Securing a diverse energy mix has been identified as a key policy objective in order to shield Europe from potential external energy crises and achieve supply-security and environmental sustainability in the long term.
Although the choice of energy mix – the desired share of coal, nuclear, gas or renewables – remains in principle a matter of national sovereignty, the EU is increasingly involved in defining energy choices by setting targets on renewable energies and greenhouse-gas reduction.
Moreover, national decisions may have an important impact on other member states. "Each member state and energy company chooses its own energy mix," the Commission stated in its 2006 Green Paper on energy. However, it added, "choices made by one member state inevitably have an impact on the energy security of its neighbours and of the Community as a whole".
Taking natural gas as an example, the paper said that over-reliance on imports in one member state "would have significant effects on the security of supply of its neighbours in the event of a gas shortage". This was illustrated in January 2006, when Russia's Gazprom briefly cut off gas supplies to Ukraine, bringing Hungary, Austria and Slovakia near shortage levels and forcing the EU to intervene (EurActiv 4/01/06).
- Wide national disparities
The EU's current energy mix often reflects national choices made decades ago, at a time when there was no attempt to co-ordinate energy policies at European level (see Commission fact sheets by country).
In France for instance, nuclear power covers more than 40% of the country's primary energy needs, providing almost 80% of its electricity. In the UK, hoever, nuclear accounts for only 9% of primary energy needs and 20% of electricity. Other countries, such as Austria, have a non-nuclear policy.
By contrast, in Poland, coal is largely dominant, covering almost 58% of the country's primary energy needs and 92% of electricity.
- Oil and gas: tackling import dependency
Common features also emerge. Oil typically covers around 40-50% of primary energy needs in almost all the 27 EU member states. Similarly, renewables rarely account for more than 10% of the mix, with the EU average standing at 6% (Austria stands out at 21%). Transport (and petroleum) is the single biggest energy-consuming sector in almost every member state, with an EU average of around 31%.
Reliance on imported hydrocarbons is expected to increase as European reserves in the North Sea diminish, with dependency expected to reach 90% for oil and 80% for gas in 2030.
- Three objectives of EU energy policy
As a result, the Commission identified a "sustainable, efficient and diverse energy mix" as a priority objective under the future common EU energy policy. A diverse energy mix, the Commission argued, means greater resilience to potential external energy shocks and shortages in imported fuels, mainly oil.
At a landmark Summit in March 2007 (see summit conclusions), EU heads of state and governments endorsed those principles, saying that the EU's energy policy should pursue three objectives simultaneously:
- Increasing security of supply;
- ensuring the competitiveness of European economies and the availability of affordable energy, and;
- promoting environmental sustainability and combating climate change.
These objectives, EU leaders added, should be pursued while "fully respecting member states' choice of energy mix and sovereignty over primary energy sources". However, some energy experts have questioned whether these goals are all attainable at the same time and suggested that they imply a number of trade-offs.
- Aiming for a 'diverse portfolio' of low-carbon technologies
In January 2007, the Commission published a Strategic Energy Review as part of its proposals to launch a common European energy policy.
The review drew up a list of the advantages and drawbacks of each energy source in terms of costs, greenhouse-gas emissions, import dependency, price sensitivity and other characteristics such as proven reserves.
Its main conclusion was that no single energy source or technology could alone meet the challenges of environmental sustainability, economic competitiveness and supply security. Rather, the report stated, "a diverse portfolio of clean, efficient and low-emission energy technologies" is needed to meet the challenge (see related LinksDossier on climate technologies).
The paper set out the following long-term vision: "For 2050 and beyond, the switch to low carbon in the European energy system should be completed, with an overall European energy mix that could include large shares for renewables, sustainable coal and gas, sustainable hydrogen, and, for those member states that want to, Generation IV fission power and fusion energy."
- Renewable energies and CO2 reduction targets
At the core of the EU's strategy is a commitment to reduce emissions of greenhouse gases. With energy accounting for 80% of all EU emissions, boosting the share of renewables was therefore identified as a central element in the EU’s energy policy.
However, most renewables are still costlier than conventional fuels and have not yet reached the economic mainstream. "The challenge for renewables policy is to find the right balance between installing large scale renewable energy capacity today, and waiting until research lowers their cost tomorrow," the Commission said in the review.
But it added that economies of scale and the integration of environmental costs such as climate change and air quality into energy prices would soon make them competitive. "Renewables have the potential to provide around a third of EU electricity by 2020. Wind power provides approximately 20% of electricity needs in Denmark, today, as well as 8% in Spain and 6% in Germany. Costs in other new technologies - photovoltaic, solar thermal power, and wave & tide, are projected to decrease from currently high levels."
At the March 2007 Summit, EU leaders agreed to boost the share of renewables in the overall EU energy mix and committed to a new set of legally binding targets to:
- Slash the EU's greenhouse-gas emissions by 20% in 2020 compared with 1990 levels, and;
- Bring the share of renewable energies to 20% of the EU's overall energy consumption by 2020.
Specific national targets on renewables are to be specified later "taking account of different national starting points and potentials, including the existing level of renewable energies and energy mix".
In addition, a specific binding target for biofuels was agreed as well as part of the overall renewable-energy target. It stipulates that each member state should source a minimum of 10% of its transport fuel needs from biofuels by 2020 (EurActiv 10/01/07).
- Coal: An abundant but dirty fuel
Coal is under particular scrutiny as power plants running on this type of fuel emit twice as much CO2 than gas, for example, threatening to worsen climate change.
At the same time, coal is an abundant and reliable source of energy for many countries and currently represents one third of total electricity production in Europe (Poland is 92% dependent on coal for its electricity and Germany around 50%, according to the Commission).
Coal is therefore likely to remain an important component of the EU's energy mix for the foreseeable future, with efforts also being made outside Europe to "clean up" the fuel, especially in China and the US, which are home to the world's largest reserves.
But the Commission also made clear that coal "is only sustainable if accompanied by commercialised carbon sequestration and clean coal technologies on an EU level". However, the technology is still immature, with the most optimistic predictions assessing that it could become commercially viable by 2020. The Commission therefore intends to establish "a favourable regulatory framework" for carbon-capture development, including the future inclusion of CCS into the EU Emissions Trading Scheme (see LinksDossier on carbon sequestration and storage).
- What role for nuclear?
Representing about one-third of the EU's electricity production and with low CO2-emissions, nuclear power is seen by the Commission as "the largest source of largely carbon-free energy in Europe".
But member states are divided on the issue. Countries such as France and Finland rely heavily on the technology, while Austria, Ireland and Sweden formally oppose it, mainly due to public concerns about safety and environmental protection.
While emphasising that nuclear waste and safety issues need to be carefully looked at, the Commission suggested that Europe could aim for "a minimum level of the overall EU energy mix originating from secure and low-carbon energy sources", a move that would have amounted to an official endorsement of nuclear power. However, it had to abandon this formulation due to fierce opposition and has since officially adopted an "agnostic" stance on the issue.
In Germany, a phase-out of nuclear power is due to be completed by 2020. But the move also has drawbacks as nuclear currently represents close to 30% of Germany's electricity generation. In a recent country report, the International Energy Agency (IEA) said that the phase-out would increase the country's dependence on imported gas, add to pressures to reduce CO2 emissions and require massive investments in new power-generation capacity that could otherwise be avoided (EurActiv 5/06/07).
Meanwhile, some have also pointed to problems with future uranium supplies, as more nuclear stations are being built to meet the booming global demand for energy. Industry dismissed those claims, saying new discoveries, technological advances and higher prices spurred by demand growth have expanded known recoverable reserves.
In its Strategic Energy Review, the European Commission estimated that global reserves were enough to last for 85 years.
- Energy subsidies: coal and nuclear controversy
As Europe embarks on an ambitious energy policy with high environmental objectives, the Commission has been criticised for its continued financial support for the coal sector. Environmental NGOs have argued in favour of scrapping the subsidies, which they say have an impact on supply options in the electricity market, and thus hamper the growth of the renewables industry.
However, the Commission has argued for the preservation of state aid to support restructuring in the coal sector and meet social policy objectives. A 2002 regulation authorises state aid for coal, provided that production follows a "downward trend" (EurActiv 21/05/07).
A similar controversy has erupted over the Euratom Treaty, which since 1958 has helped member states finance nuclear-energy installations and ensure safety standards. Nuclear supporters argue that the treaty is needed to continue promoting what they consider to be the energy of the future – capable of supplying Europe's industries and citizens with cheap, non-polluting electricity. But environmentalists say it gives preferential financial support to what they see as an expensive and dangerous energy source.
The European Commission believes that the EU "needs a real debate on the different energy sources, including costs and contributions to climate change, to enable us to be sure that, overall, the EU's energy mix pursues the objectives of security of supply, competitiveness and sustainable development".
Europe's major business lobby, BusinessEurope, believes that nuclear power has a "very strong contribution" to make as a non-CO2-producing form of power and that the EU should take steps to increase its share in electricity generation from 32% today to 40% by 2030. The group also argued that nuclear power would help bring electricity prices down for sectors such as chemicals and metals that have suffered from rising electricity prices: "An increased contribution by nuclear energy would help to promote the competitiveness of energy-intensive industries," the group said in a statement.
Eurelectric, representing European electricity producers, says that it is "vital" that policy options do "not limit countries' and companies' choice of fuels or technologies". It adds that Europe needs "a wide range of technologies that will foster energy efficiency, renewable energies, clean fossil fuels and nuclear power - which all have a role to play in the energy mix".
Euracoal, the European association for coal and lignite, believes that the abundance of coal makes it an indispensable element of the EU's energy mix. "A far-sighted energy policy has to be based on the triangle of sustainability objectives, with equal weight being given to environmental compatibility, competitiveness and security of energy supply. An equitable energy mix that has been developed under normal competitive conditions is the best way to achieve a balance between these energy policy objectives."
The European renewable energy industry association EREC and Greenpeace, the international environmental NGO, have drawn up an "energy revolution" scenario which claims that Europe could phase out fossil fuels and nuclear power at the same time. "Half of Europe’s total energy demand and more than 70% of electricity use could be covered from renewable energy sources by the year 2050 - providing us with clean, cost-effective and secure energy," said Frauke Thies, renewable energy campaigner at Greenpeace.
EWEA, the European Wind Energy Association, believes that wind could cover "almost one quarter" of EU electricity consumption by 2030 "provided that the right framework is introduced and current distortions in the EU energy markets are removed". If combined with "serious" energy efficiency measures, the share of wind energy in electricity consumption could reach 30% by 2030, it says, up from 3.3% in 2007.
Frank Van Schaik, campaign co-ordinator of the European Petition Campaign against Nuclear Power, said: "Euratom is distorting the market by giving unjustified financial support to a specific technology for electricity production. While the EU is in the process of internalising environmental costs of energy production by starting an emission cap-and-trade system, nuclear energy producers do not pay for the full costs of decommissioning and radioactive waste storage."
EU official documents
- Commission:Energy Mix - Fact sheets by country
- Commission:Communication: An energy policy for Europe(includes strategic energy review) FR FR DE
- Commission:Green paper: A European Strategy for Sustainable, Competitive and Secure Energy(8 March 2006) FR FR DE
- Council of the EU:Action Plan (2007-2009): Energy Policy for Europe(p.16) FR FR DE
- European Regulators' Group for Electricity and Gas (ERGEG):ERGEG’s response to the European Commission’s Communication “An Energy Policy for Europe”(6 Feb. 2007)
- OECD:Energy pages
- International Energy Agency (IEA):World Energy Outlook
- International Energy Agency (IEA):The Energy Mix of a sustainable future(presentation, 2 Feb. 2006)
- International Energy Agency (IEA):What will the Future Energy Mix Look Like?(presentation, 14 Feb. 2007)
- International Atomic Energy Agency (IAEA):Analysis of Uranium Supply to 2050
Business & Industry
- European Wind Energy Association (EWEA):Strategic Overview of the Wind Energy Sector
- COGEN Europe:Strategic energy review: Cogeneration should be at the centre of the Europe’s Initiative(12 Jan. 2007)
- Eurima:Comments on today’s release of the Strategic Energy Review for Europe.(10 Jan. 2007)
- European Nuclear Society:EU Energy Initiative Recognises Role of Nuclear
- Alliance of Energy-Intensive Industries:Contribution to the EU strategic energy review(22 Sept. 2006)
NGOs and Think-Tanks
- WWF:Energy pages
- Greenpeace / EREC:Energy [r]evolution: A sustainable world energy outlook(25 Jan. 2007) Executive summary
- Greenpeace:Invest in a clean energy future! Greenpeace exposes the EU's dirty energy subsidies(July 2005)
Think tanks & Academia
- Institut Français des Relations Internationales (IFRI):La sécurité des approvisionnements énergétiques en Europe : principes et mesures(Jan Horst Keppler, Apr. 2007)
- Clingendael International Energy Programme (CIEP):Nuclear energy and the EU energy mix(Presentation, 24 Jan. 2006)
- UK (Department for Business, Enterprise and Regulatory Reform):EU Common Energy Policy
- UK:Response to the Commission Green Paper: A European Strategy for Sustainable, Competitive and Secure Energy Supplementary response
- France:Les enjeux énergétiques pour la France
- France (Conseil économique et social):Blog - La question du mix énergétique
- Germany:The Energy Mix of the Future
- Total:The future of energy FR
- ExxonMobil:Future of energy
- Shell:The changing energy mix
- E.ON:Energy Mix