The Energy Community Treaty

The Energy Community Treaty brings together Albania, Bosnia and Herzegovina, Georgia, Kosovo, North Macedonia, Moldova, Montenegro, Serbia, Ukraine and the EU with the goal of creating a common energy market. It entered force in 2006 for a period of ten years and in 2013 a decision was taken to extend it to 2026. 

This includes the obligation for member countries to implement selected pieces of EU energy, competition and environmental law, including renewable energy and energy efficiency targets and state aid guidelines. In December 2022 the Energy Community countries for the first time also adopted greenhouse gas emissions reduction targets under the Treaty. 

Implementation is slow, but the Treaty has still helped significantly in modernising some of the countries’ energy legislation. Still, there are insufficient consequences for those breaching the rules, and a wider range of EU environmental protection rules are needed in the countries. The Treaty needs to be extended and updated in order to reach its full potential.  

The Energy Community Treaty sets out, among others, which energy-related parts of EU legislation have to be adopted by the participating countries.

The following are very much needed for the Energy Community countries to undertake a just and sustainable energy transition: 

• A strengthened enforcement mechanism, with effective, proportionate and dissuasive penalties in place for breaches of the Energy Community acquis. 
• A clear and binding commitment to decarbonise the Contracting Parties’ economies in line with the Paris Agreement by 2050, and the introduction of climate-related acquis, including carbon pricing.  
• A requirement for the ex-ante notification of State aid to the Energy Community Secretariat or European Commission with the effective competence of the Secretariat to assess the compatibility of the aid measure with EU competition law. 
• Strengthening of the environmental acquis in the Treaty has stagnated in the last few years. At minimum, chapters II and IV of the Industrial Emissions Directive, and relevant provisions of the Air Quality Directive, National Emissions Ceilings Directive, Habitats Directive, Birds Directive and the Water Framework Directive need to be made binding in the Treaty. 
• A Just Transition Fund, either within or independently of the Treaty, needs to be made available by the EU to assist the transition of coal regions.