Annexes to COM(2015)80 - Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2015)80 - Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy. |
|---|---|
| document | COM(2015)80  |
| date | February 25, 2015 |
As part of a revitalised European energy and climate diplomacy, the EU will use all its foreign policy instruments to establish strategic energy partnerships with increasingly important producing and transit countries or regions such as Algeria and Turkey; Azerbaijan and Turkmenistan; the Middle East; Africa and other potential suppliers.
The EU will further develop its partnership with Norway, the EU's second largest supplier of crude oil and natural gas. The EU will continue to integrate Norway fully into its internal energy policies. The EU will also develop its partnerships with countries such as the United States and Canada.
When the conditions are right, the EU will consider reframing the energy relationship with Russia based on a level playing field in terms of market opening, fair competition, environmental protection and safety, for the mutual benefit of both sides.
Particular attention will be paid to upgrading the Strategic Partnership on energy with Ukraine. This will address issues related to Ukraine's importance as a transit country as well as those related to Ukraine's energy market reforms, such as the upgrade of its gas network, the setting up of an appropriate regulatory framework for the electricity market and increasing energy efficiency in Ukraine as a means of reducing its dependence on imported energy.
In our immediate neighbourhood, the Commission will propose to strengthen the Energy Community, ensuring effective implementation of the EU's energy, environment and competition acquis, energy market reforms and incentivising investments in the energy sector. The goal is closer integration of the EU and Energy Community energy markets. The energy relationships with the European Neighbourhood Partnership (ENP) countries will be considered in the ongoing ENP review.
More transparency on gas supply
An important element in ensuring energy (and in particular gas) security is full compliance of agreements related to the buying of energy from third countries with EU law. Such compliance checks for Intergovernmental Agreements (IGAs) and related commercial agreements based on the relevant Decision[14] are currently carried out after a Member State and a third country have concluded an agreement. In practice, we have seen that renegotiating such agreements is very difficult. The positions of the signatories have already been fixed, which creates political pressure not to change any aspect of the agreement. In future, the Commission should be informed about the negotiation of intergovernmental agreements from an early stage, so that a better ex ante assessment of IGA's compatibility with internal market rules and security of supply criteria is ensured. Commission participation in such negotiations with third countries and a move towards standard contract clauses could also more effectively avoid undue pressure and ensure respect of European rules. Therefore, the Commission will review the Intergovernmental Agreements Decision and will propose options to ensure that the EU speaks with one voice in negotiations with third countries.
In the context of the review of the Security of Gas Supply Regulation, the Commission will also propose to ensure appropriate transparency of commercial gas supply contracts that may have an impact on EU energy security, while safeguarding the confidentiality of sensitive information.
2.2. A fully-integrated internal energy market
Despite progress made in recent years, Europe’s energy system is still underperforming. The current market design does not lead to sufficient investments, market concentration and weak competition remain an issue and the European energy landscape is still too fragmented. We have to give a new political boost to completing the internal energy market.
The internal market’s hardware: connecting markets through interconnections
At this moment, the European electricity and gas transmission systems, notably cross-border connections, are not sufficient to make the internal energy market work properly and to link the remaining energy islands to the main electricity and gas network.
Work on infrastructure projects has accelerated in recent years, even more so in light of recent events at the European Union’s Eastern border. In 2013, the European Union identified 248 energy infrastructure Projects of Common Interest (PCIs). The list will be reviewed and up-dated later this year and then again every other year.[15] In 2014, the European Energy Security Strategy identified 33 infrastructure projects which are essential to improve security of supply and better connect energy markets.
A specific minimum interconnection target has been set for electricity at 10% of installed electricity production capacity of the Member States, which should be achieved by 2020. The necessary measures to achieve this 10% target are set out in the Commission Communication presented with this Energy Union Strategic Framework. In 2016, the Commission will report on the necessary measures to reach a 15% target by 2030.
The transition towards a more secure and sustainable energy system will require major investments in generation, networks and energy efficiency, estimated at some € 200 billion annually in the next decade.[16] While the private sector will bear the costs of much of these investments, access to financing will be key. Today, the European Investment Bank, the Connecting Europe Facility and financing under the European Structural and Investment Funds already provide the means. Moreover, the proposed European Fund for Strategic Investments will provide additional support, hence, further facilitating access to finance for projects of European significance such as in energy networks, renewable energy and energy efficiency. The Commission will explore proposals for energy investment regimes that pool resources to finance economically viable investments, avoiding market distortion and fragmentation.
Investors can draw on the Investment Portal being set up as part of the European Fund for Strategic Investments that is designed to boost the transparency of the EU investment project pipeline to make information accessible to potential investors. The Commission will also bring together information on infrastructure projects funded by the Connecting Europe Facility and EU Cohesion Policy Funds, to bring more coherence in the wide array of existing funding schemes and maximise their impact.
The Commission will regularly take stock of the implementation of major infrastructure projects which contribute to the Energy Union, in particular in the framework of the PCI follow-up. As part of this stock-taking exercise, it will make an annual report on the progress to reach the 10% electricity interconnection target with a specific focus on the implementation of the regional action plans. Finally, the Commission will also convene a dedicated Energy Infrastructure Forum where progress should be discussed with the Member States, relevant regional cooperation groups as well as with EU institutions. It will meet for the first time in late 2015.
Implementing and upgrading the internal energy market’s software
Full implementation and strict enforcement of existing energy and related legislation is the first priority to establish the Energy Union. There is no point in developing new policies and approaches on weak foundations.
The Commission will use all available policy instruments in this regard and will insist that Member States fully implement and enforce the 3rd Internal Energy Market Package, in particular as regards unbundling and the independence of regulators. Certain ex-ante conditions must be met so that the European Structural and Investment Funds can be used for co-financing energy investments. This will help to ensure compliance with EU energy legislation.
Strict enforcement of the Treaty's competition rules will help to prevent companies from distorting the internal energy market. Antitrust enforcement will ensure that energy can flow freely by addressing territorial restrictions in supply contracts as well as upstream/downstream and network foreclosure issues (including interconnectors). The Commission will also assess – through competition law enforcement – the evolution and formation of energy prices.
A well-functioning internal energy market needs an effective regulatory framework. The 3rd Internal Energy Market Package set up bodies to ensure cooperation among transmission system operators and regulators. In the context of the market design discussion, the functioning of these bodies will be strengthened. Currently decisions in these bodies still reflect national views.
Transmission system operation will need to become much more integrated to meet the challenges of the transformed energy system. The European Networks of Transmission System Operators for Electricity and Gas (ENTSO-E/G), which were also set-up by the 3rd Internal Energy Market Package, need to be upgraded to fulfil such a role. Regional operational centres will have to be created, so that they can effectively plan and manage cross-border electricity and gas flows.
The Agency for Cooperation of Energy Regulators (ACER) was established by the 3rd Internal Energy Market Package to assist national regulators, in particular on cross-border issues. However, ACER currently acts primarily through recommendations and opinions. It has very limited decision-making rights, e.g. it can only take decisions at the request of the national regulators or if they fail to take a decision within a certain timeframe. EU-wide regulation of the single market should be strengthened, through a significant reinforcement of the powers and independence of ACER to carry out regulatory functions at the European level in order to enable it to effectively oversee the development of the internal energy market and the related market rules as well as to deal with all cross-border issues necessary to create a seamless internal market.[17]
The 3rd Internal Energy Market Package also provided for the adoption of network codes in order to help harmonise the flow of electricity and gas across different transmission systems. This work has to be completed to ensure a better functioning of cross-border energy markets.
Market integration of renewable electricity generation requires flexible markets, both on the supply and demand side, within and beyond a Member State's borders. Electricity grids must therefore evolve significantly. There is a need to expand the possibilities for distributed generation and demand-side management, including intraday markets, to develop new high-voltage long distance connections (supergrids) and new storage technologies.
The Commission will prepare an ambitious legislative proposal to redesign the electricity market and linking wholesale and retail. This will increase security of supply and ensure that the electricity market will be better adapted to the energy transition which will bring in a multitude of new producers, in particular of renewable energy sources, as well as enable full participation of consumers in the market notably through demand response. Closer integration, including on a regional level, more cross-border trade and the development of both short and long term markets with effective price formation will deliver the right investment signals as well as the necessary flexibility to allow market integration of new generation sources.
A fully functioning internal energy market, providing efficient investment signals, is the best means to reduce the need for capacity mechanisms. The Commission has already set out guidance[18] and rules[19] to limit the detrimental effects of badly-designed, fragmented and uncoordinated public interventions. However, effective application of this guidance can only be a first step to ensure that divergent national market arrangements, such as capacity mechanisms and uncoordinated renewables support schemes become more compatible with the internal market.[20] Even though in some cases required and justified to address market failures, some forms of public intervention have had a serious negative impact on the effective functioning of the internal energy market. The Commission will work together with Member States to ensure that capacity mechanisms and support for renewable electricity are fully in line with existing rules and do not distort the internal energy market. Environmentally harmful subsidies need to be phased out altogether.[21] A reformed Emission Trading System will also play an important role in setting the right investment signals.
Finally, the Commission will ensure greater transparency in the composition of energy costs and prices by developing regular and detailed monitoring and reporting, including on impacts of energy costs and prices on competitiveness. Particular attention will be paid to public interventions such as regulated tariffs, energy taxation policies and the level of public support, as well as their impact on pricing mechanisms, including electricity tariff deficits.
Enhanced regional cooperation within a common EU framework
In an Energy Union, Member States must coordinate and cooperate with their neighbours when developing their energy policies.
Technical implementation of the different elements of our Energy Union strategy will be very complex. Some elements, such as new market arrangements for short term markets in gas and electricity or integrating the operations of transmission system operators should be developed and implemented at regional level as a step towards full EU-wide market integration. Existing arrangements such as the Pentalateral Energy Forum or the Baltic Energy Market Interconnection Plan (BEMIP) are initiatives on which to build further. Successes in these regions should act as a catalyst for other regions. The Commission will ensure that all regional initiatives evolve in a coherent way and lead towards a fully integrated Single Energy Market.
Given its particular vulnerability, there is a need to improve cooperation, solidarity and trust in the Central and South-Eastern part of Europe. Dedicated cooperation arrangements would help to accelerate the better integration of these markets into the wider European energy market which would improve the liquidity and resilience of the energy system and would allow full use of the region's energy efficiency and renewable energy potential. The Commission will take concrete initiatives in this regard as an urgent priority.
For the Northern and Baltic Seas, the Commission will work with Member States and industry on delivering cost-reduction to these offshore energy systems.
A new deal for consumers
In an Energy Union, consumers in one Member State should be able to make informed choices and buy their energy freely and simply from a company in another Member State. This requires the further adaptation of the current national regulatory frameworks since the vast majority of European households remain passive consumers. In some Member States consumers have a limited choice of suppliers and switching between suppliers is relatively cumbersome.
In order to empower consumers, Member States and their authorities need to fully implement and enforce existing European rules, including consumer protection rules. Necessary support measures should be undertaken also by regional and local authorities, so that consumers have understandable, readily-accessible information, user-friendly tools, and financial incentives for saving energy.
Smart technologies will help consumers and energy service companies working for them to reap the opportunities available on the energy market by taking control of their energy consumption (and possible self-production). This will deliver more flexibility in the market and potentially reduce consumer bills.
The Commission will continue to push for standardisation and to support the national roll-out of smart meters[22] and to promote the further development of smart appliances and smart grids, so that flexible energy use is rewarded. It will develop synergies between the Energy Union and the Digital Single Market agenda and take measures to ensure privacy protection and cyber-security.
However, this will only work if market prices send the right signals. In a number of Member States, regulated tariffs still limit the development of effective competition, which discourages investments and the emergence of new market players. Regulated end-user prices are often used to protect households or even non-household customers from increases in energy costs. The impact of such measures falls on non-regulated customers, on electricity companies and/or public finances, where electricity tariff deficits are incurred. However, in the long run, these measures harm the interests of the consumers they are meant to help. The Commission will seek the phasing-out of below cost regulated prices through the competition and economic governance frameworks. It will also encourage Member States to establish a road map for the phasing-out of all regulated prices.
Protecting vulnerable consumers
Energy poverty negatively affects living conditions and health. It has many causes, mostly resulting from a combination of low income and general poverty conditions, inefficient homes and a housing tenure system that fails to encourage energy efficiency. Energy poverty can only be tackled by a combination of measures, mainly in the social field and within the competence of authorities on the national, regional or local levels. When phasing out regulated prices, Member States need to propose a mechanism to protect vulnerable consumers, which could preferably be provided through the general welfare system. If provided through the energy market, it could be implemented through schemes such as a solidarity tariff or as a discount on energy bills. The cost of such schemes needs to be covered by non-eligible consumers collectively. Hence, it is important that such a system is well targeted to keep overall costs low and to limit the distortions deriving from regulated prices (e.g. not increase further tariff deficits in Member States).
2.3. Energy efficiency as a contribution to the moderation of energy demand
The European Council set in October 2014 an indicative target at the EU level of at least 27% for improving energy efficiency in 2030. This will be reviewed by 2020, having in mind an EU level of 30%. It is in this context necessary to fundamentally rethink energy efficiency and treat it as an energy source in its own right, representing the value of energy saved. As part of the market design review, the Commission will ensure that energy efficiency and demand side response can compete on equal terms with generation capacity.
Most of the work has to be done at national, regional and local level, but the Commission can play a strong role creating the appropriate framework for progress. The Commission will, therefore, encourage Member States to give energy efficiency primary consideration in their policies.
The EU has already put in place the world's leading set of measures to become more efficient in our energy consumption. Through energy labelling and ecodesign legislation, consumers can make informed energy consumption choices. While all economic sectors must take steps to increase the efficiency of their energy consumption, the Commission will pay special attention to those sectors with a huge energy efficiency potential, in particular the transport and buildings sector. The Commission will further establish synergies between energy efficiency policies, resource efficiency policies and the circular economy. This will include exploiting the potential of "waste to energy".
Increasing energy efficiency in the buildings sector
Heating and cooling is the largest single source of energy demand in Europe and the majority of Europe’s gas imports are used for these purposes. Huge efficiency gains remain to be captured with regard to district heating and cooling, which will be addressed in a Commission strategy.
Actions by Member States, particularly at the local and regional levels, are needed to exploit the energy efficiency potential of buildings. Attracting investments at the scale needed remains a challenge, especially at the local level, mainly due to lack of awareness and expertise in small-scale financing. The Commission will support ways to simplify access to existing financing and offer ‘off-the-shelf’ financing templates for financial instruments to the European Structural and Investment Funds managing authorities and interested stakeholders, promote new financing schemes based on risk and revenue sharing, develop new financing techniques and support in terms of technical assistance. Financial support needs to be combined with technical support to help aggregate small-scale projects into larger programmes which can drive down transaction costs and attract the private sector at scale.
The work of the Smart Cities and Communities-initiatives as well as to the Covenant of Mayors, which are primarily carried forward by mayors, civil society organisations, investors, financial institutions and service providers, is important for achieving progress on energy efficiency in and outside the EU. This work has the Commission's firm support. The Commission will also develop a "global excellence for energy efficiency policy-making” initiative as a contribution to the G20 Energy Efficiency Action Plan. It will strongly promote the adoption of ambitious energy efficiency goals and targets in fora such as the UN "Sustainable Energy for All" initiative and the International Energy Agency. As a global leader in energy efficiency technology, this should be a driver for exports, and growth and jobs in the EU.
EU funds and EIB financing can make a huge difference. The European Fund for Strategic Investments provides an opportunity to leverage major investments in renovating buildings. Investments in this area can provide great returns in terms of growth and jobs.
Towards an energy-efficient, decarbonised transport sector
Transport represents more than 30% of final energy consumption in Europe. Realising its energy efficiency potential requires a continued focus on tightening CO2 emission standards for passenger cars and vans post-2020, and on measures to increase fuel efficiency and reduce CO2 emissions for heavy duty vehicles and buses. Better traffic management should also be promoted as a modern, forward-looking tool to cut CO2 emissions.
This should be accompanied by measures to better exploit the potential of the single market and to internalise external costs. The Commission will promote the use of road charging schemes based on the polluter-pays and user-pays principles and increase efforts to create a single European transport area, based on a more optimal use of the fleet. Considerable fuel savings could also be realized by removing barriers to less green-house gas intensive modes of transport, such as rail, maritime transport and inland waterways, and by making these modes more attractive and cost efficient. The Commission will further promote the ‘Shift2Rail’[23] initiative.
The Commission will also take further actions to decarbonise the transport sector, which is still essentially running on oil products. This will require a gradual transformation of the entire transport system as well as an increased development and deployment of alternative fuels. The Commission will take further action to promote the swift deployment of the necessary infrastructure, i.e. refuelling and recharging stations. [24] Market up-take of such vehicles depends on infrastructure, vehicles and fuels being rolled out together.
Electrification of transport is important to break oil dependency and to decarbonise transport, especially for road (short and medium distance) and rail transport. Europe needs to speed up electrification of its car fleet and other means of transport and become a leader in electro-mobility and energy storage technologies. This requires a full integration of electric vehicles in urban mobility policies and in the electricity grid, both as energy consumers and potential storage facilities.
2.4. Decarbonisation of the economy
An ambitious climate policy is an integral part of our Energy Union. The EU's climate policy is based on an EU-wide carbon market (the EU Emissions Trading System), ambitious but fair national green-house gas reduction targets for the sectors outside the Emissions Trading System and an energy policy to make the European Union the number one in renewable energy.
An ambitious EU Climate policy
The agreement on the 2030 climate and energy framework has defined the EU commitment of an at least 40% domestic reduction in greenhouse gas emissions compared to 1990. This makes an ambitious contribution to the international climate negotiations with a view to achieving a binding climate agreement in 2015. This contribution is spelled out in the communication on the Road to Paris, presented at the same time as this Energy Union Strategic Framework. The Commission, together with the Member States, will engage with other major economies to convince them to join Europe's ambition. It will do this through an active European climate diplomacy that makes full use of trade and development instruments.
The cornerstone of Europe’s climate policy is a well-functioning EU Emissions Trading System. As a result of the Market Stability Reserve and the measures needed to meet the increased ambition decided in the 2030 framework, the EU Emissions Trading System will deliver a meaningful price on carbon emissions and stimulate cost-efficient green-house gas emission reductions. The European Commission wants the EU Emissions Trading System to fully play its role as a technology neutral, cost-effective and EU-wide driver for low-carbon investments. Through its price formation at EU level it reinforces the functioning of the internal energy market and stimulates the uptake of renewables and other low-carbon and energy-efficient technologies. Policies to prevent carbon leakage should reflect the degree of efforts undertaken in other major economies.
For the sectors not included into the EU Emissions Trading System, national targets still need to be set and the land and forestry sector will be incorporated into the EU 2030 framework, ensuring that also these sectors have the right incentives to mitigate GHG emissions and contribute to the fight against climate changes.
Becoming the number one in renewables
The European Union is committed to becoming the world leader in renewable energy, the global hub for developing the next generation of technically advanced and competitive renewable energies. The EU has also set an EU target of at least 27% for the share of renewable energy consumed in the EU in 2030.
The EU is already on track to meet its 2020 target of 20% renewable energy in its energy mix, costs for new wind and photo-voltaic capacity have reduced significantly due in large part to the EU's commitment in this area, and reform of support schemes to further drive down costs is well under way. But to achieve the 27% target, new challenges must be faced.
To integrate renewable production progressively and efficiently into a market that promotes competitive renewables and drives innovation, energy markets and grids have to be fit for renewables.[25] Existing legislation and new market rules need to be fully implemented, enabling the roll-out of new technologies smart grids and demand response for an efficient energy transition.
In line with the Environmental and Energy Aid Guidelines, renewable production needs to be supported through market-based schemes that address market failures, ensure cost-effectiveness and avoid overcompensation or distortion. Low-cost financing for capital intensive renewables depends on having a stable investment framework that reduces regulatory risk. This is necessary to ensure investor confidence and to attract investments from international funds, large scale project promoters and cooperatives and households in a market-based framework that keeps capital costs down. The Commission will facilitate cooperation[26] and convergence of national support schemes leading to more cross border opening through in-depth discussions with Member States on the respective Commission Guidance[27] and the Environmental and Energy Aid Guidelines.
Investment decisions in renewable electricity have to take into account the physical realities of resource availability and of the grid; public acceptance; consumption location and administrative barriers. Also, the development of new infrastructure, especially interconnections, needs to lower the cost of integrating renewable electricity into the internal energy market.
The EU needs to invest in advanced, sustainable alternative fuels, including biofuel production processes, and in the bio-economy more generally. This allows us to retain technological and industrial leadership and to meet climate change objectives. The EU will also need to take into account the impact of bioenergy on the environment, land-use and food production. The EU Investment Plan, as well as other EU financing sources, could help to ensure the necessary financing.
2.5. An Energy Union for Research, Innovation and Competitiveness
A new strategy for Research and Innovation (R&I) must be at the very heart of the Energy Union. If Europe’s Energy Union is to be the world number one in renewable energies, it must lead on the next generation of renewable technologies as well as to storage solutions.
Equally, putting the EU at the forefront of smart grid and smart home technology, clean transport, as well as clean fossil fuel and the world's safest nuclear generation, is central to the aim of turning the Energy Union into a motor for growth, jobs and competitiveness.
Although important progress has been made in improving the effectiveness of Europe's research programmes, much more can be done. We are still a long way from fully coordinated and focussed research, effectively combining EU and Member State programmes around common goals and deliverables. If we are to achieve our aims, we must get the maximum possible results from every Euro invested across the whole EU. This means taking an integrated approach to create synergies; working together to coordinate efforts and deliver results; ensuring more effective links between research and industry and thereby bringing new technologies to the market in the EU.
To achieve this, the new European energy R&I approach[28] should accelerate energy system transformation. This should build on Horizon 2020 and involve all Member States, stakeholders and the Commission.
Actions should be grouped around the following four core priorities, to which Member States and the Commission would commit:
– Being the world leader in developing the next generation of renewable energy technologies, including environment-friendly production and use of biomass and biofuels, together with energy storage;
– Facilitating the participation of consumers in the energy transition through smart grids, smart home appliances, smart cities, and home automation systems;
– Efficient energy systems, and harnessing technology to make the building stock energy neutral, and
– More sustainable transport systems that develop and deploy at large scale innovative technologies and services to increase energy efficiency and reduce greenhouse gas emissions.
On top of these four common priorities, there are additional research priorities which merit a much greater level of collaboration between the Commission and those Member States who want to use these technologies:
– A forward-looking approach to carbon capture and storage (CCS) and carbon capture and use (CCU) for the power and industrial sectors, which will be critical to reaching the 2050 climate objectives in a cost-effective way. This will require an enabling policy framework, including a reform of the Emissions Trading System and the new Innovation Fund, to increase business and investor clarity, which is needed to further develop this technology.
– Nuclear energy presently produces nearly 30% of the EU's electricity.[29] The EU must ensure that Member States use the highest standards of safety, security, waste management and non-proliferation. The EU should also ensure that it maintains technological leadership in the nuclear domain, including through ITER[30], so as not to increase energy and technology dependence.
An innovation-driven transition to a low carbon economy offers great opportunities for growth and jobs. New business sectors, new business models and new job profiles will emerge. Technological leadership must be followed by the development of industrial production capabilities or technology supply chains across Europe. This requires bringing together research, industry, the financing sector and public authorities. An efficient industrial strategy along these lines will enable the EU industry to benefit from the first-mover advantage, both domestically and within international technology markets, with the resulting positive effects on competitiveness and job creation.
The Commission will explore how public procurement can exploit its potential to act as a catalyst for industrial and business innovation, and green growth both within the EU and beyond its borders. It will make full use of EU trade policy to improve access to foreign markets for Energy Union related technologies and services as well as to protect the EU market from unfair trade practices, and support other countries in their efforts to establish modern and sustainable energy systems. The Commission will work with Member States and regions to ensure synergies between the different EU funds and to exploit the full potential of Cohesion Policy funding for innovation.
Change also means that some sectors, business models or job profiles will have to adjust. Vocational and other training paths for new or adapted job profiles have to be established, corresponding to the new business needs and providing people with solid professional skills. An energy transition that is just and fair will therefore require re-training or up-skilling of employees in certain sectors and, where needed, social measures at the appropriate level. The first-hand knowledge and experience of the social partners is crucial in this regard. The Commission will inform the social partners and invite them to include the energy transition in their social dialogue at European level.
3. Energy Union Governance
The Energy Union also needs an integrated governance and monitoring process, to make sure that energy-related actions at European, regional, national and local level all contribute to the Energy Union's objectives. The governance process should serve the following purposes:
- bring together energy and climate actions as well as actions in other relevant policy areas, leading to more and longer-term policy coherence. This also provides long term certainty and guidance for investors;
- secure implementation of the internal energy market and the delivery of the 2030 energy and climate framework, notably the implementation of the agreed 2030 targets on renewables, energy efficiency, non-Emissions Trading System and interconnections;
- streamline current planning and reporting requirements, avoiding unnecessary administrative burden;
- involve an energy dialogue with stakeholders to inform policy-making and support active engagement in managing the energy transition;
- deepen the cooperation between Member States, including at the regional level, and with the Commission;
- improve the data, analysis and intelligence needed to underpin the Energy Union by pooling the relevant knowledge and making it easily accessible to all stakeholders, and
- annual reporting to the European Parliament and the Council on the state of the Energy Union in order to address the key issues and steer the policy debate.
The Commission will launch a dynamic governance process for the European Energy Union. While there will be clear links between this governance process and the European Semester, the two processes will be managed separately.
4. Delivering the Energy Union
Achieving the Energy Union means delivering on the actions set out in this Strategy, which are summarised in the fifteen points set out below. The attached roadmap shows the initiatives to be developed as part of the Strategy, with a clear timetable for adoption and implementation as well as respective responsibilities. The Commission regards these as inter-linked and consistent with the scale of ambition the EU needs to transform Europe's energy system.
Successful implementation depends on the political commitment of all actors concerned, including EU institutions, Member States, the European Investment Bank and other stakeholders, including at regional and local level, in line with the principles of subsidiarity, proportionality and better regulation.
The EU must be able to react to unexpected events, seize new opportunities and anticipate and adapt to future trends. Whenever necessary, the Commission will use its right of initiative to set out an appropriate response to events.
The Commission invites the European Parliament and Council to endorse this strategy to deliver the Energy Union and to actively engage in its implementation, in close cooperation with all relevant stakeholders.
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The Energy Union in fifteen action points 1. Full implementation and strict enforcement of existing energy and related legislation is the first priority to establish the Energy Union. Ø The Commission will use all instruments to ensure that Member States fully implement energy legislation, in particular the 3rd Internal Energy Market Package, and it will strictly enforce the Treaty's competition rules. 2. The EU needs to diversify its supply of gas and make it more resilient to supply disruptions. Ø The Commission will propose a resilience and diversification package for gas in 2015-2016 by revising the existing security of gas supply Regulation. Ø The Commission will prepare a comprehensive strategy for liquid natural gas (LNG) and its storage, and Ø The Commission will work with Member States to develop access to alternative suppliers, including from the Southern Gas Corridor route, the Mediterranean and Algeria, in order to decrease existing dependencies on individual suppliers. 3. Intergovernmental agreements should comply fully with EU legislation and be more transparent. Ø The Commission will propose a revision of the Decision on Intergovernmental Agreements in 2016 to ensure compatibility with EU legislation before agreements are negotiated, involve the Commission in such negotiations, develop standard contract clauses covering EU rules and make commercial gas supply contracts more transparent. 4. The right infrastructure is a precondition for completing the energy market, integrating renewables and security of supply. Ø The Commission will support the implementation of major infrastructure projects, particularly the Projects of Common Interest, through the available financial means, e.g. the Connecting Europe Facility, the European Structural and Investment Funds and the future European Fund for Strategic Investments to leverage the necessary private and public funding. Ø The Commission will bring together information on EU-funded infrastructure projects to bring more coherence and to maximise their impact. Ø The Commission will create a dedicated Energy Infrastructure Forum to discuss progress on major infrastructure projects with Member States, regional cooperation groups and EU institutions. It will meet for the first time in late 2015. 5. Creating a seamless internal energy market that benefits citizens, ensuring security of supply, integrating renewables in the market and remedying the currently uncoordinated development of capacity mechanisms in Member States call for a review of the current market design. Ø The Commission will propose legislation on security of supply for electricity in 2016. Ø The Commission will propose a new European electricity market design in 2015, which will be followed by legislative proposals in 2016. 6. The regulatory framework set-up by the 3rd Internal Energy Market Package has to be further developed to deliver a seamless internal energy market to citizens and companies. Ø The Commission will review the regulatory framework, in particular the functioning of ACER and the ENTSOs, in 2015-2016 and will propose appropriate actions to reinforce the European regulatory framework. 7. Regional approaches to market integration are an important part of the move towards a fully integrated EU-wide energy market. Ø The Commission will develop guidance on regional cooperation and engage actively in regional cooperation bodies with Member States and stakeholders. 8. Greater transparency on energy costs and prices as well as on the level of public support will enhance market integration and identify actions that distort the internal market. Ø The Commission will produce biennial reports on energy prices, analyse in depth the role of taxes, levies and subsidies and seek the phasing out of regulated prices below cost. Ø At the national and local levels, action should be taken to protect vulnerable consumers through social policies. 9. The EU has set itself the target of reaching at least 27% energy savings by 2030. Ø In 2015 and 2016, the Commission will review all relevant energy efficiency legislation and will propose revisions, where needed, to underpin the 2030 target. Ø Member States and regions should make more use of European funds for renovation of housing. 10. Buildings have huge potential for energy efficiency gains. Retrofitting existing buildings to make them energy efficient and making full use of sustainable space heating and cooling will reduce the EU's energy import bills, reinforce energy security and cut energy costs for households and businesses. Ø The Commission will develop a ‘Smart Financing for Smart Buildings’-initiative to make existing buildings more energy-efficient, facilitating access to existing funding instruments. Ø The Commission will propose a strategy to facilitate investment in heating and cooling. 11. The EU needs to speed up energy efficiency and decarbonisation in the transport sector, its progressive switch to alternative fuels and the integration of the energy and transport systems. Ø The Commission will propose a comprehensive road transport package promoting more efficient pricing of infrastructure, the roll-out of intelligent transport solutions and enhancing energy efficiency. Ø The Commission will take further action to create the right market conditions for an increased deployment of alternative fuels and to further promote procurement of clean vehicles. This will be delivered through a mix of national, regional and local measures, supported by the EU. 12. The EU agreed a climate and energy framework for 2030 at the October European Council. This now needs to be implemented. The EU will provide an ambitious contribution to the international climate negotiations. Ø The Commission will propose legislation to achieve the greenhouse gas reduction target agreed at the October 2014 European Council both in the Emissions Trading System and in the sectors outside the Emissions Trading System. 13. The EU has agreed the target of at least 27% at EU level for renewable energy by 2030. Ø The Commission will propose a new Renewable Energy Package in 2016-2017. This will include a new policy for sustainable biomass and biofuels as well as legislation to ensure that the 2030 EU target is met cost-effectively. 14. The EU needs to develop a forward-looking, energy and climate-related R&I strategy to maintain European technological leadership and expand export opportunities. Ø The Commission will propose a European energy R&I approach, comprising an upgraded Strategic Energy Technology Plan and a strategic transport R&I agenda, with a limited number of essential priorities and clear objectives, in 2015-2016. Ø The Commission will develop an initiative on global technology and innovation leadership on energy and climate to boost jobs and growth. 15. The EU will use all external policy instruments to ensure that a strong, united EU engages constructively with its partners and speaks with one voice on energy and climate. Ø The Commission, with the HR/VP, and the Member States will revitalise the EU's energy and climate diplomacy. Ø The Commission, with the HR/VP, will develop an active agenda to strengthen EU energy cooperation with third countries, including on renewable energy and energy efficiency. Ø The Commission will make full use of the EU's external trade policy to promote access to energy resources and to foreign markets for European energy technology and services.
[1] Communication "Energy Efficiency and its contribution to energy security and the 2030 Framework for climate and energy policy", COM(2014)520.
[2] European Energy Security Strategy, COM (2014) 330.
[3] Commission estimates. The IEA estimates that EUR 1.3 trillion are needed by 2025 in generation, transport and distribution.
[4] Calculations of DG Energy based on Platts market reports and IEA data for first half of 2014.
[5] Eur'Observeur 2014 report.
[6] Compared to a 32% EU share in overall global patents.
[7] UNEP-BNEF Global Trends in Renewable Energy Investments 2014.
[8] COM (2014)330.
[9] EU leadership will continue to drive standards and efficiency improvements globally, reducing future oil consumption and thus EU dependency.
[10] Directive 2009/119/EC of 14 September 2009 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products.
[11] COM(2014) 654 final.
[12] See the Communication "Making the most of public interventions", C(2013)7243.
[13] Initiatives such as "trade in green goods" will help promote products that help reduce CO2 emissions, benefit the environment and create EU jobs and growth.
[14] Decision No 994/2012/EU establishing an information exchange mechanism with regard to intergovernmental agreements between Member States and third countries in the field of energy.
[15] This update will include strategic Projects of Energy Community Interest (PECIs) that are important to enhance the Energy Union's security of supply, if they also comply with the criteria to become PCIs.
[16] EU Investment Plan, COM(2014)903.
[17] Examples for this could be decisions relating to new infrastructure affecting more than two Member States, on exemptions from physical reverse flows in line with the Security of Gas Supply Regulation, cross-border cost allocations under the TEN-E Regulation or similar.
[18] See the Communication "Making the most of public interventions", C(2013)7243.
[19] Environmental and Energy State Aid Guidelines (EEAG), OJ C 200, 28.6.2014, p. 1-55.
[20] The application of EEAG to the support schemes approved to date has partly mitigated the effects of fragmentation, however, further action is needed.
[21] See the resource efficiency roadmap (COM(2011)571) and the 2012 Communication on the internal energy market (COM(2012)663), and in line with the G20 commitment.
[22] See Report "Benchmarking smart metering deployment in the EU-27 with a focus on electricity", COM(2014)356.
[23] Regulation 642/2014 establishing the Shift2Rail Joint Undertaking.
[24] Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure.
[25] Making markets fit for renewables means short term markets need to develop into deep, liquid and real time functioning. Existing power grids designed and often managed for conventional power production in a national scope are suboptimal for a future where supply from renewable sources will become ever more important and where balancing is needed to compensate for their inherent variability.
[26] Several Member States are looking into using cooperation mechanisms from the Renewable Energy Directive to meet their national targets cost-efficiently. The Commission has been supporting this process by helping Member States to find solutions for technical and financial issues related to these cross-border mechanisms.
[27] European Commission guidance for the design of renewables support schemes, SWD(2013)439; Guidance on the use of renewable energy cooperation mechanism, SWD(2013)440.
[28] This should comprise an updated Strategic Energy Technology Plan and a strategic transport R&I agenda.
[29] See European Energy Security Strategy, COM (2014) 330.
Roadmap for the Energy Union
Key: SoS: Security of Supply / IEM: Internal Energy Market / EE: Energy Efficiency / GHG: Greenhouse gases / R&I: Research and Innovation
Actions || Responsible party || Timetable || SoS || IEM || EE || GHG || R&I
Infrastructure || || || || || || ||
Effective implementation of the 10% electricity interconnection target || Commission Member States National Regulatory Authorities Transmission System Operators || 2015-20 || X || X || || X ||
2nd list of Projects of Common Interest (PCI) – leading to Commission Delegated Act || Commission Member States || 2015 || X || X || || X ||
Communication on the progress towards the completion of the list of the most vital energy infrastructures and on the necessary measures to reach the 15% electricity interconnection target for 2030 || Commission || 2016 || X || X || || ||
Establish an Energy Infrastructure Forum || Commission Member States || 2015 || X || X || || ||
Electricity || || || || || || ||
Initiative on market design and regional electricity markets, and coordination of capacities to ensure security of supply, boosting cross-border trade and facilitating integration of renewable energy || Commission || 2015-2016 || X || X || X || X ||
Review of the Directive concerning measures to safeguard security of electricity supply || Commission || 2016 || X || X || || X ||
Retail || || || || || || ||
New Deal for energy consumers: Empowering consumers, deploying Demand Side Response; using smart technology; linking wholesale and retail markets; phase-out of regulated prices; flanking measures to protect vulnerable customers || Commission Member States || 2015-2016 || || X || X || X || X
Gas || || || || || || ||
Revision of the Regulation on security of gas supply || Commission || 2015-2016 || X || X || || ||
Liquified Natural Gas and storage strategy || Commission || 2015-2016 || X || || || ||
Regulatory framework || || || || || || ||
Review of the Agency for the Cooperation of Energy Regulators (ACER) and the energy regulatory framework || Commission || 2015-16 || X || X || || X ||
Renewables || || || || || || ||
Renewable Energy Package: including a new Renewable Energy Directive for 2030; best practices in renewable energy self-consumption and support schemes; bioenergy sustainability policy. || Commission || 2015-2017 || X || X || || X ||
Communication on Waste to Energy || Commission || 2016 || X || || || X ||
Climate Action || || || || || || ||
Legislative proposal to revise the EU Emissions Trading System, 2021-2030 || Commission || 2015 || X || X || || X ||
Legislative proposals on the Effort-Sharing Decision and the inclusion of Land Use, Land Use Change and Forestry (LULUCF) into the 2030 Climate and Energy Framework || Commission || 2016 || || || || X ||
Transport actions || || || || || || ||
Fair and efficient pricing for sustainable transport – revision of the Eurovignette Directive and framework to promote European electronic tolling || Commission || 2016 || || || X || X ||
Review of market access rules for road transport to improve its energy efficiency || Commission || 2016 || || || X || X ||
Master Plan for the deployment of Cooperative Intelligent Transport Systems || Commission Member States Industry || 2016 || || || X || X || X
Review of Regulations setting emission performance standards to establish post-2020 targets for cars and vans || Commission || 2016 - 2017 || || || X || X || X
Establishing a monitoring and reporting system for heavy duty vehicles (trucks and buses) with a view to improving purchaser information || Commission || 2016-2017 || || || X || X || X
Review of Directive on the Promotion of Clean and Energy Efficient Road Transport Vehicles || Commission || 2017 || || || X || X ||
Communication on decarbonising the transport sector, including an action plan on second and third generation biofuels and other alternative, sustainable fuels || Commission || 2017 || || || X || X || X
Energy efficiency || || || || || || ||
Review of the Energy Efficiency Directive || Commission || 2016 || X || || X || X || X
Review of the Directive on Energy Performance of Buildings including Smart Finance for Smart Buildings initiative || Commission || 2016 || X || || X || X || X
Review of the energy efficiency framework for products (Energy Labelling Directive and Ecodesign Directives) || Commission || 2015 || X || || X || X || X
Strengthening the targeted use of financial instruments to support investments in energy efficiency || Commission || 2015- || || || X || X ||
Heating and Cooling || || || || || || ||
EU strategy for Heating and Cooling – the contribution from heating and cooling in realising the EU's energy and climate objectives || Commission || 2015 || X || X || X || X || X
External Energy and Climate Policy || || || || || || ||
EU Energy and Climate policy diplomacy || Commission HR/VP Member States || 2015 || X || X || || X || X
Review of the Decision on information exchange mechanism with regard to intergovernmental agreements between Member States and third countries in the field of energy || Commission HR/VP || 2016 || X || X || || ||
New and strengthened energy dialogues with countries of importance for EU energy policy || Commission HR/VP || 2015 - || X || X || X || X || X
Memorandum of Understanding on an upgraded strategic partnership with Ukraine || Commission HR/VP European Parliament Council || 2015 || X || X || || ||
Trilateral Memorandum of Understanding on the Trans-Caspian pipelines with Azerbaijan and Turkmenistan || Commission HR/VP European Parliament Council || 2015 || X || X || || ||
Initiative to strengthen the Energy Community || Commission Energy Community Contracting Parties HR/VP || 2015 || X || X || || ||
Strengthen Euromed cooperation on gas, electricity, energy efficiency and renewables || Commission HR/VP || 2015-2016 || X || X || || ||
Adoption and signature of a new International Energy Charter on behalf of the EU and EURATOM || Commission HR/VP || 2015 || X || X || || ||
Industrial competitiveness || || || || || || ||
A new European energy R&I approach to accelerate energy system transformation, composed of - an integrated Strategic Energy Technology (SET) Plan - a strategic transport R&I agenda || Commission || 2015-2017 || || || || || X
Analysis of energy prices and costs (including taxes and subsidies) || Commission || 2016 and every 2 years thereafter || || X || || ||
Initiative on EU global technology and innovation leadership on energy and climate to boost growth and jobs || Commission || 2015-2016 || || || X || X || X
Enhanced trade policy to facilitate export of EU technologies || Commission || 2015-2019 || X || X || || || X
Cross cutting measures || || || || || || ||
Review of the Guidelines on State aid for environmental protection and energy || Commission || 2017-2019 || X || X || X || X || X
Report on the European Energy Security Strategy; including a platform and roadmap for Euromed and strategies for LNG, energy storage, and the Southern gas corridor || Commission || 2015-2016 || X || X || X || X || X
Data, analysis and intelligence for the Energy Union: initiative pooling and making easily accessible all relevant knowledge in the Commission and Member States || Commission || 2016 || X || X || X || X || X
Nuclear || || || || || || ||
Council Regulation updating the information requirements of Article 41 of the Euratom Treaty in the light of the European Energy Security Strategy || Commission || 2015 || X || X || || ||
Communication on a nuclear illustrative programme (PINC) pursuing Article 40 of the Euratom Treaty || Commission || 2015 || X || || || X ||