European Affairs

Shaping an EU Energy Strategy Has Become More Urgent     Print Email
Marcel Rommerts

Recent developments have made the European Union's efforts to fashion a forward-looking new energy strategy timely and important. Two years ago, with its Green Paper Towards a European Strategy for Energy Supply, the European Commission launched a wide-ranging debate on a future EU energy strategy, of which one aim was to determine where common policies might be needed.

Today that debate has become even more urgent. Firstly, since September 11, 2001, the security of energy supplies has become an even bigger concern. Secondly, there is a need for immediate action to mitigate the emission of greenhouse gases that cause climate change.

Climate change is now an accepted fact. Ninety-four percent of carbon dioxide emissions arising from human activity come from the energy and transportation sectors. In the near future, major investment decisions will have to be made in Europe, and those investments will be influenced by the energy and transportation solutions we choose for the future.

The third factor is the ongoing liberalization of EU electricity and gas markets, which makes it even more urgent to develop a coherent energy strategy at European level.

The fourth consideration is the imminent enlargement of the European Union to include ten more members. The entry of these countries, many of which use energy more intensively than the existing member states, will make the European Union more dependent on energy imports. But it will also offer new opportunities to improve energy efficiency and increase the use of renewable sources.

EU member states and the prospective new entrants also often have different solutions for common problems in the energy sector. As we seek to meet our common environmental goals in the least costly way, and complete the single energy market, energy policy decisions taken by one member state will increasingly affect the energy markets of other members. Energy policy has thus obtained a new European dimension.

The Commission Green Paper arrived at a number of key conclusions. It predicted that the European Union would become increasingly dependent on external energy sources in the coming years, and even more so after the admission of the new members.

Our forecasts suggest that if strong measures are not taken, the European Union will depend on imports for 70 percent of its energy by 2030, against 50 percent today.

As for climate change, increases in European emissions of greenhouse gas are making it difficult for us to meet our common European commitments under the Kyoto Protocol to reduce emissions by eight percent by 2010, compared to 1990. Instead, these emissions may, according to some forecasts, grow by at least five percent by the target date, if further measures are not taken.

We know that we must make efforts to counter this trend, and that those efforts must continue beyond 2010. The most cost-effective way to close this gap is to invest where the cost of mitigation is the lowest, irrespective of national boundaries. This creates another EU-wide dimension and underscores the value of tradable emission rights.

We also face difficulties in influencing energy supply conditions in the short and medium term, as possible alternatives are unfortunately rather limited. Renewable and alternative energies are coming on line at an encouraging rate, but this process will nevertheless take time, and it will need additional help.

In the meantime, our short-term options for achieving greater efficiency are clearly on the demand side. We must better manage our energy demand, especially in buildings and in transportation.

There are huge returns to be obtained on investments in energy efficiency in these sectors. It is also clear that we need new initiatives at EU level, including legislative action, to reduce the growth in energy demand, an objective that is also supported by our member states.

Improved energy efficiency has already made an astonishing contribution to reducing our energy imports. According to some estimates, improvements in efficiency over the past two decades have contributed as much to the energy balance as all the solid fuels, such as coal, and nuclear power produced inside the European Union. The contribution of energy efficiency is expected to remain equally significant in future.

We must discuss the contribution of nuclear power, which is and will remain important in a number of member states. Many of them, however, are divided on the use of nuclear energy as a means of diversifying energy supply.

Based on the discussions that followed the publication of the Green Paper, the Commission is taking the initiative in five fields: improved energy efficiency, an alternative transportation policy, the use of renewable energy sources, maintaining autonomy in security of supply and solutions at EU level to common problems in member states.

To improve energy efficiency the Green Paper called for a genuine change in consumer behavior and a transformation of the market on the demand side. In order to begin this process, the Commission has proposed and begun implementing active policies for improved energy efficiency and demand management.

In spring 2000, for instance, the Commission adopted an action plan for energy efficiency and a European climate change program. Many of the plan's proposals are now being implemented.

For appliances and equipment, for example, the existing EU energy efficiency-labeling scheme is being expanded and strengthened and voluntary agreements are being finalized. Proposals are expected soon on minimum efficiency requirements for most appliances and equipment.

A directive on the energy performance of buildings has been adopted by the European Parliament and will soon be approved by the European Council. The Commission recently adopted a proposal on combined heat and power, or co-generation, which is now under discussion by the European Parliament and the Council.

In the transportation sector, if current trends continue, emissions will be up by 40 percent by 2010 compared with 1990. To prevent this, our railroads must be revitalized. Investments in railroads need to be refocused, private car use has to be rationalized and the road transportation sector has to be reorganized.

The Commission published a White Paper European Transportation Policy for 2010 last year. An agreement on engine efficiency has been concluded with the automobile manufacturers, and fuel efficiency labeling has been made mandatory in the member states.

The Commission last year also called for an alternative engine fuel strategy and adopted a proposal to promote the use of biofuels in road transportation by means of tax incentives. This proposal is now under discussion in the European Parliament and the Council.

The aim of the proposal on biofuels is to increase the share of these fuels in road transportation to six percent in 2010. In the medium and longer term, however, we see natural gas and hydrogen becoming mature engine fuels.

An action plan for renewable energies was adopted by the Commission and presented to the Council and the Parliament as far back as 1997. Considerable progress is being made. Wind power, for example, is doing well. The plan calls for doubling the share of renewables in EU energy consumption from six percent to 12 percent by 2010.

A directive setting targets for the production of electricity from renewable energy sources became law last year. If these targets are met by the member states, about 22 percent of EU electricity consumption in 2010 will be provided by renewables, compared to 14 percent today.

We are continuing to work on plans to establish EU energy autonomy in the medium term by increasing security of supply. We are currently analyzing the contributions that could come from different energy sources, including nuclear power, natural gas and renewables, as well as from energy efficiency. We are looking into our relationships with gas and oil-producing countries and into the different means we might have to secure supplies.

In our search for common solutions to common problems, we are in the process of agreeing on ways to strengthen strategic stocks of oil and gas. We are also seeking a common approach toward strengthening and diversifying our supply and transmission networks.

We must also accelerate the completion of the European single market for energy, which has been under discussion for some time in the European Council. Now that agreement has been reached, we shall create the world's largest internal, integrated energy market.

We are also heavily engaged in financial support programs. In addition to legislative measures, policy initiatives and a new non-technological energy efficiency and renewables support program, which is called Intelligent Energy for Europe, the European Union has also started a new five-year technological research framework program, running from 2002 to 2006.

The plan provides more than $400 million for long-term technological research into energy efficiency, alternative fuels and renewable energy sources over the five-year period. Another $400 million will go to activities with a short- to medium-term impact.

Of the activities with a short- to medium-term impact, the integration of renewable energy sources into the energy system will receive about 45 percent of the budget. Alternative transportation fuels, especially fuel cells for road vehicles, will receive about 20 percent. The remaining 35 percent will go to energy savings and energy efficiency.

Together with the roughly $200 million allocated to the Intelligent Energy for Europe program, the European Union will spend more than $1 billion to develop and implement its energy policy in the five-year period that began last year.

 Marcel Rommerts is Principal Administrator in the Transport and Energy Directorate- General of the European Commission, and before that he was Scientific Officer (1994-2002) in the same DG, covering urban transport policy, vehicle technology and alternative fuels. He holds a degree in transport planning and public transport from the National Academy for Traffic and Transport, Tilburg, the Netherlands.

 


 

ENERGY FACTS AND FORECASTS

Laura Sikes

The United States and Europe represent less that than 20 percent of the world's total population. Together, however, they account for:

 

  • About 60 percent of total world energy demand.
  • Nearly 83 percent of world electricity generation.
  • More than 50 percent of world oil demand.
  • 70 percent of world natural gas consumption
  • Half of world coal consumption.
  • More than 75 percent of world nuclear energy consumption.
  • Nearly half of world consumption of hydropower and renewable energy sources.

By 2020, the U.S. Department of Energy projects that:

 

  • U.S. and European energy demand could increase by about 35 percent.
  • U.S. and European electricity generation could rise by 50 percent.
  • Oil could continue to provide over 40 percent of U.S. and European energy needs.
  • U.S. dependence on oil imports could rise from about 50 percent to more than 60 percent.
  • The European Union's dependence on imported oil could rise to 90 percent.
  • EU dependence on natural gas imports could rise to about 60 percent.
  • The developing countries' energy and oil demand will have doubled, and be approaching the combined consumption of the United States and Europe.

Over the next 20 years, it is estimated that:

 

  • The United States will need almost 400 gigawatts of new power capacity.
  • The European Union will need 300 gigawatts of new capacity to replace aging power plants and up to 300 gigawatts more to meet increased demand. (These estimates are likely to rise as more countries become EU members.)
  • The United States could offset almost two thirds of its projected increase in energy demand by conservation and energy efficiency.

    Source: U.S. Department of Energy

 

This article was published in European Affairs: Volume number IV, Issue number I in the Winter of 2003.