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Günther H. OETTINGER EU Commissioner for Energy Energy challenges of the next ten years – the need for a European common policy Speech by Commissioner Oettinger at Stakeholder Conference on preparation of Energy Strategy 2011-2020 Brussels, 30 September 2010

Commission Européenne - SPEECH/10/504   30/09/2010

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SPEECH/10/504

Günther H. OETTINGER

EU Commissioner for Energy

Energy challenges of the next ten years the need for a European common policy

Speech by Commissioner Oettinger at Stakeholder Conference on preparation of Energy Strategy 2011-2020

Brussels, 30 September 2010

Ladies and Gentlemen,

The consultation we had earlier this year on energy strategy confirmed that our energy policy has strong support. Businesses, Non-Governmental Organisations, local and regional authorities, consumer organisations, and individuals all called for new dynamism in Europe's energy strategy. They want us to implement European policies and rules more fully. And they want a longer term vision – 2020 and looking forward to 2050.

I would like to thank all of you who took part for your contributions.

Europeanisation of energy policy

Another clear message from the consultation is the need to act together. Just one example: a recent speech on energy policy by Secretary Huhne, my UK colleague mentioned Europe more than 30 times!

All indeed recognise that the right level of intervention is at least the European Union. The challenges facing us are too overwhelming to be resolved by one Member State. The unpredictability of energy security, the volatility in energy prices and the delays in new technology and infrastructure investments call for decisive action.

The Europeanisation of energy policy has already started.

1. We have clear policy goals in terms of competitiveness, security of supply and sustainability. These are now laid down in the Lisbon Treaty and reappear in the national energy goals of Member States and Europe's regions.

2. We have the legislation to create an open and competitive European energy market. The adoption of the third internal energy market package last year was a major step forward. The European Networks of Transmission System Operators for gas and electricity have already started work, and we have demanding expectations from ACER, the Agency for the Cooperation of Energy Regulators.

3. Our 2020 initiative, together with last year's Renewables and Emissions Trading Directives, has created an unprecedented push to renewable and low–carbon energy in all Member States. The 2020 energy and climate targets are now part of the Europe 2020 Economic Strategy, and its flagship initiative “Resource efficient Europe", adopted by the European Council in June.

This is however not enough.

  • The internal market is still far from being integrated and competitive. As companies grow beyond national borders, their development is still constrained by a collection of different national rules and practices.

  • If the 20% target for renewables is well on track, the objective set for energy efficiency is far from being achieved.

  • Despite recent serious external supply crisis that acted as a wake up call as to Europe's vulnerability, there is still no common foreign approach towards partner supplier or transit countries.

And I could continue this list…

The energy challenge is indeed one of the greatest tests for Europe. Unlike the financial crisis, it could take decades to put our energy system onto a new, more sustainable and secure path. We need urgent and ambitious decisions today to prepare our society for a low-carbon, efficient and democratic energy future.

This is why we are here today. To make sure that the European energy strategy for 2020 is well prepared, well understood and well implemented.

Four guiding principles

Four key principles should guide our way:

1. First, we are not reinventing energy policy. The new strategy must build on what we have achieved in the last years, notably on the basis of the energy and climate package.

2. Second, we stick to our longer term vision of a largely decarbonised economy by 2050. Many decisions between now and 2020 will shape our 2050 energy mix. We must not lose this perspective.

3. Third, we do not intend to spring surprises. Major investment decisions of radical strategic importance need to be taken in the coming years. Parts of the EU could lose more than one third of their generation capacity before 2020, while the demand for electricity is growing. Enthusiasm for renewable energy has been hard hit by the economic crisis. New gas import networks will be needed to replace falling domestic output and diversify supply. The new strategy must create the confidence and stability to underpin these investment decisions.

4. Finally, we will learn from the lessons of the past. On energy efficiency, National Energy Efficiency Action Plans have been discouraging, leaving vast potential untapped. The move towards renewable fuels in transport is also happening too slowly. On technology, we are losing pace. The independent 2010 Renewable Energy Attractiveness Index now cites the US and China as the best investment opportunities for renewable energy. Internationally, global energy markets are becoming tighter, with developing Asian countries and the Middle East accounting for most of the growth in global demand. Yet the EU still hesitates to commit itself to a coherent and common external voice.

To reach our 2020 ambitions, we need to be bolder, more effective and more ambitious than ever before. We need to mobilise every sector and social group and we need to reassert our international leadership in sustainable energy and energy market reform.

Five priorities

The strategy I am preparing will be debated by the Commission early November. Based on your many contributions, I see five priorities:

1. First and foremost, I want to put the spotlight on demand. In this way, we involve everyone, as everyone is an energy consumer.

  • Energy efficiency has been an element of Europe's energy programme for over 30 years. But over this period we have failed to make any major structural changes. The 20 % target for efficiency is a major source of concern.

  • We need to create a new market for energy efficiency, and a new grass-roots demand for energy saving equipment and services. Average energy savings per household can amount up to € 1000. Time has come to deliver on this to EU citizens.

  • My first priority therefore will be to put in place a new Energy Efficiency Action Plan. The question is not simply whether it would help to make the 20% target compulsory. It is rather what we mean with 20% savings, where can it best be achieved, which tools are needed at EU level (including financial) and to what extent can we achieve more.

2. Second, I want to improve conditions for investments in low-carbon energy so we can look forward to a real energy revolution. Over the next 20 years, we will need around one trillion euros worth of investments in the energy sector. As well as replacing large parts of our power generating capacity, we need to completely renew our electricity networks to cope with a much larger renewable production, and more decentralised power production. We need to build new import pipelines such as Nabucco to diversify and strengthen our gas supply.

  • I also want to push our economy towards the cleanest and most efficient energy technologies, for supply and consumption. We need to develop and install a new generation of technologies, from offshore wind and smart grids to Carbon Capture and Storage and second generation biomass. This should deliver the drastic reduction in greenhouse gas emissions which we have promised, while ensuring Europe's competitiveness.

  • Coming out of a recession is not the best time to expect investments in new technologies and new networks. But we have no choice. In fact, low-carbon investments will create the jobs, businesses, skills and confidence that will get us on a solid growth path again. To help drive the investments we need, I would like to establish a new method for European infrastructure development, identifying the concrete projects necessary for:

  • our internal market to deliver on competition and quality,

  • large scale production of renewables such as wind or solar parks to get their way to the consumers on a competitive basis,

  • EU-wide solidarity that will ensure delivery in case of disruption (resulting from unexpected demand, physical breakdown or political games),

  • our grid to become "intelligent" in order to accommodate new demand such as e-cars and provide energy efficient solutions.

  • It is about time Energy is given comparable pan-European infrastructure, as other sectors of public interest such as telecommunication and transport are enjoying for a long time.

  • Beyond the full use of the current regulatory framework, a new infrastructure instrument should allow us to define "networks of European interest", building on the strength of regional projects. Such strategic links would enjoy swift authorisation procedures and attractive financing.

3. Thirdly, Europe's lead in technology should be extended. I would like to develop a European framework which encourages Member States and regions to maximise their efforts to accelerate market intake of technologies. Europe has some of the world's most renowned renewable energy companies and research institutions. We need to keep this leadership.

  • Beyond the implementation of the Strategic Energy Technology Plan, we should launch a few large scale European projects such as on storage, second generation biofuels and smart grids.

4. Fourthly, I want to bring the consumer onto our side. We need to improve the implementation of the internal energy market and make sure that consumers get a good deal. We also need to reassure individuals that our energy systems are safe. Safety of oil and gas production and transport must be guaranteed. We must never have an accident like Deepwater Horizon here. And we need a realistic picture of the future of nuclear energy, which currently generates around one third of EU electricity and two-thirds of EU carbon-free electricity. The EU must continue to work for high standards of safety, security and non-proliferation of nuclear both in Europe and internationally.

5. Fifthly, it is time for the EU to strengthen the external dimension of the internal market.

National sovereignty in energy is no longer an option when we have a single internal energy market, stretching from the Balkans to Scandinavia, from the Baltic to the Mediterranean. Energy independence is a chimera when gas can move around Europe from Greece to Ireland. The energy security of every Member State will be stronger and cheaper when the EU learns to speak with a single voice and leverage its real power.

Conclusion

Continuity, but innovation. Stability, but stronger, bolder, better prioritisation. Actions, not words. This is what you have told us you want. And this is what we will do in our new strategy.

European cooperation in energy is not yet fully mature. But further integration in energy policy really is the only way forward. It has started working for renewables policy, for the internal market, emergency situations, such as the gas crisis in January 2009. Now we need to make it work continuously across the whole energy spectrum, across the whole economy and for the longer term.

This strategy is very much about the actions to be undertaken in the coming eighteen months to realise our 2020 goals. We should not lose sight of the longer term. Our 2050 overall decarbonisation goals are clear in terms of emission reduction. What is needed is to qualify the actions to be taken around clearly identified milestones in order to ensure that all three energy objectives will be met: sustainability, competitiveness and security. I have seen several scenarios which suggest that this is not only technically feasible, but would indeed make us more competitive. I would like to explore the next steps in an Energy Roadmap for 2050. For this I will start a consultation in November. Your contribution will be critical.

Ladies and Gentlemen, let me thank you again for your ideas and critical comments which allow us to prepare this important 2020 milestone. It comes in time for the special European Council in early February. No doubt that together with the continuous support of the European Parliament, Heads of State and Governments will give us the necessary political momentum to achieve a breakthrough. The task will indeed be immense but the rewards considerable for our future well being and prosperity.

Thank you very much.


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