"Check against delivery"
Mr President, Honourable Members of the European Parliament,
I’m honoured to present the State of the Energy Union report to you today.
Every year, this Report provides an opportunity to take stock of our energy policy and to see whether we are on track with implementing the Energy Union.
Since our last report, we have made huge strides into implementing our clean energy agenda, in policy and legislative terms.
The EU adopted the European Climate Law in March making the reduction of at least 55% of emissions and the goal of climate neutrality by 2050 legally binding. In April, we presented the first delegated act on taxonomy.
A few months later, in July, the Commission put forward an interconnected package of proposals to put Europe on the path to climate neutrality. This “Fit for 55” package included a revision of the renewable energy and energy efficiency directives to align them with our new and higher ambition.
It has been a year of progress. At the same time, this year’s report is being published against the background of a sharp spike in gas and electricity prices, in the EU and also globally. This is a concern for citizens, industry and governments across the EU and raises questions about the future of our clean energy agenda. To respond to them, in October the Commission presented a toolbox of short and longer-term measures to tackle the challenge.
It is against this backdrop that we come to this year’s State of the Energy Union report. Because this Report and its annexes provide us some important indications to assess the progress of the Energy Union across all its dimensions, but also to chart a response to today’s rising energy prices. Today, I would like to highlight four main messages coming from this Report.
First, the report demonstrates that renewables markets have shown resilience through the pandemic.
In 2020, for the first time, renewables overtook fossil fuels as the EU’s main power source. The share of renewable energy sources in the overall EU energy mix is expected to have reached at least 22%.
Overall investment in renewables grew substantially in the EU to €48.8 billion in 2020, up from €32.9 billion in 2019.
Increasing ambition and delivering on decarbonisation is also about achieving the existing 2020 target for renewables. The latest available data shows that the EU as a whole, and the majority of Member States individually, were on track to achieve these targets, thanks partly to the lowering prices for key technologies such as wind and solar over the years.
This is a good news, but it is not enough. We need to accelerate the deployment of renewables in the years to come. This means moving forward with the revised RED III proposal but also tackling head on the permitting and authorizations bottleneck. Next year we will present ideas on how to facilitate the permitting process. A better administrative and business environment will be key in getting more projects off the ground.
Second, soaring energy prices remind us that we remain too reliant on fossil fuels in the EU. This is confirmed by this year’s State of the Energy Union. Paradoxically, in 2020 the EU level of dependency from fossil fuel imports is the highest since a decade.
More work also needs to be done to phase out fossil fuel subsidies. Although these subsidies fell in 2020, this is more a reflection of decreased energy consumption overall rather than a new trend. Subsidies are a major impediment to a cost-efficient energy and climate transition, and to a functioning energy market. They should be targeted to boost the uptake of new energy technologies, to promote sustainable patterns of energy consumption and to lower energy bills.
Third, the report makes the benefits of market coupling clear.
This is the most tangible example of the progress made in harmonising national rules on energy trading and system operation. Market coupling connects all Member States and creates a common EU trading platform for electricity. This is very important in the context of the current energy price spike.
A recent ACER report shows that those countries who are better interconnected and less dependent on fossil fuels have remained less vulnerable to energy price volatility.
Therefore, market coupling is an antidote to this phenomenon we are currently experiencing.
That’s why, I will maintain the focus on market integration. Accomplishing market coupling in all timeframes across internal borders, including close to real-time balancing, would generate additional welfare benefits of more than €1.5 billion per year. It would also reduce the need for backup fossil fuel power plants, thus saving significant GHG emissions.
Fourth, and finally, the State of the Energy Union is accompanied by a report on the competitiveness of the clean energy industry in Europe.
The report shows that the EU remains at the forefront of clean energy research. At global level, it has a greater share of ‘green’ inventions in climate change mitigation technologies than other major economies.
The EU is also well-placed in terms of global market shares in a number of established clean energy technologies, such as wind, but global competition remains fierce.
In solar PV, the EU is at the cutting edge in certain parts of the value chain, especially research and development but we have a comparably small market share in manufacturing. Next year we will present a Solar strategy to help the domestic solar industry to grow and compete on the international scale.
We also maintain our strong global position in hydrogen technology, storage and batteries. Each of these have major scaling up potential in the years to come and represents a great opportunity for the EU. Yet, the report clearly shows that we cannot be complacent, or we will rapidly lose our position in the global race.
Increased private and public investments are needed for the EU to maintain its competitiveness. The Recovery Fund is an opportunity not to be wasted.
Honourable Members, Mr President,
This report shows that we have gone a long way in our progress towards a sustainable and competitive Energy Union, but it is also a warning that more is to be done.
I will end my remarks here and look forward to hearing your views on how to make our Energy Union stronger.
Thank you for your questions. Let me respond now to a few of the main themes that came up.
First, empowering and protecting all European consumers, especially those who are vulnerable, is paramount. The potential increase of energy poverty among Europeans is a risk we have acknowledged in the recent toolbox of proposals to combat rising energy prices. We want to use the Energy Efficiency Directive to reduce the burden on vulnerable households in tandem with the Climate Social Fund. Energy poverty will reduce further as improvements in energy efficiency grow and as we increase our use of renewable energy across the EU. At the same time, the Hydrogen and Gas Decarbonisation Package coming next month will also include a set of reinforced provisions on consumer protection in the gas and hydrogen markets, drawing inspiration from those applied in the electricity market.
Second, some of you mentioned soaring energy prices. However, increasing energy prices only remind us that we remain too reliant on fossil fuels in the EU. We know that in the medium and longer term we will need to replace unabated fossil fuels, methane and natural gas. We expect that biogas, biomethane, hydrogen and e-gases will provide sustainable options for decarbonisation across a wide range of sectors, and also increase EU autonomy, thanks to domestic production. This is the context in which we are carrying out the work on the Hydrogen and Gas Decarbonisation Package.
Third, it’s clear that more needs to be done on research and innovation spending. On the public side, the EU’s rate of public investment in clean energy technologies is the lowest of the major economies, even lower than it was in 2010. But the State of the Energy Union report also clearly shows that EU recovery funding that targets clean energy R&I can help reverse this trend.
Last but not least, many of you mentioned that we have to do more to achieve our 2030 targets. You mentioned we need to do our utmost to remove barriers for deploying renewables. Right now, the total duration of an offshore renewable energy project can be up to ten years. If this does not change, it could jeopardise the energy transition and our goal of a climate neutral Europe by 2050. As part of the RED Simplify Project, we have carried out mapping on permit granting and grid connection procedures. This helps us identify the key barriers, from process, to land use and grid connection issues. Tackling this issue is also of particular importance in light of rising energy prices.
Mr. President, Honourable Members,
Thank you very much for today’s discussion.