An Energy Policy for Europe

A European Energy Policy will firmly commit the European Union (EU) to a low consumption economy based on more secure, more competitive and more sustainable energy. Priority energy objectives involve ensuring the smooth functioning of the internal market in energy, security of strategic supply, concrete reductions in greenhouse gas emissions caused by the production or consumption of energy and the EU's ability to speak with a single voice on the international stage.

ACT

Communication from the Commission to the European Council and the European Parliament of 10 January 2007, "An energy policy for Europe" [COM(2007) 1 final - Not published in the Official Journal].

SUMMARY

This Communication, a strategic review of the European energy situation, introduces a complete set of European Energy Policy measures (the 'energy' package).

JUSTIFICATIONS FOR A EUROPEAN ENERGY POLICY

The European Union (EU) faces serious energy challenges concerning sustainability and greenhouse gas emissions as well as security of supply, import dependence and the competitiveness and effective implementation of the internal energy market.

A European Energy Policy is acknowledged as the most effective response to these challenges, which are faced by all Member States.

The EU intends to lead a new industrial revolution and create a high efficiency energy economy with low CO2 emissions. To do so, it has set itself several important energy objectives.

ESTABLISH THE INTERNAL ENERGY MARKET

An internal energy market has been developed on a Community level to ensure that consumers have the opportunity to choose a supplier, at a fair and competitive price. Nevertheless, as highlighted by the Communication on prospects for the internal energy market and the inquiry into competition in the gas and electricity sectors, there are obstacles which continue to prevent both the economy and European consumers from fully benefiting from the advantages of opening up the gas and electricity markets. Ensuring the effective implementation of the internal energy market thus remains crucial.

A competitive market

There must be a clearer separation between the management of gas and electricity networks and production or sales activities.

If a company controls the management of networks as well as production or sales, there is a serious risk of discrimination and abuse. A vertically integrated company has little interest in increasing the capacity of the network and thereby exposing itself to increased competition on the market and a consequent fall in prices.

A separation between the management of networks and production or sales will encourage companies to invest more in networks, thereby promoting the entry onto the market of new arrivals and increasing security of supply.

This separation may either be achieved through the establishment of an Independent System Operator responsible for the maintenance, development and operation of the networks, which remain the property of the vertically integrated companies, or through full ownership unbundling.

An integrated and interconnected market

The internal energy market is essentially dependent on cross-border trade in energy. However, such trade is often difficult because of the disparity between national technical standards and differences in network capacity.

Effective regulation on a Community level is required. The competences and independence of energy regulators need to be harmonised, their collaboration must be reinforced and they must be obliged to take into account the Community objective of realising the internal energy market and defining regulatory and technical aspects and common security standards required for cross-border trade on a Community level.

With the goal of making the European energy network a reality, the Priority Interconnection Plan highlights the importance of financial and political support for implementing the infrastructures which have been identified as essential and of nominating European coordinators for monitoring the most problematic priority projects.

An energy public service

The EU is determined to persevere with its fight against energy poverty by developing an Energy Customers' Charter. The charter will principally encourage the implementation of aid schemes for the most vulnerable citizens in the face of increasing energy prices and also the improvement of the level of information consumers receive concerning the different suppliers and supply options.

ENSURE A SECURE ENERGY SUPPLY

Minimising the EU's vulnerability concerning imports, shortfalls in supply, possible energy crises and uncertainty with respect to future supply is a clear priority. This uncertainty is all the more problematic for Member States dependent on one single gas supplier.

The new energy policy emphasises the importance of measures which ensure solidarity between Member States and of the diversification of supply sources and transportation routes.

Measures supporting strategic oil stocks must be reinforced and the possibilities for improving the security of gas supply must be explored. Increased security of electricity supply, which remains crucial, must also be guaranteed.

REDUCE GREENHOUSE GAS EMISSIONS

Energy accounts for 80 % of all greenhouse gas emissions in the EU.

Determined to fight against climate change, the EU is committed to reducing its own emissions by at least 20 % by 2020. It also calls for the conclusion of an international agreement which will oblige developed countries to reduce their greenhouse gas emissions by 30 % by 2020. In the framework of this agreement, the EU would set itself a new objective of reducing its own emissions by 30 % compared with 1990 levels. These objectives are at the heart of the EU's strategy for limiting climate change.

Of course, reducing greenhouse gas emissions involves using less energy and using more clean energy.

Energy efficiency

Reducing its energy consumption by 20 % by 2020 is the objective the EU has set itself in its Action Plan for Energy Efficiency (2007-2012).

Concrete effort needs to be made to achieve this objective, in particular with respect to energy saving in the transport sector, the development of minimum efficiency requirements for energy-using appliances, awareness-raising amongst consumers about sensible and economic energy use, improving the efficiency of the production, transport and distribution of heating and electricity and also developing energy technologies and improving the energy performance of buildings.

The EU also intends to achieve a common approach on a global scale for saving energy through the conclusion of an international agreement on energy efficiency.

Renewable energy

The use of renewable energies (wind power, solar and photovoltaic energy, biomass and biofuels, geothermal energy and heat-pump systems) undeniably contributes to limiting climate change. Furthermore, it plays a part in securing energy supply and creating employment in Europe, thanks to the increase in the production and consumption of local energy.

Renewable energies, however, remain on the fringe of the European energy mix as they still cost more than traditional energy sources.

To increase the use of renewable energy sources, in its Renewable Energies Roadmap the EU has set itself the objective of increasing the proportion of renewable energies in its energy mix by 20 % by 2020.

This objective requires progress to be made in the three main sectors where renewable energies are used: electricity (increasing the production of electricity from renewable sources and allowing the sustainable production of electricity from fossil fuels, principally through the implementation of CO2 capture and storage systems), biofuels, which should represent 10 % of vehicle fuels by 2020, and finally heating and cooling systems.

DEVELOP ENERGY TECHNOLOGIES

Energy technologies play a central role in offering both competitiveness and sustainability in the energy sector while increasing security of supply. They are likewise crucial for attaining the other energy objectives.

The EU, today a global leader in the renewable energy sector, intends to consolidate its position and play an equally leading role in the rapidly growing market for low carbon energy technologies.

The EU must therefore develop existing energy-efficient technologies as well as new technologies, in particular those devoted to energy efficiency and renewable energies.

Even if the EU considerably diversifies its energy mix, it will still be highly dependent on oil and coal and must thus also pay particular attention to low carbon-output fossil fuel technologies, especially carbon capture and storage systems.

Investment in these emerging technologies will directly contribute to the Community strategy for increasing employment.

The Commission proposes an outline for a European Strategic Energy Technology Plan which will cover the entire innovation process, from the initial research to entry onto the market. This strategic plan will support the Seventh Framework Programme for Research, which foresees a 50 % increase in spending on research in the energy sector, along with the Intelligent Energy for Europe programme.

CONSIDER THE FUTURE OF NUCLEAR ENERGY

Faced with increasing concerns with regard to security of supply and CO2 emissions, nuclear energy has the benefit of being one of the low-carbon energy sources offering the most stable costs and supply.

The decision whether or not to use nuclear energy is made by Member States. Nevertheless, the illustrative nuclear programme emphasises the need to have a common and coherent approach with respect to security, safety and non-proliferation as well as concerning the dismantling of installations and the management of waste.

IMPLEMENT A COMMON INTERNATIONAL ENERGY POLICY

The EU is not able to achieve the objective of secure, competitive and sustainable energy alone. To do so requires the involvement and cooperation of both developed and developing countries, energy consumers and producers and countries of transit. To ensure efficiency and coherence, it is crucial that Member States and the EU are able to speak with a single voice on international energy issues.

The EU will be a driving force in the development of international energy agreements, in particular by strengthening the European Energy Charter, taking the initiative in an agreement on energy efficiency and participating actively in the post-Kyoto climate change scheme.

EU relations with consumer countries (such as the United States, India, Brazil or China), producer countries (Russia, Norway, OPEC countries and Algeria, for example) and countries of transit (such as the Ukraine) are of prime importance from the perspective of geopolitical security and economic stability. The EU will thus strive to develop energy partnerships with these countries which are transparent, predictable and reciprocal, in particular with its neighbouring countries. The EU also proposes a new partnership with Africa which will deal with a large variety of energy issues.

The EU is committed to helping developing countries to implement decentralised energy services which are low-cost, reliable and sustainable. The EU encourages these countries, in particular Africa, to immediately invest in renewable energies and the new generation of clean energy technologies.

BACKGROUND

The development of a European energy policy was at the heart of the European project, with the ECSC Treaty (establishing the European Coal and Steel Community) in 1951 and the Euratom Treaty (establishing the European Atomic Energy Community) in 1957. Despite economic and geopolitical changes since, it remains essential today.

The Energy Package presented by the European Commission on 10 January 2007 is part of the movement begun by the Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy in March 2006 and once again places energy at the heart of European activities.

Based on the Energy Package, the Heads of State and Government at the spring European Council on 9 March 2007 adopted a comprehensive energy Action Plan for the period 2007-2009.

See also

• For more information, please consult the Energy for a Changing World website from the Directorate General for Transport.

Last updated: 20.11.2007