New Directions for EU Energy Policy

(Speaking Notes at the Panel Discussion “Energy Relations in Europe” at the Joint Vienna Institute on October 24,2014)

  1. EU energy system costs around 12% EU GDP and are forecast to amount to around 14% in 2030 (EC figures). This shows that already from the quantitative point of view energy strategy considerations are very important.
  2. EU produces around 6% of global primary energy (with falling trend), but consumes around 12% (constant share), thus a large import dependency exists
  3. Import dependency is 53% (up from 43% in 1995); 34% of oil comes from Russia, 32% of gas, 26% of solids
    Import dependency is -5% in DK, 100% in MT, 75% in BE, 80% in IT, 60% in DE, 62% in AUT
    High import dependency in politically turbulent times restrict EU own energy policy options!
  4. EU climate and energy strategy has 20-20-20 target until 2020, prides itself on having already reached the carbon emissions target: but this is mainly due to the recession. EU GDP is still below its 2007 level, thus target is not ambitious enough to halt climate change.
    The new targets under discussion: 40-30-27 until 2030 are partially non-binding and also not stringent enough to effectively combat climate change.
    New targets must be social and environmental and political sustainability, i.e. affordable, climate change-reducing, autonomy-promoting.
  5. Major Flaw: EU strategy is based on primary energy use, instead of on energy services: EU Energy Security Strategy (May 14) states as its aim “the overall importance of a stable and abundant supply of energy for the EU`s citizens and the economy”:
    But we do not need oil, coal, or gas, we need mobility, energy to drive engines or process energy to create heat for chemical processes (steel, food), temperate rooms throughout the year. Primary energy is only a means to satisfy these services demand.

This requires not only direct energy policies, but far-reaching economic policies, like on land use, zoning, building standards, which require less energy to get from living to work, to shop, to entertainment. We need mobility concepts which minimize energy use: public transport, car sharing instead of owning, electric cars, etc.
In this way, primary energy is the resultant factor which can be planned to optimize the energy mix, use the necessary energy source in an optimal way (not electricity for space heating).
For this (and other) reasons, energy policy must be more strongly integrated into general economic policy, not a separate policy field. It could and should become a major focus of a new EU Infrastructure Policy.

  1. EU strategy is based on large-scale centralized energy production (installed electricity capacity has increased since 1995 by 54%, however generation only by 20%, thus oversupply) and long transmission and pipe lines, instead of decentralized short-distance between producer and consumer: this is expensive, creates environmental problems and social protest: e.g. Bavaria will not accept to have transmission lines built to receive North German wind power.
    More decentralized energy systems (micro grids) where production and consumption are regionally concentrated, lower system costs.
  2. EC has recently committed an original sin, by accepting large-scale subsidization of a new British nuclear facility, which for the first time fixes a price level for 35 years (out of a 60 year life span), to the tune of 19 billion EUR. So far this was acceptable only for renewables.
  3. Reliance on hydrocarbons, espec. Gas, damages the climate and can never be a complete long-term solution. It might be better not to pursue the gas (fracking) strategy at all. Reliance on gas inhibits move towards renewables and energy efficiency.
  4. Given the acute effects of climate change, the concept of “consumer sovereignty” with respect to energy use must be pushed back in favor of social/environmental societal considerations: not only incentives for low/no-energy developments, support for EE technologies, subsidies for renewables are in place, but also norms, prohibitions of climate-damaging behavior.
  5. The EU emissions-trading system has failed: at present, the surplus of emission licences is larger than one year emission volumes: this amounts to an implicit subsidy of 10 bill Euro of industry – which amounts to around 25% of emissions. The large rest is from electricity and space heating which have to purchase their emission certificates.

Summary: A large new push towards a modern and sustainable EU energy services policy is needed which is informed by the very large savings potential that exists, if the energy services idea is made the base of considerations.

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