The European Energy Challenge
THE ECONOMIC CRISIS that threatened to derail the global economy – and essential investments in critical European energy infrastructure – dissipated as 2010 unfolded. The Commission’s pursuit of its ambitious energy packages took hold until the latter part of the year when European financial crises resurfaced once again. The problem last year was that the EU could be sleepwalking into a renewed crisis as activity picked-up. In 2008, the EU estimated that for electricity and gas, €1,600
billion investments were needed by 2030. Building these infrastructures within these time-frames constituted in itself a considerable challenge. And the obligation to reduce CO2 emissions to combat global warming made this challenge even more complex. With the entry into force of the Lisbon Treaty high-ranking EU officials claimed a new era for modernized, stronger and united EU. These hopes could, sadly, be dashed as the economic (largely bank) crisis look to spread beyond Greece, Ireland and Portugal.
A Common & Single EU Energy Policy Challenges such as globalization, demographic shifts, climate
change, the need for sustainable energy sources and new security threats are not going to be easy to deal with, requiring greater and more rapid and coordinated responses than before. In Europe, the success of responding to these challenges will largely depend on timely and effective completion of the internal energy market which is currently suffering severe shortcomings such as poor implementation of the legislative framework, lack of critical European infrastructure, underutilised energy savings potential, and weak coordination of the external dimension of the EU energy policy. Although Europe has always been dependent
By their own admission – despite
the importance of energy policy aims – there remain serious gaps in policy delivery by the Commission. The internal energy market is still fragmented and has not achieved its potential for transparency, accessibility and choice on the level envisioned. Companies continue to grow beyond national borders, but their development is still hampered by a host of different national rules and practices. And there are still too many barriers to open and fair competition. A recent study into consumer
conditions in retail electricity markets indicates sub-optimal consumer choice. The security of internal energy supplies is undermined by delays in investments and technological progress. Currently, nearly 45% of European electricity generation is based on low-carbon energy sources, mainly nuclear and hydropower. As such, parts of the EU could lose more than a third of their generation capacity by 2020
Companies continue to grow beyond national
on imported energy, European energy policy is a relatively young concept. The liberalisation and development of the gas and power markets in Europe over the last 15 years has exposed energy consumers and their suppliers to much higher price risks than they were used to in the old administered systems. That is because the volatility of prices set freely in the markets is of a different order compared to the fluctuations in rates set by public authorities which, although not always fully predictable, were at least frequently smoothed over time. Suppliers and industrial customers have had to adapt their strategies to this growing exposure to the markets. In addition to the volume risk, they now have to actively manage their price risk. In fact, it is surprising that the EU has managed to ensure
an uninterrupted supply of energy for so long ... until the gas disruption between Russia and Ukraine. This event, affecting twelve Member States clearly demonstrated the extent of the challenge for European energy security. Parts of Europe were totally paralysed until joint European action was taken to respond to the impasse.
borders, but their development is still hampered by a host of different national rules and practices
because of the limited life-time of these installations. “This means replacing and expanding existing capacities, finding secure non-fossil fuel alternatives, adapting networks to renewable energy sources and achieving a truly integrated internal energy market. At the same time Member States still need to phase-out environmentally harmful subsidies,” according to the Commission. Also, the move towards renewable
energy use and greater energy efficiency in transport is happening too slowly. While the EU is “broadly” on track for the 20% target for renewables, it is still a long way
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