On 14 October, the European Commission has adopted its State of the Energy Union Report for 2020, where it assessed the good progress made towards achieving the current 2030 climate and energy targets.  It is the first report since the adoption of the EU Green Deal, therefore it can provide an important insight into the Energy Union’s contribution to Europe’s long-term climate goals and where we still have to improve.

Even though most of the information was gathered from the National Energy and Climate Plans (NECPs), which were written before the beginning of the COVID-19 crisis, the report also shows the importance to follow up on the EU Green Deal and reach the objectives of the Commission’s proposal for a higher 2030 energy and climate target. Arguably, this statement can go further according to the European Parliament’s vote in mid-October on its 60% GHG emission reduction target.

The report takes a holistic look into the state of the Energy Union in five key areas including decarbonisation and the growth of renewables, energy efficiency, energy security, the internal energy market, research, innovation and competitiveness as well as an overall assessment on the NECP.

To get the full picture of the report’s main outcomes and what it really means for the EU Green Deal, here are the five main takeaways from the report, which will be at the heart of the upcoming activities of CEEP Energy Task Force and Sustainability Board.

Renewable Energy

The report shows that the EU is on track with its renewable energy targets for 2020 when it is estimated to reach 22.8 % and 23.1% of renewable energy use in the overall EU energy mix. Despite the fact that many EU Member States  are fulfilling their targets, others are lagging behind. Belgium, France and Poland are at high risk of not meeting their targets for 2020, whilst the Netherlands and Luxembourg are at a moderate risk. The Commission underlines that investments in renewable energy are increasingly driven by market decisions, and Member States grant more support to renewable energy through competitive tenders. The Commission hopes to solve this problem with its new renewable energy financing mechanism, which allows countries struggling to meet their renewable targets to financially support a more decarbonised energy mix. This will give Member States the potential to accelerate their renewable production and contribute to the objectives of the EU Green Deal. However, the report also shows that public and private spending trends on clean energy research and innovation are not encouraging. Member States have spent a little less on clean energy technologies compared to the previous years and the overall EU’s public research and innovation investments as a share of GDP is the lowest of other major economies.

To reach the climate and energy goals set in the EU Green Deal, Member States have to make much better use of supportive EU instruments such as Horizon Europe, the Innovation Fund and InvestEU as well as of the EU recovery funds that will encourage appropriate pathways towards climate-neutrality.

Energy Efficiency

The results on the progress for more energy efficiency is the weak angle of this report. The EU may pass the 2020 goals of 20% energy savings, yet this is only due to the events of the COVID-19 crisis and not to structural improvements. It is clear that without the lockdown this target would not have been met. This is the consequence of Member States’ failure to renovate and adjust its inefficient buildings, which are the largest energy consumers.

Therefore, the new Renovation Wave of the Commission is tackling this exact problem by introducing a minimum energy standard for buildings to come down to 60% GHG emission reduction by 2030 compared to the 2015 level, as well as an energy consumption reduction of 14%, and energy consumptions from heating and cooling buildings must be down to 18%. The Commission stated to be prepared to sue countries falling short of this goal. At the same time, energy efficiency jobs have increased by an annual 17.4% between 2000 and 2017. That being said, much better progress needs to be made and it will be important to consider the individual national circumstances before drawing conclusions in order to improve energy efficiency in buildings.

Security of supply

The security of energy supply in the EU has passed the COVID-19 test. The report shows that the resilience and preparedness of the EU energy system has proven robust and secured the continuity of essential operations. For that reason, the Commission underlines again the need for a functional and efficient EU market. Yet there is still some work to be done for further electricity and gas integration in the market to fully ensure better use is made of smart integration technologies for industries, transport and energy sectors that can meet the energy efficiency targets that are missing.

Emission Reduction Target

At the current stage, the EU is on track with its 2030 targets in cutting down GHG emissions by 40% compared to 1990 levels. Yet, the new target proposed by the Commission of 55% reduction and the proposed new climate target – and the proposal of the European Parliament to go up to 60% – will have to change the discourse dramatically. This means that to set higher goals for national wholesale revision planning, the renewable share needs to increase up from 38% to 40% and buildings renovation rates need to double. Also, the Emission Trading System (ETS) has shown some positive effects that contributed to the reduction of the emissions due to a stable carbon price during the COVID-19 crisis, yet this effect may fade. Despite these efforts, the report pointed out for the first time in an energy subsidies analysis, a clear need to reduce subsidies supporting fossil fuels’ production and consumption. The stats show that fossil fuels’ subsidies amounted to 50 bn Euros in the EU in 2018 and were on the rise. The Commission is now counting on the 750 bn Euro recovery package to stimulate more financial flows into the climate goals of the EU Green Deal.

Internal EU Energy Market

The effects from the 2019 Clean Energy for all Europeans package shows that there was more support in streamlining rules for electricity market design as well as an improvement of the gas markets. As for the electricity market, the new rules seek to make the most of interconnectors allowing for better cross-border trade and management of power across European grids. The EU’s 2030 interconnectivity target of 15% is already exceeded by most Member States. The next step will be to deploy more smart grids, which the Commission is hoping will increase energy efficiency and more renewable based electricity.

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