EU launches Energy Union strategy

European Commission Vice President Maros Sefcovic and Energy Commissioner Miguel Arias Cañete presented the Commission’s new strategy for the Energy Union on Wednedsay.

The EU’s principles for an internal energy market are reflected in the announcement. An Energy Union, said the Commission, is about secure, sustainable and affordable energy. Specifically, the project will "allow a free flow of energy across borders and a secure supply in every EU country, for every citizen. New technologies and renewed infrastructure will cut household bills and create new jobs and skills, as companies expand exports and boost growth. It will lead to a sustainable, low carbon and environmentally friendly economy, putting Europe at the forefront of renewable energy production and the fight against global warming."

For these reasons, said Sefcovic, the Energy Union is "the most ambitious European energy project since the Coal and Steel Community."

Added Cañete, "After decades of delay, we will not miss another opportunity to build an energy union."

This is seemingly the best timing for the Commission to pursue its energy agenda. Leading German daily Sueddeutsche Zeitung reported yesterday that plans are afoot in Brussels to break Russia’s dominance by coordinating the energy policies of member states in the new Energy Union that would strengthen the EU’s negotiating position with its powerful eastern neighbour.

Although, the Russian factor cannot be ignored and is indeed triggering the EU bloc to think and plan differently, there is no doubt it also provides the Commission with a great excuse to push towards its market-dominated energy agenda.

This isn’t the first time the Commission has attempted to do so. In 2007, the Commission proposed, among other things, the full structural unbundling of the transmission networks from the other parts of the energy business in an effort to promote the development of an internal energy market, achieve lower electricity prices and promote investment. Some member states endorsed the Commission’s proposals but others, such as Germany and France, fiercely opposed it. From that point onwards there was an interesting political game,

which lasted for almost two years and ended in June 2009 with the adoption of the Third Legislative Package, which makes electricity networks unbundling voluntary.

The lesson is that some countries favour the energy sector’s segmentation into

national markets out of fear of opening their energy incumbents onto pan-European competition. The European Commission fully understands this very well and has now found the perfect timing to pursue its interests, which build on the expansion of the single market, the EU’s core principle. It remains to be seen who will win the game.

Commenting on today’s EU announcement, Frauke Thies, policy director at the European Photovoltaic Industry Association (EPIA), commented: "Now the Commission should follow up words with action. Europe needs an adapted energy market that boosts rather than hampers the energy transition and empowers consumers to access and control affordable, clean and secure energy."

Frederik Dahlmann, assistant professor of global energy at the Warwick Business School in Coventry, England, added, "The process of further market integration will inevitably challenge established companies and their business strategies, but it also opens up the possibilities for innovation and new competitors. These are sorely needed to translate the high-level policy efforts into tangible benefits for European consumers, economies and the environment."

The following months and years will see a high level policy game unfolding, involving lobbying interests from all major energy stakeholders. Hopefully, the renewable energy’s voices will also be heard and the need for further competition will prevail.