Debate: State of the Energy Union
Date: WEDNESDAY, 8 NOVEMBER 2023
Speaker: Kadri Simson
Language: EN

2022 was a watershed year. Europe’s energy system was shaken by an unprecedented energy crisis triggered by the Russian war against Ukraine. Changes happened at a fast pace. The state of the energy union report provides a rich set of data to look back at last year’s events and assess their impact. As usual, the main document is accompanied by specific reports on key topics, such as the progress in implementing the national energy and climate plans, climate action progress, progress on competitiveness of clean energy technologies and energy subsidies. This year, we have placed a particular focus on clean technologies and we presented at the same time of the report, the wind power package – a plan with concrete actions to support the resilience of the wind power sector in Europe. Looking back, the state of the energy union report shows that the EU responded effectively to the energy crisis. The REPowerEU agenda has worked well and helped avoid the worst effects of the crisis. By acting together in solidarity and unity, we managed to drastically reduce our dependence on Russian fossil fuel imports by completely phasing out imports of Russian coal, reducing our dependence on Russian oil by around 90%, and reducing imports of Russian gas by 75% between March 2021 and March 2023. Between August 2022 and August 2023, gas demand went down by more than 18% compared to the previous five-year average. Gas storage facilities were filled up to 95% ahead of last winter, playing a key role in preventing market disruptions. We have diversified our energy supplies towards more reliable, non-Russian suppliers – also through the EU energy platform created in April 2022. The crisis forced us to give priority to energy security, but this did not derail progress on the clean transition. EU greenhouse gas emissions decreased by around 3% in 2022, continuing the downward trend of the last 30 years. If all Fit for 55 measures are implemented, we will be on track towards the EU’s 2030 target of cutting greenhouse gas emissions by 55% – and possibly even surpass it. The installation of renewable energy capacities increased by 47%. In 2022, for the first time, more electricity was produced from wind and solar than from gas-fired power plants. In 2022, sales of heat pumps rose to unprecedented levels, with an increase of 39%. The sales of electric vehicles went up by 28% compared to 2021. In 2021, the EU’s primary and final energy consumption were 3.2% and 1.8% respectively lower than in 2019 – despite the COVID crisis recovery. Even with some headwinds, investments in the clean tech industry have shown a stronger resilience than many expected. And on the legislative side, key Fit for 55 initiatives were adopted, sometimes with an even higher ambition than their original proposals, in line with REPowerEU. For instance, the EU agreed higher 2030 targets for renewable energy and energy efficiency. In short, the state of the energy union report shows that despite the energy crisis, the EU delivered on its commitment to climate action and fast tracked its clean transition. But this 2023 report is not only important for what it says about our past actions – it is valuable because it points us to where we need action ahead of next year’s European elections. Let me mention five lessons we can draw from this report. First, Europe is today better prepared and has stronger crisis management tools than one year ago. Yet we remain exposed to energy shocks. A crisis in the Middle East, with markets still fragile due to the effects of the Russian war, could have wide-ranging impacts. Likewise, any incidents on key energy infrastructure may rapidly affect the sentiment of very nervous energy markets. This means that we must continue our diversification efforts and we must keep a vigilant posture, pursuing prudent policies. While we are integrating some crisis response tools into our long-term legislative framework, we should consider continuing the temporary emergency regimes introduced in 2022. These have been essential last year to go safely through the crisis – and I am referring here to the regulations on gas solidarity, on the market correction mechanism and on the permitting for renewables. Second, we must not lose momentum on renewables. For that, we need to focus on implementation. One of the key bottlenecks to make grids fit for a decarbonised energy system lies in the time needed to reinforce and expand them. That’s why, after the wind power package, I will propose an action plan for grids at the end of this month. It will include measures to address barriers – including regulatory, financial and permitting issues – and ensure better, smarter use of existing grids. Third, investors and industry need now clarity on how Member States will translate the new energy and climate targets and objectives into concrete national measures and which public funding can be leveraged. Timely, updated national energy and climate plans are key here, and only 21 Member States have so far submitted the draft updated plans, which were due by June this year. So it is urgent that Member States who have not done so deliver their plans. Fourth, we need to preserve Europe’s position in the ongoing clean technology race. We are in a good position in a number of technological sectors, but we need targeted attention to areas like wind, some parts of solar industry, cables and products for energy-efficient buildings. In the hydrogen sector, we need to push industry to move from plans on paper to final investment decisions. Skills and venture capital investment are also key areas of vulnerability across the board. Therefore, reaching an agreement on the necessary infrastructure before the end of the parliamentary term would be very important. Reinforcing competitiveness will also go hand in hand with reviewing energy subsidy schemes. Last year, the report shows, fossil fuel subsidies increased significantly to shelter consumers and industry from surging prices and it is very important that these costly subsidies are progressively scaled down. Let me conclude with the final point on energy poverty. Last year, around 40 million people were unable to keep their homes warm enough. This is nearly 10% of the EU’s population, a sharp increase from just under 7% in 2021. This winter will bring again anxiety and concerns for many more citizens. We need to take swift and targeted action to address the underlying root causes of energy poverty. Over the past year and a half, the Commission has taken many steps to protect consumers and we need to continue. I have presented two weeks ago a recommendation on energy poverty, and on the same day, Commissioner Reynders and I welcomed the renewal of the joint declaration signed by key stakeholders in the energy sector. And this declaration helps to protect vulnerable consumers from disconnection until the entry into force of the electricity market design. Honourable Members, this Parliament and this Commission started the mandate with a strong commitment to tackle energy, climate and environmental challenges. The 2023 state of the energy union report shows that despite a unique set of challenges, we stayed the course. We jointly achieved what we set out for and we are on the correct trajectory. I want to pay tribute to you, honourable Members and the work of this Parliament and the clean energy transition, but let’s not be mistaken: the coming months will be challenging. We have now seven months before the European elections, and let’s work together to close the open legislative files in the field of energy, ensure robust crisis preparedness and leave, at the end of this mandate, the EU on the right trajectory to achieve its 2030 targets. And now I’m looking forward to hearing your views.