The quest for secure, competitive, and environmentally friendly energy supplies will require tough choices as the objectives imply that a number of trade-offs are necessary, write Lars-Hendrick Röller, Juan Delgado and Hans W. Friederiszick for the Bruegel think-tank.
The report explores whether Europe’s nations can pursue individual energy policies in their quest for a secure, competitive and environmentally sustainable energy future, without mutually undercutting one another, or whether a common energy policy is required – necessitating complex political wrangling between 27 countries with very different energy needs and geographies.
The authors suggest that a common EU-energy policy is necessary, and that the Commission’s proposals made in January 2007 do not go far enough in this regard. They believe that policies should not only focus on setting targets, but – most importantly – should trace the policy path towards achieving them.
The report identifies trade-offs between the three objectives of energy policy that must take place at the national level: competitiveness, sustainability, and security of supply. The advantage of a common energy policy is that it relaxes the national trade-offs inherent in these objectives. Five policy areas are identified in which specific proposals are put forward for the creation of a common EU energy market:
• First, they suggest that as current single-market policies and competition rules provide a readily available framework for an EU-wide energy market, they do not need to be changed, but rather more fully enforced.
• Second, they propose the creation of a pan-European network of energy regulators, who must co-operate closely. The system must further involve a strong EU agency to act as a regulator of last resort.
• Thirdly, the EU should speak with one voice and provide external- supply security for all member states, they believe – noting that the weight of individual member states in conducting this policy must necessarily differ.
• Fourth, they suggest that environmental targets should be set at EU level, with market-based incentives to comply introduced (such as tradable green certificates) instead of symmetric national quotas – which they believe to be economically inefficient and difficult to implement.
• Finally, they conclude that research should focus on the most promising domestic energy sources, but be co-ordinated at EU level in order to exploit synergies and combine efforts in similar projects.