Olaf Däuper (BBH) presents at the Vienna Forum on European Energy Law, 2013

1. Legal Challenges in the Infrastructure Package –
A Perspective from Administrative Law
Dr. Olaf Däuper
Vienna, 8 March 2013

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3. 00766-13/2002249Legal Challenges in the Infrastructure Package8 March 2013
Dr. Olaf Däuper, Rechtsanwalt / lawyer
§ Born in Langen/Hessen in 1973
§ Studies of law at the Universities of Mainz, Glasgow (Erasmus
scholarship) and Freiburg/Breisgau
§ 1998 to 1999 member of the academic staff at Max Planck
Institute for Foreign and International Criminal Law (US-
Department)
§ 1998 to 2000 legal state traineeship in Freiburg, Offenburg and
Brussels
§ Since 2001 associate at BBH Berlin
§ Doctorate at Humboldt University in Berlin on an Energy
antitrust law topic in 2003
§ Since 2006 admission as lawyer at the Superior Court of Justice
§ Since 2007 partner of BBH Berlin
§ Memberships: German-American Lawyer’s Association (GALA),
Institut für Energie- und Wettbewerbsrecht in der
kommunalen Wirtschaft e.V. (EWeRK), Gesellschaft für
Energiewissenschaft und Energiepolitik e.V. (GEE)
§ Comprehensive lecturing and publication activities
Dr. Olaf Däuper
Rechtsanwalt
Partner (since 2007)
Contact:
olaf.daeuper@bbh-online.de
Tel.: 030/611 28 40-15

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Content
I. Objectives
II. As Things Are Now
III. The Infrastructure Package (IP)
IV. Priority Corridors and Areas and Projects of
Common Interest (PCI)
V. Connecting Europe Facility (CEF)
VI. Challenges for Administrative Law
VII. Conclusion
Legal Challenges in the Infrastructure Package8 March 2013

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Objectives of the Infrastructure Package
§ Achievement of the internal energy market
§ Better integration of markets and no isolation of any Member State from European
energy network (solidarity)
§ Economic
§ Modernisation of trans-European energy infrastructure (transmission systems)
§ Fostering economic growth and jobs
§ Diversification à Security of supply
§ More competition à Lower prices
§ Ecological
§ Achievement of energy and climate goals of “20-20-20 by 2020”
§ Better integration of renewable energy sources
§ “Decarbonisation” of EU energy system until 2050 (low carbon economy)
§ In General: better climate protection, sustainability
Legal Challenges in the Infrastructure Package8 March 2013
Short-term vision Long-term vision
European
Infrastructure
Package
Third Energy
Package
Energy
solidarity
Role of gas in
the EU energy
mix
External
energy policy
Internal gas
market

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Documents
§ Proposal for a Regulation of the European Parliament and of the Council on
Guidelines for Trans-European Energy Infrastructure and Repealing Decision No
1364/2006/EC (19 October 2011)
§ MEMO/11/710 – The Commission‘s Energy Infrastructure Package (19 October 2011)
§ Proposal for a Regulation establishing the Connecting Europe Facility
[COM/2011/665]
§ Communication - A growth package for integrated European infrastructures
[COM/2011/676]
Legal Challenges in the Infrastructure Package8 March 2013

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Subject Matter and Scope
§ Art. 1 – Subject Matter and Scope
§ The Regulation…
§ (a) lays down rules to identify projects of common interest necessary to implement
these priority corridors and areas and falling under the energy infrastructure categories
in electricity, gas, oil, and carbon dioxide set out in Annex II; [prioritisation]
§ (b) facilitates the timely implementation of projects of common interest by
accelerating permit granting and enhancing public participation; [streamlining of
procedures]
§ (c) provides rules for cross-border allocation of costs and risk-related incentives for
projects of common interest; [sharing of costs of cross-border projects]
§ (d) determines conditions for eligibility of projects of common interest for Union
financial assistance under [Regulation of the European Parliament and the Council
establishing the Connecting Europe Facility]. [financial support]
Legal Challenges in the Infrastructure Package8 March 2013

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As things are now…
September 2006 Decision No 1364/2006/EC (TEN-E guidelines)
2010 Launch of Europe 2020 strategy
19 October 2011 Publishing of legislative proposal 2011/0300 (COD)
28 November 2012 Agreement by Parliament and Council on Regulation
8 December 2012 Vote in committee, 1st reading/single reading
Current stage Awaiting Parliament 1st reading / single reading / budget 1st stage
(European Council concludes to further cap budget of CEF)
March/April 2013 Publication and entry into force expected
Early 2013 Decision on the budget for Projects of Common Interest
31 July 2013 (latest) Adoption of the Union-wide list of PCI
2014 Entry into force of CEF
Legal Challenges in the Infrastructure Package8 March 2013

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Content of the Infrastructure Package
The infrastructure package includes five legislative proposals
1-3 transport energy information society
↓ ↓ ↓
sectoral guideline sectoral guideline sectoral guideline
4 Connecting Europe Facility (CEF)
transport energy information society
↓ ↓ ↓
EUR 30 billion
EUR 23 billion
EUR 9.1 billion
EUR 5.1 billion
EUR 9.2 billion
EUR 1 billion
5 Project Bond Proposal
§ European Energy Infrastructure Package as part of the European Infrastructure Package
Legal Challenges in the Infrastructure Package8 March 2013

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Priority Corridors and Areas
§ Art. 1 I – Subject matter and scope, Annex I:
§ (1) Priority Electricity Corridors
§ Northern Seas offshore grid (“NSOG”)
§ North-South electricity interconnections in Western Europe (“NSI West Electricity”)
§ North-South electricity interconnections in Central Eastern and South Eastern Europe
(“NSI East Electricity”)
§ Baltic Energy Market Interconnection Plan in electricity (“BEMIP Electricity”)
§ (2) Priority Gas Corridors
§ North-South gas interconnections in Western Europe (“NSI West Gas”)
§ North-South gas interconnections in Central Eastern and South Eastern Europe (“NSI
East Gas”)
§ Southern Gas Corridor (“SGC”)
§ Baltic Energy Market Interconnection Plan in gas (“BEMIP Gas”)
§ (3) Priority Oil Corridor (Oil supply connections in Central Eastern Europe, “OSC”)
§ (4) Priority Thematic Areas
Legal Challenges in the Infrastructure Package8 March 2013
(1) electricity (2) gas (3) oil (4) carbon dioxide

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Example – Northern Seas Offshore Grid
Legal Challenges in the Infrastructure Package8 March 2013
An integrated offshore electricity grid in the North
Sea, the Irish Sea, the English Channel, the Baltic
Sea and neighbouring waters to transport
electricity from renewable offshore energy sources
to centres of consumption and storage.
Projects to be considered as potential PCIs
(list is not exhaustive)
• New interconnection between Denmark and
the Netherlands
• New sub-sea interconnector between France
and the UK
• New sub-sea interconnector between the UK
and Belgium
• Sub-sea interconnector and hub between
Germany/UK and Norway
• AC land link between Northern and Southern
Ireland
PriorityElectricityCorridor “NSOG”
source: European Commission, Connecting Europe

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Example – Southern Gas Corridor
Legal Challenges in the Infrastructure Package8 March 2013
Transmission of gas from the Caspian Basin,
Central Asia, the Middle East and Eastern
Mediterranean Basin to the Union to enhance
diversification of gas suppliers.
Projects to be considered as potential PCIs
(list is not exhaustive)
• Gas transmission infrastructures, including
new pipelines across Turkey and/or
transmission solutions across the Black Sea,
to connect gas producing countries in the
Caspian (e.g. Azerbaijan, Turkmenistan) and
Middle East (e.g. Iraq) to EU Member States
• Gas transmission infrastructures required for
connecting EU Member States to gas
suppliers in the Eastern Mediterranean and
the Middle East
PriorityGas Corridor “SGC”
source: European Commission, Connecting Europe

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Projects of Common Interest
§ Projects of Common Interest, Art. 3 – 6
§ To implement infrastructure priorities
§ Process: Identify – Evaluate – Adopt
§ Art. 3 Union-wide list of projects of common interest
§ Establishment of twelve Regional Groups, Art. 3 II, Annex III
§ Adaptation of “regional list” of proposed projects of common interest
§ Commission à Union-wide list of PCI
§ Every two years
§ First list to be adopted by 31 July 2013
Legal Challenges in the Infrastructure Package8 March 2013

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Projects of Common Interest
§ Art. 4 – Criteria for projects of common interest
§ (a) Necessity for implementation of at least one of the priority
corridors and areas mentioned
§ (b) Economic, social, and environmental viability (Potential overall
benefits outweigh its costs)
§ (c) Involvement of at least two Member States
§ by directly crossing the border of two or more Member States; or
§ Location on territory if one Member State and significant cross-border
impact; or
§ Crossing of border of at least one Member State and an EEA country
§ Further specific criteria in Art. 4
§ In general: essential contribution to integration of internal energy
market
§ Art. 5 – Implementation and monitoring
§ Art. 6 – European coordinators
Legal Challenges in the Infrastructure Package8 March 2013

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Connecting Europe Facility
§ Part of the Multiannual Financial Framework of the European Commission (MFF)
§ Proposal for a Regulation of the European Parliament and of the Council establishing the
Connecting Europe Facility COM(2011) 665, 2011/0302 (COD); 19 October 2011
§ More effectiveness
§ A single framework for investing into EU infrastructure priorities à so far funding
fragmented among many programmes
§ Maximise synergies and interaction between the energy, transport and ICT programmes
§ Simplification of rules
§ Centralisation
§ Common award criteria, conditions for financial assistance, and funding instruments
§ More certainty
§ Financial crisis led to budget cuts à infrastructure investments needed
§ Certainty à attraction of more private sector financing
Legal Challenges in the Infrastructure Package8 March 2013

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Challenges
§ Challenges for Administrative Law – Chapter III, IV, V
§ Implementation of Chapter III of the Regulation, Art. (7)8 – 11.
§ (Art. 7 – Regime of common interest)
§ Art. 8 – ‘Priority status’ of projects of common interest
§ Art. 9 – Organisation of the permit granting process
§ Art. 10 – Transparency and public participation
§ Art. 11 – Duration and implementation of the permit granting process
Legal Challenges in the Infrastructure Package8 March 2013
Proposals for Regulation
Chapter I II III IV V VI
General
Provisions
Projects of
Common
Interest
Permit Granting
and Public
Participation
Regulatory
Treatment
Financing Final
Provisions

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Overview: Challenges for Administrative
Law
§ Specific objectives for administration: ”less complexity – more efficiency”
§ Introduction of a binding overall time limit of three (and a half) years for
permit-granting
§ Concentration of permit-granting powers or coordination in one single
authority (one-stop-shop)
§ Streamlining of environmental authorisation procedures
§ More transparency to enhance public acceptance
§ Reduction of costs by 30% for project and 45% for administrative authorities
§ Promotion of cooperation between Member States
Legal Challenges in the Infrastructure Package8 March 2013

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Efficient Permit Granting
§ PCI shall be allocated the status of highest national significance possible (Art. 8 I)
§ Establishment of public interest and necessity of PCI (Art. 8 II)
§ Streamlining of environmental assessment procedures (Art. 8 IV)
§ Designation of one national competent authority (Art. 9 I) which can decide
according to…
§ (a) The integrated scheme
§ (b) The coordinated scheme
§ ((c) The collaborative scheme)
§ Cooperation of authorities if decisions required in two or more Member States
(Art. 9 III)
§ Transparency and public participation, Art. 10
§ Permit granting process consisting of two phases (Art. 11)
§ The pre-application procedure (2 years max.)
§ The statutory permit granting procedure (1 year (and 6 months) max.)
Legal Challenges in the Infrastructure Package8 March 2013

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Cost-benefit anaylsis, allocation, incentives
§ Problem: national regimes of regulation not designed for cross-border infrastructure
projects à allocation of costs via cost-benefit analysis
§ ENTSO-E and ENTSO-G, ACER and Commission to develop methodologies for a harmonised
energy system-wide cost-benefit analysis for PCI of gas and electricity, Art. 12, Annex V
§ Art. 13 I: Incurred investment costs related to a PCI of electricity or gas shall…
§ be borne by the relevant TSO(s) to which project provides a net positive impact
§ be paid for by network users through tariffs for network access
§ National regulatory authorities shall take a joint decision on the allocation of investment
costs across border to be borne by each system operator for the respective project, as well
as their inclusion in network tariffs. Economic, social and environmental costs and benefits of
the project(s) and the possible need for financial support shall be taken into account, Art. 13
V.
§ For PCI of “higher risks” national regulatory authorities shall ensure that “appropriate
incentives” are granted, Art. 14
Legal Challenges in the Infrastructure Package8 March 2013
Proposals for Regulation
Chapter I II III IV V VI
General
Provisions
Projects of
Common
Interest
Permit Granting
and Public
Participation
Regulatory
Treatment
Financing Final
Provisions

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Union financial assistance
§ Eligibility criteria (in guidelines, Art. 15)
§ Certain PCI of the electricity, gas, and carbon dioxide sector are eligible for Union
financial support in the form of:
§ In exceptional cases:
for PCI if…
§ CBA shows positive externalities
§ lack of commercial viability
§ Cross-border cost-allocation decision done
Legal Challenges in the Infrastructure Package8 March 2013
Grants for studies Financial instruments according to CEF
Grants for works according to CEF
Proposals for Regulation
Chapter I II III IV V VI
General
Provisions
Projects of
Common
Interest
Permit Granting
and Public
Participation
Regulatory
Treatment
Financing Final
Provisions

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Conclusion
§ Conclusion
§ Further development of cross-border infrastructure
essential for realisation of internal energy market
§ Essential for distribution of renewable energy
§ Streamlining of permit granting and administrative
processes to be implemented carefully and timely
§ Cuts of budget as concluded by Council may be too
drastic
§ Problem: Regulation might violate Art. 171 I TFEU
Legal Challenges in the Infrastructure Package8 March 2013

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Contact: Dr. Olaf Däuper
Thank you for your attention.