Sunday, July 14, 2024
HomeEU affairsKey takeaways from the State of the Energy Union

Key takeaways from the State of the Energy Union

The European Commission published its annual State of the Energy Union report, accompanied by a series of thematic reports that shed light on the progress made towards the EU’s overarching goal of the clean energy transition. This year’s Report is special in a way that it’s the first one since the adoption of the European Green Deal, therefore it can provide an important insight into the Energy Union’s contribution to Europe’s long-term climate goals.

“Today’s State of the Energy Union Report shows the progress we are making as well as challenges and opportunities ahead,” said Executive Vice-President for the European Green Deal, Frans Timmermans upon the presentation of the documents. “The investments and reforms we put in place need to drive the green recovery and put us on the right track for becoming climate-neutral by 2050.”

The report takes a holistic look into the state of the Energy Union including decarbonisation and the growth of renewables; energy efficiency; energy security; the internal energy market; research, innovation and competitiveness.

EU ETS covered sectors drive the drop in emissions

The report states that the EU has already overachieved its target of reducing greenhouse gas emissions mainly driven by emissions from energy supply. This is reflected in a strong drop in emissions from activities covered by the EU emissions trading system (EU ETS). The report also notes that except for a temporary price drop due to the COVID-19 crisis at the beginning of 2020, the carbon price signal managed to remain stable.

Member States are on the right track to reach RES targets

In terms of renewables, the EU is on track to achieve the 2020 targets, but greater progress is still needed in some Member States. The renewable energy progress report released that accompanies the report highlights that the share of renewable energy in the EU27 energy mix reached 18.9 per cent and that the EU is projected to exceed its renewable energy targets for 2020.

The Commission underlines that investments in renewable energy are increasingly driven by market decisions and Member States grant more support for renewable energy through competitive tenders. The recently announced new financing mechanism could provide another boost to these trends.

Energy efficiency: the weak point

Even though the COVID-19 crisis has had significantly lowered energy demand helping this way to meet the 2020 energy efficiency targets, the Commission warns that it would not lead to a structural reduction in energy consumption and rebound effects are expected as soon as the economy recovers.

Making additional long-lasting efforts to achieve the 2030 targets on energy efficiency is therefore of utmost importance. The Commission is developing additional guidance and is anchoring the energy efficiency first principle in all relevant policy proposals, such as the EU strategy on energy system integration, the renovation wave initiative and the upcoming revision of the Trans-European Networks for Energy. Member States also need to consider energy efficiency measures in planning, policy and investment decisions across the economy.

Energy security passed the COVID test

The report highlights that the preparedness of the European energy system has proved robust and ensured the continuity of essential operations even in the midst of the pandemic.

The Commission notes that infrastructure is key for a market to function properly and efficiently. Despite good progress, more work is needed to ensure that electricity and gas markets are further integrated.

EU lags behind in research and innovation

Public and private spending trends in the EU on clean energy research & innovation (R&I), are not encouraging. Member States are spending slightly less on clean energy R&I compared to previous years, while the EU’s overall public R&I investment in clean energy technologies as a share of GDP is the lowest among major economies.

Although a range of support instruments is available to Member States, such as Horizon Europe, the Innovation Fund and Invest EU very few Member States have national objectives that would show appropriate pathways to 2030 and 2050.

In the meantime, the competitiveness of the clean energy sector is clearly outperforming conventional energy source technologies concerning value-added, labour productivity, employment growth and penetration rates. The Clean energy competitiveness report demonstrates that in terms of GDP, the clean energy sector is gaining importance in the EU economy, whereas the importance of conventional energy sources is decreasing.

While the EU industry still benefits from a first-mover advantage in wind, renewable hydrogen and ocean energy technologies, it has to make sustained efforts to catch up and build a competitive edge in areas where the EU does not have (or has lost) this first-mover advantage such as solar and lithium-ion batteries.

Fossil energy subsidies must go

This year’s State of the Energy Union Report is for the first time accompanied by an analysis of energy subsidies, which identifies a clear need for better data on energy subsidies and greater efforts to reduce those which support fossil fuel production and consumption.

Fossil fuel subsidies amounted to 50 billion euros in the EU in 2018 representing one-third of all EU energy subsidies. The report notes that more than half of the 159 billion euros subsidies in 2018 supported the clean energy transition.

After the publication of the EU-level assessment of the National Energy and Climate Plans (NECPs) in September, the Commission has now also published an individual assessment of each national NECP including recommendations for each Member State’s potential use of the Recovery and Resilience Facility.

“The National Energy and Climate Plans are an essential tool for our work with Member States to plan the policies and investments for a green and just transition,” Commissioner for Energy, Kadri Simson said adding that now is the time to turn these plans into reality and use them to lead us out of the Covid-19 crisis with new jobs and a more competitive Energy Union.

In the context of the COVID-19 recovery, the Energy Union is, more than ever, could be an essential pillar for achieving the Green Deal but the following months will be crucial for Member States to develop robust and future-proof national recovery and resilience plans to propel Europe forward in a sustainable and socially fair way.

Sign up for our newsletters

    Monthly newsletter – Delivering the most important energy stories of the month selected by our Editor-in-chief
    Weekly Oil&Gas roundup - All major news about the oil and gas industry, LNG developments, the upscaling of new gases and related EU regulations arriving in your mailbox every Monday.
    Weekly Renewables&Climate roundup - All major news about investments in renewable energy sources, environment protection, green hydrogen and new innovative ways to tackle the climate crisis arriving in your mailbox every Tuesday.

    Most Popular