Article - European and International Energy Policy

European energy policy

Introduction

European Union stars in front of solar panels symbolises the EU's 2030 framework for climate and energy policies; Source: Fotolia.com/Thomas Kleber

© Fotolia.com/Thomas Kleber

European solutions are of the essence when it comes to reconciling the objectives of energy security, competitiveness, and climate change mitigation as the energy transition is progressing. The European climate and energy framework for 2030 and the legislative packages of the European Union for an energy union are of key strategic significance for the future direction of European and national climate and energy policies, and thus for the successful implementation of the energy reforms.

The European Union has set itself the target to bring down greenhouse gas emissions within the EU by at least 40 per cent by 2013 compared with 1990 levels. In addition, the share of renewable energy in the EU's final energy consumption is to be increased to 32 per cent while the EU's primary energy consumption is to be reduced by 32.5 per cent compared to a baseline scenario. In order to reach this goal, the European electricity markets are to grow closer together and to be made fit for the growing proportion of intermittent renewable energy across Europe. In addition, the rights and options of final customers in the electricity markets are to be strengthened.

“Clean Energy for All Europeans” package

Together with legislation on climate policy and the gas sector, the “Clean Energy for All Europeans” package forms the framework for the implementation of the Energy Union and the European climate and energy targets up to 2030. The package itself consists of four Directives and four Regulations.

The Federal Government welcomes the adoption of the legislative package. The agreement on ambitious but attainable objectives in combination with robust instruments for their implementation sends out a strong signal for a European energy transition. This will have a key impact on the energy transition in Germany over the next decade.

The revised Renewable Energy Directive will provide the EU with a new framework for the funding of renewable energy. The share of renewable energy in final energy consumption within the EU is to increase to at least 32% by 2030. In addition to common funding rules for electricity from renewables, the directive also addresses the heating and transport sectors, which account for two-thirds of energy consumption.

For example, the Member States will need to increase the share of renewable energy they use for heating and cooling by 1.3 percentage points from 2021 onwards. In the transport sector, the marketers of fuels are obliged to increase the share of renewable fuels by 14% by 2030 – largely via the use of new technologies such as electric mobility and power to X (using electricity to generate synthetic fuels). The updated Directive will also restrict the share of first-generation biofuels – biofuels that are produced from food crops.

The revised Energy Efficiency Directive seeks to reduce primary energy consumption within the EU by 32.5% by 2030 compared with a reference scenario. Member States remain at liberty to decide on their indicative contribution towards the EU’s energy efficiency target for 2030. The key instrument for the implementation of the Directive – the energy efficiency obligation – has been strengthened and extended beyond 2020. In this context, real savings of 0.8% a year were agreed for the first time. Up until now, the Member States had to adopt measures to achieve 1.5%; however, there were a large number of exemptions by which countries could reduce this target to below the real rate of 0.8% which has now been agreed.

The new Energy Union Governance Regulation provides a new planning and monitoring system for the implementation of the Energy Union's objectives, in particular the EU-2030 energy and climate objectives. It provides that the Member States will adopt Integrated National Energy and Climate Plans (NEPCs) (in German) – modelled upon Germany’s Energy Concept – by 2030, and also develop long-term strategies to cut greenhouse gases and carbon emissions covering the period up until 2050. The final versions of the NECPs must be transmitted to the European Commission by the end of December 2019.

The revision of the Buildings Directive provides for a further development of the long-term renovation strategies currently covered by the Energy Efficiency Directive. In addition, the revision contains provisions permitting new buildings to become better equipped to cope with the future needs and possibilities of energy and transport infrastructure. The Directive anchors an arrangement to promote the creation of the necessary infrastructure for electric mobility: in future, new buildings with more than 10 parking spaces must include conduits to permit the provision of charging infrastructure. Regarding the inspections of heating and air-conditioning systems, there will in future be a further option in addition to the existing possibility of “alternative measures”: the fitting of building automation and control systems. The European Commission will also develop a smartness indicator to assess the technological capability of a building to regulate itself and communicate with the residents and the electricity grid.

The new version of the Internal Electricity Market Directive strengthens the rights of consumers and their participation in the electricity market in Europe. Electricity suppliers that have more than 200,000 customers will have to offer flexible electricity tariffs in future. This is of particular interest to consumers who use an intelligent electricity meter ("smart meter"). These consumers can choose a tariff which allows them to purchase electricity at a lower price at certain times during the day and to adjust their consumption patterns accordingly. For example, customers can choose to charge their electric cars at a time when the price for electricity is lowest. For the first time, the new Electricity Market Directive also contains basic rules that facilitate the work of independent aggregators. These are businesses that pool small capacities from different customers and sell them on the market.

The new version of the Electricity Market Regulation stipulates, for example, that interconnectors must be opened to a larger degree for cross-border trade. Under the new Regulation, the capacity levels provided for electricity trading will be incrementally raised until they reach 70%. This is to help boost the pan-European trade in electricity and not least, to make electricity cheaper for consumers. There is also the question of how Member States are to deal with internal bottlenecks in their grids. After all, more cross-border trade in electricity translates into more pressure on the grids. Member States experiencing internal gridlock will be able to decide if they want to split up their electricity market into several bidding zones or whether they prefer to table a plan of action on how they are planning to eliminate instances of gridlock.

In future, security of supply is to be looked at from a cross-border perspective. After all, power plant capacities in neighbouring countries also contribute to security of supply in the Member States. This means that Europe-wide trade in electricity helps to achieve security of supply in a more reliable manner and to reduce the costs associated with it since less power plant capacity is required overall. The necessary action will be underpinned by a European energy security report.

Furthermore, the new version of the Regulation stipulates binding requirements for capacity reserves and capacity markets within Europe. For example, carbon-intensive power plants are excluded from participating in capacity mechanisms.

The national regulatory agencies in the energy sector (in Germany: the Bundesnetzagentur – Federal Network Agency) will in future have a greater say as regards internal decision-making processes at the European Agency for the Cooperation of Energy Regulators (ACER). In addition, the Regulation provides for ACER's competencies to be expanded in the future.

The new Risk-preparedness Regulation stipulates that Member States initially develop national crisis scenarios which show what risks exist for their national electricity supply. On this basis, Member States must draw up risk-prevention plans detailing national and cross-border action to be taken to prevent and address potential crises.

Some of the pieces of legislation agreed between the European Parliament, the Council and the European Commission have already become effective, whilst others await formal confirmation. Once all of them have been formally adopted, Member States will need to translate them into national law over the next few years.

State of the Energy Union 2015

1

19 December 1996

2

26 June 2003

3

16 February 2005

4

14 June 2006

5

10 January 2007

6

9 March 2007

7

13 July 2009

8

24 October 2014

9

25 February 2015

10

12 December 2015

11

30 November 2016

12

18 January 2016

The European Parliament and the Council adopt Directive No 96/92/EC putting in place uniform provisions for the internal electricity market (First Internal Electricity Market Directive).

Adoption of the Second Internal Electricity Market Package.

Entry-into-force of the Kyoto Protocols, which had been adopted in 1997 and which set out the first targets on limiting greenhouse gas emissions in the industrialised countries. Introduction of the EU emissions trading scheme.

The European Commission’s Green Paper entitled 'A European Strategy for Sustainable, Competitive, and Secure Energy’ sets out the three main objectives for EU energy policy.

Publication of the European Commission’s plan of action on energy entitled “An Energy Policy for Europe”.

The European Council, with Germany holding the Presidency at the time, publishes a comprehensive programme for an “integrated EU energy and climate policy”. The three energy and climate targets for 2020 are set and become known as the “20-20-20” targets.

Adoption of the Third Internal Energy Package by the European Parliament and the Council.

Adoption of the Climate and Energy Framework for 2030 by the European Council.

The European Commission tables its Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy.

UN Climate Conference in Paris; adoption of a new international agreement replacing the Kyoto Protocols.

The European Commission presents its legislative package entitled Clean Energy for all Europeans, which sets out detailed proposals for an overhaul of the energy framework, which is to deliver fresh progress towards the energy union and towards implementation of the targets for 2030.

The “Clean Energy for All Europeans” legislative package is adopted.

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