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Op-ed articles

The European Energy Union

Patrice Geoffron
Patrice GeoffronPhD in Industrial Organization and Professor of Economics at the Paris-Dauphine University

"Europe was the first region in the world to enter the carbon era in the 19th Century, and is now declaring its ambition to be the first to find greener alternatives"

Energy has been a top priority for European countries ever since the creation of the European Community. With this in mind, since the end of the 2000s, the European Union (EU) has been pursuing the goal of leading the world energy transition by reducing both its use of preservation (hydrocarbons)The final phase in petroleum system formation, after a deposit has accumulated... and its greenhouse gas (ghg) Gas with physical properties that cause the Earth's atmosphere to warm up. There are a number of naturally occurring greenhouse gases... emissions in just a few decades. With the 2020 health crisis followed by the 2022 geopolitical and energy crisis, Europe’s ability to steer its course through such uncertain times has been under great strain. Patrice Geoffron, Professor of Economics at  Paris-Dauphine University/PSL, analyzes this strategy from the perspective of the global economy.

Europe was the first region in the world to enter the carbon era in the 19th century, and is now declaring its ambition to be the first to  find greener alternatives. The strategy began to take shape at the end of the 2000s and Europe’s determination to achieve this goal was affirmed by its strong commitment upstream of the COP21 in 2015, resulting in the Paris AgreementOil contract under which the oil that is produced is shared between the state and the oil company... . Later in 2019, this led the European Commission to define a “Green Deal”, the aim being to steer the EU toward carbon neutrality in 2050, as both a response to environmental challenges and a new growth strategy.

Such an ambition is already having high repercussions: targeting a 55% decrease in emissions by 2030 means tripling the pace of decarbonizationThe decarbonization of a country’s energy system involves reducing its greenhouse gas emissions (mainly CO2 and methane). compared with the previous decade. The European Commission has estimated that achieving these objectives will require an annual investment of approximately 1,000 billion euros in decarbonized technologies (renewables, energy efficiencyIn economic terms, energy efficiency refers to the efforts made to reduce the energy consumption of a system... , storage, transportation, etc.).

The health crisis was the first test for the Green Deal. In May 2020, the Commission proposed a plan that would lead to the leveraging of 750 billion euros on the markets, and forecasting that at least 30% of the funds would be dedicated to projects related to curbing climate change. Unlike what happened during the financial crisis in the 2000s, where the room for maneuver was drastically reduced when it came to financing the transition (triggering a ‘stop and go’ situation in the support of low-carbon sectors in many Member States, particularly in southern Europe), this time Europe strived to maintain its course toward decarbonization as it weathered the health crisis.

The crisis generated by the conflict in Ukraine in 2022 raised the specter of another threat - that of securing the supply of fossil energies, owing to the marked decrease in their “indigenous” production. Over the last decade, oil and gas extraction in the EU has dropped by 40%, and that of coalCoal is ranked by its degree of transformation or maturity, increasing in carbon content from... by 30%. The material impact of this trend is that the EU is 90% dependent on imports to cover its oil consumption, 75% for gas and 40% for coal. And for these three energy sources, it transpired that Russia is Europe’s leading supplier, unveiling another latent threat.

The crisis has generated several material consequences: the price of fossil energies transiting to Europe will be higher, as the breach of trust with Russia puts the markets (in particular that of liquefied natural gas (lng)LNG is composed almost entirely of methane. Liquefying the gas reduces its initial volume by a factor of around 600... ) under strain and, above all, the threat of fuelFuel is any solid, liquid or gaseous substance or material that can be combined with an oxidant... shortages will loom large at the beginning of the decade (in particular for dieselDiesel is the name of an internal combustion engine that works by compression-ignition... ).

The crucial issue is to imagine the impact of this broken trust on Europe’s decarbonization ambitions in this decade. In the short term, the security considerations will cause countries to fall back on coal, to endure the coming winters. Alongside that, however, decarbonization solutions will become more competitive: faced with higher gas and (plausibly) oil prices, their decarbonized alternatives will be more economic. This will apply to renewables (wind, photovoltaic, green gases), and to investments in energy efficiency (domestic sector, the tertiary sector and industry), equipment that does not require combustion engines (in particular electric vehicles), and electricityForm of energy resulting from the movement of charged particles (electrons) through a conductor... storage (using batteries or hydrogenThe simplest and lightest atom, the most abundant element in the universe. at a later stage).

And throughout Europe, it will doubtless mean accepting reductions in consumption, currently seen as measures limiting freedom, but which the crisis now imposes.

Patrice Geoffron has a PhD in industrial organization and is Professor of Economics at Paris-Dauphine University, where  he was Interim President and International Vice-President. He is the Director of the Dauphine energy-climate team which oversees several research chairs (in particular Climate Change Economics) and of a Master's degree course (Energy-Finance-Carbon), at the heart of a close-knit network of industrial partners. He is a member of the Cercle des Economistes (French think tank founded in 1992). Prior to that, he was part of the team of experts advising the Citizens’ Convention on Climate.

yamina_saheb.png
Yamina SahebSenior Energy Policy Analyst, OpenExp

"Once relegated to the shadows, energy savings are finally being considered as an energy source in their own right"

Considering energy efficiencyIn economic terms, energy efficiency refers to the efforts made to reduce the energy consumption of a system... as an energy source in its own right can radically alter our vision of the energy mixThe range of energy sources of a region. . Taking this approach, the combined weight of energy savings and renewable energies in Europe could exceed total fossil fuelFuel is any solid, liquid or gaseous substance or material that can be combined with an oxidant... consumption by 2030. In this article, Yamina Saheb, an economist specialized in scientific and policy matters at the European Commission, offers her analysis.

CoalCoal is ranked by its degree of transformation or maturity, increasing in carbon content from... was the main source of energy in the 19th century, followed by oil, gas and nuclear powerIn physics, power is the amount of energy supplied by a system per unit time. In simpler terms, power can be viewed as energy output... in the 20th century and, most probably, energy efficiency and renewable energies in the 21st century.

Once relegated to the shadows, energy savings are finally being considered as an energy source in their own right. The concept was first introduced in a 2008 U.S. paper that demonstrated the increasing potential of energy efficiency technologies in the United States1. More recently, in its 2013 annual report on the world energy efficiency market, the International Energy Agency (IEA)An independent, intergovernmental organization founded within the framework of the OECD... showed that the cumulative energy savings in 11 IEA member countries between 1974 and 2010 exceeded consumption of any other single fuel source2.

Closer to home, the European Commission has released energy mix forecasts based on plans to make efficiency the continent's leading source of energy by 2030. Had energy efficiency not been factored into the mix, fossil fuels would account for 60% of energy needs in Europe.

If the political will existed among our governments and heads of state, energy savings and renewable energies could together outweigh the total amount of fossil fuels that Europe might need in 2030. Achieving this goal, however, would require our elected representatives to adopt 2030 energy efficiency targets of at least 40% before the end of 2016. The current target is 27%.

In its "Energy Union" strategy adopted in February 2015, the European Union confirmed the importance and future role of energy savings in the bloc's energy mix, highlighting the need "to fundamentally rethink energy efficiency and treat it as an energy source in its own right, representing the value of energy saved".

The strategy goes one step further by calling on the Commission to "ensure that energy efficiency and demand side response can compete on equal terms with generation capacity", thereby guaranteeing that energy savings have fair access to energy markets.

Let there be no doubt about it, Europe's energy revolution has begun.

 

Yamina Saheb is an engineer and economist with a Ph.D. in energy engineering. Yamina previously worked as a building expert at the International Energy Agency's Energy Efficiency and Environment Division, where she set up and managed the Sustainable Building Centre. In 2013, she joined the European Commission's Joint Research Centre as a Scientific and Policy Officer in charge of analyzing energy efficiency policies in Europe.

 

 

 

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