Debate: The Power of the EU – Joint European Action for more affordable, secure and sustainable energy
Date: THURSDAY, 24 MARCH 2022
Speaker: Valdis Dombrovskis
Language: EN

What we are seeing right now in Ukraine is an attack on some of the most important values. We are standing with Ukraine as it fights for its freedom. The war has had a ripple effect on Europe’s energy policy and energy security, and it’s now moving into a new era. It is now clearer than ever that we need to move even faster to reshape our energy system and bring our dependence on Russian energy to the end as soon as possible. We are not starting this work only now. Since 2009, when Russia stopped gas deliveries to Ukraine, we have been working to diversify and secure our energy supplies. Thanks to an adequate regulatory and financial toolbox, we have succeeded in building a dense, well-interconnected and resilient energy network, which has effectively prevented damaging disruptions of energy supply, including under current difficult geopolitical circumstances. For example, we have worked to bring eight new LNG terminals in the EU. And in January of this year, we imported more LNG than ever before. Even so, we are not yet where we need to be, but we believe that this communication gives us the necessary plan to get there. The communication adopted on 8 March has three main pillars. First, REPowerEU, which is our plan to bring down our dependence on Russian fossil fuels well before the end of the decade. Second, on security of supply, immediate measures to improve our gas supply for next winter. And third, on affordability, a set of measures to mitigate the impact of high energy prices on households and companies. So I will go through all three pillars and I will begin with REPowerEU. As I said, the goal of this pillar is to phase out Russian fossil fuels. This is done with a special focus on gas by diversifying our supplies, massively investing in renewables, green hydrogen and boosting energy efficiency. Two weeks ago, EU leaders came together at the Versailles summit and agreed to the key principle behind REPowerEU: we must be in charge of our own energy future. And that means that we cannot let any third country to destabilise our energy markets nor influence our energy choices. This year, we need to reduce reliance on Russian fossil fuels imported through diversification of supplies and greater reliance on LNG and energy savings. Over the next 5 years, and starting already now, we need to speed up our switch to renewables, increase energy efficiency, and develop new clean technologies like hydrogen. Renewables are a perfect solution for Europe. They are home-grown, they create jobs and they support innovation. They are a strategic investment in both our economy and our security and independence. On security of supply, we need to double down our efforts and make sure that we are much better prepared for coming winters. There are two facts about which we are sure. First, we are not yet ready to give up gas entirely. And second, if we continue to use gas as a transition fuel, as much as possible, that gas should come from non-Russian sources. LNG gives us an opportunity here to further diversify. At the same time, we could face an interruption of supply in Europe and we need to make sure that Europe is ready to face that. Right now we are emerging from winter into a relatively mild spring season, so any disruption would not cause any major issues given the current levels of storage in Europe and of imports from alternative suppliers. What we need to do now is start getting ready for the next heating season, by which point it is crucial to ensure that our gas storages are full. We have delivered on this with gas-storage legislation that was adopted as  Having sufficient gas in storage facilities across the EU is a joint responsibility and will benefit everyone. Member States without gas-storage facilities are required to ensure that gas is stored in other EU countries, corresponding to at least 15% of their annual gas consumption. As an alternative option, Member States without storage facilities may instead jointly develop a burden-sharing mechanism with one or more Member States with storage facilities. Furthermore, given the strategic importance of gas storage, we are also proposing an obligation to certify all underground gas-storage operators to avoid potential energy security risks linked to the ownership of the storage facility. Owners of non-certified storage system operators will have to give up their ownership. This legislation is yet another example of how the Commission can deliver at lightning speed what is needed. I know I can count on you and on the Council to ensure a fast-track procedure and get this proposal adopted as soon as possible. In the meantime, Member States will need to start their refilling of storage capacities and the Commission will coordinate this in the coming months. We have already set up a platform to do that. We are also ready to expand its tasks as necessary to create a fully fledged energy task force that could not only coordinate the refuelling process, but also prepare the ground for more structured energy cooperation with key gas suppliers. In parallel we are reassessing scenarios for partial and full disruption of gas flows from Russia next winter to help Member States revise their gas-supply contingency plans and better coordinate their efforts in a spirit of solidarity. What we can see clearly at this point is that there is a need for a more coordinated EU gas policy on buying, storing and responding to any supply disruption. This is also why we have stepped up our work with the Member States in the Gas Coordination Group to reinforce regional cooperation and encourage new solidarity agreements. Beyond diversification, we’re also working full speed to reduce the need for fossil gas in the first place, because fossil fuel markets have been proven to be highly volatile. This includes boosting renewables and energy efficiency, and it means more biomethane and renewable hydrogen, more innovation, heat pumps and solar panels on rooftops. It means getting serious about saving energy, which is one way that everyone can contribute to solving the current crisis. This is only going to work if we remove the barriers that are currently standing in the way of boosting renewables. Permitting is one of the biggest challenges we face. It is simply an issue of practicality. We cannot boost renewables to the scale we need if it takes years and years to authorise a single project. Therefore, the Commission will propose ways to simplify and shorten permitting and authorisation, promote the take-up of corporate purchase agreements and develop a European solar energy supply chain. Third, the pillar of the communication is on affordability. Given the extraordinary circumstances we are now facing, Member States can temporary regulate electricity and gas prices for households and micro—enterprises. The communication comes with detailed guidance on how to design these schemes. The Commission also just adopted a new temporary crisis framework for state aid, offering Member States options to provide short-term relief to undertakings in the light of the Russian invasion in Ukraine, liquidity support in the form of public guarantees and loans, and finally, temporary support to alleviate exceptionally severe increases in the price of gas and electricity. New support measures need sufficient funding, of course. One option is to use ETS revenues. From January 2021 to February 2022, emission trading generated EUR 30 billion for national budgets. Member States also have the possibility to take advantage of windfall profits in the energy sector and tax them. The Commission is looking into all possible options for emergency measures to limit the impact of high gas prices spreading to energy costs for end-users. Concretely, in line with the Versailles declaration, the Commission put forward options for exceptional and short-term measures, and these options will be discussed by the European Council which takes place today and tomorrow. The Commission will also assess options to optimise electricity market design to reap the benefits from low-cost energy. The final report of the Agency for the Cooperation of Energy Regulators, ACER will inform our work on this, as well as other contributions on the functioning of the electricity market. So, honourable Members, these are our proposals in a nutshell. We hope to move very fast on presenting all these proposals and on all legislative proposals under ‘Fit for 55’, and we count on your support. This is part of the solution to make the EU resilient to shocks and less dependent on Russian fossil fuels. We need to be united while facing these challenging times, and if there is one thing that this crisis is showing to us, it is that the EU is more united than ever in responding to Putin and supporting the Ukrainian people. I look forward to hearing your views.