The Energy Union: crisis brings opportunity?

This week the European Commission launched the much-awaited Energy Union package.

The Commission Vice-President for Energy Union, Maroš Šefčovič (pictured), said it was “the most ambitious European energy project since the Coal and Steel Community. A project that will integrate our 28 European energy markets into one Energy Union, make Europe less energy dependent and give the predictability that investors so badly need to create jobs and growth.”

The launch of the Energy Union package is, however, merely the start of an intense period of policy-making and legislative activity in the field of energy and climate action – a period of change with implications for nearly every sector of Europe’s economy.

The Energy Union is the Commission’s response to a number of challenges: Europe’s dependence on external supplies; its outdated energy infrastructure; its incomplete and dysfunctional internal market, and the high price it pays for energy, compared with other regions and competing global markets.

In Spring last year, Jean-Claude Juncker (then the European People’s Party’s lead candidate in the European elections) was quick to pick up on a call by Donald Tusk (then Polish prime minister) for a coordinated European energy policy. Tusk’s motivation was to strengthen the EU’s position in the face of Russia’s increasingly political use of its gas supplies.

Juncker made an ‘Energy Union’ one of his five pre-election priorities, and one of the ten priorities he outlined in the political guidelines presented to the European Parliament ahead of his election as Commission President in July 2014.

The Energy Union is, however, not a new concept. In 2009 Jerzy Buzek, then President of the European Parliament, launched the idea of a European Energy Community as a next step in the European integration process. A few months later, Buzek and former Commission President Jacques Delors outlined further details of this ‘Energy Union’.

With this week’s launch the Energy Union is entering a new phase: bringing the concept to life, with policy strategies and specific legislative proposals that will appear over the next few years. In certain cases it will prepare strategy documents, which will form a basis for discussion and potentially for new EU legislation. In other areas it will revise existing EU legislation.

The Energy Union package is likely to have an impact on a wider group of businesses than those in the energy sector. It is relevant to technology providers, energy transportation services, producers of a wide range of products (from energy efficiency products for buildings to appliances and cars), and the financial sector, including investors and traders. And of course, it is of interest to consumers – both domestic and industrial users.

Given Europe’s strength as an integrated market we expect that businesses and governments from outside the EU will follow closely the construction of the Energy Union.

The long list of initiatives in the Energy Union package also means that the Commission’s Work Programme becomes much bigger and more substantial. Juncker was keen to demonstrate that his Commission was taking a lean-and-mean approach, with ‘only’ 23 packages of initiatives. And yet the Energy Union package includes no fewer than 15 action points.

With the Energy Union, Juncker, Šefčovič and the Commissioner for Climate Action and Energy, Miguel Arias Cañete (pictured), are following the lessons of Jean Monnet, the godfather of today’s European Union. Monnet said “I have always believed that Europe will be established through crisis, and that the outcome will be the sum of the outcomes of those crises.”

In the face of a European Union under attack – as we outlined in a blog earlier this month – the Commission has presented an opportunity to construct a revitalised, sustainable and more prosperous European Union with a renewed sense of pride and purpose.

The five ‘dimensions’ of the Energy Union

Energy security

The Commission proposes to diversify Europe’s energy supply through a focus on greater energy efficiency, the construction of infrastructure, including gas pipelines and liquefied natural gas (LNG) facilities, diversifying external energy supplies and increasing Europe’s domestic energy production.

The Commission also wishes to strengthen the position of energy in the EU’s external relations. In particular the Union will reframe the relationship with Russia.

At the same time the EU should develop strategic energy partnerships with producing and transit countries, including Algeria, Turkey, Azerbaijan, Norway, Turkmenistan, Ukraine, the Middle East, Canada, the United States and the countries of the Energy Community.

A fully-integrated internal energy market
The Commission wants to encourage and facilitate the much-needed investments in Europe’s energy infrastructure, including through the use of EU investment funds.

At the same time the Commission will insist on the full implementation and strict enforcement of existing EU legislation as a means to a well-functioning internal energy market.

The Commission foresees an “ambitious” legislative proposal to redesign the electricity market. It also seeks to ensure that state interventions and capacity mechanisms are fully aligned with the internal market. Regional cooperation between groups of EU member states is a step towards further integrating national energy markets, which ultimately will empower consumers to exercise their rights.

Energy efficiency

The Commission will focus its energy efficiency drive in the areas of buildings and transport.

It will propose a heating and cooling strategy, as well as measures to ‘decarbonise’ the transport sector through electrification and the use of alternative fuels.

Decarbonisation of the economy

The EU’s ambition is to reduce its greenhouse gas emissions by at least 40% compared to 1990.

The key policy instrument is a revised emissions trading system. The Energy Union also aims to make the EU the world leader in renewable energy, including advanced, sustainable biofuel production.

Research, innovation and competitiveness

The Energy Union requires research and innovation in a number of areas.

These including renewable energy, energy efficiency, smart grids, energy storage, carbon capture and storage and nuclear.

Words  Diederik Peereboom and Maximo Miccinilli
Photos  (c) European Union 2015

 

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