Image: Jelena Ćirić | Iceland Review

In Focus: Third Energy Package

 In Magazine, Magazine Intro, News, Politics

This February, the Icelandic parliament will vote on whether to agree on the European Union’s Third Energy Package. The matter has caused much debate among politicians as the package plays an important role in Iceland’s relationship with the rest of Europe and its membership in the European Economic Area (EEA). Some believe agreeing to the package would have little effect on Iceland’s energy network, while others believe it would constitute handing over Iceland’s control of publicly-owned energy resources.

What is the Third Energy Package?

The main goal of the instalment of the Third Energy Package is to strengthen the internal energy market for gas and electricity in the EU in order to decrease the cost of energy. Another goal is to create safer energy use in Europe. It also sets regulations on access to natural gas transmission networks, the network for cross-border exchange of electricity, and the establishment of the Agency for the Cooperation of Energy Regulators (ACER).

The role of ACER is to further progress the completion of the internal energy market for both electricity and gas, as well as to monitor the energy market to guarantee the best price for consumers. In addition, the agency promotes cooperation between countries and helps to work out disputes.

The First Energy Package and Second Energy Package have already been agreed upon and adopted by members of the EU and EEA, including Iceland. The Third Energy Package correlates directly with Europe 2020, a strategy proposed by the European Commission intended to promote “smart, sustainable, inclusive growth” in the European Union. The strategy aims to ensure renewable energy sources supply 20% of all energy in Europe by 2020, and the release of greenhouse gases should decrease by 20%. The Third Energy Package was passed within the EU in 2009.  A decade later, Iceland is the only country that has not agreed to the package.

How will the Third Energy Package affect Iceland?

Why is Iceland the only country that has not agreed to the Third Energy Package? Iceland is located in the middle of the North Atlantic, right on a geological hotspot. The hotspot enables Iceland to use geothermal power to create energy. Unlike many other European countries, Iceland does not import energy from other countries. Connecting Iceland to Europe’s energy network would require installing a submarine cable between Iceland and mainland Europe. There is, however, no plan to do so in the near future.

If Iceland were to agree on the Third Energy Package, there would be no major changes, as Iceland is in control of its own isolated energy resource use. Specialists in European law agree that it would not jeopardise the country’s sovereignty over publicly owned energy resources, nor the right to decide which resources to use.

Different sides and arguments

Icelandic politicians, however, do not necessarily agree. Those against the package argue that it would strip Iceland of its sovereignty and hand it over to ACER, as the agency holds the most power in the European energy market. Those who do not object to the package, claim that the laws of the Third Energy Package were made with mainland Europe in mind, and therefore do not necessarily apply to Icelandic energy laws.

Despite politicians being split on the matter, opinions cross party lines, though the Progressive Party has been most vocally against the deal. They claim that the package should not determine how Icelanders use their energy and will not be beneficial to the Icelandic economy. Þórdís Kolbrún Reykfjörð Gylfadóttir, Minister of Tourism, Industry and Innovation and Vice-Chairperson of the Independence Party, argues that the Third Energy Package will not force Iceland to give up its sovereignty as it does not in any way connect to the Icelandic energy market.  

If Iceland votes against the package

The consequences of refusing the Third Energy Package are unclear, as the situation would be unprecedented. If the Icelandic government votes against it, it would be making history by being the first government to decline a legislative package put forth by the EEA. Such a decision would certainly affect Iceland’s diplomatic relations.

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