Renewables have outstripped fossil fuels as the European Union’s main source of power for the first time in history, according to the European Commission’s latest annual report on the Energy Union which is the backbone of the EU’s policy on energy and climate.
More specifically, 38 per cent of the EU’s electricity was produced from renewable sources, as opposed to 27 per cent from fossils and 25 per cent from nuclear in 2020.
However, some CEE Member States spent more on subsidising fossil fuels than on measures that incentivised green transition. For example, Hungary diverted over 1 per cent of its GDP to fossils in 2019, while Bulgaria spent almost 1 per cent but the EU average on all fossils including gas, petroleum, coal and peat comprised 0.4 per cent in the same period.
Latvia, on the other hand, spent almost 2 per cent of its GDP on subsidies for energy efficiency measures in 2019 and only 0.2 per cent on natural gas. Greece, Czechia, and Bulgaria, despite their spending on fossils, also diverted 0.8 per cent of their GDPs on renewable subsidies.
Significant progress has been made in terms of strengthening the EU’s internal energy market and harmonising national rules on energy trading and system operation. The most tangible example in this respect has been the EU market coupling which connects all Member States and creates a common EU trading platform for electricity while ensuring the dispatch of the cheapest electricity around the EU.
In terms of market coupling, the borders between Poland, Czechia, Slovakia, Romania and Hungary were successfully included in the EU-wide zone in 2021. Romania and Bulgaria were scheduled to join the Single Day-Ahead market coupling (SDAC) by the end of October 2021, Croatia and Hungaria in March 2022.
On the European Union scale, overall energy subsidies remained stable, at 177 billion euros in 2020, according to the report, however for energy efficiency measures the margin increased by 5 per cent compared to 2019.
Even though fossil fuel subsidies fell slightly in 2020, down to 52 billion euros from 56 billion euros in 2019, the report warns that “without Member States action, fossil fuel subsidies are likely to rebound as economic activity picks up” in the post-COVID-19 phase.