European Union Unveils New One Trillion Euro Energy Strategy

The European Commission unveils a new energy strategy for the coming decade, calling for investment of around €1 trillion to
secure the bloc’s energy needs in a sustainable way.

Brussels, Belgium - The
European Commission has sent an unprecedentedly clear warning to
the EU member states that without strong new policy initiatives the
EU’s existing energy and climate strategy is unlikely to achieve
the 2020 targets, and it is wholly inadequate to the longer term
challenges concerning energy and climate-change objectives.

To deal with this, the Commission is proposing to spend €1
trillion over the next decade on infrastructure, new technologies
and electricity storage, as part of a new energy strategy to
deliver on the EU’s 2020 energy and climate goals.

“In the next decade, investment in energy, both to replace
existing resources and in order to meet increasing energy
requirements, will oblige European economies to arbitrate among
energy products which, given the inertia of energy systems, will
condition the next 30 years,” it says.

Energy savings top priority

The draft strategy identifies energy efficiency as its first
priority, arguing that it needs to be mainstreamed into all
relevant policy areas. The details will be href=””
target=”_blank”>set out in the new energy efficiency plan,
which is scheduled to be presented next spring.

The EU has set itself a 20% energy savings objective for 2020,
but measuring progress will require the establishment of “a set of
fair and measurable objectives,” according to the document. The
national energy efficiency action plans drawn up by member states
will become the annual reporting tool, it explains.

Until now, national efficiency plans have failed to exert the
same influence as similar plans on renewable energy, mainly because
the targets are not legally binding.

The Commission’s plan seeks to tap into the energy savings
potential of Europe’s existing building stock. Renovation rate
should be accelerated by investment incentives and innovative
financial instruments like revolving funds, it argues, promising to
address the problem of split incentives between tenants and

Energy savings in transport, a sector that emits a fifth of
Europe’s greenhouse gas emissions, will be harnessed by introducing
energy efficiency standards for all vehicles and a “robust car
labelling system,” the draft states. 

The public sector will play a crucial role as energy efficiency
criteria should “become conditionality obligations in all spheres,
notably for allocating public funds,” according to the paper.

Industrial companies, on the other hand, should be encouraged to
make use of energy audits. A dedicated support mechanism should be
created for SMEs, it adds.

“Efficiency must become a profitable business in itself, leading
to a robust internal market for energy saving techniques and
practices and commercial opportunities internationally,” the paper

A European energy market

Another priority for the next decade will be to build an
integrated pan-European energy market, as both electricity and gas
markets remain fragmented by national boundaries.

“The new challenge to 2020 is to provide the backbone for
electricity and gas to flow where it is needed,” the plan

New infrastructure will also be key to integrating renewable
electricity to the grid and will therefore be href=””
target=”_blank”>addressed in a separate infrastructure package
that the Commission is planning to present later this month.

The Commission has also set its sights on establishing a
long-term plan for infrastructure. It will authorise European
regulators and transmission system operators to develop a blueprint
for European electricity and gas grids between 2020 and 2050, the
paper says. The map, to be presented in mid-2011, will be based on
the Commission’s 2050 roadmap, due next year, which will present a
long-term strategy for the energy market.   

“What’s important now is that all these different projects from
the Commission are harmonised, which means that the Energy
Infrastructure Package must be in line with the roadmap 2050 and
also this short-term strategy,” commented Susanne Nies, head of
energy policy at EU industry association Eurelectric.

She warned that a single European energy market would require
the Commission to condemn developments like the emergence of new
national energy taxes which she says are “going in the wrong

Clear finance still missing

The urgency of building new interconnections and developing
smart grids to avoid locking Europe into high-polluting imported
fossil fuels requires a “broad view of new funding instruments,”
the Commission states. It also refers to the possibility of getting
more money from the EU budget, calling for “the mobilisation of
additional resources under the next multi-annual financial

Money will also have to be found to finance the development of
innovative technologies. This is another priority as concerns are
being raised that China and the US are now pulling ahead of Europe
in the solar and wind power markets.

Major planned projects like offshore wind farms in the North Sea
or the Desertec initiative to supply Europe with solar power from
North Africa will require Europe-wide coordination and different
funding sources, the strategy points out.

But it is short on concrete ideas beyond saying that the
technologies supported in the EU’s Strategic Energy Technology
(SET) Plan will “be the cornerstone for the preparation of the next
financial framework as regards energy research”.

“As the real questions here have always been setting the
ambition and finding funding, here as elsewhere we are still
waiting for specifics,” said Jason Anderson, head of European
climate and energy policy at the WWF.

External policy

The strategy also focuses on creating a common EU external
energy policy so that the bloc can “effectively project its
combined market weight in relations with key third country

Consequently, the draft announces that the Commission will
present a communication on the external dimension of energy policy
next year, which will identify ways to reinforce the efficiency of
EU policies in this regard.

The idea is to diversify supply sources and routes in order to
avoid crises like the Russia-Ukraine gas dispute, which disrupted
supplies to Eastern Europe in January 2009.

To this end, the EU will sign energy framework agreements with
key suppliers and transit countries, covering for instance market
access issues like network development, the draft strategy


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