How the EU can progress towards an "Energy Union"
IEA review praises bloc's low-carbon leadership but notes that deeper market integration is essential to manage costs of clean-energy shift
The European Union has made progress
in liberalising energy markets, and its global leadership on climate
change is to be commended, the International Energy Agency (IEA) said
today as it released its review of EU energy policies.
However, the new IEA report said there
remains much room for improvement. It noted that much of the integration
of Europe’s energy market has been confined to northern and western
parts of Europe, and that until important interconnections are built
across the entire bloc, the EU will not have a truly integrated, single
energy network – the basis for an “Energy Union”. Moreover, despite
reforms at the wholesale level, markets are increasingly distorted by
the persistence of regulated prices and rising green surcharges and
levies.
In the report, Energy Policies of IEA Countries: European Union – 2014,
the IEA praised the EU for reducing its carbon intensity and taking the
lead in vehicle fuel economy standards. Thanks to the implementation of
20-20-20 targets, lower energy intensity and an unprecedented boom in
renewable energies can be witnessed. EU leaders agreed in October 2014
to ambitious climate and energy targets for 2030. Now, the legal
framework must be put in place, with market rules for a low-carbon
system. The transition to such a low-carbon system remains challenging,
as electricity and transport sectors rely heavily on fossil fuels. This
requires the swift reform of the EU Emissions Trading Scheme (EU ETS)
and support to investment in low-carbon technologies.
"As member states adopt different energy
policy choices and decarbonisation pathways towards 2030, a strong
‘Energy Union’ is needed to achieve the EU 2030 goals. But let’s be
clear: such a union should not represent a buyer’s cartel. Rather, it
should feature an integrated energy market and effective climate and
energy policies," said IEA Executive Director Maria van der Hoeven.
"To make the most of the diversity of
its energy sources, and to move towards an Energy Union, the EU must
better pool its resources within the internal energy market to enhance
both energy security and the competitiveness of its industry," she
added.
EU electricity systems and markets need
to accommodate growing shares of variable renewable energy. At the same
time, the EU faces the retirement of half its nuclear generating
capacity in the next ten years. Decisions need to be made about uprates,
upgrades and lifetime extensions. Energy security must be placed at the
centre of the Energy Union. In order to reduce dependency on one single
supplier, the EU must further diversify gas and oil supplies, and
cannot afford to reduce its energy options: nuclear, coal and
unconventional gas and oil will need to be part of the mix.
Among its key recommended policy actions, the IEA report calls for:
- A new commitment to the internal energy market across the EU, with
an interconnected energy network and competitive retail markets to
ensure:
- in electricity, the market integration of variable renewable generation with strong co-ordination of electricity system operation; generation adequacy; and demand-side response, balancing and intra-day markets across interconnected systems.
- in gas, access to and efficient use of gas storage and liquefied natural gas terminals and unconventional gas sources.
- Timely adoption of market-based and governance rules for an integrated 2030 Climate and Energy Framework with priority to energy efficiency, a strong EU ETS, and support to all low-carbon technologies, by integrating technology, RD&D and innovation foresight.
- Enhanced EU-wide co-operation on uprates, safety upgrades, and extensions of the lifetimes of existing nuclear power plants to ensure highest safety standards and regulatory stability needed for the investment decisions in those countries that opt for nuclear energy.
Energy Policies of IEA Countries: European Union – 2014
provides recommendations on how the 2030 targets can be implemented in a
cost-effective and integrated way, while fostering the competitiveness
and energy security of the European Union. The recommendations build on
the lessons learned and progress made since the first IEA in-depth
review of the European Union in 2008.
Energy Policies of IEA Countries: European Union – 2014 is on sale at the IEA bookshop. Accredited journalists who would like more information or who wish to receive a complimentary copy should contact ieapressoffice@iea.org.
To download the executive summary, please click here.
About the IEA
The International Energy Agency is
an autonomous organisation that works to ensure reliable, affordable and
clean energy for its 29 member countries and beyond. Founded in
response to the 1973/4 oil crisis, the IEA’s initial role was to help
countries co-ordinate a collective response to major disruptions in oil
supply. While this remains a key aspect of its work, the IEA has evolved
and expanded. It is at the heart of global dialogue on energy,
providing authoritative research, statistics, analysis and
recommendations.
http://www.iea.org/newsroomandevents/pressreleases/2014/december/how-the-eu-can-progress-towards-an-energy-union.html
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