Ukraine takes major step at bringing energy laws in line with EU

On 6 June 2019, the Ukrainian parliament ratified the updated Annex XXVII Energy Cooperation including Nuclear Issues to the EU-Ukraine Association Agreement, which aims at increasing market integration and bringing energy sector regulations in line with key parts of the EU acquis or body of law.

The Annex covers electricity, gas, oil, renewable energy and nuclear energy, and will radically impact the regulation and policies of the Ukrainian energy sector. The main points are as follows:

• Ukraine must bring its own laws in compliance with EU law. Any changes in EU law must be reflected in Ukrainian legislation. The Annex lists a number of EU Directives and Regulations to be implemented and considered while drafting Ukrainian energy policy.
• Ukraine must refrain from any action that prevents EU energy law from being reflected in Ukrainian legislation and must revoke any act incompatible with EU law.
• Whenever Ukraine is considering energy legislation, it must consult with the European Commission about the proposal's compatibility with EU law. Laws and regulations contradicting EU standards cannot be passed. The final draft of each energy-sector law must be communicated to the European Commission.
• Ukraine must report on its progress in adapting its laws to EU standards and its compliance with European Commission feedback on any of its draft laws.

Ukraine has agreed to bring its laws in line with the following EU legislation by the specified dates:

1. EU Directives Ukraine will implement through the Energy Community Treaty.

Electricity

• Directive 2009/72/EC of the European Parliament and the Council of 13 July 2009 concerning common rules for the internal market in electricity, and the repeal of Directive 2003/54/EC;
• Regulation (EC) No 714/2009 of the European Parliament and the Council of 13 July 2009 on conditions for access to the network for cross-border electricity exchanges, and the repeal of Regulation (EC) No 1228/2003;
• Regulation (EU) No 1227/2011 of the European Parliament and the Council of 25 October 2011 on wholesale energy market integrity and transparency;
• Directive 2005/89/EC of the European Parliament and the Council of 18 January 2006 on measures to safeguard security of electricity supply and infrastructure investment;
• Commission Regulation (EU) 838/2010 of 23 September 2010 on laying down guidelines for the inter-transmission system operator compensation mechanism, and a common regulatory approach to transmission charging;
• Commission Regulation (EU) No 543/2013 of 14 June 2013 on submission and publication of data in electricity markets, and amending Annex I to Regulation (EC) No 714/2009 of the European Parliament and the Council;
• Commission Regulation (EU) 2016/1388 of 17 August 2016 establishing a network code for demand connection;
• Commission Regulation (EU) 2016/631 of 14 April 2016 establishing a network code on requirements for grid connection of generators;
• Commission Regulation (EU) 2016/1447 of 26 August 2016 establishing a network code on requirements for grid connection of high voltage direct current systems and direct current-connected power park modules;
• Regulation (EU) 2016/1952 of the European Parliament and the Council of 26 October 2016 on European statistics on natural gas and electricity prices, and the repeal of Directive 2008/92/EC;

Gas

• Directive 2009/73/EC of the European Parliament and the Council of 13 July 2009 on common rules for the internal market in natural gas, and the repeal of Directive 2003/55/EC;
• Regulation (EC) No 715/2009 of the European Parliament and the Council of 13 July 2009 on access to the natural gas transmission networks, and the repeal of Regulation (EC) No 1775/2005;
• Council Directive 2004/67/EC of 26 April 2004 concerning measures to safeguard security of natural gas supply;
• Regulation (EU) 2015/703 of 30 April 2015 establishing a network code on interoperability and data exchange rules;
• Commission Regulation (EU) 2017/459 of 16 March 2017 establishing a network code on capacity allocation mechanisms in gas transmission systems, and the repeal of Regulation (EU) No 984/2013;
• Commission Regulation (EU) 2017/460 of 16 March 2017 establishing a network code on harmonised transmission tariff structures for gas;

Renewable energy sources

• Directive 2009/28/EC of the European Parliament and the Council of 23 April 2009 on promoting energy use from renewable sources, and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC;

Oil

• Council Directive 2009/119/EC of 14 September 2009 imposing an obligation on EI member states to maintain minimum stocks of crude oil or petroleum products;

Energy infrastructure

• Regulation (EU) No 347/2013 of the European Parliament and the Council of 17 April 2013 on guidelines for trans-European energy infrastructure, repealing Decision No 1364/2006/EC, and amending Regulations (EC) No 713/2009, (EC) No 714/2009 and (EC) No 715/2009;

Energy efficiency

• Directive 2012/27/EU of the European Parliament and the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU, and repealing Directives 2004/8/EC and 2006/32/EC;
• Directive 2010/31/EU of the European Parliament and the Council of 19 May 2010 on the energy performance of buildings;
• Regulation (EU) 2017/1369 of the European Parliament and the Council of 4 July 2017 setting the framework for energy labelling, and the repeal of Directive 2010/30/EU;

Implementing Regulations

• A number of the Commission Delegated Regulations (EU) on labelling of energy-related products on the internet, the use of tolerances in verification procedures, supplementing Directive 2010/30/EU on labelling and standard product information for the consumption of energy and other resources by energy-related products.

2. EU Directives Ukraine will implement beyond its obligation by the energy community treaty.

Gas

• Commission Regulation (EU) No 312/2014 of 26 March 2014 establishing a Network Code on Gas Balancing of Transmission Networks. Timetable: the Regulation's provisions must be implemented by 31 December 2019.

Exploration of hydrocarbons

• Directive 94/22/EC on the conditions for granting and using authorisations for the prospection, exploration and production of hydrocarbons. Timetable: the Directive's provisions must be implemented within three years after entry into force of the EU-Ukraine Association Agreement, taking into account Articles 279 and 280 of the Trade-related Energy provisions covered by Chapter 11 (Trade-related Energy) of Title IV (Trade and Trade-related Matters).

Energy efficiency of buildings

• Commission Delegated Regulation (EU) No 244/2012 of 16 January 2012 supplementing Directive 2010/31/EU of the European Parliament and the Council on the energy performance of buildings by establishing a comparative methodology framework for calculating cost-optimal levels of minimum energy performance requirements for buildings and building elements. Timetable: the Regulation's provisions must be implemented by 30 June 2019.

Energy efficiency – ecodesign

• Directive 2009/125/EC of the European Parliament and the Council of 21 October 2009 establishing a framework for the setting of ecodesign requirements for energy-related products. Timetable: the provisions of Directive 2009/125/EC must be implemented within three years after entry into force of the EU-Ukraine Association Agreement.

Implementing Regulations (among others):

• Commission Regulation (EU) 2016/2282 with regard to the use of tolerances in verification procedures. Timetable: the implementation of the Regulation's provisions must be determined by 31 December 2021.
• Commission Regulations (EU) implementing Directives 2009/125/EC and 2005/32/EC with regard to ecodesign requirements for various industrial equipment and home appliances. Timetable: the implementation of the Regulation's provisions must be determined by 31 December 2021.

Nuclear

• Council Directive 2013/59/Euratom of 5 December 2013 laying down basic safety standards for protection against the dangers arising from exposure to ionising radiation, and repealing Directives 89/618/Euratom, 90/641/Euratom, 96/29/Euratom, 97/43/Euratom and 2003/122/Euratom. Timetable: to be implemented four years after entry into force of the EU-Ukraine Association Agreement.
• Council Directive 2006/117/Euratom of 20 November 2006 on the supervision and control of shipments of radioactive waste and spent fuel. Timetable: to be implemented within two years after entry into force of the EU-Ukraine Association Agreement.
• Council Directive 2009/71/Euratom of 25 June 2009 establishing a Community framework for the nuclear safety of nuclear installations. Timetable: to be implemented within three years after entry into force of the EU-Ukraine Association Agreement.
• Council Directive 2014/87/Euratom of 8 July 2014 amending Directive 2009/71/Euratom establishing a Community framework for the nuclear safety of nuclear installations. Timetable: to be implemented within three years after entry into force of the EU-Ukraine Association Agreement.
• Council Directive 2011/70/Euratom of 19 July 2011 establishing a Community framework for the responsible and safe management of spent fuel and radioactive waste. Timetable: to be implemented within three years after the entry into force of the EU-Ukraine Association Agreement.

For more information on the Annex and opportunities in Ukraine's energy sector, feel free to contact one of the following local CMS experts:

Vitaliy Radchenko
Maria Orlyk