Energy Green Paper: What energy policy for Europe?

The Commission opened the debate on a future common European Energy Policy with the publication of a ‘Green Paper’ in March 2006. Suggestions include completing the opening of European gas and electricity markets and stepping up relations with major suppliers such as Russia and OPEC. Other key suggestions include boosting renewable energies, energy efficiency, and research on low-carbon technologies. However, EU member states have already made clear that they would not tolerate interference with national sovereignty, especially when it comes to taking sensitive political decisions such as opting for nuclear power.

Rising oil and gas prices, Europe's increasing dependency on a few external suppliers (mainly OPEC and Russia) and the emergency of global warming have restarted the debate on the need for a European energy policy.

The idea was first suggested by the British Presidency in 2005 and agreed at the Hampton Court European summit (EURACTIV 28/10/05). The Ukraine-Russia gas dispute in January 2006 further highlighted Europe's dependency on imports and on the shortcomings of keeping 25 separate policies with external energy suppliers (EURACTIV 4/0106).

The Commission on 8 March 2006 issued a 'Green Paper' spelling out options to achieve "sustainable, competitive and secure" energy supplies in the EU (EURACTIV 9/03/06). The paper lists six key priority areas:

  • completing the internal energy market for gas and electricity (see related EURACTIV LinksDossier). 
  • stepping up solidarity among EU member states in case of supply disruptions, with the creation of gas stocks along the existing compulsory oil stocks required by EU legislation. A European Energy Observatory would monitor market developments to enhance transparency of demand and supply.
  • diversifying the EU's energy mix yet respecting diverging national choices on energy policy. A regular 'Strategic EU Energy Review' would analyse the impact of national energy policies on other EU countries, a process which could in turn lead to action at community level should conflicts arise.
  • to address global warming, a new road map for renewable energy is proposed, including targets for 2020 and beyond. An energy efficiency Action Plan, originally due out in March/April will be proposed later in the year (see LinksDossier on energy efficiency and renewables)
  • strategic energy technology plan to "prevent overlaps in national technology and research programmes" and ensure EU industries lead the multi-billion market for new energy technologies (see LinksDossier on climate technologies)
  • common external energy policy to co-ordinate relations with external suppliers such as Russia and OPEC countries (see LinksDossier on Geopolitics of EU energy supply). The policy would include a list of new pipelines and Liquefied Natural Gas (LNG) terminals to improve security of supply. A revamped EU-Russia energy dialogue would include the prompt signature by Russia of the Energy Charter Treaty, an international agreement which came under the spotlight with the Ukraine-Russia gas dispute in January (see LinksDossier on EU-Russia energy dialogue).

The Commission received 1680 responses to its Green Paper consultation. The Council published a summary of the consultation responses in November 2006.

The Parliament adopted a recommendation (Eluned Morgan report) on the Energy Green Paper on 14 December 2006. The MEPs recommended setting binding targets for greenhouse gas reductions (30% by 2020) and energy efficiency (20% by 2020). They also expressed support for more use of renewables (25% by 2020) but left the decision to use nuclear power in the energy mix to the member states.

EU heads of states and governments broadly endorsed the Commission's proposals at their annual spring summit on 24 March 2006. However, several countries repeated their stance that EU action should not impinge on national sovereignty, especially on the choice of energy mix. The summit agreed on the following main points:

  • diversification of energy sources - both external and 'indigenous' such as nuclear - and transport routes, including investment in new Liquefied Natural Gas (LNG) terminals;
  • a common approach to address crisis situations "in a spirit of solidarity"
  • developing regional gas and electricity energy markets within the EU
  • developing electricity interconnections to reach the target of "at least 10% of member states' installed production capacity" (financing borne "mainly by the enterprises involved")
  • "considering raising by 2015 the share of renewable energies" to 15%; increasing the share of biofuels to 8% by the same date; implementing the biomass action plan (see LinksDossier on biofuels)

However, the idea of a single European energy regulator was rejected as premature.

Eurelectric, the union of electricity industry, says it is "vital" that policy options do "not limit countries' and companies' choice of fuels or technologies". It says Europe needs "ambitious, well-coordinated R&D policy backed by sufficient funding, covering 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".

"To ensure supply security, some 600 GW of new power generation capacity is needed over the next 25 years, with associated costs rising to €1000bn, and interfering with the market would send investors the wrong signal," Eurelectric says.

European chambers of commerce and industry (Eurochambres) applauded the new energy policy but said it should acknowledge the particular needs of SMEs. "Much more needs to be done in terms of raising awareness among smaller companies about energy efficiency, and forecasting their future needs and costs," said Eurochambres.

The European Trade Union Confederation (ETUC) insisted on ensuring a right of access to energy services for everyone in Europe, a measure which in its view would imply the existence of a European public service. ETUC secretary general John Monks said four priorities need to guide the EU's future energy policy: "the reinforcement of public control and democracy in the energy sector; the reduction of energy consumption; securing the supply side and diversification in the energy on offer". He regretted that the Commission's Green Paper "failed to take account of the social dimension of energy policy", which he says is "at odds with the fundamental objectives of the constitutional treaty".

The European Wind Energy Association (EWEA) welcomed the summit's reference to a 15% target for renewable energies in 2015 as "a cautious step in the right direction" but pointed out that it "does not constitute a long-term commitment". "Long-term targets are important for the European wind energy sector because they would provide a strong signal of commitment to investors and encourage them to commit risk capital while enabling a stable technology development and cost reductions," says EWEA. 

EuropaBio, the association of the European biotech industry, welcomed the suggestion to increase the share of biofuels to 8% by 2015. "EuropaBio advocates the use of biomass as a renewable energy source" as a way to unlock "the under-used resources of agricultural and forestry waste". 

WWF, the global conservation organisation, highlighted "the need to establish a level playing field among all actors on the market". "True liberalisation with transparent prices, together with a harmonised and independent power grid will enable renewable energies and more efficient energy to enter the supply chain," said Stephan Singer, Head of the Climate and Energy Unit at WWF.

The WWF also points to fossil fuels subsidies, which it estimates at 24bn euros per year in the EU-15 alone. "If only a fraction of these sums would be reinvested in energy efficiency and renewable energies, the EU would easily be able to cut carbon dioxide emissions by 30 per cent by 2020 and lead the world in the fight against climate change," said Singer.

In the European Parliament, the largest political group, the centre-right EPP-ED, adopted a 'wait and see' attitude, saying political actions should now follow political declarations (for more, see EURACTIV 27/03/06).

In the socialist camp, leaders of the PES on 10 March agreed to develop a new energy policy geared towards tackling climate change and security of supply as a matter of priority. "Europe needs a more coherent and longer-term policy towards the many energy related challenges facing Europe. This is an economic, environmental and social priority for our Party," said PES President Poul Nyrup Rasmussen.

The Greens/EFA group described the summit's conclusions on energy policy as "a fudge". "The summit has completely avoided the current energy market mess. All the benefits from the supposed liberalisation of gas and electricity markets are going to the pockets of a handful of energy companies and their shareholders," said Claude Turmes MEP (Luxembourg). On a more positive note, Turmes welcomed the summit's acknowledgement of the need for longer-term commitment on renewable energies and its call for a 20% rise in energy efficiency. "We […] hope that the Commission and the Member States will match the rhetoric with real action," Turmes said.

  • 10 Jan. 2007: Commission presents 'energy and climate change package' comprising:

    • Strategic energy review: analysing advantages and drawbacks of national energy choices and their impact on other EU member states. Foreign relations and internal EU energy market to be considered as well (EURACTIV 11/01/07).
    • Communications and reports on: coal, biofuels, nuclear
    • Renewables road map with 20% target for 2020
    • Final report on competition enquiry into electriticy and gas markets (EURACTIV 11/01/07)
    • Communication on the costs and benefits of global warming action post-Kyoto. Environment Commissioner Stavros Dimas told reporters in Brussels that the aim should be a 30% reduction in greenhouse gas emissions from developing countries by 2050
    • Commission consultation (Green Paper) on adaptation to climate change
  • 8-9 March 2007: EU Spring Summit to adopt an Action Plan to launch a common European energy policy

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