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Brussels, |
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REPowerEU: the EU Revolution
by eEuropa
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The European Council agrees on 30 May 2022 that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia into Member States, with a temporary exception for crude oil delivered by pipeline. On 18 May 2022 the European Commission presented the REPowerEU Plan, already announced in March. The Plan was discussed last night by the 27 European Leaders. This plan is a sort of response to the energy problems facing Europe. The need to give more courage to the ambitions already expressed for 2030 and 2050 in the energy field and that the war in Ukraine has made more urgent. This means that there is a double urgency to transform Europe's energy system:
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The European Commission thinks that "by acting as a Union, Europe can phase out the dependency on Russian fossil fuels faster" through:
- energy savings
- diversification of energy supplies
- renewable energy
- smartly combine investments and reforms
Purposes of REPowerEU
Let's see the the purposes of the Plan:
1. Energy savings
Here the measures proposed by the European Commission:
Enhanced implementation and ambitious updating of National Energy and Climate Plans (NECPs) are key to achieving REPowerEU's goals. NECPs play a crucial role in enhancing investor confidence and investment predictability. They provide a good framework for planning and encouraging the reduction of fossil fuel use.
By the end of 2022, a guide for updating Member States of their National Plans (PNEC) will be published.
The regions and municipalities are naturally involved in this objective, and they should launch awareness-raising, information and support programs. They should also do energy audits and energy management plans, with the aim of saving energy with the involvement of citizens. As well as through the European Mission on Smart Cities (zero climate impact) and the European Urban Initiative in the context of cohesion policy.
1. Energy savings
Here the measures proposed by the European Commission:
- increase to 13% the binding target in the Energy Efficiency Directive
- amend the directive on the energy performance of buildings
- approve the Eco-design Regulations for sustainable products.
- behaviour modification. Some states are introducing rules to reduce consumption and the European Commission has launched, in collaboration with the International Energy Agency (IEA), a nine-point plan "Do my part" to reduce energy consumption in EU. It is estimated that there will be a 5% reduction in demand for gas (about 13 billion cubic meters) and for oil (about 16 million toe).
- Member States are asked to use reduced VAT rates for highly efficient heating systems and for building insulation and other energy pricing measures, which encourage the switch to heat pumps and the purchase of more appliances. efficient. Such measures should cushion social and distributional impacts, eg. focusing on vulnerable families struggling to pay their energy bills and to manage the potential impact of the accelerated energy transition on the labor market, with immediate redevelopment and redevelopment needs.
Enhanced implementation and ambitious updating of National Energy and Climate Plans (NECPs) are key to achieving REPowerEU's goals. NECPs play a crucial role in enhancing investor confidence and investment predictability. They provide a good framework for planning and encouraging the reduction of fossil fuel use.
By the end of 2022, a guide for updating Member States of their National Plans (PNEC) will be published.
The regions and municipalities are naturally involved in this objective, and they should launch awareness-raising, information and support programs. They should also do energy audits and energy management plans, with the aim of saving energy with the involvement of citizens. As well as through the European Mission on Smart Cities (zero climate impact) and the European Urban Initiative in the context of cohesion policy.
2. Diversifying energy imports
Here are the initiatives and the proposed measures by the European Commission:
Diversification will also help Member States that currently depend on Russia for nuclear fuel for their reactors that serve both energy and non-energy uses.
The EU will be able to work with international partners to secure alternative sources of uranium and enhance the conversion, enrichment and manufacturing capacities of available nuclear fuels in Europe or its Partners (listed above).
Here are the initiatives and the proposed measures by the European Commission:
- The Commission and the Member States have already set up an EU energy platform for the voluntary joint purchase of gas, LNG and hydrogen (March 2020). It will serve to aggregate and structure the energy demand of the 27, with all the benefits of scale and a system of solidarity between countries to avoid emergency situations. t will also serve to have an optimised and transparent management of gas import, storage and transport infrastructures.
- Development of a voluntary "joint purchasing mechanism", responsible for negotiation and bargaining on behalf of participating Member States, in which the Western Balkans, Ukraine, Moldova, Georgia will be able to participate. The platform will also focus on the joint purchase of hydrogen.
Diversification will also help Member States that currently depend on Russia for nuclear fuel for their reactors that serve both energy and non-energy uses.
The EU will be able to work with international partners to secure alternative sources of uranium and enhance the conversion, enrichment and manufacturing capacities of available nuclear fuels in Europe or its Partners (listed above).
3. Transition to Renewable energy
The European Commission suggests a massive speed-up and scale-up in renewable energy in power generation, industry, buildings and transport, useful to meet the climatic targets, lower prices and to accelerate the EU phasing out of Russian fossil fuels.
The Commission proposed:
To achieve all these objectives, the Commission wants to put in place a series of legislative, operational and financial instruments.
They range from the revision of existing Directives, to the launch of new technological platforms and strategic alliances between companies, to the increase in European funds, both grants and loans.
The European Commission suggests a massive speed-up and scale-up in renewable energy in power generation, industry, buildings and transport, useful to meet the climatic targets, lower prices and to accelerate the EU phasing out of Russian fossil fuels.
The Commission proposed:
- 45% of the energy generation capacity with renewables by 2030 (up from 40% envisaged under Fit for 55)
- +100% of GW of solar photovoltaic newly installed by 2025 (from 160 GW to 320 GW) and + another 100% by 2030 (from 320 GW to 600 GW)
- European Solar Rooftop Initiative anchored around a legally binding EU solar rooftop obligation for certain categories of buildings
- faster wind energy deployment, supply chains to be strengthened and accelerate permitting
- 10 million units of heat pumps over the next 5 years
- enhance the regulatory framework and ensure life-cycle sustainability, by tabling, in the first quarter of 2023, ecodesign and energy labelling requirements for solar PVs, and by revising existing requirements for heat pumps.
- support efforts from Member States to pool their public resources via potential Important Projects of Common European Interest (IPCEI) focused on breakthrough technologies and innovation along the solar and wind energy and heat pumps value chains.
- 10 million tonnes of domestic renewable hydrogen production by 2030 and infrastructures
- 10 million tonnes of renewable hydrogen imports by 2030 and infrastructures (via the Mediterranean, the North Sea area and, as soon as conditions allow, with Ukraine)
- Total investment needs for key hydrogen infrastructure categories are estimated to be in the range of €28 – 38 billion for EU-internal pipelines and €6 - 11 billion for storage.
- +€200 million for Hydrogen research under Horizon Europe, to double the number of Hydrogen Valleys
- to complete hydrogen standards, in particular for hydrogen production, infrastructure and end-use appliances
- biomethane production to 35 billion cubic meters by 2030, with an investment of €37 billion by 2030
To achieve all these objectives, the Commission wants to put in place a series of legislative, operational and financial instruments.
They range from the revision of existing Directives, to the launch of new technological platforms and strategic alliances between companies, to the increase in European funds, both grants and loans.
4. Smart investment
The Commission’s analysis indicates that REPowerEU entails additional investment of €210 billion between now and 2027, on top of what is needed to realise the objectives of the Fit for 55 proposals. Such investment will pay off. Implementation of the Fit for 55 framework and the REPowerEU plan will save the EU €80 billion in gas import expenditures, €12 bn in oil import expenditures and €1.7 bn in coal import expenditures per year by 2030.
During the transition, the fast decoupling from Russian energy imports can lead to higher and more volatile energy prices. Targeted measures are needed to minimise volatility, keep prices in check and protect the individuals in or at risk of (energy) poverty in order to ensure a fair transition for all.
EU Commission explains the necessary investments in energy interconnections, storage, infrastructures for hydrogen and offshore grids.
Moreover, the Commission invites Member States to add to their existing RRPs a dedicated chapter with new actions to deliver on the REPowerEU objectives of diversifying energy supplies and reducing dependence on fossil fuels. Technical support to Member States is available under the Technical Support Instrument for that purpose.
The Commission’s analysis indicates that REPowerEU entails additional investment of €210 billion between now and 2027, on top of what is needed to realise the objectives of the Fit for 55 proposals. Such investment will pay off. Implementation of the Fit for 55 framework and the REPowerEU plan will save the EU €80 billion in gas import expenditures, €12 bn in oil import expenditures and €1.7 bn in coal import expenditures per year by 2030.
During the transition, the fast decoupling from Russian energy imports can lead to higher and more volatile energy prices. Targeted measures are needed to minimise volatility, keep prices in check and protect the individuals in or at risk of (energy) poverty in order to ensure a fair transition for all.
EU Commission explains the necessary investments in energy interconnections, storage, infrastructures for hydrogen and offshore grids.
Moreover, the Commission invites Member States to add to their existing RRPs a dedicated chapter with new actions to deliver on the REPowerEU objectives of diversifying energy supplies and reducing dependence on fossil fuels. Technical support to Member States is available under the Technical Support Instrument for that purpose.
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The current European energy structure
The European energy structure is the same as in the last 30 years, even if the use of coal has decreased in favour of gas and oil and the supply of renewable sources is constantly increasing. We see in this graph the amount of consumption in Europe between the different energy sources nel 2020. Today, renewable energies cover only 18% of Europe's annual energy needs. Knowing that increasing supply from nuclear power plants takes many years (and the consent of the population), it is understood that Europe must undergo a horse cure if it is to replace all the coal that is still burning, and all the Russian gas and oil, by starting towards the objectives set for 2030 and 2050. And the distribution of energy sources in final consumption also depends from country to country, therefore a European policy of transition towards a different energy structure must also deal with the difficulty of not having a homogeneous starting situation. In this case, attention must be paid above all to the relative values and not only the absolute ones of the sources used by each country. This explains why while for some countries giving up a source or supplier is not too complicated, for other countries it can be a very difficult choice to make in a short time. |
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How dependent is Europe on energy imports?
EU net energy import dependency reached 65.2 % in 2019.. In 2006 import dependency reached 65,4%
EU net energy import dependency reached 65.2 % in 2019.. In 2006 import dependency reached 65,4%
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What is Europe's progress towards the 2030 and 2050 goals?
Europe has seen a continuous evolution of the spectrum of primary energy sources, with a progressive replacement of coal with other fossil sources and a part of these replaced by renewable sources. It is not always a linear trend, because in the absence of public policies, the energy transition is due to market conditions, or to the initiative of pressure groups. |
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How much does each source imported into Europe weigh on final consumption?
Oil always has a dominant share, both as an imported source and as a resource used: for transport, in industry and for the production of electricity. However, it represents about 1/3 of final consumption, such as gas and electricity. The European objective is to expand the share of electricity at the expense of gas and oil, but by producing it from renewable sources and hydrogen. |
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How much are 2020 European subsidies for fossil fuels?
While fossil fuel subsidies fell slightly in 2020, down to EUR 52 billion from EUR 56 billion in 2019, this was due to falling consumption amid the COVID-19-related restrictions. Without Member States action, fossil fuel subsidies are likely to rebound as economic activity picks up
While fossil fuel subsidies fell slightly in 2020, down to EUR 52 billion from EUR 56 billion in 2019, this was due to falling consumption amid the COVID-19-related restrictions. Without Member States action, fossil fuel subsidies are likely to rebound as economic activity picks up
What is the trend in import costs and sales prices?
Energy prices seesawed violently as the economy contracted due to the Covid-19 crisis and then begun to recover. Due to cheaper fuels, subdued demand and rapidly expanding renewable generation, wholesale energy prices fell sharply in 2019.
Negative electricity prices became widespread in 2020. This downtrend was abruptly reversed: wholesale electricity prices have increased by 230 % on a yearly basis with a more moderate impact on retail prices until September 2021 (+11 % EU average).
This was largely driven by rising gas prices which had an effect on the electricity price nine times bigger than the effect of the observed carbon price increase over the same period.
Energy prices seesawed violently as the economy contracted due to the Covid-19 crisis and then begun to recover. Due to cheaper fuels, subdued demand and rapidly expanding renewable generation, wholesale energy prices fell sharply in 2019.
Negative electricity prices became widespread in 2020. This downtrend was abruptly reversed: wholesale electricity prices have increased by 230 % on a yearly basis with a more moderate impact on retail prices until September 2021 (+11 % EU average).
This was largely driven by rising gas prices which had an effect on the electricity price nine times bigger than the effect of the observed carbon price increase over the same period.
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