Σάββατο, 28 Φεβρουαρίου 2015

The Commission’s energy union ‘strategy’: A rebranded work programme

The European Commission’s grandly-titled ‘Framework strategy for a resilient energy union with a forward-looking climate change policy’ was published on February 25th. It contains 
sensible proposals. If all were enacted, EU energy and climate policies would be significantly 

improved. But they will not all be enacted – at least not in the lifetime of this Commission. A 

credible strategy needs priorities, resources and a clear timetable. This publication identifies 

only one very general priority (‘obey the rules’) and one very specific one (extend the energy 

market in South-East Europe). A forward-looking climate policy initiative would contain some 

new proposals: this paper does not. This paper is essentially a restatement of the 

Commission’s existing work programme, now rebranded as an energy union.  


Energy union

European integration has always been rules-based. Yet the Commission identifies “the 


implementation and enforcement of existing EU legislation” as the first priority of its new 

strategy. Specifically, it promises to insist that member-states implement the third energy 

market package. This is sensible, but not new: the Commission has been insisting that 

national governments implement this package ever since it was adopted in 2009.


The paper reiterates the Commission’s desire to centralise regulation. “Today, the European 


Union has energy rules set at the European level, but in practice it has 28 national regulatory 

frameworks. This cannot continue.” Whatever the Commission thinks, this will continue. In the 

late 1980s the Commission proposed a European Environment Agency to regulate Europe-

wide. When the agency was created in 1990, national governments had changed its role to 

one of collection and dissemination of information: more of an environmental Eurostat than a 

green policeman. 

The Commission’s attempts to centralise energy regulation face the same strong opposition in 


the Council. In 2009, as part of the third energy package, the EU set up the Agency for the Co-

operation of Energy Regulators (ACER). As the name suggests, this is a forum for discussion 

between national regulators, not a body that actually regulates EU markets. In the Energy Union 

paper the Commission says that ACER should “carry out regulatory functions at the European 

level”. The Council is not likely to agree. 

Apart from the statement that obeying existing rules is its first concern, the Commission 


identifies only one other priority: the integration of Central and South-Eastern European energy 

markets into the wider European market. It promises that it “will take concrete initiatives in this 

regard as an urgent priority” – though does not reveal what these might be. Central and South-

Eastern European countries are indeed very important for Europe’s energy and climate 

policies: CER will publish a paper on this subject next month. But a credible strategy for an 

energy union would have set priorities for shaping the whole of Europe’s energy market, not 

simply identified how that market should be enlarged. The strategy paper ends with a section 

called “the Energy Union in 15 action points”. Several of these have bullet points, so in total 

there are 27 items on the Commission’s ‘to do’ list. President Jean-Claude Juncker and his 

team have not said which of these it considers to be the most important. It is very unlikely to be 

able to do all of them.

So what should be the priorities for building an energy union? First should be energy efficiency. 


The Commission should propose that most new power stations must be combined heat and power. Heat that is produced when anything is burnt should be used rather than being wasted 
up cooling towers. The Commission suggested this as part of the 2012 ‘energy efficiency 

directive’, but the Council rejected the proposal. The Commission should try again. 

The second priority should be the construction of an efficient Europe-wide electricity grid. An improved and extended grid would enable member-states to harness much more renewable 


energy, so increasing energy security and reducing carbon emissions. With a Europe-wide 

grid, the EU could generate wind and tidal power in the north of the continent, and wind and 

solar power in the south. Electricity could be transmitted north to south during nights, when 

solar panels do not generate, and south to north during days when the wind is not blowing. 

(However good the grid, it cannot cater for all scenarios. Electricity storage or gas power 

stations as back up capacity will be required to ensure that the lights stay on during calm 

nights.)   

The third priority should be energy subsidy reform. In 2009 the G20 promised to end inefficient 


fossil fuel subsidies. Little progress has been made since then. The paper notes that 

“collectively, the EU spent over €120 billion per year – directly or indirectly – on energy 

subsidies, often not justified”. It declares that “environmentally harmful subsidies need to be 

phased out altogether”. But all it proposes to do on energy subsidies is an “analysis of energy 

prices and costs (including taxes and subsidies)”. This is just a delaying tactic. The 

International Energy Agency and the International Monetary Fund have both conducted this 

analysis, and published the results, in the last two years. There is no need for more analysis. 

There is a need for action. The Commission should use its state aid powers to reduce existing 

subsidies to coal power stations, and prevent new subsidies to coal (other than for carbon 

capture and storage demonstration projects). In July 2014, the Barroso Commission gave 

state aid clearance to the UK for new subsidies to existing coal fired power stations. London 

argued that this was necessary to provide a back up for intermittent renewables. Gas power 

stations are more economically efficient in this role, and much less polluting. The Juncker 

Commission should reverse the state aid clearance for new subsidies to old coal.

The fourth priority should be diversification of gas suppliers. On the day that the Commission 


published its paper, Russian president Vladimir Putin threatened to cut off gas supplies to 

Ukraine. This was predictable. The paper stresses the need for Europe to reduce energy 

imports and dependence on single suppliers of hydrocarbons. (Russia is not named in this 

context; it does not need to be named.) The suggestion that Council President Donald Tusk 

made when he was Polish prime minister – that member-states should club together to 

become single gas buyers when negotiating with the Kremlin – is given a polite nod but 

nothing more: it will be “assessed”. 

Instead, the paper stresses the need to find alternative suppliers of gas. The Commission 


promises to work on gas interconnectors within the EU. These are necessary, particularly for 

countries which import most or all of their gas from Russia, and are likely to receive EU funds. 

The Commission will also work on the Southern Gas Corridor to bring gas from Central Asia to 

Europe. And it will “encourage” Central and Eastern European and Mediterranean countries to 

build liquefied natural gas (LNG) facilities, as Northern European countries have done. More 

LNG facilities would be good for energy security. They would also be good for climate action. 

The greenhouse gas footprint of LNG is higher than that of piped gas, because of the energy 

used during its transformation. But even when turned into liquid and then back into gas, natural 

gas is less bad for the climate than coal is. 

So, the energy union priorities should be energy efficiency through combined heat and power, 


an improved and expanded electricity grid, reform of energy subsidies and diversification of 

gas suppliers. What proposals should be added to achieve forward-looking climate policies? 

First, the Commission should propose an Emissions Performance Standard (EPS), to limit the 
amount of carbon dioxide that power stations and industrial plants are allowed to emit. The 

European Parliament tried to include an EPS in the 2010 ‘industrial emissions directive’. The 

Barroso Commission blocked Parliament’s effort on the grounds that a regulatory approach 

was inconsistent with the market-based approach of the Emissions Trading System (ETS). 

This line of reasoning is not convincing. It is perfectly possible to combine an EPS with 

emissions trading, as the Californian government shows. What is more, emissions trading in 

Europe has not delivered a significant or predictable carbon price, which is needed to channel 

investment into low-carbon energy. Rejecting a new measure because it is (allegedly) 

inconsistent with an unsuccessful existing policy is not sensible. Last month, the Juncker 

Commission agreed to consider an EPS. But the Energy Union strategy does not mention it.

Second, the Commission should propose financial support for modern nuclear power technologieswhich will be even safer than existing nuclear stations and which can use radioactive waste and plutonium (of which the UK and France have large stockpiles) as fuel. 


The Commission accepts that the EU should maintain technological leadership “in the nuclear 

domain”, but argues that this should include the International Thermonuclear Experimental 

Reactor (ITER), the nuclear fusion project in France. ITER is a partnership between the EU, 

China, India, Japan, Russia, South Korea and the United States. The EU is ‘leading’ in the 

sense that the money from the EU Budget covers 45 per cent of the total; the other six partners cover just 9 per cent each. Billions have already been spent, but the earliest date that nuclear fusion could generate electricity commercially is 2050. ITER is a waste of money, and should 

be abandoned. The EU should instead invest the money in nuclear technologies which could 

contribute to energy security and decarbonisation in the 2020s.

Third, the Commission should spend more of the EU Budget on innovative renewable energy technologies. Wave and tidal power could make a major contribution to European electricity. But these technologies are still at the development or demonstration stage, so need significant 


grants. The Commission should transfer money from the transport part of its Connecting 

Europe facility into research and development of new renewables. 

Fourth, the Commission should promote a price floor for the ETS. Carbon trading has two 


objectives: cap the total amount of greenhouse gas pollution, and put a price on carbon so that 

more investment goes into low-carbon energy sources and less into dirty coal. Greenhouse 

gas levels are below the cap which the ETS sets – though this is due more to the economic 

downturn than to the ETS. But the current carbon price (around €7 per tonne of carbon dioxide 

emitted) is far too low to have any significant impact on investment decisions. The 

Commission should propose a minimum price at which allowances can be traded. The price 

floor should be introduced at €30, and go up each year.

Juncker’s Commissioners regard energy as an issue on which ‘more Europe’ is needed. They 


are not alone in thinking this: Finnish prime minister Alexander Stubb made the same point at a CER event in October 2014. The energy union paper says that national policies provide insufficient predictability for potential investors. EU regulations are more stable than national 

regulations are, because they are difficult to change once agreed. However, attempts to alter 

the tier of government at which policy is made – from member-state to EU level or vice-versa – 

cause more unpredictability and so increase the cost of capital. The Commission estimates that “over €1 trillion needs to be invested into the energy sector in the EU by 2020”. This at a 

time when the European economy is weak. The Commission, Parliament and national 

governments must not allow inter-institutional arguments to increase the price tag. They should 

focus on energy and climate issues, not on constitutional squabbles.

President Juncker promised to lead a more political Commission. Sadly, the energy union 


framework strategy is not political enough. It is too bureaucratic and too timid, and needs more 

focus.

by Stephen Tindale


Stephen Tindale is a research fellow at the Centre for European Reform.


sourche: http://www.cer.org.uk/insights/commission%E2%80%99s-energy-union-%E2%80%98strategy%E2%80%99-rebranded-work-programme?utm_source=All+website+signups+as+of+21+March+2014&utm_campaign=b5afb76a92-insight_energy_union&utm_medium=email&utm_term=0_c3be79867d-b5afb76a92-301763949

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