The European Commission presents “Energy Union Package"
On 25 February 2015, the European Commission presented an “Energy Union Package” consisting of three communications on “A framework Strategy for a resilient Energy Union with a Forward-looking Climate Change Policy” (COM(2015) 80 final), “The Paris Protocol – A blueprint for tackling global climate change beyond 2020” (COM(2015) 81 final) and “Achieving the 10% electricity interconnection target” (COM(2015) 82 final).
This package supports the targets (1) agreed upon by the European Council at its October 2014 meeting for 2030:
• 40% greenhouse gas reduction
• 27% renewables
• 27% energy efficiency
• 10% electricity interconnections
1. Overview of the “Energy Union”
After defining a vision of what an EU “Energy union” should be, and briefly analysing what the current energy policy shortcomings are, the Energy Union Communication proposes a plan aiming to provide greater energy security, sustainability and competitiveness by acting in the following areas i) energy security, solidarity and trust; ii) a fully integrated energy internal market; iii) energy efficiency; iv) decarbonisation of the economy, and v) research, innovation and competitiveness.
i) Energy security, solidarity and trust;
Building on its Energy Security Strategy of May 2014, the Commission proposes to act towards the diversification of supply, particularly of gas, with the development of new infrastructures (pipelines and liquid gas hubs) or the reinforcement of the stock policy for both oil and gas products.
Concerning electricity, the Commission will establish a range of acceptable risk levels for supply interruptions and an EU-wide assessment of security of supply. A legislative proposal on security of supply for electricity will be proposed in 2016.
The Commission plans to reinforce the EU weight in terms of energy and climate diplomacy, by establishing strategic partnerships with key suppliers, and by revising the decision of 2012 on an EU information exchange mechanism on energy agreements between Member States and third countries, with an ex-ante information mechanism. The ultimate goal is that the EU negotiates directly such agreements.
ii) A fully integrated energy internal market
Building on its report of October 2014 on progress towards completing the Internal Energy Market, the Commission proposes to work on the following areas:
a) The internal energy market’s hardware:
This concerns the development of interconnections, and the use of such instruments as the TEN-E, with the identification of projects of common interest (PCIs), or the framework set by the European Energy Security Strategy to select energy security projects. An Energy Infrastructure Forum will be launched late 2015. With regards to financing schemes, the Communication refers to the Connecting Europe Facility, the EU Structural and Investment Funds and the recently proposed European Fund for Strategic Investments.
As part of this action, the Electricity interconnection Communication aims to give a political push to the goal of achieving the 10% electricity interconnection target, by better use of existing instruments such as the TEN-E regulation (notably focusing on better cooperation between the four Regional Groups for electricity), the EU financial funds (including the new European fund for Strategic Investment), and the Ten-Year Network Development Plan prepared and regularly updated by ENTSO-E (European Network of Transmission System Operators in Electricity). The Commission will propose in 2016 a plan to reach 15% interconnections by 2030.
b) The internal energy market’s software
This concerns the full implementation and strict enforcement of the provisions of the 3rd energy package and competition legislation. The Commission plans to:
• Upgrade and strengthen the ENTSOs to help them become much more integrated, and to create regional operational centres
• Reinforce the independence of the ACER and its regulatory/decision-making rights, beyond its currently limited power of enacting recommendations and opinions
• Propose legislation aiming at redesigning the electricity market and linking wholesale and retail
• Reinforce the application of energy state aid guidelines, especially towards subsidy mechanisms on renewables; environmentally harmful subsidies should be banned
• Develop a regular and detailed monitoring and reporting scheme on the composition of energy costs and prices
• Promote regional cooperation, as a first step towards a full EU-wide integration, particularly in the Central and South-Eastern part of Europe
• Promote the empowerment of consumers via smart meters, smart grids and smart appliances
• Work towards the phasing out of all regulated prices, while protecting vulnerable consumers.
iii) Energy efficiency
With the goal of 27% energy efficiency improvements in 2030 in mind (to be possibly updated in 2020 towards 30%), the Commission plans to focus its action towards both sectors having the most energy efficiency potential, namely the transport and building sectors.
On the building sector, a specific strategy will address the district heating and cooling sector, heating and cooling being the largest single source of energy demand in Europe. Support will continue to be given to initiatives on Smart Cities and Communities and to the Covenant of Mayors, and more information and technical assistance will be provided to finance investments using European Structural and Investment Funds.
With regards to transports, the Commission proposes to work in the areas of CO2 emission standards for road vehicles, traffic management, road charging schemes, shift to non-road modes of transport, and the development of alternative fuels, including electrification. The role of electric vehicles as potential storage facilities is underlined. The Communication however does not mention harbours electrification or shore-to-ship technologies.
iv) Decarbonisation of the economy
The Commission proposes to act towards climate change - and to reach the new target of 40% greenhouse gas emission reduction in 2030 via two channels: the EU Emission Trading System (ETS) and a push towards renewables.
On the ETS, legislation will be proposed to ensure the achievement of the target in both the sectors covered and not covered by the ETS, and the ETS itself will be revised.
On renewables, a new renewable energy package will be proposed in 2016-2017 to support the 27% target. One of the aims will be to ensure that renewable energy production is supported through market-based schemes avoiding overcompensation or distortion. The EU’s ambition is to become the world leader in renewable energy.
v) Research, innovation and competitiveness.
The Commission proposes to address six priorities in terms of Research and Innovation: i) being the world leader in developing the next generation of renewable energy technologies, ii) helping consumers’ participation through smart home appliances, smart cities, home automation systems, smart grids, iii) supporting the development of energy efficient systems, and of technologies making the building stock energy neutral, iv) developing more sustainable transport systems, v) supporting, also with regulatory and financial means, carbon capture and storage and carbon capture and use, and vi) enhancing the EU’s leadership in the nuclear domain.
The SET Plan (Strategic Energy Technologies) will be upgraded, a strategic transport Research and Innovation agenda put in place, and the Commission will develop an initiative on global energy and climate technology and innovation leadership.
2. EU contribution to the future international agreement on climate change
The Paris Protocol Communication presents the EU’s vision and contribution to the 21st Conference of the Parties (“CoP 21”) to the United Nations Convention on Climate Change (UNFCCC), to take place in Paris in December 2015.
In this Communication, the Commission translates into the EU’s “Intended Nationally Determined Contribution” (2) the decision of the European Council to achieve a 40% reduction in greenhouse gas emissions by 2030 compared to 1990.
It also pleas for the outcome of the “CoP 21” to be the signature of a new international and legally binding agreement, in the form of a Protocol to the UNFCCC, to be implemented as of 2020. This Protocol should include, amongst others, the long term goal of reducing global emissions of greenhouse gases by at least 60% (below 2010) levels in 2050, a review mechanism, technology transfer and financing commitments.
(1) As a reminder;
a) Greenhouse gas reduction: 20% by 2020 and 40% by 2030
• Reference: year 1990
• Measurement: T-CO2 eq.
• Greenhouse gases concerned: CO2, CH4, N2O, HFCs, PFCs, SF6
• Reference: Regulation (EU) No 525/2013 of 21 May 2013 on a mechanism for monitoring and reporting greenhouse gas emission
b) Share of renewables in energy use in the EU: 20% by 2020 and 27% by 2030
• Renewables include: wind, solar, aero thermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases;
• Measurement: the calculation is based on the sum of the gross final consumption of electricity + the gross final consumption of energy for heating and cooling + the gross final consumption in transports
• Reference: Directive 2009/28/EC on the promotion of the use of energy from renewable sources
c) Increase in energy efficiency: 20% by 2020 and 27% by 2030 (with a review in 2020 aiming at 30%)
• This target is translated by a maximum of 1483 M Toe of primary energy used, and 1086 M Toe final energy used in 2020 (based on projections showing a primary energy consumption of 1853 Mtoe and a final energy consumption of 1357 Mtoe for the 28 Member States in 2020)
• Reference: Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC
d) Part of connection of the national grid to EU internal energy market: 10% in 2020 and possibly 15% in 2030
• The target is to achieve the interconnection of at least 10 % of Member States installed electricity production capacity, calculated in GW
• Reference: European Council Conclusions of 23rd October 2014
(2) During previous CoP negotiations, countries agreed to publicly outline what actions they intend to take as part of the new Paris agreement These country commitments are known as Intended Nationally Determined Contributions (INDCs).
