The Energy Community comprises of Albania, N. Macedonia, Bosnia and Herzegovina, Georgia, Kosovo, Moldova, Montenegro, Serbia, and Ukraine. These countries, also known as Contracting Parties, have signed the Energy Community Treaty with the EU and are legally obligated to transpose European Energy Law in their national law. This initiative was started in 2005 by the EU with the objective of expanding the EU internal energy market to Eastern Europe and the Western Balkans in order to further integrate these countries into the European economy. In the context of this process, electronic registries for GOs have been established in these countries. The Energy Community’s adoption of the EU’s Renewable Energy Directive (RED II) in November 2021 has been the driving force behind launching the project to create electronic systems for GOs.

To gain a better perspective of the timeline of the legislative reforms, EU countries have already integrated all the European Energy legislation and have proceeded to make the necessary market reformations. The Contracting Parties of the Energy Community, however, are still in the process of implementing the market reforms of the Third Energy Package, something that the EU Member States started doing in 2009.

In the last Ministerial Council on 20 December 2022, significant progress was made as the negotiations on the 2030 

 (see table below) concluded and were set in the amended texts of the RED II, the Energy Efficiency Directive, and the Governance of the Energy Union Regulation. Thus, the overall share of RES in final energy consumption will amount to 31% by 2030 across EnC countries. By mid-2023 the Contracting Parties will produce their own 

 – a document that all EU Member States have already drafted – which is effectively their schedule to achieve the decarbonisation targets that have been set.

2030 Targets

Furthermore, significant progress was made 

in the field of electricity market design

. All the legislation from the Clean Energy Package was integrated into the Acquis Communautaire (EU laws that are transposed in the Union candidate countries), marking significant reforms that the Contracting Parties must now facilitate in their power markets. Considering that 

many of the countries of the Energy Community have not successfully completed the power market reforms from the Third Energy Package, integrating this additional legislation could pose a significant challenge

. More specifically, Moldova and Georgia are still lagging in promoting the necessary reforms to successfully unbundle the generation and transmission activities in their power markets and Bosnia’s reforms have stalled to the point that the Energy Community Secretariat has started legal action against the Bosnian government.


 adopted one year ago, a working group was established with the target of conceptualising a carbon pricing system and bringing forward a proposal for discussion in the Ministerial Council of 2023. Three pieces of EU legislation were added to the Acquis Communautaire on Energy: 

on the monitoring and reporting of GHG emissions

These files serve as the legislation underpinning the structure and design of the EU ETS. Through their addition to the Acquis Communautaire on Energy, the Energy Community commits to adopting national legislation in order to comply with each file by 31 December 2023. 

On the surface, the inclusion of the EU ETS founding directive seems like an ambitious step towards the creation of a carbon pricing mechanism in Western Balkan countries, however, the details of the legislative adaptation reveal that this is mainly a step towards closely monitoring emissions comparably to the system established in the EU

. Most of the key articles from Directive 2003/87/EC that enable auctioning, allocating, and trading allowances (EUAs) are deleted from this transposition. With the remainder of the text and the inclusion of the other two regulations, the Energy Community has essentially agreed to establish systems for monitoring, reporting, and verification that align with those employed in the EU.

Acquis Communautaire

In respect to Guarantees of Origin (par. 21 of meeting 

 coordinated by the Secretariat of the Energy Community, the non-EU countries of the Energy Community have now completed the establishment of their national electronic registries with the technical assistance provided by Grexel. In addition, they have been invited by the Community’s Secretariat to proceed with signing an agreement with Grexel that will set the company as the operator of their registries, something that Georgia did and has since started issuing RES GOs from 1 January 2023.

underlined the significance of ensuring that the GOs issued by the Contracting Parties of the Energy Community will be recognised by EU Member States via an amendment of the Energy Community Treaty or a separate agreement. This is because under Article 19 of the Renewable Energy Directive II, the use of GOs from third countries in the EU is currently not allowed

 unless there is an agreement on mutual recognition and only when direct imports and exports of energy are possible.

The Contracting Parties therefore invited the European Commission to present a proposal in the next Ministerial Meeting at the end 2023. If a proposal for an international agreement that will render EnC members eligible to export their GOs to EU Member States is presented by the Commission in late 2023, and considering the necessary processes for the transposition and ratification of the treaty by national legislative bodies that follow the signing of an international Treaty

, one could safely assume that Energy Community GOs will not be eligible for cancellation in the EU for at least another two years

we believe that the first phase of GO market trading will occur

. Ultimately, the EnC countries will need to apply for the AIB membership, a 

 that requires significant technical harmonisation with the European Energy Certificate System (EECS) rules. If successful, this could translate into more GO volumes and demand coming into the market.

For more info on the EU ETS, reach out to henry@greenfact.com

For more info on EU Regulation and Policy, reach out to mary@greenfact.com

News

ETS revision inches closer to final approval

ISCC update on the Union Database for renewable fuels

Energy Community adopts 2030 RES targets and electricity market package

1st Italian Auction in 2023 - Twice less volumes offered and prices up by 24% on average!

Carbon markets - Week 3: Voluntary market slips on credit quality criticism

AIB Meeting 2022: Upcoming changes for the GOs 

January HUPX Pan-European auction - Prices recovering?

I-REC(E) 2022 Annual Analysis

Update on FuelEU Maritime – Progress on Trilogues

Washington Enters the Western Climate Initiative 

Drop in REDD+ projects’ confidence lowers the demand for nature-based solutions

GO Week 2 Overview - Price Rebound for 2022 and 2023 Contracts

EAC Market Report - In The Midst Of A Bullish Wave

A platform with real-time GO data and insights, reporting prices and market fundamentals for Wind, Hydro, Solar, Biomass, Biomethane and RGGOs. 

Our community offers access to webinars, discussions and updates from industry leading experts and analysts. 

In December 2022, the Energy Community (EnC) covering Western Balkans states, as well as Georgia, Ukraine, and Moldova, agreed to national renewable targets that range from 27-52% of RES share by 2030 and sowed the seeds for the establishment of an ETS market. While these reforms put the Energy Community on the map, the cancellation of their GOs in the EU, and the establishment of a functioning ETS, are not foreseen in the next five years.

Our Platform gives you unfettered access to price benchmarking, analytics, new and insights covering the green certificates markets. 

Register for a 7 day trial now and someone from our team will be in touch with you to learn more about your involvment in the markets and to answer any questions you may have.

News

Energy Community adopts 2030 RES targets and electricity market package

To read this article and explore our services, register for a 7 day trial!

Related reading

ETS revision inches closer to final approval

ISCC update on the Union Database for renewable fuels

Energy Community adopts 2030 RES targets and electricity market package

1st Italian Auction in 2023 - Twice less volumes offered and prices up by 24% on average!

Carbon markets - Week 3: Voluntary market slips on credit quality criticism

AIB Meeting 2022: Upcoming changes for the GOs

January HUPX Pan-European auction - Prices recovering?

I-REC(E) 2022 Annual Analysis

Update on FuelEU Maritime – Progress on Trilogues

Washington Enters the Western Climate Initiative

Drop in REDD+ projects’ confidence lowers the demand for nature-based solutions

GO Week 2 Overview - Price Rebound for 2022 and 2023 Contracts

Benchmark for Guarantees of Origin (GO) prices and insights

Contact information

Links

Social