Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Second Strategic Energy Review : an EU energy security and solidarity action plan {SEC(2008) 2870} {SEC(2008) 2871} {SEC(2008) 2872}
Date: 2008-11-13
Institutions: European Commission
Subjects: EU action, air quality, energy policy, energy supply, environmental protection, greenhouse gas, security of supply

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.11.2008 
COM(2008) 781 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Second Strategic Energy Review 

AN EU ENERGY SECURITY AND SOLIDARITY ACTION PLAN 

{SEC(2008) 2870} 
{SEC(2008) 2871} 
{SEC(2008) 2872} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Second Strategic Energy Review 

AN EU ENERGY SECURITY AND SOLIDARITY ACTION PLAN 

1. 

INTRODUCTION 

The  EU's  new  energy  and  environment  policy  agreed  by  the  European  Council  in  March 
20071 establishes a forward-looking political agenda to achieve the Community’s core energy 
objectives of sustainability, competitiveness and security of supply. To make this a reality, the 
EU has committed to the "20-20-20" initiative: reducing greenhouse gas emissions by 20%, 
increasing the share of renewables in the energy consumption to 20% compared to 8.5% today 
and improving energy efficiency by 20%, all by 2020.  

To  put  this  into  effect,  in  September  2007  the  Commission  tabled  the  third  Internal  Energy 
Market  legislative  package2  aimed  at  ensuring  more  effective  competition  and  creating  the 
conditions fostering investment, diversity and security of supply; a competitive energy market 
is fundamental in achieving the "20-20-20" targets. In January 2008 it put forward a proposal 
to revise the Emissions Trading Scheme (ETS) Directive covering the period 2013-2020, a so-
called  "effort-sharing"  decision  for  sectors  not  covered  by  the  ETS  and  a  new  Renewable 
Energy  Directive,  which  will  provide  a  secure  and  predictable  investment  climate  for  EU 
industry3. The Parliament and Council have expressed their determination to ensure that these 
proposals are rapidly adopted.  

Europe's new Energy Policy will fundamentally alter the EU's energy outlook. The package 
will reduce energy consumption in the EU in 2020 by as much as 15%, and lead to a reduction 
of expected imports of energy by up to 26% compared to the developments before the 20-20-
20  initiative4.  In  other  words,  the  EU  will  have  taken  the  first  steps  to  break  the  cycle  of 
increasing energy consumption, increasing imports, and increasing outflow of wealth created 
in the EU to pay energy producers. Today, Europe imports 54%5 of its energy. At this year's 
energy prices, these imports represent an estimated €350bn, or around €700 per year for every 
EU citizen. While trade in energy has a positive role to play, energy efficiency, greenhouse 
gas  emissions  reductions,  diversity  of  energy  sources  and  diversity  of  supplies  are  needed 
throughout  our  energy  system.  With  the  adoption  of  the  20-20-20  package,  the  EU  will  be 
poised to take the key next steps towards a more sustainable, more secure, more technology-
based, energy policy, creating wealth and jobs in the EU. 

1 
2 
3 
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5 

Presidency conclusions, European Council, March 2007 
COM(2007)0528-32 
COM(2008)30  
Based  on  comparison  of  New  Energy  Policy  +  High  Oil  Price  scenario  with  Baseline  scenario  with 
moderate oil price. For details on all statistics, projections and scenario analyses used in this Review, 
see accompanying Commission Services Working Paper "Europe's current and future energy position: 
demand – resources – investment".  
Eurostat, year 2006 

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However, complementary measures are necessary to attain all three underlying objectives of 
the EU's new energy policy: sustainability, competitiveness and, above all, security of supply. 
For  example,  the  EU  is  projected  to  remain  dependent  on  imported  energy  -  oil,  coal  and 
especially  gas  –  for  many  years  to  come.  Europe's  indigenous  production  of  fossil  fuels  is 
declining. As a result, net imports of fossil fuels are expected to stay at roughly today's levels 
in 2020 even when the EU's climate and energy policies are fully implemented.  

The  medium-term  trends  for  global  oil  and  gas consumption foresee  a continued significant 
and sustained increase in demand, particularly from developing countries. At the same time, 
remaining reserves and spare production capacity are becoming increasingly concentrated in a 
few hands. Recent severe price rises and volatility on oil and gas markets reflect these trends. 

With  respect  to  the  EU,  this  is  of  most  concern  with  respect  to  gas,  where  a  number  of 
Member  States  are  overwhelmingly  dependent  on  one  single  supplier.  Political  incidents  in 
supplier  or  transit  countries,  accidents  or  natural  disasters,  the  impacts  of  climate  change, 
remind the EU of the vulnerability of its immediate energy supply.  

While  each  Member  State  is  responsible  for  its  own  security,  solidarity  between  Member 
States  is  a  basic  feature  of  EU  membership.  With  the  internal  market  for  energy,  specific 
national solutions are often insufficient. Strategies to share and spread risk, and to make the 
best  use  of  the  combined  weight  of  the  EU  in  world  affairs  can  be  more  effective  than 
dispersed  national  actions.  For  these  reasons,  energy  security  is  an  issue  of  common  EU 
concern. 

Given these global developments, the EU needs to take action to secure its energy future and 
to protect its essential energy interests. The EU needs to intensify its efforts in developing an 
effective external energy policy; speaking with one voice, identifying infrastructure of major 
importance to its energy security and then ensuring its construction, and acting coherently to 
deepen its partnerships with key energy suppliers, transit countries and consumers.  

It  also  needs  to  tap  the  full  potential  of  its  oceans  and  seas  for  energy  generation,  rapidly 
evolve  its  transport  system  and  make  real  progress  in  terms  of  the  interconnection  of  the 
European energy market. The first priority in this respect is to ensure the adoption and rapid 
implementation of 20-20-20 package. To complete this, the Commission proposes as the core 
of this second Strategic Energy Review an EU Energy Security and Solidarity Action Plan, 
which complements the measures tabled to date in order to ensure the achievement of all three 
of the EU's core energy objectives.  

In  addition,  this  Strategic  Energy  Review  takes  the  first  steps  towards  the  next  stage  of  a 
European  Energy  Policy,  considering  the  challenges  likely  to  be  faced  between  2020  and 
2050 and beginning the process of defining an EU response to these longer term challenges. 

2. 

AN EU ENERGY SECURITY AND SOLIDARITY ACTION PLAN 

The  Commission  proposes  a  five-point  EU  Energy  Security  and  Solidarity  Action  Plan, 
focusing on:  

•  Infrastructure needs and the diversification of energy supplies 

•  External energy relations 

•  Oil and gas stocks and crisis response mechanisms 

•  Energy efficiency 

•  Making the best use of the EU’s indigenous energy resources. 

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2.1. 

Promoting infrastructure essential to the EU's energy needs.  

Whereas the oil market is a liquid international market, gas supply depends mainly on fixed 
pipeline  infrastructure.  At  present,  imports  comprise  61%  of  EU  gas  gross  inland 
consumption. 42% of these imports come from Russia, 24% from Norway, 18% from Algeria, 
and  16%  from  other  countries,  the  latter  mostly  in  the  form  of  LNG6.  By  2020,  as  EU 
indigenous  production  continues  to  decline,  the  percentage  of  gas  imports  is  expected  to 
increase to 73% from 61% today7.  

At the EU level, this represents a reasonably well-diversified supply picture. At national level, 
however, for historical reasons a number of Member States rely on a single supplier for 100% 
of  their  gas  needs.  Interconnection  and  solidarity  within  the  internal  market  is  not  only  a 
natural  feature  of  an  integrated  market-based  system  but  is  equally  essential  to  spread  and 
reduce individual risk. The EU therefore needs to take concrete measures to ensure that these 
markets increase the diversity of their gas supply.  

In addition, in order to meet the EU's 20-20-20 objectives in a manner guaranteeing electricity 
and  gas  supply  to  all  the  EU's  citizens,  major  changes  in  the  EU's  internal  energy 
infrastructure will be necessary over the coming years and decades. It requires transparent and 
reliable  framework  conditions  within  the  EU  and  with  respect  to  third  countries  so  that 
business  will  be  able  to  take  up  new  investment  opportunities.  A  determined  approach  at 
Community level to catalyse these developments is essential.  

The  Commission  therefore  proposes  that  the  following  six  priority  infrastructure  actions  be 
accepted as Community priorities: 

•  Connecting  the  remaining  isolated  energy  markets  in  Europe  is  a  priority.  Together  with 
the Member States concerned, and in close collaboration with national energy regulators, 
the Commission will develop a Baltic Interconnection Plan covering gas, electricity and 
storage  in  2009.  This  will  identify  the  key  missing  infrastructures  necessary  for  the 
effective interconnection of the Baltic region with the rest of the EU, establishing a secure 
and  diverse  energy  supply  for  the  region,  and  listing  necessary  actions,  including 
financing, to ensure its realisation. The efficient development of the market as well as the 
contribution of energy efficiency and renewables to increased security of supply will need 
to be duly taken into account in developing the Plan. Work will start immediately within a 
High Level Group set up with the Member States concerned. A regional Summit meeting 
will be called in the second half of 2009 to launch its implementation. 

•  A  southern  gas  corridor  must  be  developed  for  the  supply  of  gas  from  Caspian  and 
Middle Eastern sources, which could potentially supply a significant part of the EU's future 
needs.  This  is  one  of  the  EU's  highest  energy  security  priorities.  The  Commission  and 
Member States need to work with the countries concerned, notably with partners such as 
Azerbaijan and Turkmenistan, Iraq and Mashreq countries, amongst others, with the joint 
objective of rapidly securing firm commitments for the supply of gas and the construction 
of  the  pipelines  necessary  for  all  stages  of  its  development.  In  the  longer  term,  when 
political conditions permit, supplies from other countries in the region, such as Uzbekistan 
the  EU.  
and 

further  significant  supply  source 

Iran,  should 

represent  a 

for 

The feasibility of a block purchasing mechanism for Caspian gas ("Caspian Development 

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Eurostat, year 2006 
New Energy Policy + High Oil Price scenario; see footnote 4 

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Corporation") will be explored, in full respect of competition and other EU rules. Transit 
for the gas pipelines will need to be agreed with transit countries and notably Turkey in a 
way that respects both the basic principles of the EU acquis and their legitimate concern 
for their own energy security. The Commission will invite representatives of the countries 
concerned  to  a  Ministerial  level  meeting  to  secure  concrete  progress  and  a  timetable  to 
reach  agreement.  It  will  seek  to  identify  by  mid-2009  any  remaining  obstacles  to  the 
completion of the project which will be the subject of a Communication on the Southern 
Gas Corridor to the Council and Parliament. 

•  Liquefied natural gas and adequate gas storage are important in providing liquidity and 
diversity to EU gas markets. Sufficient LNG capacity consisting of liquefaction facilities in 
the producing countries and LNG terminals and ship-based regasification in the EU should 
be  available  to  all  Member  States,  either  directly  or  through  other  Member  States  on  the 
basis  of  a  solidarity  arrangement.  This  is  particularly  important  for  Member  States 
currently overwhelmingly dependent on a single gas supplier. In 2009 the Commission will 
assess  the  global  LNG  situation  and  identify  gaps  with  a  view  to  proposing  an  LNG 
Action Plan. 

•  A  Mediterranean  energy  ring  now  needs  to  be  completed,  linking  Europe  with  the 
Southern Mediterranean through electricity and gas interconnections. In particular the Ring 
is essential to develop the region's vast solar and wind energy potential. The list of priority 
infrastructure  projects  adopted  by  the  December  2007  Euromed  Energy  Ministerial 
meeting and the Mediterranean Solar Plan adopted in Paris in July 20088 form a blueprint 
for  this  development,  and  benefit  from  EU  financial  and  political  support.  No  later  than 
2010  the  Commission  will  put  forward  a  Communication  on  the  Mediterranean  Ring 
outlining  a  plan  for  completing  the  missing  links,  including  key  projects  important  for 
diversifying the EU’s external energy supplies in further away regions, such as the future 
links from Iraq, the Middle East and Sub-Saharan Africa. 

•  North-South  gas  and  electricity  interconnections  within  Central  and  South-East 
Europe  need  to  be  developed  as  a  priority,  building  notably  on  the  New  European 
Transmission  System  (NETS)  initiative  to  create  a  common  gas  transmission  system 
operator9, the Energy Community Gas Ring, the priority interconnections identified by the 
Energy Community ministerial in December 200710, and the Pan-European Oil Pipeline11. 
The new Internal Energy Market package envisages the establishment of a regular 10-year 
Network  Development  Plan  outlining  missing  links and the action  necessary to complete 
them.  This  rolling  plan  will  be  elaborated  by  the  new  European  network  of  transmission 
system operators (ENTSO). The Commission will work together with the national energy 
regulators  and  the  TSOs  in  support  of  their  preparation  of  a  first  such  plan  in  2010,  if 
necessary  even  before  the  formal  entry  into  application  of  the  third  internal  market 
package. 

•  In  line  with  the  work  of  the  European  coordinator  and  the  Communication  on  Offshore 
Wind tabled by the Commission together with this Strategic Energy Review, a Blueprint 
for  a  North  Sea  offshore  grid  should  be  developed  to  interconnect  national  electricity 
grids  in  North-West  Europe  together  and  plug-in  the  numerous  planned  offshore  wind 
projects.  It  should  become,  together  with  the  Mediterranean  Ring  and  the  Baltic 

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11 

www.euromedinfo.eu 
www.molgroup.hu/en/press_centre/press_releases/european_energy_infrastructure__ndash__nets_project/ 
www.energy-community.org/ 
www.ens-newswire.com/ens/apr2007/2007-04-03-03.asp 

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Interconnection  project,  one  of  the  building  blocks  of  a  future  European  supergrid.  The 
Blueprint  should  identify  the  steps  and  timetable  that  need  to  be  taken  and  any  specific 
actions that need to be adopted. It should be developed by the Member States and regional 
actors involved and facilitated where necessary by action at Community level. 

The  Commission  will  therefore  use  its  existing  instruments  to  pursue  rapid  progress  on  all 
these priority actions, which have already been recognised as projects requiring Community 
support  and  action  under  the  existing  TEN-E  programme.  This  will  include  an  active 
approach  collaborating  with  Member  States  concerned  to  make  maximum  use  of  the  EU's 
ability to speak with one voice on international energy issues. 

the  European  Investment  Bank  and 

Considerable  efforts  of  all  involved  parties  will  be  required  in  order  to  finance  the  projects 
outlined above. A closer and more effective collaboration with the private sector and financial 
the  European  Bank  for 
institutions,  notably 
Reconstruction  and  Development,  is  necessary  to  promote  the  necessary  financing,  in 
particular for cross-border projects. This work appears as a key element of the EU response to 
the  current  financial  crisis  and  thus  should  be  accelerated,  as  suggested  in  the  recent 
Commission Communication12, inter alia to support employment and contribute to offsetting 
the  fall  in  demand.  This  is  particularly  important  for  certain  key  external  energy 
infrastructures  which  face  heightened  non-commercial  risks.  The  development  of  public-
private partnerships, providing the necessary political underpinning, a supply framework and 
potentially a certain level of public financing or guarantees, as well as other innovative forms 
of  funding,  may  also  become  increasingly  important.  This  may  potentially  involve  EU 
Member  States,  companies  and  Community  financial  institutions,  as  well  as  public  and 
private entities from third countries. 

However, in order to make further and rapid progress, the Commission considers that existing 
instruments  are  insufficient.  As  a  first  step,  the  EU  should  agree  that  the  above  projects 
represent energy security priorities.  

As a second step, during 2009-2010 the precise detailed actions – in particular, identifying the 
financing needs and potential sources of finance – necessary to ensure their realisation will be 
determined,  in  close  collaboration  between  the  Commission,  Member  States,  industry, 
transmission  system  operators,  national  energy  regulators  and  the  European  Parliament, 
resulting  in  the  Communications  mentioned  above.  In  this  respect,  it  needs  to  be  noted  that 
energy infrastructures will be in place for a long time. The Commission will ensure that their 
development,  design  and  location  take  into  account  the  impacts  of  changing  climatic 
conditions for the rest of the century, which will be a key element of their economic viability. 
All new EU energy infrastructures must be climate-proof. 

As a third step, from 2010 onwards, the identified actions will need to be undertaken at both 
Community and national level. It should be noted that the current TEN-E budget of €22m per 
year  means  that  its  scope  for  catalysing  the  development  of  major  projects  of  Community 
interest is limited. The original TEN-E instrument was conceived and developed when the EU 
was  considerably  smaller,  and  faced  energy  challenges  of  a  completely  different  dimension 
compared to today. Thus, together with this Strategic Energy Review, the Commission tables 
a  Green  Paper  that  launches  a  reflection  on  how  the  existing  TEN-E  instrument  could  be 
replaced by a new instrument, the EU Energy Security and Infrastructure Instrument with 
the  possible  objectives  of  (i)  completing  the  Internal  Energy  Market,  (ii)  ensuring  the 
development of the grid to permit the achievement of the EU's renewable energy objectives 

12 

Commission  Communication  "From  financial  crisis  to  recovery:  A  European  framework  for  action" 
Com (2008)706, 29.10.2008  

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and (iii) guaranteeing EU security of energy supply, through assistance for key infrastructure 
projects within and outside the EU. In addition, the Green Paper launches a reflection on how 
best  to  ensure  the  effective  use  and  evolution  of  the  EU's  external  policy  and  financial 
instruments to contribute to achieving these objectives, without prejudice to the planned mid-
term review of external assistance instruments in Spring 2009. 

In the light of the results of the consultation following the publication of the Green Paper, the 
Commission  will  consider  tabling  a  proposal  for  the  above-mentioned  new  EU  Energy 
Security  and  Infrastructure  Instrument.  Inter  alia,  the  need  for  future  Community  funding 
would be evaluated, including for the next financial framework starting in 2014. 

2.2. 

A greater focus on energy in the EU's international relations 

Worldwide,  countries  are  becoming  increasingly  interdependent  in  energy  matters.  Energy 
interdependence  is  influencing  development,  trade  and  competitiveness,  international 
relations  and  global  cooperation  on  climate.  Energy  must  be  given  the  political  priority  it 
merits  in  the  EU's  international  relations,  including  its  trade  policy  and  agreements,  its 
bilateral  partnerships,  cooperation  and  association  agreements  and  political  dialogues.  The 
widely-varying  interests  of  countries  in  the  energy  field,  in  a  context  of  increasing  energy 
interdependence, point to the need for more robust international legal frameworks based on a 
balance of commitments and benefits, within energy and across economic sectors.  

As  much  as  the  European  Union  seeks  security  of  supply  through  greater  predictability  and 
diversity, including from different companies within upstream markets, foreign governments 
and external suppliers seek security of demand, particularly where large investments in new 
upstream  gas  supplies  for  delivery  by  pipeline  are  concerned.  They  require  clear  and  stable 
rules for the functioning of the internal market and arrangements on access to or investment in 
the European market. In many cases, there is a need to develop trust and deeper and legally 
binding  ties  between  the  EU  and  producer  and  transit  countries,  which  could  deliver 
significant  mutual  benefits  in  the  long-term  perspective  that  is  needed  to  finance  the  more 
capital-intensive  projects  of  the  future.  The  EU  should  therefore  use  all  the  tools  at  its 
disposal,  internal  as  well  as  external,  to  strengthen  its  collective  weight  with  energy  supply 
countries and to offer new kinds of broad-based partnerships. At the multilateral level, the EU 
should continue to press for further liberalisation of trade and investment in the energy sector.  

In  some  cases,  there  is  already  regulatory  and  market  integration.  Norway  is  already 
integrated in the internal energy market as a member of the European Economic Area. Its role 
in  enhancing  the  EU  security  of  supply  in  gas  (24%  of  EU  imports)  and  oil  (16%)13  is 
essential  and  should  be  further  developed  within  the  EU-Norway  energy  dialogue,  with 
common projects such as offshore wind in the North  Sea  and  the  development  of  Norway's 
substantial  proved  reserves.  Effective  collaboration  with  Norway  is  essential  for  EU  energy 
security; maximising the long-term output of the Norwegian continental shelf on a sustainable 
basis is of equal interest to Norway and the EU. 
The Energy Community14 is building an integrated market in Southeast Europe anchored to 
the  EU.  It  encompasses  the  internal  market  and  security  of  supply  legislation  for  electricity 
and gas and discussions on its extension to oil are underway. If negotiations formally starting 
in November are successful, the accession of Ukraine, the Republic of Moldova and Turkey 
to the Energy Community would catalyse their energy sector reforms and result in a mutually 
beneficial  enlarged  energy  market  based  on  common  rules.  This  could  help  Ukraine,  an 

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Eurostat, year 2006  
www.energy-community.org 

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important  transit  country,  to  upgrade  its  infrastructure.  When  appropriate,  extension  of 
observer status to other countries should also be considered. Finally, it should be noted that 
the enlargement process can play an important role in developing the wide application of the 
community acquis in the energy sector, thus following the EU's energy security objectives and 
contributing to the security of enlargement countries.  

A strategy on Belarus should be developed, taking account of its importance as a neighbour 
and transit country. 

Today  the  EU  has  Memoranda  of  Understanding  on  energy  with  a  large  number  of  third 
countries. Europe should develop a new generation of “energy interdependence" provisions 
in broad-based agreements with producer countries outside Europe. Energy interdependence 
provisions should aim at a balance between security of demand and security of supply. The 
focus  should  be  on  encouraging  upstream  investments,  facilitating  the  development  of  the 
necessary  infrastructures,  clear  conditions  of  access  to  markets  (within  energy  and  across 
economic  sectors),  dialogue  on  market  and  policy  developments,  and  dispute  settlement 
provisions. Transit arrangements must be agreed to guarantee normal flows even in periods of 
political tension, possibly through innovative approaches such as joint management and even 
ownership  of  pipelines  by  companies  of  supplier,  transit  and  consumer  countries.  The 
provisions should be based on the EU's energy acquis where appropriate, and the principles of 
the  Energy  Charter  Treaty15.  The  provisions  should  contribute  to  a  long  term  political 
framework,  reducing  political  risks  and  encouraging  commitments  by  private  companies  on 
supply and transit. European banks such as the European Investment Bank and the European 
Bank  for  Reconstruction  and  Development  could  provide  appropriately-structured  finance 
linked to the development of major infrastructure projects in third countries. Special attention 
will be given to key external infrastructures which face heightened non-commercial risks. 

In the case of Russia, the current wider context is the intention to negotiate a wide-ranging 
New Agreement replacing the 1997 Partnership and Cooperation Agreement. It is important 
for  the  long  term  health  of  the  energy  relationship  between  EU  and  Russia  that  the  1997 
Agreement be deepened and given a stronger and broader foundation. Russia will remain the 
EU's  main  energy  partner  far  into  the  future  and  more  needs  to  be  done  to  ensure  that  this 
relationship is based on trust; each would benefit from consolidating the main principles on 
which this partnership is based into law. Negotiations could in this way facilitate the reform 
and liberalisation of the energy market in Russia in line with its domestic objectives, provide 
stability and predictability of demand for Russian gas, and clarify the conditions under which 
Russian  companies  may  invest  downstream  in  the  EU.  Finally,  an  agreement  with  Russia 
could  help  establish  binding  and  effective  transit  rules  across  the  pan-European  continent, 
which  are  lacking  today.  Each  of  these  improvements  would  contribute  to  make  Europe's 
sourcing, and Russia's supply, more diversified and dependable. 

It is therefore important that legally binding energy interdependence provisions be developed, 
within  the  framework  of  the  New  Agreement  to  succeed  the  Partnership  and  Cooperation 
Agreement. This would require complementing the New Agreement mandate with a mandate 
to  launch  FTA  talks.  In  the  past  Russia  and  the  EU  have  linked  FTA  negotiations  with 
Russia's accession to the World Trade Organisation, but decisive progress in this negotiation 
has  recently  become  less  certain.  Furthermore,  the  EU-Russia  Energy  Dialogue  should  be 
continued and further practical cooperation activities and joint projects should be developed. 
The more the EU-Russia energy relation is put on a solid mutually-agreed and balanced legal 

15 

www.encharter.org 

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basis, the more trust and confidence will grow, creating a climate conducive to investments in 
exploration and infrastructure projects. 

A  similar  approach  should  be  developed  with  the  countries  of  the  Caspian  region.  The 
European Council has given high priority to the further development of relations with these 
countries.  Given  their  energy  resources  and  their  importance  to  progress  on  the  priority 
energy  security  infrastructures  noted  in  the  previous  section,  the  Commission  will  focus  all 
instruments on building robust cooperation, including a strengthening of the Baku process16, 
to  promote  a  genuine  energy  partnership.  Enhanced  engagement  with  all  the  relevant 
countries, notably through bilateral relationships, is an important priority. 

The  EU-OPEC  Energy  Dialogue  provides  a  forum  for  joint  assessment  of  the  factors 
affecting  prices,  upstream  and  downstream  investments  needed  in  both  producer  and 
consumer  countries  and  the  impact  of  technological  developments.  The  Dialogue  is  a 
recognition  of  the  fact  that  producer  and  consumer  countries  have  common  interests  in 
encouraging  regular  supply  at  affordable  prices.  Energy  relations  with  Iraq  and  the  Gulf 
Cooperation  Council  should  be  further  developed  in  the  field  of  hydrocarbons,  including 
new  areas  such  as  clean  energy  technologies.  In  parallel,  bilateral  energy  relations  with 
individual Gulf Cooperation countries will be pursued. 

Cooperation with partners such as Australia, Canada, Japan and the US as well as emerging 
consumer  countries  should  be  deepened  to  promote  a  common  view  on  global  energy 
security,  to  improve  the  transparency  of  global  energy  markets  and  to  address  the  issue  of 
sustainability.  Cooperation  frameworks  are  being  developed  with  countries  like  China  and 
India, bilaterally and multilaterally, and regions such as Latin America and the Caribbean. 
Cooperation is being developed with alternative supplier countries such as Brazil as a major 
biofuels exporter. 

Energy relationships with Africa, notably North Africa, should be stepped up in view of its 
important  potential  ranging  from  hydrocarbons  to  an  immense  untapped  potential  in 
renewable  energies.  Countries  such  as  Algeria,  Egypt,  Libya  and  Nigeria  have  long  been 
important  oil  and  gas  suppliers  and  it  is  important  that  energy  relations  with  them  are 
enhanced.  The  Trans-Sahara  Gas  Pipeline  represents  an  important  additional  opportunity 
for  the  EU  to  diversify  routes  and  energy  sources.  The  EU  stands  ready  to  help  in  its 
realisation  through  its  various  instruments,  notably  bilateral  cooperation,  the  European 
Neighbourhood  and  Partnership  Instrument,  the  European  Development  Fund  and  the 
European Investment Bank. Furthermore, the Africa-EU Energy Partnership with the African 
Union  together  with  the  African  Regional  Economic  Communities  will  be  instrumental  in 
developing  a  deeper  energy  dialogue  and  concrete  initiatives.  The  EU  will  assess  the 
increasingly important role of Africa in the EU energy security and ensure that the adequate 
means  and  policies  are  made  available.  Regional  integration  of  electricity  markets  and  the 
promotion  of  renewable  energy  represent  particularly  important  development  opportunities 
for Africa, and the Commission will step up its assistance efforts in these areas.  

A number of the EU’s partners are considering launching a nuclear programme, a technology 
where  EU  industry  enjoys  a  global  leadership,  or  expanding  their  current  activities.  Many 
developing countries do not currently have the legislative and regulatory infrastructure needed 
to  ensure  that  safety  is  the  priority  in  design,  construction  and  operational  decisions.  EU 
action  to  promote  the  highest  standards  of  nuclear  safety  and  security  has  recently  been 
outlined17.  With  the  Instrument  for  Nuclear  Safety Cooperation, the EU will  cooperate  with 

16 
17 

ec.europa.eu/dgs/energy_transport/international 
"Addressing the international challenge of nuclear safety and security", COM(2008)312 

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and  assist  third  countries  in  improving  their  nuclear  safety  culture  and  the  safety  of  their 
operating  nuclear  power  plants.  For  emerging  countries  intending  to  build  nuclear  power 
plants, the EU will help in the development of competent and independent nuclear regulatory 
authorities, capable of ensuring that the new plants are built according to international nuclear 
safety standards and operate in accordance with the highest standards.  
In  meeting  the  EU's  objectives,  it  is  vital,  as  the  European  Council  has  identified18,  that 
Europe speaks with one voice and acts accordingly. The recent review of EU's energy policy 
by  the  International  Energy  Agency19  identifies  external  relations  and  energy  security  as 
priority  actions  for  the  EU.  Speaking  with  one  voice  does  not  mean  a  single  Community 
representative  for  external  issues,  but  effective  planning  and  coordination  to  ensure  a 
commonality of both action and message at Community and Member State level. In order to 
put  this  into  practice,  in  2009  the  Commission  will  identify  the  concrete  mechanisms 
necessary  for  ensuring  transparency  between  Member  States  and  the  EU.  This  should 
enable better coordination on developments and intentions on international energy issues. To 
complement  such  mechanisms,  the  Commission  will  consider  proposing  a  revision  of 
Regulation  736/96  which  obliges  Member  States  to  notify  to  the  Commission  investment 
projects of interest to the Community in the petroleum, natural gas and electricity sectors, in 
order  to  increase  its  relevance  to  today's  energy  challenges.  The  Commission  will  consider 
how best to further develop early warning systems with key neighbouring energy partners 

2.3. 

Improved oil and gas stocks and crisis response mechanisms 

To  meet  its  energy  security  objectives,  the  EU  also  needs  to  ensure  that  its  internal  crisis 
mechanisms  and  security  standards  are  as  effective  as  possible.  The  third  element  of  the 
Energy  Security  and  Solidarity  Action  Plan  therefore  updates  and  improves  the  existing 
Community rules in this area.  
A mandatory regime of emergency oil stocks has existed since 196820. Member States have 
developed  different  mechanisms  implementing  the  Oil  Stocks  Directive:  some  rely  on 
government held stocks similar to the US and Japanese systems, others rely on stocks held by 
industry. The system has proven effective to deal with limited disruptions, mostly in response 
to joint actions coordinated by the International Energy Agency. Nevertheless, in the light of 
experience the current system can be improved.  

Together with this Strategic Energy Review the Commission therefore proposes a revision of 
the  EU  emergency  strategic  oil  stocks  legislation  to  improve  coherence  with  the 
International  Energy  Agency  regime,  increase  the  reliability  and  transparency  of  available 
stocks, simplify compliance and verification, and clarify emergency procedures.  

At present, the EU publishes data on the level of strategic oil stocks for each Member State. 
Unlike  the  US,  it  does  not  publish  information  on  the  level  of  additional  commercial  oil 
stocks  held  in  the  EU.  In  order  to  improve  oil  market  transparency  and  limit  the  effects  of 
uninformed  speculation,  the  Commission  proposes  that  the  EU  now  takes  the  step  of 
publishing,  on  an  aggregated  basis,  the  level  of  commercial  oil  stocks  held  by  EU  oil 
companies on a weekly basis. 

18 
19 
20 

Eg March 2007 European Council Presidency conclusions 
IEA Energy Policies Review – The European Union", OECD/IEA, September 2008  
http://ec.europa.eu/energy/oil/stocks/index_en.htm 

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The Commission has also reviewed the implementation and effectiveness of the Security of 
Gas  Supply  Directive.21  It  finds  that  today's  legal  framework  could  be  improved.  In 
particular,  greater  harmonisation  of  security  of  supply  standards  and  predefined  emergency 
measures on regional and EU levels are needed. However, there is insufficient evidence at this 
stage  for  the  EU  to  decide  upon  obligatory  strategic  gas  stocks.  Strategic  gas  stocks  cost  at 
least  five  times  more  than  oil  stocks.  A  more  effective  approach  is  to  promote  the 
development  and  effective  transparent  operation  of  commercial  storages,  diverse  supply 
connections  enabling  flexible  sourcing  from  LNG  or  neighbouring  providers  within  the  EU 
internal  market,  and  rapid  demand  reduction  through  interruptible  contracts  and  fuel 
switching especially in electricity generation. 

As  in  the  oil  sector,  EU  level  crisis  response  coordination  must  be  improved,  both  among 
Member States and in relations with supplier and transit countries. A more suitable threshold 
for  triggering  EU  action  should  be  considered  and  compensation  arrangements  should  be 
clarified. The Gas Coordination Group should continue developing scenarios  for  reacting to 
future  possible  gas  supply  crises.  Taking  into  account  this  work  and  the  work  of  the 
International Energy Agency and the European Regulators Group for Electricity and Gas, the 
Commission  will  consult  interested  parties  with  a  view  to  proposing  a  revised  Security  of 
Gas Supply Directive in 2010. 

2.4. 

A new impetus on energy efficiency 

The  EU  has  taken  a  commitment  to  achieve  a  20%  improvement  in  energy  efficiency  by 
2020. Both the greenhouse gas emission reduction and the renewables targets to which the EU 
has  committed  itself  will  contribute  to  achieving  this  objective  and,  conversely,  ambitious 
action  on  energy  efficiency  will  greatly  help  achieve  the  EU's  climate  objective  by  2020, 
notably under the effort sharing decision. Energy efficiency measures have therefore a critical 
role to play in ensuring that the climate and energy objectives are being achieved at least cost, 
with a particular focus on buildings and transport. 

It  is  equally  evident  that  the  20%  energy  efficiency  objective  will  contribute  greatly  to  the 
EU's  sustainability  and  competitiveness  objectives.  In  addition,  consuming  less  through 
energy efficiency is the most durable way to reduce dependence on fossil fuels and imports. 
Measures  to  improve  energy  efficiency  and  green  technologies  can  also  provide  new 
opportunities  for  the  economy,  including  SMEs,  in  the  current  difficult  economic  situation. 
Energy  efficiency  has  to  be  at  the  heart  of  the  EU's  Energy  Security  and  Solidarity  Action 
Plan.  

Important  progress  has  been  made  towards  the  20%  energy  efficiency  objective.  These 
measures  should  achieve  an  improvement  in  energy  efficiency  of  some  13-15%.  Together 
with  this  Strategic  Energy  Review  the  Commission  therefore  tables  a  new  2008  Energy 
Efficiency  Package  of  energy  efficiency  initiatives  to  make  further  important  progress  in 
meeting the 20% objective:  

•  A  revision  of  the  Energy  Performance  of  Buildings  Directive  to  extend  its  scope, 
simplify its implementation and develop energy performance certificates of buildings into 
a  real  market  instrument.  Such  a  revised  Directive  will  have  the  potential  to  save  an 
average family hundreds of euros per year, even after deducting the cost of energy-efficient 
heating, cooling and building products. 

21 

Communication on evaluation report on security of gas supply Directive 2004/67, COM(2008)735 

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•  A  revision  of  the  Energy  Labelling  Directive,  which  has  so  far  covered  only  household 
appliances, to apply labelling to a broader range of energy-using products, commercial and 
industrial,  and  to  establish  a  harmonised  base  for  public  procurement  and  incentives 
provided  by  Member  States.  The  Commission  is  also  preparing  upgraded  or  new 
classifications  for  a  number  of  product  groups.  Under  a  separate  legal  instrument,  a  new 
energy label will be introduced for car tyres.  

•  An intensification of the implementation of the Ecodesign Directive. The Commission will 
adopt in the coming months minimum requirements for light bulbs (leading to the phasing 
out  of  wasteful  incandescent  light  bulbs),  electrical  equipment  in  standby  and  off-mode 
functions  of  devices,  street  and  office  lighting  equipment,  external  power  supplies  and 
simple set-top boxes for televisions. This first set of measures will be followed shortly by 
measures  targeting  washing  machines,  dishwashers  and  refrigerators,  boilers  and  water 
heaters,  motors,  and  televisions.  When  completed,  considering  the  combined  impact  of 
ecodesign and labelling, they will have the capacity to save 96 Mtoe by 202022. 

•  Promotion  of  cogeneration  is  an  important  priority.  To  this  end,  the  Commission  is 
adopting,  together  with  this  Strategic  Energy  Review,  a  Communication  and  detailed 
guidelines for technical implementation of the Cogeneration Directive.  

•  The Commission will develop benchmarking  and networking mechanisms to  disseminate 
best practice. The Covenant of Mayors23 will be an important instrument to facilitate this. 
Community funds (including the Intelligent Energy Europe programme) will be allocated 
to reinforce replication across the EU, together, where appropriate, with other EU financial 
instruments. A new Sustainable Energy Financing Initiative to be launched jointly with the 
European Investment Bank and where appropriate the European Bank for Reconstruction 
and Development will pursue this objective. The design and implementation of appropriate 
financing  instruments  for  the  small  scale  investments  that  are  often  required  in  energy 
efficiency  investments  is  important  (for  example,  upfront  costs  for  owners  or  users  of 
buildings).  

•  Cohesion  Policy  programmes  have  allocated  over  EUR  9bn  to  the  promotion  of  energy 
efficiency and renewable energies in the period 2007-13. Cohesion Policy Funds support a 
vast range of activities, including energy efficiency improvements in industry, commerce, 
transport  and  public  buildings,  cogeneration  and  local  energy  production,  innovation  for 
sustainable energy, and training for monitoring and evaluation of energy performance. In 
addition,  in  the  new  Member  States  Cohesion  Policy  supports  investment  in  energy 
efficiency in residential housing under certain conditions. As some of these actions may be 
funded  by  other  Cohesion  Policy  budget  headings  such  as  R&D,  urban  and  rural 
regeneration, and technical assistance, the actual allocation in support of Europe's Energy 
Policy  is  expected  to  be  much  higher.  Financial  instruments,  including  debt  finance  and 
equity funds provided by the EIB Group (e.g. through structural programme loans) and the 
EBRD, could allow additional funding in support of Operational Programmes. 

•  A  Green  Tax  Package  will  be  presented  as  a  complement  to  the  energy  and  climate 
change package. It will include a proposal to review the Energy Tax Directive to make it 
fully  compatible  with  the  energy  and  climate  change  goals  and  an  examination  of  how 
VAT  and  other  fiscal  instruments  can  be  used  to  promote  energy  efficiency.  The 

22 

23 

Derived from preparatory studies under Directive 2005/32/EC 
http://ec.europa.eu/energy/demand/legislation/eco_design_en.htm 
http://ec.europa.eu/energy/climate_actions/mayors/index_en.htm  

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Commission will continue its efforts to promote the liberalisation of energy-efficient goods 
and services also in the context of trade negotiations. 

It  is  at  least  as  important  to  achieve  improved  energy  efficiency  in  other  industrialised 
countries and emerging economies as in Europe. Progress on a global agreement on climate 
change  would  create  major  new  incentives  for  cooperation  on  energy  efficiency.  Energy 
efficiency  should  be  one  of  the  main  objectives  of  the  Energy  Community  in  the  coming 
years. The Commission will build on the International Partnership on Energy Efficiency 
Cooperation agreed in the G8 context with China, India and Korea in July 2008 to promote 
common product standards and ambitious efforts throughout the world, and will participate in 
its launch in 2009 as an IEA Implementing Agreement. In this context, the outreach activities 
of the IEA with emerging countries, is particularly important.  

Energy  efficiency  has  to  be  a  constant  priority  for  Community  energy  policy.  The 
Commission  will  evaluate  the  Energy  Efficiency  Action  Plan  in  2009  and  prepare  a  more 
focused Action Plan, as requested by the June 2008 European Council 

2.5.  Making better use of the EU’s indigenous energy reserves 
Energy produced within the EU represents 46% of the total consumed24. Before the 20-20-20 
initiative,  this  was  set  to  fall  to  36%  by  202025.  Implementation  of  the  new  Energy  Policy 
would keep it at around 44% of EU consumption26.  

All  cost-effective  measures  that  can  be  taken  to  promote  the  development  and  use  of 
indigenous  resources  should  form  an  important  element  of  an  EU  Energy  Security  and 
Solidarity Action Plan. 

The  development  of  renewable  energy  such  as  wind,  solar,  hydro,  biomass  energy  and 
marine  resources  has  to  be  seen  as  the  EU's  greatest  potential  source  of  indigenous  energy. 
Today  it  accounts  for  around  9%  of  final  EU  energy  consumption,  the  objective  of  a  20% 
contribution by 2020 has been agreed. Following the entry into force of the new Renewable 
Energy  Directive,  the  Commission  will  focus  on  monitoring  and  facilitating  its  correct  and 
timely implementation, and on remaining practical issues likely to hamper the effective and 
rapid  increased  penetration  of  renewable  energy  into  the  market,  such  as  constraints  on  the 
grid. In the light of experience gained with the new Renewables Directive, the Commission 
will  table  a  Communication  "Overcoming  Barriers  to  Renewable  Energy  in  the  EU", 
identifying barriers and proposing actions to redress them.  

In  order  to  establish  appropriate  financing  mechanisms  for  the  massive  development  of 
renewable  energy  at  EU  level,  the  Commission  is  working  with  the  European  Investment 
Bank, the European Bank for Reconstruction and Development and other financial institutions 
to  set  up  the  above-mentioned  EU  Sustainable  Energy  Financing  Initiative  to  mobilise 
large-scale  funding  from  capital  markets  for  investments  in  energy  efficiency,  renewable 
energies,  the  clean  use  of  fossil  fuels  and  combined  heat  and  power  from  renewables  in 
Europe's cities.  

In  maximising  the  EU's  natural  resources,  the  role  of  technology  is  crucial.  The  need  for 
renewable  energy  will only  grow as our greenhouse gas objectives increase, so it is vital to 
catalyse  rapid  advances  in  the  competitiveness,  efficiency  and  sustainability  of  renewable 

24 
25 
26 

Eurostat, year 2006; consumption includes bunkers 
Baseline projection with moderate oil price; see footnote 4 
New Energy Policy + High Oil Price scenario; see footnote 4 

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energy production. Indeed, this represents a huge economic opportunity for the EU as much 
as an energy security and sustainability priority. This objective is currently being pursued in 
the  context  of  the  Strategic  Energy  Technology  Plan,  endorsed  by  the  European  Council  in 
200827.  Progress  has  already  been  made  in  its  implementation,  including  on  six  European 
Industrial  Initiatives:  wind,  solar,  bio-energy  (second  generation  biofuels),  CCS  (carbon 
capture, transport and storage), electricity grids and sustainable nuclear fission. The initiatives 
are being developed in close cooperation with existing Technology Platforms and European 
industry.  The  next  step  will  be  a  Communication  on  Financing  Low  Carbon  Technologies, 
which  will  be  tabled  by  the  Commission  in  2009,  in  close  association  with  the  European 
Investment  Bank.  It  will  evaluate  needed  resources  and  potential  sources  of  funding  and 
propose ways to support large scale demonstrations at EU level, including up to twelve CCS 
demonstration  plants.  It  will  take  into  account  the  outcome  of  ongoing  discussions  on  the 
revision  of  the  Emissions  Trading  Directive,  particularly  the  option  of  using  auctioning 
revenues and earmarked emission allowances as a way to accelerate the implementation of the 
much needed demonstration activities.  

Coal  remains  an  essential  component  of  Europe's  domestic  energy  supply  and  an  important 
alternative to oil and gas. It is available in large quantities from numerous suppliers around 
the world, and it can be relatively easily stored. Coal-based electricity generation is growing 
in importance across much of the world and continued substantial use of coal and lignite in 
generation in Europe is projected. Higher emissions of CO2 are its main drawback. Its use in 
the  longer  run  is  only  compatible  with  the  climate  challenge  if  highly-efficient  plants 
predominate  and  carbon  capture  and  storage  (CCS)  is  widely  available.  CCS  development, 
both in Europe and outside, will depend on regulation and carbon pricing and the availability 
of new technology and processes. Obligatory CO2 emissions standards should be considered 
only  after  results  of  industrial  demonstrations  have  been  evaluated,  notably  if  incentives 
provided by the Emission Trading Scheme as mentioned above have proven to be inadequate. 
Europe's  aim  to  have  up  to  twelve  commercial  scale  demonstration  plants  in  operation  by 
2015  and  the  G8  commitment  to  launch  twenty  demonstration  plants  globally  by  2020  will 
require greater incentives than currently available.  

Although  Europe's  gas  and  oil  resources  are  declining,  high  oil  prices  and  the  security 
premium to be placed on indigenous resources increase the interest of extracting indigenous 
oil and gas reserves, including unconventional reserves insofar as this can be achieved in a 
sustainable  manner.  Furthermore,  other  domestic  fuels  in  some  areas  of  the  EU  such  as  oil 
shale and peat may also contribute to the energy security of some Member States.  

In  fact,  unconventional  resources  quadruple  the  EEA's  combined  gas  reserves  to  more  than 
60 000  Mtoe  although  their  exploitation  poses,  in  some  cases,  significant  technological  and 
environmental  challenges.  The  Commission  will  commence  discussions  in  the  Berlin  Fossil 
Fuel Forum28 on which additional measures could be taken at Community and national level, 
and in particular in partnership with Norway, to further promote the increased cost-effective 
and environmentally-compatible access to indigenous EU fossil fuels. 

Oil refining capacity represents an important additional factor in ensuring EU energy security. 
It is important to improve the level of transparency of the demand-supply balance for refining 
capacity  necessary  to  serve  the  EU's  needs,  bearing  in  mind  drivers  of  demand  (notably 
initiatives to green transport) and in particular, concerns regarding the potential availability of 

27 
28 

Com(2007) 0723; ec.europa.eu/energy/res/setplan/communication_2007_en.htm 
http://ec.europa.eu/energy/oil/berlin/index_en.htm 

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diesel fuel in the future. In 2010 the Commission's Energy Market Observatory will prepare a 
Communication on Refining Capacity and EU Oil Demand. 

Finally, nuclear energy contributes to the EU's security of energy supply as a major source of 
baseload  electricity,  not  increasing  greenhouse  gas  emissions  and  thus  combating  climate 
change.  EU  uranium  supplies  are  diversified  within  stable  regions  (Australia  and  Canada 
representing nearly half of the EU needs) and the cost of uranium has a limited impact on the 
electricity price. A third of electricity generation in the EU comes from nuclear energy. 

As  indicated  in  the  Communication  "Update  of  the  Nuclear  Illustrative  Programme", 
accompanying this Review, over the next 10-20 years the majority of nuclear power plants in 
the EU will reach the end of their originally designed lifetimes. By 2020 the share of nuclear 
energy in power generation would decrease significantly if there are no decisions made about 
new  investments.  Decisions  about  lifetime  extension,  new  investments  or  replacement 
become more acute, notably in the light of the EU CO2 reduction objective. 

It  is  for  each  Member  State  to  choose  whether  or  not  to  invest  in  nuclear  energy  but  the 
nuclear safety and security framework applied everywhere in the EU is of common interest. It 
must  be  clear  that  the  EU  maintains  the  highest  safety,  security,  non-proliferation  and 
environmental protection standards for nuclear generation. The EU therefore needs to develop 
a  common  legislative  framework  with  respect  to  the  safety  of  nuclear  installations  and  the 
management of nuclear waste.  

Following  the  establishment  of  the  High  Level  Group  on  Nuclear  Safety  and  Waste 
Management,  composed  of  national  regulators,  and  the  discussions  within  the  European 
Nuclear  Energy  Forum,  the  Commission  will  therefore  present  in  2008  a  revised  proposal 
for a Directive setting up a Community framework for nuclear safety.  

3. 

TOWARDS A VISION FOR 2050 

As global demand for oil continues to grow and many existing oil fields decline in production 
capacity,  the  demand-supply  balance  will  become  increasingly  tight,  possibly  critically  so. 
The  need  to  address  climate  change  will  require  a  massive  switch  to  high-efficiency,  low-
carbon energy technologies.  

The EU’s agenda for 2020 has set out the essential first steps in this process. Deep structural 
change  such  as  carbon-free  electricity  generation,  or  a  radical  technological  shift  such  as 
breaking transport's dependence on oil will take considerably more time but require choices to 
be  made  by  policymakers,  investors,  educational  institutions  and  scientists  today.  The 
Commission  will  therefore  propose  to  renew  the  Energy  Policy  for  Europe  in  2010  with  a 
view  to  charting  a  policy  agenda  for  2030  and a  vision  for  2050.  It  will  result  from  a  wide 
consultation to examine possible longer-term objectives such as: 

•  Decarbonising  the  EU  electricity  supply  by  2050.  This  is  a  huge  challenge,  but  one  that 
will  be  necessary  if  the  EU  is  to  fully  play  its  role  in  reducing  global  greenhouse  gas 
emissions  by  2050  to  prevent  climate  change.  It  will  require  a  further  shift  to  renewable 
energy,  carbon  capture  and  storage  and,  for  those  countries  that  so  choose,  nuclear.  The 
implementation  of  the  emissions  trading  scheme  will  facilitate  the  shift  to  low  carbon 
electricity through the replacement of existing electricity generation capacity, half of which 
reaches its end of life by 2030. If strategic investment decisions are taken rapidly, nearly 
two thirds of European electricity generation could be low carbon in the early 2020s from 
the current level of 44%. 

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•  Ending oil dependence in transport. The shift to electric, hydrogen and alternative fuel cars 
will  not  happen  overnight,  and  will  require  huge  changes  in  the  EU's  transport 
infrastructure. On the basis of the 2008 Commission Communication "Greening Europe's 
transport", the Commission will study the actions necessary to put the EU at the forefront 
of  these  changes.  In  particular,  it  will  consider  (i)  the  need  for  tax  breaks  and  other 
incentives, respecting state aid law, for the purchase of greener, electric, biomethane and 
hydrogen vehicles and the early retirement of older,  polluting ones, (ii) the possibility of 
requiring a minimum percentage of all new government and local authority vehicles to be 
electric,  biomethane  or  hydrogen  and  (iii)  the  possible  requirement  for  filling  stations  to 
introduce  the  necessary  infrastructure  to  permit  the  rapid  development  of  alternative 
transport across Europe. It will also consider how to catalyse further improvements in the 
efficiency of vehicles after 2012. 

•  Low energy and positive power buildings. 40% of final energy is consumed in buildings. 
Buildings can be designed and used in such a way that they do not consume more energy 
than  they  are  able  to  produce,  and  indeed,  to  become  net  energy  producers.  The 
Commission will establish common principles for defining low or zero carbon and energy 
buildings  and,  where  necessary,  propose  measures  in  order  to  further  increase  their 
number.  It  is  also  urgent  to  make  progress  on  converting  the  existing  stock  of  buildings. 
Every investment in existing buildings today may reduce our energy needs and contribute 
to the EU's emission reduction targets for decades to come. The Commission and Member 
States  will  further  look  into  internal  market  conditions  and  incentives  to  leverage  these 
investments for saving energy in the housing sector.  

•  A  smart  interconnected  electricity  network.  Today’s  grid  was  constructed  to  transmit 
electricity  from  large  power  plants  to  national  retail  distribution  networks.  Tomorrow’s 
grid  will  need  to  take  account  of  climate  change  impacts  and  to  serve  an  integrated 
European market with multiple small suppliers of renewable energy, be it from wind farms 
or domestic electricity generation which, alongside the larger power plants, will contribute 
to  an  increasing  extent  to  guaranteeing  essential  electricity  for  the  EU  economy.  Huge 
changes  to  the  EU's  electricity  grid  will  be  required  to  accommodate  decentralised 
generation. Concepts such as an offshore supergrid ring around Europe to connect southern 
solar, western wave and northern wind or hydro energy with the main consumption centres 
needs  to  be  explored  further.  Smart  meters  and  controls  at  the  retail  level  can  greatly 
increase energy efficiency, and encourage the development of electric vehicles.  

•  Promoting  a  high-efficiency,  low-carbon  energy  system  throughout  the  world.  The 
beneficial effects of an ambitious European energy agenda for 2030/2050 can be multiplied 
by  convincing  and  helping  the  rest  of  the  world  to  follow.  Progress  towards  a  global 
agreement  on  climate  will  be  a  powerful  driver  of  change  worldwide.  An  early  and 
ambitious energy transformation agenda in Europe will help to make Europe’s automotive, 
construction and energy engineering world technology leaders.  

This is not an exhaustive list of the issues to be considered but these examples are based on 
technologies  which  have  already  been  shown  to  work  on  an  experimental  scale.  They 
represent  fundamental  technological  shifts  which  will  not  happen  without  a  coordinated 
agenda for research and technological development, regulation, investment and infrastructure 
development, often on a continental scale.  

In  order  to  move  forward  on  this,  the  Commission  will  prepare  in  the  framework  of  the 
Strategic Energy Technology Plan, a Roadmap towards a 2050 Energy Policy of actions to 
be taken, in dialogue with Member State officials, academics and industry experts, in order to 
facilitate, where justified, their large-scale implementation. In particular, this Road Map will 

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set out the actions necessary to achieve a zero-carbon electricity supply for the EU by 2050 
and the choices available to do so.  

4. 

CONCLUSIONS 

The  Commission’s  proposals  on  greenhouse  gas  emissions,  renewable  energies  and  the 
internal energy market set the framework for Europe to meet the 2020 targets adopted by the 
European  Council.  They  will  make  a  first  major  step  towards  transforming  the  EU  into  a 
sustainable and secure, technology-based, low CO2 energy market, creating wealth and jobs 
throughout the EU. A rapid agreement and implementation of these proposals represents the 
first essential element of any energy security policy for Europe.  

•  The  20-20-20  measures  alone  will  however  not  meet  the  EU's  energy  security  needs. 
Responding to the call from the European Council of 15-16 October 2008 to intensify work 
on  energy  security,  the  Commission  proposes  a  five-point  Action  Plan  for  Energy 
Security and Solidarity and calls on the Council and Parliament to endorse the need for 
the EU to intensify its efforts in developing an effective external energy policy; speaking 
with  one  voice,  identifying  infrastructure  of  major  importance  to  its  energy  security  and 
then acting to ensure its construction, and acting coherently to deepen its partnerships with 
key  energy  suppliers,  transit  countries  and  consumers.  In  this  regard  the  Council  and 
Parliament is invited to endorse 

•  As  a  first  step,  the  six  priorities  identified  by  the  Commission  as  essential  for  the  EU's 
energy security: the Southern gas corridor, a diverse and adequate LNG supply for Europe, 
effective interconnection of the Baltic region, the Mediterranean Energy Ring, the need for 
adequate  North-South  gas  and  electricity  interconnections  within  Central  and  South-East 
Europe, and the North Sea Offshore Grid. 

In addition, the Commission calls on the Council and Parliament to welcome: 

•  As  a  second  step,  the  Commission's  intention  to  identify  and  to  communicate  to  the 
Council  and  Parliament  by  2009/2010,  the  specific  actions  necessary  to  ensure  the 
realisation of these projects in practice. 

•  As  a  third  step,  the  intention  of  the  Commission  to  consider  tabling  on  the  basis  of  the 
response  to  Green  Paper,  in  2010,  a  new  EU  Energy  Security  and  Infrastructure 
Instrument, building on the existing TEN-E instrument.  

•  The Commission's determination to ensure the development of a Southern gas corridor and 
encourage the Commission and the Community financial institutions to collaborate closely 
in  exploring  the  feasibility  of  block  purchasing  mechanism  ("Caspian  Development 
Corporation").  

•  The  Commission's  intention  to  outline  the  measures  necessary  to  ensure  that  the  EU 
"speaks with one voice" on external energy issues and the actions outlined in section 2.1. 

•  The Commission's intention to increase collaboration with Africa on energy issues through 
the  Africa-EU  Energy  Partnership  and  to  place  greater  focus  on  renewable  energy 
promotion in Africa through EU development policy. 

•  The 2008 Energy Efficiency Package, encouraging the Council and European Parliament 

to expedite work on reaching rapid agreement on its elements. 

•  The  proposed  revision  of  the  Oil  Stocks  Directive,  and  the  Commission's  intention  to 

propose a refinement of the Gas Security of Supply Directive in 2010.  

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•  The  Commission's  intention  to  promote  the  environmentally-compatible  development  of 
the EU's indigenous fossil fuel resources and to encourage the Berlin Fossil Fuel Forum to 
develop  a  concrete  set  of  recommendations  regarding  the  action  necessary  to  further  this 
objective. 

•  The  Commission's  intention  to  table,  in  the  light  of  experience  gained  with  the  new 
Renewables  Directive,  a  Communication  "Overcoming  Barriers  to  Renewable  Energy  in 
the EU". 

•  The revised proposal for a Directive setting up a Community framework for nuclear safety. 

•  The  initiative  of  establishing  a  Sustainable  Energy  Financing  Initiative  as  a  joint 
Commission/European  Investment  Bank  project  to  mobilise  large-scale  funding  from 
capital markets for investments in energy efficiency, renewable energies and the clean use 
of fossil fuels. 

Finally, the EU needs to begin preparing its energy future in the longer term. The Commission 
will therefore propose to renew the Energy Policy for Europe in 2010 with a view to charting 
a policy agenda for 2030 and a vision for 2050, to be supported by a new Action Plan. 

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ANNEX  

Annex 1 – Main scenarios for 2020 

The  table  below  shows  the  EU’s  energy  profile  in  2005  and  the  projected  profile  in  2020 
under four scenarios: (i) a baseline scenario, without the Energy Policy for Europe and with 
oil prices at 61$/bbl; (ii) a scenario without the Energy Policy for Europe but with an oil price 
at $100/bbl; (iii) a scenario with the Energy Policy for Europe and the moderate oil price; (iv) 
a scenario with the Energy Policy for Europe and the higher oil price. 

EU-27  

Mtoe 

2005  Baseline 

projection29, 
oil price 
61$/bbl 

Baseline 
projection, oil 
price $100/bbl 

New Energy 
Policy 
projection, 
oil price 
$61/bbl 

New Energy 
Policy 
projection, 
oil price 
$100/bbl  

1811 

1968 

1903 

1712 

1672 

Primary  energy 
demand 

Oil  

Gas  

Solids 

Renewables 
Nuclear30 

666 

702 

445  

505  

320 

123 

257 

342 

197 

221 

EU energy 
production  

896 

725 

Oil 

Gas  

Solids 

Renewables 

Nuclear 

Net imports  

Oil  

Gas Mtoe (bcm) 

133 

188  

196 

122 

257 

975  

590  

257 
(298) 

53 

115  

142 

193 

221 

1301 

707 

648 

443 

340 

221 

249 

774 

53 

113 

146 

213 

249 

608 

399 

216 

270 

218 

733 

53 

107 

108 

247 

218 

1184 

651 

1033 

610 

567 

345 

253 

274 

233 

763 

52 

100 

129 

250 

233 

962 

569 

390 (452) 

330 (383) 

291 (337) 

245 (284) 

Solids 

127  

200 

194 

108 

124 

29 

30 

The baseline scenario is a projection of current trends. Only policies implemented by end-2006 are included.  
Assumes nuclear phase-outs decided by Member States as at end-2006  

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Final  electricity 
demand  

238  

303 

302 

257 

260 

More  detailed  analyses  are  presented  in  the  annexed  Commission  Services  Working  Paper, 
"Europe's current and future energy position: demand – resources – investment". Note that the 
last  two  columns  show  predictions  for  the  EU's  energy  supply  picture  once  the  20-20-20 
targets have been met in full, based on the Primes model. 

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