2015 could be the year in which Europe fundamentally changes the way it thinks energy and climate policy. In a new discussion paper from E3G and our partners Cambridge Institute for Sustainability Leadership and the European Climate Foundation, we explain why the Energy Union is a unique defining political moment for Europe. In it, we set out six core principles to deliver a secure, competitive and decarbonised energy system, summarised here:
1. Clear and consistent long term goals
Europe’s energy and climate strategies must be complementary, not contradictory.
- Long term and consistent goals should be set out in order to ensure the Energy Union’s focus on affordable, secure and green energy. All investments and policies as part of the Energy Union should be fully consistent with the EU’s climate goals.
- The Energy Union should include a regulatory strategy and glide-path for phasing out unabated coal, including measures to ensure security is maintained.
- Metrics for affordability and security should be redefined as part of the EU’s new governance framework, with specific indicators developed for macroeconomic resilience to fuel price shocks, unit energy costs for industry, and measures of fuel poverty and differentials in consumer purchasing power for energy within Europe
2. Securing investment
EU security depends on access to finance and clean technology, not just fuels.
- A European energy investment strategy should be produced to ensure the Capital Markets Union and Investment Plan for Europe are designed to deliver the investment needs of the Energy Union, and to establish criteria to prevent publicly-backed investment from being mis-spent on projects that run counter to Europe’s energy and climate security goals.
- Prioritise structural reform and liberalisation of EU energy efficiency markets to create a more open and competitive EU-wide market for energy efficiency services, efficient construction products and components.
- The Energy Union investment agenda should focus on scaling-up low cost citizen finance sources as well as institutional investment from large asset holders such as pension funds.
3. Integrated infrastructures
Investment choices should look beyond outdated barriers between energy systems.
- A new package of measures should be developed to kick start new markets in smarter demand services and technologies across Europe, ensure demand-side resources are enabled to compete on a fair and equivalent basis to the supply side, and make sure that the requisite enabling data and energy infrastructure is delivered.
- The Energy Union should accelerate the timely delivery of cross-border electricity infrastructure and market integration, including regional platforms for cooperation as a stepping stone to fully integrated European power markets.
- Europe should put in place more ambitious strategies for electrification of transport and heat and for smarter mobility, which are designed to maximise the cost-effective reduction in EU exposure to imported fossil fuels as well as reduce CO2 and other harmful emissions.
4. Energy system resilience
Explicit stress-testing and stronger governance can improve EU resilience to risk.
- The EU’s energy systems and policies need to be stress tested against a range of risks. The EU and member states should develop shared horizon-scanning assessments of potential risks to delivery of EU and member state energy and climate objectives, drawing on a full range of scientific, economic, security, foreign policy, and technological expertise. This should be incorporated into the new governance system as part of the 2030 climate and energy framework.
5. Responsibilities as well as rights
Cross-border solidarity should be matched by effective management of energy demand.
- Access to EU energy funding for supply side or import infrastructure investment should be made conditional on fulfilling agreed demand side goals.
- The Energy Union should be built on an ‘Efficiency First’ approach, which prioritises lower-cost demand-side measures ahead of supply-side interventions.
- Improving the efficiency of space heating in existing buildings should be an early priority for the Energy Union.
6. A neighbourhood and global perspective
Like energy systems themselves, an Energy Union must go beyond European borders.
- Access to the Energy Union should be opened to the Energy Community, Turkey and other neighbourhood countries, and should include a strategy for co-development of renewables, storage and energy efficiency in Europe’s neighbourhood.
- Europe should implement a clean technology diplomatic strategy for engagement with consumer countries, focused on cost reductions through development of global supply chains, open trade and coordinated research and innovation.