The proposal to create an Energy Union is already two years old and remains one of the EU’s most ambitious projects. But it risks falling behind expectations on climate policy. EurActiv Germany reports.
The Paris Agreement on climate protection has been signed and Germany recently came to a compromise on its national climate protection plan. By the end of the month, EU Energy Commissioner Maroš Šefčovič wants to submit the first legislative proposals as part of his plans for an Energy Union, first floated two years ago.
The Energy Union, which brings together five distinct EU policy areas, is a balancing act between the political ambitions of European governments, business interests and environmental concerns.
The project wants to achieve lower emissions, lower consumption and more renewable energy usage, as well as providing the EU member states with a more secure energy supply. The internal energy market will also allow Europe’s economies to transition to lower CO2 emission models and is intended to prioritise an energy mix in favour of renewable energies.
In 2013, around 76% of European electricity production came via fossil fuels and nuclear energy. According to the Heinrich Böll Foundation’s Coal Atlas 2015, Germany’s 30 largest coal-fired power plants contribute a quarter of Germany’s greenhouse gas emissions.
While a quarter of Germany’s electricity came from renewables in 2015, on the back of a significant increase in their use, coal retains a high share in the country’s energy mix. The climate objectives of the Paris Agreement will not be achieved if this continues.
Moreover, according to a European Commission draft on regulating the European energy market, seen by Spiegel Online, the executive wants to limit renewable feed-in tariffs. Environmental organisations and renewable energy providers are alarmed by what they see as plans to create an uneven playing field.
Windfarms and solar power could soon lose the privilege of getting priority over other energy sources on European electricity grids, leaked documents show.
“We don’t need to give precedence to conventional energy in the energy balance anymore,” said Karsten Brüggemann, Nordex’s head of central Europe region, a producer and operator of wind energy. “I think that politicians are still not aware of what technical possibilities we have in the renewable energy sector,” he added.
Instead of more regulation, the Energy Union’s players want a “market design that allows fair competition between conventional and renewable energy”. Brüggemann maintained that EU tax instruments like the emissions trading scheme stand in the way, though.
Introduced as a market instrument intended to reduce greenhouse gases, the Emissions Trading Scheme (ETS) is yet to really demonstrate its environmental benefits or economic efficiency after a decade of operation.
“We are seeing a big price-drop in a constant number of certificates,” said Dr Nikolas Wölfing of the Centre for European Economic Research (ZEW). “If Germany, for example, sells its certificates to another European country, the level of CO2 emissions with the EU is not reduced,” he said.
And “although the EU has a detailed plan on how the number of allowances will be reduced from 2020, the problem is that the number of certificates already allocated could build up”, he warned.
Intervening in the price structure by setting up a minimum price and a reduction of the number of certificates already issued before 2020 is more than advisable, Wölfing added.
Renewable energy sources continue to remain “safe bets” for investors as clean energy transactions thrived in the second quarter of 2016 amid ongoing global market volatility, according to EY’s latest report on the global power and utilities sector.
Implementing other measures, to make the ETS an effective climate protection instrument again, would be more time consuming and complicated. The EU’s emissions trading rules have been implemented by all 28 member states, as well as Liechtenstein, Iceland and Norway.
Europe has already shown how difficult it is to harmonise their national legislations with each other, so without a binding and working EU framework, it is often a futile task.
Dr Julia Verlinden, a member of the Bundestag with Bündnis 90/Die Grünen and the party’s energy policy spokesperson, said that the pan-European project’s efforts can only be meaningful if “the Energy Union is extended to a ‘Climate Union'”.
This would promise the possibility of both meeting the objectives of the Paris Agreement and the EU reducing its dependence on energy imports. “It’s not just about diversifying countries, it’s about reducing the initial need,” Verlinden told EurActiv.de.
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Across Europe, there is a lot of untapped potential, particularly in the building sector. While “Germany still has a very low renovation rate,” there are already good signs in the EU. Projects like the Energy Union especially could lead to a “real thermal transition”. However, they should be focusing on “cooperation on energy efficiency and diversification of energy supply towards renewables”.
If the Energy Union’s backers manage to get something down on paper before the end of the year, it could be a step in the right direction. Ultimately, if the EU can’t take these decisions, there will be no effective climate protection.