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EU energy union to initiate billions in infrastructure spending

Europe is set for EUR40bn in investment in order to build a new power infrastructure and ultimately save the bloc billions of euros each year.

The launch of the Energy Union strategy took place on Wednesday with EU chiefs promising £29bn in annual savings for the bloc’s energy users.

Marie Donnelly of the Commission had indicated the direction of the document at a speech in London on Tuesday and so it proved that initiatives involving heating and cooling, power interconnection and reduced dependency on Russian imports are all to the fore in the document’s stated intentions.
Climate Action and Energy European Commissioner-designate Miguel Arias Canete
The strategy for an energy union seeks to reduce import dependency through better grids and pipelines to improve energy sharing across the 28 member states. The plan would cut costs, the Commission says, by increasing consumer options, integrating renewable energy supplies and reducing the need for expensive imports.

Climate Action and Energy Commissioner Miguel Arias Canete and Maroš Šefcovic, Vice-President of the EC in charge of Energy Union fielded vigorous questioning on one particular detail during the press Q&A: Greater transparency for intergovernmental agreements –the move designed to allow the Commission greater control in energy supply negotiations with outside parties such as Russia.

“Europe is losing up to EUR40bn a year by not having a fully connected energy market,” Canete said, citing research carried out for the Commission.

Referring to the strategy as a holistic approach to EU energy management, Canete added he was releasing a “country-by-country plan to achieve a goal of ensuring cross-border links equate to at least 10 per cent of a nation’s power generation capacity by 2020.

The overall amount of investment needed in EU energy infrastructure is around EUR200bn between now and 2020. Of this, the cost of reaching the 10 per cent goal is roughly EUR40bn, the Commission says, meaning it would be swiftly offset by the savings it foresees.

With regard to greater transparency in intergovernmental agreements, Canete said consultation with Brussels in those arrangements is ‘not good enough’, citing the example of the South Stream deal with Russia.

“Our proposal is that the Commission should be part of the negotiating team when such important agreements are being signed. We also want to push it further and increase the transparency of gas contracts in the long term- I am convince we can develop that mechanism while respecting commercial secrets. Without proper transparency on the European side it’s very difficult for us to negotiate with the dominant suppliers.

“When it comes to prices, volumes, delivery points, when you look to the states in central and Eastern Europe it would be very good to have advice from the Commission on what is being negotiated with other countries and partners, so we are not being pushed into disadvantaged negotiations points.”

Canete also emphasised the importance of a robust infringement process to ensure new regulations are properly implemented and also pointed out that the Commission’s place in the front line of negotiations on agreements would be more efficient as there would be less need for European Courts of Justice in the process, with less EU laws being contravened.

“It is much better to consult in advance and make sure agreements are complied with – agreements often contradict community rules- so it is much more efficient to consult, see the experience and approach in a reasonable way instead of going through ECJ process.

The Commission says 12 member states do not have enough connection to the rest of the EU electricity market: Britain, Cyprus, Estonia, Ireland, Italy, Latvia, Lithuania, Malta, Poland, Portugal, Romania and Spain.

Canete told the press briefing, “After decades of delay it is important that we don’t lose the opportunity to create energy union. Energy islands still exist in Europe which threaten our security and make us vulnerable. This is the first concrete union showing country by country how we can get to a 10 per cent interconnection target by 2030 and it marks our independence from external suppliers and our interdependence as Europeans.

There will be positive implications for Europe’s gas infrastructure arising from the strategy and a commitment to forge stronger relationships with neighbours such as Tukey, Algeria and Norway, thereby reducing dependency on any one external arrangement. Canete also added that carbon capture and storage would have to be developed if Europe is to maintain its coal-fired power capacity.