European energy and climate: incentives for growth and business

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Another “double strategy” –energy and climate -is being implemented in the EU-27 states’ national recovery: i.e. the two aspects in states priorities are, actually, closely integrated and interconnected. The strategy provides vital orientations for both national political economies’ priorities and for incentives in perspective business models: that is, climate and energy issues are becoming vital parts of national recovery and resilience plans and business development strategies. 

To meet the global and European energy and climate challenges, the EU targets for up to 2030 require the member countries to establish a 10-year integrated national energy and climate plans (NECPs); it is for the period from 2021 to 2030. The national plans outline the ways the EU countries have to address five main areas in their growth patterns: energy efficiency, renewables, greenhouse gas emissions reductions, internal energy infrastructure interconnections, and research and innovation in the “double strategy” issues. Important enough, that these five areas provide vital orientations for businesses and entrepreneurship incentives towards new perspectives in business models.
Although, both climate and energy issues are closely interconnected in national recovery, for a better clarification of measures in each direction it is well worth to take them separately.

First, climate issues
The European attention to climate problems, at least officially, dates back to Paris agreement reached at the end of 2015 by most world countries; hence in December 2019, the EU launched a European Green Deal to introduce “transition paths” to fairer, healthier and more prosperous national growth patterns, while guaranteeing a healthy environment for future generations; two main priorities have been at the core of the “transition”: increased socio-economic growth decoupled from resource use and zero-emissions of greenhouse gases by 2050. The EU-wide surveys show that Europeans see climate change as a serious problem and feel that protecting the environment is personally important for them.
The Commission launched the European Green Deal (coped with the European Climate Pact) at the end of 2020 with a EU-wide platform for states’ cooperation in developing solutions and building networks for real changes in climate mitigation. The initiative outlined that the “green deal” can only succeed if people, communities, states and organisations are all involved and take action.
For example, the Climate Pact provides for a “fertile ground” for initiatives, networks and movements to “revolutionise the approaches to climate actions” in Europe; from the EU side, huge investments are being offered: about one-third of the €1.8 trillion from the NextGenerationEU Recovery Plan (as part of the EU’s seven-year budget) will finance the European Green Deal. Besides, the member states are obliged to devote 37 percent of their budgets on climate change measures.
The European Commission adopted a set of proposals to make the EU’s climate, energy, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels (the initiative called popularly, “Fit for-55”).
More information on Commission’s website: Delivering the European Green Deal.
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Among recent “green deal” perspective measures are the following:
– By December 2021, the Commission collects proposals on the following actions: – on new transport policies targeted on greater efficiency and more sustainable travel; – on measures to remove, recycle and sustainably store carbon; and – on new EU framework to decarbonise gas markets, promote hydrogen and reduce methane emissions.
– By March 2022, to collect proposals on the following measures: on joint European action for more affordable, secure and sustainable energy (within REPowerEU); – to mitigate high energy prices with common gas purchases and minimum gas storage obligations; and – making sustainable products the norm in the EU, boosting circular business models and empowering consumers for the green transition.
– By April 2022, to collect proposals aimed at modernising the EU member states’ industrial emissions rules to steer large industry in long-term green transition.
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The Commission also supports the EU states in preparing their long-term strategies: first, by providing information on: a) the state of the underlying scientific knowledge, and b) revealing opportunities for sharing knowledge and best practices, including, where relevant, the necessary guidance for the states.
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As to the EU emissions reduction efforts, its history dates back to 2011, when the European Commission put forward a roadmap for a competitive low-carbon Europe by 2050. The roadmap included adequate member states’ actions up to 2050 which could enable them to deliver greenhouse gas reductions in line with the 80 to 95% target agreed internationally. Besides, the roadmap also outlined milestones towards the target, policy challenges, investment needs and opportunities in different economy sectors.
The Commission will be assessing the national long-term strategies’ adequacy for the EU-wide political priorities in order to collectively achieve the objectives and targets set out in the governance regulation and provide information on any remaining deficiencies. Thus, the EU states have to develop their strategies with fill attention to combined efforts in European energy issues and that of preventing climate change (e.g. in line with the EU regulation adopted in 2018 on the European integrated national energy and climate plans (NECPs) based on a common region-wide approach. National strategies are added to the EU structures as soon as they are received by the Commission, e.g. Estonia and Lithuania have already presented their national strategies in the web-sites’ format at the end of September 2021.

Second, the energy issues
Energy issues have been always an important part in the EU political agenda; however during last decade they attracted particular attention. As a result of that, a new integration instrument was created called the European “energy union”, the process that evolved through four stages: the first stage in November 2015 (just after the Paris agreement has been reached), the second, in November 2017, the third in April 2019 and the fourth stage in October 2020. During all these stages, the main energy union concepts and contents have been created.
Hence, the energy union is based on three long-term objectives (security of supply, sustainability and competitiveness) and five mutually supportive “dimensions”: – energy security, solidarity and trust; – internal energy market; – energy efficiency; – decarbonisation of the economy; and – research, innovation and competitiveness. Besides, there are included such items as nuclear energy, renewable energy, as well as oil, gas and coal issues becoming quite vulnerable during present Russia-Ukraine military conflict).
For example, in secure energy supplies the EU intends to become less dependent on imported energy by making more efficient use of own domestic energy while diversifying sources and supplies; in energy efficiency, main direction is to formulate rules on buildings, industry, consumer products and transport to assist the states in meeting energy-efficiency targets and moving to low-carbon societies; in energy technology and innovation, the EU supports deployment of low-carbon technologies such as photovoltaic, wind power, carbon capture and storage (CCS), and energy storage technologies; in the EU single energy market, the EU wants to reduce technical and regulatory barriers so that energy can flow across national borders and energy providers can compete among EU-27; in renewable energy, the EU coordinates work to reach national targets in line with the renewable energy directive (it also promotes alternative energy use in transport); in oil, gas and coal, the EU aims to keep fossil fuel markets fair and to protect the environment, including when new technologies such as shale gas extraction are being used; in energy infrastructure, the main instrument, the Trans-European Networks (TEN-E) strategy focuses on extending and upgrading Europe’s infrastructure and creating networks across national borders.
The EU is still the largest energy importer in the world, importing 53% of its energy, with annual cost of around €400 billion).
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National energy-climate strategies
Stable long-term national strategies are crucial for achieving economic transformations in energy and climate issues needed for implementing broader sustainable development goals, as well as moving towards long-term goal set by the Paris Agreement (enforced in EU at the end of 2016).
The main aspects of the agreement are dealing with reducing emissions (among some other issues); the EU states agreed on the following measures: a) following a long-term goal of keeping the increase in global average temperature to well below 2°C above pre-industrial levels; b) to limit the increase in the global average temperature to 1,5 °C (since this would significantly reduce risks and the impacts of climate change); c) to undertake rapid emissions reductions thereafter (in accordance with the best available science, in order to achieve a balance between emissions and removals in the second half of this century). However, the main EU framework of the strategy for a resilient energy union is closely connected with a forward-looking climate change policies in the member states.
As a contribution to the objectives of the agreement, countries have to submit comprehensive national climate action plans (called, nationally determined contributions, NDCs).
Specifically, the agreement postulates an active role of authorities in cities, regions and local communities to: a) scale up their efforts and support actions to reduce emissions; b) build resilience and decrease vulnerability to the adverse effects of climate change; and c) uphold and promote regional and international cooperation.
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Integrated national energy and climate plans (NECPs) for the period from 2021 to 2030 cover the following main dimensions, which at the same time constitute the EU “energy union” priorities: – decarbonisation (greenhouse gas reduction and renewables), energy security and efficiency, – creating EU-internal energy market infrastructure, and – promoting research, innovation and competitiveness in energy issues.
For example, as to “clean energy transition”, the following three key principles would help the states reduce greenhouse gas emissions and enhance environmental quality: a) ensuring secure and affordable EU energy supply; b) developing a fully integrated, interconnected and digitalised EU energy market; and c) prioritising energy efficiency, improving buildings’ energy performance and developing a power sector based largely on renewable sources (about 40 percent of Europe’s energy use goes into heating, cooling and powering offices and residential buildings).
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According to the so-called governance regulation (nr. 1999 of 2018), the EU member states submitted their long-term 2021-2030 draft plans for energy and climate to Commission by the end of 2018 and the final plans by the end of 2019. The governance regulation from 2018 required the EU states to submit their first national long-term energy-climate strategies to the Commission by January 2020. The next EU strategy plan is due by January 2029 and every 10 years thereafter the EU and the member states can update -when necessary- their strategies.
The Commission will make final assessment of the present national energy and climate plans (with the consequential alteration and updating when necessary) by the end of June 2023: first in a draft form and by 30 June 2024 in a final form in order to reflect both increased European climate ambition and energy feasibility.
Until then, the EU states can adapt their national policies and measures separately and at any time, provided such changes are included in the biennial integrated national energy and climate progress reports to the Commission.
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See also: Regulation 2018/1999 on the governance of the energy union and climate action, 11 December 2018 (further on “the governance regulation”).

The Commission renders support and assistance to the member states in preparing their long-term energy and climate strategies by providing information on: a) the state of the underlying scientific knowledge, and b) on existing opportunities for sharing knowledge and best practices, including, where relevant, guidance for the states.
The Commission will assess whether the national long-term strategies are adequate for the EU to collectively achieve the objectives and targets set out in the governance regulation and provide information on any remaining collective gap.
The EU member states should develop their strategies in an open and transparent manner and ensure opportunities for the public to participate.
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