FAQ on EU Energy Security and Solidarity Action Plan

November 14, 2008 // Published as a news service by IHS

Why is the EU doing a strategic energy review?
The EU agreed upon a forward-looking political agenda to achieve its core energy objectives of sustainability, competitiveness and security of supply. It plans to do this by reducing greenhouse gas emissions by 20%, increasing the share of renewable energy sources in energy consumption to 20% and improving energy efficiency by 20%, all of it by 2020.

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This agenda means a very substantial change in Europe's energy system over the coming years, with public authorities, energy regulators, infrastructure operators, the energy industry and citizens all actively involved.

It means choices and investments during a time of much change in global energy markets and international relations. Europe's political leaders need to give clear messages on the energy strategy. Hence, the need for a strategic energy review.

What is the EU's approach to energy security?
Energy security is an issue of common EU concern. With the integration of energy markets and infrastructures within the EU, specific national solutions are often insufficient.

While each EU member state is responsible for its own security, solidarity between member states is a basic feature of EU membership. Strategies to share and spread risk, and to make the best use of the combined weight of the EU in world affairs, can be more effective than dispersed national actions.

From a medium to long-term energy security viewpoint, the EU's "20-20-20" strategy is the right direction to go in. An energy system with a diversity of non-fossil-fuel supplies, flexible infrastructures and capacities for demand management will be very different in energy security terms than today's system.

In the short to medium term, Europe's dependence on imports means that effective provisions for preventing and dealing with supply crises must be in place. Europe can and must diminish its vulnerability to energy supply shocks, first and foremost, by developing its own strengths, internally and externally.

What is the EU's Energy Security and Solidarity Action Plan?
The EC proposes a five-point EU Energy Security and Solidarity Action Plan:

• More effective support is needed for projects to build the required infrastructure.
• The EU has to make better use of its indigenous energy resources, both renewable and fossil.
• More attention has to be paid to solidarity, including EU crisis mechanisms, oil stocks and a variety of mechanisms to respond to possible gas disruption.
• Additional and more urgent efforts have to be made to improve energy efficiency.
• More attention needs to be paid to external energy relations with other countries.

Why is promoting infrastructure essential to EU's energy needs?
The third internal energy market legislative package encourages investments in infrastructures, notably cross-border infrastructures. The EC considers that a number of infrastructure developments should be recognized as energy security priorities of the European Community:

• Development of a Baltic interconnection plan, better linking the region with the rest of the EU, improving the security and diversity of its energy supply, and enabling solidarity.

• Development of a southern gas corridor for supply from the Caspian and Middle Eastern sources and possibly other countries in the longer term, improving security of supply.

• As liquefied natural gas (LNG) is now contributing to diversity of gas supply, sufficient capacity should be available to all member states, either directly or through other member states on the basis of solidarity arrangements. This means that an LNG action plan needs to be considered. This is particularly important for EU member states that are currently overwhelmingly dependent on a single gas supplier.

• Completion of a Mediterranean energy ring, linking Europe with the southern Mediterranean through electricity and gas interconnections to improve energy security and to help develop the vast solar energy and wind energy potential.

• Development of north-south gas and electricity interconnections within Central and South-East Europe, building on the energy community, inter alia, supporting the national energy regulators and transmission system operators.

• Development of a blueprint for a North Sea offshore grid, interconnecting national electricity grids and plugging in planned offshore wind projects.

The Trans-European Energy Networks (TEN-E) instrument and its budget were conceived and developed when the EU was considerably smaller and faced energy challenges of a completely different dimension compared to today.

The EC is tabling a green paper that launches a reflection on how the existing TEN-E instrument could be replaced by a new EU energy security and infrastructure instrument with the possible objectives of completing the internal energy market, ensuring the development of the grid to permit the achievement of the EU's renewable energy objectives and guaranteeing EU security of energy supply, through infrastructure projects within and outside the EU.

In addition, the green paper will launch a reflection on how best to ensure the effective use and evolution of EU's external policy and financial instruments to contribute to achieving these objectives.

Why is there a new impetus on energy efficiency?
The 2006 Energy Efficiency Action Plan will be evaluated in 2009. In the meantime, a 2008 energy efficiency package is being tabled, focused on improvements in the legislation on energy efficiency of buildings and on energy labeling, as well as extending the ecodesign and cogeneration directives.

These are all areas in which energy efficiency improvements can be achieved, with substantial impact on Europe's energy consumption and energy security.

A new Sustainable Energy Financing Initiative is being prepared jointly with the European Investment Bank and other financial organizations, to mobilize large-scale funding from capital markets for investments in energy efficiency as well as renewable energies, clean use of fossil fuels and combined heat and power from renewables in Europe's cities.

Why is there a greater focus on energy in EU's international relations?
The EU needs to intensify its efforts to develop an effective external energy policy - speaking with one voice, identifying an infrastructure of major importance to its energy security and ensuring its construction, plus acting coherently to deepen its partnerships with key energy suppliers, transit countries and consumers.

The EC will identify the concrete mechanisms necessary for ensuring transparency between EU member states so that a common message can be constructed.

With the energy interdependence of countries growing, international frameworks are needed that are capable of sustaining the major investments and innovations needed in the coming years. The European Economic Area (EEA) and the energy community with EU's neighbors provide very good bases.

Effective cooperation with Norway, part of the EEA, is essential for EU energy security. A framework for cooperation is also provided by the energy community that is building an integrated energy market in South-East Europe anchored to the EU. If negotiations are successful, the accession of Ukraine, the Republic of Moldova and Turkey to the energy community would catalyze their energy sector reforms and create a mutually beneficial enlarged energy market based on common rules.

With producer countries outside Europe - notably Russia and the Caspian countries - the EU needs to develop a new generation of "energy interdependence" provisions in its broad-based agreements. As much as Europe seeks security of supply, external suppliers and industry seek security of demand. The increasingly important role of Africa in EU's energy security needs to be assessed.

The EU-OPEC energy dialogue recognizes the common interests of producer and consumer countries in encouraging regular supply at affordable prices.

Relations with other consumer countries are important in energy security. Cooperation needs to be deepened, promoting a common view on global energy security and addressing sustainability. Progress on a global climate change deal could be a powerful driver of cooperation and change worldwide.

What is the role of improved oil and gas stocks and crisis response mechanisms?
The EC proposes a revision in EU's strategic oil stocks legislation, improving coherence with the International Energy Agency regime, reliability and transparency on available stocks and clarifying emergency procedures.

To improve oil market transparency, the EC proposes that the EU publish weekly, on an aggregated basis, the level of commercial oil stocks held by EU oil companies.

The EC, after its evaluation of the Directive on Security of Gas Supply (Council Directive 2004/67), concluded that greater harmonization of security of supply standards and predefined emergency measures at both the regional and EU levels are needed.

The threshold for triggering EU action should be reconsidered and compensation arrangements should be clarified. The EC considers that there is insufficient evidence at this stage for making strategic gas stocks obligatory. A revision of the Directive on Security of Gas Supply may be tabled in 2010.

How can the EU make better use of its indigenous energy reserves?
Indigenous production currently provides 46% of the energy used in Europe. (Nuclear energy is included, as the fuel represents only a small part of the value of the energy.) The EU's greatest potential source of indigenous energy is renewable energy. Today it accounts for about 9% of final EU energy consumption and the target is to raise this to 20% by 2020.

Technology is crucial in developing and using EU's resources in a cost-effective and environmentally sustainable way, so the next step in the Strategic Energy Technology Plan will be a communication on financing low-carbon technologies. This will propose ways to support large-scale demonstration plants at the EU level, including up to 12 carbon capture and storage (CCS) demonstration plants.

Europe's aim to have these demonstration plants in operation by 2015, plus the G8's commitment to launch 20 demonstration plants globally by 2020, will require greater incentives than currently available.

Use of coal in the longer run is only compatible with the climate challenge if highly efficient plants predominate and CCS is widely available.

The Berlin Fossil Fuel Forum will look at which additional measures could be taken at both the national and European Community level, and, in partnership with Norway, to promote cost-effective and environmentally compatible access to indigenous EU fossil fuels.

The EU maintains it is for each member state to choose whether to invest in nuclear energy. However, the nuclear safety and security framework applied everywhere in the EU is of common interest. A common legislative framework on the safety of nuclear installations and the management of nuclear waste is needed. The EC is tabling a revised proposal for a directive on nuclear safety.

What is the EU's vision for 2050?
The EU's agenda for 2020 has set out the essential first steps in the transition to a high-efficiency, low-carbon energy system. The EU needs to develop a vision for 2050 and a policy agenda for 2030.

The fundamental technological shifts involved in decarbonizing the EU electricity supply, ending oil dependence in transport, low-energy and positive-power buildings, and a smart interconnected electricity network will only happen with a coordinated agenda for research and technological development, regulation, investment and infrastructure development.

In addition, the transition to a high-efficiency, low-carbon energy system needs to be promoted, not only in Europe, but worldwide. In the framework of the Strategic Energy Technology Plan, the EC will prepare a roadmap towards a 2050 Energy Policy, in dialogue with EU member state officials, academic representatives and industry experts.

More information
For further information, see the EC's web sites on Second Strategic Energy Review - Securing our Energy Future and on Energy Policy for a Competitive Europe.

Source: European Commission.