Overview over the energy policy of the European Commission in recent year

Piebalgs, Andris

Revistes Catalanes amb Accés Obert

Competitiveness 
and energy: two sides 
of the same coin
The year 2009 started with three crises: the economic one, the gas
crisis between Russia and Ukraine and the bushfires in Australia.
All three are intimately related to the energy industry and all three
require a global response; in our case, a coordinated response at
European level. This is why I would like to explain in this article
how the European Commission plans to do a new industrial
revolution based on a common energy policy so as to change the
dominant paradigm based on fossil fuels and create a trend towards
the energy of the future, an energy that improves our
competitiveness, sustainability and supply safety.
ANDRIS PIEBALGS
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In these times in which the financial and eco-
nomic crisis forces to tighten the belt, we need
to distinguish products and services that are
really necessary from those that are not. Energy
can be regarded as being part of essential services:
we need power for our homes but also for our
computers and transport systems – all in all, to
have our economy work.
At European level, we are aware of the impor-
tance of energy for our economy’s competitiveness
and for our citizens’ wellbeing. In fact, energy 
is one of the core items of the EU strategy to
create economic growth and new jobs. For
instance, the creation of a competitive energy
market in the long term will help reduce the
energy cost for our consumers, which will allow
them to increase consumption in other areas, a
key element to secure economic growth. Like-
wise, we have already seen the appalling effects
of high energy prices on the economy as we
suffered them in the first half of 2008.
Energy is one of the core items of 
the EU strategy to create economic
growth and new jobs.
However, competitiveness is just one side to
energy policy. Energy supply and production
needs to be safe and sustainable. When I refer to
safety, I do not only mean that energy needs 
to be protected from risks (both accidental and
criminal) but we also need to make sure that
every citizen and every company has access 
to affordable energy. This is intimately related to
sustainability because it is obvious that we need
to make sure that energy-related economic turmoil
does not bring about climate change in the long
term, for which the energy industry is especially
responsible.
Ensuring clean, safe and affordable energy is a
big challenge. The European energy policy will
play an essential –though not exclusive– role to
tackle it. We have a good starting point. Origi-
nally, the European Union was born from the
will of sharing two very important energy
resources: coal and nuclear energy (ECSC
–European Coal and Steel Community– and
Euratom –European Atomic Energy Commu-
nity– treaties). As time passed, the European
energy policy was extended to other areas, par-
ticularly power and gas, creating a single mar-
ket. Environmental awareness, especially
following the signature of the Kyoto protocol,
led to fostering clean energy sources such as
renewable energies or the creation of a green-
house gas emission market.
Based on all this, all EU institutions have worked
to set out an even more ambitious strategy that
allows to take on the challenges of the 21st century.
Since 2006, the Commission has been setting the
main lines of this strategy with a true European
Energy Policy. The implementation of the 2006
plan has led to the famous three-fold 20% strat-
egy for 2020: 20% reduction of CO2 emissions,
20% of renewable energies on final energy 
consumption and 20% energy savings. At the
European summit held on 11 and 12 December
2008, a final agreement on the main lines of 
this strategy was reached. This agreement clearly
shows that the EU way of doing things still works
and yields concrete results.
However, it is time now to look towards the
future. On 13 November 2008, the Commission
presented the action plan for the following
years, the Second Strategic Energy Review. I
would like to point out some of its elements.
The first is energy efficiency. In 2006, the Com-
mission adopted an Action Plan for Energy 
Efficiency that sets the ambitious goal of reducing
energy consumption by 20% as of 2005. If this
goal is met, the European Union could save 
100 billion euros every year and reduce CO2
emissions by 780 million tons a year. One measure
within this action plan is the decision to gradu-
ally take incandescent bulbs from the market,
which shall allow to save energy equivalent to
the consumption of 11 million households and
inject 5-10 billion euros a year back into real
economy.
The second element is competitiveness. In 2005,
the Commission started a survey to identify
Change of cycle or change of model?22
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problems in the domestic energy market. 
This research concluded that there were big
obstacles to safeguard competition in the market
and freedom of supplier choice by consumers.
To solve these problems, the Commission sub-
mitted an ambitious package in September 2007
aiming at market integration and non-discrimi-
natory access to networks, with a clear separa-
tion of the competitive market side (generation
and sales) from the monopolistic one (trans-
mission networks). This measure was reinforced
by enlarging the powers of energy regulators
and creating a European agency aimed at 
integrating the rules of the game at European
level.
The Action Plan for Transmission
Infrastructure Development is
completed by an international energy
policy based on the permanent
dialogue with the main suppliers.
The third area of action is supply safety. The
Commission recently presented an Action Plan
for Transmission Infrastructure Development.
This plan identifies the priority projects needed
to bring about both the integration of European
markets (power interconnection between France
and Spain is a clear example for it) and supply
safety (e.g. the Caspian Sea gas pipeline). The
plan is completed by a true international energy
policy based on the permanent dialogue with
our main suppliers and a determined diversifi-
cation policy related to energy sources, countries
of origin and transmission routes.
In fourth place, there is a will to increase the
ratio of renewable energies on overall energy
consumption. In early 2008, the Commission
presented a directive to increase the renewable
energy rate from a current 8.5% to 20%. This
ambitious and compulsory goal has now been
accepted by all member states. This will create
the necessary investment safety to develop a
high-tech industry that will allow to curb exter-
nal dependence, reduce emissions and create
businesses and jobs in Europe.
The fifth element considers the will of the EU to
promote these goals at international level by
means of a big global partnership for energy
efficiency that contributes to reach an interna-
tional agreement on the struggle against climate
change. To do so, a meeting will take place in
Copenhagen in 2010. The European Council has
also reached an ambitious agreement to reduce
CO2 emissions and to set up a CO2 emissions
market that places us at the forefront of the
global struggle against climate change.
The European Union shall promote its
goals at international level by means
of a big global partnership for energy
efficiency.
Within the sixth area, the Commission has pre-
sented an Action Plan for Technology Promotion
aimed at all those technologies able to con-
tribute to meet our environmental and renew-
able energy goals. These technologies can lead
to a new industrial revolution based on clean
23paradigmes /  Issue no. 2 / June 2009
Andris Piebalgs and José Manuel Durão Barroso
at a European conference on energy
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energies and intelligent networks that allow to
overcome the depletion, sooner or later, of fossil
fuels.
These six working areas show how the Commis-
sion works for the goal of obtaining clean, safe
and affordable energy. With this strategy, the
Commission also makes an important contribu-
tion to competitiveness of the European econ-
omy and the reduction of risks inherent to
external dependence and energy price volatility.
It remains to be seen if the current economic cri-
sis will be an obstacle or an opportunity to carry
out this new energy policy. On the one hand, the
financial crisis will make it more difficult to raise
credits for urgent energy investments, but this
would happen with any energy model anyway.
On the other hand, many experts consider that in
order to leave the crisis behind, public expenditure
on activities creating jobs and economic growth
in future industries will be needed. Based on
what I explained above, investment in energy
efficiency, renewable energies, interconnection
infrastructures and clean technologies means
expenditure on industries with a great growth
and job creation potential at the locations where
the investment is done.
Besides, these investments will reduce the risk
of external dependence, increase competitive-
ness of the European economy and place
Europe at the forefront of those technologies
that will ultimately dominate the energy market
once oil starts running out or becomes too
expensive to be considered a feasible option. For
these reasons, I think that, as opposed to what
others say, the economic crisis does not need to
be a reason to reconsider the European energy
policy but rather a reason to accelerate it.
Change of cycle or change of model?24
ANDRIS PIEBALGS
EU Energy Commissioner since November 2004.
Degree in Physics at the University of Valmiera (Latvia).
A diplomat during almost ten years, he has been Undersecretary of State for
EU Affairs at the Latvian Ministry of Foreign Affairs and has held several positions
in Latvian politics, being Minister of Education and Finance Minister.
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Competitiveness and energy: two sides of the same coin

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Revistes Catalanes amb Accés Obert