Energy Union: principles and blueprints for a most competitive and green Europe
Energy has been at the heart of European Union since its foundation but the importance of a european energy policy still grow, today more than ever. At the same time, the climate change – which influence our lives always more – remember us the strictly connection between clima and energy.
Since the rise of the first energy crises (for example the oil crises of the 60s and 70s) it has become increasingly clear the idea that energy policies can’t remain confined in the national areas, but must somehow be relate with higher governance’s levels. The idea that important sources of energy such as electricity and gas could not escape the internal market and therefore the application of his rules (the rules on the fundamental economic freedoms, competition rules and on services of general economic interest) was born in the occasion of the internal market’s relaunch as a result of the Single European Act of 1986. The result of this gradual extension activities of the law EC/EU activities related to the energy cycle is traceable especially in different “editions” of the EC directives on the internal electricity and gas Markets. Directives 2003/54/EC and 2003/55/EC concerning common rules for the internal market for electricity and gas have been replaced in 2011 by Directives 2009/72/EC and 2009/73/EC of 13 July 2009. Through the mentioned acts it has begun to realize one of the most important goals of energy policy of the EC/EU: the liberalization of the national electricity and gas that is the transition from a monopolistic to a competition regimes in order to achieve free access to the networks.
Section 194 TFEU too, has had a strategic role in the same direction. The interest raised by the provision in question is even more tied to the growing energy connection with other relevant EU policies such as the environment, economic and social cohesion, trans-European networks and consumers.
The main ideas which provides section 194 TFUE, namely the division of powers the EU/Member States in relation to the energy sector, reconciling energy objectives with the EU environmental objectives, the importance of the principle of energy solidarity, and finally, the notion of energy policy are the base on which has been built the blueprint of the Energy Union.
In Europe we import more than half of our energy. According to European Commission’s studies, 53% of EU’s energy is imported at the cost of €400 bn a year and 94% of transport relies on oil products, of which 90% is imported. These data make us the biggest energy importer.
Moreover, our energy market remains fragmented and so our companies pay much more than the others international competitors. This framework shows the excessive dependance on a limited number of supply which leaves the EU countries vulnerable to supply disruptions. Even the affordability of energy, the competitiveness of energy prices and the greenhouse gas emissions are a concern to households and businesses.
For all this reasons on 25 Februar 2015, “A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy” was adopted by the Commission and was setted up in President Junker’s political guidelines like one of the Commission’s top priorities :“We have to move away from an economy driven by fossil fuels, an economy where energy is based on a centralised, supply-side approach and which relies on old technologies and outdated business models. We have to empower consumers providing them with information, choice and creating flexibility to manage demanda as well as supply. We have to move away from a fragmented system characterised by uncoordinated nation policies, market barriers and energy-isolated areas.”
It is time to achieve a resilient Energy Union with a forward-looking climate change policy which will be based on:
- Energy security, solidarity and trust
Since the EU imports 53% of the energy it consumes and some countries depend for their gas imports on one main supplier, the aim for improving our energy security will be to diversify the energy sources and suppliers. Exploring new supply regions for fuels, exploring new technologies, further developing indigenous resources and improving infrastructure to access new sources of supply are all elements that will contribute to the increased diversification and security of Europe’s energy sector. In this context, as far as gas is concerned, the Commission will develop a resilience and diversification package for gas, which in particolar will include a revision of the Security of Gas Supply regulation.
- A fully integrated energy market
It will be necessary the integration of variable renewable energy. Meeting this challenge requires a market designs that provides for coordination of capacities at regional level, storage and more flexibility in demand response, enabling consumer to better partecipate in markets and allowing energy to be exchanged across borders more easily.
- Energy efficiency
Heating and cooling remains the largest single source of energy demand in Europe. The Commission will therefore carry out a review of the Energy Efficiency and Energy Performance of Buildings Directives to create the right framework for further progress in delivering energy efficiency in buildings. Based on the on-the-ground experience in the Member States, the Commission will support ways to simplify access to existing financing to make building stocks more energy-efficient. Investments in buildings’ efficiency are amongst the most profitable for citizens and industry today.
- Decarbonising the economy
The Energy Union aims to guarantee that renewable energy will be mainstreamed and fully integrated into a fully sustainable, secure and cost-efficient energy system. In order to allow that the EU mantain its world leader position in competitive renewable energy technology and innovation, the Commission will:
- put in place new market rules so as to integrate renewable production efficiently into the market, including by the development of new infrastructure, especially interconnections;
- Facilitate cooperation and the convergence of national renewable energy policies and ensure fair competition between all generation sources as well as demand and lead to more cross border opening of renewables support;
- promote renewable energy research, including through dedicated EU funds;
- speed up the decarbonisation of the transport sector, including by promoting the electrification of the transport sector and invenstments in advanced biofuel production, and further integrate the energy and transport system.
This will lower the overall financing cost for renewable projects and facilitate the achievement of the 2020 and 2030 targets.
In fact, EU wants to operate a reduction target of at least 40% in greenhouse gas emission by 2030 (which means reduce emissions in the carbon market’s sectors: 43% for the ETS and 30% for the non-ETS compared to 2005), to increase the share of the renewable in the energy mix to 27% and to improve energy efficiency by at least 27%. The “at least 40%” target is ambitious and fair and is in line with a cost-efficient pathway to at least 80% domestic reduction by 2050.
This is an ambitious climate policy that wants to turn a challenge into an opportunity.
Apart from its crucial importance for EU climate policy, the emission reduction has multiple energy, economic and environmental benefits. From an energy perspective, meeting the emissions reduction target will result in less consumption of fossil fuels. This, in turn, will reduce the vulnerability of our economy to fuel insecurity and high costs of imported fuel. Furthermore the costs of a low carbon transition do not differ substantially from the costs that will be incurred in any event due to the need to renew an ageing energy system. From the environmental perspective, meeting the target will also reduce air pollution.
- Research, Innovation and Competitiveness
A vital contribution to the objectives of the Energy Union will come from the implementation of Horizon 2020, the nearly €80 billion EU Framework Programme for Research and Innovation. This financial support will play a significant catalysing and leveraging role to develop the secure, clean and efficient energy technologies of tomorrow. The Energy theme, which is part of the key social challenges addressed in the programme, is broad, far-reaching and will help to improve lives, protect the environment and make the European industry more sustainable and competitive.
All the above mentioned dimensions are areas that require more integration and coordination. As said by Miguel Arias Cañete, Commissioner for Climate Action and Energy “We need a new era of cooperation, we need solidarity”. This desire and need of solidarity reached the zenith with the Paris Conference on clima. Europe needs a new climate agreement because the International community has recognised the scientific evidence that global average annual temperature increase needs to be held well below 2°C compared to the temperature in pre industrial times in order to prevent climate change from reaching dangerous levels.
Europe needs to speak with one voice to take on this challenge for the future generation who will benefit if climate change is prevented from reaching dangerous levels. Because, as Robert Schuman said, “Europe will not be made all at once, or accordingly to a single plan. It will be built through concrete achievements which first create a de facto solidarity”.
 Both in GUUE L 176 of 25 July 2003.
 Both in GUUE L 211 of 14 August 2009.
 See COM(2015) 80 final at the following link: http://ec.europa.eu/priorities/energy-union/docs/energyunion_en.pdf.
 Regulation (EU) No 994/2010 of 20 October 2010 concerning measures to safeguard security of gas supply and repealing Directive (EC) 2004/67.
 Since 2005, the European Union has introduced the EU Emissions Trading Scheme (EU ETS) with a view of reducing CO2 emissions in energy-intensive sectors. The Scheme covers more than 11,000 power stations and industrial plants in 31 countries, as well as airline operators throughout Europe. Based on a European Commission proposal from 2014, the European Parliament and the Council currently discuss legislation to reform the EU ETS by introducing a market stability reserve (MSR). This feature has been designed to increase the shock resilience of the EU ETS in the future. At the same time it allows to neutralise negative impacts of the prevailing significant market surplus on low-carbon investment incentives. The co-legislators are currently negotiating MSR design elements which will determine the pace of absorbing surplus allowances into the MSR. Beyond this reform process, the Commission will propose further changes to the legislation swiftly after the MSR legislation has been agreed. These further changes are needed to implement the strategic guidance of EU leaders on how the EU ETS should operate in the decade up to 2030. This includes an increase in the linear reduction factor (the rate at which the emissions cap is tightened from year to year) from 1.74 % to 2.2 % as of 2021. In addition, legislation will be changed to allow industry to benefit from carbon leakage measures and free allocation of emission allowances beyond 2020 in line with principles agreed by EU leaders. Finally, changes to the ETS Directive will be made to create a legal basis for establishing an innovation fund and a modernisation fund. These two financial vehicles are funded from the proceeds of allowances in 2021 to 2030. The innovation fund will support low-carbon demonstration activities across the EU and the modernisation fund will support the modernisation of energy systems in low-income Member States.
 See in number 3 of Across the EUniverse “Horizon 2020: what, who and how it works in practice” written by Elena Bertolotto.