An open letter to Alenka Bratušek and Miguel Arias Cañete, Europe’s next commissioners for climate action and energy
Dear Ms Bratušek and Mr Cañete
Congratulations on your respective appointments as European Commission vice president in charge of energy union, and commissioner for climate action and energy. These files will be critical for Europe’s future security and prosperity, and you take them on at a moment of rapid transition.
The geopolitical, technological, economic and energy landscape facing Europe Commission is radically different to that your predecessors encountered five years ago. The new Commission will need to implement a strong and forward-looking reform agenda to ensure Europe is responsive to these new realities. This open letter outlines a set of priorities and ideas to assist you in this task.
Your predecessors have left you with a full inbox.
In coming months your directorates will need to legislate to implement the new energy and climate package for 2030 (once finally agreed by the European Council), and clear up key unanswered questions such as what the proposed “EU-binding” targets for renewables and energy efficiency mean in practice if they do not require national commitments.
You will need to shepherd through reforms of the EU emissions trading scheme to prevent the carbon price collapsing even further, and oversee the implementation of new internal energy market rules.
But you should not content yourself with merely sorting through the unfinished business of outgoing commissioners Gunther Oettinger and Connie Hedegaard. New challenges need new ideas.
The first challenge is energy and climate security. The current crisis in Ukraine lays bare the deep-seated vulnerability of the EU energy system to external shocks.
The continued instability in the Middle East and North Africa underlines that this vulnerability goes beyond dependence on Russian gas. Yet there is no one in charge of monitoring or managing systemic risks.
This has worrying parallels to the financial crisis, where individually-rational decisions left Europe collectively exposed. We need a better system for monitoring and acting on this risk landscape, such as through a new independent European Energy and Climate Security Observatory.
The long-term solution to the security challenge is simply for the EU to import less fuel. Yet the lowest hanging fruit for energy security – retrofitting Europe’s leaky and inefficient building stock – remains largely unpicked. You should enact a buildings renovation directive to kick start a Europe-wide retrofit programme.
The EU should also augment its security through scaling up its funding for network infrastructure. A better connected Europe is a more resilient one. But funding for infrastructure projects (and particularly on gas pipelines) needs to be linked to delivery of energy efficiency commitments – or you will be left with a morass of wasted opportunities and stranded assets.
The second challenge is ensuring Europe’s market designs and institutions are sufficiently responsive to the rapid transition currently unfolding in Europe’s energy system. Renewables and demand-side technologies are no longer marginal, but represent an increasing part of the market.
Costs of solar, onshore wind, batteries and smart energy management technologies have fallen dramatically since the previous Commission took its seat in 2009. The challenge is no longer primarily one of promoting technology innovation but rather one of systems integration.
The previous internal energy market packages focused overwhelmingly on large-scale generation and networks. New technologies for flexible demand and decentralised energy demand have massive growth potential, but need fair and equivalent treatment to the supply side in order to succeed. A new internal market package is now needed for demand-side energy services.
The third challenge is responding to Europe’s changing place in the world, as global dynamics become increasingly multi-polar. This makes European leadership on climate change and international relationships on energy more important rather than less important.
A core part of the “energy union” concept is for Europe to speak with one voice when engaging with external suppliers and partners.
Negotiating access to alternative supply routes of fossil fuels gives the EU some short term breathing space in the context of the current dispute with Russia, however it is no long term solution to Europe’s energy and climate problems. It will therefore be essential to build international alliances to develop the tools and technologies to move away from fossil fuels rather than continuing relationships of dependence.
The climate talks in Paris in late 2015 is by far the most important venue for achieving this. The negotiations have the potential to influence the global climate regime for years to come (for good or for ill). Europe has a core strategic interest in ensuring an international agreement, as it relies on a strong rules-based system to manage climate risk.
The EU cannot of course deliver an agreement on its own, but a lack of clear leadership or a myopic strategy would a sure-fire recipe for failure.
Finally, however, Europe loses its credibility on the international stage if it turns back to burning coal at home while claiming to be a climate leader. A number of EU countries are seeking to subsidise coal by the back door through capacity payments to keep creaky old coal plant on the system.
This market-distorting practice quite simply needs to be ended, and a clear regulatory glide-path needs to be set out for the retirement of old coal plant.
There is much to do. Good luck.
Nick Mabey is chief executive and a founder director of E3G. Jonathan Gaventa is E3G’s programme leader focusing on European energy infrastructure.