What to take away from the State of the Energy Union?

A brief analysis

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As foreseen by the European Commission’s Communication on the Energy Union from February 2015, the State of the Energy Union was published on 18 November 2015. It is intended to address the key issues and steer the political debate by providing a state of play, challenges and next steps of the implementation of the Energy Union. We have summarised and assessed the content of the State of the Energy Union report and its annexes.

First, let us take a step back and look at what exactly the Energy Union is. Officially launched in 2015, it aims to provide the necessary governance to achieve secure, sustainable, competitive and affordable energy. To do so, it builds on five “pillars” or dimensions:

  1. Energy security, solidarity and trust;
  2. A fully integrated European energy market;
  3. Energy efficiency contributing to moderation of demand;
  4. Decarbonising the economy, and
  5. Research, Innovation and Competitiveness.


The State of the Energy Union looks at the progress made and upcoming initiatives for these five areas, and provides policy conclusions accordingly. As a first remark, it is interesting to note that energy security has been replaced by decarbonisation as the first item of the Energy Union. This may reflect a changing international situation and priorities, from the war in Ukraine at the beginning of the year, to the COP21 in Paris in December 2015. Energy efficiency has made it to the second position, which may be due to the upcoming energy efficiency package next year.

What’s in the document and its annexes?

Progress so far looks at the actions undertaken in 2015. It lists the EU position for COP21, a proposal for revision of the Energy Labelling Directive, reinforced cooperation between Member States on gas connections, as well as with neighbouring countries, the revision proposal of the Emissions Trading Scheme along with an adoption process of the Market Stability Reserve.

The State of the Energy Union does not make new announcements but provides context on ongoing and upcoming initiatives for 2016. Key elements announced are:

  • The 2nd list Projects of Common Interest (PCIs) listed in annex,
  • Proposal to deliver on non-ETS emissions reduction by 2030 (review of the Effort Sharing Decision),
  • The European Fund for Strategic Investment will contribute to investments in renewables and energy efficiency. For the latter, schemes to aggregate smaller energy efficiency projects will be established,
  • New Renewable Energy Directive and bioenergy sustainability policy for 2030 to be proposed, a communication on the electricity market design is planned,
  • A new strategy for heating and cooling will be presented,
  • Proposals on Energy Efficiency with a view to 2030, upholding the ambition of a 30% target. Specific focus on buildings (revision of Energy Performance of Buildings Directive). The revision of the Energy Labelling Directive is under way.
  • Action on gas and electricity market (enquiries in several countries on capacity markets for instance)
  • Legislative proposals for Gas Security of Supply and Security of Electricity Supply


All these initiatives are planned to take place by the end of 2016.

The State of the Energy Union is accompanied by several annex documents. One of them, the Guidance on national plans, provides elements of governance for the 2030 framework. It details which elements should be included in the national plans for the period 2021 to 2030, for reporting on progress by Member States to the EU. Also included in another annex are key indicators to measure progress towards the achievement of the 2030 targets and the achievement of the Energy Union. The range of indicators aims at providing a picture of the Member States’ situation.  

What are the main takeaways?

The State of the Energy Union provides a good overview of planned initiatives for next year without nonetheless giving details on what exactly these initiatives will entail, for instance on their level of ambition or their timeline.

With the guidance on national plans and the proposed key indicators to measure progress, the State of the Union provides information on the intended governance framework for the Energy Union and the 2030 targets. However, it does not answer some crucial questions as to the definition of competences and powers in the Energy Union. How will the Energy Union deliver? What governance will be implemented?  The concept and its end-objectives remain ambiguous.

Many initiatives are of non-binding character leaving the question open of their effectiveness and of the “teeth” of the Union. This is of course understandable in the current political context of Member States reclaiming their sovereignty on a number of topics, including energy. However, the Energy Union could be seen as a tool for the European Commission to prevent further renationalisation of energy policy.

It is also hard to connect the pillars with each other. It appears as if these are stand-alone areas, whereas they all have implications on each other. Policies should be checked for impact and synergies. For instance, the energy security part is mainly focused on the supply side of gas. The report mentions the interactions with decarbonisation and energy efficiency, but does not seem to translate it into combining policies.

Despite a focus on decarbonisation and the availability of the European Fund for Strategic Investments (EFSI), there is no commitment to financing and deployment of renewables and energy efficiency. In the absence of dedicated, ring-fenced financing, the level of investment remains uncertain.  

While the need for a new electricity market design and the focus on consumers are stated several times across the report, no binding initiatives are planned in this respect. It seems that the European Commission rather seeks to shape the energy market through competition policy. Following the Energy and Environmental Aid Guidelines of 2014 that changed the rules for renewables support, the state aid sector inquiry on Electricity Capacity Mechanisms  seems to be the instrument of choice for influencing the design of European electricity markets.

As a matter of fact, the State of the Energy Union provides an overview of the European Commission’s action in the energy field, and possibly gives it an increased coherence. However, it leaves many questions unanswered. The ambiguity on its means and goals may be a pre-requisite to get support and achieve consensus from the Member States, but it might also lead to dispersion of action and only limited impact of what is one of the Commission’s flagship projects.

For additional insights and further reading:

Erstellt am 19-11-2015 Fachgebiet: Energie- & Klimapolitik Tags: eu , eu 2030 , ets , electricity , renewable energy , power system , policy , energy union

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