention of the latter.
163
http://www.amc.gov.ua/amku/control/main/uk/publish/article/131425 http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=uriserv:OJ.L_.2016.275.01.0039.01.ENG&toc=OJ:L:2016:275:TOC 164
Methodology The Project is being implemented by five partners and two invited permanent experts. The Project is being implemented by the following five partners: NGO “DIXI GROUP”, Resource & Analysis Center “Society and Environment”, Civil Network “OPORA”, Association “European-Ukrainian Energy Agency”, and AllUkrainian NGO “Energy Association of Ukraine”. Among the project permanent members are L. Unigovskyi, General Director of Naftogazbudinformatyka LLC, and G. Riabtsev, Social Program Director of Psycheа Scientific and Technical Centre. For the purpose of monitoring the implementation of the Association Agreement, the project participants have been divided into six working groups. These are, in particular, Gas group: L. Unigovskyi and R. Nitsovych (DiXi Group); Electricity group: S. Golikova (Energy Association of Ukraine) and O. Shumilo; Energy Efficiency and Social Issues group: T. Boyko (OPORA) and D. Nazarenko (DiXi Group); Environment and Renewable Energy Sources group: N. Andrusevych (Society and Environment) and N. Yermakova (DiXi Group); Business Climate and Investments group: V. Beliakova (European-Ukrainian Energy Agency) and A. Bilous (DiXi Group), Oil group: G. Riabtsev (Psychea) and T. Tkachuk (DiXi Group). The Project participants identified the monitoring framework for each working group based on the results of their analysis of the Association Agreement. This framework is described in Annex 1. The main source of information for monitoring purposes is official information provided by public authorities. These include, in particular, adopted regulatory and legal acts, statements by top officials, information about meetings and events with the participation of representatives of public authorities. Also, monitoring could be based on messages by key energy market players, their decisions and initiatives. Other sources of information can include published articles, interviews, news, as well as results of bilateral meetings between experts and energy market players. The subject of monitoring is transposition and, if appropriate, implementation of Directives. The groups and experts monitor, first of all, transposition of acquis into the Ukrainian legislation and compliance therewith. If appropriate, but only as an option, the quality of implementation of acquis and the effect of their implementation on the market and/or consumers can be subject to monitoring.
Methodology ANNEX 1. List of Articles of the Association Agreement and Acquis Subject to Monitoring The group Electricity and Nuclear Security conducts monitoring and assessment of issues relating to electricity, nuclear energy, coal and elimination of consequences of the Chornobyl accident. Acquis concerned: Article 269, Chapter 11, Title IV, Directive 2009/72/EC (market-related provisions) Article 270, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 271, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 273, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 274, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 305, Chapter 14, Title IV, Directive 2009/72/EC, Directive 2005/89/EC Article 338, Chapter 1, Title V Article 338, Chapter 1, Title V, Cooperation Agreements with IFIs Article 339, Chapter 1, Title V, coal market Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector, Council Directive 2014/87/Euratom, Council Directive 2013/59/Euratom, Council Directive 2006/117/Euratom Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector The group Gas conducts monitoring and assessment of issues relating to gas, in particular, the implementation of the following acquis: Articles 338, 341, Directive 2009/73/EC (market-related provisions) Articles 338, 341, Regulation (EC) 715/2009 Articles 338, 341, Directive 2004/67/EC + Annex XXVI (Early Warning Mechanism), Articles 275 (Unauthorised taking of energy goods), 276 (Interruption), 309 and 314 (resolution of disputes) of the Association Agreement Chapter 11 Trade-related energy, in particular Articles 269 (Domestic regulated prices), 270 (Prohibition of dual pricing), 271 (Customs duties and quantitative restrictions), 272 (Transit) and 273–274 (Transport, cooperation on infrastructure) Annex XXVII to Chapter 1 Energy cooperation, including nuclear issues — Directive 94/22/EC + Articles 279– 280 (Access to and exercise of the activities of prospecting, exploring for and producing hydrocarbons, and licensing conditions) The group Energy Efficiency and Social Issues conducts monitoring and assessment of the implementation of the following acquis: Directive 2010/30/EU Directive 2010/31/EU Directive 2006/32/EU Directive 2012/27/EU Directive 2009/72/EC (social issues) Articles 338, 341 of the Association Agreement Directive 2009/73/EC (social issues) Articles 338, 341 of the Association Agreement
Methodology The group Environment and Renewable Energy Sources conducts monitoring and assessment of the implementation of the following acquis: Article 363, Directive 2011/92/EU Article 363, Directive 2001/42/EC Article 363, Directive 2003/42/EC Article 363, Directive 2003/35/EC Directives 85/337/EEC and 96/61/EC Article 363, Directive 2008/50/EC Article 363, Directive 1999/32/EC Article 363, Directive 94/63/EC Article 363, Directive 2009/147/EC Article 363, Directive 2010/75/EU Article 338, Directive 2009/28/EC The group Oil conducts monitoring and assessment of the implementation of the following acquis: Directive 2009/119/EC Directive 94/22/EC Directive 98/70/EC Articles 274, Chapter 11 of the Association Agreement (Trade-related energy) Articles 275, Chapter 11 of the Association Agreement (Trade-related energy) Articles 276, Chapter 11 of the Association Agreement (Trade-related energy) Articles 279, Chapter 11 of the Association Agreement (Trade-related energy) Articles 280, Chapter 11 of the Association Agreement (Trade-related energy) Article 337 of the Association Agreement Article 338 of the Association Agreement Article 339 of the Association Agreement The group Business Climate conducts monitoring and assessment of the implementation of the following acquis: Article 27, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 28, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 29, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 88, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 93, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 97-102, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 104, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 105, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 107, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 144-147, Chapter 7 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Chapter 8 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and the Directive 2014/25/EU Article 255, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 256, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 258, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement
Methodology Article 263, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 267, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 277, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and Directives 2003/54/EC and 2003/55/EC (as regards the regulatory authority) Articles 355-359, Chapter 5, (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement and Directive 2008/92/EC Article 379, Chapter 10 (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement
Glossary ANNEX 2. Glossary (Short Description) of EU Acquis Subject to Implementation Monitoring
Gas Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive establishes common rules for the transmission, distribution, supply and storage of natural gas. The rules established by this Directive apply to natural gas, liquefied natural gas (LNG), biogas and gas from biomass. They aim to achieve a competitive, secure and environmentally sustainable market. This Directive provides for compulsory functional unbinding (supply) of transmission system operators (TSO) in vertically integrated undertakings. EU Member States must ensure that all customers are entitled to freely choose natural gas supplier and can easily change supplier within three weeks. At the same time, Member States may impose on suppliers selling gas to household customers obligations which may relate to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency. Regulation (EU) No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005 This Regulation sets common rules for access to gas transmission systems, LNG terminals and storage facilities taking into account the special characteristics of national and regional markets. The document establishes the procedures of certification of transmission system operators, as well as development, elaboration and implementation of network codes (with the participation of the European Network of Transmission System Operators — ENTSO — for Gas). The key objective of this Regulation is to ensure that all market participants have free and non-discriminatory access to relevant infrastructure and capacities. Directive 2004/67/EC concerning measures to safeguard security of natural gas supply This Directive establishes a common framework within which Member States must define general, transparent and non-discriminatory security of supply policies compatible with the requirements of a competitive market, and clarify the roles and responsibilities of market players (including in case of emergency). The government must specify minimum security of supply standards to be complied with by the market players, prepare and update national emergency measures, identify “vulnerable” customers and ensure adequate security for them, establish cooperation with the European Commission and other stakeholders.
Electricity and Nuclear Security Council Directive 2014/87/Euratom of 8 July 2014 amending Directive 2009/71/Euratom establishing a Community framework for the nuclear safety of nuclear installations The Directive establishes a European framework for maintaining and promoting consistent improvement of nuclear safety and its regulation. It sets an ambitious safety goal across the EU in order to prevent accidents and avoid radioactive waste from nuclear installations. The directive applies to any nuclear installation subject to licensing. Council Directive 2013/59/Euratom laying down basic safety standards for protection against the dangers arising from exposure to ionising radiation The Directive establishes basic safety standards to protect the health of employees, the general public, patients and others from the dangers of exposure to ionising radiation. The Directive applies to any
Glossary planned, existing or emergency situation which involves a risk to ionising radiation. In particular, it applies to: the manufacture, production, processing, handling, disposal, use, storage, holding, transport, import to and export from the EU of radioactive material; the manufacture and operation of electrical equipment emitting ionising radiation; human activities withnatural radiation sources that could lead to a significant increase in the exposure of employees or the public, such as the exposure of space crew to cosmic radiation; domestic exposure to radon gas in indoor air and external exposure to gamma radiation from building materials; managing emergency exposure situations that require measures to protect the public and workers. Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive establishes common rules for the generation, transmission, distribution and supply of electricity. It also lays down universal service obligations and the rights of electricity consumers and clarifies competition requirements. Open internal market enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers (free movement of goods, the freedom of establishment and the freedom to provide services). At the same time, this Directive sets stricter requirements to unbundling of transmission system operators (TSO) in vertically integrated undertakings. It also contains consumer rights provisions, reinforces and clarifies the functions and powers of regulatory authorities. Regulation (EC) No. 714/2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No. 1228/2003 This Regulation establishes the rules for cross-border exchanges of electricity with the view to enhancing competition and achieving harmonization within the internal market in electricity. Comparing to the previous Regulation No. 1228/2003, this Regulation contains additional provisions on certification of transmission system operators (TSO), introduction of network codes and publication of information by system operators. It also clarifies that the European Network of Transmission System Operators for Electricity (the ENTSO for Electricity) is responsible for the management of electricity transmission networks to allow trading and supplying electricity across borders within the EU. Directive 2005/89/EC concerning measures to safeguard security of electricity supply and infrastructure investment This Directive establishes measures aimed at safeguarding security of electricity supply so as to ensure the proper functioning of the internal market for electricity, an appropriate level of interconnection between Member States, an adequate level of generation capacity and an adequate balance between supply and demand. It establishes a framework within which Member States are to define general transparent and non-discriminatory policies on security of electricity supply compatible with the requirements of a competitive market for electricity. They must define and publish roles and responsibilities of competent authorities and all relevant market actors. In implementing these measures, Member States are supposed to guarantee continuity of electricity supplies, explore possibilities for cross-border cooperation in relation to security of electricity supply, reduce the long-term effects of the growth of electricity demand, ensure diversity in electricity generation, encourage energy efficiency and the adoption of new technologies, ensure regular renewal of networks. Council Directive 2006/117/Euratom on the supervision and control of shipments of radioactive waste and spent fuel This Directive authorizes transboundary shipments of spent fuel between Member States for processing, requires prior authorization for transboundary shipments of radioactive waste and spent fuel where such fuel is moved from, through the territory of or to a Member State. This Directive also requires return of radioactive waste to its country of origin.
Glossary Energy Efficiency and Social Issues Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products This Directive regulates labelling of energy-related products and provision of information to consumers relating to their consumption of electric energy. It applies to products which have a direct or indirect impact on the consumption of energy and on other resources during use. Suppliers placing products on the market must ensure that such products are labelled with the information about their consumption of energy and other resources. Suppliers must also produce technical documentation to include: a general description of the product; the results of design calculations carried out; test reports; the references allowing identification of similar models. The technical documentation must be available for inspection purposes for a period ending five years. Suppliers must provide the labels and product-related information free of charge to dealers, and the latter must display labels properly, in a visible and legible manner. Directive 2010/31/EU on the energy performance of buildings This Directive promotes the improvement of the energy performance of buildings within the Union, taking into account outdoor climatic and local conditions. It lays down minimum requirements, common general framework for a methodology and covers energy used for heating, hot water, cooling, ventilation and lighting. National authorities must establish reasonable minimum requirements to energy efficiency to be reviewed every five years. They also establish a system of certification of the energy efficiency. Such certificates provide information to prospective buyers or tenants on the energy performance of buildings, and advice on enhancing it. Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC This Directive establishes a common framework of measures for the promotion of energy efficiency within the Union in order to ensure the achievement of the Union’s 2020 20% headline target on energy efficiency. Such measures include:
annual 1.5% energy savings resulting from implementing energy efficiency measures by distribution network operators and suppliers; enhancing energy performance of heating systems, installation of double-glazed windows and roof insulation; purchase of buildings, products and services with high energy-efficiency performance by public bodies; annual energy modernization of at least 3% of the total floor area of buildings owned and occupied by public bodies; expanding rights and possibilities of consumers in the area of energy management which includes easy and free access to the metering data on the actual consumption; national incentives for small and medium-sized enterprises to conduct energy audit that should be mandatory for all large enterprises; monitoring of the energy performance of new energy generating capacities.
Environment and Renewable Energy Sources Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (codification) This Directive introduces an important instrument of the environmental policy — environmental impact assessment. Member States must ensure, first of all, that projects likely to have significant effects on the environment (by virtue, inter alia, of their nature, size or location) are made subject to a requirement for development consent and an assessment with regard to their effects. This Directive contains two lists of projects subject to environmental impact assessment (from nuclear power stations, gas pipelines, etc., to
Glossary large pig farms). An important element is stricter publicity requirements, including to the public participation in the environmental impact assessment. Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment This Directive introduces an important instrument of environmental policy — strategic environmental assessment. An environmental assessment must be carried out of certain plans and programmes during their preparation. Such assessment includes preparation of the environmental report (that must contain detail information on the likely significant environmental effects and reasonable alternatives) and consultations with the relevant authorities and the public. Where a transboundary effect is possible, an assessment and consultations in a transboundary context must be carried out. Directive 2003/4/EC on public access to environmental information and repealing Council Directive 90/313/EEC This Directive implements the provisions of the Aarhus Conventions relating to public access to environmental information. It aims to guarantee public access to environmental information owned by public authorities — both upon request and through active dissemination thereof. Environmental information must be made available to an applicant within one month after the receipt by the public authority of the applicant’s request. A request for environmental information may be refused if the request is manifestly unreasonable, or formulated in too general a manner, concerns an unfinished document or internal communications. Directive 2003/35/EC providing for public participation in respect of the drawing up of certain plans and programmes relating to the environment and amending with regard to public participation and access to justice Council Directives 85/337/EEC and 96/61/EC This Directive addresses the implementation of the Aarhus Convention in respect of public participation and access to justice. It sets the requirements to the introduction of mechanisms of informing the public, holding consultations with the public and taking account of comments and proposals of the public in decision-making. Member States must ensure that the public is given early and effective opportunities to participate in the preparation and modification or review of the plans or programmes required to be drawn up under the provisions listed in Annex I of the Directive. Directive 2008/50/EC on ambient air quality and cleaner air for Europe This Directive establishes ambient air quality and ambient air quality management standards. For this purpose, it establishes upper and lower assessment thresholds, target and threshold values, sets objectives for the reduction of the effect of particulate matters, defines and classifies zones and agglomerations, introduces the systems of informing the public and ambient air quality assessment with respect to various pollutants. Where, in a given zone or agglomeration, there is a risk that the levels of pollutants will exceed the alert thresholds, short-term action plans must be drawn up. Directive 1999/32/ЕС relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC, as amended by the Regulation (EC) No. 1882/2003 and Directive 2005/33/EC The purpose of this Directive is to reduce the emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels and thereby to reduce the harmful effects of such emissions on man and the environment. It sets the maximum sulphur content in heavy fuel oil, gas oil and marine gas oils. It also specifies methods of sampling and analysis of sulphur content in fuel to check compliance with the requirements.
Glossary Directive 2009/147/EC on the conservation of wild birds (Article 4.2) This Directive relates to the conservation of all species of naturally occurring birds in the wild state in the European territory of the Member States. The mechanism of conservation of wild birds provides for the protection of their habitats; protection and use of birds; prevention of harm that can be caused by invasive species; research and reporting. According to Article 4.2, special protection areas need to be established based on ornitological criteria. Special measures also need to be taken to protect migratory species naturally occurring in the territory of a particular state, especially in wetlands. Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) This Directive lays down rules on integrated prevention and control of pollution arising from industrial activities. It requires using the integrated approach to activities referred to in Annex I thereto. All installations covered by this Directive must prevent or reduce pollution due to using best available techniques, efficient energy use, prevention and control of emissions. Transparency of the integrated approach is ensured by the public participation. Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC This Directive provides for setting mandatory national targets for the overall share of energy from renewable sources in the overall energy balance to take account of statistics and potential of each particular country. These targets include the achievement of a 20% share of energy from renewable sources in overall Energy Community energy consumption by 2020 and a 10% target to be achieved for the share of RES in the transport sector. This Directive, among other, establishes rules for joint green energy projects between Member States and third countries and access to the grid-system of electricity produced from renewable energy sources.
Oil Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products This Directive lays down rules aimed at ensuring a high level of security of oil supply in the Community through reliable and transparent mechanisms based on solidarity amongst Member States. It provides for the adoption of such laws, regulations or administrative provisions as may be appropriate in order to ensure that the total oil stocks maintained at all times within the Community for their benefit correspond, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. Directive 98/70/EC relating to the quality of petrol and diesel fuels The EU introduced rules prohibiting leaded petrol and limiting the permitted sulphur content in diesel fuel with the view to improving air quality and reducing greenhouse gas emissions. This Directive sets technical specifications applicable to petrol, diesel fuels and biofuels used in vehicles, as well as to gas oils used in non-road mobile machinery. Apart from the prohibition of marketing leaded petrol, Member States must conduct assessment of national consumption of fuel, adopt laws and identify the authorized body (bodies) to introduce the fuel quality monitoring system. Directive 94/63/EC on the control of volatile organic compound (VOC) emissions resulting from the storage of petrol and its distribution from terminals to service stations, as amended by Regulation No. 1882/2003 165 This Directive provides for the registration of all terminals used for storage, loading and unloading of oil products, installation of technical means allowing reduction of VOC emissions from mobile containers with 165
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Glossary oil products, bringing all stationary tanks, rail, marine and motor vehicle tanks and loading installations in compliance with the established requirements. Directive 94/22/EC on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons This Directive establishes common rules to ensure the non-discriminatory access to and pursuit of activities relating to the prospection, exploration and production of hydrocarbons. These objective and transparent rules reinforce integration of the internal energy market, encourage greater competition and improve security of supply. The document provides for the implementation of measures to ensure:
equal access to all organizations possessing necessary resources for prospecting, exploring for and producing hydrocarbons; granting authorizations on the basis of objective, published criteria; communication of all necessary information to all organizations participating in the established procedures.
Business Climate Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC This Directive aims to ensure market openness, as well as fair procurements, in particular in the energy sector: extraction (production), transmission and distribution of gas, heat, electricity. Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive provides for the implementation of laws on the electricity market which defines electricity as an energy-related product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures nondiscriminatory access to the existing infrastructure, creates favourable conditions for electricity producers to invest in new forms of energy (wind, solar, etc.). Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive provides for the implementation of laws on the gas market which defines gas as an energyrelated product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures that companies have non-discriminatory access to distribution networks, gas storage facilities and cross-border gas pipelines. Directive 2008/92/EС concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users Pursuant to that Directive, open, generally accessible mechanisms of providing information on the prices of energy resources for customers must be introduced. A particular methodology of collection of respective information about gas and electricity prices is to be drawn up and the respective mechanism to that effect is to be introduced.
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