The EU Commission as a Global Energy Player | IIEA
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The EU Commission as a Global Energy Player

Introduction

On Monday, 13 November 2023, in the fifth instalment of the 2023 REthink Energy series, co-organised by the IIEA and ESB, Ditte Juul Jørgensen, Director General for Energy of the European Commission, reflected on the role of the European Commission as a Global Energy player. The EU has introduced far-reaching measures in the field of energy and within the auspices of the European Green Deal, including the Union’s ambitious plan for a green transition in the form of the Fit--for-55 package, the REPowerEU plan to promote energy saving, the EU’s Next Generation COVID-19 recovery programme, and more.

The European Green Deal

The primary objective of the European Green Deal is to achieve climate neutrality in the European Union by 2050, coupled with a commitment to reduce greenhouse gas emissions by at least 55% by 2030. The Green Deal has gained added significance following the Russian full-scale invasion of Ukraine in 2022, notably through the implementation of the REPowerEU plan, which is intended to wean the EU off Russian oil, gas, and coal.

Given that the energy sector is responsible for approximately two-thirds of the EU’s carbon emissions—be it from production or consumption—it is clear that the European energy system required an overhaul even before the onset of the war in Ukraine. The desired transformation is facilitated through the "Fit for 55" package which is designed to establish an optimal regulatory framework for the EU’s energy system. It does so by incentivising and facilitating the changes in the energy system that are necessary to bring the European Union in line with its ambitious climate targets and to expedite the shift towards a more sustainable and low-carbon economy. The far-reaching package includes updates to the Renewable Energy Directive (RED) and the Energy Efficiency Directive (EED), the introduction of the Energy Performance and Buildings Directive (EPBD), clarification around the rules regarding the production and usage of green hydrogen, and the establishment of guidelines for a market transition towards decarbonised gas.

The Energy Crisis

During her address, Ms. Jørgensen highlighted the European Commission's strategic response to the ongoing energy crisis, emphasizing the need for a transformative shift to achieve climate neutrality. The REPowerEU plan, introduced after the Russian invasion, focuses on reducing reliance on Russian fossil fuels structured around three key pillars:

  1. Reduction of consumption
  2. Acceleration of renewable energy deployment
  3. Diversification of energy supplies and routes

In 2023, the EU has set a renewable energy target for 2030 to a minimum 42.5%, up from the previous 32% target, with the aspiration to reach 45%.

Key achievements of the REPowerEU Plan:­

Ms. Jørgensen emphasised that throughout the first year of the crisis following the Russian invasion of Ukraine in February 2022, significant milestones were achieved, and the EU was better prepared for upcoming winters. These included:

  • Demand Reduction, through the introduction of efficiency measures which led to an 18% reduction in demand for natural gas in 2022, with an anticipated 21% savings in 2023 compared to the preceding 5 years.
  • Reduced dependency on Russian gas, as the EU successfully reduced the proportion of Russian gas in the energy mix from 45% before the war to about 24% in 2022.
  • Diversification and Replacement, whereby the EU managed to replace Russian gas with other sources, primarily benefiting from a significant increase in pipeline supplies from Norway and other regional suppliers.

Renewable Energy

Under the REPowerEU initiative, the EU has expedited the installation of renewable energy technologies and infrastructure, with 2022 witnessing the addition of some 58 gigawatts to the EU’s overall energy capability. This translates to approximately 12 billion cubic metres of gas, amounting to a significant dent in fossil fuel consumption. What is more, wind and solar now account for some 22% of EU electricity, surpassing natural gas for the first time. The Commission projects a further increase of renewable energy in 2023, replacing an additional 13 billion cubic metres of natural gas.

Ireland's Green Transition: Targets and Actions

While Ireland has not been heavily reliant on Russian gas compared to most countries in mainland Europe, the country has undertaken substantial efforts to curtail consumption, which has contributed to both Ireland's energy security as well as to broader EU objectives. Ireland has established ambitious sectoral carbon budgets and has increased its renewable electricity target from 70% to 80% by 2030—objectives that surpass EU targets.

Next Steps towards Climate Neutrality

Electricity Market Design: The objective of the EU’s Electricity Market Design is to make consumers’ energy bills more independent from short-term fluctuations in the market. This entails decoupling electricity prices from gas prices through measures including long-term stable pricing arrangements, including power purchasing agreements and contract-for-difference arrangements with state aid.

Green Deal Industrial Plan and the Net Zero Industrial Act: Amid concerns about the impact of high energy prices on businesses, measures are being implemented to strengthen European competitiveness. These initiatives intertwine sustainability with economic resilience, ensuring stable supply chains, securing critical raw materials, and advancing key technologies.

Wind Power Action Plan: This plan addresses permitting constraints of wind power plants, improves auction systems, facilitates access to finance, and seeks to establish a level playing field for the wind sector.

COP 28

Recognising the pivotal role of the energy sector in addressing climate challenges, Ms Jørgensen highlighted two key priorities for the EU at COP 28, which took place in November-December 2023, namely:

  • The Global Pledge for Renewable Energy and Energy Efficiency
  • Methane Emission Reduction

COP 28 was regarded by the EU as crucial, not only in addressing the climate crisis but also in fostering partnerships for global energy security. During her remarks, Ms Jørgensen stressed that the fight against climate change is a shared global responsibility, demanding commitments and tangible actions from countries, governments, international organisations, citizens, and companies alike.

Key Takeaways:

  1. Ongoing efforts are needed: Despite notable achievements in reducing natural gas demand, diminishing Russian gas dependency across the EU, and the rapid diversification of energy sources, ongoing efforts are crucial across the EU to meet the 1.5-degree target and to advance renewable energy for a more sustainable future.
  2. Effective implementation of Fit for 55 is still to be achieved: Ms Jørgensen highlighted that while the EU has a comprehensive regulatory framework now, the EU needs to ensure the effective implementation of regulatory updates, providing the necessary incentives for businesses and individuals to embrace a low-carbon lifestyle.
  3. Enhancing competitiveness: It is crucial to ensure that the economic benefits of the ongoing energy transition are harnessed to bolster EU competitiveness, particularly in the green technology sector.
  4. Global collaboration for climate action: Active participation in international collaborations, as seen in COP 28 commitments, will continue to be essential.
  5. A just transition: The energy crisis has taken a toll on households throughout the EU, which highlights the importance of a just transition. It is imperative to ensure that everyone can access and enjoy the advantages of more affordable and cleaner energy.