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25/09/2016

Will EU states play ball on Energy Union?

Energy

Will EU states play ball on Energy Union?

European Commission building's banner on Energy Union, Brussels

European Commission

EU policymakers have unveiled plans for an Energy Union, hailing it as the biggest energy shake-up for more than half a century. Experts told EurActiv that governance will be a sticking point. Member states will have to play ball for the project to be a success. 

“It’s the biggest energy project since the Coal and Steel Community,” said Maros Šef?ovi?, European Commission vice-president responsible for Energy Union, when he presented the executive’s plans in Brussels on Wednesday (25 February).

The EU executive said the clash with Russia over its seizure of Ukraine’s Crimea region means there is the strongest case yet to pool resources across the EU. The European Union relies on Moscow for around a third of its energy.

The energy plans aim to improve infrastructure to share available supplies across borders, partly with EU money; to end regulated pricing, increase the number of liquefied natural gas (LNG) terminals and enforce existing EU law on competition.

Europe’s energy union strategy includes a raft of measures and will be followed by legislative proposals. But striking the right balance between granting the EU powers while respecting subsidiarity – the allocation of powers and responsibilities –  will be a challenge, experts told EurActiv.

“The Commission will only be able to deliver a meaningful Energy Union is member states play ball,” said Jacopo Moccia, policy & operations director at Ocean Energy Europe. Moccia responded to a poll conducted by EurActiv ahead of the Commission’s communication, based on a leaked draft.

Success depends on powers granted

National governments have always jealously guarded their own control over energy decisions, largely because of strategic needs and their stance on the environment.

“The EU Commission will only be able to deliver its vision if leading, not following the 28 member states,” argued Alice Stollmeyer, EU energy expert and blogger who published a draft version of the communication last week.

It’s unclear whether the Energy Union will be able to bridge this “because it all depends on governance the enforcement and implementation of energy policy goals in member states – and the Commission paper provides no detail,” said David Buchan, senior research fellow at the Oxford Institute for Energy Studies.

“The Commission will need some new power to supervise member states’ performance in renewables and energy efficiency,” Buchan said. “ACER needs to be given more power over the European networks of transmission system operators [ENTSOE, for electricity, and ENTSOG, for gas],” he added.

The Agency for the Cooperation of Energy Regulators (ACER) was tipped earlier as the single supervisor for the Commission’s planned measures, which was confirmed in today’s communication. 

According to Buchan, granting ACER such powers could “speed up agreement on cross-border trading arrangements and prioritise and direct new infrastructure investment for which there currently is no real incentive or reward.”

Commission’s ear

The Commission is also calling on member states and companies to consult it when negotiating with big suppliers, such as Russia, in an attempt to end Moscow’s strategy of divide and rule that has allowed some countries to secure more favourable deals than others.

Previous attempts to persuade firms or nations to divulge information to the Commission have met stiff resistance, but Šef?ovi? said he was convinced member states could be persuaded of the mutual benefit in the current geopolitical context.

Russia’s conflict with Ukraine has been complicated by a row over gas pricing, which last year led Russian producer Gazprom to cut off supplies to Kiev.

“It’s a completely different reality today,” Šef?ovi? said, drawing the contrast with previous discussions on sharing contract details. “We have to make it very, very clear it will be for the benefit of EU member states [to share information].”

Environmental campaigners, meanwhile, have criticised the energy union as placing too much emphasis on diversifying gas suppliers and not enough focus on renewable energy (see Positions).

The Commission says better energy connections can save consumers up to €40 billion per year, which corresponds to roughly €80 per capita across the EU.

Positions

European Parliament President Martin Schulz said, "Energy was central to the foundation of the European project in the '50s. Now, in the aftermath of the crisis, it should again give a boost to a stronger Europe. The President of the European Commission was right in making the energy union one of his top priorities and I am glad that it will be supported by his investment plan. The five dimensions and fifteen actions outlined today in the European Parliament touch upon issues the European Union has been struggling with for years. This is the right moment to work together at European, national, regional and local level to make the energy union a reality.

"Current events only help highlight even further the urgency for Europe to increase its energy security, its diversification of resources, the need to unite a fragmented market and speak with a stronger voice in energy and trade negotiations with third countries. This makes sense from a political, security and economic perspective.""

"The Energy Union is even more necessary and urgent in the run up to the December Paris Climate Conference. We need to go to Paris with a credible mandate, demonstrating that our energy union in fact results in a more sustainable, more secure and more competitive economy.

"The European Parliament will now look at the Commission proposals, scrutinise them, improve them where needed and turn them into legislation. Let's get to work to make the energy union a success."

“A strategic vision for our existing building stock is what the Commission must deliver in order to be big on growth, jobs and energy security” explained Adrian Joyce, Secretary General of EuroACE.  “It is the sector that can most quickly and surely boost job creation and economic activity whilst also delivering future resilience and long-lasting benefits to the EU as of now. Were those not the headline objectives of the Energy Union Package - to make the EU forward-looking, resilient and competitive? Why then does the Energy Union Framework not take more action on buildings?”

Spanish GUE/NGL MEP Paloma Lopez  said, "The Commission is using the limits of state policies to impose its own liberalising agenda. Specific problems of highly-dependent states such as the Baltic countries or Cyprus become levers for projects which involve aggressive monopolising of resources with the development of mega private infrastructures that require a lot of demand to be profitable."

Thomas Nowak of the European Heat Pump Association said, “The Energy Package adopted by the Commission today offers a comprehensive view of the energy challenges to be addressed by the EU but it fails to picture the right mix. We welcome the announcement of a strategy and actions on heating and cooling and the determination towards energy efficiency and renewables. But why is so much energy put in replacing the gas dependency of the EU to one country by the dependency to another, when reducing the overall dependency is possible as of today?”

Sandrine Dixson-Declève, director of the Prince of Wales’s Corporate Leaders Group said, "This strategy is a sound basis for getting Europe’s house in order. It moves from supply side solutions and recognises the important role energy efficiency has to play in securing and decarbonising our energy supplies, but gas is still king, and we will need a clear investment plan and capital markets union to drive industrial-scale investment in clean energy.

“It’s now up to policymakers to ensure the strategy is translated into robust EU and national legislation – this is a rallying call to Europe’s leaders to gather around a new ‘Grand Marshall Plan’ and drive a robust low-carbon Energy Union”

Bertrand Cazes, Glass for Europe secretary general said, “What is most encouraging is that the European Commission highlights that buildings and transport are the priority sectors in which most energy efficiency gains must be reaped and that the European Fund for Strategic Investment provides an opportunity to leverage major investments in building renovation.”

Sini Eräjää, EU Bioenergy Policy Officer at BirdLife Europe, stated: "We welcome the Commission's clear commitment to sustainable use of biofuels and biomass. It is crucial that this new policy includes bioenergy used for all purposes and addresses the carbon emissions from burning of biomass, biofuels and biogas, the negative impacts on the environment and food production and limits bioenergy use to the sustainable biomass supply".

"Instead of focusing on security of gas supply - adds BirdLife's Eräjää - more measures are needed to make energy markets and grids fit for renewable energy, as the Communication states. This is not just about making the markets more competitive, it should also be about planning for a new energy system based on renewables". 

Roland Joebstl, European Environmental Bureau policy officer on Energy and Climate Change, said, “The Juncker Commission claims it is ‘big on big things’ , yet in the case of climate and energy this is still to be demonstrated.” He added “Tackling climate change and the issue of energy security means that the 2030 targets and related policies must be revised upwards instead of spending political capital on looking for more fossil fuel suppliers.”

Transport & Environment director Jos Dings commented, "We welcome the Commission's good intentions on cleaner cars and the electrification of transport, including rail. But shying away from an earlier commitment to introduce CO2 standards for trucks and buses is an entirely unwelcome concession to special interests. Now that the Commission has clarified that aviation and shipping are in the 2030 reduction commitment, we need to see follow-through at both EU and international level.”

“The Energy Union is an ambitious and much needed project with multiple potential benefits for industry, jobs, consumers and our climate,” said Józef Niemiec, deputy general Secretary of the European Trade Union Confederation. “It will have winners and losers, and it is essential that workers are able to benefit from new job opportunities, and have alternatives in place when jobs are lost. The employment aspects must be part of the planning and implementation from the outset.”

Thomas Becker, CEO of the European Wind Energy Association, said, “These are positive signs coming out of the Commission. We’re seeing recommendations for a shift away from a fossil fuel-dominated economy to more sustainable, secure and decarbonised sources of energy.” 

Jonathan Gaventa E3G associate director said,“The Energy Union paper sets out a strong vision for Europe’s energy transition to a low-carbon economy, through an active role for citizens, an integrated EU-wide energy market, and by moving away from dependence on fossil fuels and outdated business models. This vision is the right one for safeguarding Europe’s energy and climate security.”

“But you can’t move an economy off of fossil fuels by spending more EU money on gas import pipelines and LNG terminals. EU gas demand has fallen by 14% since 2005 and will continue to fall as Europe continues to deliver on energy efficiency. There is a serious risk that this new infrastructure will become expensive stranded assets.”

Brook Riley of Freiends of the Earth Europe said, “If Europe would exploit the full potential of energy savings and renewables, much higher emission cuts would be possible and we could leave the beaten track of fossil fuel dependency once and for all.”

Greenpeace EU energy policy adviser Tara Connolly said: “The left hand doesn’t know what the right hand is doing with this plan. The Commission says the EU should move away from fossil fuels but it also wants to chase after new gas supplies and doesn’t rule out coal. Europe needs a coherent, joined-up plan if it’s going to play its part against climate change and be the world number one in renewables.”

BusinessEurope Director General, Markus J. Beyrer commented, “European business supports the European Commission’s commitment to revitalise energy policy and to strengthen the EU’s ability to act in this field. The proposed holistic approach is a good foundation to balance the EU’s energy, climate and industrial challenges better than in the past. But important trade-offs will have to be addressed in the implementation of the strategy. We will be vigilant on future decisions. What we expect is concrete action on the challenge of high energy prices, which is undermining the competitiveness of our industry”.

Howard Chase, director of government affairs at Dow Chemical EMEA said, "“The biggest contribution Energy Union can make is to move Europe further along the path towards a single energy market. Progress towards a more connected and competitive natural gas market is producing clear benefits but much more can be done. As expected, the focus on implementation of internal market rules is also unsurprisingly proving to be Europe’s most influential lever in external energy security.

"Unfortunately the position in electricity markets is much less clear, where lack of interconnectivity and national subsidy schemes are breaking up the market and failing to deliver the benefits that could be available for consumers. It’s an issue that needs urgent and continued attention. More positively, the drive for energy efficiency is warmly welcomed and together with energy markets, including for emissions, will do much to achieve GHG targets if operated as effectively as possible.”

Josh Roberts, ClientEarth lawyer, said, “The Energy Union Communication is a step towards decarbonising the EU energy system. In it the Commission promises to bring forward binding legislation on renewable energy, energy efficiency and greenhouse gas emission reductions. Unfortunately, it steps back from agreeing the division of roles and responsibilities for how to achieve the 2030 climate and energy targets, due in large part to the influence of the UK. As a result, it is not clear whether the process will be governed under the rule of law.

“We applaud the Commission’s intent to decarbonise and increase cleaner energy. However, to make these commitments work in practice, they need binding legislation on climate governance.”

Tony Long, director of the WWF European Policy Office, said, “The Energy Union plan could be the roadmap for a much-needed reorganisation of the EU’s energy system around renewables and efficiency. Or it could be a recipe for maintaining the status quo. Everything depends on follow-up. The plan is currently marked by inconsistencies, such as the focus on fossil fuels for energy security, despite pledging to move towards renewables.”

Background

When he was Prime Minister of Poland, Donald Tusk, spearheaded the idea of an EU Energy Union.

The idea has since been taken up by the European Commission which nominated a special Commissioner, Maroš Šef?ovi?, to steer the project.

Details of the proposal started to emerge on 4 February, when the College of Commissioners discussed the plan for the first time.

The final package was published on 25 February and includes an annex of “concrete proposals”, including legislation, decisions and analysis.

The final Energy Union will cut across a number of policy sectors including energy, transport, research and innovation, foreign policy, regional and neighbourhood policy, trade and agriculture, Šef?ovi? said.

The Commission believes there is strong political momentum behind the plan because the EU is dependent on outside imports for more than 53% of the energy it consumes.

Timeline

  • 25 February: Commission to publish the Energy Union proposal 
  • November-December 2015: UN climate change conference COP21, held in Paris
  • 2016 and 2017: New legislative proposals expected to be published

Further Reading