I thank the Chairman and the members of the committee for the invitation to discuss with them the outcome of the March Energy Council.
The Council's agenda included the two main discussion points of energy union and energy infrastructure. Before I address the two main agenda items, let me mention the matter dealt with under the heading of any other business at the meeting. When the Commission gave an update on energy security, the Czech delegation referred briefly to the 10th plenary meeting of the European Nuclear Energy Forum. That forum meeting will be held in Prague on 26 and 27 of May next. The meeting will provide an opportunity to discuss the role of nuclear power and its contribution to the decarbonisation efforts under the umbrella of the developing energy union concept. While I will be interested to know the outcome of that discussion, I do not propose to attend it or have officials present.
I shall next discuss the energy union aspect of the deliberations. Discussions on the first substantive item of energy union began with a presentation by the Commission and was followed by an exchange of views among member states. In my intervention, I welcomed the communication from the Commission and the concept of energy union, generally. I emphasised how strongly Ireland supports the five dimensions of the energy union proposals as a way to strengthen the three pillars of European energy policy, namely, the security of supply, sustainability and competitiveness.
Enhancing Europe's energy security is of particular importance to Ireland and other inadequately connected member states, and those reliant on only one supply source. It is vital that diversity of routes and sources of energy, together with the appropriate infrastructure, are put in place to address these challenges.
I stressed the significance of the roll out of projects of common interest with support, as required, from the EU Connecting Europe Facility and the European Fund for Strategic Investments. These are important elements to achieve security of supply for Ireland. In this regard, I reiterated the necessity to provide safeguards and flexibilities for small member states with poorly interconnected markets.
Ireland is currently almost completely reliant on external sources of gas. In this regard, I noted that we are looking forward to the Commission's proposals in regard to a revised EU Regulation 994/2010 on gas security of supply.
I understand that the Commission will seek to enhance co-operation between member states in the revised proposal. This would strengthen our position, in that the regulation would provide for greater collaboration and sharing of resources in the event of disruption of our gas supply.
Developing indigenous resources, particularly renewables, is also extremely important for increasing security of supply. We need to focus on all technologies, including onshore and offshore wind, solar, biomass and geothermal. In this regard, we need to continue the focus on research and innovation, particularly in regard to ocean energy and developing wave and tidal technologies.
I referred to the particular vulnerabilities facing Ireland in terms of dependence on oil, specifically in the heating and transport sectors. We must remember the importance of oil in meeting our energy needs, and consider the contribution to our oil security of refining capacity across the EU.
Completing the internal energy market is the key to energy union. I noted the Commission's view that EU-wide decision-making is required from the Agency for the Cooperation of Energy Regulators, ACER, and the European Networks of Transmission System Operators, ENTSOs, in both electricity and gas. However, we need to avoid imposing one-size-fits-all decisions on all member states. Instead we should provide safeguards and flexibilities for member states, particularly smaller member states with poorly interconnected markets. Related to this is the Commission's proposal to present legislation on a new electricity market model. The emphasis will be on a redesign that links wholesale and retail. It will increase security of supply and provide for a multitude of producers. It will also enable the full participation of consumers in the market through better demand response measures. This is an interesting proposal, but it must be a logical evolution of the current market design. Customers cannot be expected to pay for constant evolutions in market design. Industry must have regulatory stability and a clear policy pathway if it is to invest in the infrastructure required to complete the internal energy market.
On this issue, I reiterated Ireland's position that capacity payments can be appropriate, necessary and EU-compliant in certain circumstances. While market integration and decarbonisation remain critical targets, principles of national flexibility must also be respected.
Other member states generally welcomed the Commission's communication on an energy union. At the end of the debate both Commission Vice-President Šefovi and Commissioner Cañete were encouraged by the support.
The Latvian Presidency confirmed that it would write to President Tusk of the European Council, to reflect the views of the Energy Council and the views of the Environment Council, in preparation for the discussion on energy union at the meeting of Heads of State and Government which took place on 19 and 20 of March.
As an additional note for information, in preparation for European Council at the General Affairs Council on 17 March, the discussion on energy union indicated divergences among member states on the questions of transparency in the gas market, and the ex ante assessments of intergovernmental agreements.
There were also calls for stronger language on energy efficiency, energy infrastructure and climate change. The Minister of State at the Department of Foreign Affairs and Trade, Deputy Dara Murphy, repeated the importance of including a reference in the conclusions to the position of poorly connected peripheral regions and the need to have the citizen at the centre of the energy union.
At the European Council meeting held on 19 March the issues of transparency in the gas market and assessments of intergovernmental agreements arose again.
In the end, the text proposed by the President was agreed. From an Irish perspective the Taoiseach was successful in introducing language into the conclusions that recognised the position of peripheral regions in the context of interconnections, as I mentioned. Positive language was also introduced on ensuring affordability for households and businesses.
I turn now to the second substantive agenda item, namely, energy infrastructure. The discussions began with a presentation by the Commission on developments and priorities and this was followed by a policy debate. I expressed our interest in achieving the 10% electricity interconnections target, which accompanied the communication on energy union. From Ireland's standpoint as a small member state which has developed one of the first cross-border electricity markets in the EU, I said that poorly interconnected peripheral regions must have additional interconnection for our energy consumers to reap the benefits of the internal energy market. Our approach to the energy union and collective funding decisions must reflect this goal. Otherwise the project of the internal energy market runs the risk of being seen as irrelevant or, worse, detrimental to the needs and interests of European consumers in poorly connected markets.
Second, I welcomed an enhanced regional approach as a stepping stone to delivering full European energy market integration. Ireland has witnessed the benefits of regional co-operation since the establishment of the single electricity market, SEM, in November 2007. This combined two separate wholesale markets on the island into a single, cross-jurisdictional and jointly governed and regulated wholesale market on the island of Ireland. The benefits achieved by the single electricity market include improved security of supply, competitive prices and increased penetration of renewable energy, the key goals of the energy union project.
On regional co-operation, Ireland continues to participate in the North Sea countries' offshore grid initiative which was formed in 2009 by nine EU member states and Norway. This is a regional co-operation initiative to facilitate the co-ordinated development of a possible offshore electricity grid in the North Sea. The work is still at an early stage but it will facilitate the bringing forward of projects in the coming years. The Commission intends to add to the momentum by bringing forward an action plan for the northern seas regional group. It will also convene an energy infrastructure forum to facilitate progress.
I informed our European hosts and my ministerial colleagues that we have also recently explored the possibility of exporting electricity from renewable sources to our near neighbour, the United Kingdom. Members of the committee will see that some of the projects of common interest, PCIs, listed in the annex to the communication relate to the proposed Ireland-UK energy trading project. For various reasons this project is not progressing at present, so the related PCIs are unlikely to be developed in the timeframe indicated. Other important PCIs are being progressed, most notably the North-South transmission line project, an important gas project in south-west Scotland and a feasibility study for an interconnector between Ireland and France.
The issues of funding and our location as a peripheral, poorly connected member state are key challenges to the development of energy infrastructure. Having low electricity interconnection levels and also being cut off from the continental oil grid are a high cost burden on a small, energy using population and provide a challenge to private investment. I welcomed the establishment of the European Fund for Strategic Investments to support and enhance existing funds such as the connecting Europe facility. I hope that this fund will stimulate investors to develop the infrastructure necessary to complete a fully integrated European energy market.
To conclude, it was a successful Council and I made full use of the opportunity to stress the importance we attach to key elements of European energy policy. Following the Council, I read press reports of some very ill-informed criticism of Ireland's energy policy and of our contribution to European measures to tackle climate change. I hope this report to the committee underlines our active engagement in regional co-operation in this area, including in the North Sea countries' offshore grid initiative. I also assure the committee that Ireland is fully committed to making its contribution to the overall EU 2030 targets for carbon emission reductions, energy efficiency and the generation of renewable energy. Measures to help deliver our transformation to a low carbon economy and society will be at the centre of the energy White Paper which I will publish later this year. The energy agenda has never been fuller. Its complexity makes many demands on all stakeholders. Much of what is topical at European level is echoed here in Ireland. All of the debate is helpful to me as I seek to develop Ireland's energy policy out towards 2030.
As I have mentioned repeatedly in the Chamber and elsewhere, I will publish a definitive energy policy for this country next September. Clearly, all of us have a role in developing our future energy policy to support economic development, underpin the social recovery that is clearly gathering momentum and manage the transition to a low carbon economy.
I thank you, Chairman, for the invitation to the meeting and look forward to hearing the members' views.