181 Chapter 8 ENERGY IN THE EUROPEAN UNION AND IN CROATIA Ana Maria Boromisa Croatian Energy Regulatory Council VRED Zagreb ABSTRACT The objective of this work is to determine the extent of the conformity of the Croatian energy sector with the conditions for membership in the EU According to a comparative analysis an identification is made of the state of affairs in the energy sector in the EU in the Republic of Croatia and in the applicant countries the level at which the conditions for membership are fulfilled and the necessary measures that have to be implemented during the reform The main conclusion is that the legal system itself in the area of the Croatian energy system is already mainly harmonised with the EU system However concrete application of the rules departs from the way rules are applied in the EU Since these rules obtain their final form only during application and the manner of interpretation and application is much harder to change than the rules themselves particular attention needs devoting to practice in the process of adjustment Key words energy market liberalisation single energy market criteria for membership Croatia applicants EU The views expressed herein are the standpoints of the author are not binding upon the institution in which she works and do not necessarily coincide with the official views of the Croatian Energy Regulatory Council Croatian acronym VRED 182 INTRODUCTION Adaptation to the EU system is a process of the gradual acceptance of its rules and standards The membership criteria define the necessary level of harmonisation with the EU system that must be attained by applicant states In an evaluation of fulfilment of membership criteria the European Commission takes into account the conformity of the national political system as a whole degree of democracy effectiveness of the rule of law establishment of market economy and of individual sectors In the energy sector during membership negotiations the EU first of all required from the applicants an increased level of nuclear safety However with reform and liberalisation of the energy sector new requirements have been set up for states that wish to join In this paper these requirements are identified their implementation in the EU in the applicant countries and in the Republic of Croatia According to what has been achieved to date by certain groups of countries the main difficulties in meeting EU demands and the measures that might help to solve them are identified MEMBERSHIP CRITERIA In each sector of the economy fulfilment of the membership conditions is evaluated according to how much the economic and legal criteria for membership are met The fulfilment of economic criteria for membership implies a the existence of a functioning market economy liberalisation of prices and trade demand and supply equilibrium established by market forces and b the capacity to cope with competitive pressure and market forces within the Union The fulfilment of the second criterion is evaluated however among other things according to an estimation of whether the proper infrastructure exists The legal conditions imply the acceptance and application of the acquis communautaire At the level of states members and at the level of the Union no effective market economy in energy has yet been set up For example the system of market laws at EU level is only just developing for more detail see Pelkmans 2001 and this is one of the elements for the estimation of whether there is an effective market economy For this reason in the energy sector the level to which membership conditions has 183 been fulfilled is monitored with respect to the degree of liberalisation achieved within the EU Hence fulfilment of conditions for membership in the energy sector is estimated above all according to the ability to accept and apply the acquis In this the key determinants for an estimation of the state of affairs are as follows decide on an overall energy policy with clear timetables for restructuring the sector prepare for the internal energy market the Gas and Electricity directives the Directive on electricity produced from renewable energy sources improve energy networks in order to create a real European market prepare for crisis situations particularly through the constitution of 90 days of oil stocks address the social regional and environmental consequences of the restructuring of mines waste less energy and increase the use of renewable energies such as wind hydro solar and biomass in their energy balance ensure the safety of nuclear power plants in order for electricity to be produced according to a high level of nuclear safety ensure that nuclear waste is handled in a responsible manner and prepare for the implementation of Euratom Safeguards on nuclear materials CURRENT LEVEL OF FULFILMENT OF THE REQUIREMENTS FOR MEMBERSHIP The current level of the fulfilment of membership conditions is evaluated according to a comparative analysis of energy in the Republic of Croatia in the applicant countries and in the EU Elements for an evaluation of the state of affairs are bounded on key definitions for the evaluation of the conformity of the applicants with the acquis and the results of previous negotiations Lithuania team 2002 op cit European Commission DG TREN 2002 i Since during membership negotiations the capacity of an applicant to take part in the single market adequacy of reserves and nuclear safety have been defined as key points the analysis is focused on these determinants 184 Joining the single market The ability to take part in the single market is evaluated according to the institutional and technical capacities of a given country Institutional capacity implies the acceptance and implementation of that part of the acquis that makes possible the establishment of a market economy in energy and technical readiness assumes an appropriate infrastructure and interoperability of systems Institutional capacity The creation of a single market in energy and of the corresponding acquis started with the liberalisation of the 1990s In the first phase transparent pricing was assured and the access of third parties to the transport infrastructure was made possible The second phase of liberalisation started in 1993 This made possible the allotment of licenses for the construction of transport capacities on a non discriminatory basis which thus enabled competition Vertically integrated firms separated the accounts of individual activities
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