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Pressing energy and climate duties awaiting the new European Commission

As the current European Commission’s term ends, the incoming Commission will have to set new priorities in the EU energy and climate policy. Significant changes are anticipated in the energy and industry sectors, driven by the Fit for 55 package implementation, aiming to reduce emissions by 2030 and significantly deploy renewables. This transition is essential for enhancing EU energy independence, reducing fuel import costs and improving environmental quality. However, challenges remain due to disparities in wealth and institutional weaknesses, particularly in Central Europe.

Europe faces additional instability from external conflicts like the Russian aggression against Ukraine, whose effects are evident, particularly in Central Europe and the Middle East conflict, which shifted focus to security and defence. Rising energy prices, societal polarisation, global competition for critical raw materials and new technologies and uncertainties about the future of the industry are also pressing issues for European policymakers.

These are just a few of the challenges facing the Union over the next five years. Each of these pieces of a complex puzzle must be recognised and addressed. The new European Commission, which will be formed after the elections will have to face a broad range of tasks related to the energy security, market, grids, investments and social challenges.

There is a need to draft a new energy security strategy as the current one is outdated and does not properly address the challenges of future energy systems. A new strategy should consider electricity’s growing role (heat pumps, electric vehicles, data centres), reducing coal and gas reliance, addressing cyber risks, critical infrastructure protection, better planning and coordination at the EU level. It should also include securing critical raw materials, for example, for batteries and solar to avoid over-dependence on non-EU suppliers.

Insufficient access to dispersed data, especially in new sectors like buildings, transport and agriculture, is a bottleneck for the energy transition, particularly acute in Central Europe. A response to these challenges could be the establishment of the EU Energy Transition Agency which would improve knowledge and data management for transparency and smooth implementation. Better preparation of transition plans, impact assessments and support for member states can constitute an element that will improve energy and climate policymaking.

The energy crisis highlighted flaws in the current energy market design, proving it is not fully adapted to a carbon-neutral energy system. Further market reforms are needed to allow consumers to benefit from renewable development and provide a stable framework for investors. Capacity markets for critical balancing capacity, flexibility markets to optimise distributed energy resources and locational pricing based on production and delivery costs could improve efficiency. It would save European consumers money spent on stranded infrastructure that is not needed in a distributed energy system.

The new Commission should also prioritise accelerating grid deployment and modernisation by promoting construction, revising administrative procedures and facilitating financing. Efficient use and management of existing assets is essential, with close TSO-DSO collaboration in network planning across energy carriers.

As the transition accelerates, the social dimension will be significant, affecting energy prices, jobs, and technology-switching incentives. The Commission must counter adverse effects through a well-designed Social Climate Fund and Just Transition Fund, providing technical support and consumer protection. Disregarding social challenges could impact climate policy’s reputation in and outside the EU and constitute a serious challenge for social support.

An increasingly important concern is the declining EU competitiveness and hurdles faced by European industry. The EU is facing global competition and the changes in the economy and society are implemented in such a short time. The European Green Deal should evolve into an economic agenda with a strong financial and industrial component. A well-designed industrial policy and special dedicated fund with flexible rules covering capital and operational costs could support clean technology companies and address fair distribution of funds across EU countries, diminishing disparities in state aid.

As traditional resources diminish and the role of new materials and technologies rises, the EU must adopt policies and tools to strengthen its global position, support neighbours’ transitions and identify key partnerships for hydrogen, biomethane and renewables development. Also, EU enlargement, particularly to Ukraine, will have strategic implications requiring clear conditions and cost-benefit analysis which goes beyond purely strategic and security considerations. Integrating neighbours into the EU legal and political area will have to be well prepared and identify the most important partnerships in terms of, for example, the use of green gases, storage and common strategic reserves.

The new European Commission will play a crucial role in guiding the EU through an energy transition, aiming for a cost-effective, socially just, and environmentally sustainable energy transition provided it will set clear priorities and draft comprehensive transition plans which meet the interests of different EU regions.

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This is an abstract of Forum Energii’s paper on “European Commission priorities for 2024-2029. The view from Poland on energy and climate.”

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