Piece by piece, the European Union is putting its puzzle together to create a mutually beneficial reality for all member states of the Union. One of those puzzle pieces is the Energy Union. On the 28th of November 2017, the parliament will have a first reading of a legislative document dealing with the governance of the ‘Energy Union’. The purpose of this piece of legislation is “to set out the necessary legislative foundation for a reliable and transparent governance that ensures the achievement of the objectives and targets of the Energy Union.”
The Sum of its Parts
For the Energy Union, this is an essential piece of legislation. However, what is the Energy Union exactly? What is its purpose, its opportunities and what does it mean for the citizens and the industry of the European Union?
The Energy Union is part of a larger EU-strategy to modernise our economy. Its story starts with Donald Tusk who – as prime minister of Poland – introduced the idea of an Energy Union. The council-members appreciated this input, and on the 25th of February, the Commission published the “Energy Union Package.” This document recognised five different and closely interrelated dimensions that would update and improve our energy sector:
- Energy security, solidarity and trust;
- A fully integrated European energy market;
- Energy efficiency contributing to moderation of demand;
- Decarbonising the economy, and
- Research, Innovation and Competitiveness
This package was official introduced on the 19th of March 2015 by the President of the European Commission, Jean-Claude Juncker. In his presentation, he highlighted what the possible opportunities could be for an interconnected Union as well as putting the emphasis on the high price we as EU citizens pay for our energy as well as the importance of green and sustainable energy.
In support of the Energy Union, and to provide a legislative framework to facilitate a clean energy transition, the ‘Clean Energy for All Europeans’ package was officially communicated on the 30th of November 2016. This package aims at making the Energy Union a possibility through eight supportive legislation:
- Energy Efficiency [Com(2016) 761] read more
- Energy Performance of Buildings [Com(2016) 765] read more
- Renewable Energy [Com(2016) 767] read more
- Governance of the Energy Union [Com(2016) 759] read more
- The Electricity Directive [Com(2016) 864] read more
- Electivity Regulation [Com(2016) 861] read more
- Risk Preparedness [Com(2016) 862] read more
- Rules of Regulator ACER [Com(2016) 863] read more
These eight supportive legislations are accompanied by five other ‘communications’. For more information, follow this link
Governance of the Energy Union
As mentioned in the introduction, the EU hopes with this legislation to create a strong governance that ensures that policies and measures at governmental levels (local, regional or national) are sufficient, enforce each other and are comprehensible. The aim is that this initiative is accompanied by other non-legislative measures and actions.
David Buchan notes for EURactiv, “The Commission will need some new power to supervise member states’ performance in renewables and energy efficiency. ACER needs to be given more power over the European networks of transmission system operators [ENTSOE, for electricity, and ENTSOG, for gas],” emphasising the importance of the governance of the Energy Union.
A simple blogpost can hardly encapsulate the possibilities and significances of the Energy Union on the European energy market. Nonetheless, we wish to give a hint of the Energy Union’s potential as well as confer to the industry the subtle hint to stay on top of their EU game.
The often-mentioned catalyst for the Energy Union was the realisation how dependent the Union is on Russian gas. A few years ago, Russia stopped transporting gas to Europe after it got into conflict over unpaid debts with Ukraine. This result was that some members of the Union were completely cut off. A second, and perhaps more cited argument is that the European Union wishes to positively contribute to fighting climate change.
It will also give the Union an important edge when it comes to international trade. All member states combined pay around €400 billion every year on energy import. This makes us the largest energy importer in the world. It would be to our advantage if we can drastically reduce this number. Moreover, since the majority of the member states rely on a select amount of suppliers, it leaves them open for political pressure (as mentioned above: 6 EU Member States are dependent on one single external supplier for all their gas imports).
Europe will also have the opportunity to modernise its ageing energy infrastructure. By working together, sharing expertise and knowledge, we can lay the foundation of a Europe-wide, green and modern, future-proof energy infrastructure. Clean energy also means less polluting our air, water and soil and improve the liveability of our urban centres. Moreover, by investing and pooling resources together, Europe could become the patent leader in new and sustainable technologies.
It will also create a positive environment were the various research departments of the member states cooperate to create durable and green solutions. These kind of collaborations could set a positive precedent, and encourage future partnerships on subjects such as medicine, infrastructure, transport, smart-cities etc.
Perhaps the best news for the ordinary European citizen however is the expected decreased costs and increased choice of who their energy suppliers will be. This is imperative considering wholesale electricity prices in Europe are 30% higher, and wholesale gas prices over 100% higher, than in the US.
summarised in a list, the advantages of a functioning Energy Union are:
- Fighting climate change (EU wishes to reduce our greenhouse gas emissions by 40% in 2030 compared to 1990)
- International trade advantage (Reduce the 400 billion a year spend on energy import)
- Make the EU less (politically) dependent on external suppliers (The oil and gas industry is controlled by a limited group of countries)
- Improve cleanliness of our water, soil and air
- Become patent leader concerning clean, green and sustainable technologies
- Modernise Europe’s ageing energy-infrastructure
- Encourage cooperation between member states
- Reduce price and increase choice for EU citizens
- create job-growth (The EU expects this plan will create 900 000 jobs)
- Increase our economic growth (There is potential EU-wide growth of 1% in GDP over a decade)
- Allow energy sharing through an interconnected grid (Belgium consumers could make use of Romanian mountains to create wind energy)
- Digitalise and modernise our infrastructure to more efficiently make use of renewable energy
On the introduction of the “Clean Energy for All” package, Commissioner for Climate Action and Energy Miguel Arias Cañete said:
“Our proposals provide a strong market pull for new technologies, set the right conditions for investors, empower consumers, make energy markets work better and help us meet our climate targets. I’m particularly proud of the binding 30% energy efficiency target, as it will reduce our dependency on energy imports, create jobs and cut more emissions. Europe is on the brink of a clean energy revolution. And just as we did in Paris, we can only get this right if we work together. With these proposals, the Commission has cleared the way to a more competitive, modern and cleaner energy system. Now we count on European the Parliament and our Member States to make it a reality.”
However, it is up to our private enterprises to transition from an industry – still largely based on fossil fuels – to one that meets the 2030 and 2050 EU goals. How this transition will evolve depends largely on the legislative framework that the EU produces, and how the multiple enterprises incorporate said legislation.
*all figures are taken from the European Commission’s website