Energy solidarity: a political notion or a binding principle for Member States and EU institutions?

In its decision C‑848/19 P (Federal Republic of Germany v. EU Commission) the European Court of Justice confirms the binding nature for Member States and EU institutions of the energy solidarity principle as stated in article 194 TFEU.

Case at hand

The decision concerns the exemption of the OPAL pipeline (= the Baltic Sea Pipeline Connector, the section between Germany and the Czech Republic of the Nord Stream 1 gas pipeline which transports gas from Russia into Europe) from the rules on third-party access to the gas pipeline network and on tariff regulation.

In 2009 the European Commission approved under application of Directive 2003/55, subject to conditions, the decision of the German Federal Network Agency in this respect, in order to enable new investments which would not take place if the standard regulatory provisions were to be applied in full. The OPAL pipeline was fully exempted from third party access and tariff regulation provisions. However, to ensure effective competition on the gas markets in the Czech Republic, companies with a dominant position on one of the Czech gas markets (which includes the Gazprom group and RWE group) were only then allowed to book more than 50 % of the capacity for the Czech Republic if they implemented a 'gas release programme', a sale of gas under conditions set by the regulatory authority. Such a programme was never implemented and as a consequence, significant parts of the pipeline capacity remained unused.

As Gazprom, the dominant undertaking on the market for the supply of gas, never complied with one of the conditions imposed by the European Commission, it was able to operate the OPAL pipeline only up to 50% of its capacity since it was put into service in 2011.

The German Federal Network Agency notified in 2016 the European Commission of its intention to vary certain provisions of the exemption granted in 2009. In essence, the variation proposed was to enable the OPAL pipeline to be operated at its full capacity, on condition that at least 50% of that capacity would be sold by way of auction.

By decision of 2016 taken under application of Directive 2009/73/EC, the European Commission approved that variation subject to certain conditions.

Considering that this decision threatened the security of Poland’s gas supply because of the transfer to the Nord Stream 1/OPAL transit route of part of the volumes of natural gas previously transported through the States of the central European region, including Poland, via pipelines competing with OPAL, the Republic of Poland brought an action for annulment of that decision before the General Court.

In its decision T 883/16 of 10 September 2019 the General Court annulled the decision of the European Commission for breach of the principle of energy solidarity laid down in Article 194(1) TFEU. According to the General Court, the European Commission should have examined the impact of the variation of the regime governing the operation of the OPAL pipeline on Poland’s security of supply and energy policy.

The Federal Republic of Germany appealed to this decision, considering that the principle of energy solidarity as set out in Article 194(1) TFEU does not have binding effect, in the sense that it does not entail rights and obligations for the European Union and the Member States. According to the Federal Republic of Germany it is an abstract, purely political notion, and not a legal criterion for the assessment of the validity of an act of an EU institution. It is only by the adoption of more specific rules in secondary legislation that such a principle could become a legal criterion to be implemented and applied by the executive. This follows from the fact that it is not the purpose of primary law to establish legal criteria that might be relied on before the courts, but to define in political terms the general framework within which the European Union is to develop and the European Union’s objectives, the latter being pursued and more closely defined by regulations and directives.

The Federal Republic of Germany upheld that Article 36(1) of Directive 2009/73 gives specific form to the principle of energy solidarity in secondary legislation and is consequently the only article in the light of which the legality of the decision at issue should be reviewed.

Decision of the European Court of Justice

1/ The principle of energy solidarity is binding upon the EU Institutions and the Member States

According to European Court of Justice the spirit of solidarity between Member States, mentioned in article 194 TFEU, constitutes a specific expression, in the field of energy, of the principle of solidarity, which is itself one of the fundamental principles of EU law.

Several other provisions of the Treaties refer to the principle of solidarity. The principle of solidarity underpins the entire legal system of the European Union and it is closely linked to the principle of sincere cooperation, laid down in Article 4(3) TEU, pursuant to which the European Union and the Member States are, in full mutual respect, to assist each other in carrying out tasks which flow from the Treaties.

In that regard, the Court reminds that it has held, inter alia, that that principle not only obliges the Member States to take all the measures necessary to guarantee the application and effectiveness of EU law but also imposes on the EU institutions mutual duties to cooperate in good faith with the Member States

According to the Court, the principle of solidarity forms the basis of all of the objectives of the European Union’s energy policy, serving as the thread that brings them together and gives them coherence. Acts adopted by the EU institutions, including by the European Commission under that policy, must be interpreted, and their legality assessed, in the light of the principle of energy solidarity. The principle, like general principles of EU law, constitutes a criterion for assessing the legality of measures adopted by all the EU institutions.

Thus, the absence in Article 36(1) of Directive 2009/73 of any reference to the principle of energy solidarity did not relieve the European Commission of the need to examine the effect of that principle on the derogating measures adopted by the decision at issue. The principle of energy solidarity, read in conjunction with the principle of sincere cooperation, requires that the European Commission verify whether there is a danger for gas supply on the markets of the Member States, when adopting a decision on the basis of Article 36 of Directive 2009/73.

The principle of energy solidarity requires that the EU institutions, including the European Commission, conduct an analysis of the interests involved in the light of that principle, taking into account the interests both of the Member States and of the European Union as a whole.

2/ Not an emergency mechanism

The European Court of Justice also ruled that the principle of energy solidarity is not an emergency mechanism, which must be used only in exceptional cases, as argued by the Federal Republic of Germany

The EU institutions and the Member States must take into account the principle of energy solidarity, referred to in Article 194 TFEU, in the context of the establishment and functioning of the internal market and, in particular, the internal market in natural gas, by ensuring security of energy supply in the European Union, which means not only dealing with emergencies when they arise, but also adopting measures to prevent crisis situations.

The European Union and the Member States must, in the exercise of their respective competences in that field, balance the energy interests involved, avoiding the adoption of measures that might affect the interests of stakeholders liable to be affected, as regards security of supply, its economic and political viability and the diversification of sources of supply, and do so in order to take account of their interdependence and de facto solidarity.

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