State of the Energy Union: we need clear targets & effective governance

State of the Energy Union Review Highlights the Need for Clear Targets and Effective Governance on the EU and Member State Level

This blog links to a more detailed working paper: A Comparison of the European Climate and Energy 2020 and 2030 Packages

Antony Froggatt, 18th November 2015

The release by the European Commission of its State of the Energy Union assessment highlights that progress is being made to meet key climate change and energy objectives.  However, below the surface there are worry signs for future targets and objectives.   In particular, the Commission notes that only around a third of countries have comprehensive energy and climate strategies in place beyond 2020, which is said to be of ‘serious concern’.  Furthermore, they note that the integration of these plans is necessary to have more strategic regional and EU wide plans.

European energy policy matters; not just to the EU’s Member States but also to the wider continent, and in many instances it can and does have a global impact.   None more so than the setting of the decadal climate and energy targets, the current one of which is in the midst of being agreed upon by the EU institutions and Members States.

The first climate and energy package was settled in 2009 and covered the period up to 2020, while the second relates to the period 2020-2030.  On the surface they are similar, in that they both introduce binding targets for the reduction in Greenhouse Gas emissions, the use of renewable energy and energy efficiency.   However, there are significant differences in their legal frameworks and governance mechanisms.

The 2009 package was known as the 20:20:20 package, as it proposed to reduce GHG emissions by 20% from 1990 levels, 20% of the EU’s energy was to come from renewables and there was to be a 20% improvement in energy efficiency, all by 2020.   The package was introduced in preparation for the Copenhagen Climate Change Conference in 2009. Despite this, in many ways it has been the renewable energy target that has had the most global impact, since it has been the EU that drove the global market for solar and wind, leading to rising production across the world and falling costs. Since the package was introduced there has been significant progress in meeting the key targets.  GHG emissions have fallen by 23% since 1990, while renewables provided 15% of energy in 2013 and an expected 16% in 2014.   At the same time energy consumption fell between 2005 and 2013 by 8.3%.

The 2030 package has introduced a relatively ambitious GHG target that is binding on Member States and which should lead to a reduction of 40% from 1990s levels.  This target is the EU’s pledge for the Paris Climate Change Conference in December 2015. The renewable energy target, of 27% by 2030, is of a new type; one which is binding on the EU overall but not on Member States individually.  This was the result of a compromise between Member States, as some wanted a similar target to that for 2020 while others didn’t.  Consequently, the extent to which countries will be encouraged or even be assessed for the production of specific quantities of renewable energy remains to be agreed.   Also introduced was an indicative target for a 27% improvement in energy efficiency by 2030 compared to current projections.

While the 2030 GHG target is ambitious relative to the 2020 target, it is again the renewable energy target that has the potential to be of global significance, particularly in the power sector, if implemented (and this is a big if).    As with the 2020 target, the electricity sector is expected to lead the charge, with higher uses of renewables expected than for the transport and heat and cooling sectors.   Consequently, it is calculated that by 2030, up to 45% of the EU’s power will come from renewables – in 2013 production was 26%.  If this target is to be achieved it will mean a transformation of the sector, with new balancing and storage technologies, flexible demand and greater interconnection, all in turning requiring new actors and further market reform.  Fear of this transformation, especially from, the incumbents, has increased resistance to the binding nature of the renewables target.

To address this, included in the 2030 climate and energy package and in the discussions around the introduction of a European Energy Union are proposals for a new European Governance Framework.  The extent there may or may not be penalties for non-compliance or failure to meet common EU objectives, will be a, if not the, determining factor for the extent to which the 2030 targets and other common energy policy objectives are met.

Discussions on the political shape of the European Governance framework may be concluded at the December Energy Council meeting.  But even if they are, this will not be the end of the process as it is likely that the Commission will be tasked with getting agreement on the details about how the European Governance Framework will actually function, including an inventory of current reporting frameworks, proposals for a template for progress reporting and a developing a methodology for key performance indicators.   These will be the nuts and bolts of the future Governance Framework, so there will still be much work still to be done at both the National and European level.  To be effective, ultimately, the new Governance Framework will need the ability to sanction in the event of non-compliance either in information provision or implementation. However, to date, this is not something that Member States are agreed on and therefore there is still much work to be done in developing a real European Energy Union.

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