Clean energy for all Europeans: a turning point for the Energy Union?

Clean energy for all Europeans: a turning point for the Energy Union?

Nicoló Sartori | Senior Fellow and Head of the Energy program at the IAI
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The Winter Package, the latest plan approved by the Commission, is a milestone for Europe in its personal journey toward cleaner energy. The plan focuses on the development of renewables, energy efficiency and, generally, on the future of the sector in the EU

Over a thousand pages of Communications, proposals for Directives and Regulations, and evaluation and impact assessment documents, for what can be fully considered the most full-bodied and ambitious package of measures proposed by the European Commission on energy. The so-called ‘Winter Package’, presented by the Vice President of the Energy Union, Sefcovic, and by the Commissioner for Energy and Climate, Canete, represents the final stage of a journey that has led the EU to ratify the Paris Agreement, for the adoption of which Brussels played a key role, before, during and after COP21.
The package, under the motto "Clean energy for all Europeans", focuses on three main points: energy efficiency, development and integration of renewables, and consumer protection, in addition to other issues of great importance to the energy future of the EU, including the governance mechanisms of the Energy Union, the reform of the ACER and investments in technology and innovation.

The European ambition after Paris

#WinterPackage by the #EuropeanCommission the goal: changing the energy sector to seize opportunities and face the challenges of transition

Vice President Maros Sefcovic had, in fact, promised that 2016 would be the Energy Union’s year of "delivery". And indeed the action of the Commission did not keep us waiting for long, with a total of four Communications, three new Regulations, six proposals for the revision of existing Directives and Regulations, and a long series of assessment and analysis documents on European performance, included inside the Winter Package.
An ambitious initiative that goes hand in hand with the willingness and need of the Commission to give continuity to the path launched before, during and after COP21 in Paris, the aim of which is not only to ride the energy transition that is underway worldwide and achieve the 2030 European targets, but also – and above all – to use it as a driving force for economic growth and development in Europe.
To this end, the package takes a holistic approach and provides for a series of legislative proposals on the entire spectrum of the energy chain, with major spin-offs in related business sectors. Thanks to the stimulus provided by the new measures, according to the forecasts of Brussels, the real estate, engineering and steel industries should experience a growth – respectively – of 5%, 3.8% and 3.5%, with employment growth of around a million workers.

Efficiency, renewables and consumers

At the center of the Commission’s Winter Package, as mentioned, is the aim of transforming the European energy sector to be able to seize the opportunities and face the challenges of the transition in progress. The package revolves around three main actions: giving priority to energy efficiency; consolidating leadership in the renewables sector and protecting consumers within the energy market.
In terms of efficiency, after a series of ambitious announcements (i.e. Efficiency First) followed by substantial regulatory inaction, the Commission is finally attempting to launch a solid path. Great attention, in this context, is paid to the real estate sector, which accounts for 40% of European consumption, partly due to largely inefficient buildings (75% are below standards). To improve European performance in this sector, the Commission is introducing new schemes and mechanisms, including financial, to increase renovation activities and the introduction of smart technologies, linking them to clear performance assessment tools.
Regarding the renewables plan, the aim of Brussels is to maintain its global leadership in the industry, by ensuring stability and regulatory predictability to investors, in both the electricity generation sector and in the transport and domestic heating sectors. The proposals specifically aim to improve and/or introduce market mechanisms (e.g. priority access, short-term trading) to promote the penetration of renewables and to ensure returns and benefits to clean energy producers and consumers, as well as to provide common principles in terms of support schemes, such as to ensure a progressive transnational integration of the renewable capacity.
Considering its key role in the current energy transition, the Winter Package pays specific attention to the theme of consumers. The measures proposed in the package are aimed at creating a 2.0 energy sector, thanks to which innovative technologies and services (e.g. smart metering), better access to information and better dynamism at the contractual level, can ensure – in combination with the potential benefits of self-generation and self-consumption – a more conscious, competitive and sustainable use of energy by consumers.

The Winter Packare will give continuity to the agreements reached during COP21. With this plan the Commission aims to not only to ride the energy transition that is already underway, but also to use it as a driving force for economic growth and development in Europe

European governance and technologies

To be able to implement these ambitious measures and take the irreversible path toward energy transition in Europe, however, there are at least a couple of elements – both dealt with in the Winter Package – that are impossible to overlook: the first, effective governance by the Energy Union; the second, technological development and innovation.
As regards governance, the Regulation proposed by the Commission redefines the mechanisms and tools for planning and monitoring the action of the Member States on the energy sector, significantly simplifying the reporting obligations, but at the same time introducing more solid cooperative schemes to make the national planning more integrated and in line with European objectives. In this context, the simultaneous strengthening of the ACER’s powers over the regulatory plan may be an important step forwards in the enforcement of the European provisions.
The package finally highlights the need to accelerate innovation processes in the energy sector which, according to the Commission may be ensured thanks to a three-dimensional strategy based on: the development of targeted policies and the adoption of clear regulatory frameworks by the institutions; definition of European financial instruments capable of reducing private investor risk in innovative technologies and processes (e.g. the InnovFin Energy Demonstration Projects scheme); direct financing for research and development by the EU through the H2020 program.
In conclusion, with the adoption of the Winter Package, the Commission has the great merit of proposing, through an integrated scheme, a series of measures and reforms that are potentially capable of changing the current nature of the European energy sector. This complexity, however, risks becoming a boomerang: due to so many "irons in the fire", the process of adoption, implementation and application could be subject to delays and setbacks on the national level, and this is what Brussels will be called upon to monitor with great attention.