Energy issues are the most important items in national political economy. With enormous pressure and challenges, global and European energy problems require new and resolute approaches on energy security, pollution reduction, sustainable growth and climate mitigation. Discussions on achieving fair green and digital transition, energy efficiency and reducing fossil fuels dependency are in agendas of the EU institutions and the member states’ governance. The EU “green deal”, specified during 2020-22, involves a number of policy and economy measures to tackle existing challenges.
The EU’s energy policies cover a number of issues aimed at accelerating and facilitating the just and sustainable transition away from fossil fuels towards clean energy technologies. For a long time, official EU-wide energy policy has been formulated on the threefold objectives of achieving a more secure, more sustainable and more affordable regional energy system. However, with the adoption and amendments of the European Green Deal in 2020-22, the EU’s objectives have acquired some new dimensions: i.e. achieving regional carbon-neutrality by 2050. This novice policy’s approach is based on the following longer-term goals: a) increased offshore renewable energy, b) “renovation wave” strategy*), c) integration of national energy systems, d) developing hydrogen and methane energy sources.
*) As to the “renovation wave strategy” (which was adopted in October 2020, with the Renewable Energy Directive revised in June 2021), it is aimed at improving buildings’ energy performance. The EU’s ideas is at least double renovation rates in the next ten years and insure that all kind of renovations would lead to higher energy and resource efficiency. This policy approach will enhance the quality of life for people living in and using the buildings, reduce EU’s greenhouse gas emissions, foster digitalisation and improve the reuse and recycling of materials. Thus, 35 million buildings could be renovated by 2030; it is evident that about 85% of buildings in the EU were built over 20 years ago, and 85-95% is expected to be still there by 2050. This part of the strategy is particularly vital for the Baltic States countries and other Eastern European states that recently joined the EU.
Buildings in the EU are responsible for about 40 percent of the EU’s energy consumption, and 36 percent of greenhouse gas emissions. But only 1% of buildings undergo energy efficient renovation every year, so effective action is crucial to making Europe climate-neutral by 2050. With nearly 34 million Europeans unable to afford keeping their homes heated, public policies to promote energy efficient renovation are also a response to energy poverty, support the health and wellbeing of people and help reduce energy bills. Therefore, about € 72 billion of the EU funds over next seven years will be used for renovation of buildings, access to zero and low emission mobility, and even income support.
Following the political commitment to reduce emissions by 55% by 2030, which is dubbed as “fit for 55” program, the Commission includes proposals for revising the rules on renewables, energy efficiency, and the energy performance of buildings, and moves to encourage the decarbonisation of the gas market, including through clean hydrogen, and measures to address methane emissions.
Besides, the Commission proposes to the states: a) to renovate at least 3% of the total floor area of all public buildings annually, b) to set a benchmark of 49% of renewables in buildings by 2030, and c) require increasing the use of renewable energy in heating and cooling by +1.1 percentage points each year until 2030.
More in: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1835, and in: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/delivering-european-green-deal_en
Green deal and energy issues
The European Green Deal is a complex and cross-sectoral continental politico-economic agenda aimed at transforming the member states’ economies along resource-efficient, sustainable and aka therefore more competitive paths with adequate climate-change measures. In part, the “deal” is to ensure that the states reach zero-emissions pattern of greenhouse gases by 2050, that national economic growth is decoupled from resource use (particularly, fossil fuels) and environmental quality is sustained; besides, these directions shall be socially-oriented and inclusive. In return, in order to accomplish these ambitious goals and policies, the EU’s seven-year budget allocates financial support to national efforts; specifically, the European Green Deal “offers” one-third of the € 1.8 trillion investments from the NextGenerationEU program and other national recovery-resilience plans.
Reference to: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en
Green deal includes the following energy-oriented policies: addressing energy poverty in the states, reducing external energy dependency, reducing CO2 emissions of new cars and vans by 50-55 percent by 2030, and zero-emissions in new cars by 2035 (in addition, from 2026, road transport will be covered by emissions trading, putting a price on pollution, stimulating cleaner fuel use, and re-investing in clean technologies. In industrial sector, the greed deal presents a great opportunity in the states towards clean technologies and products; the entire value chains in numerous sectors, e.g. energy and transport, construction and renovation will help creating a new set of sustainable and “green but well-paid” jobs in the EU states. Particularly, about 35 million buildings in the EU shall be renovated and 160 thousand new jobs created in the construction sector by 2030.
Specifically, the climate-oriented policies in the green deal include reducing greenhouse gas emissions by 55% by 2030 compared to 1990 levels (up from 40%); besides, the EU adopted the following new targets for 2030: a) raise the share of renewable energy to 40% of total EU energy consumption (up from 32%), and b) improve energy efficiency by 36% (final energy consumption) and 39% (primary energy consumption) relative to the 2007 projections of consumption levels without energy efficiency measures (up from 32.5%), which is equivalent to about 9 percent increase from the previous projections made in 2020.
For example, presently, the EU takes additional actions in renewable energy, in part through a new Commission’s proposal on the so-called RePowerEU program. Thus, on the day of the released details of the “re-power” program, chief executive officers in six energy companies: Shell, BP, Total, ENI, E.ON and Vattenfall met discussed with the Commission President von der Leyen and Energy Commissioner Kadri Simson on the day the EU-wide plans to move Europe away from Russian fossil fuels and set up an industry task force to determine “feasible” measures at a time of a “devastating climate emergency and a huge cost-of-living crisis’. The expert opinion is such that in order to end EU’s reliance on foreign gas imports (either from Russia or otherwise) the member states’ governance shall at least “reset” existing relationship between the fossil fuel industry and decision-makers. Main difficult task is to actually cutting fossil fuel interests out of national political system”.
Commission’s approach in formulating energy policy is based on discussions with all relevant stakeholders in order to the crucial points in practical policy’s implementation “on the ground”. However, a Commission’s final decision on the policy orientation always depends on the “common European interests”, rather than the interest of any state and/or economy sector. Corporate leaders (e.g. Vattenfall experts) mean that that the Commission’s “strong ambitions” regarding decarbonisation and “becoming fossil free within one generation” need serious corrections in the course of the EU “green deal” implementation; for example giving food security priorities over environmental concerns.
It is clear, that without a reduction in resource demand and active global cooperation in resource management, the EU-27 would not substitute existing energy resource dependency (e.g. in fossil fuels) with other vital material resources dependency, e.g. rare earth elements (e.g. for the latter, the EU is almost entirely dependent on China), as well as some necessary materials for renewables. So far European energy and other natural resources’ import represents a heavy burden both for environmental quality and biodiversity; at the same time “feeding European demand” exceeds pollution and harmful emissions in other regions around the world.
Therefore, in order to maintain a productive and competitive industrial development in the member states, the EU has to proceed with productive international cooperation to foster sustainable global economic systems while signifying investments towards fair, just and sustainable transitions.
Green deal, gas and energy in the Baltic Sea Region
Through the EU’s sub-regional strategy for the Baltic Sea area, the Nordic States and three Baltic countries are paying particular attention to sustainability and energy cooperation. For example, vital discussion on all these will take place in Finland at the 14th annual Baltic Sea Region’s Forum “The European Green Deal and the Baltic Sea Region” (16 June 2022). The organizers have chosen three items for discussion out of so many. Seemingly, the choice was dictated by the sub-regional most pressing issues, such as European Green Deal and Competitiveness (Panel I), Energy revolution ahead: What does it mean for us? (with panelists from Finland, Estonia and Germany, Panel II), and Natural gas in the Baltic Sea Region (Panel III).
More on the forum’s program in: https://www.centrumbalticum.org/en/baltic_sea_region_forum/programme
Energy issues are the most important items in political economy of any state, as no country can survive without energy sources; however, the present energy systems are under severe stress and have to be changed. The global and European energy challenges require new approaches: e.g. through for example the “energy transition” and “net-zero economies”, the issues pertinent to both the EU and the member states.
The Forum’s organizers have fundamentally prepared for discussions: a newly published book analyses the recent development of liquefied natural gas (LNG) in the Baltic Sea region and the energy security’s issues which, according to authors, have improved after Finland, Lithuania, Poland, Russia and Sweden have constructed their LNG import terminals.
In addition, the LNG’s issues include major pipeline projects in the sub-region, such as Baltic Pipe, Balticconnector, Nord Stream 2 (failed to function due to Russia-Ukraine military conflict) and Gas Interconnection Poland-Lithuania and their impact on energy security of the Baltic Sea area. Having these issues under analysis, the book represents a perfect reference source for all interested in the European energy markets and energy security issues in the Baltic sea area.
On the LNG in the Baltics: The Future of Energy Consumption, Security and Natural Gas. LNG in the Baltic Sea region. Liuhto, Kari (Ed.). – Springer Publ. Palgrave Macmillan. – 2022; ISBN 978-3-030-80367-4.
The e-book version in: https://www.springer.com/in/book/9783030803667.
Our Institute’s comments on the issues are in the following web-links: a) https://www.integrin.dk/2021/10/07/energy-issues-and-lng-in-europe-and-the-baltics-part-i/; and b) https://www.integrin.dk/2021/10/09/energy-issues-and-lng-in-europe-and-the-baltics-part-ii/.
It has to be concluded finally, that there are five closely related and mutually reinforcing dimensions in the EU-wide energy strategy:
=Security, solidarity and trust – diversifying Europe’s sources of energy and ensuring energy security through solidarity and cooperation among EU-27;
= A fully integrated internal energy market – enabling the free flow of energy through the EU through adequate infrastructure and without technical or regulatory barriers;
= Energy efficiency – improved energy efficiency is to reduce dependence on energy imports, lower emissions, and drive jobs and growth;
= Climate action, decarbonising the economy – the EU is committed to a quick ratification of the Paris Agreement and to retaining its leadership in the area of renewable energy; and
= Research, innovation and competitiveness – supporting breakthroughs in low-carbon and clean energy technologies by prioritising research and innovation to drive energy transition and improve competitiveness.
These issues have to be kept in mind in any national/regional discussions on the European energy policy issues…