9State of the Energy Union
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Committee’s assessment |
Politically important |
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Cleared from scrutiny; drawn to the attention of the Business, Energy and Industrial Strategy Committee |
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Document details |
(a) Commission Communication—Second report on the state of the energy union; (b) Commission Staff Working Document: Monitoring progress towards the Energy Union objectives—key indicators; (c) Commission Report—2016 assessment of the progress made by Member States in 2014 towards the national energy efficiency targets for 2020 and towards the implementation of the Energy Efficiency Directive; (d) Commission Report—Renewable Energy Progress Report |
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Legal base |
— |
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Department |
Business, Energy and Industrial Strategy |
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Document Numbers |
(a) (38504), 5902/17 + ADDs 1–2, COM(17) 53; (b) (38512), 5901/17, SWD(17) 32; (c) (38502), 5868/17, COM(17) 56; (d) (38503), 5890/17, COM(17) 57 |
Summary and Committee’s conclusions
9.1The Energy Union is one of the ten political priorities identified by the Commission President, Jean-Claude Juncker. It has five dimensions: energy security; a fully integrated European energy market; energy efficiency; decarbonising the economy; and research, innovation and competitiveness.
9.2The Commission concludes in its Report on the State of the Energy Union (document (a)) that progress has been made on all of these dimensions. It categorises 2016 as a “year of delivery” during which various legislative proposals were tabled, such as those revising the electricity market and amending the energy efficiency and renewable energy Directives. The focus now, it says, should be on implementation.
9.3At the same time, the Commission published progress reports on energy efficiency and renewable energy. These demonstrate that the EU is on schedule to meets its 2020 targets in both areas. The UK is cited as one of the Member States, however, which might have to reinforce cooperation with others in order to reach its national binding renewable energy target.
9.4The Parliamentary Under-Secretary of State, (Jesse Norman), is content with the various Reports. He identifies the recent improvements in interconnection within the EU as an important building block towards a fully functioning energy market and an important contribution to energy security.
9.5The documents are progress Reports and do not make new proposals. They relate, however, to the wide-ranging package of Clean Energy legislative proposals which we considered at our meeting of 25 January 2017. The Minister’s specific reference to interconnection and to a fully functioning energy market point to the importance of resolving the UK’s energy relationship with the EU following Brexit. This is a matter that we raised in our scrutiny of the Clean Energy package, and we look forward to the Government’s response.
9.6Given that background, we judge the documents to be of political importance and accordingly draw them to the attention of the House. We have no concerns additional to those already raised on earlier documents. We therefore clear them from scrutiny and draw them to the attention of the Business, Energy and Industrial Strategy Committee.
Full details of the documents
(a) Commission Communication—Second Report on the state of the energy union: (38504), 5902/17 + ADDs 1–2, COM(17) 53; (b) Commission Staff Working Document: Monitoring progress towards the Energy Union objectives—key indicators: (38512), 5901/17, SWD(17) 32; (c) Commission Report—2016 assessment of the progress made by Member States in 2014 towards the national energy efficiency targets for 2020 and towards the implementation of the Energy Efficiency Directive 2012/27/EU as required by Article 24 (3) of the Energy Efficiency Directive 2012/27/EU: (38502), 5868/17, COM(17) 56; (d) Commission Report—Renewable Energy Progress Report: (38503), 5890/17, COM(17) 57.
Report on the State of the Energy Union (documents (a) and (b))
9.7The Commission concludes that the EU as a whole has continued to make good progress on delivery of the Energy Union’s objectives, in particular in meeting the EU’s 2020 climate and energy targets. The EU is on track to meet its 2020 energy efficiency target. Greenhouse gas emissions were 22% below 1990 levels (against a 20% target for 2020) and although there was a temporary increase in emissions in 2015, emissions remain on a decreasing trend. Emissions in the EU Emissions Trading System (EU ETS) continued to fall. The EU is also on track to meet its 2020 renewable energy target with renewables reaching 16% of final energy consumption in 2014 though the Commission highlights the need for further efforts to 2020. The EU also continues to successfully decouple economic growth from greenhouse gas emissions with Gross Domestic Product growing by 50% from 1990–2015 whilst emissions have decreased by 22%.
9.8The report highlights the entry into force of the Paris climate change agreement in 2016 and the legislative proposals on the EU ETS, effort share for sectors outside the ETS and integration of land use, land use change and forestry. The Commission also published a low emission mobility strategy in 2016 and the Clean Energy Package, including proposals on electricity market design, renewable energy, energy efficiency and a governance framework for the Energy Union.
9.9The Commission highlights a number of important interconnection projects that began operation in 2016 with work beginning on a number of others. A new high-level group was also established for co-operation in the North Sea focussed on integration of offshore wind and interconnection.
9.10On financing, the Commission highlights the important role of the European Fund for Strategic Investments in helping unlock private finance. European Structural and Investment Funds and Horizon 2020, the EU’s research programme, are also identified as important sources of funding. In 2017 the Commission intends to launch a Smart Finance for Smart Buildings initiative in co-operation with the European Investment Bank to help accelerate building renovation.
9.11Turning to the EU’s neighbourhood, there was a particular focus in 2016 on market reform in Ukraine with progress made in the gas market and on energy efficiency. The Commission also conducted a series of meetings with Ukraine and Russia to ensure stable supplies to Ukraine and gas transit to the EU.
9.12The Staff Working Document (document (b)) reports against a range of specific indicators intended to monitor and assess progress on meeting the Energy Union objectives.
Energy Efficiency Progress Report (document (c))
9.13The Report assesses the progress made by the EU and individual Member States up to 2014 towards energy efficiency targets for 2020. It also reviews implementation of the Energy Efficiency Directive (2012/27/EU).
9.14The Commission considers that considerable progress has been made to date and is optimistic that the 2020 target will be reached if Member States continue to implement existing legislation and programmes effectively. In 2014 the EU’s primary energy consumption60 was only 1.6% above the EU’s 2020 target and final energy consumption61 was 2.2% below the 2020 target though the Commission notes that 2014 was a very warm year and that both primary and final consumption increased in 2015.
9.15The Commission notes that the annual reduction in primary energy consumption in the UK between 2013 and 2014 had been substantial (7%). The UK is judged by the Commission to be reducing consumption at a rate higher than that needed to meet the 2020 targets.
9.16The Commission reports that the Energy Efficiency Directive has not been fully transposed in some Member States. The UK Government has formally notified the Commission that it has completed transposition of the Directive. The Commission considers that Member States have made good progress towards reaching their binding national energy-saving targets under Article 7 of the Energy Efficiency Directive. The UK is highlighted as one of eight Member States to have reached or exceeded expected savings in 2014.
Renewable Energy Progress Report (document (d))
9.17The current Renewable Energy Directive, agreed in 2009, sets a target for 20% of energy to be renewable across the EU by 2020. EU Member States are also set individual binding targets for consumption of energy from renewable sources (UK 15%) as well as an additional target to achieve 10% renewable energy in transport.
9.18The EU is on track to reach its 20% renewable energy target by 2020, having achieved a share of 16% renewables in its final energy consumption in 2014 and approximately 16.4% in 2015.
9.19The EU is also performing strongly in terms of the deployment of renewables in electricity, with the highest share of Renewable Energy Sources (RES) in this sector. In 2011, renewables generated 21.7% of the EU’s electricity; by 2015, this figure reached 27.5% and it is expected to climb to 50% by 2030. This continued growth has resulted in lower renewable costs. For example, the prices of photovoltaic modules fell by 80% between the end of 2009 and the end of 2015.
9.20The transport sector had a 6% share of renewable energy in 2015, below the mandatory 10% target due to relatively high greenhouse gas (GHG) mitigation costs and regulatory uncertainty. Renewable energy in transport comes largely from biofuels (88%).
9.21The report states that the EU Member States which are currently projected not to meet their national RES share binding targets by 2020 are the UK, Ireland, Luxembourg, and the Netherlands. The estimated RES share for the UK in 2020 is 14.8%, against a binding 15.0% target. To meet their target, EU Member States will be able to use cooperation mechanisms with other Member States and countries outside the EU such as statistical transfers of renewable energy or joint renewable energy projects.
Minister’s Explanatory Memoranda of 21 February 2017
Report on the State of the Energy Union (documents (a) and (b))
9.22The Minister welcomes the Report. Particularly encouraging is the Commission’s assessment that the EU is on track to meet its 2020 targets for greenhouse gas emissions, energy efficiency and renewable energy. He sets out the Government’s position in the following terms:
“The Government shares the Commission’s view that 2016 was an important year in delivering the objectives of the Energy Union. In particular, the publication of the Clean Energy package in November represents a significant milestone in implementing the EU’s 2030 climate and energy framework with important legislation on electricity market design, renewable energy, energy efficiency and Energy Union governance to be negotiated over the coming year.
“The Communication also rightly highlights the importance of ratification of the Paris Agreement and the action taken in 2016 to implement the EU’s commitments by bringing forward proposals on the EU ETS and the Effort Share Decision in 2016. We also look forward to the translation of the Low Emissions Mobility Strategy into specific initiatives over the coming year.
“The Commission’s intention to continue to work to address barriers to investment and leverage private finance through EFSI is a positive step forward—a number of UK projects are already receiving support. We look forward to practical proposals under the Smart Finance for Smart Buildings initiative to help facilitate investment in building renovation.
“The recent improvements in interconnection within the EU recorded in the report are also welcome as an important building block towards a fully functioning energy market and an important contribution to energy security. The UK is also a signatory to the political declaration on energy co-operation between the North Seas Countries adopted in 2016 and referred to in the report.
“The Government supports the important work the Commission has done over the last year in brokering agreements between Russia and Ukraine to secure gas supplies for Ukraine and the important work on reforming Ukraine’s energy market. The UK also supported adoption of the revised Decision on Inter-Governmental Agreements in order to ensure effective transparency, co-operation and compliance with EU law.”
Energy Efficiency Progress Report (document (c))
9.23The Minister expressed the Government’s support for the Report, including its assessment that the EU as a whole and individual Member States, including the UK, have made considerable progress towards meeting EU and national energy efficiency targets for 2020. He comments:
“The fact that the Commission considers that the EU is on track to meet the EU’s 2020 target and that this is primarily due to improvements in energy efficiency driven by public policy is a reflection of the significant efforts made at the national level. The lessons derived from the progress made to date will also be an important contribution to the current negotiations on energy efficiency targets for 2030 in the updated Energy Efficiency Directive that formed part of the Commission’s Clean Energy Package published in November 2016.”
Renewable Energy Progress Report (document (d))
9.24The Minister notes simply that the Government will play a full part in the forthcoming negotiations on the Commission’s proposed recast of the Renewable Energy Directive, which would cover the period 2021 to 2030, as part of its wider legislative package “Clean energy for all Europeans”.
Previous Committee Reports
None.
60 Total energy demand of a country, including consumption by the energy sector itself.
61 Total energy consumed by end users, such as households, industry and agriculture.
10 March 2017