COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Energy 2020 A strategy for competitive, sustainable and secure energy
Date: 2010-11-10
Institutions: European Commission
Subjects: common strategy, energy policy, energy site, energy supply

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EUROPEAN COMMISSION 

Brussels, 10.11.2010 
COM(2010) 639 final 

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

Energy 2020 
A strategy for competitive, sustainable and secure energy 

{SEC(2010) 1346} 

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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 

Energy 2020 
A strategy for competitive, sustainable and secure energy 

INTRODUCTION 

The price of failure is too high. 

Energy is the life blood of our society. The well-being of our people, industry and economy 
depends on safe, secure, sustainable and affordable energy. At the same time, energy related 
emissions  account  for  almost  80%  of  the  EU's  total  greenhouse  gas  emissions.  The  energy 
challenge  is  thus  one  of  the  greatest  tests  which  Europe  has  to  face.  It  will  take  decades  to 
steer our energy systems onto a more secure and sustainable path. Yet the decisions to set us 
on the right path are needed urgently as failing to achieve a well-functioning European energy 
market will only increase the costs for consumers and put Europe’s competitiveness at risk. 

Over  the  next  ten  years,  energy  investments  in  the  order  of  €  1  trilli on  are  needed,  both  to 
diversify existing resources and replace equipment and to cater for challenging and changing 
energy  requirements.  Structural  changes  in  energy  supply,  partly  resulting  from  changes  in 
indigenous  production,  oblige  European  economies  to  choose  among  energy  products  and 
infrastructures. These choices will be felt over the next 30 years and more. To enable these 
decisions  to  be  taken  urgently  calls  for  an  ambitious  policy  framework.  Postponing  these 
decisions will have immeasurable repercussions on society as regards both longer-term costs 
and security. 

A  common  EU  energy  policy  has  evolved  around  the  common  objective  to  ensure  the 
uninterrupted physical availability of energy products and services on the market, at a price 
which is affordable for all consumers (private and industrial), while contributing to the EU's 
wider  social  and  climate  goals.  The  central  goals  for  energy  policy  (security  of  supply, 
competitiveness, and sustainability) are now laid down in the Lisbon Treaty1. This spells out 
clearly what is expected from Europe in the energy area. While some progress has been made 
towards these goals, Europe's energy systems are adapting too slowly, while the scale of the 
challenges grows. Forthcoming enlargements of the EU will make this challenge even greater 
as  the  Union  takes  in  countries  with  outdated  infrastructure  and  less  competitive  energy 
economies. 

The European Council adopted in 2007 ambitious energy and climate change objectives for 
2020 – to reduce greenhouse gas emissions by 20%, rising to 30% if the conditions are right2, 
to increase the share of renewable energy to 20% and to make a 20% improvement in energy 
efficiency.  The  European  Parliament  has  continuously  supported  these  goals.  The  European 

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Article 194 of the Treaty on the functioning of the European Union (TFUE). 
The  European  Council  specified:  "provided  that  other  developed  countries  commit  themselves  to 
comparable emission reductions and economically more advanced developing countries to contributing 
adequately according to their responsibilities and respective capabilities" 

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Council has also given a long term commitment to the decarbonisation path with a target for 
the EU and other industrialised countries of 80 to 95% cuts in emissions by 2050.  

Nevertheless, the existing strategy is currently unlikely to achieve all the 2020 targets, and it 
is wholly inadequate to the longer term challenges. EU energy and climate goals have been 
incorporated  into  the  Europe  2020  Strategy  for  smart,  sustainable  and  inclusive  growth3, 
adopted  by  the  European  Council  in  June  2010,  and  into  its  flagship  initiative  ‘Resource 
efficient  Europe’.  The  urgent  task  for  the  EU  is  to  agree  the  tools  which  will  make  the 
necessary  shift  possible  and  thus  ensure  that  Europe  can  emerge  from  recession  on  a  more 
competitive, secure and sustainable path. 

Despite the importance of energy policy aims, there are serious gaps in delivery. 

The  internal  energy  market  is  still  fragmented  and  has  not  achieved  its  potential  for 
transparency,  accessibility  and  choice.  Companies  have  grown  beyond  national  borders,  but 
their development is still hampered by a host of different national rules and practices. There 
are still many barriers to open and fair competition4. A recent study into consumer conditions 
in  retail  electricity  markets  indicates  sub-optimal  consumer  choice5.  Implementation  of 
internal market legislation is disappointing, with over 40 infringement procedures underway 
on the second internal energy market package from 2003 alone. 

The  security  of  internal  energy  supplies  is  undermined  by  delays  in  investments  and 
technological progress6. Currently, nearly 45% of European electricity generation is based on 
low-carbon energy sources, mainly nuclear and hydropower. Parts of the EU could lose more 
than  a  third  of  their  generation  capacity  by  2020  because  of  the  limited  life-time  of  these 
installations.  This  means  replacing  and  expanding  existing  capacities,  finding  secure  non-
fossil fuel alternatives, adapting networks to renewable energy sources and achieving a truly 
integrated  internal  energy  market.  At  the  same  time  Member  States  still  need  to  phase  out 
environmentally harmful subsidies. 

The quality of National Energy Efficiency Action Plans, developed by Member States since 
2008, is disappointing, leaving vast potential untapped. The move towards renewable energy 
use and greater energy efficiency in transport is happening too slowly. While we are broadly 
on track for the 20% target for renewable, we are a long way from achieving the objective set 
for energy efficiency. 

At an international level, little heed is paid to warnings about tight oil supply in the future7. 
Despite  serious  gas  supply  crises  that  have  acted  as  a  wake-up  call,  exposing  Europe’s 
vulnerability, there is still no common approach towards partner, supplier or transit countries. 
The  potential  for  further  development  of  EU  indigenous  fossil  fuel  resources,  including 
unconventional gas, exists and the role they will play must be assessed in all objectivity. 

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Communication from the Commission (doc. 7110/10 of 5 March 2010). 
As evidenced by the Commission's Energy Sector Inquiry, Communication from the Commission of 1 
January 2007 Inquiry pursuant to Article 17 of Regulation (EC)No 1/2003 into the European gas and 
electricity  sectors  -  COM(2006)  851  -  and  the  high  number  of  investigations  into  anti-competitive 
behaviour in the sector (e.g. IP/10/494 of 4 May 2010). 
Study of the functioning of retail electricity markets for consumers in the European Union, November 
2010. 
ENTSO-Electricity has estimated that the EU needs to build or renew 30 000 km of network cables in 
the next ten years. 
E.g. IEA World Energy Outlooks 2009 and 2010. 

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Member States’ energy interdependence requires more European action. 

The EU is the level at which energy policy should be developed. Decisions on energy policy 
taken by one Member State inevitably have an impact on other Member States. The optimum 
energy  mix,  including  the  swift  development  of  renewables,  needs  a  continental  market  at 
least. Energy is the market sector where the greatest economic efficiencies can be made on a 
pan-European  scale.  Fragmented  markets  not  only  undermine  security  of  supply,  they  also 
limit the benefits which energy market competition can bring. The time has come for energy 
policy to become truly European.  

The EU must remain an attractive market for companies at a time of increasing competition 
on  energy  resources  worldwide.  The  new  European  energy  strategy  must  support  the 
integrated  industrial  approach  just  presented  by  the  European  Commission8,  in  particular 
since energy remains an important cost factor for industry9. The EU must also consolidate its 
competitiveness  in  energy  technology  markets.  The  share  of  renewable  energy  in  the  EU 
energy mix has risen steadily to some 10% of the gross final energy consumption in 2008. In 
2009, 62% of newly installed electricity generation  capacity  in  the  EU  was  from  renewable 
sources, mainly wind and solar. However, Europe’s lead is challenged. The independent 2010 
Renewable Energy Attractiveness Index10 now cites the US and China as the best investment 
opportunities for renewable energy. New stimulus is needed; more than ever is EU leadership 
called to address these challenges. 

In international energy affairs, the EU could be much stronger and effective if it took charge 
of its common interest and ambition. Despite accounting for one fifth of the world’s energy 
use,  the  EU  continues  to  have  less  influence  on  international  energy  markets  than  its 
economic  weight  would  suggest.  Global  energy  markets  are  becoming  tighter,  with 
developing Asian countries and the Middle East accounting for most of the growth in global 
demand11. As the world's largest energy importer, the EU is likely to be more vulnerable to 
supply risks as a result.  

The inclusion of energy policy in the EU Treaty calls for a new outlook. 

We must build on what we have achieved, and be bold in our ambition. 

The EU cannot afford to fail in its energy ambitions. Therefore the Commission proposes a 
new energy strategy towards 2020. This will consolidate the measures which have been taken 
so  far  and  step  up  activity  in  areas  where  new  challenges  are  emerging.  It  is  the  result  of 
extensive debates within the EU institutions and wide-ranging public consultations.  

The focus here is not on a comparative analysis of different energy sources, rather the steps 
which  are  required  to  deliver  Europe's  medium term policy objectives.  Various scenarios in 
terms of energy mix will be presented in the forthcoming energy roadmap 2050, which will 
describe  ways  of  achieving  Europe’s  long-term  decarbonisation  goal  and  their  implications 
for  energy  policy  decisions.  This  strategy  sets  out  initial  policy  decisions  which  will  be 
needed  to  meet  our  2020  energy  objectives  as  they  currently  stand.  The  2050  low  carbon 

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Communication on an "integrated industrial policy for the globalisation era" (COM 2010) 619 
For example, it is estimated that electricity prices in Europe is 21% more expensive than in the United 
States or 197% more expensive than in China. 
Issue 26, August 2010. 
International Energy Agency World Energy Outlook 2010. 

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economy and energy roadmaps will further inform and guide this programme of action and its 
implementation by offering a long term vision. 

We urgently need far-reaching changes in energy production, use and supply.  

First and foremost, the strategy underlines the need to rebalance energy actions in favour of a 
demand-driven policy, empowering consumers and decoupling economic growth from energy 
use.  In  particular,  the  transport  and  construction  industries  must  pursue  an  active  energy 
savings  policy  and  diversify  towards  non-polluting  energy  sources.  Beyond  the  Emissions 
Trading  Scheme  (ETS),  the  strategy  should  help  create  market  conditions  which  stimulate 
higher  energy  savings  and  more  low  carbon  investments,  to  exploit  a  wide  range  of 
centralised  and  distributed  renewable  energy  as  well  as  key  technologies  for  energy  storage 
and electro-mobility (notably electric vehicles and public transport).  

Energy policy is a key contribution for achieving the objective of the new strategy for smart, 
sustainable and inclusive growth in support of a strong, diversified and competitive industrial 
base.  In  this  context,  Europe  has  to  acknowledge  that  its  industrial  base  is  in  need  of  all 
sectors across the entire value chain. 

Public  authorities  have  to  lead  by  example.  Each  year,  16%  of  EU  GDP,  around  € 1,500 
billion,  is  spent  by  public  authorities.  Public  procurement  rules  should  insist  on  efficiency 
conditions  to  increase  energy  savings  and  spread  innovative  solutions,  notably  in  buildings 
and transport. The potential of market-based and other policy instruments, including taxation, 
to enhance energy efficiency should be fully exploited. 

On  the  supply  side,  the  priority  must  continue  to  be  the  development  of  secure  and 
competitive sources of energy. In the field of electricity generation, investments should lead 
to nearly two thirds of the electricity coming from low carbon sources by the early 2020's, the 
current level being 45%. In this context, priority should be given to renewable energies. The 
strategy must provide a framework at EU level which, while respecting national differences, 
would  not  only  allow  Member  States  to  outperform  their  respective  targets,  but  also  ensure 
that the renewable energy sources and technologies are economically competitive by 2020. 

The  contribution  of  nuclear  energy,  which  currently  generates  around  one  third  of  EU 
electricity  and  two  thirds  of  its  carbon-free  electricity,  must  be  assessed  openly  and 
objectively.  The  full  provisions  of  the  Euratom  Treaty  must  be  applied  rigorously,  in 
particular in terms of safety. Given the renewed interest in this form of generation in Europe 
and worldwide, research must be pursued on radioactive waste management technologies and 
their safe implementation, as well as preparing the longer term future through development of 
next  generation  fission  systems,  for  increased  sustainability  and  cogeneration  of  heat  and 
electricity, and nuclear fusion (ITER). 

For  oil  and  gas,  rising  import  requirements  and  increasing  demand  from  emerging  and 
developing countries call for stronger mechanisms to secure new, diversified and safe supply 
routes. As well as crude oil access, refining infrastructure is a crucial part of the supply chain. 
The  EU  is  a  strong  geopolitical  partner  in  energy  markets  and  must  have  the  ability  to  act 
accordingly.  

The new energy strategy focuses on five priorities:  

1. 

Achieving an energy efficient Europe; 

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2. 

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5. 

1. 

Building a truly pan-European integrated energy market; 

Empowering consumers and achieving the highest level of safety and security; 

Extending Europe's leadership in energy technology and innovation; 

Strengthening the external dimension of the EU energy market.  

AN EFFICIENT USE OF ENERGY THAT TRANSLATES INTO 20% SAVINGS BY 2020 

Europe cannot afford to waste energy. Energy efficiency is one of the central objectives for 
2020  as  well  as  a  key  factor  in  achieving  our  long-term  energy  and  climate  goals.  The  EU 
needs  to  develop  a  new  energy  efficiency  strategy  which  will  enable  all  Member  States  to 
further decouple their energy use from economic growth. This strategy will take into account 
the diversity between Member States in terms of energy needs. Energy efficiency is the most 
cost effective way to  reduce  emissions, improve energy  security  and  competitiveness, make 
energy consumption more affordable for consumers as well as create employment, including 
in  export  industries.  Above  all,  it  provides  tangible  benefits  to  citizens:  average  energy 
savings for a household can amount to €

 1 000 per year12. 

It  is  necessary  to  address  the  paradox  whereby  demand  for  more  energy-intensive  or  new 
products  outstrips  gains  in  energy  efficiency.  It  is  high  time  that  we  move  from  words  to 
actions.  Thus,  energy  efficiency  needs  to  be  mainstreamed  into  all  relevant  policy  areas, 
including  education  and  training,  to  change  current  behavioural  patterns.  Energy  efficiency 
criteria must be imposed in all spheres, including the allocation of public funds.  

Efforts  should  be  concentrated  on  the  whole  energy  chain,  from  energy  production,  via 
transmission  and  distribution,  to  final  consumption.  Effective  compliance  monitoring, 
adequate  market  surveillance,  widespread  usage  of  energy  services  and  audits,  as  well  as 
material efficiency and recycling are all musts. 

We  are  a  long  way  from  achieving  the  20%  energy  savings  objective.  The  new  strategy 
therefore calls for reinforced political commitment to achieving it through a clear definition of 
the  objective  to  be  reached  and  strong  compliance  monitoring.  Member  States  and  regional 
and local authorities are called to intensify their work to implement adequate policies and to 
make full use of the available tools, objectives and indicators, with comprehensive National 
Energy Efficiency Action Plans. 

Special  attention  should  be  given  to  the  sectors  with  the  largest  potential  to  make  energy 
efficiency gains, namely the existing building stock and transport sector. Member States have 
agreed to legally binding climate targets for these and other non-ETS sectors but still need to 
implement appropriate measures13. The revision of the energy taxation directive could provide 
steering  effects  with  the  potential  of  long-term  efficiency  gains.  Measures  need  to  be 
developed to speed up significantly the rate of refurbishment using energy-efficient products 
and technologies. In the residential sector, the issue of divided incentives between owners and 
tenants  needs  to  be  addressed.  Regarding  the  substantial  stock  of  public  buildings,  the 
authorities need to exploit all available opportunities, including those offered by EU Regional 

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COM(2008) 772. 
Effort Sharing Decision No. 406/2009/EC. 

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Policy,  to  improve  the  energy  efficiency  and  autonomy  of  the  buildings.  In  the  transport 
sector,  significant  potentials  for  example  in  multimodal  solutions,  efficient  vehicles  and 
efficient driving should be tapped. 

The information and communication technologies have an important role to play in improving 
the  efficiency  of  major  emitting  sectors.  These  technologies  offer  potential  for  a  structural 
shift  to  less  resource-intensive  products  and  services,  for  energy  savings  in  buildings  and 
electricity  networks  as  well  as  for  more  efficient  and  less  energy  consuming  intelligent 
transport systems14. 

The industry sector needs to incorporate energy-efficiency objectives and energy technology 
innovation  into  its  business  model.  The  ETS  contributes  significantly  to  do  so  for  larger 
companies, but there is need for a wider use of other instruments, including energy audits and 
energy  management  systems  in  smaller  companies  and  supporting  mechanisms  for  SMEs. 
Efficiency  benchmarking  can  give  indication  to  companies  where  they  stand  in  efficiency 
terms  in  comparison  with  their  competitors.  Efficiency,  including  in  electricity  use,  must 
become  a  profitable  business  in  itself,  leading  to  a  robust  internal  market  for  energy-saving 
techniques and practices and commercial opportunities internationally. A framework for wide 
resource efficiency would increase such savings. 

The public sector needs to lead by example. Ambitious objectives ought to be set for public 
sector consumption. Public procurement should support energy efficient outcomes. Innovative 
integrated  energy  solutions  at  local  level  contributing  towards  transition  to  so-called  ‘smart 
cities’  should  be  supported.  Municipalities  represent  a  major  actor  of  the  required  change, 
thus their initiatives like the Covenant of Mayors should be further strengthened. Cities and 
urban areas, which consume up to 80% of the energy, are at the same time part of the problem 
and part of the solution to greater energy efficiency.  

Resource-efficiency policies, including energy-efficiency investments, often have short-term, 
up-front  costs  before  the  medium-  and  longer-term  benefits  are  felt.  Tools  are  needed  to 
encourage new investments in energy-efficient technologies and practices. EU financing can 
have  a  high  leverage  factor  and  innovative  solutions  must  be  developed.  Innovative  and 
carefully  considered15  uses  of  taxation  and  pricing  should  also  be  explored  as  tools  to 
encourage behavioural changes or to fund investments.  

The  Energy  Efficiency  Plan  to  be  presented  in  early  2011  will  be  followed  by  concrete 
regulatory proposals  in the course  of that year. It will also address the issue of financing in 
terms  of  access  to  finance,  the  availability  of  innovative  financing  products,  incentives  to 
induce  energy-efficiency  investments  as  well  as  the  role  of  EU  funding,  in  particular  the 
structural funds, further building on existing successful examples. 

Priority 1: Achieving an energy-efficient Europe 

Action 1: Tapping into the biggest energy-saving potential — buildings and transport  

– 

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The energy-efficiency renovation rate should be accelerated by investment incentives, 
wider  use  of  energy  service  companies,  innovative  financial  instruments  with  high 
leverage  factors  and  financial  engineering  at  European,  national  and  local  levels.  In 

Specific actions have been set out in the Digital Agenda for Europe, COM(2010)245. 
Notably with regard to the possible cumulative effects of different market based measures  

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– 

– 

this context, division of investment incentives between owners and tenants and energy 
labelling  of  buildings  (certificates  used  in  the  real  estate  market  and  public  support 
policies) will be addressed in forthcoming proposals by the Commission. 

Public  authorities  need  to  lead  by  example.  Energy  criteria  (regarding  efficiency, 
renewables and smart networking) should be used in all public procurement of works, 
services  or  products.  Programmes  and  technical  assistance  facilities  are  needed  that 
build  the  capacities  of  energy  services  market  participants  to  develop  and  structure 
finance for projects that target both public authorities and private actors. EU financial 
programmes will target energy savings projects and make energy efficiency a strong 
condition for allocating financial support. 

The  forthcoming  White  Paper  on  future  transport  policy  will  present  a  menu  of 
measures  to  improve  transport  sustainability  and  reduce  oil  dependence.  This  will 
include initiatives aimed at increasing the energy efficiency of the transport system, 
including support for clean urban mobility as well as multimodal transport solutions, 
intelligent  traffic  management  and  energy  efficiency-standards  for  all  vehicles, 
adequate  economic  signals  and  the  promotion  of  sustainable  behaviour.  In  this 
context, more efficient car-labelling systems should be explored. 

Action 2: Reinforcing industrial competitiveness by making industry more efficient 

– 

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The  Commission  will  seek  to  support  European  industries'  competitiveness  through 
energy efficiency by widening the Ecodesign requirements for energy and resource-
intensive  products  complemented  by  system  level  requirements  where  relevant.  The 
potential effect of voluntary agreements with energy and resource-intensive industry 
branches should be explored. More extensive energy labelling should be introduced to 
ensure more comprehensive comparison between products. 

Energy-management  schemes  (e.g.  audits,  plans,  energy  managers)  should  be 
implemented  in  industry  and  in  the  services  sector.  A  particular  emphasis  on  SMEs 
through dedicated support mechanisms should be established.  

Action 3: Reinforcing efficiency in energy supply 

– 

– 

Energy efficiency, in the production as well as in the distribution, should become an 
essential criterion for the authorisation of generation capacities and efforts are needed 
to  substantially  increase  the  uptake  of  high  efficiency  cogeneration,  district  heating 
and cooling. 

Distribution  and  supply  companies  (retailers)  should  be  required  to  secure 
documented energy savings among their customers, using means such as third party 
energy  services,  dedicated  instruments  such  as  ‘white  certificates’,  public  benefit 
charges  or  equivalent  and  speeding  up  the  introduction  of  innovative  tools  such  as 
‘smart  meters’  which  should  be  consumer-oriented  and  user-friendly  so  that  they 
provide real benefits for consumers. 

Action 4: Making the most of National Energy Efficiency Action Plans 

– 

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The  National  Energy  Efficiency Action Plans provide comprehensive benchmarking 
on  energy  efficiency,  including  measurable  objectives  and  indicators  to  monitor 
relative  starting  positions  and  national 
progress, 

into  account 

taking 

the 

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circumstances.  An  annual  review  mechanism  should  feed  into  the  Europe  2020 
objective for energy efficiency.  

2. 

ENSURING THE FREE MOVEMENT OF ENERGY 

Europe’s  energy  markets  have  been  opened  up  to  enable  citizens  to  benefit  from  more 
reliable, competitive prices as well as more sustainable energy. This potential will not be fully 
realised  unless  robust  efforts  are  made  to  create  a  more  integrated,  interconnected  and 
competitive market. 

Electricity and gas markets are not yet working as a single market. The market is still largely 
fragmented into national markets with numerous barriers to open and fair competition. Most 
energy  markets  remain  national  in  scope  and  are  highly  concentrated, often  with  incumbent 
companies  having  a  de  facto  monopoly  position.  Regulated  energy  prices  further  reduce 
competition  in  many  Member  States16.  Given  the  remaining  anti-competitive  practice  in  the 
energy sector17, pro-active competition enforcement, not only by the Commission, but also by 
Member  States,  is  needed.  Improving  competition  in  the  energy  markets  will  contribute  to 
setting  the  right  incentives  for  the  investments  required  and  reducing  their  cost  to  what  is 
necessary. 

By  introducing  a  legislative  framework  designed  to  promote  the  achievement  of  the  20% 
target  for  renewable  energy  in  2020,  Europe  has  just  taken  the  first  step  in  this  area.  It  is 
necessary  to  ensure  that  the  legislation  is  fully  implemented  and  to  pave  the  way  for  large 
scale  use  of  renewable  energy  in  the  decades  beyond  2020.  The  legal  framework  must  be 
properly enforced to give investors the confidence to invest in new production, transport and 
storage options for renewable sources. The effects of the Renewable Energy Directive will be 
assessed as from 2011 with a view to strengthening or extending it where and when needed. 

The further development of renewable energy will continue to rely for some time on support 
schemes. The Commission must play its part in ensuring that these are sustainable, consistent 
with  technological  progress  and  not  hindering  innovation  or  competition.  It  must  however 
also ensure the required degree of convergence or harmonization between national schemes as 
the market for renewables is moving from a local to a cross-border supply. In this context, the 
necessary  requirements  for  a  pan-European  trade  in  renewable  energy  should  be  defined  on 
the  basis  of  best  practice.  Greater  use  of  balanced,  cost-effective  and  predictable  feed-in 
premiums, more technology-specific support and financing instruments should be mobilized in 
accordance  with  state  aid  rules  when  applicable.  In  particular,  retroactive  changes  to  support 
schemes should be avoided given the negative effect such changes have on investors' confidence. 

As  the  Monti  Report  outlined,  the  new  challenge  to  2020  is  to  provide  the  backbone  for 
electricity and gas to flow where it is needed. Without a proper infrastructure across Europe, 
comparable to the means of transport of other strategic sectors such as telecommunications or 
transport,  the  market  will  however  never  deliver  on  its  promises.  Further  efforts  need  to  be 
made to upgrade energy infrastructure particularly in Member States that joined as of 2004 as 
well as in less developed regions. 

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Report on progress in creating the internal gas and electricity market - COM(2010) 84. 
After the Energy Sector Inquiry revealed manifold competition problems in the energy sector, which led 
to the adoption of nine major antitrust decisions, the Commission continues assessing the competitive 
landscape in European energy markets. 

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Most important, Europe is still lacking the grid infrastructure which will enable renewables to 
develop and compete on an equal footing with traditional sources. Current projects of large-
scale wind parks in the North and solar facilities in the South need corresponding power lines 
capable of transmitting this green power to the areas of high consumption. Today’s grid will 
struggle  to  absorb  the  volumes  of  renewable  power  which  the  2020  targets  entail  (33%  of 
gross electricity generation).  

Smart meters and power grids are the keys to full exploitation of the potential for renewable 
energy  and  energy  savings  as  well  as  improvements  in  energy  services.  A  clear  policy  and 
common standards on smart metering and smart grids18 are needed well before 2020 to ensure 
interoperability across the network. 

Finally,  the  obligation  of  solidarity  among  Member  States  will  be  null  and  void  without  a 
sufficient  internal  infrastructure  and  interconnectors  across  external  borders  and  maritime 
areas. As a major energy importer, the EU is directly affected by the evolution of networks in 
neighbouring  countries.  The  construction  of  new  interconnections  at  our  borders  should 
receive the same attention and policies as intra-EU projects. Such links are essential not only 
for  our  neighbours  but  to  ensure  the  EU's  stability  and  security  of  supply.  There  will  be 
specific  emphasis  on  the  Southern  corridor  and  the  effective  start  of  projects  of  European 
interest, in particular Nabucco and ITGI. 

Investment  of  around  €
 1  trillion  will  be  needed  by  2020  to  replace  obsolete  capacity, 
modernise  and  adapt  infrastructures  and  cater  for  increasing  and  changing  demand  for  low 
carbon energy. While investment decisions lie mainly with market players (energy companies, 
system operators and consumers), public policy is decisive in creating a stable and transparent 
framework  for  investment  decisions.  The  new  tools  created  by  the  third  Internal  Energy 
Market Package, including an Agency for the Cooperation of Energy Regulators (ACER) and 
the new Networks of Transmission System Operators for Electricity and Gas (ENTSO-E and 
ENTSO-G) should be fully utilised in the coming years for the further integration of energy 
markets. Regional initiatives19 should serve as stepping stones towards a European market.  

Infrastructure investments will continue to be financed mainly from tariffs paid by the users. 
However,  given  the  scale  of  the  investments,  their  nature  and  their  strategic  character,  it 
cannot be assumed that all the necessary investments will be delivered by the market alone. 
The  Commission  will  adopt  a  new  strategy  on  energy  infrastructure  development  to 
encourage adequate grid investments in electricity, gas, oil and other energy sectors. Provided 
the supply is stable, natural gas will continue to play a key role in the EU’s energy mix in the 
coming  years  and  gas  can  gain  importance  as  the  back-up  fuel  for  variable  electricity 
generation.  This  calls  for  diversified  imports,  both  pipeline  gas  and  Liquefied  Natural  Gas 
terminals, while domestic gas networks are required to be increasingly interconnected.  

Beyond  the  financing  issue,  complex  and  lengthy  administrative  procedures  can  be  a  major 
bottleneck.  Existing  rules  and  procedures  for  projects  of  European  interest  (e.g.  serving 
security  of  supply,  solidarity  or  renewables  integration  purposes)  will  need  to  be  improved 
and  streamlined  significantly,  while  respecting  the  principles  of  public  acceptance  and 
existing  environmental  legislation.  Communities  at  local,  regional  and  national  levels  will 
engage  more  constructively  in  facilitating  projects  of  European  interest  if  these  also  bring 

18 

19 

The  European  Commission  has  set  up  a  smart  grid  task  force  to  discuss  the  implementation  of  smart 
grids at the European level: http://ec.europa.eu/energy/gas_electricity/smartgrids/taskforce_en.htm. 
E.g. Baltic Energy Market, Mediterranean Ring. 

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concrete,  shorter  term  benefits  for  them  through,  for  example,  privileged  access  to  public 
funds. 

Priority 2: Building a pan-European integrated energy market 

Action 1: Timely and accurate implementation of the internal market legislation 

– 

The  Commission  will  continue  to  ensure  correct  and  timely  implementation  of  the 
existing  internal  energy  market  and  a  forceful  competition  policy.  For  further 
integration of the energy market, the regulatory framework needs to be consolidated 
(e.g. network codes), complemented by other actions such as market coupling, target 
model  development20  and  a  robust  framework  for  traded  markets  through  effective 
transparency  and  oversight.  If  these  measures  prove  not  to  be  sufficient  or  ACER's 
remit too narrow, further legislative measures will be envisaged. 

Action 2: Establishing a blueprint of the European infrastructure for 2020-2030 

– 

– 

– 

– 

20 

The  Commission's  forthcoming  infrastructure  communication  will  allow  Europe  to 
identify priority infrastructure to be deployed in order to have a functioning internal 
market,  ensure  integration  of  large-scale  production  of  renewables  and  guarantee 
security of supply, in line with the vision for a sustainable European energy system by 
2050.  By  2015,  no  Member  States  should  be  isolated  from  the  European  internal 
market.  Cross-border  corridors  will  also  be  covered.  The  10-year  network 
development plans of ENTSO-E and ENTSO-G will be taken forward with the help 
of  ACER,  together  with  all  other  relevant  stakeholders.  This  exercise  will  build  on 
successful  regional  initiatives  such  as  the  one  in  the  Baltic  region  and  will  also 
include  an  assessment  of  the  necessary  storage  facilities  and  climate  adaptation 
measures, including possible future needs for CO2 transportation infrastructure in the 
EU. 

The Commission's proposal also aims at preparing the grid for the inevitable changes 
in  demand  which  will  ensue  from  energy  and  transport  policies,  such  as  electro 
mobility  and  an  increase  in  decentralised  as  well  as  large  scale  renewable  power 
generation. 

A  set  of  policy  tools  will  be  proposed  by  the  Commission  next  year  to  implement 
strategic  infrastructure  priorities  in  the  next  two  decades.  They  will  include  a  new 
method  for  defining  the  strategic  infrastructures  which  will  be  essential  for  the 
European Union as a whole in terms of competitive energy provision, environmental 
sustainability  and  access  to  renewables  as  well  as  security  of  supply.  These  vital 
sections will be clearly identified in the overall mapping exercise and awarded a label 
of ‘European interest’ so that they can benefit from an improved permitting procedure 
and concentrated funding if necessary. Selectivity will be of the essence in this work. 
Network connections with third countries will be duly taken into account. 

ACER, ENTSO-E and ENTSO-G will be given a mandate to develop the blueprint of 
European  electricity  and  gas  grids  on  the  horizon  of  2020-2030.  This  should  be 

An electricity target model has been developed in the context of Florence forum, in the so called Ad-
Hoc Advisory Group. The guidelines and codes to implement this target model are being prepared. A 
target model for gas is being developed in the framework of the Madrid Forum. 

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followed  by  a  longer-term  vision  on  the  basis  of  the  energy  2050  roadmap  to  be 
presented in 2011. 

Action 3: Streamlining permit procedures and market rules for infrastructure 

developments 

– 

– 

The Commission will propose to introduce a permitting scheme applying to projects 
of  "European  interest"  to  improve  the  current  process  through,  for  example,  the 
nomination of a single authority at national level, while respecting safety and security 
standards  and  ensuring  full  compliance  with  the  EU  environmental  legislation.  The 
streamlined and improved procedures will provide for more transparency and ensure 
open  and  transparent  debates  at  local,  regional  and  national  level  to  enhance  public 
trust in and acceptance of the installations. In addition, ways of positively rewarding, 
through  enhanced  access 
that 
constructively engage and succeed in facilitating the timely construction of projects of 
European interest will be explored. 

to  public  fund  regions  and  Member  States 

To establish market coupling by 2014, ACER  will, within the scope of its mandate, 
ensure  the  definition  and  implementation  of  all  necessary  technical  (harmonisation, 
standardisation, etc.) and regulatory issues linked to the interconnection of networks 
across  borders;  access  to  renewables;  and  the  integration  of  new  technologies.  A 
detailed  programme  of  action  will  be  presented  accordingly  to  assist  the  Member 
States in the process of rolling out smart metering/smart grids (including the issue of 
display of information for consumers) and encouraging new energy services. 

Action 4: Providing the right financing framework 

– 

Acknowledging  the  fact  that  most  of  the  infrastructure  development  is  of  a 
commercial nature, a methodology will be defined by the Commission to analyse the 
optimum balance between public and private financing (on the following principles to 
be applied across the Union: ‘user pays’, ‘beneficiary pays’ - in terms of cross-border 
cost-benefit allocation, and ‘tax payer pays’ - burden-sharing for commercially non-
viable and ‘EU-wide benefit’ infrastructure). This will be defined in accordance with 
applicable state aid rules. For projects of ‘European interest’ which have no or poor 
commercial viability, innovative funding mechanisms will be proposed for maximum 
leverage of public support to improve the investment climate for the coverage of main 
risks  or  to  speed  up  project  implementation.  The  development  of  proper  energy 
infrastructure  is  critical  and  urgent;  it  requires  a  broader  view  of  new  funding 
instruments  (both  public  and  private)  as  well  as  the  mobilisation  of  additional 
resources under the next multi-annual financial framework.  

3. 

SECURE, SAFE AND AFFORDABLE ENERGY FOR CITIZENS AND BUSINESSES 

A  well  functioning,  integrated  internal  market  benefits  consumers  with  wider  choice  and 
lower  prices.  Yet,  many  consumers  do  not  perceive  that  they  are  better  off  as  a  result  of 
market  opening  and  competition  among  different  suppliers.  Individual  consumers  must  be 
aware  of,  and  exercise,  their  rights  under  EU  legislation.  They  should  be  able  to  take 
advantage of the opportunities which market opening creates and feel confident that they have 
access  to  the  energy  services  they  need  in  the  quality  and  emission  profile  they  want.  The 
opening of markets can deliver the best prices, choice, innovation and service for consumers 

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if  it  goes  hand  in  hand  with  measures  to  guarantee  trust,  protect  consumers  and  to  support 
them to play the active role expected of them by liberalisation. 

However  citizens  appear  to  be  unaware  of  their  rights  under  EU  legislation,  or  reluctant  to 
exercise  them.  Far  greater  efforts  are  needed  to  inform  consumers  about  their  rights  and 
involve them in the internal market. Likewise, the potential for reducing energy bills through 
energy  savings  needs  to  be  better  articulated.  The  Citizens'  (London)  Forum  and  the 
Sustainable Energy (Bucharest) Forum were established with a view to improving the energy 
situation of household consumers and ways should be explored to make them more responsive 
to consumers' needs. 

The competitive position of important sectors of the European economy also depends on the 
availability of secure energy at affordable prices. Energy, in particular electricity, constitutes a 
substantial part of the total production costs of key European industries, including large and 
small and medium enterprises.  

The international market for oil supplies could become very tight before 2020, which means 
that it is important for EU consumers to step up their efforts to reduce oil demand. This is not 
happening at the moment. Consumers need to be made more aware of the necessity to reduce 
their consumption of fossil fuels and they need to know how they can reduce their bills at a 
time  of  rising  prices.  "User-friendly"  smart  grids,  smart  meters  and  billing  can  help  in  this 
respect. But consumers also need to become more pro-active. To help consumers participate 
in the market, measures should be put in place to raise awareness of opportunities, enhance 
price comparison, and facilitate the switching and improve complaint handling procedures. 

Providing affordable but cost-reflective and reliable supplies to consumers is mainly the task 
of  the  internal  market.  A  functioning  internal market  on  the  basis  of  sufficient  transmission 
and storage infrastructure is the best guarantee for security of supply,  as  energy will follow 
market mechanisms and flow to where it is needed. However, safety nets are necessary, in the 
case  of  vulnerable  consumers  for  example,  or  at  the  time  of  a  supply  crisis  which  market 
mechanisms cannot sufficiently address. The internal market is also hampered when Member 
States are not fully interlinked, such as in the Baltic States. The Gas Security Regulation is 
important in that it ensures that markets are fully prepared to cope in a crisis and that domestic 
consumers  are  protected.  Furthering  of  interconnection  amongst  Member  States  as  well  as 
active  competition  enforcement  by  the  Commission  and  Member  States  can  contribute  to  a 
further diversification of supply sources particularly in those Member States which currently 
depend on only one or few supply sources. 

Energy  policy  is  also  responsible  for  protecting  European  citizens  from  the  risks  of  energy 
production and transport. The EU must continue to be a world leader in developing systems 
for safe nuclear power, the transport of radioactive substances, as well as the management of 
nuclear waste. International collaboration on nuclear safeguards plays a major role in ensuring 
nuclear  security  and  establishing  a  solid  and  robust  non-proliferation  regime.  In  the  oil  and 
gas  exploitation  and  conversion  sector,  the  EU  legislative  framework  should  guarantee  the 
highest level of safety and an unequivocal liability regime for oil and gas installations.  

Priority 3: Empowering consumers and achieving the highest level of safety and security 

Action 1: Making energy policy more consumer-friendly 

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– 

– 

– 

– 

Active  competition  policy  enforcement  at  European  and  national  levels  remains 
indispensible  to  foster  competition  and  guarantee  that  consumers  have  access  to 
energy at affordable prices. 

The  Commission  will  propose  measures  to  help  consumers  better  participate  in  the 
energy market in line with the third energy package. These measures will include the 
development  of  guidance  based  on  best  practice  in  the  area  of  switching  suppliers, 
the  further  implementation  and  monitoring  of  the  billing  and  complaint-handling 
recommendations,  and  the  identification  of  best  practices  in  alternative  dispute 
resolution  schemes.  A  price  comparison  tool  based  on  a  methodology  to  be 
developed by energy regulators and other competent bodies should be available to all 
consumers, and all suppliers should provide updated information on their tariffs and 
offers. Finally, further efforts should be aimed at moving focus from energy prices to 
energy costs by developing the market for energy services. 

The  Commission  will  publish  regular  benchmark  reports  assessing  the  level  of 
implementation  of  the  regulatory  provisions  relating  to  consumers  and  the  overall 
level  of  protection  across  the  internal  market.  Particular  emphasis  will  be  given  to 
vulnerable customers and to practices which enable consumers to reduce energy use. 

Efforts  to  improve  the  functioning  of  the  retail  market  should  be  stepped  up  by 
regulatory  authorities  with  the  help  of  the  London  Citizens’  and  the  Sustainability 
(Bucharest) Fora. 

Action 2: Continuous improvement in safety and security 

– 

– 

– 

The  safety  conditions  of  offshore  oil  and  gas  extraction  are  being  reviewed  by  the 
Commission  in  the  light  of  the  Deepwater  Horizon  accident,  with  the  aim  of 
introducing stringent measures from prevention to response and liability issues which 
will guarantee the highest level of protection throughout the EU and the rest of the 
world. 

The legal framework for nuclear safety and security will be further enhanced through 
the  mid-term  review  of  the  Nuclear  Safety  Directive,  the  implementation  of  the 
Nuclear  Waste  Directive,  the  redefinition  of  the  basic  safety  standards  for  the 
protection of workers and the population and a proposal for a European approach on 
nuclear  liability  regimes.  Greater  harmonisation  of  plant  design  and  certification  at 
the  international  level  should  also  be  actively  pursued.  All  these  measures  should 
allow  the  EU  to  keep  its  leadership  in  safe  nuclear  energy  and  contribute  to 
responsible use of nuclear energy worldwide. 

The same security and safety considerations will also be upheld in the development 
and  deployment  of  new  energy  technologies  (hydrogen  safety,  safety  of  CO2 
transportation network, CO2 storage, etc…). 

4. 

MAKING A TECHNOLOGICAL SHIFT 

Without  a  technological  shift,  the  EU  will  fail  on  its  2050  ambitions  to  decarbonise  the 
electricity and transport sectors. Given the time scale for the development and dissemination 
of energy technology, the urgency of bringing new high performance low-carbon technologies 
to the European markets is more acute than ever. The EU ETS is an important demand side 

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driver  supporting  the  deployment  of  innovative  low  carbon  technologies.  However,  new 
technologies  will  reach  markets  more  quickly  and  more  economically  if  they  are  developed 
through collaboration at the EU level.  

Europe-wide  planning  and  management  is  paramount  for  investment  stability,  business 
confidence  and  policy  coherence.  The  Strategic  Energy  Technology  (SET)  Plan  sets  out  a 
medium  term  strategy  valid  across  all  sectors.  Yet  development  and  demonstration  projects 
for the main technologies (second generation biofuels, smart grids, smart cities and intelligent 
networks,  Carbon  Capture  and  Storage,  electricity  storage  and  electro-mobility,  next 
generation nuclear, renewable heating and cooling) must be speeded up. Similarly, the crucial 
nature of innovation was highlighted in the Europe 2020 flagship on ‘Innovation Union’21. 

The resources required in the next two decades for the development of these technologies are 
very significant, especially when seen in the context of the current economic climate. Major 
projects, such as the ones over 140 GW of offshore wind power currently being planned by 
European utilities, developers and governments, mostly in the North Sea or the Desertec and 
initiatives,  affect  several  Member  States.  Europe-wide  coordination  and 
Medring 
collaboration should include the pooling of different funding sources. All stakeholders will be 
expected to contribute. The Commission will seek to leverage the EU budget to raise further 
the overall level of funding. 

The  EU  is  facing  fierce  competition  in  international  technology  markets.  Countries  such  as 
China, Japan, South Korea and the USA are pursuing an ambitious industrial strategy in solar, 
wind  and  nuclear  markets.  EU  researchers  and  companies  need  to  increase  their  efforts  to 
remain at the forefront of the booming international market for energy technology and, where 
it  is  mutually  beneficial,  they  should  step  up  cooperation  with  third  countries  in  specific 
technologies.  

Priority 4: Extending Europe’s leadership in energy technology and innovation 

Action 1: Implementing the SET Plan without delay 

– 

– 

21 
22 

23 

The Commission will reinforce the implementation of the SET Plan, in particular the 
Joint  Programmes  of  the  European  Energy  Research  Alliance  (EERA)  and  the  six 
European Industrial Initiatives (wind; solar; bio energy; smart grids; nuclear fission; 
and  CCS).  Work  will  intensify  with  Member  States  to  finance  the  activities  of  the 
Technology Roadmaps for 2010-2020 and to ensure the success of related large scale 
demonstration  programmes  such  as  under  the  New  Entrants  Reserve  (NER300) 
programme22. Available Community funding23 will be concentrated on the SET Plan 
initiatives. 

The  Technology  Roadmaps  of  the  European  Industrial  Initiatives  for  2010-2020  are 
being implemented from this year on and will be given additional support. They will 
be  the  cornerstone  for  the  preparation  of  the  next  financial  framework  as  regards  a 
consolidated,  regularly  assessed,  more  efficient  and  focused  energy  research 

SEC(2010)1161, 6 October 2010. 
The revised ETS directive (2009/29/EC) foresees that 300 m ETS allowances from the New Entrants 
Reserve (NER) shall be available to support commercial-scale CCS and innovative RES demonstration 
projects in the territory of the Union. 
Funding available under the current Financial Perspectives. 

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programme.  In  this  context,  the  Commission  will  promote  the  development  of 
strategic energy research infrastructures in Europe as they strongly contribute to the 
shortening  of  the  distance  between  research  and  technological  development.  It  will 
also pursue other avenues with great potential, such as marine renewable energy and 
renewable heating and cooling. 

Action 2: The Commission will be launching four new large-scale European projects  

– 

– 

– 

– 

1.  The  Commission  will  take  forward  a  major  European  initiative  on  smart  grids  to 
link the whole electricity grid system, from the off-shore wind farms in the North Sea, 
solar plants in the South and existing hydro-electric dams, to individual households, 
while making power networks more intelligent, efficient and reliable.  

2. Re-establishing Europe’s leadership on electricity storage (both large-scale and for 
vehicles).  Ambitious  projects  will  be  developed  in  the  fields  of  hydro  capacity, 
compressed  air  storage,  battery  storage,  and  other  innovative  storage  technologies 
such as hydrogen. These will prepare the electricity grid at all voltage levels for the 
massive  uptake  of  small-scale  decentralised  and  large-scale  centralised  renewable 
electricity. 

3.  Implementing  large-scale  sustainable  biofuel  production,  including  in  the  light  of 
the ongoing review concerning the impact of indirect land use change. The € 9 billion 
European  Industrial  Bioenergy  Initiative24  will  be  launched  shortly  to  ensure  quick 
market uptake of sustainable second-generation biofuels.  

4. Providing cities, urban and rural areas with ways of making greater energy savings. 
The  ‘Smart  Cities’  innovation  partnership  to  be  launched  early  2011  will  bring 
together  the  best  from  the  areas  of  renewable  energies,  energy  efficiency,  smart 
electricity  grids,  clean  urban  transport  such  as  electro  mobility,  smart  heating  and 
cooling  grids,  combined  with  highly  innovative  intelligence  and  ICT  tools.  EU 
Regional Policy can play an important role in unlocking local potentials. Rural areas 
also have a significant potential in this respect and could make use of the EARDF that 
provides financial means to support such innovation projects. 

Action 3: Ensuring long-term EU technological competitiveness  

– 

– 

– 

In  order  to  lay  the  foundations  of  our  future  competitiveness  in  the  face  of  strong 
international  competition,  the  Commission  will  propose  a  €  1  billion-initiative 25  to 
support  the  frontier  research  needed  to  deliver  science  necessary  for  low-carbon 
energy breakthroughs. 

EU leadership must also be maintained in the global flagship research project ITER. 
The Commission will ensure effective governance (including cost containment) and 
industrial value creation from ITER and the European fusion programme. 

The  Commission  will  develop  an  EU  research  programme  for  energy  materials, 
allowing  the  EU  energy  sector  to  stay  competitive  despite  dwindling  rare  earth 
resources.  

24 
25 

See footnote 23. 
See footnote 23. 

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5. 

STRONG INTERNATIONAL PARTNERSHIP, NOTABLY WITH OUR NEIGHBOURS 

The  European  energy  market  is  the  world’s  largest  regional  market  (over  500  million 
consumers)  and  largest  energy  importer.  However,  the  same  collaboration  and  common 
purpose that has led to the adoption of the EU’s headline energy and climate targets is not yet 
evident in external energy policy. Several of the challenges facing the EU — climate change, 
access  to  oil  and  gas,  technology  development,  energy  efficiency  —  are  common  to  most 
countries  and  rely  on  international  collaboration.  Member  States  have  repeatedly  called  for 
the EU to speak with a common voice in third countries. In practice, national initiatives do not 
leverage the strength of the size of the EU market and could better express the EU interest.  

International  energy  policy  must  pursue  the  common  goals  of  security  of  supply, 
competitiveness  and  sustainability.  While  relations  with  producing  and  transit  countries  are 
important,  relations  with  large  energy-consuming  nations  and  particularly  emerging  and 
developing  countries  are  of  growing  significance.  To  lift  people  out  of  poverty  will  require 
access to energy since achieving the goal of eradicating extreme poverty by 2015 cannot be 
met unless substantial progress is made on improving access. In order to ensure that this does 
not harm other policy goals, sustainable development needs to be at the core of both energy 
and development policy, such as proposed in the Green Paper on Development Policy26.  

New patterns of supply and demand in global energy markets and increasing competition for 
energy resources make it essential for the EU to be able to throw its combined market weight 
effectively in relations with key third-country energy partners. Europe should be in a position 
to rely on significant additional energy supply sources and routes by 2020. 

The  need  for  international  solutions  obliges  us  to  push  our  agenda  for  decarbonisation  and 
energy  efficiency  with  our  main  partners  and  in  international  negotiations  and  frameworks. 
The  ETS  is  a  driver  of  international  carbon  markets,  and  further  action  should  build  on 
ongoing action to further develop these markets. As a frontrunner in policy development, the 
EU has more scope to influence standard-setting environmental issues, and to promote respect 
for transparent and competitive markets.  

The EU already has a series of complementary and targeted frameworks ranging from specific 
energy  provisions  in  bilateral  agreements  with  third  countries  (Free  Trade  Agreements, 
Partnership and Cooperation Agreements, Association Agreements, etc.) and Memoranda of 
Understanding  on  energy  cooperation,  through  to  multilateral  Treaties  such  as  the  Energy 
Community Treaty27 and participation in the Energy Charter Treaty. It is currently negotiating 
with several countries new agreements including important energy provisions.  

The EU must now formalise the principle whereby Member States act in the benefit of the EU 
as a whole in bilateral energy relations with key partners and in global discussions. Building 
on  the  legal  basis  in  the  Lisbon  Treaty,  which  clarifies  and  strengthens  the  external 

26 

27 

Non-OECD countries could account for all the projected growth in CO2 emissions by 2030; however, 
ensuring universal access to modern energy services for all only mean a rise of 0.8% of CO2 emissions, 
IEA World Energy Outlook 2009 and special early excerpt of the IEA WEO 2010 for the Millenium 
Development Goals Summit. 
The  Energy  Community  Treaty  is  promoting  market  integration  but  also  acquis  transposition  and 
implementation in the Western Balkans and is extending the EU internal energy market to South East 
Europe.  This  is  not  only  a  framework  of  cooperation  but  a  legally  binding  instrument  to  prepare 
accession  to  the  EU.  Other  parties  are  joining  the  Energy  Community  Treaty:  Moldova  is  already  a 
member; Ukraine and Turkey are in the process of joining. 

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dimension,  the  EU’s  external  energy  policy  must  ensure  effective  solidarity,  responsibility 
and  transparency  among  all  Member  States,  reflecting  the  EU  interest  and  ensuring  the 
security of the EU’s internal energy market. More effective coordination at EU and Member 
State level need to be put in place. 

In the nuclear field, international cooperation has produced good results. This is particularly 
relevant since various neighbouring countries operate or, plan to operate nuclear power plants. 
The EU must now encourage partner States to make all existing international nuclear safety 
and  security  standards  and  procedures  legally  binding  and  effectively  implemented 
worldwide. The EU is particularly well placed, as it is the first to have taken such action both 
in the field of safety and security and has specific cooperation instruments for this purpose. 

As well as being vital for the EU's security of supply, the external dimension of EU energy 
policy  must  be  consistent  and  mutually  reinforcing  with  other  external  activities  of  the  EU 
(development,  trade,  climate  and  biodiversity,  enlargement,  Common  Foreign  and  Security 
Policy and others). There must be synergies between energy objectives and other policies and 
instruments  including  trade,  bilateral  agreements,  and  development  cooperation  instruments 
and vice-versa. 

Energy  security  is  closely  intertwined  with  EU's  foreign  and  security  priorities28. 
Diversification of fuels, sources of supply and transit routes is essential for EU security as are 
good governance, respect for the rule of law and protection of EU and foreign investments in 
energy producing and transit countries. Moreover, EU policy will pay particular attention to 
safety  and  security  of  oil,  natural  gas  pipelines  and  related  production  and  transport 
infrastructure by combining energy policy and CFSP instruments. 

In 2011 the Commission will present concrete proposals to reinforce the overall consistency 
and  efficiency  of  our  external  energy  policy,  involving  Member  States,  various  external 
policies of the European Union and external support programmes.  

Priority 5: Strengthening the external dimension of the EU energy market 

Action 1: Integrating energy markets and regulatory frameworks with our neighbours 

– 

– 

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The Energy Community Treaty should be implemented and extended to all those EU 
neighbours  who  are  willing  to  adopt  the  EU  market  model.  In  this  context,  market 
integration  and  regulatory  convergence  should  be  pursued  through  comprehensive 
EU  agreements  based  on  the  EU  rules  in  the  countries  covered  by  the  European 
the 
Neighbourhood  Policy  and 
Mediterranean  region  and  with  transit  countries  such  as  Ukraine  and  Turkey. 
Moreover,  the  Energy  Community  Treaty  should  be  deepened  by  extending  new 
acquis  to  the  signatories  to  the  Treaty.  This  approach  would  strengthen  the 
participation of neighbouring countries in the internal market, while providing a level 
playing field and a safeguards against the risk of carbon leakage through the power 
sector. 

the  Enlargement  process, 

in  particular 

in 

Mechanisms  will  be  proposed  by  the  Commission  to  align  existing  international 
agreements  (notably  in  the  gas  sector)  with  the  internal  market  rules  and  to 
strengthen  cooperation  between  Member  States  for  the  conclusion  of  new  ones. 

European Security Strategy adopted by the European Council in December 2003. 

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Proposals will also be made to set the required regulatory framework between the EU 
and third countries to develop strategic routes from new suppliers, notably around the 
Southern corridor and the Southern Mediterranean. Supply issues, including network 
development  and  possibly  grouped  supply  arrangements  as  well  as  regulatory 
aspects, notably concerning the freedom of transit and investment security, would be 
covered. 

– 

EU  technical  assistance  will  be  mobilised  for  the  effective  implementation  of  the 
internal  market  acquis  and  the  modernisation  of  the  energy  sector  in  neighbouring 
countries, while improving the coordination of support schemes provided by the EU, 
its Member States and the international community. 

Action 2: Establishing privileged partnerships with key partners 

– 

While  pursuing  diversification  of  import  sources  and  routes,  reinforced  energy 
partnerships will be  established by  the EU with key suppliers and transit countries. 
They  will  aim  at  promoting  key  principles  such  as  those  contained  in  the  Energy 
Charter Treaty (for example the freedom of transit, transparency, safety, investment 
opportunities as well as compliance with international law). 

Action 3: Promoting the global role of the EU for a future of low-carbon energy 

– 

– 

Energy  efficiency,  clean  technologies  and  safe  and  sustainable  low-carbon  energy 
should  be  integrated  into  EU  and  bilateral  cooperation  activities,  particularly  with 
major consumer and emerging economies and with global partnerships. 

The Commission will launch a major cooperation with Africa on energy initiatives in 
order  to  progressively  provide  sustainable  energy  to  all  citizens,  in  line  with  the 
Green Paper on Development Policy.  

Action 4: Promoting legally binding nuclear-safety, security and non-proliferation 
standards worldwide 

– 

The  Commission  will  develop  initiatives  aiming  at  encouraging  partner  States  to 
make  international  nuclear  safety,  security  and  non-proliferation  standards  and 
procedures  legally  binding  and  effectively  implemented  around  the  globe,  in 
particular  through  reinforced  cooperation  with  the  International  Atomic  Energy 
Agency  and  the  conclusion  of  Euratom  agreements  with  key  nuclear  suppliers  and 
user countries. 

CONCLUSIONS 

The  EU  is  on  the  threshold  of  an  unprecedented  period  for  energy  policy.  Energy  markets 
have been largely cushioned from the effects of global market turbulence in recent years as a 
result  of  liberalisation,  ample  supply  and  production  capacities  and  adequate  import 
possibilities. However, dramatic changes are afoot. Energy prices will be affected by the huge 
need for energy sector investments, as well as carbon pricing and higher international energy 
prices.  Competitiveness,  supply  security  and  climate  objectives  will  be  undermined  unless 
electricity  grids  are  upgraded,  obsolete  plants  are  replaced  by  competitive  and  cleaner 
alternatives and energy is used more efficiently throughout the whole energy chain. 

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Member  States  and  industry  have  recognised  the  scale  of  the  challenges.  Secure  energy 
supplies, an efficient use of resources, affordable prices and innovative solutions are crucial to 
our long-term sustainable growth, job creation and quality of life. Member States have agreed 
that these challenges will be tackled most effectively by policies and action at EU level, by 
‘Europeanising’  energy  policy.  This  includes  directing  EU  funding  support  towards  public 
priorities that markets fail to meet and that bring the most European value. 

The  new  EU  energy  strategy  will  require  significant  efforts  in  technical  innovation  and 
investment.  It  will  foster  a  dynamic  and  competitive  market  and  will  lead  to  a  major 
strengthening of institutional arrangements to monitor and guide these developments. It will 
improve the security and the sustainability of energy systems, grid management, and energy 
market  regulation.  It  will  include  extensive  efforts  to  inform  and  empower  domestic  and 
business consumers, to involve them in the switch to a sustainable energy future, for example 
by  saving  energy,  reducing  wastage  and  switching  to  low-carbon  technologies  and  fuels. 
Investments  in  low-carbon  energy  production  will  be  further  encouraged  by  market-based 
instruments such as emissions trading and taxation. The new strategy will take the first steps 
to prepare the EU for the greater challenges which it may well have to face already by 2020. 
Above  all,  it  will  ensure  better  leadership  and  coordination  at  the  European  level,  both  for 
internal action and in relations with external partners.  

The global energy system is entering a phase of rapid transition with potentially far-reaching 
implications  that  will  unfold  in  the  next  decades.  Europe  has  to  act  before  the  window  of 
opportunity closes. Time is short. Thus, the Commission will present most of the proposals to 
achieve  the  2020  goals  in  the  coming  18  months.  Discussion,  adoption  and  implementation 
will  be  needed  quickly.  In  this  way,  the  EU  will  be  better  able  to  put  in  place  the  building 
blocks  for  the  2020  outcome  –  standards,  rules,  regulations,  plans,  projects,  financial  and 
human resources, technology markets, social expectations etc. – and prepare Europe's citizens 
for the challenges ahead.  

Due  to  the  long  lead  in  times  for  energy  system  changes,  taking  action  today  does  not 
guarantee that the structural changes needed for the low-carbon transition will be completed 
in the period to 2020, which this strategy covers. It is therefore necessary to look beyond the 
timescale of the present strategy to ensure that the EU is well prepared for the 2050 objective 
of  a  secure,  competitive  and  low-carbon  energy  system.  The  Commission  will  therefore 
follow up this strategy with a complete roadmap for 2050 which will set the measures covered 
in this paper in a longer term and consider further and complementary steps.  

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