EN Official Journal of the European Union C 423/64

Opinion of the European Committee of the Regions — Energy Union Package

(2015/C 423/12)

Rapporteur: Mr Pascal MANGIN (FR/EPP), Regional Councillor of Alsace Reference documents: A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy (COM(2015) 80 final) and Achieving the 10 % electricity interconnection target — Making Europe’s electricity grid fit for 2020 (COM(2015) 82 final)

POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS,

Key messages

1. underlines that to achieve the goals of the Energy Union, Member States and local and regional authorities must ensure strict enforcement of existing legislation regarding the internal market and energy and climate policies;

2. recalls that energy has been a key element of European integration (1951 Treaty of Paris, Euratom Treaty of 25 March 1957); notes that the choice between different energy sources and the general structure of supply remain prerogatives of the Member States (Article 194 TEU), but underlines that stronger coordination at EU level is necessary to ensure the proper functioning of the energy market, strengthen competitiveness and enable the move towards sustainable and secure energy supply for all territories in the European Union;

3. points out that, according to the Conclusions of the European Council of 20 March 2015, the Energy Union consists of five equal dimensions;

4. welcomes the adoption by the Commission of the non-legislative Energy Union package as a step towards a better-integrated energy market across the 28 Member States and as a framework for wider debate on current key challenges in the area of energy policy, which are also reflected in the CoR’s recent political work and opinions on sustainable, affordable and competitive energy and security of supply;

5. calls on the European Commission to respect the subsidiarity and proportionality principles in the upcoming legislative proposals concerning the Energy Union;

6. emphasises the impact of energy imports on the EU trade balance and its increasing dependence on third countries;

7. therefore calls for the adoption of regulatory initiatives and the implementation of infrastructure projects that effectively address the problem of the Member States’ excessive import dependency on individual suppliers;

8. recalls that the European electricity system is currently in transition. It has considerable excess production capacity with the advent of intermittent renewable energy, which increases the need for balancing energy and means that many older power stations need replacing, while security of supply still gives rise to genuine concerns that require an urgent response;

9. notes that because renewable energy production has increased, European wholesale market prices and the profitability of historical means of production have fallen, leading, paradoxically in some cases to the re-opening of coal-fired plants and consequently to an increase in CO2 emissions; recognises that one reason for this situation is the lack of sufficient mechanisms to promote the investments that could make the system more efficient and sustainable;

10. can find scarcely any indication in the documents presented of how one of the main energy transition issues is to be addressed, namely reconciling long-term investment with the high volatility created by progressive market liberalisation. This affects for instance hydroelectric and pump storage power plants, as well as modern, highly efficient gas-powered CHP and combined cycle gas and steam plants;

11. stresses that the electricity market faces great challenges, with constantly declining wholesale market prices which do not reflect the full costs necessary for the development and modernisation of infrastructure; underlines furthermore that this market has to build upon the existing resources and infrastructure in the different Member States while taking into account that some market actors are operating across different countries or even on a European scale;

12. observes that end-user prices for European citizens are going up because of the great need for investment, increased taxes, support schemes in favour of renewable energy and alternative energy sources, and a monopoly pricing situation for the consumer, but also because of the hidden subsidies to fossil or other forms of non-renewable energy;

13. considers it essential to link energy policy to the EU policy for combating climate change and emphasises that a well-functioning carbon market leading to an effective price for CO2, together with increased energy efficiency and investment in renewable energy are the most efficient tools for achieving the desired investment in a green low-carbon economy;

14. stresses the need to put an end to ‘subsidy shopping’ by fully internalising energy costs and reducing the imbalance between different support schemes and subsidies; asks the European Commission to publish guidelines and recommendations to harmonise the various support schemes, subsidies and tax incentives across the EU;

15. is seriously concerned that the risks and proven disadvantages of nuclear energy are being completely overlooked. Saying that the EU is ‘at the forefront’ of ‘the world’s safest nuclear generation’ suggests that nuclear technology is safe, but the risks of nuclear energy are not mentioned. And stating that the EU must ensure use of the highest standards for disposing of nuclear waste implies that nuclear waste is actually being disposed of, whereas current technology only allows such waste to be stored without it actually being eliminated. The problem of disposal is thus merely shelved, and certainly not solved;

16. regrets that nuclear energy is presented in a very unbalanced and unduly positive way, and assessed largely uncritically. In many places in the text the term ‘low-carbon’ is used as a code for nuclear energy: if primarily renewables were meant, this should read ‘renewable, low-carbon energy’. The impression is created that nuclear energy is a necessary means to achieve decarbonisation. In effect, linking carbon reduction and nuclear energy like this creates a questionable prescription considering the initial reference to the Member States’ freedom to choose;

17. welcomes the proposal to reform the Emission Trading System and emphasises that the Energy Union must go hand in hand with an improved Emission Trading System because a malfunctioning ETS will fragment the internal market and distort the level playing field, thus bringing us back to national measures;

18. takes the view that European energy policy is an important catalyst for territorial cohesion at the EU level as it takes into account the handicaps and strengths of different territories, and believes that the combined strengths and weaknesses of each must lead to an improvement for all; underlines in particular that the transition to low-carbon sustainable energy offers huge potential for development in many regions, not least in regions which are currently lagging behind, but which may be rich in sustainable energy sources such as sun or wind;

19. expresses its willingness to be involved as an institutional partner in recently opened discussions on the Energy Union, and to contribute political recommendations to the work of other institutions especially with regard to legislation and Energy Union governance;

20. emphasises the role of local and regional authorities in strengthening the security of energy supply and developing a common energy market in the European Union;

21. also notes the specific role assigned to local and regional authorities in the Energy Union Package concerning the efforts needed in the area of energy efficient buildings, and welcomes the European Commission’s commitment to improving the framework conditions for the financing of energy efficiency projects, including at local and regional level;

22. asks to be more closely involved in the work of the Commission, specifically in setting up a new initiative on ‘Financing for Smart Buildings’ and as regards the measures to improve the energy efficiency of existing buildings;

23. regrets nevertheless the absence of references to local authorities in key areas dealt with by the Energy Union Package, such as renewable energy, innovation and technology, security of supply and external relations, and calls for the CoR to be more involved and for its political recommendations to be taken on board when the Commission prepares the new legislation foreseen by the Energy Union package;

24. points out that the Energy Union’s success will be measured by its added value, which consists in providing free energy streams, security of energy supply and transparency in the sector at competitive and affordable prices, since this is the foundation for modernising the sector in the endeavour to expand the low carbon economy needed to meet climate protection goals; security of energy supply, completion of the internal energy market and infrastructure modernisation are the heart of the Energy Union, so all other measures to create this union must logically be directed to strengthening these core aspects;

25. reiterates the importance of political ownership at all levels in order to successfully implement European policies, and stresses that turning the Energy Union’s ambitious vision into a reality will require a strong commitment from the European institutions, Member States, national Parliaments, local and regional authorities, companies and citizens, each at their own level and according to their own capacities;

26. emphasises the role of local authorities as indispensable stakeholders in the Energy Union, notably when it comes to energy saving in urban and inter-urban transport, inter-regional communication strategies, cross-border energy infrastructures, cooperating in new storage technologies, co-financing on energy efficient and smart public buildings, passing legislation on low carbon economy, and using ESI funds for cross-border collaboration on renewable energy. Local and regional authorities sometimes own production infrastructure, which makes them energy producers;

27. singles out the Covenant of Mayors as a particularly strong example of local authority contributions to the implementation of sustainable energy policy; recalls that the CoR has been a strong supporter of this initiative and considers it necessary to make greater use of it as a possible means of implementing the Energy Union as well as EU energy targets for 2030; calls on the European Commission to increase its support for the Covenant of Mayors and extend it to 2030 in order to recruit new members; also calls for local and regional initiatives that do not come under this arrangement, but which have produced ambitious results, such as those carried out by Eurocities and the Council of European Municipalities and Regions, to be encouraged;

Concerning ambitious energy efficiency and renewable energy targets for 2030:

Stepping up support to local and regional players

28. notes that international, national and regional support systems for local and regional energy and climate efforts should be strengthened or introduced. This can be done both within and outside the Covenant of Mayors, through cooperation between local and regional authorities, the Member States, regions, regional energy agencies, etc.;

29. points out that regional cooperation is one of the most important factors in creating a fully operational single EU energy market and the Energy Union; regional cooperation must be further strengthened and taken to a higher level, especially so that higher political priorities can be pursued and the functioning of a true Energy Union made a reality with the help of regional integration;

30. recalls that EU measures should not be geared only towards large cities as approximately 56 % of EU towns and cities are small and medium in size with a population of between 5 000 and 1 00 000 and have a strong cumulative effect;

31. proposes to this end for example to explore the creation of a territorial forum for EU local and regional authorities, in close cooperation with the Covenant of Mayors and supported by the CoR, including a section dedicated to the Energy Union, that could help to disseminate good practices in the energy field and financing opportunities, and also research and promote ways to gain citizen’s support for and acceptance of energy transition projects;

32. considers that action at local and regional authority level should be aimed at diversification of suppliers, sources and transport routes of raw materials. Therefore, it is important to implement Projects of Common Interest (PCI), also at local and regional authority level, by streamlining procedures, issuing licences etc.;

33. calls for the views of the regions involved to be taken into account in the PCI consultation process;

Taking into account the efforts and contributions of local authorities

34. recalls that local authorities often implement, on a voluntary basis, more ambitious targets than those required by EU legislation;

35. stresses the need to establish voluntary demand aggregation mechanisms (joint purchasing) and points to good practice in this area at local and regional authority level (joint purchasing of thermal energy);

36. calls on the Commission to identify these good practices and to use them as a starting point when turning the Energy Union’s objectives into law;

37. proposes that a territorial forum in close cooperation with the Covenant of Mayors could assist the European Commission in this task and could collect local authorities’ commitments, give them the necessary publicity and ensure their compatibility and soundness;

Enhancing and expanding the Covenant of Mayors’ activities

38. points to the multi-level governance approach which was successfully applied to the Covenant and which should be strengthened and transferred to other policy areas within the Energy Union;

39. indicates that the CoR is ready to contribute to defining the Covenant of Mayors’ post-2020 strategy;

40. emphasises the importance of energy data sharing, in Member States’ legislative frameworks and possibly in compliance with future Community legislation, between key partners in the energy sector involved in the development, management and operation of projects and energy distribution companies at the local and regional level, including energy agencies, network operators, observatories and companies, for the purpose of development, implementation and monitoring of sustainable energy action plans (SEAP), thereby using the local energy data for the calculation of the Baseline Emission Inventory (BEI);

Calling for the outermost regions to be used as test-beds for energy transition

41. recognises the specific nature of the outermost regions, which are most often not interconnected and are thus dependent on expensive carbon-based energy production, whereas they have great potential for renewable energy development;

42. calls on the Commission to support innovative projects which could turn the outermost regions into test-beds of energy transition;

Concerning funding for energy efficiency and sustainable energy projects at local and regional level

Possessing efficient financial tools

43. confirms that it is the CoR’s priority to work together with the other institutions in order to improve the regulatory and financial conditions for local and regional investment in sustainable energy; highlights the importance of the successful EIB initiatives and of continued cooperation on financial engineering measures;

44. acknowledges the importance of better promotion of financial facilities, particularly for energy efficiency, low-carbon technologies and renewable energy in the transport and buildings sector, notably at the local level, such as the expected ‘Smart finance for smart buildings’ initiative, considered to be a potentially important European Commission initiative for the CoR;

45. urges the Commission to single out and highlight locally driven best practices that support efforts for energy efficiency in buildings, not least in order to develop innovative and effective funding mechanisms under the EBRD, the EIB and other EU financing programmes, and build synergies between them. The focus should be both on improving the efficiency of the building envelope and on reducing energy requirements through local and collective systems such as district heating and district cooling;

46. calls in this context for funds and financial instruments from the EU and the EIB to support not only large infrastructure projects but also smaller-scale projects that benefit local communities;

47. stresses that these policies will in many cases depend on the mobilisation of private funding. In order to achieve this, the regulatory environment has to be harmonised and secure while at the same time it must allow innovation to develop, in order to ensure smarter systems and better and cheaper services for the consumer;

48. notes critically that public investment in renewable energy production would be considerably hampered if the European Commission’s plans were to be realised. The ambitious goal of increasing the share of renewables across the EU to at least 27 % by 2030 is unlikely to be achieved if support is provided solely through market mechanisms which are not allowed to create distortions in the internal energy market, since this would considerably restrict the freedom of action of the Member States and local and regional authorities;

49. insists on the need to ensure that renewable energy sources can continue to be used and promoted in all the Member States, since centralisation under EU management would prevent many renewables from being boosted in certain countries, and this would significantly increase the need for interconnection. Regional renewable energy sources should not be placed at a disadvantage;

50. calls on the Commission to ensure that new state aid guidelines for energy do not create additional burdens for local and regional renewable energy and energy efficiency projects or for local models built around ‘smart grids’ and storage which are not able to compete with big operators;

Concerning the focus on consumers in the internal energy market

51. welcomes the Commission’s Communication on a New Deal for Energy Consumers, because it covers areas identified as essential in the CoR’s latest opinions on energy policy, in particular the active involvement of consumers in the energy system; recalls that the issues of energy poverty and the protection of vulnerable consumers also need to be addressed at EU level;

Promoting energy efficiency to reduce energy consumption

52. recognises that the EU’s aim of further exploiting the energy efficiency potential of the buildings sector is essential. Measures in this area should reduce occupants’ energy bills while at the same time also decreasing the EU’s carbon footprint and dependence on energy imports;

53. recalls that supporting energy efficient home insulation can be an important measure in combating energy poverty and developing employment at a local level;

54. stresses that this policy cannot be fully effective unless it is carried out on a large scale;

55. recalls in this respect that the effectiveness of this measure is based on both high energy performance targets and close cooperation between local authorities and occupants;

Having effective regulations to protect consumers

56. stresses that regulation is key to the successful functioning of the energy market and that a price signal is needed to find the ideal location for infrastructure and means of production, as well as to enable joint actions aimed at optimising costs of the energy users. Itemising energy costs to enable comparison would also ensure transparency in competition;

57. notes that, from the point of view of consumers, it is crucial to ensure transparency in the operation of the gas and electricity markets in the European Union. The instruments available in this area, e.g. under the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT), should be used appropriately. The Committee of the Regions therefore calls on the European Commission to provide the Agency for the Cooperation of Energy Regulators (ACER) with appropriate budgetary resources from 2016 for the performance of this task;

58. calls on the European Commission to submit, in the framework of the planned legislative initiatives, an effective mechanism for ex-ante scrutiny of international agreements and commercial contracts, in order to ensure their compliance with EU law and the EU’s energy security policy priorities;

59. bearing in mind the above, notes the need to enhance market transparency as part of the review of the Regulation on the Security of Gas Supply (SoS);

60. recalls that the energy sector is capital-intensive, which entails long-term regulatory stability;

61. notes that the increase in renewable energy production, by nature more dispersed, entails the dispersal of production locations and hence increased local authority involvement. This will ensure, inter alia, higher energy production within the EU;

62. asks the European Union to urge national regulatory bodies to include a local authority representative;

63. hopes that ACER will incorporate a local authority representative, who could be appointed by the CoR;

Combating energy poverty: a European priority

64. deplores the increase in energy poverty, i.e. the situation for people who do not have normal and regular access to the energy resources necessary for meeting their needs, not only in their homes, but also when they travel;

65. proposes that a definition of energy poverty should be established that takes into account the Member States’ particular characteristics and that EU indicators should be defined to better identify and tackle the problem;

66. proposes that the territorial forum should organise regular meetings to discuss energy poverty, to promote local, national and European initiatives and to put forward practical recommendations to political decision-makers and those from associations and industry;

67. considers that the fight against energy poverty must result from energy efficiency and transport policies especially through action on buildings inhabited by low-income households, as well as educational and social policies;

68. considers that dealing with the most difficult cases requires a comprehensive approach to the problem which may include social policy measures, direct financial support, information and counselling initiatives, but also more long-term energy policy measures;

Smart networks and meters: tools for the benefit of consumers

69. insists on the need to speed up the development of a smart system on both the network and producer/consumer levels, to optimise the system as a whole as well as to implement smart meters which are essential to the efficient management of demand, with the active involvement of the consumer; recalls the need to address issues of data protection and data security in this context;

Concerning energy infrastructure: the need to interconnect certain States

70. recognises the strategic importance of a fully integrated internal energy market interconnecting gas and electricity across the EU; agrees that it is essential to ensure that existing infrastructure is used to best effect before investing in new infrastructure, and that investing in network and system intelligence is the top priority;

71. stresses the importance of energy infrastructure investment and calls for the CoR to be involved in the activities of the energy infrastructure forum;

72. highlights the need to invest in resilient energy infrastructure so as to reduce the risk associated with natural and man-made disasters. Recalls that it is more cost efficient to build resilient infrastructures than it is to retrofit;

73. recalls, however, that this infrastructure is financed by consumers and should therefore be based on detailed cost-benefit analyses and real efforts to inform and involve citizens in order to ensure broad public support for these investments within a reasonable time;

74. in order to ensure maximum effectiveness of the solidarity mechanisms provided by the Regulation on the Security of Gas Supply (SoS), proposes the introduction of obligatory cross-border preventive and emergency response plans. The definition of ‘protected customers’ within the meaning of the SoS Regulation should be harmonised so as not to restrict the opportunities for mutual assistance between States in the event of a gas supply crisis;

Recognising the contribution of local authorities to securing the electricity network

75. notes that local authorities are important for making energy production needs secure by finding an ideal location for the means of production, particularly taking into account local energy potential;

76. believes that innovation in renewable energies, soft mobility, modernising existing energy infrastructure, building smart power plants, carbon capture and energy storage should be promoted at the local level;

77. proposes that, in line with the principle of subsidiarity, the European Union could encourage the creation of regional energy system development schemes established at least at a regional level and whose coherence would be supervised at the European level;

Transforming cross-border areas into Energy Union test-beds

78. regrets that as a result of the border effect and different national laws, many cross-border areas are often at a disadvantage or are unable to fully harness their own potential for innovative and sustainable energy solutions and therefore suggests that the Commission should promote voluntary regional approaches aimed at overcoming the negative border effects;

79. calls on the EU to support, where necessary, regulatory and legislative frameworks such as EGTC capable of promoting interaction between distribution networks on both sides of borders and of optimising energy integration;

80. calls on the European Commission to support and promote regional cooperation projects for distribution in particular;

81. calls for a consistent balance between European Union spending on large cross-border infrastructure and responding to local needs, so as to even better integrate locally produced renewable energy into the grid while at the same time developing smart distribution grids;

Concerning research and innovation: stimulating energy transition and providing a vector for employment

82. acknowledges the strategic role of research and innovation in energy technology with a view to the successful decarbonisation of the EU’s energy system and the ensuing reduction in emissions;

83. emphasises that the setting up of highly technological industrial sectors, facilitating active management of demand, smart energy use and energy efficiency, in close cooperation with research centres and universities, must be a priority for the Energy Union; also considers that priority should be given to innovations in the most energy-intensive industrial sectors;

84. estimates that such a transition, if rapidly achieved, could represent the primary source of gains in terms of energy competitiveness, reduced CO2 emissions and non-relocatable jobs;

85. considers that, in the area of employment and innovation, local authorities have powerful tools for increasing the use of renewable energy and improving energy efficiency not only through building, housing, mobility and spatial planning policies, but also through education and vocational training;

86. expresses the CoR’s interest in working with DG ENER and DG REGIO and with the Joint Research Centre to explore the possibilities for establishing better links/synergies between the EU’s policies and its funding programmes, in order to optimise local and regional energy investment efforts in the area of strategies for smart specialisation;

87. points to the high added value of strengthening the Energy Community by, inter alia, streamlining the mechanisms for applying EU law in the member countries of the Energy Community; at the same time sees significant added value in involving the member countries of the Energy Community in the EU’s energy security mechanisms, including the new SoS Regulation;

88. calls on the Member States, in line with the principle of solidarity, to coordinate their positions and negotiate with one voice vis-à-vis third countries; points out that cooperation in the field of energy can contribute to promoting and strengthening democracy, the rule of law and human rights in the partner countries;

Concerning the external dimension of energy policy:

89. points out that the CoR has regularly participated in the Eastern Partnership’s Platform for Energy Security, and that the European Union’s experience should be beneficial to our external partners while at the same time promoting the industrial and technological know-how of our businesses;

90. stresses that local and regional sustainable energy projects are key to reducing the European Union’s dependency on the sources of energy and third countries to which external suppliers are very often linked, and that more needs to be done to explore this potential more fully; suggests that the CoR should be directly involved in developing future initiatives in particular at local and regional level relating to external energy policy.