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Brussels, 1 February 2011

Energy policy - key issues for the European Council

Energy policy is crucial for the Union's security and economic success. Growth and jobs depend on safe, secure, sustainable and affordable energy supplies. To set the EU firmly on a more secure and sustainable energy path for the future, EU leaders must urgently take a number of critical decisions.

Therefore, the European Council of 4th February comes at a highly opportune moment. Over the last year, the European Commission has set the scene for a future-oriented EU energy policy that delivers to citizens and businesses, notably with its Energy 2020 strategy (IP/10/1492) and the Communication on infrastructure (IP/10/1512 and MEMO/10/582). These ideas will serve as a basis to this week’s debate. The EU adopted visionary energy and climate objectives in 2007. Now is the time to further develop its toolbox to reach the objective of safe, secure, sustainable and affordable energy.

Three areas are of particular importance:

1. Completing the European Energy Market:

The Commission is working hard to ensure the realization of a truly integrated European energy market – the bedrock of a functioning European energy policy. The current fragmentation of markets must be overcome to ensure tangible solidarity and security of supply between Member States and to enable consumers and companies to reap the benefits of choice and competition. For instance, the effects of the gas crisis of 2009 would have been much less harmful had the appropriate infrastructures and a well-functioning internal energy market been in place at that time. Moreover, the capacity to develop renewables more cost-efficiently and to feed them into the electricity grid requires a functioning continental market.

The Commission will in particular press for the following deliverables:

  • Completion of the Internal Gas and Electricity market by 2014. The national regulatory bodies, the European Agency for the Cooperation of Energy Regulators and the European Networks of Transmission System Operators will have to speedily deliver, in particular as regards :

  • the decisions on grid codes for transmission of electricity and gas,

  • the removal of national technical barriers,

  • the setting of tariffs at levels consistent with financing needs.

  • Agreement on key priorities for infrastructure links. No Member State must remain an island in the electricity and gas networks by 2015. Also, Member States should streamline procedures for construction permits and the provision of public funds for infrastructure deemed of European interest in case of market failures. Before the summer, the Commission will table ideas on infrastructure financing including innovative solutions addressing the shortfall in equity and debt financing.

2. Innovative solutions for efficient and sustainable energy use:

Energy efficiency measures have enormous potential for both security of supply and sustainability. However, progress in Member States on this front remains insufficient. It would fall short of the 20% savings target if business as usual continued, and would fail to bring the expected benefits for competitiveness and lower emissions.

To jump-start work on energy efficiency, the Commission will present in the coming weeks an action plan on how to reach the objective of a 20 % efficiency gain by 2020. This will include ideas for regulatory improvements as well as for innovative financial incentives. A particular focus will be laid on the energy efficiency of buildings and mobility. Inter alia, the Commission will propose that Member States use the lever of public procurement, which accounts for 16% of EU GDP, around € 1,500 billion annually.

Moreover, we expect the European Council to call for strengthening research in the energy field, notably in the priority areas identified in the Commission’s strategic energy technology (SET) plan (deployment of smart grids, new storage technologies, sustainable bio fuels, energy saving solutions and smart cities).

3. Building the external dimension of the internal market:

The European Union imports more than half of its energy supplies, accounting for 2.5% of its GDP. The diversification of its sources, suppliers and transit routes, the reduction of its overall external reliance and the strengthening of global energy rules are therefore crucial.

Over the last years, the Commission has put special emphasis on the integration of the energy markets and regulatory frameworks with neighbouring countries in the East and in the South, including through the Energy Community Treaty.

Furthermore, we are working on strong partnerships with key hydrocarbon suppliers and the creation of legal and political frameworks for new strategic routes of supply, in particular around the Southern Corridor (gas) and the Southern Mediterranean (solar energy and gas). Work has already started on the creation of a single European interface to negotiate purchase agreements with producing countries. We are equally aligning international agreements with internal market rules and reinforcing energy discussions with key partners at world level. We expect the European Council to provide renewed impetus to these strands of the Union’s external energy policy, including a commitment by Member States to inform the Commission on all new and existing bilateral energy agreements by January 2012.

Following the European Council, the Commission will present a Communication on the EU’s external energy policy.

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