EN Official Journal of the European Union C 383/84

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank on A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’

(COM(2015) 80 final)

and the

‘Communication from the Commission to the European Parliament and the Council on Achieving the 10 % electricity interconnection target — Making Europe’s electricity grid fit for 2020’

(COM(2015) 82 final)

(2015/C 383/12)

Rapporteur: Ms Ulla SIRKEINEN Co-rapporteur: Mr Pierre COULON

On 9 March and 25 March 2015 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank on A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy

(COM(2015) 80 final), and the

Communication from the Commission to the European Parliament and the Council on Achieving the 10 % electricity interconnection target — Making Europe’s electricity grid fit for 2020

(COM(2015) 82 final).

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 16 June 2015.

At its 509th plenary session, held on 1 and 2 July 2015 (meeting of 1 July), the European Economic and Social Committee adopted the following opinion unanimously by 100 votes.

1. Conclusions and recommendations

The EESC concludes that

1.1 EU energy policy has been partly successful in particular in increasing the use of renewable energy and increasing consumer choice. Still most energy policy issues are treated mainly as national interests.

1.2 Challenges have increased: risks for security of gas supply; increased energy costs which harm consumers and weaken industrial competitiveness; effects of high shares of intermittent renewable energy on the electricity system stability.

1.3 Massive investments are needed to secure energy supply in Europe. Investors need a political framework as predictable and reliable as possible.

1.4 In order to deliver what Europeans expect energy has to be tackled in a more coherent way. Cooperation between Member States and a fully functioning internal energy market are inevitable.

1.5 The proposal for a European Energy Union is endorsed and its implementation is urgent. This could lead to making free movement of energy the fifth EU freedom! The EESC recommends that

1.6 The success of the initiative would require a clearer message — a leading vision — on what European citizens and enterprises will gain from the Energy Union.

1.7 Alongside security of supply and sustainability, a high priority should be action on energy costs to citizens and enterprises. Where increases in final electricity prices are due to political action, correction can be rightfully expected.

1.8 Energy should become a central part of the EU’s external policies in face of increasing competition for energy sources and the need to diversify sources of supply.

1.9 When preparing proposals for reviews of different strands of energy legislation, as proposed in the roadmap and supported by the EESC, the Commission should avoid inconsistencies and increasing costs, but rather try to simplify processes.

1.10 Methods to activate consumers should be developed in cooperation with consumers themselves, including innovative use of ICT. Energy poverty should be addressed primarily by social policy measures.

1.11 In tapping the big potential of energy efficiency gains in buildings and transport, in particular, innovative funding ideas are in demand.

1.12 A structural reform of the EU emissions trading scheme (EU ETS) is needed, while measures in the non-ETS sectors are just as important.

1.13 Until a global level playing field is a reality the problem of carbon leakage must be taken very seriously. Best industrial performers need to be fully compensated for direct and indirect cost increases.

1.14 Development of renewable energy, including bioenergy, needs support but this should not increase user costs.

1.15 Solving future energy challenges requires strengthened R&I financing. Dealing with energy as a production input as efficiently and sustainably as possible offers a broad potential for growth and jobs in the EU.

1.16 A new energy policy governance must ensure coherence between different aspects of energy as well as fulfilment of EU-level targets. The supporting European Energy Dialogue (EED), proposed by the EESC, should be activated without delay.

1.17 Measures to increase the interconnection of electricity grids must be urgently implemented, including faster approval processes. Whether an equal target for all is really viable could be explored.

2. Introduction

2.1 Energy policy in the EU has three main objectives: security of supply, sustainability and competitiveness. EU legislation covers energy markets as well as environmental and climate aspects of energy. EU finance supports energy R&D and infrastructure development. Efficiency of energy use is by nature to a large extent a local or national responsibility, with internal market aspects to be observed. The Treaties give Member States the right to decide on the use of their energy resources and their energy mix.

2.2 Energy policies in Europe have been partly successful. Targets (20-20-20 by 2020) set for decreasing greenhouse gas emissions and increasing the use of renewable energy sources seem to be met ahead of time and energy efficiency seems to develop almost to the target, albeit partly due to the economic downturn. Markets have been opened and consumer choice increased. Still, in practice energy policy is treated mainly as a national issue. EU legislation has been slowly or incompletely implemented, a real functioning internal market has not been achieved. At EU and national levels, policies on different aspects of energy have been fragmented and often unbalanced.

2.3 To amend this, in 2010 the Notre Europe-Jacques Delors Institute proposed the formation of a European Energy Community. This initiative was actively supported by the EESC.

2.4 Recently new energy challenges have risen to the forefront. Concerns over security of energy supply are acute in some Member States. Consumers, especially the vulnerable, suffer from increased energy costs in the face of the economic downturn. Industry struggles for competitiveness against lower energy prices in competing regions and if industrial decline in many Member States together with carbon leakage continues, not only jobs and growth, but also the energy transition itself is in danger. In spite of great successes in the field of renewable energy, Europe is in danger of losing its frontrunner position. In some countries an ever higher share of renewables leads to management problems in the electricity system and traditional energy production is becoming increasingly unprofitable. Investments of the magnitude of EUR 2 000 billion are needed according to the Commission (1) between 2020 and 2030 to secure energy supply, including generation and grid investments, independently of the question as to whether conventional or alternative fuel sources are used.

3. The Communications from the Commission

3.1 The new Commission under Jean-Claude JUNCKER has made energy policy one of its ten priority areas. In October 2014 the European Council set policy targets for energy and climate policy up to 2030: a decrease of at least 40 % of greenhouse gas (GHG) emissions from the 1990 level, at least a 27 % share of renewable energy and at least 27 % better energy efficiency.

3.2 On 25 February 2015 the Commission presented its Communication on a Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy (2). The strategy has five mutually reinforcing and interrelated dimensions designed to bring greater energy security, sustainability and competitiveness: — energy security, solidarity and trust, — a fully integrated European energy market, — energy efficiency contributing to moderation of demand, — decarbonising the economy, and — research, innovation and competitiveness.

3.3 The strategy presents the Commission’s overall vision of an Energy Union. Based on brief descriptions of challenges in the five dimensions, it proposes fifteen action points. An appended roadmap lists the Commission’s planned actions, covering mainly this year and 2016. Most of these are revisions of existing legislation.

3.4 In the same package the Commission published a Communication on Achieving the 10 % electricity interconnection target — Making Europe’s electricity grid fit for 2020 (3) and a Communication on The Paris Protocol — A blueprint for tackling global climate change beyond 2020 (4).

4. General remarks

4.1 The Committee sees the European Commission’s initiative for a European Energy Union as akin to the earlier idea of a European Energy Community, and consequently endorses this initiative.

4.2 In order to be able to deliver on the massive needs, investors need as soon as possible a predictable and reliable legislative framework from 2020 onwards. The action points and the roadmap presented by the Commission do not include big changes, but reviewing and updating of present legislation. What matters most is implementation. It is now of utmost importance that the swiftness of the timetable is not deviated from. Naturally it is of equal importance that neither the Parliament nor the Council drag their feet on these issues.

4.3 The success of this initiative would however, in the view of the EESC, require a clearer message — a leading vision — on what European citizens and enterprises will gain from the Energy Union. This vision should be kept at the top of the minds of all decision makers involved.

4.4 Many stakeholders are concerned about inconsistent legislation and interference in too many aspects of the energy economy. In order to deliver what Europeans expect, in particular in relation to new challenges, energy has to be tackled in a more coherent way. This applies to the different policy goals and areas as well as national vs. wider common EU interests.

4.5 The EESC is convinced that cooperation between Member States and a fully functioning internal energy market are inevitable to achieve energy policy goals. More renewable energy sources are needed to reduce external dependence and emissions. It is already obvious that an electricity system with bigger shares of intermittent renewables may function better in a bigger than national market. Back-up, peak and (gas) storage costs are also lower on a bigger market.

4.6 Alongside security of supply and sustainability, a high priority should be action on energy costs to citizens and enterprises. When citizens feel more and more alienated from the EU and are distressed by the economic slowdown, energy costs are undoubtedly an important concern. The same is true for enterprises, in particular SMEs, and their workers competing on international markets.

4.7 Where the increases in end energy prices, in particular for electricity, are mainly due to political decisions on taxes and charges, correction of this can be rightfully expected. The Commission should go ahead with its plans on reviewing prices and guiding support measures. At the same time the Commission should explain what the price effects of the planned changes in the emissions trading system and the promised abolition of subsidies for environmentally harmful energy sources (5) will be.

5. Specific remarks

Energy security, solidarity and trust

5.1 The EESC agrees with the Commission that key drivers of security of supply are the completion of the internal energy market and more efficient energy consumption. In addition the international geopolitical scene merits much more attention. Global competition for energy resources will intensify, and this as well as diversification of supply of energy to the EU should be central parts of the EU external and trade policy actions.

5.2 Diversification of energy sources is largely a matter of national energy mix and supply choices. The EU can and should support infrastructure development. Gas supply is now under special attention. The development of gas demand in the EU should be thoroughly explored, and projections for infrastructure investments should be adapted to this. More attention should be directed to other energy sources, like indigenous ones.

5.3 It should be obvious for Member States that they have an interest in closer cooperation and exchange of information in a market — gas or other — where they are faced with a dominant supplier or a cartel. Cooperation should however not hinder the market from working. Solidarity is to be expected between Member States but this can only be based on trust and respect of common commitments and rules. The problems of energy islands require special attention, including the specificities of islands as compared with the mainland.

A fully integrated internal energy market

5.4 Updating electricity and gas networks is of key importance for the realisation of the Energy Union. The issue of electricity interconnection will be discussed in chapter 6 based on the Communication on this subject.

5.5 Energy, especially electricity markets, suffers from incomplete implementation of the relevant directives and still weak cooperation between transmission system operators and national regulators. The EESC supports the Commission’s proposals on these issues, but warns against increasing administrative burdens and costs.

5.6 The links between wholesale and retail markets are weak, or at least obscure — more transparency is needed for pricing. Insufficient price signals for investments and lack of demand side flexibility seem to be key issues. Challenges are the increased share of renewables and the question of overcapacity versus the need for balance and peak capacity. A review of relevant regulation is needed, but in drafting the Commission should avoid increased user costs while supporting solutions conducive to trans-border markets.

5.7 Electricity and gas markets have increasingly already developed into de facto regional markets of neighbouring countries. This is a welcome development, on the way to EU-wide markets, and should be supported by rule-makers. In particular, good practices and experiences should be shared between regions and, indeed, the EU. Here, too, more administrative burdens must be avoided.

5.8 It is in everybody’s interest to activate the consumers in the energy markets, but this cannot be done by force. Carefully chosen methods, in particular innovative use of ICT, need to be developed in cooperation with the consumers themselves in order to tap the potential lying in demand response and thereby cost reduction.

5.9 Vulnerable consumers are even more vulnerable in today’s economic situation in many Member States. The EESC agrees with the Commission’s thinking of primarily supporting these consumers by sufficient social policy measures. The observatory of energy poverty, proposed by the Committee earlier, would help to identify real needs.

Energy efficiency as a contribution to the moderation of energy demand

5.10 On energy efficiency, the EESC agrees with the Commission that most of the work has to be done nationally and locally. Successful EU measures in this area have been labelling and eco-design rules, which need to be reviewed regularly.

5.11 The EESC welcomes the Commission’s intention to present proposals to ensure that efficiency measures and demand side response could compete on equal terms in the energy market, provided this is designed to meet users’ real interests.

5.12 The EESC agrees that in the building and transport sectors the energy efficiency — or actually saving — potential is big and should be tapped by carefully designed measures. For instance energy certification and building material labelling systems would need reviews. Innovative funding ideas are in demand.

Decarbonisation of the economy

5.13 The EESC is preparing a separate Opinion on the ‘road to Paris’. The EESC mainly supports the EU efforts on this absolutely crucial road to achieving sufficient global legally binding commitments.

5.14 The EESC also supports, as in earlier opinions, the structural reform proposals of the EU emissions trading scheme (EU ETS). Just as important are the decisions on future, mainly national, measures in the non-ETS sectors.

5.15 Until a global level playing field is a reality, the problem of carbon leakage must be taken very seriously by the EU. Energy intensive industries under threat of carbon leakage must be secured compensation for both direct and indirect cost increases of the EU ETS in relation to their GHG efficiency, fully compensating best performers. For the indirect compensations an EU-wide frame is needed to avoid distortion of competition within the EU.

5.16 The EESC warmly supports the objective to ensure the EU as global number one on renewable energy. Support measures are needed, but they should be in line with competition and market rules, be market based and avoid increasing end user prices of energy. Support to mature and competitive technologies should be phased out. In these respects the EESC supports the Commission’s efforts.

5.17 In addition to renewables the development of all kinds of decarbonisation technologies and solutions — clean tech — should be an EU goal.

5.18 The EESC supports the Commission’s view that the EU needs investments in the plant-based bio-economy as an important source of non-intermittent renewable energy. In preparing plans for this area, impact on the environment, land use and food production have to be taken into account. Also hydropower has potential to offer.

An Energy Union for Research, Innovation and Competitiveness

5.19 The EESC supports the proposed new strategy for R&I but repeats its view from earlier opinions that more resources are needed to solve future energy challenges. The Committee emphasises the need, in particular, to stimulate private funding by using EU measures and to be more involved in global R&D cooperation.

5.20 EU competitiveness is, however, not only about being best at energy- and climate-related technologies. It is just as much, or even more, about dealing with energy as a production input as efficiently and sustainably as possible, better than the competitors. This is a broader and more secure way to ensure growth and more jobs in Europe.

5.21 Transition is eminent in all sectors of the economy. The EESC underlines its strong view that transition has to be just and fair. Training and life-long learning are key measures for success. Social dialogue at EU and national levels has a central role on this road.

Energy Union Governance

5.22 The EESC fully supports the Commission’s efforts to ensure coherence between different aspects of energy policy and coordination between Member States. The new governance must also aim at ensuring fulfilment of EU level targets for 2030. However more planning or reporting obligations should not be put upon Member States, instead present requirements must be streamlined.

5.23 The EESC is pleased to see that its initiative for an energy dialogue with stakeholders has been taken on board by the Commission. A detailed action plan on this is now expected.

6. Remarks on the communication on achieving the 10 % interconnection target

6.1 Increased shares of renewable, intermittent electricity requires more network capacity, as does the goal of reducing costs for peak and back-up capacity. The need for more interconnection capacity is in many cases obvious, even pressing. It is astonishing that in so many cases the 10 % target is so far from being reached. The proposed measures in the Communication are welcomed. The EESC has earlier commented on this issue, including in a recent own-initiative opinion on European cooperation in energy networks.

6.2 The approach by Projects of Common Interest seems to be appropriate. It also seems effective to give priority to financing of projects that will most significantly increase the interconnection capacity from present levels below 10 %. But it also seems reasonable to take into account the economic situation in the countries in question.

6.3 Full implementation of the TEN-E regulation is urgent. Efforts to shorten approval procedures are most necessary. Furthermore, this is an area where all possibilities to smoothen and speed up processes by involving local stakeholders early should be explored. The EESC has for this purpose, inter alia, proposed to set up the European Energy Dialogue. This should be taken into account when developing the proposal of an Energy Infrastructure Forum.

6.4 Still, it could be explored as to whether an equal target for all Member States, irrespective of size, energy mix, neighbourhood etc., is really viable. A levelled electricity price could be used as an indicator of sufficient interconnector capacity.

Brussels, 1 July 2015. The President of the European Economic and Social Committee Henri MALOSSE

(1) COM(2014) 903 final.

(2) COM(2015) 80 final.

(3) COM(2015) 82 final.

(4) COM(2015) 81 final.

(5) These are estimated by the International Monetary Fund at EUR 330 bn per annum.