Wednesday, March 08, 2006

Fuelling our future: the European Commission sets out its vision for an Energy Strategy for Europe

The basis for a European Energy Policy has been set out by the European Commission in a major new Green Paper, which invites comments on six specific priority areas, containing over 20 concrete suggestions for possible new action.

"The energy challenges of the 21st century require a common EU response. The EU is an essential element in delivering sustainable, competitive and secure energy for European citizens. A common approach, articulated with a common voice, will enable Europe to lead the search for energy solutions", underlined European Commission President Barroso.

"The completion of the internal market, the fight against climate change, and security of supply, are common energy challenges that call for common solutions. It is time for a new European energy policy", said Energy Commissioner Andris Piebalgs.

-On this basis; the Green Paper outlines how a European Energy Policy could meet the three core objectives of energy policy: sustainable development, competitiveness, and security of supply.
Developing a European energy policy will be a long term challenge. As a foundation for this process the Commission proposes that a Strategic EU Energy Review be presented to the Council and Parliament on a regular basis, covering all energy policy issues. This would constitute a regular stocktaking and action plan for the European Council and Parliament, monitoring progress and identifying new challenges and responses on all aspects of energy policy.

Six priority areas have been identified:

In order to complete the internal energy market the Green paper considers new measures such as: a European energy grid code, a priority European interconnection plan, a European Energy Regulator and new initiatives to ensure a level playing field, particularly regarding the unbundling of networks from competitive activities. Concrete proposals will be tabled by the end of the year.

The second priority area concerns security of supply in the internal energy market, ensuring solidarity among Member States. Among the possible measures proposed is the establishment of a European Energy Supply Observatory and a revision of the existing Community legislation on oil and gas stocks to ensure they can deal with potential supply disruptions.

A more sustainable, efficient and diverse energy mix is identified as the third priority area. The choice of a Member States energy mix is and will remain a question of subsidiarity; however, choices made by one Member State inevitably have an impact on the energy security of its neighbours and of the Community as a whole. This could be achieved through the Strategic EU Energy Review, covering all aspects of energy policy, analysing all the advantages and drawbacks of different sources of energy, from renewable to coal and nuclear. This in turn may eventually lead to objectives being established at Community level regarding the EU's overall energy mix to ensure security of supply, whilst respecting the right of Member States to make their own energy choices.

In its fourth Action area, the Commission suggests a series of measures to address the challenges of global warming. In particular, it puts forward possible contents for an Action Plan on energy efficiency to be adopted by the Commission later this year. This Action Plan will identify the measures necessary for the EU to save 20% of the energy that it would otherwise consume by 2020. In addition, it proposes that the EU prepares a new Road Map for renewable energy sources in the EU, with possible targets to 2020 and beyond in order to provide a stable investment climate to generate more competitive renewable energy in Europe.

Energy efficient and low carbon technologies constitute a rapidly growing international market that will be worth billions of Euros in the coming years. A strategic energy technology plan, as proposed in the fifth Action Area of the Green Paper, will ensure that European industries are world leaders in this new generation of technologies and processes.

Finally, the Green Paper stresses the need for a common external energy policy. In order to react to the challenges of growing demand, high and volatile energy prices, increasing import dependency and climate change, Europe needs to speak with a single voice in the international arena. To this end the Commission proposes that its Strategic Energy Policy Review should: identify infrastructure priorities for the EU's security of supply (including pipelines and LNG terminals) and agree concrete action to ensure that they are realised; provide a road-map for the creation of a pan-European Energy Community with a common regulatory space; identify a renewed approach with regard to Europe's partners, including Russia, the EU's most important energy supplier, reflecting our inter-dependence and finally propose a new Community mechanism to enable rapid and coordinated reactions to emergency external energy supply situations.

These are a selection of the suggestions outlined in the Green paper. On the basis of replies and comments to what will be a very widespread public consultation, as well as the conclusions of the European Council and Parliament, the Commission will propose a series of concrete measures.

Green Paper:


Context of EU energy policy development

Key EU energy challenges:

-There is an urgent need for investment. In Europe alone, to meet expected energy demand and to replace ageing infrastructure, investments of around one trillion euros will be needed over the next 20 years.
Our import dependency is rising. Unless we can make domestic energy more competitive, in the next 20 to 30 years around 70 % of the Union's energy requirements, compared to 50% today, will be met by imported products – some from regions threatened by insecurity.
Reserves are concentrated in a few countries. Today, roughly half of the EU's gas consumption comes from only three countries (Russia, Norway, and Algeria). On current trends, gas imports would increase to 80 % over the next 25 years.
Global demand for energy is increasing. World energy demand - and CO2 emissions – is expected to rise by some 60% by 2030. Global oil consumption has increased by 20% since 1994, and global oil demand is projected to grow by 1.6% per year.
Oil and gas prices are rising. They have nearly doubled in the EU over the past two years, with electricity prices following. With increasing global demand for fossil fuels, stretched supply chains and increasing dependence on imports, high prices for oil and gas are probably here to stay. This is difficult for consumers in the short term but may, however, trigger greater energy efficiency and innovation.
Our climate is getting warmer. According to the Intergovernmental Panel on Climate Change (IPCC), greenhouse gas emissions have already made the world 0.6 degrees warmer. If no action is taken there will be an increase of between 1.4 and 5.8 degrees by the end of the century. All regions in the world – including the EU - will face serious consequences for their economies and ecosystems.
Europehas not yet developed fully competitive internal energy markets. Only when such markets exist will EU citizens and businesses enjoy all the benefits of security of supply and lower prices. To achieve this aim, interconnections should be developed, effective legislative and regulatory frameworks must be in place and be fully applied in practice, and Community competition rules need to be rigorously enforced. Furthermore, the consolidation of the energy sector should be market driven if Europe is to respond successfully to the many challenges it faces and to invest properly for the future.


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