2 Energy 2020
| (32170)
16096/10
+ ADD 1
COM(10) 639
| Commission Communication: Energy 2020 — A strategy for competitive, sustainable and secure energy
|
| Legal base | —
|
| Document originated | 10 November 2020
|
| Deposited in Parliament | 12 November 2010
|
| Department | Energy & Climate Change
|
| Basis of consideration | EM of 24 November 2010
|
| Previous Committee Report | None, but see footnotes
|
| To be discussed in Council | See paragraph 2.20
|
| Committee's assessment | Politically important
|
| Committee's decision | For debate in European Committee A
|
Background
2.1 Not surprisingly, the EU's aim of achieving a
safe, secure, sustainable and affordable energy supply has been
the subject of a number of initiatives from the Commission. In
particular, it put forward in January 2007 a Strategic Energy
Review,[1] which was followed
in November 2008 by a second such review,[2]
the two documents being debated on 24 July 2007 and 3 March 2009
respectively. However, the Commission says that energy remains
a crucial element of overall EU policy, and that decisions are
required urgently if more secure and sustainable systems are to
be achieved, with investments of around €1 trillion needed
over the next ten years to diversify existing resources and cater
for new requirements. It states that this requires an ambitious
policy framework, and it has sought in this Communication to outline
what such a strategy would entail. The Communication is accompanied
by a Commission Staff Working Document, which evaluates EU policy
initiatives in relation to energy efficiency and savings, the
internal energy market (including consumers' rights), securing
a sustainable and competitive supply, and external supply and
worldwide promotion of sustainable use.
The current document
2.2 The Commission says that
a common energy policy has evolved around the aim of ensuring
the uninterrupted availability of energy products and services
at an affordable price, whilst contributing to the EU's social
and climate goals, and it points out that the central goals —
security of supply, competitiveness and sustainability —
are now set out in Article 194 of the Treaty on the Functioning
of the EU. However, it notes that, although some progress has
been made, energy systems are adapting too slowly, whilst the
scale of the challenge grows, and that the situation will be exacerbated
by forthcoming enlargements. In particular, the Commission recalls
the objectives for 2020 adopted by the European Council in 2007,
under which greenhouse gas emissions would be reduced by 20% (rising
to 30%, if other countries are prepared to make commensurate reductions),
the share of renewable energy increased to 20%, and energy efficiency
improved by 20%, and it also notes the European Council's long
term commitment to emission cuts of 80-95% by 2050. However, it
says that the existing strategy is unlikely to achieve all the
2020 targets and is wholly inadequate to meet the longer term
challenges, and that the EU must agree as a matter of urgency
the tools which enable the necessary shift to take place.
2.3 In the meantime, it highlights what is sees as
a number of shortcomings:
- the continuing fragmentation of the internal
energy market, meaning that there is still sub-optimal consumer
choice;
- the need to replace existing low-carbon energy
sources, particularly nuclear and hydropower, if the EU is not
to lose one-third of its generation capacity by 2020;
- the poor quality of Member States' National Energy
Efficiency Plans, resulting in the EU being well short of achieving
its 2020 target;
- the insufficient heed paid at international level
to warnings about future tight oil supply, and the need to realise
the potential for developing the EU's indigenous fossil fuel reserves;
- the role which a continental market can play
in obtaining the optimum energy mix;
- the need for the EU to remain an attractive market
at a time of increasing worldwide competition for energy resources;
- the need for it to adopt its common interest
and ambition in international energy affairs.
2.4 The Commission suggests the
adoption of a new energy strategy focusing on the following five
priorities:
- achieving an energy efficient Europe;
- building a truly pan-European integrated energy
market;
- empowering consumers and achieving the highest
level of safety and security;
- extending Europe's leadership in energy technology
and innovation;
- strengthening the external dimension of the EU
energy market.
These are then spelt out in more detail in the remainder
of the Communication.
ACHIEVING AN ENERGY EFFICIENT EUROPE
2.5 The Commission stresses that
Europe cannot afford to waste energy, and that its efficient use
is thus one of the central objectives for 2020, and a key factor
in achieving long-term energy and climate goals. It therefore
believes that it should be mainstreamed into all relevant policy
areas in order to change current behaviour, with energy efficiency
criteria being imposed in all spheres, including the allocation
of public funds. It says that efforts should be concentrated on
the whole energy chain, with effective compliance monitoring,
adequate market surveillance, widespread use of energy audits,
as well as material efficiency and recycling, and that this needs
to be backed by a reinforced political commitment. It adds that
special attention needs to be given to buildings and transport
as the sectors with largest potential for efficiency gains, with
Member States taking the steps needed to implement the legally
binding climate targets which have been set, and it suggests that
revision of the energy taxation directive could help to realise
long-term efficiency gains. It also notes the important part which
information and communication technologies can play, and the role
of energy audits, energy management systems, and efficiency benchmarking:
and it observes that efficiency must become a profitable business
in itself, leading to a robust internal market for energy-saving
techniques. In addition, it highlights the need for the public
sector to lead by example by setting ambitious consumption objectives,
and to address the fact that energy-efficient investments often
have short-term up-front costs before the medium and longer-term
benefits are felt, suggesting that EU funding can have a high
leverage factor in encouraging new investments, as can innovative
and carefully considered uses of taxation and pricing.
2.6 The Commission says that it will present an Energy
Efficiency Plan in early 2011, which will be followed in the course
of the year by concrete regulatory proposals. The Plan will also
address financing issues, such as access to finance, innovative
financing products, incentives for energy-efficiency investments,
and the role of EU funding, in particular the structural funds.
BUILDING A TRULY PAN-EUROPEAN INTEGRATED ENERGY MARKET
2.7 The Commission comments that
the opening up of Europe's energy markets has enabled consumers
to benefit from more competitive and sustainable supplies, but
that this potential will not be fully realised unless a more integrated,
interconnected and competitive market is created. It suggests
that the electricity and gas markets are still largely fragmented,
with numerous barriers, and remain national in scope, with incumbent
companies having a de facto monopoly position, and regulated
energy prices further reducing competition. It says that pro-active
competition enforcement is therefore needed by both the Commission
and Member States, and it adds that, by introducing a legislative
framework to achieve the 20% renewable energy target by 2020,
Europe has taken the first step in this area, it now being necessary
to ensure that the legislation is fully implemented.[3]
2.8 The Commission goes on to say that the further
development of renewable energy will continue to rely for some
time on support schemes, and that it will have to play its part
in ensuring that these are sustainable, consistent with technological
progress, and do not hinder innovation or competition. It adds
that there must also be a degree of convergence or harmonisation
between national schemes as the market for renewables moves towards
cross-border supply, and that the requirements for a pan-European
trade should be defined on the basis of best practice, with greater
use being made of feed-in premiums, technology-specific support,
and the mobilisation of financial instruments in accordance with
state aid rules.
2.9 The Commission also stresses the need for a proper
energy infrastructure across Europe, comparable to those for telecommunications
and transport, if the market is to work properly, and it says
that further upgrading is needed, particularly in those Member
States which joined in 2004, and in less developed regions. In
particular, it highlights the lack of a grid infrastructure to
enable renewables[4] to
compete on an equal footing, adding that today's grid will struggle
to absorb the volumes of renewable power implied by the 2020 targets.
It suggests that smart meters and power grids are the keys to
full exploitation of renewable energy savings, and that a clear
policy and common standards are needed in these areas well before
2020: it also believes that solidarity between Member States will
be null and void without interconnectors across external borders
and maritime areas, noting that, as a major energy importer, the
EU is directly affected by the evolution of networks in neighbouring
countries.
2.10 The Commission says that an investment of around
€1 trillion is needed by 2020 to replace obsolete capacity,
modernise and adapt infrastructures, and cater for increasing
and changing demand for low-carbon energy: and it adds that, whilst
investment decisions lie mainly with energy companies, system
operators and consumers, public policy is decisive in creating
a stable and transparent framework for such decisions, with a
need to utilise fully the new tools[5]
created by the Third Internal Energy Market Package, and regional
initiatives serving as stepping stones towards a European market.
Whilst observing that infrastructure investment will continue
to be financed mainly from tariffs paid by users, it says that
the market alone will not necessarily deliver the scale of investment
needed, and that it proposes to adopt a new strategy on infrastructure
development to ensure adequate grid investments in electricity,
gas, oil and other energy sectors, notably natural gas. It also
states that complex and lengthy administrative procedures can
be a major bottleneck, and that existing procedures for projects
of European interest will need to be improved and streamlined,
whilst respecting the principles of public acceptance and existing
environmental legislation, and engaging local, regional and national
communities more constructively.
EMPOWERING CONSUMERS AND ACHIEVING THE HIGHEST LEVEL
OF SAFETY AND SECURITY
2.11 The Commission observes
that, whilst a well functioning internal market benefits consumers
through wider choice and lower prices, many do not perceive that
they are better off as a result of greater competition between
suppliers, and that individuals need to exercise their rights
under EU legislation and to be aware of the potential for reducing
energy bills through savings, noting also the importance of competitive
energy for important European industries. It says that, since
the international market for oil supplies could become very tight
before 2020, EU consumers need to step up their efforts to reduce
demand, and that, although this can be achieved through user-friendly
smart grids, smart meters and billing, consumers also need to
become more pro-active. However, although the Commission regards
the provision of affordable and reliable supplies as primarily
the task of the market, it says that safety nets are necessary
for vulnerable consumers or at times of supply crisis, and that
the internal market is also hampered when Member States are not
fully interlinked: and it points to the importance of the Gas
Security Regulation,[6]
to the need for further interconnection between Member States,
and for active competition enforcement. Finally, it comments on
the need to ensure that European citizens are protected from the
risks of energy production, and that the EU must continue to be
a world leader in developing systems for safe nuclear power, the
transport of radioactive substances, and the management of nuclear
waste, with international collaboration on nuclear safeguards
playing a major role.
EXTENDING EUROPE'S LEADERSHIP IN ENERGY TECHNOLOGY
AND INNOVATION
2.12 The Commission says that,
without a technological shift, the EU will fail in its 2050 ambitions
to decarbonise electricity and transport, and that, given the
timescale for developing and disseminating new low-carbon technologies,
it is more urgent than ever to bring these to European markets.
It observes that the Emissions Trading Scheme is an important
demand-side driver, but that new technologies will reach markets
more quickly and economically if they are developed through collaboration
at the EU level. It points out that the Strategic Energy Technology
(SET) Plan sets out a medium term strategy for all sectors, but
that development and demonstration projects for the main technologies
must be speeded up, noting also the crucial role of innovation
highlighted in the Europe 2020 flagship on "Innovation Union".[7]
2.13 The Commission points out that the resources
required over the next two decades for the development of these
technologies are very significant, especially in the current economic
climate: and it suggests that, as major projects — such
as offshore wind power — affect several Member States, the
Europe-wide coordination needed should include the pooling of
different funding sources, with all stakeholders being expected
to contribute, and leverage by the EU budget raising further the
overall level of funding. The Commission also stresses the fierce
competition which the EU faces in international technology markets,
for example solar, wind and nuclear energy, and the need for its
researchers and companies to increase their efforts, including
stepping up cooperation with third countries where this is mutually
beneficial.
INTERNATIONAL PARTNERSHIPS
2.14 The Commission notes that
the EU is the world's largest regional energy market and importer,
but that the same collaboration and common purpose is not yet
evident in external energy policy, even though several of the
challenges it faces are common to most countries and rely on international
collaboration. It adds that international energy policy must be
based on security of supply, competitiveness and sustainability,
and that, whilst relations with producing and transit countries
are important, those with large energy-consuming nations, not
least emerging and developing countries, are of growing significance,
with sustainable needs being at the core of both energy and development
policy, as proposed in the Green Paper on Development Policy.
It also observes that new patterns of global supply and demand,
and increasing competition for resources, make it essential for
the EU to apply its combined weight effectively in relation to
its third country suppliers, and to push its agenda for decarbonisation
and energy efficiency. It notes that the Emissions Trading Scheme
is a driver of international carbon markets, and can further their
development, and that the EU already has a series of complementary
and targeted frameworks ranging from specific energy provisions
in bilateral agreements to multilateral arrangements, such as
the Energy Community Treaty and the Energy Charter Treaty, with
negotiations for new agreements currently taking place with several
countries.
2.15 The Commission says that the EU must now formalise
the principle that Member States should act for the benefit of
the EU as a whole in bilateral relations, and that, building on
the legal basis in the Lisbon Treaty, its external energy policy
must be based on effective solidarity, responsibility and transparency
among all Member States, ensuring the security of the internal
energy market, and involving more effective coordination. It suggests
that international cooperation has produced good results in the
nuclear field, and that the EU should now encourage partner states
to make international nuclear safety and security standards and
procedures legally binding and effectively implemented worldwide.
It adds that, as well as being vital for its security of supply,
the external dimension of EU energy policy must be consistent
with its other external activities on development, trade, climate
and biodiversity, enlargement, and Common Foreign and Security
Policy: and it says that energy security is closely intertwined
with the EU's foreign and security priorities, with diversification
of fuels, sources of supply and transit routes being essential.
It says that it will present in 2011 concrete proposals to reinforce
the overall consistency and efficiency of EU external energy policy.
2.16 The Commission concludes by repeating that the
EU faces huge challenges in securing the secure energy supplies
which are crucial to sustainable growth, and that the new strategy
will help to prepare it for those it may have to face by 2020.
However, it adds that the long lead-in times needed for changes
to energy systems means that the transition to a low-carbon economy
by 2020 cannot be guaranteed, and that it therefore proposes to
follow up this strategy with a roadmap for 2050.
The Government's view
2.17 In his Explanatory Memorandum
of 24 November 2010, the Minister of State for Energy and Climate
Change at the Department of Energy & Climate Change (Mr Charles
Hendry) says that the Government welcomes the publication of this
Communication as an important step towards defining the EU's energy
policy over the coming decade. It believes that Member States
face common challenges as they try to reduce emissions, increase
energy security and improve competitiveness, and that it is vital
they work together to address challenges such as the need to drive
down energy consumption, incentivise investment in infrastructure,
and promote the development and deployment of low carbon technologies.
2.18 The Minister says that the Government agrees
with the broad priorities identified by the Commission, and welcomes
in particular the strong focus on making the internal market work;
the development of low carbon infrastructure; the intention to
focus on implementation of the SET Plan; and the commitments to
continue the EU's work on standard-setting and labelling regimes
to improve energy efficiency. He adds that the Commission has
rightly identified the need to ensure that the EU has good relationships
with suppliers and other major consumer states, and the importance
of working together to achieve this, and that the Government also
agrees that the EU needs to tackle issues such as lack of consumer
information and freedom to switch suppliers, in particular through
implementation of internal market legislation, this being vital
if a change in behaviour and a good deal for consumers is to be
encouraged.
2.19 The Minister notes the Commission's intention
to present a number of legislative actions and proposals over
the next eighteen months, and says that the Government will want
to ensure that these do not lead to unnecessary increases in regulatory
burdens and that any new use of EU funds is focused on areas which
provide added value, represent value for money, and reflect the
need for fiscal consolidation across the EU. He adds that the
Government will monitor closely all proposals to ensure that they
respect the divisions of competence between Member States and
the EU, and notes that the UK has some concerns about proposals
in relation to European external relations policy and references
to taxation and planning policy.
2.20 The Minister says that the Communication was
due to be discussed at the Energy Council on 3 December, and will
in turn inform the energy-themed European Council on 4 February
2011.
Conclusion
2.21 Although this is the
third major review of energy strategy produced by the Commission
in a little under four years, this is a policy area which is of
manifest political, economic, environmental and social importance,
given the various commitments which the EU has made, including
those to reduce greenhouse gas emissions, increase the uptake
of renewables, and improve energy efficiency. We are therefore
drawing this document to the attention of the House.
2.22 At the same time, as each of the two previous
Communications was debated in the not-too-distant past, we have
considered carefully whether another debate at this stage would
be appropriate. We have concluded that it would, partly because
this is a topical and fast-moving area whose importance, if anything,
increases over time, and partly because a debate now would provide
the present House with its first opportunity to consider EU policy
in this area in some detail. We are therefore recommending that
the document should be debated in European Committee.
1 (28276) 5282/07: see HC 41-x (2006-07), chapter 2
(21 February 2007). Back
2
(30198) 15944/08: see HC 19-iii (2008-09), chapter 2 (14 January
2009). Back
3
For example, the Commission says that it will assess from 2011
the effects of the Renewable Energy Directive. Back
4
Such as North Sea wind power and solar facilities in southern
Europe. Back
5
These include the Agency for the Cooperation of Energy Regulators
and new Networks of Transmission System Operators for Electricity
and Gas. Back
6
Regulation (EC) No 994/2010. Back
7
(32042) 14035/10: see HC 428-viii (2010-11), chapter 8 (17 November
2010) Back
|
