European Commission unveils mammoth winter package for energy

At 1,000 pages it would take a little while to fully unpack the European Commission’s ‘winter package’ on clean energy that was released in Brussels in late November. But the key points of the document, Clean Energy for All Europeans are – according to the Commission – to put energy efficiency at the front of European energy policy, for Europe to achieve global leadership in renewable energy, and to provide a fair deal on energy for consumers.

As well as the detail on energy efficiency and renewables, the package also covers the design of the electricity market, security of electricity supplies in Europe, and how the Commission’s Energy Union strategy will be governed.

One of the most tangible elements of the package is the proposal of a binding 30% energy efficiency target by 2030 for the EU bloc (compared to the business-as-usual projected energy use in 2030). This is a step up from the non-binding 27% target that exists today. The renewables target for 2030 remains at 27%, though the Commission is proposing that a proportion of member state renewables support schemes are also available to cross-border participation from 2021 onwards.

On biofuels, the Commission is proposing to reduce the cap on biofuels from food-based feedstocks from 7% today to 3.8% in 2030. And, on capacity payments to support back-up generation for renewables, the Commission has introduced a cap on emissions meaning that only power plants with 550 grams or less of carbon dioxide per kWh will be eligible to benefit from capacity payments from 2025 onwards – ie, no coal. Member states will also only be able to introduce a capacity mechanism after a regional assessment indicates other measures that incorporate neighbouring states are not fit to be used for back up.

There is also a focus in the document on Europe capitalising on the growth opportunities presented by clean energy, something the Commission thinks the EU can use its research, development and innovation expertise to turn into an industrial opportunity. The package proposes using €177bn of public and private investment per year post 2021 to create 900,000 new jobs in clean energy and which would increase Europe’s GDP by 1% over the next decade.

There is also detail on increasing transparency and providing better regulation to enable consumers to become active players in the energy market – by using digital technologies and producing and selling their own electricity.

However, the package is just a proposal, and a legislative process will begin with member states and the European Parliament taking two years to discuss and implement the measures.

Commenting on the package, European Commissioner for Climate Action and Energy Miguel Arias Cañete said: ‘Europe is on the brink of a clean energy revolution. And just as we did in Paris, we can only get this right if we work together. With these proposals, the Commission has cleared the way to a more competitive, modern and cleaner energy system. Now we count on European Parliament and our member states to make it a reality.’

Reactions to the package from energy organisations, lobby groups and NGOs were abundant. Pöyry said that the package signals a change of focus for European energy markets with its focus more on lower voltage parts of the system than in previous packages; through active roles for demand side response, storage, aggregators and consumers. This reflects the reality of a growing number of households or businesses with their own renewable generation and storage assets, says the consultancy.

The Point Carbon team at Thomson Reuters said that the 30% efficiency target in the package would affect the European Emissions Trading Scheme (ETS) due to more efficient facilities contributing to the oversupply of emission permits in the ETS. The 30% target could reduce prices by €1.4 per tonne (9%), says Point Carbon.

Greenpeace said that the 2026 start date for the introduction of an emission limit for power generators eligible for capacity payments was too late, and that coal generators would continue to be benefit from subsidy in the interim.

The entire package, should you have a spare week, is online here