The European Commission’s dream of knocking down national borders and building a single energy union is proving tougher than some might have thought.
It’s been nearly three years since Brussels unveiled its blueprint for an interconnected and harmonized EU market where gas and power can flow freely from one corner to another, countries step in to help each other out when supply falls short and climate-harming greenhouse gas emissions keep falling.
The Commission’s part is largely done, as emphasized in its annual energy union assessment report released Friday. It has proposed enormous policy changes for 2021 to 2030, ranging from overhauls of the bloc’s electricity market and Emissions Trading System to rules to make sure countries help each other out when gas runs short.
Now the focus turns to the European Parliament and Council negotiations on the Commission’s proposals, and making sure the energy union is “no longer a policy but a well-framed reality” by 2019, Maroš Šefčovič, the Commission’s energy union vice president, told reporters on Thursday.
“We, at the moment, are in the most difficult part, in acting like honest brokers between the Council and the Parliament,” Miguel Arias Cañete, the climate action and energy commissioner, said Friday.
Arias Cañete declined to grade the Commission’s work toward building the 2015 energy union vision, saying only: “I’m humble, I will go for the middle ground.”
POLITICO doesn’t have those scruples. Here’s our report card for the EU’s work on five key pieces of the energy union project.
1. Energy security
Energy union goal: To reduce reliance on Russian gas by making sure EU countries have at least three different sources of gas, for which they pay the market rate.
How it’s going: Liquefied natural gas from the United States, Norway and Qatar is helping central, eastern and southern Europeans diversify their supplies even though they’re paying more compared to piped Russian imports. Poland signed its first longer-term contract for American cargoes this week, and work on a large pipeline from Azerbaijan to the EU is progressing slowly, despite obstacles including local opposition in Italy and some of the financing not being in place.
However, exports from Russia’s Gazprom to Western Europe are still on the rise. And Russia is still vying for new supply routes westward, with the controversial Nord Stream 2 pipeline, which would concentrate 80 percent of Russian exports to the EU into Germany. The problem for Brussels is that it can’t stop the project being built, although it is trying to slow things down by updating EU gas rules to apply to pipelines from outside the bloc.
Verdict: Good and bad. The EU can now boast that it’s better connected to global gas markets and is generally more resilient when it comes to gas cutoffs. But Nord Stream 2 and Russia’s plan to boost its supplies to Europe through another pipeline to Turkey are throwing a wrench in this key energy union objective.
Grade: B
2. Cutting carbon
Goal: To build a “low-carbon society” that draws on more homegrown, green energy like solar and wind, uses clean forms of transport like electric cars and keeps cutting its greenhouse gas emissions.
How it’s going: The EU set itself three broad targets for 2030, compared to 1990: Reduce emissions by at least 40 percent, boost the share of renewables by at least 27 percent and improve energy efficiency by at least 27 percent (although negotiations are now underway to raise the third goal to 30 percent or more).
But meeting those goals requires pushing countries to make changes in dominant old industries like coal, steel and farming. The reform of the emissions trading market completed this month left lobbyists and countries on both sides of this battle only mildly satisfied. It’s still a little too tough for factories and manufacturers facing international competition; still too weak to push the market price as high as environmentalists had hoped. Many more policies, including national emissions reduction goals in non-industrial sectors like transport and agriculture, CO2 standards for cars and vans and rules to protect forests from logging, are still a matter of debate among MEPs and the Council.
Verdict: If the emissions trading reform is anything to go by, Brussels is doing its darndest to cut a middle ground between looking tough on climate change and protecting industries. If you listen to environmental campaigners, the fact that the EU is overachieving on its energy and climate pledges for 2020 means it could do much more — especially since the 2030 goals still fall short of what the bloc should do to limit global warming under the international Paris accord.
Grade: B-
3. Internal energy market
Goal: To better connect national and regional power grids and set common market rules across the EU.
How it’s going: There are more gas links between countries and rules to make them help each other out in case of an emergency. However, over 150 gas and electricity interconnectors are still needed, according to a list of priority energy projects the Commission released Friday. On the electricity side, countries are debating how to redesign the market to make room for the growing share of renewable energy, as well as rules for encouraging renewables and improving energy efficiency.
But the plan to build the single energy market predated the energy union project and missed its 2015 deadline for completion. Part of that effort was to build up power links between countries by 2020, but only 17 have met the goal so far, Arias Cañete said Friday. To move things along, the Commission set out a strategy Friday to help countries build additional interconnections out to 2030.
Verdict: Completing the internal energy market was a goal the EU failed to achieve before it even announced the energy union. While countries say they want to boost their links, several priority projects have been slowed by regulatory barriers. And so far, the Council is proving to be less ambitious than Parliament on its commitments to boost the share of renewable energy or become more efficient by 2030.
Grade: C+
4. Working better together
Goal: To get countries to think outside their national boundaries, work and plan better together, share their energy and rely on each other in times of need.
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How it’s going: The EU now has rules in place to ensure countries help each other out if their gas is cut off — but that came after difficult negotiations. They now have to go through a similar exercise for electricity, and figure out who will fill the gap if the bloc falls short of meeting its EU-wide goal for adding renewable energy.
National governments are resistant to ideas like paying into a fund if they don’t meet their renewable energy obligations or open up their renewable support schemes to companies in other countries. There’s also pushback on the Commission’s demand that governments get an early start on their national energy and climate plans for the next decade and follow set reporting rules. Brussels believes that’s needed to give investors certainty.
Verdict: If last year’s heavy winter was a reflection of where countries stand on regional cooperation — when some of them stopped power exports to their neighbors due to huge demand at home — then breaking national mindsets is one of the most challenging pieces of the energy union. Based on where negotiations are heading, there is a risk of a re-nationalization of energy policies that may turn the energy union into patchwork of solutions.
Grade: C-
5. European Commission’s work
Goal: The Commission assigned itself a hefty load of homework in February 2015 — to come up with a series of big packages of policies over the next few years, and complete them within President Jean-Claude Juncker’s five-year term.
How it’s going: At an efficient clip. From the emissions trading reform in July 2015, to the gas solidarity rules in February 2016 and the 1,000-plus page package of electricity-focused policies in November 2016, the Commission has followed through on its promise of legislative changes. All that’s left is a proposal for limiting emissions from heavy-duty vehicles, expected around May 2018. The task ahead: “Keep the coherence and ambition” during negotiations with EU countries and MEPs, Arias Cañete said. “Now we are in a more difficult political situation,” he said. “At the moment what I am seeing is more ambition on the side of the European Parliament, but I wouldn’t say the same for the Council.”
Verdict: The Commission largely stuck to its deadlines. And journalists know how tough that can be. So …
Grade: A
Kalina Oroschakoff contributed reporting