Energy, EU – Baltic States, Investments, Legislation

Energy has been around humankind all the time: it is used to heat and to cool buildings and homes, transport goods, and – in general – power the economy. But with ageing infrastructure, poorly integrated markets, and uncoordinated policies, European consumers, households and businesses do not benefit from increased choice or from lower energy prices.

The Commission made a new effort to complete the EU single energy market as one of the ten top priorities set out in President Juncker's political guidelines. On 25 February 2015, the European Commission has set out its energy strategy to achieve a resilient energy union with a forward-looking climate change policy.

As Commissioner Miguel Arias Cañete argued, “after decades of delay, we will not miss another opportunity to build an energy union; the Juncker Commission gets the big things right.”

The EU’s energy union: main composition

According to the new strategy, the energy union means in particular:

·                     Solidarity clause: reducing the dependence on single suppliers while fully relying on energy exchange among the EU member states (specifically when confronted with energy supply disruptions). The need for more transparency is underlined when EU countries make deals to buy energy or gas from countries outside the EU;

·                     Energy flows (as if a fifth “basic freedom”): free flow of energy across borders while strictly enforcing the current rules in areas such as energy unbundling and the independence of regulators (taking legal action if needed). Redesigning the electricity market, to be more interconnected, more renewable, and more responsive. Seriously overhauling state interventions in the EU internal market in energy, and phasing out environmentally harmful subsidies.

·                     Energy efficiency first: fundamentally rethinking energy efficiency and treating it as an energy source in its own right so that it can compete on equal terms with generation capacity;

·                     Transition to a lasting low-carbon society: ensuring that locally produced energy – including from renewables – can be absorbed easily and efficiently into the grid; promoting EU technological leadership, through developing the next generation of renewables technology and becoming a leader in electromobility, while European companies expand exports and compete globally.

It is underlined that the new “energy union” shall be favorable to consumers and citizens at large: the prices should be affordable and competitive; energy should be secure and sustainable, with more competition and choice for consumers. Action plan commitments suggest ambitious goals in the EU energy and climate policy.

Commissions’ opinion

Jean-Claude Juncker, Commission President underlined that for too long, energy issues in the EU’s priorities have been exempt from the fundamental freedoms. Current events show, he said, that many Europeans fear they may not have the energy needed to heat their homes. Thus the new energy policy is about the member states acting together, for the long term in order that energy would underpin EU economy to be resilient, reliable, secure, growingly renewable and sustainable.

Maroš Šefčovič, the Vice-President responsible for the Energy Union stressed that the EU had launched the most ambitious European energy project since the Coal and Steel Community; a project that will integrate 28 European energy markets into one Energy Union, making EU less energy dependent and give the predictability in creating jobs and growth.

He underlined that the EU set in motion a fundamental transition towards a low-carbon and climate-friendly economy, towards an Energy Union that puts citizens first, by offering them more affordable, secure, and sustainable energy. Together with all other EU institutions, with the support of the entire Commission and the member states the Energy Union will turn into reality, he added.

Miguel Arias Cañete, Commissioner for Climate Action and Energy said that the Commission had set the course for a connected, integrated and secure energy market in Europe. However, he added, the common path to real energy security and climate protection begins in the member states. That's why the Commission will focus on building common energy market, saving more energy, expanding renewables, and diversifying energy supply.

Key energy market figures

·                     The EU is the largest energy importer in the world, importing 53% of its energy, at an annual cost of around €400 billion.

·                     12 EU states do not meet the EU's minimum interconnection target (Cyprus, Estonia, Ireland, Italy, Lithuania, Latvia, Malta, Poland, Portugal, Romania, Spain and the UK); it means that at least 10% of installed electricity production capacity be able to "cross borders". The EU has listed 137 electricity projects, including 35 on electricity interconnection; if implemented, these projects could reduce the above figure from 12 down to 2 member states.

·                     An appropriately interconnected European energy grid could save consumers up to €40 billion a year.

·                     6 EU Member States are dependent on one single external supplier for all their gas imports: Bulgaria, Estonia, Finland, Latvia, Lithuania and Slovakia;

·                     75% of the EU’s housing stock is energy inefficient; 94% percent of transport relies on oil products, of which 90% is imported.

·                     Over €1 trillion needs to be invested into the EU energy sector by 2020 alone.

·                     Wholesale electricity prices in Europe are 30% higher, and wholesale gas prices over 100% higher, than in the US.

·                     European renewable energy businesses have a combined annual turnover of €129 billion, employing over a million people. The challenge is to retain Europe's leading role in global investment in renewable energy.

·                     EU greenhouse gas emissions fell 18% in the period 1990-2011.

·                     By 2030, the EU aims to cut greenhouse gas emissions by at least 40%, boost renewable energy by at least 27%, and improve energy efficiency by at least 27%.

Main EU agreement points on energy & climate

·                     A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy. This sets out, in five interrelated policy dimensions, the goals of an energy union – and the detailed steps the Commission will take to achieve it, including new legislation to redesign and overhaul the electricity market, ensuring more transparency in gas contracts, substantially developing regional cooperation as an important step towards an integrated market, with a stronger regulated framework, new legislation to ensure the supply for electricity and gas, increased EU funding for energy efficiency or a new renewables energy package, focusing European R&I energy strategy and reporting annually on the 'State of the Energy Union', etc.

·                     An Interconnection Communication, setting out the measures needed to achieve the target of 10% electricity interconnection by 2020, which is the minimum necessary for the electricity to flow and be traded among EU states. It shows which projects are necessary to close the gap by 2020.

·                     A Communication setting out a vision for a global climate agreement in Paris in December 2015. The vision is for a transparent, dynamic and legally binding global agreement with fair and ambitious commitments from all parties. The Communication also translates the decisions taken at the European Summit in October 2014 into the EU's proposed emissions reduction target (the so-called Intended Nationally Determined Contribution, or INDC) for the new agreement.

More information about Energy Union:

= Commission Website;

= Fact Sheet: Energy Union in:  

http://europa.eu/rapid/press-release_MEMO-15-4485_en.htm;

= Fact Sheet: Connecting power markets to deliver security of supply, market integration and the large-scale uptake of renewables;

= Fact Sheet: Questions and Answers on the European Commission Communication: The Paris Protocol – A blueprint for tackling global climate change beyond 2020.

= http://europa.eu/rapid/press-release_IP-15-4497_en.htm