Secure Our Future: Towards a European Energy Strategy

Issue 2 and Volume 4.

 By Günther Oettinger, Commissioner for Energy, European Commission

Energy is the lifeblood of our society. Our way of life is inconceivable without reliable and affordable supplies of energy: electricity, heat and fuel. Never before has the world needed so much energy: we use almost twice as much as in 1980. If this trend continues, it will be difficult to avoid a major energy crisis, with electricity cuts, petrol or gas shortages.

We cannot afford to wait

The energy challenges are among the greatest tests which Europe has to face. Our economic competitiveness fully depends on a reliable energy supply and the physical availability of energy products and services at the most affordable price. We must also act now to prevent global warming. Simultaneously, there is increasing competition at world level, with emerging powers like India or China demanding a larger share of the world’s energy resources…and investing hugely in new energy technologies. Growing EU dependence on imports from third countries is also a matter of great concern, in particular for oil (85 percent) and gas (65 percent). All these challenges must be addressed and require strong action. The economic recession, the lack of a proper global climate change agreement, fast growing demand for energy in developing countries and the relatively high price of renewable energy technology make our task more difficult.

Over the next 20 years, we need to invest around 1 trillion Euro in energy, whatever happens. If we invest this wisely, we can develop new energy sources, expand supply networks, boost renewable energy use and cut energy consumption significantly. But this requires bold decisions now.

A new strategy for the next decade

Therefore, the European Commission is proposing an ambitious strategy for the coming years which will give real backbone to the single European energy market and “Europeanize” energy policies across the EU. National policies are not sufficient anymore to allow a strong economic recovery and maintain our welfare. Any decision taken by one Member State has an impact on the others. Fragmented markets undermine the security of supply and limit the benefits of a fair competition while our investments for the future will only be profitable and efficient within a continental market. There will be no miracles. We must promote a common energy policy serving our joint policy objectives: competitiveness, sustainability and security of supply.

I see five pillars for action to the benefit of all Member States and citizens.

Focus on energy savings

First, there is a vast amount of untapped potential to save energy, which would save money for individuals and businesses alike. Faced with commitments to reduce drastically our emissions and achieve the objective to increase energy efficiency by 20 percent by 2020, action on energy demand has the most potential with immediate impact for saving energy, reducing waste and maintaining our competitiveness. Estimates show that average energy savings for a household can amount to €1,000 per year. To achieve this, we must develop the best ways to save energy and use energy more efficiently and we must put in place effective tools. To this end, the Commission will propose this year a new Energy Efficiency Action Plan to clarify the energy savings objective and identify innovative solutions for immediate and long-term action, notably in buildings and transport. As a matter of priority we should focus on public authorities who can lead by example and apply energy efficiency criteria in all public procurement of works, services or products.

A single Energy Market

The energy market must be fully integrated. A single European market offers the right scale to assure access to resources and to justify the huge investments which are needed. We should no longer tolerate barriers which impede energy flow within the EU. National borders can threaten the benefits of the single market, the competitiveness of our industry and the supply of basic needs to all our citizens. Fair competition, quality of service and free access must be guaranteed. The full and proper application of EU legislation is a must. But the existence of the adequate infrastructure is a condition sine qua non. It is time energy is given comparable pan-European infrastructure, as other sectors of public interest such as telecommunication and transport have enjoyed for a long time: by 2015, no Member State should be isolated from the European internal market in energy supply. This means that we have to concentrate our efforts on concrete projects necessary to achieve our goals: solidarity, an interconnected market, new power capacities, an “intelligent grid” and large scale production of renewable available to all at competitive prices. We also need to build new import pipelines—such as Nabucco—to diversify and strengthen our gas supply. The EU has a vital role to play to ensure that these investments take place and create the needed leverage to make the investments more attractive.

Citizens first

These efforts should always focus on the impact on citizens. Consumers should benefit from wider choice and take advantage of new opportunities. Energy policies have to be more consumer-friendly and this will require further transparency and information: I would like all tools, like the consumer check list, to be improved and applied more widely. This also implies that all consumers enjoy their right to basic energy needs at all times, including in a supply crisis.

EU energy policy also aims to achieve more transparency, access to better and more information, better functioning of the retail market, development of adequate infrastructure and safety nets for vulnerable consumers. This is in addition to constant efforts for more safety and security in energy production and processing. Today, the EU represents a decisive added-value for all citizens by ensuring that the highest standards are applied in all Member States for nuclear safety and security, offshore oil and gas extraction or the development of new energy technologies. We must keep on track and continue to be vigilant.

Towards a Technological shift

In energy technology, we must consolidate and extend Europe’s lead. I would like to develop a European reference framework in which Member States and regions can maximize their efforts to accelerate market uptake of technologies. Europe has some of the world’s best renewable energy companies and research institutions: we need to keep this leadership. Beyond the implementation of the Strategic Energy Technology Plan, we should launch a few large scale projects with strong European added-value:

  • Smart grids to link the whole electricity grid system to individual households and give better access to renewable sources of energy,
  • Leadership on electricity storage to favor the massive uptake of renewable electricity,
  • Large-scale sustainable biofuel production with a major €9 billion European Industrial Bioenergy initiative to ensure quick uptake of second-generation biofuels,
  • The “smart cities” innovation partnership to promote throughout Europe integrated energy systems at local level and facilitate energy savings.

Strengthening EU leadership

The EU should be a favored partner in international negotiations. The present situation, where external partners can “divide and rule”, is untenable. The EU has the world’s largest regional energy market, 500 million people. It accounts for one-fifth of the world’s energy use. We import on average around 3 million tonnes of oil equivalent every day. The EU is also the world’s biggest economic trading block. We must exploit our geopolitical weight in the world and enjoy the benefits of the Single Market. Every time that the EU has spoken with one voice, for instance in the nuclear international cooperation, it led to results. Europe needs a mechanism to coordinate its efforts and send coherent messages to our main partners. The integration of energy markets with our neighbors is a must which contributes to both our, and their, security. But our international relations must go further and should aim at establishing strategic partnerships with key partners. A common European policy is a strong leverage to strengthen our position in difficult negotiations and secure our international leadership.

Time for action

The global energy system is entering a phase of rapid transition with potentially far-reaching implications for the next decades. The time for action is now. Our 5 pillars strategy paves the way for success in the coming years.

In the next 18 months I will present a number of new European initiatives to deliver our 2020 energy targets and to make our energy systems more secure, sustainable and competitive. The winners will be our citizens and our weight in the world. As Jean Monnet said: “Where there is no vision, people perish”. Our generation must take the opportunity to make of this strategic vision a reality.

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