REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Fourth report on the State of the Energy Union
Date: 2019-05-13
Institutions: European Commission, Secretariat-General
Subjects: EU energy policy, climate change policy, energy cooperation, energy law, energy market, innovation, investment, renewable energy, security of supply, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 13.5.2019  COM(2019) 175 final/2  CORRIGENDUM  This document corrects document COM(2019)175  final of 9 April 2019. Concerns all languages versions. Correction of graph entitled "2030 Framework for Climate and Energy" The text shall read as follows:  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK                            Fourth report on the State of the Energy Union  
 
 
INTRODUCTION 

I.  
The Juncker Commission’s Energy Union project1 set out to give EU consumers secure, 
sustainable,  competitive  and  affordable  energy  by  overhauling  Europe’s  energy  and 
climate  policies.  It  also  committed  to  making  the  EU  the  world  leader  on  renewable 
energy, to placing energy efficiency first and to continuing to lead global efforts to fight 
climate change. Four years on, the Energy Union is a reality. With strong support from the 
European  Parliament,  Member  States  and  stakeholders,  the  Energy  Union  has  made  Europe 
more resilient and thoroughly modernised European policy on energy and climate in a number 
of essential ways. 

First, it has resulted in a comprehensive and legally binding framework for reaching the 
Paris  Agreement  goals,  while  simultaneously  helping  to  modernise  the  European 
economy  and  its  industry.  The  Energy  Union  includes  a  governance  framework,  which 
will  allow  Member  States  and  the  European  Commission  to  work  together  to  develop  the 
policies and measures necessary to deliver on our climate and energy goals. It is also firmly 
embedded  in  the  broader  framework  of  EU  priorities.  The  Energy  Union  helps  to  meet  the 
Sustainable Development Goals and implement the circular-economy and air-quality agendas. 
It is closely linked to policies for the Capitals Market Union, the Digital Single Market, the 
New Skills Agenda for Europe, the Investment Plan for Europe, and the Security Union. 

Secondly, this comprehensive approach to the Energy Union has enabled the EU to put 
in place clear and ambitious targets for 2030 in renewable energy and energy efficiency. 
It  has  enabled  the  EU  to  set  up  equally  ambitious  policies  on  clean  mobility  including 
emissions  for  new  cars,  vans  and  lorries.  It  has  also  provided  a  solid  basis  for  work 
towards  a  modern  and  prosperous  climate-neutral  economy  by  2050.  The  European 
Commission’s 2050 vision2 has laid out a framework for future climate and energy policy that 
will put Europe on a path towards climate neutrality, while providing significant benefits for 
the economy and for the quality of life of its people3. 

Thirdly,  the  Energy  Union  provides  a  combination  of  a  fully  up-to-date  regulatory 
framework and a vision  for the policies that are required between now and  2050. This 
provides  the  certainty  necessary  for  high-quality,  innovative  investment  to  modernise 
the EU economy and create local jobs. There are more than 4 million ‘green jobs’ in the EU 
today, and the energy transition provides clear opportunities to create more. More green jobs 
will  be  created  by  EU  investment  through  cohesion  policy  funds;  research  and  innovation 
funds;  the  Juncker  Plan;  and  the  European  Commission’s  recent  initiatives  on  sustainable 
finance.  The  Energy  Union  supports  the  competitiveness  of  European  industry  by  fostering 
innovation that creates a global ‘first mover’ advantage. The Energy Union is also promoting 
the creation of European value chains  in  critical  and emerging  sectors such as batteries  and 
hydrogen. 

Fourthly, the Energy Union has at its core the deepening of the internal energy market, 
which  is  key  to  providing  all  citizens  with  a  supply  of  secure,  sustainable,  competitive 

1  A  Framework  Strategy  for  a  Resilient  Energy  Union  with  a  Forward-Looking  Climate  Change  Policy 
(COM(2015) 080 final), 25 February 2015. 
2  A  Clean  Planet  for  all  —  A  European  strategic  long-term  vision  for  a  prosperous,  modern,  competitive  and 
climate neutral economy (COM(2018) 773 final), 28 November 2018. 
3  See  also:  10  trends  reshaping  climate  and  energy,  European  Political  Strategy  Centre,  3  December  2018. 
https://ec.europa.eu/epsc/sites/epsc/files/epsc_-_10_trends_transforming_climate_and_energy.pdf. 

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and  affordable  energy.  Investments  in  smart  infrastructure,  including  cross-border 
interconnections,  and  common  arrangements  to  prevent  and  manage  possible  disruptions, 
have increased the security of energy supply and improved the overall resilience of the EU’s 
energy system to external energy shocks. These investments have also prepared the EU’s grid 
for  the  changing  energy  system.  In  parallel,  recent  changes  to  the  design  of  the  electricity 
market will make access to this market more competitive, ensure the cost-efficient integration 
of  renewables,  and  deliver  better  value  for  consumers,  who  will  be  able  to  offer  their 
production and flexibility to the market. 

Fifthly,  in  parallel  to  the  regulatory  framework,  the  European  Commission  has  put  in 
place an enabling  framework of supporting measures  to address  social,  industrial, and 
other issues. These measures seek to empower citizens, businesses, cities, and innovators to 
play an active role in the energy transition. New approaches that the European Commission 
has  pioneered  are  proving  to  be  effective,  notably  in  helping  to  create  a  European  battery 
industry,  supporting  coal  regions  in  transition,  or  giving  cities  the  means  and  motivation  to 
scale up their climate and energy action. The enabling framework will be critical to mobilise 
the investment that is necessary to take full advantage of the energy transition, and to ensure 
that  the  transition  is  fair  and  socially  acceptable  for  all.  The  social  implications  of  these 
changes  must  be  a  part  of  the  policy  process  from  the  outset,  and  not  simply  be  an 
afterthought. 

Finally,  the  Energy  Union  has  allowed  the  EU  to  speak  with  one  voice  on  the 
international stage. The EU has been able to exercise effective climate leadership by being a 
key player in the Paris Agreement, ensuring that the Agreement entered into force in record-
time, and implementing the Agreement through the Katowice Rulebook adopted in December 
2018. In this process, the EU’s credibility is underpinned by concrete action and the adoption 
of  the  full  legislative  package  needed  to  reach  its  2030  commitment  under  the  Paris 
Agreement.  In  line  with  its  firm  commitment  to  multilateralism,  the  EU’s  unity  and 
determination  has  been  key  to  maintaining  international  confidence  in  the  climate  regime, 
faced with the vacuum of leadership following the post-2017 withdrawal of the United States 
from this regime. Europe has continued close international cooperation on climate and energy 
policies.  For  example,  it  worked  with  China  on  kicking  off  a  nationwide  emissions  trading 
system in 2017. 

With  this  modern  governance  framework  for  climate  and  energy  policy  firmly 
established  on  the  European  level,  Member  States  are  now  working  to  integrate  and 
upgrade  their  national  policies.  The  Energy  Union  ensures  that  all  Member  States  move 
forward  together,  as  they  agreed  to  finalise  their  National  Energy  and  Climate  Plans  by  the 
end of 2019. These plans will be based on national public consultations and feedback from the 
European  Commission  on  initial  drafts,  which  all  Member  States  have  now  officially 
submitted.  The  common  framework  promotes  mutual 
the 
opportunities  for  regional  cooperation.  It  also  kicks  off  a  learning-by-doing  exercise,  as  the 
Energy Union plans regular ‘checkpoints’ to review and collaboratively improve policies. The 
management  of  this  iterative  dialogue  will  be  a  key  challenge  for  2019  and  an  essential 
element in ensuring that the Energy Union collectively delivers all its benefits. 

learning  and  maximises 

Beyond  energy  and climate policy, the Energy Union  is  about  a structural  modernisation of 
the  European  economy.  It  promotes  structural  reform  of  energy  and  resource  use  in  all  key 
sectors: energy, with its central role; buildings; transport; industry; agriculture; and land use 
more generally. The Energy Union is also an investment strategy, which has positive impacts 
on  the  economy  and  employment,  and  takes  into  consideration  its  impact  on  vulnerable 
regions  and  people.  Through  its  focus  on  efficiency  and  domestic  energy  resources,  it  will 
strengthen the EU’s position in global markets. 

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II.  

TRENDS AND POLICY OBSERVATIONS 

Greenhouse  gas  emissions  and  energy  consumption  are  increasingly  decoupled  from 
economic  growth.  The  transition  to  a  modern,  low-carbon  and  energy-efficient  economy  is 
well  underway,  and  Europe  is  on  a  credible  pathway  to  meeting  its  Paris  Agreement 
commitments. The EU is well on track to achieve its 2020 target for reductions in greenhouse 
gas  emissions  (i.e.  a  reduction  in  emissions  of  20 %  by  2020  compared  to  1990  levels). 
Between 1990 and 2017, the EU economy grew by 58 %, while emissions decreased by 22%, 
according to preliminary data submitted by the Member States4 (Figure 1). 

160

140

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100

80

60

40

20

0

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9
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Greenhouse Gas emissions

Gross Domestic Product

Greenhouse Gas intensity

1990

1995

2000

2005

2010

2015

Figure 1: Changes in EU Gross Domestic Product (in real terms), EU greenhouse gas (GHG) 
emissions, and GHG-emissions intensity of the EU economy 

Since  1990,  emissions  have  decreased  in  all  economic  sectors  except  transport.  The  most 
marked  fall  has  been  in  emissions  from  energy  supply  (Figure  2).  Economic  growth  is  less 
dependent  on  energy  consumption  (Figure  3).  Both  energy  productivity  and  the  greenhouse 
gas intensity of energy consumption have continuously improved in the EU, thanks primarily 
to energy efficiency measures in Member States. 

4 Annual European Union greenhouse gas inventory 1990–2016 (European Environment Agency), approximated 
EU greenhouse gas inventory 2017 (European Environment Agency), Gross Domestic Product from the Annual 
Macro-Economic  Database  of  the  European  Commission’s  Directorate  General  for  Economic  and  Financial 
Affairs. 

3 

 
 
 
                                                           
 
 
 
2 000
1 800
1 600
1 400
1 200
1 000
 800
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 0

.

q
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2

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Energy supply
Industrial processes and product use
Other energy use
Waste

Energy use in manufacturing industries
Transport
Agriculture
International aviation

Figure 2: EU greenhouse gas emissions by sector 1990-2016 

However, there is a need to further intensify efforts to reach the 2020 energy efficiency 
target. The most recent analysis5 shows that following a gradual decrease between 2007 and 
2014, energy consumption has started to increase in recent  years, and is  now slightly above 
the  linear  trajectory  for  the  2020  targets.  This  is  due  to  weather  variations,  notably  colder 
years  2015  and  2016,  but  also  increased  economic  activity  and  low  oil  prices.  Energy 
intensity in industry has continued to improve by as much as 22 % between 2005 and 2017 
and energy savings have indeed helped offset parts of the impact of these increases. But they 
have  been  insufficient  to  maintain  total  consumption  on  a  downward  trend.  While  the  2020 
energy efficiency target is still within reach, continued increase in energy consumption could 
put  it  at  risk.  This  is  why  the  European  Commission  has  established  a  Task  Force  with 
Member States to mobilise efforts and fully exploit energy efficiency potentials.  

In the transport sector, energy consumption and emissions decreased between 2007 and 2013, 
but are now roughly back at 2005 levels. The positive impact of efficiency policies (and, in a 
more limited manner, the positive impact of a modal shift in transport) has been outweighed 
by increased transport activity, and low capacity utilisation in road- freight transport. 

5 See report from the Commission to the European Parliament and the Council – 2018 assessment of the progress 
made by Member States towards the national energy efficiency targets for 2020 and towards the implementation 
of the Energy Efficiency Directive as required by Article 24(3) of the Energy Efficiency Directive 2012/27/EU 
(COM(2019) 224 final), 9 April 2019. 

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Figure 3: Changes in EU GDP and primary energy consumption 

Strong growth continued in the renewable sector but with an unequal deployment. Since 
2014,  the  share  of  renewable  energy  in  the  EU  energy  mix  has  significantly  increased, 
reaching 17.5 % in 20176. Investments in renewable energy are increasingly driven by market 
decisions  and  Member  States  increasingly  grant  support  for  renewable  energy  through 
competitive  tenders  and  ensure  that  renewable  energy  installations  are  integrated  in  the 
electricity market, as required by State aid rules7. This has significantly decreased the costs of 
renewable deployment8. However, the penetration of renewable energy varies across sectors, 
with  renewable  energy  reaching  30.8  %  in  the  electricity  sector,  but  only  19.5  %  in  the 
heating and cooling sector, and 7.6 % in the transport sector. The pace of increase in the share 
of renewable energy has also slowed since 2014.  While the EU is on track to meet its 2020 
targets for renewable energy, efforts should be stepped up to ensure that 2030 targets are met 
(Figure 4). 

6 See report from the Commission to the European Parliament, the Council, the European Economic and Social 
Committee and the Committee of the Regions – Renewable Energy Progress Report (COM(2019) 225 final), 9 
April 2019. 
7 Guidelines on State aid for environment and energy 2014-2020, OJ C 200, 28.6.2014, p.1. 
8  For  example,  in  Germany  support  levels  for  solar  photovoltaic  plants  were  set  administratively  at  around  9 
ctEUR/kWh in 2015. Competitive tenders helped to reduce costs to below 5 ctEUR/kWh in 2018. 

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Figure  4:  Renewable  energy  shares  in  EU  gross  final  energy  consumption  vs  Renewable 
Energy Directive and National Renewable Energy Action Plan trajectories9 
In 2017, 11 Member States10 already had a renewable energy share above their 2020 targets. 
In addition, 21 Member States11 met or exceeded their average indicative trajectory from the 
Renewable Energy Directive12 for the two-year period 2017-2018. The remaining 7 Member 
States13  needed  to  step  up  efforts  to  comply  with  the  average  2017-2018  trajectory  towards 
2020. 
However,  for  11  Member  States14,  the  policies  currently  being  planned  or  implemented  to 
promote  renewable  energy  appear  insufficient  to  meet  their  indicative  trajectory  if  only 
domestic supply, without cooperation mechanisms, is considered15. Moreover, for 7 Member 
States16, there is some uncertainty on whether they will achieve the 2020 renewable targets.  

To meet the 2020 renewable energy targets and sustain these levels as a baseline from 2021 
onwards, Member States should continue to increase their efforts to both deploy renewables 
and  reduce  energy  consumption.  In  addition,  all  Member  States  should  consider  the 
possibility of using statistical transfers, as provided for in the Renewable Energy Directive17, 
either  to  ensure  that  they  achieve  the  target  when  there  is  a  deficit  or  to  sell  their  potential 

9  National  Renewable  Energy  Action  Plans  are  detailed  reports  submitted  by  Member  States  outlining  their 
commitments  and  initiatives  to  develop  renewable  energy  in  accordance  with  Article  24  of  the  Renewable 
Energy Directive 2009/28/EC. 
10 Bulgaria, Czechia, Denmark, Estonia, Croatia, Italy, Lithuania, Hungary, Romania, Finland and Sweden. 
11  Bulgaria,  Czechia,  Denmark,  Germany,  Estonia,  Greece,  Spain,  Croatia,  Italy,  Cyprus,  Latvia,  Lithuania, 
Hungary, Malta, Austria, Portugal, Romania, Slovakia, Finland, Sweden and the United Kingdom. 
12 Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the 
use of energy from renewable sources, OJL 140, pp. 16-62. 
13 Belgium, France, Ireland, Luxembourg, Netherlands, Poland and Slovenia. 
14  Belgium,  Ireland,  Greece,  France,  Cyprus,  Luxembourg,  Malta,  the  Netherlands,  Poland,  Portugal  and  the 
United Kingdom. 
15 See Member States’ progress report towards their indicative renewable energy targets for 2020. 
16 Austria, Germany, Spain, Latvia, Romania, Slovenia and Slovakia. 
17 Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the 
use  of  energy  from  renewable  sources  and  amending  and  subsequently  repealing  Directives  2001/77/EC  and 
2003/30/EC, OJ L 140, 5.6.2009, p. 16–62.. 

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surpluses to other Member States. The Commission stands ready to support Member States in 
this. 

In  this  context,  a  number  of  actions  are  underway  across  the  EU.  These  are  taking  place 
through  the  task  force  on  energy  efficiency,  which  the  Commission  launched,  the  new 
renewable  energy  auctions  announced  by  several  Member  States,  including  France,  the 
Netherlands,  Portugal,  and  the  wider  use  of  corporate  power  purchase  agreements  through 
which European companies bought a record amount of wind power capacity in 2018. 

Good  progress  has  been  made  towards  a  more  integrated  European  energy  market. 
Energy  is  now  traded  more  freely  (although  still  not  sufficiently  freely)  across  borders18, 
building  on  the  Electricity  and  Gas  Market  Directives19  as  well  as  antitrust  enforcement20. 
Antitrust decisions have notably given customers in Central and Eastern Europe an effective 
tool to make sure they have access to more competitive gas prices. As concerns electricity, the 
measurable  decrease  in  wholesale  electricity  prices  by  6.4 %  between  2010  and  2017 
contributed to a decrease in the costs of energy for households and industry by 6 % and 30 %, 
respectively. However, the increase  in network charges as well as taxes and levies led to an 
average increase in final consumer prices of 19.3 % for households and 8.7 % for industrial 
consumers across the EU over the same period (see Figure 5). Energy-related taxes and levies 
represent up to 40% of the retail energy prices for households. 

Figure 5: Changes in energy prices for households and industry (source: Eurostat) 

Air quality has progressed, but further improvements remain necessary. Thanks to joint 
efforts by the EU and Member States, emissions of air pollutants have decreased in the EU in 
recent decades, with the exception of ammonia (Figure 6). This trend has contributed to better 
air quality. It has also led to a decrease in the number of air quality zones exceeding EU limit 
values for particulate matter, and a decrease in the estimated number of premature deaths due 
to air pollution, to around 400 000 in the latest estimates21. Emissions of air pollutants in the 
EU are projected to continue decreasing, as Member States implement measures to fulfil their 

18 See Agency for the Cooperation of Energy Regulators/Council of European Energy Regulators (ACER/CEER) 
Annual reports on the results of monitoring the internal electricity and natural gas markets in 2017, September 
2018: https://acer.europa.eu/Official_documents/Publications/Pages/Publication.aspx. 
19  Directive  2009/72/EC  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  concerning  common 
rules  for  the  internal  market  in  electricity,  OJL  211,  14.8.2009,  pp.  55-93  and  Directive  2009/73/EC  of  the 
European Parliament and of the Council of 13 July 2009 concerning the common rules for the internal market in 
natural gas, OJL 211, 14.8.2009, pp. 94-136. 
20 The Commission has adopted numerous antitrust decisions, which contributed to unrestricted flow of energy 
in the  internal  market in both gas and electricity  markets,  most recently in the  following decisions:  AT.39816 
Gazprom commitment decision, AT.40461 DE-DK Interconnectors commitment decision, AT.39849 BEH Gas 
prohibition decision. 
21 See: https://www.eea.europa.eu/publications/air-quality-in-europe-2018. 

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national commitments on reductions in emissions of pollutants for 2020 and 2030 onwards22. 
The implementation of several Energy Union policies makes these emissions reductions easier 
and  less  costly  to  achieve  –  for  example,  reductions  in  the  use  of  coal,  energy  efficiency 
measures to replace inefficient heating equipment, and the development of more sustainable 
means of transport23. 

Figure 6: Changes in EU emissions of air pollutants24, as a percentage of 2000 levels 

The EU’s Emissions Trading System is more robust. The start of operation of the Market 
Stability Reserve in January 2019, and the adoption of the reform of the post-2020 Emissions 
Trading  System  in  early  2018,  significantly  strengthened  the  carbon  price  (Figure  7).  The 
Market Stability Reserve will address the current surplus of 1.65 billion emissions allowances 
and improve the system’s resilience to major shocks in the future by adjusting the supply of 
allowances to be auctioned. The stronger carbon price signal is already boosting confidence in 
greater  development  and  deployment  of  low-carbon  technologies.  According  to  market 
analysts,  the  Market  Stability  Reserve  will  maintain  its  effect  on  the  carbon  market  in  the 
following  decade  with  carbon  prices  at  a  similar  or  higher  level.  This  is  combined  with 
concrete  measures  to  avoid  carbon  leakage,  protecting  the  competitiveness  of  European 
industry.  

Figure 7: Changes in the carbon price on the European carbon market 2005-2018 (source: 
ICE) 

22  Directive  (EU)  2016/2284  of  the  European  Parliament  and  of  the  Council  of  14  December  2016  on  the 
reduction of national emissions of certain atmospheric pollutants, OJL 344, 17.12.2016, pp.1-31. 
23 Report on the First Clean Air Outlook (COM(2018) 446 final), 7 June 2018. 
24 This graph represents relative changes  from one  year to the other and takes into account the changes in the 
number of EU Member States over the years. 

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Public  investment  (national  and  EU)  in  the  Energy  Union’s  research  and  innovation 
priorities was relatively stable throughout 2014-2017. Public investment in these priorities 
during this period averaged around EUR 5.3 billion a year (Figure 8)25. With national funding 
of  EUR  4.1  billion  on  average  per  year26,  the  EU’s  Horizon  2020  research  programme  and 
cohesion  policy  funds  were  essential  in  keeping  research  and  innovation  investment  steady 
over the last 4 years. The European Commission is on track to invest almost EUR 2 billion in 
2020  in  clean  energy  research  and  innovation,  meeting  its  commitment  to  double  its  public 
research  and  innovation  investment  in  this  area  since  2015  as  part  of  its  membership  of 
Mission  Innovation.  However,  the  private  sector  remains  the  main  provider  of  such 
investment,  consistently  accounting  for  more  than  75%  of  EU  investments  in  clean  energy 
research and innovation, having increased annual spending from about EUR 10 billion to over 
EUR  16  billion  within  a  decade.  Public  funding  will  continue  to  play  a  key  role  in 
coordinating research and steering private investment to priorities compatible with our long-
term  strategic  vision,  also  through  smart  specialisation.  This  will  help  bridge  the  gap  from 
research  to  commercial  deployment  and  attract  new  private  investments  by  de-risking 
technologies.  Strong  policies  and  predictable  price  signals  are  necessary  conditions  for 
promoting  innovation  in  the  clean-energy  ecosystem,  which  will  ultimately  boost  research 
investment in clean energy technologies. 

Figure 8: Public investment in Energy Union research and investment priorities 2014-2017 
(source: Joint Research Centre) 

III.   AN AMBITIOUS AND MODERN LEGISLATIVE FRAMEWORK 

Under  this  European  Commission,  the  EU  has  successfully  adopted  a  completely  new 
legislative  framework  for  energy  and  climate  policies27.  The  European  Parliament  and 
Council agreed on a revision of the EU’s climate legislation, including the Emissions Trading 

25 Pasimeni, F.; Fiorini, A.; Georgakaki, A.; Marmier, A.; Jimenez Navarro, J.P.; Asensio Bermejo, J. M. (2018): 
SETIS Research & Innovation country dashboards. European Commission, Joint Research Centre (JRC). 
26 Idem.  
27  In  parallel,  the  Commission  adopted  along  with  the  present  report  a  communication  on  the  institutional 
framework “A more efficient and democratic decision making in EU energy and climate policy” (COM (2019) 
177 final, 9 April 2019). 

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System  Directive28,  both  for  stationary  installations  and  for  aviation,  the  Effort  Sharing 
Regulation29,  and  the  Regulation  on  Land  use,  Land  use  change  and  Forestry30.  They  also 
agreed on the eight legislative proposals in the ‘Clean Energy for All Europeans’ package31, 
and on the ten mobility proposals following the ‘Low-Emission Mobility Strategy’32. 

This comprehensive legislative framework forms a robust basis for the EU to deliver on 
its climate and energy policies for 2030 and beyond. This framework will allow us to deal 
with future challenges such as digitisation, the integration of renewables into the market, and 
an energy policy that is more consumer oriented. The legislation addresses both cross-cutting 
elements  to  promote  climate  and  energy  action,  and  specific  provisions  for  sectoral  action 
where needed. The EU has also sent a strong message to other countries around the world that 
it  intends  to  continue  to  lead  by  example.  It  is  doing  this  by  taking  concrete  and  ambitious 
steps  to  deliver  on  its  commitments  and  adaptation  goals  under  the  Paris  Agreement.  The 
EU’s agreed framework also contains built-in review clauses and provisions to guarantee that 
these  commitments  will  be  met.  This  framework  puts  the  EU  on  a  good  trajectory  to  a 
climate-neutral economy by 2050. 

The updated legislative framework sets out quantified objectives and a clear ‘direction 
of travel’ to 2030 providing a stable, predictable environment for planning and investment. In 
particular,  the  EU  has  considerably  raised  its  ambition  by  setting  new  targets  for  2030, 
namely: to reduce greenhouse gas emissions domestically by at least 40 % compared to 1990 
levels;  to  reach  a  share  of  at  least  32 %  in  renewable  energy33;  and  to  increase  energy 
efficiency  by  at  least  32.5 %34.  The  electricity  interconnections  target  was  set  to  improve 
security of supply by stepping up to 15 % in each Member State by 2030. Binding targets for 
2030  were  also  set  to  reduce  carbon  emissions  from  cars  by  37.5 %  compared  to  2021 
levels35; from vans by 31 % compared to 2021 levels36; and from lorries by 30 % compared to 
2019 levels. 

28 Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 to enhance cost-
effective emission reductions and low-carbon investments, OJL 76, 19.3.2018, pp. 3-27. 
29 Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding annual 
greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet 
commitments under the Paris Agreement, OJL 156, 19.6.2018, pp. 26-42. 
30 Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of 
greenhouse  gas  emissions  and  removals  from  land  use,  land  use  change  and  forestry  in  the  2030  climate  and 
energy framework, OJL 156, 19.6.2018, p. 1-25. 
31 Clean Energy for All Europeans (COM(2016) 860 final), 30 November 2016. 
32 A European Strategy for Low-Emission Mobility (COM(2016) 501 final), 20 July 2016. 
33  Directive  (EU)  2018/2001  of  the  European  Parliament  and  of  the  Council  of  11  December  2018  on  the 
promotion of the use of energy from renewable sources, OJL 328, 21.12.2018, pp. 82-209. 
34  Directive  (EU)  2018/2002  of  the  European  Parliament  and  of  the  Council  of  11  December  2018  on  energy 
efficiency, OJL 328, 21.12.2018, pp. 210-230. 
35 EU legislation already provided that by 2021, phased in from 2020, the fleet average to be achieved by all new 
cars is 95 grams of CO2 per kilometre. 
36 EU legislation already provided a 2020 target of 147 grams of CO2 per kilometre for vans. 

10 

 
 
                                                           
The  EU  has  strengthened  its  energy  security.  New  rules37  on  security  of  gas  supply  and 
electricity risk preparedness have been adopted to organise operational cross-border regional 
cooperation to prevent and manage risk of gas disruptions, electricity shortage or black-out.  

Significant progress has also been made in improving the design of electricity markets. 
There  is  now  a  more  integrated  set  of  rules  on  the  design  of  the  electricity  market38.  These 
rules  are  improving  the  efficiency  of  the  electricity  market  through  increased  price 
convergence  and  cross-border  exchanges.  They  also  set  a  common  framework  for  capacity 
mechanisms to ensure that these are compatible both with the internal market as well as with 
the  EU’s  decarbonisation  objectives.  There  has  been  a  thorough  State  aid  sector  enquiry  on 
capacity  mechanisms,39  and  State-aid  control  and  antitrust  rules40  help  ensure  that  our 
ambitious  energy  and  climate  targets  are  achieved  at  the  lowest  cost,  and  without  undue 
distortions  of  competition.  Overall,  the  European  Commission’s  efforts  allow  electricity  to 
move  more  freely  to  where  it  is  most  needed,  and  facilitate  the  integration  of  renewable 
energy, demand response, and storage facilities to the market at least cost. It will also enhance 
digitisation across the sector and foster stronger consumer empowerment.  

Progress has also been made in the gas market, notably with the agreement on the revision 
of  the  Gas  Directive41,  according  to  which  gas  pipelines  entering  or  leaving  the  European 
internal  gas  market  will  now  need  to  comply  with  EU  rules.  In  addition,  the  European 
Commission can now ensure that Member States’ agreements with countries outside the EU 

37  Regulation  (EU)  2017/1938 of  the  European  Parliament  and  of  the  Council  of  25  October  2017  concerning 
measures  to  safeguard  the  security  of  gas  supply  and  repealing  Regulation  (EU)  No  994/2010,  OJ  L  280, 
28.10.2017,  p.  1–56  and  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  risk-
preparedness  in  the  electricity  sector  and  repealing  Directive  2005/89/EC,  COM/2016/0862  final  -  2016/0377 
(COD) 
38 See: https://ec.europa.eu/energy/en/topics/markets-and-consumers. 
39 The first of its kind under State aid rules, this inquiry concluded in November 2016. See 
http://ec.europa.eu/competition/sectors/energy/state_aid_to_secure_electricity_supply_en.html.  
40 The Commission has now adopted 19 State aid decisions on 13 different capacity mechanisms under the 2014 
State aid guidelines, ensuring the participation of foreign capacity and technology neutral competitive allocation 
processes. The Commission’s case practice in this area is available here:  
http://ec.europa.eu/competition/sectors/energy/state_aid_to_secure_electricity_supply_en.html.  
The  Commission  also  adopted  a  DE-DK  Interconnectors  antitrust  decision  in  late  2018  requiring  German 
network  operator  TenneT  to  enable  imports  of  electricity  from  Denmark  into  Germany  and  in  any  event  to 
guarantee 75% of the Danish-German electricity interconnectors’ capacity for trade. 
41 See: https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation. 

11 

 
 
 
                                                           
comply with EU law42 before they are concluded. These achievements will help increase the 
predictability of the single market for investors. 

The regulatory framework for specific sectors has also been brought up to date. This was 
done  to  make  buildings  ‘smarter’  and  more  energy  efficient43;  to  set  limits  to  carbon 
emissions  from  cars,  vans44  and  lorries45;  to  update  rules  on  land  use,  land-use  change  and 
forestry46; and to update rules on the eco-design of energy-related products47. This will ensure 
that  all  sectors  contribute  to  the  energy  and  climate  transition,  taking  into  account  their 
specific needs. 

The new governance framework will help to implement and further develop the Energy 
Union48. Member States’ integrated National Energy and Climate Plans will include national 
contributions to the collective EU targets (and the necessary policies and measures to achieve 
these  contributions)  for  ten-year  periods.  Member  States  will  develop  their  plans  through  a 
continuous,  iterative  dialogue  with  the  European  Commission.  They  will  also  ensure  public 
participation  and  consult  with  other  Member  States  in  a  spirit  of  regional  cooperation.  This 
will  increase  opportunities  for  cooperation  between  Member  States,  and  provide  greater 
regulatory  certainty  for  stakeholders.  The  National  Energy  and  Climate  Plans  will  make  it 
easier  to  identify  areas  of  interest  for  future  investments,  and  opportunities  for  economic 
development, job creation and social cohesion. 

All  Member  States  have  now  submitted  their  first  draft  National  Energy  and  Climate 
Plans  (covering  the  period  2021-2030).  The  European  Commission  is  assessing  these 
draft plans with a view to issuing potential recommendations to Member States by June 
2019,  to  help  Member  States  further  improve  their  plans,  and  ensure  that  the  EU  can 
collectively deliver on its commitments. One key question of the assessment will be whether 
the  Member  States’  national  contributions  to  the  renewable  energy  and  energy  efficiency 
targets are sufficient to meet the EU’s collective level of ambition as a whole. Building on this 
process, Member States will continue to develop, and ultimately adopt, their national energy 
and climate plans in the second half of 2019. 

Box: towards an EU long-term strategy for a prosperous, modern, competitive and climate-
neutral economy by 2050  

In  November  2018,  the  European  Commission  published  a  strategic  long-term  vision49 
for  a  prosperous,  modern,  competitive  and  climate-neutral  economy  by  2050.  This 

42 Decision  (EU) 2017/684  of the European Parliament and  of the Council  of 5  April 2017 on establishing an 
information  exchange  mechanism  with  regard  to  intergovernmental  agreements  and  non-binding  instruments 
between Member States and third countries in the field of energy, OJL 99, 12.4.2017, pp. 1-9. 
43  Directive  (EU)  2018/844  of  the  European  Parliament  and  of  the  Council  of  30  May  2018  on  the  energy 
performance of buildings, OJL 156, 19.6.2018, pp. 75-91. 
44 See: https://ec.europa.eu/clima/policies/transport/vehicles/proposal_en#tab-0-1. 
45 See: https://ec.europa.eu/clima/policies/transport/vehicles/heavy_en. 
46 Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of 
greenhouse  gas  emissions  and  removals  from  land  use,  land  use  change  and  forestry  in  the  2030  climate  and 
energy framework, OJL 156, 19.6.2018, pp. 1-25. 
47  As  part  of  the  implementation  of  the  Ecodesign  Working  Plan  2016-2019,  a  set  of  revised  Ecodesign  and 
Energy labelling measures will be adopted in the first half of 2019. 
48  Regulation  (EU)  2018/1999  of  the  European  Parliament  and  of  the  Council  of  11  December  2018  on  the 
Governance of the Energy Union and Climate Action, OJL 328, 21.12.2018,  pp. 1-77. The new regulation also 
requires  Member  States  to  develop  long  terms  strategies,  and  integrates  and  streamlines  energy  and  climate 
reporting. 
49 A  Clean Planet  for all  —  A  European strategic long-term  vision  for a prosperous,  modern, competitive and 
climate-neutral economy (COM(2018) 773 final), 28 November 2018. 

12 

 
 
                                                           
document  (drafted  following  requests  from  the  European  Council50  and  the  European 
Parliament51  and  as  called  for  as  part  of  the  agreed  governance  framework52)  was  the 
Commission’s contribution to the EU’s long-term low greenhouse gas emission development 
strategy,  which  should  be  adopted  and  communicated  by  2020  to  the  United  Nations 
Framework  Convention  on  Climate  Change,  in  accordance  with  the  Paris  Agreement.  In 
parallel, each Member State will also need to prepare its national long-term strategy. 

The  European  Commission  presented  a  vision  not  only  to  keep  the  global  increase  in 
temperature  well  below  2 °C  compared  to  pre-industrial  levels,  but  also  to  pursue  efforts  to 
limit this increase to 1.5 °C by achieving net-zero greenhouse gas emissions by 2050. 

The strategy demonstrates how Europe can lead the way to climate neutrality by investing in 
realistic technological  solutions,  empowering citizens, and aligning action in  key  areas such 
as industrial policy, finance, or research – while simultaneously ensuring social fairness for a 
just transition and not leaving behind any region nor any population group. 

The  European  Commission’s  strategy  shows  that  transforming  the  economy  in  this  way  is 
both possible and beneficial. It is an investment in the modernisation of the EU’s economy to 
better  face  forthcoming  challenges.  To  achieve  this  transition,  the  EU  will  need  to  make 
progress  on  seven  strategic  building  blocks53.  These  building  blocks  build  on  the  five 
dimensions  of  the  Energy  Union.  They  also  set  the  direction  of  travel  for  EU  climate  and 
energy policy to achieve the temperature objectives in the Paris Agreement. 

IV.  AN ENABLING FRAMEWORK SUPPORTING THE ENERGY TRANSITION 

Over  the  past  five  years,  in  addition  to  strengthening  the  legislative  system,  the 
European Commission has delivered a framework of actions to support the energy and 
climate transition. This framework is about creating the conditions for Member States, and 
all stakeholders, to deliver on the EU’s objectives. 

1.  A future-proof infrastructure ensuring the EU’s security of supply and enabling the green 

transition 

Europe  enjoys  one  of  the  world’s  most  comprehensive  and  reliable  networks  for 
electricity and gas. The prime objective of the European Commission has been to strengthen 
this network where necessary to address remaining security of supply issues, connect energy 
islands,  and  address  challenges  resulting  from  the  ongoing  transition  to  a  low-carbon 
economy. 

A key priority of the Energy Union has been to end the energy isolation of disconnected 
regions. Significant progress has been achieved in the Baltic states. While these states were 
once an energy ‘island’ in the EU, they are now well interconnected with the rest of the EU, 
with  23.7 %  cross-border 
interconnection.  This  has  been  made  possible  by  new 
interconnectors  with  Sweden,  Finland  and  Poland.  Work  is  now  concentrating  on 
synchronising the Baltic states’ power system with the continental European network by 2025 

50 European Council conclusions, 22 March 2018. 
51  European  Parliament  resolution  of  4  October  2017  on  the  2017  UN  Climate  Change  Conference  in  Bonn, 
Germany (COP23). 
52 Article 15 of Regulation (EU) 2018/1999 of 11 December 2018 on the Governance of the Energy Union and 
Climate Action. 
53  Energy  efficiency;  the  deployment  of  renewables  and  increased  electrification;  clean,  safe,  and  connected 
mobility;  competitive  industry  and  circular  economy;  infrastructure  and  inter-connections;  bio-economy  and 
natural carbon sinks; and tackling remaining emissions with carbon capture and storage. 

13 

 
 
                                                           
at  the  latest54.  Greater  integration  of  the  Iberian  peninsula  is  also  being  promoted  by  the 
support by the European Commission for the INELFE55 project and for a power line crossing 
the Bay of Biscay. These efforts will double the exchange capacity between France and Spain 
by  2025,  bringing  Spain  closer  to  the  10 %  interconnection  target,  and  progressively 
integrating  the  whole  Iberian  peninsula  into  the  internal  electricity  market.  The  European 
Commission also supports further efforts to integrate the gas market of the Iberian Peninsula 
and  the  rest  of  Europe.  These  efforts,  which  show  the  value  of  European  solidarity  and 
regional  unity,  have  been  discussed  in  regular  summit  level  meetings  between  France, 
Portugal and Spain with the European Commission56.  

The efforts of the European Commission to ensure diversification of gas supply are also 
delivering concrete results. These efforts are ending dependency on a single supplier in 
certain Member States, increasing the resilience of the Member States’ energy systems, 
enhancing competition, and decreasing prices. As a result, all Member States but one have 
access  to  two  independent  sources  of  gas,  and  if  all  ongoing  projects  are  implemented  on 
schedule, all Member States except for Malta and Cyprus will have access to three sources of 
gas  by  2022,  and  23  Member  States  will  have  access  to  the  global  liquefied  natural  gas 
market.  Ongoing  diversification  initiatives  based  on  liquefied  natural  gas  and  the  Southern 
Gas Corridor are of particular importance to the  eastern Baltic sea region and central south-
eastern  Europe.  These  areas  were  historically  dependent  on  a  single  gas  supplier.  If  the 
necessary commitment is maintained, and there are no delays in implementing key projects, 
Europe  should  achieve  a  well-interconnected  and  fully  shock-resilient  gas  grid  by  2020  or 
shortly thereafter. 

The  European  Commission  has  been  also  supporting  projects  to  improve  the  EU’s 
electricity  grid  and  to  allow  for  greater  uptake  of  renewable  generation.  Despite  the 
progress, investments on a much larger scale are needed in electricity grids (both transmission 
and distribution).  The level  of  investment  needed for electricity transmission  is  estimated at 
more  than  EUR  150  billion  for  the  period  2021-203057.  These  new  investments  should  be 
bundled with further digitisation and ‘smartening’ of the grids, as well as the deployment of 
new storage facilities. 

The EU’s trans-European networks (TEN-E) policy has been instrumental in upgrading 
the  EU’s  infrastructure.  The  TEN-E  policy  promoted  a  focused  approach  to  identify  and 
implement  the  Projects  of  Common  Interest  (PCIs)  critical  to  building  well-connected 
networks  across  Europe.  So  far,  over  30  PCIs  have  been  implemented,  and  some  75  PCIs 
should  be  in  place  by  2022.  The  creation  of  four  high-level  regional  groups58  under  the 
leadership  of  the  European  Commission  has  helped  to  accelerate  the  implementation  of  the 
PCIs.  PCIs  have  also  benefited  from  EU  financial  support,  which  has  leveraged  private 
investment.  Since  2014,  91  PCIs  have  received  EUR  3.2  billion  in  support  from  the 
Connecting  Europe  Facility  (CEF)  programme  and  EUR  1.3  billion  in  support  from  the 
European  Fund  for  Strategic  Investment  (EFSI).  This  has  leveraged  total  investments  of 

54 Political Roadmap on the synchronisation of the Baltic States’ electricity networks with the Continental 
European Network via Poland, 8 June 2018. 
55 ‘Interconexión Eléctrica Francia-España’. 
56  http://europa.eu/rapid/press-release_IP-18-4621_en.htm. 
57 Investment needs in trans-European energy infrastructure up to 2030 and beyond, Ecofys, July 2017. 
58 The four high-level groups in the area of energy infrastructure are Central and South Eastern European Energy 
Connectivity (CESEC), North Seas Energy Cooperation, South-West Europe, and the Baltic Energy Market 
Interconnection Plan (BEMIP). 

14 

 
 
                                                           
around  EUR  50  billion.  Additionally,  EU  cohesion  policy  has  contributed  with  EUR  2.8 
billion in natural gas and electricity infrastructure projects that were selected by end 2018. 

Level of funding per sector under the Connecting Europe Facility (CEF) 

Stronger and better-interconnected grids  in the Member States  have  allowed for more 
effective  application  of  the  internal  energy  market’s  rules.  This  has  resulted  in  greater 
competitiveness, reduced costs and better security. So far, 26 countries — accounting for over 
90 % of European electricity consumption and more than 400 million people — have coupled 
their day-ahead  electricity  markets.  Over the past  7  years, day-ahead market  coupling  alone 
has  rendered  a  benefit  of  approximately  EUR  1  billion  per  year  to  European  consumers59. 
There have also  been  significant  welfare  gains  from  the integration of intraday  markets  and 
the  balancing  of  cross-border  markets,  which  has  led  to  several  billion  euro  in  savings  per 
year. Market coupling has also promoted price convergence in various regions in recent years 
(e.g.  by  80 %  and  41 %  price  convergence  in  the  Baltic  and  central-western  Europe  regions 
respectively).  In  addition,  the  European  Commission  has  supported  the  establishment  of 
regional cooperation centres to help the integration of cross-border power flows and variable 
power flows across the European power system. The digitisation of power infrastructure will 
require increased attention on improving cybersecurity and protecting critical infrastructure. 

Investments  have  been  made  to  enable  sector  integration.  However,  more  needs  to  be 
done  to  bring  together  the  power  generation  and  end-use  sectors.  This  is  necessary  to 
integrate the rising share of variable renewable energy; heating and cooling; and electric 
vehicles  in  the  energy  system.  Since  the  end  of  2016,  close  to  EUR  400  million  in 
Connecting  Europe  Facility  (CEF)  grants  have  been  made  available  to  over  50  projects  to 
deploy alternative fuels, mobilising total investments exceeding EUR 3 billion. The aim is to 
make  available  an  additional  EUR  350  million  through  the  CEF  blending  facility  in  2019. 
This will be a key area of attention for the future. Future demand for electrical vehicles will 
vary across EU regions, and be dependent on a number of factors, including the development 
of  alternative  fuels  infrastructure.  Furthermore,  EU  cohesion  policy  remains  an  important 
source  of  EU  co-funding  for  the  deployment  of  clean  transport,  e.g.  with  about  EUR  12 
billion planned for sustainable urban mobility.  

59 See Agency for the Cooperation of Energy Regulators/Council of European Energy Regulators (ACER/CEER) 
Annual reports on the results of monitoring the internal electricity and natural gas markets in 2017, September 
2018: https://acer.europa.eu/Official_documents/Publications/Pages/Publication.aspx. 

15 

 
 
 
                                                           
2.  Piloting ways to ensure social fairness of the transition 

The  energy  and  climate  transition  is  already benefiting  the  economy  and fostering  job 
creation, and it has the potential to do more. Between 2000 and 2014, employment in the 
environmental sectors of the economy grew considerably faster (+49 %) than employment in 
the  economy  as  a  whole  (+6 %)60.  Today,  there  are  4  million  ‘green  jobs’  in  the  EU.  This 
includes around 1.4 million jobs in the energy sector related to renewable technologies61 and 
900 000  jobs  related  to  energy  efficiency  activities62.  These  figures  are  expected  to  increase 
with  further  energy  and  climate  action,  as  investments  in  Europe  replace  imports  of  fossil 
fuels,  European  industries  gain  competitiveness  from  the  early-mover  advantage,  and 
adaptation to climate change protects jobs and job opportunities.  

While  this  transition  benefits  the  vast  majority  of  people  and  regions,  it  also  brings 
social  challenges  in  some  cases.  For  example,  regulatory  or  fiscal  measures  can  have 
unintended  regressive  effects  which  can  exacerbate  energy  poverty.  The  benefits  of  the 
transition  also  risk  to  be  unevenly  distributed.  Most  sectors,  regions  and  population  groups 
will enjoy significant  growth as a result of this transition,  while others may need support to 
deal  with  the  adjustment.  Also  as  regards  energy  poverty,  although  decreasing  to  pre-crisis 
levels,  important  differences63  among  Member  States  remain.  There  are  many  policies  to 
address these challenges on the national level, particularly  education and training as well as 
social and fiscal policies. Important and sustained human capital investments are essential to 
equip future generations with the skills required by a changing economy.64  

The initiative for coal and carbon-intensive regions in transition helps mitigate the social 
consequences  of  the  low-carbon  transition.  There  are  currently  41  coal  regions  across  12 
Member  States  that  still  provide  around  185  000  jobs  in  coal  extraction.  The  European 
Commission is helping these regions to draw up low-carbon transition strategies that address 
the potentially negative socioeconomic impacts in two ways, outlined below. 

1.  Firstly,  the  European  Commission  has  created  an  open  platform  that  brings  together  all 
affected stakeholders (national, regional and local governments; businesses; civil society 
organisations;  etc.)  to  exchange  best  practices,  foster  peer  learning,  and  receive 
information on EU support instruments that are available. 

2.  Secondly,  the  European  Commission  provides  tailored  support,  either  in  the  form  of 
operational country teams or bilateral discussions with Commission experts. This support 
can help national and regional authorities to identify ways to start and lead the transition. 
This support is accompanied by existing EU funds, financing tools, and programmes. 18 
regions in 8 Member States65 are currently benefiting from this support. Early experience 
shows  that  regional  transition  needs  to  be  planned  with  the  broad  support  of  all 

60 https://ec.europa.eu/eurostat/web/products-eurostat-news/-/EDN-20170529-1?inheritRedirect=true  
61 https://irena.org/-
/media/Files/IRENA/Agency/Publication/2018/May/IRENA_RE_Jobs_Annual_Review_2018.pdf. 
62 https://ec.europa.eu/energy/sites/ener/files/documents/CE_EE_Jobs_main%2018Nov2015.pdf. 
63  Energy  poor  are  considered  those  with  arrears  on  utility  bills  and/or  unable  to  keep  their  homes  adequately 
warm. 
64  For  a  presentation  and  discussion  of  the  expected  impacts  on  skills,  wages  and  tasks,  see  in  particular  the 
recent  publication  by  Eurofound  on  “Employment  Implications  of  the  Paris  Climate  Agreement”: 
http://www.eurofound.europa.eu/publications/report/2019/energy-scenario-employment-implications-of-the-
paris-climate-agreement. 

65  These  regions  include  Trenčín  (SK),  Silesia,  Lower  Silesia  and  Greater  Poland  (PL),  Western  Macedonia 
(EL),  the  Jiu  Valley  (RO),  Moravskoslezský,  Karlovarský  and  Ústecký  (CZ),  Aragón,  Asturias  and  Castilla  y 
León (ES), Savinja and Zasavje (SI) Saxony, Saxony-Anhalt, Brandenburg, NordRhein Westphalen (DE) 

16 

 
 
                                                           
stakeholders.  Early  experience  also  shows  that  engagement  from  the  European  level  is 
effective in mobilising stakeholders and identifying avenues for investment which might 
otherwise not be considered. 

The  initiative  on  clean  energy  for  EU  islands  aims  to  accelerate  the  clean  energy 
transition  in Europe's  over  1 000  inhabited  islands.  It  aims  to  help  these  islands  tap  into 
locally available renewable energy sources, energy efficiency potential and innovative storage 
and  transport  technologies  and  become  self-sufficient  in  energy,  thus  reducing  costs, 
environmental  pollution  and  reliance  on  heavy  fuel  oil  to  generate  power,  while  creating 
growth and local jobs. 

More  must  be  done  to  address  energy  poverty,  which  still  affects  nearly  50  million 
people  across  the  EU.  A  key  way  of  doing  this  is  to  promote  investments  in  energy 
efficiency for households. This improves living conditions and reduces energy bills. Almost 
EUR  5  billion  from  the  European  Structural  and  Investment  Funds  2014-2020  have  been 
allocated  to  help  renovate  the  homes  of  around  840  000  households.  In  addition,  as  part  of 
their national energy and climate plans, Member States will now assess the number of energy-
poor  households.  If  this  number  is  significant,  Member  States  will  outline  policies  and 
measures  to  alleviate  this  energy  poverty.  To  support  these  processes,  the  European  
Commission launched the European Energy Poverty Observatory66 whose mission is to collect 
data, provide guidance, and disseminate best practices. 

In  2016,  the  European  Commission  launched  the  European  Solidarity  Corps  which 
creates opportunities for young people to volunteer, do a traineeship or work on a variety of 
projects,  including  climate  and  energy  projects  that  benefit  communities around  Europe.  So 
far,  around  120 000  young  people  have  registered  for  the  Corps,  and  over  13 000  have 
completed — or are currently engaged in — their solidarity activities. 

On the global level, the European Commission has supported elevating the social issue of 
the  need  for  a  ‘just  transition  of  the  workforce’,  that  creates  decent  work  and  quality 
jobs, as one of the key challenges facing the world in the fight against climate change67. 

3.  Empowering cities and local communities 

Cities  are  home  to  70 %  of  Europeans.  They  can  be  powerful  supporters  of  Energy 
Union objectives, but they also face specific challenges. Cities have a key role to play in a 
variety  of  issues  such  as:  building  standards;  urban  mobility;  adaptation  to  climate  change 
impacts;  heating  and  cooling;  and  renewable  energy.  Local  authorities  recognise  the 
opportunities,  but  often  face  constraints  in  their  ability  to  design  policies  and  mobilise 
investments. 

To help mobilise local-level  action,  the European Commission has played a key role in 
developing  the  EU  Covenant  of  Mayors  for  Climate  and  Energy.  The  Covenant  is  a 
bottom-up initiative through which local and regional authorities showcase their actions for a 
low-carbon economy, receive support, exchange good practices, and share resources. The EU 
Covenant of Mayors is now the world’s widest-ranging network of local authorities, with over 
8 800 cities representing more than 230 million  Europeans. These  cities, who contribute  for 
nearly a third of the EU’s 2020 commitment for emissions reductions, have already cut their 

66 https://www.energypoverty.eu/. 
67  At  the  United  Nations  COP24  conference  in  Katowice  in  December  2018,  the  EU,  alongside  54  countries, 
adopted the ‘Solidarity and Just Transition Silesia Declaration’, which calls for a just transition for the workforce 
and  the  creation  of  decent  work  and  quality  jobs  as  an  important  enabler  for  the  implementation  of  the  Paris 
Agreement. 

17 

 
 
                                                           
emissions  by 23 % from their baseline  year inventory68. By the end of last  year,  over 1 500 
cities had committed to work towards the more ambitious target of a 40 % reduction in carbon 
emissions by 2030, and implement additional adaptation actions. The Covenant is open to any 
European  city  willing  to  take  on  climate  and  energy  commitments  in  support  of  EU 
objectives.  It  has  inspired  also  similar  European  Commission-funded  initiatives  in  other 
regions  of  the  world,  all  coming  together  under  the  umbrella  of  the  Global  Covenant  of 
Mayors  alliance  to  accelerate  energy  transition  towards  the  Paris  climate  agreement 
objectives. 

The  Urban  Agenda  for  the  EU  is  also  advancing  well.  Several  of  its  ongoing  14 
Partnerships, involving local authorities, Member States and EU institutions in an innovative 
governance  approach,  address  issues  related  to  the  Energy  Union69.  Urban  Innovative 
Actions continue to test innovative solutions that could be transferred to other EU cities. 
In addition to the ongoing projects on Energy Transition, new projects are being supported on 
Climate Adaptation on Air Quality70.URBIS is a new dedicated urban investment advisory 
platform  within  the  European  Investment  Advisory  Hub  which  helps  cities  to  facilitate, 
accelerate and unlock urban investment. URBIS has already begun handling 36 requests from 
all over Europe covering a broad range of urban subsectors. The European Commission will 
continue working with the European Investment Bank to develop URBIS. 

Finally, the Energy Union legislative framework acknowledges the role played by local 
and regional actors, notably in the Governance Regulation and calls for  actions, for instance 
on low-carbon mobility and energy-efficient buildings71. 

4.  New ways to support research and innovation 

Research  and  innovation  are  key  to  the  objectives  of  the  Energy  Union.  The 
Communication on Accelerating Clean Energy Innovation72 outlined a strategy for promoting 
clean  energy  research  and  innovation  and  for  bringing  results  to  the  market  quickly.  This 
strategy  sets  priorities  by  committing  through  the  Horizon  2020  research  and  innovation 
programme  around  EUR  2.5  billion  for  the  period  2018-2020  to  decarbonise  the  EU’s 
building stock; strengthen EU leadership in renewables; develop energy-storage solutions and 
electro-mobility;  and  encourage  a  more  integrated  urban  transport  system.  In  support,  the 
Strategic Energy Technology Plan (SET Plan) has brought together detailed Implementation 
Plans73  for  public  and  private  investments  in  all  these  priorities  to  place  Europe  at  the 
forefront  of  the  energy  transition.  The  Horizon  Europe  programme,  starting  in  2021,  will 
include a mission oriented approach that will have concrete targets and will be time-bound, to 
achieve societal objectives. A mission area on Climate Neutral and Smart Cities is included in 
the proposal.  

The  European  Commission  is  promoting  new  ways  to  bring  the  results  of  research 
projects  to  market.  It  is  preparing  to  launch  a  co-investment  fund  with  Breakthrough 

68 http://publications.jrc.ec.europa.eu/repository/bitstream/JRC103316/jrc103316_com%20achievements%20and
%20projections_online.pdf. 
69 e.g. the partnerships on Energy Transition, on Climate Adaptation, on Urban Mobility, on Air Quality and on 
Housing https://ec.europa.eu/futurium/en/urban-agenda 
70 https://www.uia-initiative.eu/en 
71 Directive (EU) 2018/844 of the European Parliament and of the Council of 30 May 2018 on the energy 
performance of buildings, OJL 156, 19.6.2018, pp. 75-91. 
72 Accelerating Clean Energy Innovation (COM(2016) 763 final), 30 November 2016. 
73 https://setis.ec.europa.eu/actions-towards-implementing-integrated-set-plan/implementation-plans.  

18 

 
 
                                                           
Energy74  (a  coalition  that  includes  private  investors,  global  corporations,  and  financial 
institutions)  to  support  innovative  European  companies  developing  radically  new  clean-
energy  technologies  and  bringing  them  to  market.  In  addition,  the  European  Innovation 
Council  pilot  provides  support  to  breakthrough  innovations,  including  in  clean  energy 
technologies, to develop innovations and bring them to the market by combining grants and 
equity investments. Further evidence of the progress made by EU-funded projects can be seen 
in more than 100 cases on energy and resource efficiency, shortlisted to be part of the World 
Alliance  for  Efficient  Solutions  portfolio75.  The 
instrument  for  energy 
demonstration projects76 is proving highly successful, having mobilised more than EUR 140 
million in 2018, compared to only EUR 25 million during its pilot phase from 2015 to 2017. 
This brings the total EU support until now to almost EUR 170 million, for total project costs 
of more than EUR 350 million. In view of the important demand for supporting demonstration 
of large-scale innovative technologies, undisbursed funds were reallocated from the NER 300 
Programme77 to the InnovFin Energy Demonstration Projects and Connecting Europe Facility 
Debt  Instruments.  Cohesion  policy  funds  also  support  low-carbon  research  and  innovation, 
based  on  smart  specialisation,  with  at  least  EUR  2.5  billion  of  EU  funding  available,  out 
which about EUR 1.2 billion have already been allocated to selected projects at end 201878. 
The European Commission also established the Innovation Fund and aims to invest around 
EUR 10 billion in innovative clean technologies. 

InnovFin 

The EU is supporting the creation of a European network of academics and innovators 
in clean-energy technologies. The European Institute of Innovation and Technology supports 
start-ups  through  its  Knowledge  and  Innovation  Communities  (KICs)  network.  Over  the 
period  2018-2020,  around  EUR  150  million  has  been  allocated  from  the  KICs  to  develop 
solutions that promote clean-energy innovation. 

New areas of interest are emerging in space and hydrogen technologies. As proposed in 
the  European  Space  Programme  Regulation79,  the  European  Commission  is  fostering  the 
adoption of EU space technologies. The European Space Programmes Copernicus and Galileo 
are important enablers for innovative solutions relevant to the whole economy, including the 
energy  sector  and  the  fight  against  climate  change.  Positioning  services  result  in  higher 
efficiency  in  weather  forecast  and  EU  earth  monitoring  capabilities  will  provide  accurate 
identification of CO2 and methane80 emissions so to design better energy and climate policies. 
Hydrogen can also play an important role in both addressing the needs for large-scale/inter-
seasonable energy storage and optimising the overall energy system through sector coupling. 
Hydrogen  can  support  the  decarbonisation  of  gas  infrastructure,  transport,  and  energy-
intensive  industries.  Over  the  past  10  years,  over  EUR  1  billion  was  invested  in  hydrogen 
technologies through the Fuel Cells and Hydrogen Joint Undertaking. 

74 http://www.b-t.energy/. 
75 https://solarimpulse.com/network/EUFunded. 
76 http://www.eib.org/attachments/thematic/innovfin_energy_demo_projects_en.pdf. 
77  The  NER  300  programme  took  its  name  from  the  sale  of  300  million  emission  allowances  from  the  New 
Entrants' Reserve (NER) set up for the third phase of the EU emissions trading system. 
78 http://s3platform.jrc.ec.europa.eu/esif-energy.  
79 Proposal for a Regulation establishing the space programme of the Union and the European Union Agency for 
the Space Programme, COM/2018/447 final of 6 June 2018. 
80 The European Commission is launching a study on methane emissions in the energy sector. 

19 

 
 
                                                           
Europe is taking a leading role in developing fusion as a promising low-carbon energy 
source for the future. The EU’s investment in ITER81, along with US, Japan, China, Russia, 
South Korea and India, has already produced tangible benefits for EU's economy and society 
in terms of innovation and growth. European companies and research centres are developing 
the technologies that will make fusion energy possible in the future and have  already found 
various applications beyond the energy sector. 

5.  Sustaining and strengthening Europe’s industrial competitiveness 

To  foster  discussions  between  industry  players  across  value  chains,  and  as  part  of  an 
effort  to  enhance  the  links  between  research  and  industry,  the  European  Commission 
launched  three  ‘industry-led  initiatives’  in  2017  on  batteries,  renewable  energy,  and 
construction. The European Commission also established the Clean Energy Industrial Forum, 
organised  as  an  integral  part  of  the  annual  EU  Industry  Days  (22-23  February  2018,  5-6 
February  2019  as  well  as  separately  on  renewable  energy  on  18  March  2019),  to  foster 
exchanges among industry representatives, academia, local authorities and policy-makers. 

A  Strategic  Forum  on  Important  Projects  of Common  European  Interest  (IPCEI)  was 
set up in May 2018. This covers key strategic value chains such as batteries.  

Batteries will indeed be of particular strategic importance in decarbonising the European 
economy, strengthening the EU’s strategic autonomy in energy supply, and boosting the EU’s 
industrial competitiveness.  Batteries will be important  for the management  of the electricity 
grid  to  distribute  and  store  power  from  renewable  energy  sources.  They  will  also  help  to 
promote  low-emission  and  zero-emission  mobility. Building  on  the  European  Battery 
Alliance82,  the  European  Commission  report  on  the  implementation  of  the  strategic  Action 
Plan on Batteries, ‘Building a Strategic  Battery  Value Chain  in  Europe’  (adopted83 together 
with the present report), underlines the importance of this strategic value chain. It highlights 
the  broad  nature  of  the  challenges  facing  the  battery  sector  in  Europe  and  reports  on  the 
progress made in the European Commission’s strategic Action Plan on Batteries84.  

The  full  implementation  of  the  Circular  Economy  approach  is  also  critical  for 
decarbonising the European economy, notably energy intensive sectors such as steel, cement 
or  glass,  while  keeping  or  increasing  its  competitiveness.  Re-use  and  recycling  of  raw 
material  lead  to  lower  emissions  –  and  reduces  Europe’s  dependency  on  raw  materials 
supply85. In December 2018, the European Commission launched the Circular Plastic Alliance 
of  key  industry  stakeholders  covering  the  full  plastics  value  chain  as  part  of  its  persisting 
efforts to reduce plastics littering, increase the share of recycled plastics and stimulate market 
innovation. 

6.  Investments in sustainability and in the energy transition 

The  investment  gap  in  Europe  following  the  financial  crisis  is  now  nearly  closed. 
However,  delivering  high-quality  investment  will  remain  essential  for  a  prosperous 

81  The  EU  is  part  of  an  international  consortium  building  an  experimental  facility  called  ITER  ("the  way"  in 
Latin) in the  South of France. This  will be  the  largest fusion device  to produce energy  and is one of the  most 
ambitious energy projects in the world today. 
82 https://ec.europa.eu/growth/industry/policy/european-battery-alliance_en. 
83 Report on the implementation of the strategic action plan of batteries: building a strategic battery value chain 
in Europe (COM(2019) 176 final), 9 April 2019. 
84  Annex  to  Europe  on  the  move  —  Sustainable  Mobility  for  Europe:  safe,  connected  and  clean  (COM(2018) 
293 final), 17 May 2018. 
85 https://www.sitra.fi/en/publications/circular-economy-powerful-force-climate-mitigation/ 

20 

 
 
                                                           
future86, and the Energy Union is a key investment opportunity. Achieving the benefits of 
the  2030  climate  and  energy  framework  will    require  an  estimated  EUR  180  billion  in 
additional  annual  investment  between  2020  and  2030.87    Reaching  climate-neutrality  will 
require additional investments in the range of EUR 142-199 billion a year between 2030 and 
205088 (compared to a baseline with existing measures89 requiring already close to EUR 400 
billion investment each year90). Public resources can provide leverage or steer investments in 
the  right  direction,  but  the  vast  majority  of  this  investment  will  have  to  come  from  private 
sources. This is why the Energy Union and the EU’s industrial policy have both focused on 
reducing  the  risks  of  investments  in  clean  energy.  Member  States  will  continue  to  play  a 
central role in securing revenues for new projects in the form of support schemes. But long-
term  offtake  arrangements  in  the  form  of  corporate  power-purchase  agreements  will 
increasingly  play  a  complementary  role  in  hedging  the  revenues  of  renewable  energy 
providers. 

The  Investment  Plan  for  Europe  (also  known  as  the  ‘Juncker  plan’)  mobilises 
investments  in  renewable  energy,  energy  efficiency  and  energy  infrastructure.  From  a 
total  of  EUR  390  billion  investments  mobilised by  European  Fund  for  Strategic  Investment 
(EFSI), close to EUR 70 billion was invested in the energy sector. For example, the EFSI has 
contributed  to  finance  renewable  energy  access  to  7.4 million  households  in  the  EU.  A 
number  of  national  and  regional  scale  energy  efficiency  investment  programs  in  residential 
buildings  in  France,  Spain,  Italy,  Germany,  Finland,  Poland,  Czech  Republic  and  other 
Member States have benefited from EFSI support. EFSI also contributed to the financing of 
electricity  interconnector  between  Italy  and  France,  and  major  gas  infrastructure  projects, 
such as Transadriatic pipeline and Black Sea Gas Connection.  

EU  cohesion  policy  also  provides  substantial  support,  including  significant  funding  of 
EUR 69  billion  –  or  around  EUR 92  billion  with  national  public  and  private  co-financing  – 
under  2014-2020  programmes  for  all  five  Energy  Union  dimensions.  Implementation  is 
progressing  well,  with  71%  of  the  total  funding  allocated  to  projects  by  end  2018.  Around 
EUR 2.5 billion for low-carbon economy investments is deployed via financial instruments.  

In addition, the ‘Smart Finance for Smart Buildings’ initiative is boosting investment in 
energy  efficiency  renovations  of  households  and  SMEs.  It  is  achieving  this  by  enabling 
public  funds  to  be  used  more  effectively  through  (i)  the  use  of  financial  instruments  (e.g. 
guaranteed  loans)  and  energy  performance  contracting;  (ii)  improving  aggregation  and 
assistance for project development; and (iii) reducing the risks of investments. 

In  May 2018,  the  European  Commission  proposed  to  further  strengthen  climate 
mitigation and adaptation in the next Multiannual Financial Framework 2021-202791. It 
proposed to increase the current targets for EU budget expenditure on climate objectives from 

86 Annual Growth Survey 2019: For a stronger Europe in the face of global uncertainty (COM(2018) 770 final), 
21 November 2018. 
87 Compared to 2016 Reference scenario 
88 If including transport: EUR 176 to 290 billion annually - see “In-depth analysis in support of the Commission 
Communication (2018) 773”, Table 10. 
89 Baseline assumed to respect the 2030 objectives for energy efficiency (32.5%) and renewables (32% of gross 
final energy demand) and to prolong the 2030 policies without strengthening them or adding new ones. 
90  If  including  transport:  EUR  1 200  billion  annually  -  see  “In-depth  analysis  in  support  of  the  Commission 
Communication (2018) 773”, Table 10. 
91 “A Modern Budget for a Union that Protects, Empowers and Defends The Multiannual Financial Framework 
for 2021-2027” COM/2018/321 final of 2 May 2018.  

21 

 
 
                                                           
20 %92  to  25 %.  It  also  proposed  to  increase  Horizon  Europe  expenditure  on  climate 
objectives to 35 %93. Projects will have to be resilient to current and future climate changes. 
This  will  be  complemented  by  instruments  to  facilitate  a  just  transition  to  a  low-carbon 
economy  in  carbon-dependent  regions,  such  as  the  Modernisation  Fund  under  the  EU’s 
Emission  Trading  System  –  a  fund  that  will  support  decarbonisation  and  modernisation  of 
energy systems in 10 beneficiary Member States as of 2021. 

To boost sustainable investment, in May 2018, the European Commission proposed a series 
of measures to create a unified classification system (taxonomy) of what can be considered an 
environmentally sustainable economic activity. On 25 February 2019, co-legislators agreed on 
this new generation of low-carbon benchmarks, which will regulate disclosure obligations for 
how  institutional  investors  and  asset  managers  can  integrate  environmental,  social  and 
governance factors in their risk processes. These measures will also develop a new category 
of  low-carbon  and  positive-carbon-impact  benchmarks,  which  will  provide  investors  with 
better information on the carbon footprint of their investments.  

A phase-out of environmentally harmful fossil fuel subsidies is necessary to achieve an 
efficient  and  effective  Energy  Union,  as  recognised  by  EU  commitments  in  the  G20 
framework. Between 2008 and 2016, fossil fuel subsidies did not decrease. These subsidies 
are estimated to be worth EUR 55 billion in 2016, implying that EU and national policies are 
not yet sufficient to phase them out94. 

7.  A strong external dimension to the Energy Union 

As a global player, the EU has been among the first to recognise the challenge of climate 
change and the opportunities of the clean-energy transition. Thanks to close coordination 
with EU Member States, the EU is successfully engaging in energy and climate diplomacy by 
mobilising  its  diplomatic  networks  and  cooperation  agencies  to  push  for  ambitious  global 
climate  action.  This  includes  outreach  to  partner  countries  and  the  scaling-up  of  climate 
finance  and  technical  assistance  to  help  countries  implement  their  Nationally  Determined 
Contributions to the Paris Agreement. The EU has organised ministerial meetings with China 
and  Canada  on  climate  action  that  have  helped  to  maintain  confidence  in  global  climate 
action. The EU also works closely with G7 and G20 presidencies and partners to promote the 
global  climate  agenda,  underlining  the  need  for  high-emitting  economies  to  demonstrate 
leadership  and  progress.  Additionally,  the  Mission  Innovation  initiative  is  providing  an 
important  intergovernmental  forum  for  new  research  and  development  activities.  Annual 
Mission  Innovation  organised  back-to-back  with  the  Clean  Energy  Ministerial95  provide 
major opportunities for accelerating investments into clean energy innovation.  

The  EU’s  global  leadership  on  clean  energy  and  climate  is  embedded  in  its  other 
international objectives. Climate change acts as a ‘threat multiplier’, contributing to global 
instability  and  large-scale  migration  flows.  Conversely,  clean-energy  investments  in  partner 
countries  create  opportunities  for  pioneering  European  low-carbon  industries,  which  EU 
action seeks to maximise.  

The EU is seeking new ways to align trade and climate objectives.  For example, the EU-
Japan  Economic  Partnership  Agreement  is  the  first  in  the  world  to  include  a  specific 

92 The figure shows that the total contribution to climate mainstreaming is expected reach 19.3 % in 2018. The 
figure is revised every year. 
93 https://ec.europa.eu/commission/sites/beta-political/files/communication-modern-budget-may_2018_en.pdf. 
94 https://ec.europa.eu/energy/en/data-analysis/energy-prices-and-costs. 
95 http://www.cleanenergyministerial.org/ 

22 

 
 
                                                           
commitment  to  the  Paris  Agreement.  In  the  area  of  bilateral  trade  and  energy,  the  EU  also 
agreed in 2018 on an ‘energy and raw materials’ chapter with Mexico and continues to insist 
on such chapters in ongoing free trade agreements negotiations with important energy and raw 
materials countries, such as Australia, Azerbaijan and Chile.  

Addressing  emissions  from  international  aviation  and  maritime  transport  remains  a 
challenge  considering  the  projected  emissions  growth  linked  to  traffic  increase.  In 
October 2016, the International Civil Aviation Organisation agreed on the development of a 
global  market-based  measure,  CORSIA96,  as  an  initial  step  aimed  at  offsetting  emissions 
beyond  2020  levels  from  2021.  In  the  maritime  sector,  the  International  Maritime 
Organisation  adopted  an  initial  strategy97  in  April  2018,  on  reducing  greenhouse-gas 
emissions  from  ships  by  at  least  50 %  by  2050  compared  to  2008  levels.  For  both  sectors, 
these essential steps towards decarbonisation will need to be secured. 

The  EU’s  international  engagement  has  contributed  to  the  Energy  Union  objective  of 
diversifying Europe’s sources of energy and ensuring energy security. The EU maintains 
a regular energy dialogue with key energy suppliers and partners — both bilaterally (Norway, 
the U.S., Iran, Algeria, Egypt and Turkey) and through multilateral platforms (e.g. OPEC, the 
Union for the Mediterranean, the G7 and the G20). 

On  gas  supply,  the  European  Commission  has  facilitated  several  rounds  of  trilateral  talks 
between  Ukraine  and  the  Russian  Federation  aimed  at  ensuring  the  uninterrupted  transit  of 
natural gas from Russia via Ukraine. The first deliveries of natural gas via the Southern Gas 
Corridor are expected to start next year, as a result of the EU’s consistent engagement with all 
the relevant partners and project stakeholders. The European Commission has also supported 
the  efforts  of  eastern  Mediterranean  countries  to  explore  common  solutions  to  bring  their 
significant gas resources to the market. The European Commission also remains committed to 
supporting  the  region’s  development  into  a  natural  gas  hub  and  a  future  provider  of  natural 
gas  to  the  EU.  It  will  continue  its  policy  aiming  at  further  diversification  of  supply  sources 
and  transport  routes  as  well  as  strict  implementation  of  the  energy  acquis  throughout  the 
territory of the Union.  
The European Commission has followed up on its  strategy of 201698 to ensure that the 
EU becomes an even more attractive destination for global liquefied natural gas (LNG) 
supply, helping it to play a crucial part in our diversification efforts. The EU is pursuing close 
exchanges  on  all  energy  policy  issues  with  our  major  partners,  and  in  particular  the  United 
States;  both  the  United  States  and  the  EU  have  taken  concrete  steps  to  increase  imports  of 
competitively  priced  United  States  LNG  to  the  EU.  Since  the  meeting  between  President 
Juncker  and  President  Trump  of  July  201899,  the  LNG  trade  relation  has  intensified,  with  a 
total  of  almost  9  billion  cubic  metres  as  of  end  of  March  2019100  imported.  A  high-level 

96 Carbon Offsetting and Reduction Scheme for International Aviation. The agreement sets out (i) the objective 
to stabilise emissions at 2020 levels by requiring airlines to offset the growth of their emissions,  (ii) key design 
elements of the global scheme, and (iii) a roadmap for the completion of the work on implementing modalities 
— see https://ec.europa.eu/clima/policies/transport/aviation_en. 
97 http://www.imo.org/en/OurWork/Environment/PollutionPrevention/AirPollution/Documents/Resolution%20
MEPC.304(72)_E.pdf. 
98 EU strategy for liquefied natural gas and gas storage, COM(2016) 49 final, 16 February 2016. 
99 European Commission Press Release: EU-U.S. Joint Statement of 25 July: European Union imports of U.S. 
Liquefied  Natural  Gas  (LNG)  are  on  the  rise.  Brussels,  9  August  2018.  URL:  http://europa.eu/rapid/press-
release_IP-18-4920_en.htm. 
100 http://europa.eu/rapid/press-release_IP-19-1531_en.htm. 

23 

 
 
                                                           
conference on LNG under the EU-U.S. Energy Council will be held on 2 May 2019 to further 
enhance business-to-business contacts.  

The EU has continued to help countries in its neighbourhood to modernise their energy 
sector. Through the Energy Community, the EU has continued to assist the contracting parties 
to  adopt  the key  elements  of the  EU’s energy  and climate  acquis.  An update of the  Energy 
Community Treaty is ongoing. 

Ensuring nuclear safety beyond the borders of the European Union has also been a key area of 
attention  for  the  European  Commission.  Stress  tests  have  been  organised  in  the  EU’s 
neighbourhood, as the ones carried out  on all EU reactors, and will continue to  be pursued. 
The stress test carried out by Belarus was peer-reviewed by EU experts.  

On  civil  nuclear  cooperation,  the  EU  has  successfully  continued  to  advance  its 
cooperation with Iran, in line with the Joint Comprehensive Plan of Action. In this context, 
the  EU  aims  to  foster  cooperation  —  to  understand  better  Iran’s  civil  nuclear  needs  and  to 
gradually  increase  confidence  in  Iran’s  nuclear  programme  —  and  broader  long-term 
reengagement  with  Iran.  The  EU  has  launched  several  actions  to  support  this  process, 
particularly in nuclear safety and in support of Iran’s Nuclear Regulatory Authority. The EU 
also  recently  organised  the  third  EU-Iran  high-level  seminar  on  international  nuclear 
cooperation and nuclear governance. 

The EU has further expanded its international cooperation with international partners 
on carbon markets, working closely with China to support the start and development of their 
nation-wide  system,  but  also  with  New  Zealand  and  California.  The  first  Emission  Trading 
System linking Agreement was signed and concluded between the EU and Switzerland.  

The EU recognises the importance of sustainable and clean energy for development and 
global stability. For this reason, the EU is continuously building up its support for access 
to  sustainable  and  affordable  energy.  In  the  current  Multiannual  Financial  Framework 
2014-2020,  EUR  3.7  billion  has  been  earmarked  for  sustainable  energy.  Two  challenges  of 
tremendous significance must be faced simultaneously: the challenge of access to energy and 
the  challenge  of  climate  change  mitigation  and  adaptation.  Given  the  significance  of  these 
challenges,  the  EU  is  also  focusing  its  efforts  on  supporting  the  governance  of  the  energy 
sector  and  on  providing  innovative  financial  mechanisms  to  leverage  private  investments  in 
sustainable  energy.  These  innovative  financial  mechanisms  include  the  European  External 
Investment  Plan.  Under  the  new  Africa-Europe  Alliance  announced  in  September  2018,  a 
joint  Africa-Europe  high-level  platform  for  sustainable  energy  investments  was  launched  in 
November  2018.  This  high-level  platform  will  be  contributing  to  the  African  led  ‘Africa 
Renewable Energy Initiative’. 

As  action  by  governments  alone  is  insufficient  to  reach  global  climate  targets,  the  EU 
engages with global civil society, the private sector and local and regional governments 
to  help  them  mobilise  for  climate  action.  For  example,  the  European  Commission  has 
supported the development of the Global Covenant of Mayors for Climate and Energy since 
its creation in 2017. So far, 9 296 cities, representing more than 808 million people worldwide 
and  10.59%  of  the  total  global  population,  have  committed  to  the  Global  Covenant.  Such 
actions  not  only  mobilise  commitments  by  cities,  they  also  facilitate  investment  in  urban 
climate and energy plans by replicating on the global level solutions that have been pioneered 
in the EU.  

Box: further strengthening the euro’s global role in the energy sector 

The  EU  is  the  world’s  largest  energy  importer  with  an  annual  energy-import  bill  averaging 
EUR 300 billion over the last 5 years. It therefore has a strategic interest in promoting the use 

24 

 
 
of the euro in the energy sector. This would reduce the exposure of European companies to 
currency and political risks. It would also reduce costs and risks for European businesses, and 
reduce interest rates paid by households. 

This  can  only  happen  if  there  is  a  joint  effort  from  the  EU,  Member  States,  market 
participants and other players. For this reason, in December 2018, the European Commission 
adopted  a  recommendation101  to  promote  the  wider  use  of  the  euro  in  international  energy 
agreements  and  transactions.  The  European  Commission  has  also  launched  a  series  of 
consultations with stakeholders on the market potential for a broader use of euro-denominated 
transactions, including those related to crude oil, gas or refined products. 

V. 

CONCLUSIONS 

Creating  the  Energy  Union  has  required  close  cooperation  between  the  EU  institutions, 
Member  States  and  all  segments  of  society.  It  has  made  a  significant  contribution  to 
strengthening  Europe’s energy security. This was achieved  through interconnecting national 
renewables,  
markets, 
implementing  energy  efficiency  measures  and  promoting  an  enabling  environment  for 
investment.  These  efforts  need  to  be  maintained  to  ensure  Europe’s  energy  security  and 
competitive energy prices.  

further  diversifying  energy 

sources,  deploying 

indigenous 

To deliver on its economic potential and promote climate neutrality, the Energy Union 
must now be firmly rooted on the ground. The implementation of the new legal framework 
and the enabling actions are attracting investments that will develop Europe’s entire economy 
and create jobs and promoting inclusive growth. These efforts must now be redoubled to reap 
further benefits. The transition must be fair and socially acceptable. Social implications of the 
process must be at the centre of policies from the outset.  

Between now and 2030, the ongoing iterative dialogue between Member States and the 
European  Commission  over  National  Energy  and  Climate  Plans  will  be  critically 
important. This dialogue will help to find collective solutions, foster mutual support among 
Member States, and involve all stakeholders. This will ensure that the EU jointly delivers on 
its  commitments.  Following  the  assessment  of  the  draft  National  Energy  and  Climate  Plans 
submitted by Member States, and the recommendations issued by the European Commission 
by  30 June 2019,  Member  States  will  adopt  their  final  plans  before  31 December 2019.  The 
next ‘State of the Energy Union’ report will be published before October 2020. By then, this 
report will be in a position to emphasise progress delivered through the implementation of the 
agreed  legislative  framework,  and  new  developments  on  enabling  actions.  Reviewing 
progress and adapting dynamically to new developments will remain important. 

Integrating and innovating in all economic sectors, and promoting consistency between a 
wide  range  of  related  policies  and  various  scales  of  action,  will  be  more  essential  than 
ever.  This  approach  —  including  energy;  climate  mitigation  and  adaptation;  air  quality; 
digital  technologies;  industry;  transport;  land;  agriculture;  social  issues;  security;  and  many 
other  issues  —  needs  to  be  fostered  at  European,  national,  regional,  and  local  level.  It  will 
equip  the  EU  to  deal  with  future  challenges,  such  as  digitisation,  consumer  empowerment, 
and the development of flexible electricity markets that can cope with high shares of variable 
renewables. 

101 Commission recommendation of 5 December 2018 on the international role of the euro in the field of energy 
(C(2018) 8111 final), 5.12.2018. 

25 

 
 
                                                           
to 

foster  cooperation,  create  complete 

The  European  Commission  needs  to  continue  to  engage  citizens,  local  authorities  and 
industry 
industrial  value  chains  and 
strengthening  urban  innovation  and  investment.  In  particular,  securing  the  necessary 
funding  will  be  key  —  the  financial  sector  in  the  EU  has  the  potential  to  deliver  the 
yearly investment needs of almost EUR 180 billion to achieve the EU’s climate and energy 
targets by 2030. It will be essential to secure stable, long-term funding over many years and to 
ensure that this funding meets the needs of the Energy Union.  

The EU needs to maintain and step up its  leadership role in global climate and energy 
action, while providing energy and climate security to all its citizens.  It will therefore be of 
the utmost importance to continue strengthening the enabling framework, facilitate the energy 
transition, and create the right conditions for a climate-neutral economy.  

The EU’s strategic long-term vision for a prosperous, modern, competitive and climate-
neutral  economy  by  2050  will  be  essential  to  give  a  clear  direction  to  the  further 
development of the Energy Union. The proposal put forward by the European Commission 
shows  the  direction  of  travel  towards  a  climate-neutral  and  modern  economy.  It  underlines 
once  again  the  importance  of  the  EU’s  wide-ranging  enabling  framework  to  attain  climate-
neutral status by mid-century. This framework promotes favourable conditions on finance and 
investment through internalising externalities, a consistent research and innovation agenda, a 
just transition for regions, economic sectors, and the general public, and a full use of relevant 
policies, including the EU’s budget, employment and cohesion policies. 

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