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EU energy and climate policy:

achievements of the past five years

October 22, 2019

 

By Klaus-Dieter Borchardt

Deputy Director-General of the Energy Directorate of the European Commission

The gradual transition away from fossil fuels towards a carbon-neutral economy is one of the greatest challenges of our time. It is a vital transformation not just for the good of the planet, but also for the modernisation of our society. This clean energy transition is already underway in Europe and our aim as policy makers is to do whatever we can to further accelerate this transition in an inclusive, economically sustainable manner that is understood and appreciated by all.

 

The EU was an early mover on clean energy. Back in 2009, the EU was the first to set ambitious energy and climate targets. The 2020 objectives of achieving a 20% greenhouse gas emission reduction, 20% in renewable energy and 20% energy efficiency were ground-breaking at the time. This set a clear sense of direction which has driven investment in infrastructure, and research and innovation. It was a concept that has now been followed by most countries all over the world.

 

Ten years later, the EU is broadly on track to achieve the 2020 objectives. The EU is the only economic power to have 56% of its electricity decarbonised, thanks to renewables and nuclear energy. Latest figures show 17.5% of final energy consumption in Europe coming from renewables in 2017 and the EU is the global leader on energy efficiency. We have felt the economic benefits of clean energy, proving that it is possible to reduce emissions and achieve GDP growth and a net increase in employment in the energy sector. Between 1990 and 2017, total emissions decreased by 22%, while the EU’s combined GDP grew by over 54%. Moreover, through innovation, technological development and economies of scale, the costs of renewable energy in Europe have come down significantly. To the extent that solar and wind power can now compete on market terms with other forms of power generation.

 

When this Commission took office at the end of 2014, President Juncker announced that one of his main priorities would be to build an energy union to ensure Europe’s energy supply is safe, viable and accessible to all, based on 5 dimensions: energy security, a fully-integrated internal market, energy efficiency, decarbonising the economy, and research, innovation and competitiveness. As we enter the final phase of this Commission, I am proud to say that we have already delivered on virtually all aspects of the energy union and the EU now has a coherent, coordinated framework to take the transition forward.

 

One major turning point in this clean energy transition was the Paris Agreement. In December 2015, the EU played an instrumental role in delivering the global Paris Agreement to limit global temperature increase to well below 2°C, and to pursue efforts to limit it to 1.5°C. The Agreement is the world’s first legally binding and universal deal aimed at preventing dangerous climate change.

 

And in order to further accelerate the clean energy transition and to meet the EU’s Paris Agreement commitments, the EU has completely revamped its energy legislation these last 5 years. Through 8 different legislative proposals – called the Clean Energy for All Europeans package - the EU has now the most ambitious climate and energy legislative framework in the world. After intensive negotiations with the Council and the European Parliament, the final elements of this package were formally approved on 15 April 2019.

 

The purpose of the measures is to ensure a clean and fair energy transition at all levels of the economy – from energy generation all the way to people's homes, such as increasing renewable electricity and encouraging the take-up of smart meters. The measures also aim to improve inter-connections between Member States and to make the different actors more competitive and innovative. This means finding the right blend between regulatory tools and market forces, encouraging private investment on clean energy where it makes economic sense and using EU funding to stimulate investment where market forces alone are not sufficient. The Clean Energy for All Europeans package sets the right balance between making decisions at EU, national, and local level – because all levels of government are involved. In doing so, we unearth synergies and efficiency gains that could not be found if each EU country went about it alone. And yet each country retains its independence to choose its own energy mix and the path it will take to reach its energy and climate targets – but within an EU context and following a common approach. This is European added value.

 

The new measures are not just for businesses - they provide far greater opportunities for citizens. Indeed, through greater market efficiency and reinforced consumer rights, citizens will have a real influence over their energy footprint – whether through smart meters, taking control of household bills, or actually investing to produce their own renewable energy, which is then fed into the grid.

 

As the headline part of the Clean Energy for All Europeans package, the EU has set ambitious targets for 2030 at EU-level of at least 32.5% for energy efficiency and of at least 32% for renewables. There is also a review clause for a possible upwards revision of these targets in 2023. In global terms, it also means that the EU will be able to go beyond its Paris Agreement commitment for a 40% GHG reduction. In fact, latest modelling suggests that these targets will enable an emissions reduction of close to 45% by 2030. The clean energy transition demands determination and leadership and we have delivered.

 

Under the new Energy union rulebook – notably the new “Governance” regulation – each EU Member State is required to draw up 10-year integrated National Energy and Climate Plans (NECPs) which outline how it will achieve the targets by 2030. All of the draft NECPs have been submitted to the Commission which is now evaluating them with a view for Member States to finalise them by the end of 2019. In a process which has drawn parallels with the European Semester process, the aim of the Commission input is to ensure that we achieve our collective commitments for 2030.

 

As for security of supply, the new Package will increase it by helping integrate renewables into the grid and manage risks, and by improving cross-border cooperation: this will lead to a cleaner, more stable and more competitive electricity sector across Europe. Moreover, the new electricity market design rules introduce a framework for cross-border cooperation and put an emissions cap on new capacity mechanisms in order to restrict subsidies for the most polluting technologies. This important change reconciles our objectives of decarbonisation on the one hand and security of supply on the other.

 

Under the new rules on risk preparedness, all neighbouring countries are required to coordinate efforts and prepare solutions to any potential threat or crisis. Furthermore, another achievement has been the new adopted gas rules, that will ensure that EU law is applied to pipelines bringing gas to Europe and that everyone interested in selling gas to Europe respects European energy law. With this new law, Europe has given itself a strong set of tools to deal effectively and collectively with our external energy suppliers.

 

Finally, I believe another key result of this mandate has been the EU’s commitment to move towards a climate neutral economy by 2050. This is the EU’s long-term contribution to the aims of the Paris climate agreement to keep the temperature increase to well below 2°C and pursue efforts to keep it under 1.5°C. This endeavour will be undertaken by investing in realistic technological solutions, empowering citizens, and aligning action in key areas such as industrial policy, finance, or research, while ensuring social fairness for a just transition to the net zero carbon economy. Reducing emissions and transforming the energy system does not imply that the livelihoods of Europeans need to suffer. It is possible to reduce emissions while creating prosperity, high-quality local jobs, and improving quality of life. This can be done by developing and deploying current technologies. It is in Europe's interest to reduce spending on fossil fuel imports and invest in a clean, green Europe that generates growth and new jobs. In this process, no European citizen and no region should be left behind. As new sectors emerge, traditional sectors will need to adjust. The EU will support those more impacted by the transition so that everyone can benefit from our investment in the clean energy transition.