ENERGY

Interview with

EU Energy Commissioner Kadri Simson

November 17, 2020

IMAGE: European Union, 2020

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EU Energy Commissioner Kadri Simson was born in Tartu, Estonia. While working for Tallinn City Council and the NATO Parliamentary Assembly, she obtained a degree in History from the University of Tartu and a Master’s degree in Political Science from University College London—showing from a young age that she was hard-working, and passionate about both local and national issues. Senior roles in the Estonian Centre Party followed and in 2007, Kadri was elected to the Riigikogu (Estonian Parliament) and was Minister of Economic Affairs and Infrastructure from 2016 to 2019. During the Estonian presidency of the Council of the EU in July-Dec 2017, she chaired the meetings of the Transport, Telecommunications and Energy Council and the Competitiveness Council.

 

In December 2019, she became the European Commissioner for Energy. Despite the issues caused by the COVID-19 pandemic, she remains optimistic that Europe’s recovery can be closely aligned with the EU Green Deal, and she’s proud of the progress already made in adopting renewable energy.

 

Kadri believes the energy transition must include “the 3Ds”: Decarbonisation, Decentralisation of energy production and storage, and Digitalisation, using digital tools to increase energy efficiency.

 

She found time in her busy schedule to talk to us about the future of fossil fuel subsides, and her ideas for ensuring a greener recovery from the pandemic.

 

 

 

 

You recently went on record stating that, "The European Green Deal is clear: fossil fuel subsidies have to end". Does this mean that we can expect to see an eventual phase-out of fossil gas subsidies within the Just Transition Fund, and if so, when might that happen?

 

I stand by those words: the future of the EU energy mix is decarbonised, and therefore, fossil fuel subsidies eventually need to be phased out. Today, public support should go first and foremost to financing the future of our energy system: energy efficiency, clean energy, smart and integrated networks, etc. However, let me put this into a wider context, as, on this as on many other elements of the energy transition, EU countries do not have the same starting point.

 

First, there is the issue of Member States subsidies. In line with the EU’s international commitments in the G7, G-20 and through the Paris Climate Agreement, the European Commission closely monitors how fossil fuel subsidies evolve. In October, the Commission published for the first time a report on ‘Member States' progress towards phasing out energy subsidies, in particular fossil fuel subsidies’. The report showed that fossil fuel subsidies, amounting to 50 billion euros in 2018, were relatively stable over the past decade. However, between 2015 and 2018 they rose by 6%.

 

As a share of GDP, these subsidies ranged from 1% in Greece to less than 0.1% in Luxembourg (amounting to 0.4% on average). Subsidies to natural gas amounted to €8.8 billion in the EU-27 in 2018. Within the overall figures for fossil fuel subsidies, however, the biggest share is linked to petroleum products (more than the half), and natural gas and coal had a lower share in 2018 (around 17-18% both). The Commission will continue to monitor these figures on an annual basis, and review Member State reporting and plans to phase out fossil fuel subsidies, preparing a guidance on better reporting of subsidies.

 

There is also the issue of EU public support. I am a strong believer in communicating with the general public and making sure that not only is our transition to greener solutions fair, but it also seems fair. You rightly mention the Just Transition Fund as an EU instrument where the issue of public support for natural gas is still on the table. First, I want to recall that the original Commission proposal for the JTF Regulation did not include support to natural gas. In the course of the ongoing negotiations, the European Parliament is seeking to create a small window of opportunity for natural gas, on condition that it is used to accelerate the phase-out of coal. This is because gas will be needed as a bridge fuel in some countries, as the shift from coal to renewables cannot happen overnight. The question is: how much can be financed by the market, and is public support necessary? Of course, we need to make sure that our funds do not benefit what will become stranded assets, nor create strong lock-in effects. It is a delicate question, and it will be up to the co-legislators to strike the right balance.

 

 

The COVID-19 pandemic has hampered growth in the EU renewable energy sector. Looking ahead, what do you think are the keys to getting back on track even stronger?

 

Almost all of the new power generation capacity being built in the EU nowadays is already renewable – mainly solar and wind, of course. While the Covid crisis has severely hit the EU economy, it also demonstrated that our energy systems are already able to function with very high levels of renewables. Provisional figures indicate that the figure may reach 51% for Germany this year.

 

We have also made sure that our recovery efforts are closely aligned with the objectives of the EU Green Deal. This means that a lot of support will be going towards fostering investment in the clean energy sectors. In addition to the already available considerable support from the EU budget and the European Investment Bank, the EU economic recovery package contains measures across the board, including via the future loan guarantee scheme Invest EU, which aims at triggering at least €650 billion in additional investment to boost innovation and job creation in Europe.

 

In parallel, The Commission has identified 3 key initiatives to turn this crisis into an opportunity for the energy sector:

 

  • On building renovation, the Commission’s Renovation Wave initiative, published in October, aims for a faster and deeper renovation, moving the EU towards climate neutral buildings. Such renovation work is labour intensive and would engage local companies, mostly SMEs, across all Member States. It can have immediate impact by boosting the necessary demand and supporting the local supply chains.

  • Second, our Energy System Integration Strategy and the Hydrogen Strategy will improve the resilience of our energy system, unlocking key European clean technologies and value chains. This will trigger new investment, jobs and growth, and strengthen EU industrial leadership at a global level, contributing to the economic recovery. Combined with EU's leadership in renewables technologies, the emergence of a hydrogen value chain serving a multitude of end-use sectors could employ up to 1 million people by 2050, directly and indirectly.

  • Finally, our Offshore Renewable Energy Strategy, published on 19 November, set out a range of measures to further support the vast potential of renewable offshore power. This is a sector where EU companies and technologies are world leaders, and we want to consolidate this leadership and expand to new markets.

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