Energy, EU – Baltic States, Investments, Legislation

In his speech at Tatra Summit in Bratislava (13 November 2014) called “Towards a more powerful EU: rebalancing the EU architecture”, newly elected Commission Vice-President Maroš Šefčovič (responsible for energy union), underlined the perspectives for a more efficient “EU architecture”.

Time´s accelerating

The pace of change is accelerating, and not necessarily in a negative way, though external changes are a source of uncertainty but also major reform catalyst.

For example, looking back more than twenty five years ago, Europe is united in EU-28 states; people are used to live in prosperous, free and secure region. Looking back ten years ago, there were EU-15 members waiting for enlargement with Central and Eastern European states. This integration has led to a European Union with four basic freedoms, with the euro zone encircling 19 states from 2015.  

Looking back six years ago: Europe was entering worst economic and financial crisis since the Great Depression. Many speculators predicted the Greece-exit and the implosion of the euro. Some were even prompt to announce the collapse of the EU. The EU was able to pull its sources to keep Greece in the euro zone and the euro on its sail; it also managed to reform EU economic governance by putting into place a banking union, a fiscal union and an economic union.

Hopefully, looking ahead in five years, it is possible to get over economic crisis, pick up from a fragile recovery, very high levels of unemployment in some states and increase citizens' trust in political institutions. Thanks to the EU’s resolute collective action, argued vice-president, EU-28 was able to consolidate sustainable growth, boost jobs and progressively regain citizens' confidence.

Making a more powerful Europe

The following measures are deemed important according to Commission Vice-President Maroš Šefčovič; first direction is the democratic dimension and a starting point is through greater citizens' involvement.

In May 2014, for the first time in the history of integration, EU citizens got to vote for the frontrunners of the main European political parties. And, upon proposal by the European Council, the European Parliament elected Jean-Claude Juncker, the frontrunner from the party with most votes in the assembly. For the first time, a direct link has been established between electors' choice and the proposal of President of the Commission.

This procedure (it could be improved) for a newly elected President Jean-Claude Juncker has shown a major breakthrough in terms of democratic legitimacy.

As to the European public attitude, some signs are encouraging: in July 2014, Eurobarometer showed that the number of citizens who felt that their voice counted in the EU had risen from 29% to 42% - the highest level in ten years.

Consolidating the results achieved

Second direction is the decision-making legitimacy: ownership of decisions taken in Brussels shall be increase. The EU decisions are taken collectively, by the European Parliament and the Council, in most cases on the basis of a proposal from the Commission.

However, very often the national politicians are blaming "Brussels" for unpopular decisions to which they have principally agreed. Truly, decisions may be taken in Brussels, but they are not made by Brussels: they are made by EU institutions, national governments, parliaments, acting together.

Therefore national leaders need to take responsibility vis-à-vis their national constituencies for the decisions they themselves take in Brussels. The mass media, including the social media, also play a defining role in communicating EU decisions to the citizens and politicians need to reflect on how best to implement them.

In rebuilding trust in EU politics, the new European Commission has proposed a rebalancing act to the other EU institutions, the Member States and the citizens of Europe. To a great extent, this rebalancing concerns EU priorities, governance, powers and the Commission’s structures.

Rebalancing priorities: investing in the people

The number-one priority for this Commission is to get people back to work. President Juncker was quite clear about this in his first address as President-elect to the European Parliament.

To do this, structural reforms and fiscal responsibility is simply not enough; the EU also needs to stimulate demand and investment to restore growth and jobs in Europe.

The President has thus proposed a rebalancing to shift the focus of attention from austerity to investment.

Before the end of 2014, the Commission will launch an ambitious "jobs, growth and investment" package to mobilise up to €300 billion in additional public and private investments in the real economy over the next three years. These investments should ensure high economic and social returns.

What is important: the social dimension is being put back at the core of the European project thus any Commission proposal will be assessed on its social impact. Commission will look also very carefully at the social – not only economic - impact of the corporate social responsibility, CSR or any future conditional stability support programs for euro area countries, to seek a balanced approach.

Rebalancing the governance: joint ownership

In issues of collective decision-making, the human or social dimension goes hand in hand with making sure that the agenda decided in Brussels goes to the member states. This means reforming the legitimacy, the transparency and the effectiveness of the governance of the European semester by promoting joint ownership of decisions taken in Brussels. There is a need for a broader range of actors, reaching out to national governments, national parliaments and social partners.

Latvian Commissioner, Valdis Dombrovskis is Vice-President for both the euro and social dialogue. His task is to steer social dialogue and engage with social partners at EU level on all aspects of interest for delivery of these priorities.

National governments and parliaments also need to be better involved in the decision-making in order to adjust the governance system with the progressive co-ownership of the decisions taken. This means reinforced upstream dialogue to ensure stronger support and thus implementation downstream.

All Commissioners will be politically active in the member states, in dialogue with the national parliaments and the citizens, presenting the EU agenda, its main proposals, listening to concerns and ideas and engaging with the main stakeholders. Vise-president underlined that without the involvement and support of these actors, the important reform agenda decided in Brussels would just stay in Brussels. The need is to bring Brussels decision-making closer to the citizens. As mentioned by President Juncker, there is a need to review the decision-making procedures to have a more legitimate and democratically accountable structure.

Rebalancing of powers: subsidiarity

However, not everything should be decided in Brussels; as President Juncker recalled, “we want a European Union that is bigger and more ambitious on big things and smaller and more modest on small things".

Everything that is not a priority policy on which this Commission aims to deliver concrete results will be left to the member states who are more legitimate and better equipped to give effective policy responses at national, regional and local level, in line with the subsidiarity principle.

Rebalancing Commission’s structures: the project teams

To deliver on these new priorities, the Commission is organised around project teams lead by Vice-Presidents; such organisation is quite original for the EU’s political structure.

The objective is to break down silos and create synergies by steering and coordinating the work of a number of Commissioners in priority areas or projects such as jobs, growth, investement, a deeper and fairer EMU, a connected digital single market or a resilient Energy Union. Strong cooperation will be needed both within each project and also between projects.

The major investment package under preparation, for instance, will rely extensively on the completion of the Energy Union. Not only will the focus of this package be notably on energy infrastructures, renewable energy and energy efficiency, but private investments will also need the right incentives through the completion of the single energy market and removal of remaining obstacles.

The Energy Union

The Energy Union is an area with great potential on the impact on the life of citizens who – through their energy bills – pay a high price for our dependency. Building the Energy Union is one of the most pressing challenges of this Commission.

In this field, more than any other, time is accelerating. Geopolitical events - notably in Ukraine and Russia, the worldwide energy competition and the impact of climate change are triggering a "mind switch" in terms of EU energy and climate strategy: momentum is thus building up for the Energy Union like never before, argued Vice-President.

Future European Energy Union will be based on five pillars.  

First pillar: security, solidarity and trust. As to security of supply: the EU currently imports 53% of its energy at a cost of more than €400 billion a year. Vice-President said that the EU was the biggest energy customer in the world but the EU should stop thinking of markets as national territories: integration is needed. For example, the EU needs to explore common purchasing of gas, to diversify energy sources and routes, and reduce the high energy dependency on several of EU member states.

Then solidarity: the member states should be ready to help and stand for each other; solidarity is key to securing gas supplies.

Trust means increased transparency as to how member states are negotiating with third countries’ suppliers. The Commission should be involved in these negotiations. Similarly, no member state should modify its energy system without prior consultation of its partners as this may have huge consequences for their systems.

Second pillar is based on completing the internal market for energy. A fully functioning, transparent and competitive energy market is the backbone of the European Energy Union. It will bring real benefits to both households – in particular the most vulnerable ones – through affordable energy prices – and the industry – through more competitiveness. The Third energy package must be fully implemented and applied through strict monitoring and assistance to the states which experience difficulties.

This should be supplemented by adequate energy infrastructure with good interconnections, in particular to integrate renewables into the grid and to unlock energy islands. All EU structural funds, joint investments and the Commission’s upcoming investment package will contribute to the financing of these energy infrastructure projects.

Generally, the EU will need to pool resources, combine infrastructures, and unite negotiating power vis-à-vis third countries.

Third pillar is based on moderation of demand. The Commission will proceed in the direction of substantially reducing households and industry´s energy bills. The key to moderating energy demand is to substantially improve energy efficiency. This concerns for instance the heating and cooling of buildings: new technologies exist and they have to be applied and expanded with solidarity mechanisms and joint funding when needed.

Without an ambitious energy efficiency policy especially in priority areas such as buildings, transports and products the Energy Union will not be complete. This is indispensable both to increase EU’s energy security and to enhance the competitiveness of European industry.

Fourth pillar is the decarbonisation of the EU energy mix. The Commission managed to find an ambitious agreement in October 2014 at the European Council on EU-2030 objectives. This breakthrough generates political momentum, showing that Europe is in a position to lead the global negotiations on climate change agreement in Paris in 2015.

Fifth pillar is based on research and innovation which is crucial to support energy projects. As part of the EU-2020 strategy, the member states need to step up their efforts to bring new high performance, low-cost, low-carbon energy technologies to the market.

Basically, the momentum is building up for a resilient Energy Union with a forward-looking climate change policy. The EU should put an end to energy dependence and enhance competitiveness, which will guarantee access to energy that is at the same time affordable, secure and sustainable.

Reference: European Commission, Speech “Towards a more powerful EU: rebalancing the EU architecture” by the Commission Vice-President Maroš Šefčovič, Tatra Summit, Bratislava, 13 November 2014. In:

http://europa.eu/rapid/press-release_SPEECH-14-1684_en.htm?locale=en