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Delivering the Green Deal in the European energy sector

The European Commission lead by President Von der Leyen has made clear from the outset that the European Green Deal is the main priority for its five-year mandate.

Our principal objective is to move to a climate-neutral economy by 2050, and the Green Deal coordinates our approach across all policy areas and all sectors. Energy is of course one of the domains that will play a crucial role in the transition.

If we look at Europe’s economy, we see that energy generation, transmission and conversion is responsible for 75% of the EU’s emissions. A lot has already been done to make EU energy policy legislation fit for the new challenges.

Finalised in 2019, the Clean energy for all Europeans package addressed the three main priorities of EU energy policy: security of supply, affordability, and sustainability.

The Green Deal aims to continue in this path across all sectors and complete the transformation of our energy system into one which is not only carbon-neutral, but also more cost effective, energy efficient and secure.

At the same time, some areas face a larger transformation than others, and so we must ensure that we do not leave any person or region behind.

The principle of ‘Energy efficiency first’ is at the heart of the Deal.

The cheapest and cleanest energy is the one we do not use, so the more we can do to reduce energy consumption, the better. This approach is also good news for consumers saving energy will not only cut emissions, but shrink their energy bills.

This efficiency principle will be applied at all levels of Commission policy-making. In particular, we will focus on further improving the energy efficiency of our buildings, through a renovation wave, aiming to triple the existing, insufficient rate of renovation in Europe.

A crucial aspect is the inclusion of social housing in the wave, to help address the challenge of energy poverty in the EU. Our latest figures indicate that up to 50 million people around the EU are not able to properly heat their homes. This is not acceptable!

Energy efficiency is important, but so is the source of our energy. We need to increase the share of renewable energy by making it easier to incorporate renewables into our energy system.

For this to succeed, we must move towards smart sector integration, which will promote stronger integration of the electricity, heating and cooling, transport, gas, industry, and agricultural sectors.

We have already achieved impressive results in decarbonising the electricity sector, where 31% of electricity is produced from renewable sources.

In order to further boost decarbonisation, we will present a new strategy to boost offshore renewable energy, addressing all the opportunities and challenges, such as the impact on energy grids and markets, the management of maritime space and the industrial policy dimensions of offshore wind.

That said, the decarbonisation of our energy system cannot happen overnight. Natural gas still constitutes almost one quarter of the EU’s energy mix, and will therefore have a role to play in the medium term, as a substitute for more polluting sources like coal, lignite or oil shale.

While the role of gas in the transition is up to each Member State to decide upon, much like their energy mix in general, the EU can and should contribute to the decarbonisation of the gas sector ultimately, the gas we use in the EU has to be clean.

We are already working on creating an environment where clean gases can have a significant presence in the EU gas sector.

The EU has managed to diversify our sources of energy supply in recent years  in terms of more varied forms of energy and different suppliers  but we remain dependent on imports.

Security of energy supply continues to be crucial and, amongst other policies, we need a forward-looking, modern, secure and smart energy infrastructure to safeguard it.

To ensure consistency with Europe’s climate neutrality objective and the Green Deal, we will review the regulatory framework for energy infrastructure this year, through a proposal to modify the TEN-E regulation.

As for technology and innovation, the Green Deal will trigger a major push towards digitalisation in all sectors, facilitating the clean energy transition in all parts of the energy supply chain, from generation to transmission to distribution, and including smart metres at home.

As we increase the digitalisation of energy, we will also need new rules on cybersecurity that are tailor-made for the energy sector.

Given the variability of certain renewables such as solar and wind, we also need to improve our capability to store energy. Our forthcoming Strategic Action Plan on Batteries will address the urgent need for progress on batteries and other forms of storage.

Other new and innovative technologies that will be fostered by the Green Deal are Carbon Capture, Use & Storage, and an increase in the use of hydrogen, which has the potential to play a major role in our move towards climate neutrality.

Making the Green Deal a reality will depend on funding the necessary investment and the smartest combination of public and private finance.

Just to meet our 2030 climate and energy targets, we need an estimated additional €260 billion in annual investments. Public money alone cannot foot this bill.

In fact, we will have to rely primarily on the private sector. By setting clear long-term goals, we are already reducing the risks for investors. Public spending can also play an important role in leveraging private support and providing guarantees.

In this context, the Commission has already outlined a Green Deal Investment Plan, which, over the course of the decade, can generate as much as €1 trillion to fund sustainable projects.

In a similar vein, the Commission has also already published the Just Transition Mechanism  a series of elements to encourage the necessary public and private investment in regions that face the biggest challenges, such as those, which have been most dependent on coal and other fossil fuels.

This includes € 7.5 billion of new funding in the EU budget from 2021-2027 for the Just Transition Fund aimed at the most vulnerable people and regions.

Our ambition will be achieved, if Member States are on board. Under existing rules, each Member State has been required to put together integrated National Energy & Climate Plans for 2021 to 2030, outlining how it intends to contribute to our 2030 targets.

Commission experts are currently analysing these plans and assessing the cumulative impact. We are still missing some, so I urge the countries who are still behind schedule to move with haste.

This assessment, due out in the summer of 2020, will provide a clearer picture of where we stand and where we are likely to be in 2030. It will also tell us to what extent we can and should raise our ambition, individually or collectively.

We know that moving towards a climate neutral economy by mid-century will be a long journey and that the energy sector will need to make a major contribution.

But we are not starting from scratch and we are more efficient and stronger by joining forces at EU level.