Feature Report: The Long Road to a European Energy Union

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The Five Pillars of the European Energy Union

In early 2015, Jean-Claude Juncker, President of the European Commission, laid out his roadmap for an "Energy Union", just shortly after his November 2014 election. In doing so, he implicitly acknowledged Europe's past failures in the area. The main objectives of the roadmap are to limit the E.U.'s dependence on Russian natural gas, bring down energy prices and reduce greenhouse gas (GHG) emissions.

Jean-Claude Juncker, President of the European Commission since November 2014, wants to create a "European Energy Union". © FREDERICK FLORIN / AFP

Even though E.U. Member States essentially hold the reins when it comes to energy through the choice of source and suppliers, the European Commission presented far-reaching proposals for a "European Energy Union" in March 2015, with the first tangible measures expected by 2017. The proposals are grouped into five areas1.

  • Supply security – The European Union imports 53% of its energy (all sectors combined), leaving it with a hefty bill despite current low oil prices. The 2015 Ukraine crisis highlighted how dependent eastern and central European countries were on Russian natural gas. To lessen this, Europe is trying to diversify its gas supply sources and strengthen cooperation among countries for energy transfers and storage (see Close-Up: "Natural Gas: Securing Supply Is the Number One Priority"). Energy security also means making more efficient use of electricityForm of energy resulting from the movement of charged particles (electrons) through a conductor... generated in Europe.
  • A fully-integrated internal energy market – Here the goal is to build on work that has been underway for several years. In particular, this means improving the flow of electricity and natural gas throughout Europe and promoting healthy competition among energy suppliers by empowering consumers to choose their provider freely.

53%: The proportion of energy (all sectors combined) imported by the European Union

Regarding natural gas, there has been a significant rise in volumes traded on European short-term markets (as opposed to longer-term contacts negotiated between large companies or states).

For electricity, energy producers in countries witnessing a temporary drop in prices may sell their electricity on a neighboring country's market. Here it is bought until demand pushes prices up to the same level as the wholesale market, or until the cross-border interconnector reaches saturation point (see Close-Up: "Electrical Interconnectors: The European Commission's Targets"). In 2014, 17 European countries linked their markets in this way.

The aim of these measures is to reduce electricity prices, which are always lower on wholesale markets than what consumers pay because of renewable energyEnergy sources that are naturally replenished so quickly that they can be considered inexhaustible on a human time scale... subsidies. In 2015, electricity prices in Europe were two-to-three times higher than in the United States. Similar distortions are found in the natural gas market, where U.S. shale gasShale gas is found in deeply buried clayey sedimentary rock that is both the source rock and the reservoir for the gas... production gives the country a significant competitive advantage.

The E.U. has set a target of reducing greenhouse gases by 40% between now and 2030.

The Juncker Commission wants to leverage the E.U. emissions tradingThe buying and selling of products in financial markets... system, the first regional scheme of its kind in the world. But the system has so far failed to set a satisfactory price signal. The Commission was preparing various technical measures in an attempt to remedy this in early 2016.

  • Research and innovation – The Commission intends to support advances in low-carbon technologies, and has so far seen some groundbreaking ideas emerge. One European directive, for example, encourages all E.U. countries to use interoperable recharge systems for electric vehicles. And studies have been carried out, notably in Germany, on recharging electric trucks using catenary wires along motorways.

 

 

Source :

(1) European Commission: Priorities - Europaforum : General overview (in French)