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European Commission - Speech - [Check Against Delivery]

Opening speech of the Vice-President for Energy Union Maroš Šefčovič at the Energy Union Conference, Riga

Riga, 06 February 2015

Maroš Šefčovič - Vice-President for Energy Union

Honourable Minister – dear Dana,

Ministers, Ladies and Gentlemen,

This morning I took a very close look at the list of participants and I was struck by its diversity.

In this room, we have representatives of Member States and representatives of Europe's neighbours. And rightly so, because the Energy Union does not stop at our borders.

We have CEOs and NGOs. We have representatives of trade unions and consumer organisations. We have think tanks and energy associations. We have professors and prosumers. We have Members of the European Parliament and Members of national parliaments …

Madam Minister, you and your team managed to convene a fine group of people who came to Riga today to share their very best ideas with us, so I would very much like to thank you for hosting this event, which is the kick-off of what many in Brussels already now call 'the Riga-process'.

Ladies and gentlemen,

Two days ago we had a very useful orientation debate on the Energy Union in the college of the Commission. It was the first time that all commissioners together had an in-depth discussion on the issue. And I can tell you that there was very broad agreement on the main features of the future Energy Union, an Energy Union that puts citizens at its core, as many commissioners put it.

Because the Energy Union is about ensuring that European consumers can heat their houses without the fear of prices skyrocketing or the supply running out because of geopolitical instabilities around the world. Many cannot, 10% of EU households are energy-poor.

It is about ensuring that our businesses can buy their energy at competitive prices and continue to be a driver for jobs and growth. And many cannot.

It is about ensuring that the leading cutting edge research in renewable energy is European. And often it's not. Just look at the top ten solar companies – none is European.

And it is about building a sustainable future for the next generation.

That's what should be in all our minds when we talk about the Energy Union.

We should do more than just talk about it, we should also act on it. The time to act is now! We have a Commission and a Commission President, committed to deliver. We have a European Parliament – and I spent a lot of time in the Parliament recently - that is dedicated to work on it. We have a European Council President, who I met last week to discuss this topic, for whom Energy Union is a top priority. And we have a geopolitical context – however unfortunate in itself – in which not doing anything is simply not an option.

Some would say: do we still need an Energy Union now that the oil prices are about 50% lower than 6 months ago? Of course we do! We should use the current context, the present breathing space that is a result of lower oil and gas prices is a golden opportunity to reset our energy policy in the right direction and to take the necessary investments now. It is a golden opportunity to encourage EU Member States to reduce costly public financial support to fossil fuels, invest in renewables and low-carbon technologies and end our dependence on external sources of oil and gas.

So whether we represent industry, NGOs, governments, international institutions or just ourselves, we all have an interest in getting this right.

I am convinced that most if not all of you are by now familiar with the five dimensions I propose to establish the Energy Union. I will not repeat them in detail. Let me just illustrate with some telling figures why I think these dimensions are the ones we should focus on.

First: security of supply. We are the biggest energy importer in the world, importing more than €1 billion per day, 3.2% of our GDP. Every year, we import more than €300 billion of crude oil and oil products alone, of which one third from Russia. For electricity, three Member States, including this country, Latvia, are dependent on one external operator for the operation of their electricity network. 27% of the gas we consume in the European Union is imported from Russia, and some of our Member States pay a high price for this, also literally. That's why I always stress the importance of solidarity. Some of our Member States are more vulnerable than others, but in the end energy security of supply concerns every EU country. We need an Energy Union with a solidarity clause.

There are ways to solve it. Through more energy efficiency for instance. If we increase Europe's energy efficiency by 1%, our gas imports will fall by an additional 2.6%. Or through diversifying our supply routes and sources. Or through creating real transparency in long-term gas contracts, an issue to which I attach particular importance.

Security of supply is of course closely linked to our second dimension: to build a single internal energy market in which energy flows freely and in which prices do what they should do: give the right market signals.

To make that happen we need to bring down the technical and regulatory barriers among Member States and strengthen the regulatory framework, and I am happy that the Director of ACER is here to discuss this with us. This, of course, will not happen overnight. As a first step, we should build stronger regional cooperation arrangements, within a European framework. What better place to discuss regional cooperation than here in Latvia, a Member of the Baltic Energy Market Interconnection Plan, a prime example of a successful regional cooperation arrangement!

I already mentioned energy efficiency, the third dimension. We need effective legislation in this field to have a level playing field; we need to make sure that there are enough financial means and that these go projects where they are most needed, including at the local level; and - equally important – we have to better explain why energy efficiency matters. Here also, the figures are telling. By using energy efficient products under the current framework for energy labelling and eco-design, for instance, consumers could save €465 on their energy bills per household per year. There is also a business case. Only by fostering energy efficiency in products we can deliver €55 billion per year extra revenue for businesses with the knock on impact on much-needed jobs and wages.

Energy savings are needed in all sectors of our economy, but let us in particular look at the buildings sector. I know that there are plenty of private investors eager to invest in bringing more energy efficiency to the building sector. I met several of them. At the same time, the needs are high. Buildings energy efficiency has been increasing at only 1.4% per year, a relatively limited rate largely due to low renovation rates.

Fourth element: we have to be unambiguous about decarbonising our economies in Europe. Investors expect this from policy-makers. That's why a strong Energy Union goes hand in hand with a strong climate policy. These are two sides of the same coin. In October, we agreed on a binding target of reducing domestic greenhouse gas emissions with at least 40% by 2030. Europe became a 'climate leader'. We will take up this responsibility and, through a pro-active climate diplomacy, convince major global players to sign up to a binding global agreement in Paris.

Our commitment to becoming a low-carbon economy also means that we have to step up our efforts in the field of renewables, so that we can honour the promise made by President Juncker when he became Commission President: that the Energy Union should be the world number one in renewables. I would be interested in your views on how to get there.

As far as I am concerned, we can get there by - inter alia - an ambitious research and innovation strategy, the fifth dimension of the Energy Union project. In May 2012, the American economist Jeremy Rifkin said, in a speech at the Mission Growth Summit: 'The Second Industrial Revolution, powered by ever more expensive fossil fuels and organized around an ageing electricity grid and an outmoded transport network, all embedded in a crumbling carbon-based infrastructure, is incapable of spawning thousands of new businesses and millions of new jobs. We need a bold new economic narrative'.

The Energy Union should contribute to such new economic narrative. By setting the stage for an energy system in which European citizens can produce their own clean energy. By empowering our citizens so that they can better control their own energy consumption through smart meters, and can share it through flexible, smart grids; by developing better storage and by plugging clean cars into our energy network.

No other geographical area has integrated such an amount of renewables in the grids. We have the experience, we must continue to innovate, and through an industrial strategy, translate this technological lead into European jobs and growth. This will require investments: in research, in capital, but also in people, giving them the right skills and making sure that where this is difficult, the inevitable transition is just and fair. Because to be sustainable, the Energy Union should also be just and fair.

Ladies and gentlemen,

I mentioned many figures to show that we have a solid case. That in the field of energy we have more to win with a European approach than with 28 national approaches.

We now have a unique opportunity to look beyond energy and climate policy and link it up with other areas such as industrial policy, transport, competition, agriculture, foreign, trade and development policy, or research. This is the only way to transcend the so-called contradiction between 'competitiveness' and 'decarbonisation'. There is no such contradiction, we need both at the same time, and I am sure that today we will hear some examples on how we can make it happen.

We now have a unique opportunity to bring all players concerned to the same table. This is why it is called a union. It is about countries, industries, local governments, European institutions and people working together, each at their own level and in respect of their own competences.

It’s in that spirit that I look forward to your thoughts today, and I am convinced we will leave Riga with a set of very practical, very concrete ideas to build the Energy Union that we need, and to which the Commission is ready to contribute.

I thank you.


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