This report reviews the main achievements regarding the external aspects of the EU energy policy since 2011.

The report concludes that the Commission’s Communication on security of supply and international cooperation and the Energy Council Conclusions of November 2011 have provided an important impetus for EU action in this field.

The past two years have seen an intensification of activities , including political agreements to enhance energy cooperation with a number of the EU's partners as well as the launch of negotiations on a number of energy-specific and cross-sectoral agreements. Success has not been uniform across all areas and with all partners, but the positive trends observed call for continued EU attention and efforts.

The strategy and the priorities chosen two years ago are fundamentally still valid . Nonetheless, flexibility and pragmatism in EU's external energy relations should be retained in order to adjust to the rapid changes under way in global energy markets, as well as political and economic developments, if and when such adjustment is needed. The EU regulatory framework on the internal energy market, energy efficiency, renewable energy, environment, competition and others remain important references for many of the EU's partners. Sharing the EU's experience on energy policy development, its successes and challenges, provides an opportunity for positive engagement and building trust with many of its partners.

Continued successful implementation of external energy priorities will require a close working relationship between the Commission and the High Representative and EEAS , making optimal use of their instruments and resources, including the EU Delegations.

Sustained efforts to increase coordination with and between the EU Member States will also be needed. EU external energy activities do not and should not aim to replace bilateral cooperation established by Member States , but rather at complementing them, where there is a real EU added value. Nonetheless, it is necessary to ensure that the EU speaks with a single voice when addressing its partners . Ultimately, a coordinated approach will allow for an effective promotion of the EU’s strategic interests and increase the EU's collective weight and negotiating power vis-à-vis its partners.

The European Parliament adopted by 470 votes to 86 with 53 abstentions a resolution on engaging in energy policy cooperation with partners beyond our borders: a strategic approach to secure, sustainable and competitive energy supply. Members note that the EU’s dependence on energy imports is likely to increase over the next decade as its fossil fuel resources are depleted, despite increasing input from renewables, energy efficiency and research on energy technologies. Energy efficiency is key to reducing the EU’s reliance on foreign energy, as the EU is spending more than EUR 400 billion a year on energy imports. Achieving the minimum 20% energy savings target will not only enhance our energy security but also reduce by at least EUR 50 billion a year the wealth transfer from EU economies to energy-producing countries.

Internal energy market – better coordination at EU level : Members stress (a) the need to ensure that cross-border energy infrastructure within the Union is fully developed, with the EU giving priority to investments in energy infrastructure; (b) the need for strong coordination between Member States’ policies and for joint action and solidarity in the field of external energy policy and energy security; (c) energy policy must be an integrated and prominent part of the common foreign policy and should be elaborated and implemented in synergy with other policies that have an external dimension.

Parliament stresses the need to increase resources for projects interlinking energy markets in the EU and to complete the European gas and electricity infrastructure networks by the end of 2015, in particular the Baltic interconnection plan, as set out in the EU’s Third Energy Package.

Members recall Parliament’s request that plans be prepared for a European Energy Community involving strong cooperation on energy networks and European funding of new energy technologies. They also urge the Commission to bring forward a proposal to establish an Energy Observatory with the objectives of improving intelligence on energy import markets and enhancing analysis of export markets.

Parliament calls on the EU and Member States to ensure a connected internal energy market that can withstand external pressures and attempts to use energy supply and prices as a tool of foreign policy pressure. It believes that a fully functioning, interconnected and integrated European internal energy market can significantly enhance supply security even in the short term and that it is an essential element for a successful European external energy policy.

The Commission and the EEAS must ensure that all the EU’s agreements, especially partnership and cooperation agreements, fully comply with EU internal market rules and ensure reciprocity, a level playing field and transparency in order to provide a secure legal environment for EU investors in energy supply countries and transit countries. Members emphasise that the EU should aim for regulatory convergence with neighbouring countries willing to embrace its internal energy market rules, and stress the importance of the Energy Community.

They call on the Commission to:

· support the establishment of a comprehensive EU system of gas indexation based on gas market prices; develop an information sharing tool to collect and make available relevant data on the Member States’ and EU administrative and financial institutions’ energy programmes and projects in third countries;

· monitor global energy markets and cooperate in this regard with Member States and international organisations such as the IEA, and to present a legal instrument for this purpose before the end of 2012.

Members stress the need to establish an energy policy desk within the EEAS and to involve EU delegations in the conduct of energy diplomacy on the ground. They also support the use of instruments such as the Early Warning Mechanism in relations with energy suppliers and transit countries. Parliament is convinced that further promotion of the idea of common purchasing of energy raw materials by Member States is needed in the context of growing competition for resources and existing producer monopolies.

Diversification – enhanced security of European energy supply : Members stress that the EU Treaty calls for solidarity between Member States, and the Commission is asked to provide a clear definition of ‘energy solidarity’ in order to ensure that it can be respected by all Member States.

Parliament also calls on the Commission to support research and development in the field of own-fuel resources, and to support the establishment of fuel supplies from diversified suppliers, sources of supply and fuel transmission lines to individual EU regions in order to ensure a minimum of two different sources of supply for each region, in accordance with the Commission communication on Energy infrastructure priorities for 2020 and beyond .

It emphasises the following:

· action to diversify suppliers, routes and sources of energy supply to the EU should be accelerated ;

· diversification should mean new non-Russian sources of oil, gas and electricity for those Member States which are overly dependent on this single supplier, since Russian gas accounts for between 48% and 100% in 12 of the 27 Member States, and therefore has a direct impact on the Union’s energy security;

· the importance of improving the interconnection of energy grids and completing the Euro-Mediterranean and Euro-Atlantic electricity and gas infrastructure rings and the Baltic energy market interconnection plan ;

· action to increase internal production of renewable energy is critical to reducing the EU’s dependence on imports of hydrocarbons ;

· the importance of further extending the European Energy Community and setting up legal control mechanisms to deal with deficient acquis implementation;

Parliament calls on the Commission to:

· support the ‘energy security clause’ to be included in trade, association and partnership and cooperation agreements with producer and transit countries, which would lay down a code of conduct and explicitly outline measures to be taken in the event of any unilateral change in terms by one of the partners;

· draw up a comprehensive set of short-, medium- and long-term energy policy priorities in relations with its neighbours with a view to establishing a common legal area based on the acquis-related principles and norms of the internal market;

Members take the view that with the development of new, unconventional energy technologies (oil sands and shale gas from Canada, the United States, Australia, Qatar, Brazil and Argentina, energy exploration in the Arctic region, and further exploitations in Iraq, Venezuela and Africa), new actors are emerging as possible future suppliers, and the EU should develop new energy partnerships in order to diversify its suppliers.

Sustainability – strengthened partnership with supplier countries and international organisations : Parliament states that the world’s increasing demand for energy and the high concentration of fossil fuel reserves in largely unstable and undemocratic countries makes the EU vulnerable and deeply undermines the development of credible, effective and consistent common European policies.

EU energy partnerships and EU participation in global forums such as the G20 must be used to promote more sustainable energy policies in third countries. Furthermore, Members want to expand the links between the European energy network and neighbouring countries (the Western Balkans, Eastern neighbours, Caspian countries, North Africa and the Middle East) by building new interconnectors and promoting a wider regulatory area, extending EU environmental and safety standards as far as possible.

On Russia, Members emphasise that in the EU-Russia energy dialogue , where the EU should speak with one voice, the dependent situation of the Central and Eastern European Member States should be taken into account as their energy supply security can only be guaranteed through the interconnection of EU-wide infrastructure. Crucial topics such as access to energy resources, networks and export markets, investment protection, reciprocity, crisis prevention and cooperation, a level playing field and the pricing of energy resources should be taken into account in the dialogue. Members want Russia to ratify the Energy Charter Treaty and call for the Energy Charter Treaty to be extended to more countries and for the participants at the Energy Charter Conference to work towards a negotiated settlement leading to the full acceptance of the principles of the Charter and its protocols by Russia.

Parliament goes on to note that sustainable energy is a key driver of development, and reiterate its call for a specific ‘energy and development’ programme with particular focus on renewable, energy-efficient, small-scale and decentralised energy solutions and the promotion of capacity development and technology transfer in order to ensure local ownership.

Furthermore, strategic energy partnerships should be developed between the EU and key third countries, such as the BRICS and countries whose energy consumption is growing rapidly, inter alia, in the following areas: (i) R&D cooperation on low-carbon technologies and innovation; (ii) investment in sustainable energy production; (iii) data-sharing on know-how transfer, including in the field of clean and renewable energy sources; (iv) promotion of energy efficiency and energy saving; (v) balancing of systems; (vi) smart grids, (vii) fusion research; (viii) clean coal technology and carbon capture and storage.

Members particularly stress the need to improve cooperation on R&D&I with third countries with a view to tackling global challenges. Parliament calls on the Commission to draw up joint energy roadmaps with all the key energy suppliers and strategically important transit countries, and to establish partnerships with countries facing similar energy challenges, notably with the aim of promoting technological, research and industrial cooperation .

The EU should work closely with major third-country exporters of biofuels to ensure that these alternative, clean energy options, which can contribute to diversification of supply, can be truly sustainable, and that indirect land-use change with negative consequences can be avoided.

Members urge the Commission and the EU to:

· develop legally binding sustainability criteria aimed at preventing negative climate, environmental and social impacts from the production and use of biomass for energy;

· put in place a policy for sustainable biomass production and its use for energy purposes that meets the requirements of the climate change policy and is also consistent with the Union’s development cooperation policy;

· draw up joint energy roadmaps with all the key energy suppliers and strategically important transit countries, and to establish partnerships with countries facing similar energy challenges and sharing similar values.

Lastly, Parliament welcomes the EU's participation in the International Thermonuclear Experimental Reactor (ITER) project and the Generation IV International Forum (GIF).

The Committee on Industry, Research and Energy adopted the own-initiative report by Edit HERCZOG (S&D, HU) on engaging in energy policy cooperation with partners beyond our borders: A strategic approach to secure, sustainable and competitive energy supply. Members note that the EU’s dependence on energy imports is likely to increase over the next decade as its fossil fuel resources are depleted, despite increasing input from renewables, energy efficiency and research on energy technologies. Energy efficiency is key to reducing the EU’s reliance on foreign energy, as the EU is spending more than EUR 400 billion a year on energy imports. Achieving the minimum 20% energy savings target will not only enhance our energy security but also reduce by at least EUR 50 billion a year the wealth transfer from EU economies to energy-producing countries.

Internal energy market – better coordination at EU level : Members stress (a) the need to ensure that cross-border energy infrastructure within the Union is fully developed, with the EU giving priority to investments in energy infrastructure; (b) the need for strong coordination between Member States’ policies and for joint action and solidarity in the field of external energy policy and energy security; (c) energy policy must be an integrated and prominent part of the common foreign policy and should be elaborated and implemented in synergy with other policies that have an external dimension.

The committee stresses the need to increase resources for projects interlinking energy markets in the EU and to complete the European gas and electricity infrastructure networks by the end of 2015, in particular the Baltic interconnection plan, as set out in the EU’s Third Energy Package.

Members recall Parliament’s request that plans be prepared for a European Energy Community involving strong cooperation on energy networks and European funding of new energy technologies. They also urge the Commission to bring forward a proposal to establish an Energy Observatory with the objectives of improving intelligence on energy import markets and enhancing analysis of export markets.

The committee calls on the EU and Member States to ensure a connected internal energy market that can withstand external pressures and attempts to use energy supply and prices as a tool of foreign policy pressure. It believes that a fully functioning, interconnected and integrated European internal energy market can significantly enhance supply security even in the short term and that it is an essential element for a successful European external energy policy.

The Commission and the EEAS must ensure that all the EU’s agreements, especially partnership and cooperation agreements, fully comply with EU internal market rules and ensure reciprocity, a level playing field and transparency in order to provide a secure legal environment for EU investors in energy supply countries and transit countries. Members emphasise that the EU should aim for regulatory convergence with neighbouring countries willing to embrace its internal energy market rules, and stress the importance of the Energy Community.

They call on the Commission to:

· support the establishment of a comprehensive EU system of gas indexation based on gas market prices; develop an information sharing tool to collect and make available relevant data on the Member States’ and EU administrative and financial institutions’ energy programmes and projects in third countries;

· monitor global energy markets and cooperate in this regard with Member States and international organisations such as the IEA, and to present a legal instrument for this purpose before the end of 2012.

Members stress the need to establish an energy policy desk within the EEAS and to involve EU delegations in the conduct of energy diplomacy on the ground.

Diversification – enhanced security of European energy supply : Members stress that the EU Treaty calls for solidarity between Member States, and the Commission is asked to provide a clear definition of ‘energy solidarity’ in order to ensure that it can be respected by all Member States.

The committee also calls on the Commission to support research and development in the field of own-fuel resources, and to support the establishment of fuel supplies from diversified suppliers, sources of supply and fuel transmission lines to individual EU regions in order to ensure a minimum of two different sources of supply for each region, in accordance with the Commission communication on Energy infrastructure priorities for 2020 and beyond .

It emphasises the following:

· action to diversify suppliers, routes and sources of energy supply to the EU should be accelerated ;

· diversification should mean new non-Russian sources of oil, gas and electricity for those Member States which are overly dependent on this single supplier, since Russian gas accounts for between 48% and 100% in 12 of the 27 Member States, and therefore has a direct impact on the Union’s energy security;

· the importance of improving the interconnection of energy grids and completing the Euro-Mediterranean and Euro-Atlantic electricity and gas infrastructure rings and the Baltic energy market interconnection plan ;

· action to increase internal production of renewable energy is critical to reducing the EU’s dependence on imports of hydrocarbons ;

· the importance of further extending the European Energy Community and setting up legal control mechanisms to deal with deficient acquis implementation;

The report calls on the Commission to:

· support the ‘energy security clause’ to be included in trade, association and partnership and cooperation agreements with producer and transit countries, which would lay down a code of conduct and explicitly outline measures to be taken in the event of any unilateral change in terms by one of the partners;

· draw up a comprehensive set of short-, medium- and long-term energy policy priorities in relations with its neighbours with a view to establishing a common legal area based on the acquis-related principles and norms of the internal market;

Members take the view that with the development of new, unconventional energy technologies (oil sands and shale gas from Canada, the United States, Australia, Qatar, Brazil and Argentina, energy exploration in the Arctic region, and further exploitations in Iraq, Venezuela and Africa), new actors are emerging as possible future suppliers, and the EU should develop new energy partnerships in order to diversify its suppliers.

Sustainability – strengthened partnership with supplier countries and international organisations : the report states that the world’s increasing demand for energy and the high concentration of fossil fuel reserves in largely unstable and undemocratic countries makes the EU vulnerable and deeply undermines the development of credible, effective and consistent common European policies.

EU energy partnerships and EU participation in global forums such as the G20 must be used to promote more sustainable energy policies in third countries. Furthermore, Members want to expand the links between the European energy network and neighbouring countries (the Western Balkans, Eastern neighbours, Caspian countries, North Africa and the Middle East) by building new interconnectors and promoting a wider regulatory area, extending EU environmental and safety standards as far as possible.

On Russia, Members emphasise that in the EU-Russia energy dialogue , where the EU should speak with one voice, the dependent situation of the Central and Eastern European Member States should be taken into account as their energy supply security can only be guaranteed through the interconnection of EU-wide infrastructure. Crucial topics such as access to energy resources, networks and export markets, investment protection, reciprocity, crisis prevention and cooperation, a level playing field and the pricing of energy resources should be taken into account in the dialogue. Members want Russia to ratify the Energy Charter Treaty and call for the Energy Charter Treaty to be extended to more countries and for the participants at the Energy Charter Conference to work towards a negotiated settlement leading to the full acceptance of the principles of the Charter and its protocols by Russia.

The committee goes on to note that sustainable energy is a key driver of development, and reiterate its call for a specific ‘energy and development’ programme with particular focus on renewable, energy-efficient, small-scale and decentralised energy solutions and the promotion of capacity development and technology transfer in order to ensure local ownership.

Furthermore, strategic energy partnerships should be developed between the EU and key third countries, such as the BRICS and countries whose energy consumption is growing rapidly, inter alia, in the following areas: (i) R&D cooperation on low-carbon technologies and innovation; (ii) investment in sustainable energy production; (iii) data-sharing on know-how transfer, including in the field of clean and renewable energy sources; (iv) promotion of energy efficiency and energy saving; (v) balancing of systems; (vi) smart grids,

(vii) fusion research; (viii) clean coal technology and carbon capture and storage.

Members particularly stress the need to improve cooperation on R&D&I with third countries with a view to tackling global challenges.

The EU should work closely with major third-country exporters of biofuels to ensure that these alternative, clean energy options, which can contribute to diversification of supply, can be truly sustainable, and that indirect land-use change with negative consequences can be avoided.

Members urge the Commission and the EU to:

develop legally binding sustainability criteria aimed at preventing negative climate, environmental and social impacts from the production and use of biomass for energy; put in place a policy for sustainable biomass production and its use for energy purposes that meets the requirements of the climate change policy and is also consistent with the Union’s development cooperation policy; draw up joint energy roadmaps with all the key energy suppliers and strategically important transit countries, and to establish partnerships with countries facing similar energy challenges and sharing similar values.

PURPOSE: to put forward suggestions with a view to drawing up an external energy policy.

BACKGROUND: the EU’s energy policy has three objectives: secure sustainable and competitive energy – and its external dimension is crucial for all three. The EU imports over 60% of its gas and over 80% of its oil and faces growing competition for fossil fuel resources, including from emerging countries and energy producers themselves.

The Energy 2020 strategy identified strengthening the external dimension of the EU energy policy as one of the key priorities in the coming years. The Member States, the European Parliament and European citizens have repeatedly called for the EU to speak with a common voice when it comes to external energy relations. A consistent and well coordinated external energy policy is also vital to the completion of the internal market and the delivery of key policy targets, including in international cooperation. A coherent, dynamic and pro-active external energy policy is vital to enable the EU and its Member States to establish a lead position in energy geopolitics, to effectively promote both EU and national energy interests beyond the EU's borders, and to contribute to the competitiveness of the European industry.

CONTENT: to maximise this potential and to assert EU and Member State interests more effectively in changing world energy markets, this Communication proposes a number of strategic actions and objectives , in line with European Union interests. It suggests the drawing up of an external energy policy with the following priorities:

1) Building up the external dimension of the internal energy market : the EU energy market depends on high levels of imports to function, and therefore depends on free and transparent markets. In their absence, the EU is vulnerable to political and price volatility. Supply security in one part depends on security across the market as a whole. External energy policy needs to reflect the interconnectedness of the internal market and the interdependence of the EU Member States .

The main objectives are the following:

Coordination in the internal market: enhancing the influence of the EU and Member States : bilateral agreements of Member States with third countries have a significant impact on the development of energy infrastructure and energy supply to the EU. They must be in full compliance with EU legislation. The Commission therefore proposes, together with this Communication, a Decision setting up an information exchange mechanism on intergovernmental agreements between Member States and third countries in the field of energy.

Furthermore, the leverage of the EU internal energy market should be better used to facilitate large-scale infrastructure projects linking the EU network to third countries, particularly ones with political, commercial or legal uncertainties.

Network integration: diversification of supply sources and routes : t he EU needs to expand and diversify links between the European network and neighbouring countries. In this perspective, it should:

pursue the implementation of the key infrastructure projects defined in the Commission Communication on 'Energy infrastructure priorities for 2020 and beyond '; diversify gas and oil supply sources and routes including by opening the Southern Corridor as a matter of urgency; promote viability and continuous functioning of the existing oil and gas infrastructure in the East and support the rehabilitation of the Ukrainian gas transmission network by 2020; develop a tri-partite cooperation at political and administrative level with Russia and Ukraine to ensure stable and uninterrupted gas supplies through the Eastern Corridor.

Market integration with neighbouring states : the Commission and the High Representative of the Union for Foreign Affairs and Security Policy are committed to stepping up energy cooperation to improve market integration and energy security with European Neigbourhood policy partners. The aim is to achieve an integrated energy market with all countries of its neighbourhood based on regulatory convergence. However, a differentiated approach will be needed to build balanced partnerships reflecting the willingness of the countries to approximate their regulatory framework to the EU and, where relevant, to implement carbon pricing as an element of a level playing field for power producers. In this regard, the Commission suggests:

stepping up energy cooperation with countries engaged in the EU accession process; deepening and extending the validity of the Energy Community Treaty beyond 2016, and focusing on effective implementation; proposing to partners a regional EU-Southern Mediterranean Energy Partnership initially focused on electricity and renewable energy market development in these countries by 2020 encouraging third countries to implement ambitious energy efficiency and renewable energy policies and carbon pricing, while ensuring a level playing field for the power sector.

EU-Russia energy dialogue : Russia has a uniquely important role in Europe's energy market. Our common aim should be the increased convergence of the two energy markets . Our energy cooperation requires a new and strong legal base. Therefore, the negotiations on the New EU-Russia Agreement need to address crucial topics like access to energy resources, networks and export markets, investment protection, reciprocity, crisis prevention and cooperation, level playing field, and pricing of energy resources.

Legal certainty is also needed on nuclear issues , where the Euratom-Russia nuclear cooperation agreement is currently under preparation. In the Baltic region, where it is necessary to synchronise the Baltic States' networks with the power system of the Union, the EU should work towards the conclusion of a technical agreement between the EU, Russia and Belarus on the rules for the management of electricity networks in the region.

2) Strengthening partnerships for secure, safe, sustainable and competitive energy : as a major energy consumer, importer and technology provider, the EU has an interest in the energy policy developments of its partners across the globe. It is in the EU strategic interest to build stable and long-term partnerships with its key suppliers and new potential suppliers, as well as consumer countries, including emerging economies.

The EU has some of the world's highest standards of market transparency and regulation, as well as high standards of nuclear and oil and gas safety. Through international cooperation the EU can help other countries raise their standards.

Lastly, a stable and predictable framework for trade and investment is vital: the EU should continue to include key principles for trade and investment such as non-discrimination and market access and make them enforceable through effective dispute settlement procedures both in bilateral agreements as well as in multilateral legal frameworks. These rules should be negotiated to suit the specific energy relations and interests of individual countries, or groups of countries.

3) Improving access to sustainable energy for developing countries : today, 1.4 billion people around the world, most of them in Sub-Saharan Africa and South Asia, still lack access to electricity and 2.7 billion people still rely on traditional uses of biomass for cooking. The Commission's Green Paper on the EU development policy highlights how sustainable energy is a key driver of development.

Energy plays a vital role in achieving Millenium Development Goals and is a key driver for poverty eradication and inclusive growth. Yet access to modern energy services remains one of the main challenges for sustainable development and is therefore at the heart of the Commission's development policies.

In Africa, EU efforts should be fully mobilised to achieving the Joint EU-Africa Energy Partnership targets on access to modern energy services, regional interconnections and renewable energy. The EU Energy Initiative will be further expanded and adapted to take into account the global challenges such as climate change.

4) Better promoting EU policies beyond its borders : this would be mainly achieved by:

setting up a Strategic Group for International Energy Cooperation; promoting concrete action on offshore drilling safety, nuclear safety and low emission development strategies in the G-8/G-20 energy agenda and cooperating with third countries to address the volatility of energy prices; exploiting further synergies with the International Energy Agency's work on energy forecasts, market analysis and technology collaboration; creating an information-sharing tool designed to gather and display relevant data on EU and Member States energy programmes and projects in third countries.

The Commission considers that these priorities should be reflected in the work of the High Representative and the EEAS, giving EU Delegations in strategic partner countries an active role in their implementation. It invites the European Parliament and the Council to endorse the proposed approach and also looks forward to continuing the dialogue with all stakeholders to make the ambition of an EU external energy policy a reality.

PURPOSE: to put forward suggestions with a view to drawing up an external energy policy.

BACKGROUND: the EU’s energy policy has three objectives: secure sustainable and competitive energy – and its external dimension is crucial for all three. The EU imports over 60% of its gas and over 80% of its oil and faces growing competition for fossil fuel resources, including from emerging countries and energy producers themselves.

The Energy 2020 strategy identified strengthening the external dimension of the EU energy policy as one of the key priorities in the coming years. The Member States, the European Parliament and European citizens have repeatedly called for the EU to speak with a common voice when it comes to external energy relations. A consistent and well coordinated external energy policy is also vital to the completion of the internal market and the delivery of key policy targets, including in international cooperation. A coherent, dynamic and pro-active external energy policy is vital to enable the EU and its Member States to establish a lead position in energy geopolitics, to effectively promote both EU and national energy interests beyond the EU's borders, and to contribute to the competitiveness of the European industry.

CONTENT: to maximise this potential and to assert EU and Member State interests more effectively in changing world energy markets, this Communication proposes a number of strategic actions and objectives , in line with European Union interests. It suggests the drawing up of an external energy policy with the following priorities:

1) Building up the external dimension of the internal energy market : the EU energy market depends on high levels of imports to function, and therefore depends on free and transparent markets. In their absence, the EU is vulnerable to political and price volatility. Supply security in one part depends on security across the market as a whole. External energy policy needs to reflect the interconnectedness of the internal market and the interdependence of the EU Member States .

The main objectives are the following:

Coordination in the internal market: enhancing the influence of the EU and Member States : bilateral agreements of Member States with third countries have a significant impact on the development of energy infrastructure and energy supply to the EU. They must be in full compliance with EU legislation. The Commission therefore proposes, together with this Communication, a Decision setting up an information exchange mechanism on intergovernmental agreements between Member States and third countries in the field of energy.

Furthermore, the leverage of the EU internal energy market should be better used to facilitate large-scale infrastructure projects linking the EU network to third countries, particularly ones with political, commercial or legal uncertainties.

Network integration: diversification of supply sources and routes : t he EU needs to expand and diversify links between the European network and neighbouring countries. In this perspective, it should:

pursue the implementation of the key infrastructure projects defined in the Commission Communication on 'Energy infrastructure priorities for 2020 and beyond '; diversify gas and oil supply sources and routes including by opening the Southern Corridor as a matter of urgency; promote viability and continuous functioning of the existing oil and gas infrastructure in the East and support the rehabilitation of the Ukrainian gas transmission network by 2020; develop a tri-partite cooperation at political and administrative level with Russia and Ukraine to ensure stable and uninterrupted gas supplies through the Eastern Corridor.

Market integration with neighbouring states : the Commission and the High Representative of the Union for Foreign Affairs and Security Policy are committed to stepping up energy cooperation to improve market integration and energy security with European Neigbourhood policy partners. The aim is to achieve an integrated energy market with all countries of its neighbourhood based on regulatory convergence. However, a differentiated approach will be needed to build balanced partnerships reflecting the willingness of the countries to approximate their regulatory framework to the EU and, where relevant, to implement carbon pricing as an element of a level playing field for power producers. In this regard, the Commission suggests:

stepping up energy cooperation with countries engaged in the EU accession process; deepening and extending the validity of the Energy Community Treaty beyond 2016, and focusing on effective implementation; proposing to partners a regional EU-Southern Mediterranean Energy Partnership initially focused on electricity and renewable energy market development in these countries by 2020 encouraging third countries to implement ambitious energy efficiency and renewable energy policies and carbon pricing, while ensuring a level playing field for the power sector.

EU-Russia energy dialogue : Russia has a uniquely important role in Europe's energy market. Our common aim should be the increased convergence of the two energy markets . Our energy cooperation requires a new and strong legal base. Therefore, the negotiations on the New EU-Russia Agreement need to address crucial topics like access to energy resources, networks and export markets, investment protection, reciprocity, crisis prevention and cooperation, level playing field, and pricing of energy resources.

Legal certainty is also needed on nuclear issues , where the Euratom-Russia nuclear cooperation agreement is currently under preparation. In the Baltic region, where it is necessary to synchronise the Baltic States' networks with the power system of the Union, the EU should work towards the conclusion of a technical agreement between the EU, Russia and Belarus on the rules for the management of electricity networks in the region.

2) Strengthening partnerships for secure, safe, sustainable and competitive energy : as a major energy consumer, importer and technology provider, the EU has an interest in the energy policy developments of its partners across the globe. It is in the EU strategic interest to build stable and long-term partnerships with its key suppliers and new potential suppliers, as well as consumer countries, including emerging economies.

The EU has some of the world's highest standards of market transparency and regulation, as well as high standards of nuclear and oil and gas safety. Through international cooperation the EU can help other countries raise their standards.

Lastly, a stable and predictable framework for trade and investment is vital: the EU should continue to include key principles for trade and investment such as non-discrimination and market access and make them enforceable through effective dispute settlement procedures both in bilateral agreements as well as in multilateral legal frameworks. These rules should be negotiated to suit the specific energy relations and interests of individual countries, or groups of countries.

3) Improving access to sustainable energy for developing countries : today, 1.4 billion people around the world, most of them in Sub-Saharan Africa and South Asia, still lack access to electricity and 2.7 billion people still rely on traditional uses of biomass for cooking. The Commission's Green Paper on the EU development policy highlights how sustainable energy is a key driver of development.

Energy plays a vital role in achieving Millenium Development Goals and is a key driver for poverty eradication and inclusive growth. Yet access to modern energy services remains one of the main challenges for sustainable development and is therefore at the heart of the Commission's development policies.

In Africa, EU efforts should be fully mobilised to achieving the Joint EU-Africa Energy Partnership targets on access to modern energy services, regional interconnections and renewable energy. The EU Energy Initiative will be further expanded and adapted to take into account the global challenges such as climate change.

4) Better promoting EU policies beyond its borders : this would be mainly achieved by:

setting up a Strategic Group for International Energy Cooperation; promoting concrete action on offshore drilling safety, nuclear safety and low emission development strategies in the G-8/G-20 energy agenda and cooperating with third countries to address the volatility of energy prices; exploiting further synergies with the International Energy Agency's work on energy forecasts, market analysis and technology collaboration; creating an information-sharing tool designed to gather and display relevant data on EU and Member States energy programmes and projects in third countries.

The Commission considers that these priorities should be reflected in the work of the High Representative and the EEAS, giving EU Delegations in strategic partner countries an active role in their implementation. It invites the European Parliament and the Council to endorse the proposed approach and also looks forward to continuing the dialogue with all stakeholders to make the ambition of an EU external energy policy a reality.