One for All - an energy policy for the EU

By Prof. Derek Taylor, Former Energy Advisor to the European Commission

Part 2. The Road to an Energy Union


In 2007, in response to a proposal by UK Prime Minister Tony Blair and as agreed by the Glen Eagles European Council, the European Commission produced an Energy and Climate Policy. This text – or rather a series of texts – tied together for the first time the future of energy in the European Union (EU) and the state of the climate. A vital feature and driver of the policy was the EU’s “Kyoto commitment” to reduce its greenhouse gas (GHG) emissions by 20%, relative to the 1990 emissions, by the year 2020.
The energy policy was built on the three classic pillars of security of supply, competitiveness and sustainability. A distinguishing feature was its three very specific targets which were central to the overall objective of the policy. These were an increase to 20% of renewable energies, a 20% improvement in energy efficiency and the achievement of the 20% reduction in GHG required under the Kyoto Convention. All three targets were to be achieved by 2020.
The day after the policy was published, I made what was probably the first public presentation of it to a large conference in Brussels. In this I referred to the policy as the “twenty, twenty, twenty by twenty twenty policy” (or 20,20,20 by 2020). Interestingly, I was criticised internally in the Commission for “trivialising” the policy. However, it was such an easy way to remember it – and taken up immediately by the Press – that in many of its later documents, the Commission characterised the policy in exactly the same way.
The renewable energies (RES) target was a “win-win” target. The more RES we have, the better our security of supply will be as it should reduce our dependency on energy imports. It is also more sustainable with very low or zero GHG emissions. One the other hand, the cost is generally higher than for conventional fuels and nuclear, so does not improve our competitiveness. It was agreed – after considerable discussion – that each Member State should have its own “binding” target to reflect its present capacity and potential for growth. Significant progress has been made. The share of RES in the EU’s final energy mix has risen from 8.7% in 2005 to 15% in 2013 – so the 20% target looks achievable.  Most States appear reasonably well on track – but some, in particular the UK and the Netherlands, look to be falling well short.
Energy efficiency is very much a “win-win-win” situation. If you do not have to use energy you save money and resources plus increase your energy security. It fits well with the three pillars and is very popular with the public and politicians, until …… you come to try to legislate it! Then it becomes rather more difficult. We can legislate for more energy efficient buildings but cannot force everybody to improve their home insulation. We can legislate for more efficient energy-using products, but we cannot force people to scrap their latest piece of equipment and replace it by a more energy efficient (and possibly more expensive) model. Progress has been made in the EU and some States have already reached their self-defined efficiency targets. In spite of this, the Commission now estimates that improvements will only total 17.6% by 2020 – in spite of much lower than expected demand brought about by the financial crisis and recession. (This possibly accounted for one-third of the expected improvement).
The GHG reduction is simply a “must do”. The main sources of these gases, in particular the carbon dioxide, are fossil fuels. However, such fuels provide us with nearly three-quarters of our total primary energy, so weaning ourselves off them is extremely difficult. On the other hand, reducing our dependency on them also reduces our dependency on imports and improves our security of supply. Alternative forms of energy can be more expensive and/or less reliable. Many difficult decisions need to be made. The main instrument designed to try and bring about the necessary innovation and technology change in the most economically efficient way, is the EU’s Emission Trading System (ETS). It could take up several blogs to describe and analyse the ETS and its costs and benefits. Here I will say that it has not yet performed as well as it was hoped (something of an understatement), but I believe that its presence has had some impact on our energy system and dampened the growth of fossil fuels, in particular coal, in Europe. Whatever the reason, the EU is well on track to achieve its 20% reduction in GHG emissions by 2020.
In 2014, the European Council agreed that energy and climate policies remain as one of the five priority areas for the EU. Agreement was also reached on a 2030 Framework for Climate and Energy and on the European Energy Security Strategy. (I would note here that the Commission has an excellent website from which all such documents can be easily downloaded Drawing these together and building on them, the Commission has now proposed an Energy Union. At the core of this will be “an ambitious climate policy” and “secure, sustainable, competitive and affordable energy”.
An important difference between the 2007 policy and the new Energy Union will be the new targets. Both renewable capacities and energy efficiency will have a target of at least 27% by 2030. The European Parliament, in particular, would like higher targets and they will be reviewed in 2020 “with a view to increase them to 30%.” The Member States have also agreed to reduce the EU’s GHG emissions by 40% (relative to 1990) by 2030. This is the EU’s position in the COP21 negotiations. In fact, the sectors covered by the ETS will be required to cut their emissions by at least 43%. As a result the ETS “emission cap” will start to reduce at a rate of 2.2%/year after 2020 (as opposed to 1.74%/year now).
Finally, in the Roadmap to 2050, the European Council and the European Parliament have endorsed a GHG cut of between 80% and 95% by 2050. For the industrial sector this will require an 83% to 87% reduction. For the power sector the GHG emission reduction will have to be between 93% and 99%. This clearly has dramatic consequences for the future of fossil-based fuel use in Europe. For example, given the expected lifetime of a new coal-fired power plant, who would take the decision to build one now in Europe? The same argument will soon be applicable to gas-fired plants. They will be driven out of our energy mix – unless they can remove their carbon emission by using carbon capture and storage (CCS). However, in Europe, our progress on CCS has been lamentably slow – it could be too little and too late.
We have very good intentions – but we are still a long way of achieving our goal of a clean, secure and affordable energy for all!

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