A Sting Exclusive, the European Commissioner for Energy Günther Oettinger writes for the Sting on “EU Industry: a major energizer”

Günther Oettinger, European Commissioner responsible for Energy

Written by Günther Oettinger, European Commissioner responsible for Energy 

In the European Union, energy and industry are two sides of the same coin. A strong industrial base is the precondition for the robustness of our economy, for the excellence of our research and for the number and quality of our jobs. Industry accounts for over 80% of Europe’s exports and 80% of private research and innovation. At the same time, energy affects 90% of economic activities, in particular intensive industries such as steel, chemicals, cement, glass, paper, automobiles and aeronautics. Such a close link needs to be reflected in both the energy policy and the industrial strategy of the European Commission. A strong industrial base is of vital importance to our economic and social model. This must be reflected in the way in which we define our energy and climate policies.

On 22 January the European Commission outlined plans for a climate and energy framework for 2030. One core goal is to reduce greenhouse-gas-emissions by 40% below the 1990 level by 2030. This is very ambitious, as it implies tripling the speed of reduction in emissions in the decade from 2020 to 2030 compared to the speed until 2020. Moreover, we have to bear in mind that the EU accounts for about 11% of worldwide greenhouse-gas-emissions. Therefore it cannot afford to walk ahead without anybody else joining behind, if it wants to preserve industrial competitiveness. We need to get global partners on board in our fight against climate change.

As regards the share of renewables in energy consumption, the Commission aims for a binding target of at least 27% at EU level. A new governance system shall ensure that this ambitious goal can be reached. Setting clear targets is important to provide legal certainty and confidence in order to trigger the necessary investment in renewables and the respective technology. We also have to renew our efforts as regards energy efficiency. The Commission is examining Member States’ progress in reaching their existing energy efficiency targets, and will assess and report on this by summer 2014. Effective energy efficiency measures will be crucial to reach the goals for 2030.

Together with the energy and climate framework for 2030, the Commission presented a study on the drivers of energy costs and prices in the EU. It shows among others that for industry the retail price for electricity rose by 3.5 % annually from 2008 to 2012. Companies in the EU pay twice as much for electricity than their competitors in the USA. For gas, they even have to shoulder the three- to fourfold. This is not sustainable for energy intensive European companies that face tough global competition. Hence, Europe needs to act. We need to ensure, at a minimum, that the price gap for gas and electricity does not continue to widen. The price study underlines how important it is to reach our energy and climate goals in a cost effective way.

EU Heads of State or Government discussed the Commission proposal at the summit of 21 March. An agreement on the future 2030 policy framework should be reached as quickly as possible – and no later than October 2014, in time for the climate talks in Paris in 2015. It is important that the EU acts now and thereby provides a predictable framework for companies: Investors in the energy sector consider 2020 to have taken place yesterday, and 2030 to come tomorrow.

One cannot discuss about Europe’s industrial competitiveness and energy policy without stressing the necessity of completing the internal energy market. Open markets are essential to encourage competitive energy prices and innovation. They stimulate the entry of new players to the market and therefore enable consumers to find cheaper and better services. The EU is taking steps to ensure that the internal market can work better, for example, by tackling distorting effects of energy subsidies and price controls. 

However, a prerequisite for a properly functioning internal market is a well-developed infrastructure. In order to accelerate the completion of the gas- and electricity networks the Commission has presented a list of so-called “Projects of Common Interest” in October last year. Around 250 projects listed benefit from accelerated licensing procedures and improved regulatory conditions and may have access to financial support from the Connecting Europe Facility. Under this facility a €5.85 billion budget has been allocated to trans-European energy infrastructure for the period 2014-20. The build-up of infrastructure is also an important pillar of our strategy to increase energy security: The gas crisis in 2009 has shown how important it is that Member States are well connected, so that they are able to help each other in times of need. In the light of the recent developments in Ukraine energy security is high on the agenda in Europe: The Commission will undertake a study on energy security and by June 2014 will present a comprehensive plan for the reduction of the EU’s energy dependence. 

One conclusion is unavoidable: In order to successfully master the challenges the EU currently faces in the field of energy, we need to further integrate our markets. A fragmented approach will not lead us much further, whereas a true “europeanisation” of energy policy will bring long-term benefits to both, citizens and businesses, in Europe.

About the Author

Günther Oettinger is the European Commissioner responsible for Energy. Mr Oettinger has been Member of the European Commission responsible for Energy since February 2010. Before moving to Brussels he was Minister-President of Baden-Württemberg in Germany from 2005 to 2010. Prior to that, he fulfilled various roles in the Christian Democratic Union and worked as lawyer and later as CEO of a firm of auditors/tax consultancy. Mr Oettinger studied law and economics in Tübingen. He was born on 15 October 1953 in Stuttgart and has one son.