EC Announces Plans To Reform Electricity Market in 2023

On October 18, the European Commission (Commission) published its work program 2023 (programme). Among other initiatives, the Commission proposes the creation of a European hydrogen bank and a comprehensive reform of the EU electricity market in the coming year. Both initiatives will be presented in the course of 2023 within the framework of the European Green Deal.

The creation of a European hydrogen bank, already mentioned by Commission President von der Leyen in September’s State of the Union address, aims to boost investment in hydrogen projects and boost the European Union’s green hydrogen economy. Under the program, the bank will receive €3 billion in capital to achieve its goals. However, the program does not confirm whether the initiative, which is expected to be published in the third quarter of 2023, will come in the form of a legislative or non-legislative proposal.

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In addition, with regard to other developments in the hydrogen market in the EU, the Commission calls on the European co-legislators to act swiftly and reach an agreement by 2023 on the Commission’s proposals for a regulation on the internal markets for renewable and natural gases and for hydrogen; and for a directive on common rules for the internal markets for renewable and natural gases and for hydrogen.

As regards the comprehensive reform of the EU electricity market, the Commission’s actions aim to help the European Union prepare to better deal with future energy price volatility, ensure affordable electricity bills and to prepare for the industrial transformation needed to achieve its decarbonisation targets by 2050. The proposal also addresses the decoupling effect of gas prices on electricity prices. The EU electricity market reform is expected to be presented in the first quarter of 2023 as a legislative initiative, accompanied by an impact assessment.

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The program also explains that to complement the Commission’s recent action on energy markets with emergency measures to tackle the rise in energy prices and support the fight against the climate crisis, it is crucial to build resilience and strengthen the EU’s response capacity of critical infrastructure. The latter forms the core of a five-step plan1 announced by Commission President von der Leyen during the European Parliament plenary session on 5 October. Building on such a plan, the Commission further published on 18 October a proposal for a Council Recommendation aimed at maximizing and accelerating work to protect critical infrastructure in three priority areas: preparedness, response and international cooperation.

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Energy policy and legislation will continue to be an important theme for the European Union in 2023, both because of the objectives of the European Green Deal and because of current geopolitical developments that have major consequences for Europe’s energy supply, affordability and structural resilience.

Kathleen Keating and Paula Esteban Gómez also contributed to this article.


FOOTNOTES

1 The five-step plan consists of increasing preparedness; work with Member States to stress-test their critical infrastructure, starting with the energy sector and followed by other high-risk sectors; increasing response capacity, in particular through the EU Civil Protection Mechanism; make good use of satellite capabilities to detect potential threats; and strengthening cooperation with the North Atlantic Treaty Organization and key partners on critical infrastructure resilience.

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