Why Europe Needs a Strong Energy Union

By Gerben-Jan Gerbrandy the environment spokesman of the Alliance of Liberals and Democrats for Europe (ALDE)
Spring 2015

The European Commission recently presented a proposal for one of its most important flagship projects: the creation of a European Energy Union. If done right, it could lead to the delivery of a genuine single European energy market with increased competition and lower energy costs. It could increase energy efficiency, create millions of new jobs, make Europe the leader again in the fight against climate change and make Europe a more attractive place for companies to invest in. Moreover, European energy independence would be a blow to Russia's geopolitical significance and make Europe more independent from third country energy suppliers.

But it will only work if Europe dares to propose an Energy Union with teeth. We need to invest substantially in energy efficiency, renewables and infrastructure the coming years. If we make the right choices now Europe will have cheap, clean and secure energy in abundance. This requires concrete actions in five areas.

Europe urgently needs a much more ambitious energy efficiency strategy. The potential benefits of becoming more efficient are enormous! The International Energy Agency even calls energy efficiency the world’s "first fuel" by virtue of its lowest cost, availability and sustainability. If Europe modernises its houses and offices, updates its transport means and allows smart technologies and ICT innovations, we could save incredible amounts of currently wasted energy. A clear focus on energy efficiency will boost investment and potentially create millions of jobs, for instance in the building sector, but also in Europe's troubled manufacturing industries. It is a crucial condition, if we are to achieve the EU's goal to reduce emissions up to 95% in 2050.

Secondly, we must establish a competitive and integrated energy market within the EU. Liberalisation measures, such as the Third Energy Package, are underway, but EU Member States have been too reluctant to implement these laws. They have made little effort to invest in interconnections with other energy grids and they too often act only to protect their own semi-state owned energy companies. While in fact, a more integrated single market in energy could result in efficiency gains of some 50 billion euros a year. We need to overcome the current fragmentation of energy policy into 28 different systems and reaping the full benefits of a common European.

In order to secure a functioning Energy Union, strong European governance is essential. Modelled on the economic governance framework, the EU should set up an "Energy Pack" that will keep all 28 Member States on track. The Commission must monitor and strictly enforce the rules regarding the Energy Union, but also the implementation of the targets that will be set in the EU 2030 climate and energy framework – those include a drastic reduction of CO2 emissions, and an increasing use of renewable energy.

Fourthly, Europe's advanced position in clean technologies needs to be maintained by boosting research and innovation. We must enhance cooperation between researchers by better targeting existing European funds. Particular attention should go to bridging the gap between the pre-commercial demonstration stage and the actual marketing of new technologies, bringing economies of scale.

Finally, special attention needs to be given to the business side of the Energy Union. The single biggest barrier to investment is regulatory uncertainty, with national and Union policy frameworks changing constantly. Investors will only put their money in the many projects of the Energy Union if the associated regulatory framework is put in place, environmental legislation is predictable and competition policy is sound. This also applies for citizens – today's micro-investors – who increasingly want to produce their own energy.

The stakes are high. If Europe can deliver an ambitious and effective Energy Union, we will achieve our crucial goal: having cheap, clean, and secure energy in abundance. Europe will once again lead the development of green technologies and make a fast transition to a sustainable economy. Putin and many of the other energy exporters outside the EU, who have grown wealthy on our addiction to fossil fuels, will be willing us to fail; but this is a fight we cannot afford to lose.