EU ‘winter energy’ proposals tread fine line between change and continuity

Published by MLex 18 November 2016. By Emily Waterfield.

Efforts to transfer grid-management powers to the EU and to impose a binding requirement for energy savings are likely to hit national objections later this month.

But investors, politicians and environmental campaigners look set to find little change to the status quo in the rest of the eight-part “winter energy package.”

The European Commission on Nov. 30 plans to publish a batch of proposals designed to help national power systems handle increasing amounts of renewable energy on a grid designed for fossil fuels and atomic power.

The proposals will be the latest stage of EU efforts to build an “energy union,” reducing the bloc’s dependence on Russian natural gas, and boosting production of domestic power from wind and sunlight.

Most of the proposals’ objectives have already been sketched out by national governments, in expert consultations with the commission, and at a meeting of heads of state and government in October 2014 that saw leaders agree on EU climate targets.

The draft package, seen by MLex, contains only rare deviations from the expected EU line. Still, any such changes are likely to face fierce opposition from governments eager to guard the right to decide on their own energy mix.

In particular, a proposal to update the workings of EU energy regulators’ group ACER would make the director of the agency chairman of the board of regulators.

This apparently minor change would in practice take significant powers away from member states. The ACER board of regulators is made up of national regulators, with the chairmanship handed to a different national official every two and a half years. The agency director represents the EU as a whole and holds his or her position for five years.

Together with the increased powers for the agency foreseen in the draft proposal, the change could in effect see the influence of national officials significantly watered down.

These powers would include the ability to adopt “decisions necessary to effectively monitor wholesale market integrity and transparency, decisions concerning electricity and natural gas infrastructure . . . [and] exemptions from the internal market rules.”

The director him or herself would be responsible for the agency’s draft work program and budget.

But the commission seems to have stepped back from a complete transfer of powers to the director in most cases, deciding “not to substitute systematically majority decisions by national regulators through decisions by the director,” according to the latest draft seen.

Energy Efficiency Target

One other surprise proposal likely to upset national regulators and some industries, is the draft’s suggestion to set a binding target of improving energy efficiency by 30 percent by the end of 2030 — rather than an indicative target of 27 percent, as agreed by governments in 2014.

The 30 percent figure and the binding nature of the target are in square brackets in the draft, meaning that they are still under debate in the commission.

EU electricity industry group Eurelectric warned the commission this week that any increase from the 27 percent target “must be supported by a robust and comprehensive impact assessment” to prove that a change was needed.

An energy-efficiency target in force across the bloc today is non-binding, and governments opted for the same approach in 2014, showing that most countries are opposed to mandatory energy savings.

But the European Parliament has repeatedly called for a target of 30 percent or more, meaning that if the increased figure makes it to the final proposal a long battle between the EU institutions lies ahead.

Observers suggest the commission may be considering proposing a binding 30 percent in the hope of getting at least 27 percent past governments, binding or not, reducing the likelihood of calls to water down ambitions still further.

More of the same

Conservation group Birdlife this week objected to another target in the renewable energy proposal, another part of the winter package.

The draft is “falling miserably short in addressing the well known and indisputable problems with bioenergy,” Birdlife said in a statement on Tuesday.

The draft text itself suggests more or less a continuation of the approach suggested by the commission in 2012, and approved by member states two years ago.

Under this new approach, governments have to phase out support for biofuels made from food crops, and replace these with “advance” fuels from products such as waste and algae.

As well as biogas produced from waste crops, “advanced biofuels… renewable transport fuels of non-biological origin, waste-based fossil fuels and renewable electricity in transport can contribute to low carbon emissions,” the draft proposal says.

This means that, after 2020, these fuels can be counted toward a renewable-energy target across the EU. Specifically, “suppliers designated by the member states and covering at least 50 percent of the energy supply are required to gradually mainstream renewable energy in their total annual sales volume until 2030, by 1 percentage point annually.”

This renewable energy will then be used to meet the needs of heating and cooling, electricity and transport, up to the a total target of 27 percent across the bloc.

Environmental group CAN Europe on Tuesday said in a statement that 27 percent “is hardly any higher than the 24 percent that is predicted to happen anyway.”

“A low target and lenient rules will not give European households and companies the confidence to invest in the renewable future,” the group said.

But countries are very unlikely to budge from the 27 percent agreed in 2014. Several major EU economies, including Poland, France and the UK, are less interested in renewable-energy investments than are Germany and Denmark, preferring to cut emissions through the use of new technologies and energy-efficiency improvements.

Brexit bonus

The UK government hopes to start negotiations on leaving the EU next year, meaning that it will no longer be a member when the winter package rules come into force.

Deciding which, if any, EU energy and climate rules will still apply to the UK when it leaves will be part of the exit negotiations.

The latest draft has been formatted in a way that could potentially ease the process of departure for the UK.

In the draft seen by MLex, the UK could hope to be covered by paragraphs concerning areas the UK has traditionally taken a lead in, such as emission cuts, while dropping less popular renewable-energy requirements.

A proposal on “energy governance” — the way in which climate targets will be enforced by the EU — says countries would be required to report in detail every 10 years on long-term strategies “to reduce anthropogenic greenhouse gas emissions” under UN and EU rules.

The UK, which has set national greenhouse-gas targets well in excess of what is required by the EU, is unlikely to object to this once-a-decade reporting requirement.

Reporting on investments in renewable energy would be required every two years, under a separate clause. The UK, which has cut back on national support for renewable energy in favor of nuclear power and shale gas, might want to opt out of this paragraph.

All of which adds to the fine line to be trod by the commission at the end of the month. Necessary changes to the energy grid can’t afford to take governments by surprise. And changes to the EU itself over the rest of the decade mean every sentence proposed will face more scrutiny than ever.