BRUSSELS INSIDER #1 - July 10, 2018
No new targets, gas is in, jobs and growth are key: the EU is designing a new climate and energy strategy for the coming decades that must reflect a new EU identity post-Brexit – and must drive economic opportunity to ensure it is “populism-proof”.
Brussels is usually deserted in summer. The institutions shut down and everyone takes a break. This year, there are two big energy projects that will keep some people busy however.
First, the Austrian EU Presidency, which took over from Bulgaria on 1 July, will lead technical talks on a new electricity market design for Europe. This is part of the EU’s Clean Energy Package. With new laws on renewables, energy efficiency and governance concluded last month, market design is the Package’s last outstanding file. Austria wants to wrap it – and therefore the EU’s climate and energy framework fror 2030 – up by the end of the year.
It organised a first “trilogue” or negotiating session between Member States, the European Parliament and the European Commission on 27 June. This was basically a “meet and greet” session. Work will now get underway at a technical level over the summer ahead of a second trilogue scheduled for 11 September.
The second big topic this summer is a new EU climate and energy strategy for 2050. European heads of state and government called for it by next spring; the European Commission aims to deliver it by November. It is holding a big two-day stakeholder conference on it in Brussels on 10-11 July – in a room big enough for 1000 people, an official said (see programme).
Next week, the Commission will launch a 3-month public consultation on the strategy, ensuring that stakeholders as well as officials are kept busy over the summer months.
No new targets
What do we already know about the new strategy? First, unlike back in 2011, when the Commission produced a trio of 2050 visions, one for energy, one for climate and one for transport, this time round it is working on one integrated vision. This reflects the prominent role that sector coupling – or the much closer integration of different sectors, for example through electrification of transport or heating, or the storage of power in gas – has taken up in the Comission’s thinking. It’s in effect a reflection of the next stage of the energy transition.
In this context, the Commission has already reassured the gas industry that it does not intend to suggest that everything should be electrified asap. Europe cannot afford gas becoming a stranded asset. But officials are looking for signals from the industry that gas can go green. As we reported the other week, these signals are starting to appear.
A more interesting question is what the new integrated approach means for policy tools such as the EU Emisson Trading Scheme (ETS). The ETS vs. non-ETS regulatory split doesn’t work so well anymore if sectors are increasingly joined up.
We know that the Commission will produce a series of scenarios. Last time round, it assumed an 80% cut in EU greenhouse gas emissions by 2050. This time round, it will map out several pathways to something close to “net zero” emissions. It will also consider – a political must – what is needed to have a shot at limiting global warming to 1.5 degrees (in practice, this means negative emissions, or the absorption of CO2 already in the atmosphere e.g. by forests or through bio-CCS).
There will be no new targets, Energy Post understands. So don’t expect a “20/20/20 by 2020” or “40/30/27 by 2030” style objective for 2050. There will be no greenhouse gas emission reduction, renewables or energy efficiency targets in the new strategy. Instead, the Commission will investigate the role of new technologies and behavioural change, for example. It will explore the investment gap for decarbonisation and how to fill it. It will study the effects of disruptive technologies and economic models in other sectors, from Europe’s pursuit of a “circular” economy to digitalisation. It will try to avoid hypes while taking into account long-term trends.
Keeping the EU alive after Brexit
The new 2050 vision will include stronger industrial and social dimensions than back in 2011. This is in line with Commission President Jean-Claude Juncker’s vision for Europe as a whole: a Europe that protects (in this case, the planet), defends (in this case, a “just transition” for people and regions) and empowers (in this case, new business models, bringing jobs and growth).
The “just” transition and the idea that “green” industries such as renewables could help Europe reindustrialise (see the EU’s Clean Energy Industrial Forum), are new concepts that have only emerged in the last few years. They also reflect the next stage of the energy transition. There are new industrial challenges too as the energy transition spreads to transport, and puts pressure on the future of the European car industry for example. And there are lessons from the past, for example the loss of solar PV panel production to China.
Finally, it is critical that this long-term strategy comes as the EU-27 search for a new identity post-Brexit. In that sense, it is part of a broader rethink and plan for the future. If the EU is a political and not a technical project, then climate and energy need a political dimension. More to the point, the Commission needs to use energy and climate policy to drive economic prosperity, jobs, and ultimately European unity. They must become weapons in the arsenal against populism and help give the EU a new raison d’etre.