State of the Energy Union Raises Doubts Despite Careful Political Process
Vice President of the European Commission in charge of Energy Union Maroš Šefčovič presented the first State of the Energy Union on Wednesday, which raised doubts over the ability of European authorities to tackle fast-changing risks, while underlining the strength of the European approach - Brussels is increasing its efforts towards a pan-European energy strategy through strong engagement with stakeholders and member states.
“In 2016 we are laying the foundation for a robust mechanism, while in 2017 we will come with a proposal that anchors this mechanism into legislation,” Šefčovič said during a conference in Brussels, adding that the European Parliament will play a role in the process of creating an Energy Union.
The European Commission and Šefčovič want to increase accountability, keeping track of the progress in the last nine months in the energy sector. On the other hand, this methodologically solid approach decreases the scope for a knee-jerk reaction. Experts unanimously told Natural Gas Europe that Šefčovič’s intervention showed that there is "little progress."
For example, the Commission did not release its LNG Strategy, which is now expected in February 2016. This is likely due to unprecedented difficulties the European Union is facing at the moment.
Šefčovič explained that geopolitical risks are slowing down diversification efforts. These complexities are likely to have played a role in the European Commission’s decision to reduce the scope of its actions. With respect to the first list, the executive body of the European Union took 53 projects away from the second list of Projects of Common Interests (PCI). The PCIs are now 195 projects (from 248), showing Brussels’ intentions to increase its focus.
THE PRIORITIES: LOW-CARBON ECONOMY, CONSUMER-CENTRED TRANSITION, DEALING WITH GEOPOLITICAL COMPLEXITIES
Šefčovič's priorities seem to be three.
First, the EU is looking at the low-carbon economy both as a constraint and as an opportunity.
“There is a road to Paris, but there is also a road from Paris, and also on the road from Paris, the EU should continue to lead the way,” Šefčovič commented.
Brussels wants to do so mainly giving the right price signals. According to Šefčovič, the European Commission will soon come up with a proposal on the redesign of the electricity market, while working on the Effort Sharing Decisions in the non-ETS and developing financing instruments more suitable at the local level.
Second, Brussels wants the energy transition to be consumer-centred, through a mix meant to increase transparency and incentivise citizens' active participation.
“Next year, we will present a proposal with a huge potential impact: the one on redesigning the electricity market, meant to facilitate demand-response and reward active participation in the market,” Šefčovič said.
Third, the European Commission underlined the importance of dealing with geopolitical uncertainties and third countries.
“We have to keep pushing for the diversification of energy sources, routes and suppliers, through an ambitious LNG Strategy which we will present in February” reads a document published by the European Commission quoting Šefčovič.
Unveiling his 16-page State of the Energy Union, Šefčovič also spoke of a “first guidance to Member States.” The European Commission did indeed publish fact sheets for each member state.
SUMMING UP: DIFFICULTIES, SILVER LININGS
Results are probably far down the road: the State of the Energy Union shows that the intentions are there, but results are difficult to achieve. As experts unanimously told Natural Gas Europe, “it is time for action and legislation.”
An additional source of complexity has to do with timing. Being announced less than a month away from the COP21, the European Commission had to stress the need to go green. However, it did not mention clear parameters to measure this transition.
All in all, according to experts speaking with Natural Gas Europe, the documents released on Wednesday are mainly political in nature. As Commissioner Šefčovič explained, they do not include binding laws.
The Energy Union is one of the European Commission’s ten priorities, and it is one of the main projects to promote common goals, and stronger unity. Doubts over the entire process are natural, and difficulties related to striking a fair compromise are evident.
Nonetheless, despite its shortfalls, the EU’s attempt to increase transparency should be praised. The task to realise an Energy Union is daunting. The political process is, at the same time, cautious in the approach and ambitious in scope. It is giving some sign of change, while avoiding major mistakes that could add to an already difficult political situation in Europe. The slow speed is a logical consequence.
Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci