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EU Cross-Border Energy Investments in an International Context: The Case of Commodity Transportation and Transmission Infrastructure

Porins, Kristians LU (2016) JAEM03 20161
Department of Law
Abstract
In regard to the energy sector, it is generally presumed that in post-Lisbon era and since the adoption of Third Energy Package the Member States and institutions of the Union act in a shared format. However, by developing new legislation in the field, supra-national institutions tend to shift the competence away from shared (as it currently stands). Even if the guidelines for decisions granting exemptions are laid down in sector specific legislation, the Commission tends to 1) grant divergent infrastructure exemptions on a case-by-case basis and such decisions result in a discriminatory treatment and 2) force mandatory investments if entity is dominant and has refrained from investing in capacity of the relevant infrastructure. On the... (More)
In regard to the energy sector, it is generally presumed that in post-Lisbon era and since the adoption of Third Energy Package the Member States and institutions of the Union act in a shared format. However, by developing new legislation in the field, supra-national institutions tend to shift the competence away from shared (as it currently stands). Even if the guidelines for decisions granting exemptions are laid down in sector specific legislation, the Commission tends to 1) grant divergent infrastructure exemptions on a case-by-case basis and such decisions result in a discriminatory treatment and 2) force mandatory investments if entity is dominant and has refrained from investing in capacity of the relevant infrastructure. On the other hand, whether the remedy should then be rather sought in the realm of competences and the respective international agreements?
While the EU internal natural gas market is subject to the liberalisation processes, investing entities might be “locked-up” concerning their decisional abilities as legislation overly tries to ensure an equal level playing field for every investor. Therefore, one of the possibilities is to challenge the troublesome EU law measure under the WTO. Entities transporting the commodity hold the highest share of incentives to expand, develop and operate on the market. It has to be understood that the Union itself cannot construct the necessary infrastructure in order to satisfy the ever-growing consumer demand for natural gas. The author emphasises that the EU energy acquis should not extend outside the internal market otherwise acquis would fail.
The Commission has decided to offer an innovative solution to remedy any congestion in infrastructure of natural gas transportation by stepping from a duty to deal to duty to invest. This is an innovative solution that demands for more elaboration as “strategic underinvestment” is prohibited. Why “strategic over-investment” then is not a violation of Art.102(b)?
The author argues that rules related to infrastructure exemption policy and rules on competition prescribed in the primary legislation share similar characteristics, but both are, nevertheless, applied in different scenarios. It is arguable that the Commission acts ultra vires in both legal frameworks. Although, the CJEU also has an opportunity to decide upon the application of refusal to deal and the respective essential facilities doctrine, it has, nonetheless, not chosen to follow the path of the Commission. Overall, the author encourages penetration of Art.102(b) TFEU into the sectorial legislation, which then would be a suitable mix of two legal disciplines. Such a mixed legal instrument then would qualify as a solution for boosting up innovation. (Less)
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author
Porins, Kristians LU
supervisor
organization
course
JAEM03 20161
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Directive 2009/73, downstream, energy competence, essential facilities, exemption policy, GATS, infrastructure foreclosure, innovation, interconnectors, investment, midstream, natural gas transportation, refusal to deal, shared competence, strategic underinvestment, third party access, transmission, WTO
language
English
id
8895380
date added to LUP
2016-11-25 09:24:59
date last changed
2016-11-25 09:24:59
@misc{8895380,
  abstract     = {In regard to the energy sector, it is generally presumed that in post-Lisbon era and since the adoption of Third Energy Package the Member States and institutions of the Union act in a shared format. However, by developing new legislation in the field, supra-national institutions tend to shift the competence away from shared (as it currently stands). Even if the guidelines for decisions granting exemptions are laid down in sector specific legislation, the Commission tends to 1) grant divergent infrastructure exemptions on a case-by-case basis and such decisions result in a discriminatory treatment and 2) force mandatory investments if entity is dominant and has refrained from investing in capacity of the relevant infrastructure. On the other hand, whether the remedy should then be rather sought in the realm of competences and the respective international agreements?
While the EU internal natural gas market is subject to the liberalisation processes, investing entities might be “locked-up” concerning their decisional abilities as legislation overly tries to ensure an equal level playing field for every investor. Therefore, one of the possibilities is to challenge the troublesome EU law measure under the WTO. Entities transporting the commodity hold the highest share of incentives to expand, develop and operate on the market. It has to be understood that the Union itself cannot construct the necessary infrastructure in order to satisfy the ever-growing consumer demand for natural gas. The author emphasises that the EU energy acquis should not extend outside the internal market otherwise acquis would fail.
The Commission has decided to offer an innovative solution to remedy any congestion in infrastructure of natural gas transportation by stepping from a duty to deal to duty to invest. This is an innovative solution that demands for more elaboration as “strategic underinvestment” is prohibited. Why “strategic over-investment” then is not a violation of Art.102(b)?
The author argues that rules related to infrastructure exemption policy and rules on competition prescribed in the primary legislation share similar characteristics, but both are, nevertheless, applied in different scenarios. It is arguable that the Commission acts ultra vires in both legal frameworks. Although, the CJEU also has an opportunity to decide upon the application of refusal to deal and the respective essential facilities doctrine, it has, nonetheless, not chosen to follow the path of the Commission. Overall, the author encourages penetration of Art.102(b) TFEU into the sectorial legislation, which then would be a suitable mix of two legal disciplines. Such a mixed legal instrument then would qualify as a solution for boosting up innovation.},
  author       = {Porins, Kristians},
  keyword      = {Directive 2009/73,downstream,energy competence,essential facilities,exemption policy,GATS,infrastructure foreclosure,innovation,interconnectors,investment,midstream,natural gas transportation,refusal to deal,shared competence,strategic underinvestment,third party access,transmission,WTO},
  language     = {eng},
  note         = {Student Paper},
  title        = {EU Cross-Border Energy Investments in an International Context: The Case of Commodity Transportation and Transmission Infrastructure},
  year         = {2016},
}