Policy Update: Clean Energy for Europe

The European Commission recently published a new package of measures on clean energy transition for European Union (EU) member states in an effort to drive energy efficiency, increase consumer options and make the EU a clean energy leader.

The package includes legislative proposals on energy efficiency, renewable energy, market design and supply security, along with governance rules.

“Clean Energy for All Europeans”

A number of key commitments and initiatives were introduced within the proposals:

1 – A binding energy efficiency target. Efficiency goals for 2030 will increase from 27 to 30 percent for the member states — as a collective, not individually — as part of the integrated national energy and climate plans under the governance regulation.

The Energy Efficiency Directive will be updated to reflect the new pan-EU objective. This increase is expected to deliver up to €70 billion of additional gross domestic product and 400,000 more jobs across Europe, coupled with further strengthening energy security and reducing the EU fossil fuel import bill.

2 – A binding target on renewable energy use. Total consumption of green energy will increase 27 percent by 2030. Once again, the target will be for the whole EU, not each member state, and it will be introduced via the revised Renewable Energy Directive. New policies will be adopted in different areas: heating and cooling supply, transport and bio-fuels with corresponding targets and strategies.

3 – New rules for electricity markets. The guidelines will provide better price signals to secure investment where it is needed most, reflecting grid constraints and demand centers rather than national borders. The European Commission will accelerate the rollout of smart meters and provide access to dynamic electricity price contracts in order to bridge the gap between consumers and the market.

These new targets and strategies will require additional investment. At least 40 percent of the infrastructure projects under European Fund for Strategic Investments will contribute to climate action to secure an extra €177 billion required from 2021 onward to reach the 2030 climate and energy goals, in line with the commitments under the Paris climate agreement.

What’s on the Horizon?

As detailed in the Second Report on the State of the Energy Union, the EU Parliament and European Council will focus on implementing the initiatives in 2017 to continue progress toward the Paris commitments. Over the next couple years, both bodies will work together on the published proposals, inviting input from all member states and sectors.

The Commission also requested member states to present integrated national energy and climate plans before January 2018 in order to comply with the guidelines. To that end, some governments have started to revisit their regulatory frameworks, embedding new targets and adopting new schemes in the field of energy efficiency and renewable energy.

The proposed set of measures is aimed at developing more robust energy and environmental protocols, which should provide confidence to businesses investing in efficiency technologies, boost the benefits of renewable and self-generation technologies, and implement flexible market mechanisms that favor efficient energy consumers.