EC Proposes Integrated Energy and Climate Change Legislative Package

January 12, 2007 // Published as a news service by IHS

The EC believes that when an international agreement is reached on the post-2012 framework, this should lead to a 30% cut in emissions from developed countries by 2020. To further underline its commitment, the EC proposes that the EU commit now to cut greenhouse gas emissions by at least 20% by 2020, in particular through energy measures.

EC President José Manuel Barroso said, "Today marks a milestone for the European Union. Energy policy was a core area at the start of the European project. We must now return it to centre stage. The challenges of climate change, increasing import dependence and higher energy prices are faced by all EU members. A common European response is necessary to deliver sustainable, secure and competitive energy. The proposals put forward by the EC today demonstrate our commitment to leadership and a long-term vision for a new energy policy for Europe that responds to climate change. We must act now, to shape tomorrow's world."

Andris Piebalgs, EC commissioner for energy policy, said, "If we take the right decisions now, Europe can lead the world to a new industrial revolution: the development of a low carbon economy. Our ambition to create a working internal market, to promote a clean and efficient energy mix and to make the right choices in research and development will determine whether we lead this new scenario or we follow others."

Stavros Dimas, EC commissioner for the environment, said, "Climate change is one of the gravest threats to our planet. Acting against climate change is imperative. Today, we have agreed on a set of ambitious, but realistic targets which will support our global efforts to contain climate change and its most dire consequences. I urge the rest of the developed world to follow our lead, match our reductions and accelerate progress towards an international agreement on the global emission reductions."

Europe faces real challenges. There is a greater than 50% chance that global temperatures will rise during this century by more than 5°C. Based on current projections, energy policies and transport policies, EU emissions will increase by around 5% by 2030. With current trends and policies, the EU's energy import dependence will jump from 50% of total EU energy consumption today to 65% in 2030. In addition, the internal energy market remains incomplete, which prevents EU citizens and the EU economy from receiving the full benefits of energy liberalisation.

The new package proposed by the EC seeks to provide solutions to these challenges based on three central pillars:

1. A true internal energy market
The goal is to give real choice for EU energy users, whether citizens or businesses, and to trigger the huge investments needed in energy. The single market is good not just for competitiveness, but also for sustainability and security.

The competition sector enquiry (see IP/07/26) and the internal market communication show that further action is required to deliver this goal through a clearer separation of energy production from energy distribution. It also calls for stronger independent regulatory control, taking into account the European market, as well as national measures to deliver on the EU's target of 10% minimum interconnection levels, by identifying key bottlenecks and appointing coordinators.

2. Accelerated shift to low-carbon energy
The EC proposes to maintain the EU's position as a world leader in renewable energy, by proposing a binding target of 20% of its overall energy mix will be sourced from renewable energy by 2020. This will require a massive growth in all three renewable energy sectors: electricity, biofuels, and heating and cooling. This renewables target will be supplemented by a minimum target for biofuels of 10%. In addition, a 2007 renewables legislative package will include specific measures to facilitate the market penetration of both biofuels and heating and cooling.

Research is also crucial to lower the cost of clean energy and to put EU industry at the forefront of the rapidly growing low-carbon technology sector. To meet these objectives, the EC will propose a strategic European energy technology plan. The EU will also increase by at least 50% its annual spending on energy research for the next seven years.

At present, nuclear electricity makes up 14% of EU energy consumption and 30% of EU electricity. The EC proposals underline that it is for each member state to decide whether or not to rely on nuclear electricity. The EC recommends that where the level of nuclear energy reduces in the EU, this must be offset by the introduction of other low-carbon energy sources; otherwise, the objective of cutting greenhouse gas emissions will become even more challenging.

3. Energy efficiency
The EC reiterates the objective of saving 20% of total primary energy consumption by 2020. If successful, this would mean that by 2020 the EU would use approximately 13% less energy than today, saving €100 billion and around 780 tonnes of CO2 each year.

The EC proposes that the use of fuel-efficient vehicles for transport be accelerated; that tougher standards and better labelling on appliances be enforced; and that there be improved energy performance of buildings as well as improved efficiency of heat and electricity generation, transmission and distribution. The EC also proposes a new international agreement on energy efficiency.

An international energy policy where the EU speaks with one voice
The proposals centred on these three pillars will need to be underpinned by a coherent and credible external policy. The EU cannot achieve its energy and climate change objectives on its own. It needs to work with both developed and developing countries and energy consumers and producers. The EU will develop effective solidarity mechanisms to deal with any energy supply crisis and actively develop a common external energy policy to increasingly "speak with one voice" with third countries. It will endeavour to develop real energy partnerships with suppliers based on transparency, predictability and reciprocity.

Drawing on the consultation process on its green paper issued in 2006, the EC has already made progress towards a more coherent external energy policy, as demonstrated by the creation of a network of energy security correspondents. The EC proposes a whole series of concrete measures to strengthen international agreements - including the Energy Charter Treaty, post-Kyoto Protocol climate regime, extension of emissions trading to global partners and further extended bilateral agreements with third countries - so that energy becomes an integral part of all external EU relations and especially of the European Neighbourhood Policy. As major new initiatives, the EC proposes to develop a comprehensive Africa-Europe partnership and an international agreement on energy efficiency.

Concrete action is urgently required. Taken together, the sector enquiry, strategic review and action plan represent the core of a proposed new European energy policy. This process seeks to move from principles into concrete legislative proposals. The EC will seek endorsement of the energy and climate change proposals during the spring European Council and will come forward with legislation in light of these discussions.

All the documents for the new energy policy can be found at the following addresses: http://europa.eu/press_room/presspacks/energy/index_en.htm.

Source: European Commission.