Clean energy for all Europeans - BusinessEurope comments on the package

Key messages

The energy system is the backbone of European economy. The energy and climate policies should adapt to the ongoing transition and strike a balance in terms of different objectives. These include security of electricity supply and Europe’s low-carbon agenda, while making sure that power remains affordable to consumers. Policies shall address current political, technical and societal challenges, including lack of investments in the power sector. Overall, the proposed Clean energy package is a step in the right direction. Yet, there are issues that need to be resolved when designing an enabling framework. BusinessEurope has the following key observations:

• IMPROVE COHERENCE. To make best use of the proposed instruments, these have to complement rather than contradict each other or overlap. In terms of content and process, the EU institutions have to guarantee coherence and consistency. The example of higher energy efficiency target shows the risk of undermining the ongoing reform of the emissions trading scheme (EU ETS).
• INCENTIVISE INVESTMENTS. The transition to a low-carbon economy can only work if the level of investments in new energy technologies is not only maintained, but increased. A stable and predictable framework to enhance markets and price signals is key for financing this transition. This requires among others more market-based price formation, less restrictions in the wholesale markets and better use of long-term contracts.
• ENABLE RENEWABLES. With higher demand for low carbon technologies, the integration of the renewable energy in the current system is a highly complex task. Making sure that renewables are fit for the market and the market fit for renewables is essential. The transition has to be done in a cost-effective manner, with competition of low carbon technologies and equal importance of the sectors of electricity, buildings, heating and cooling and transport. At the same time, remuneration for mature renewable energy technologies should come from the market and grid distortions have to be minimized.
• EMPOWER CONSUMERS. Increasing complexity of the energy system requires new models and solutions. With new entities entering the energy market, and consumers turning to prosumers, the markets and infrastructure have to be designed to accommodate them, while preserving fair competition. Setting right conditions for demand response and putting value on flexibility is a prerequisite.
• STRENGTHEN EUROPE. More integration and cooperation is expected to contribute to an increased energy system efficiency and lower costs. It is important that the Commission better addresses and quantifies the expected benefits of such an approach in its proposals. Despite the need for improvements, the proposals on regional cooperation, adequacy assessments and capacity mechanisms bring ‘more Europe’ in the political debate on energy system governance.
• PROMOTE EFFICIENCY. Energy efficiency is a guiding principle in the society. While industry continuously invests to be more efficient, there is still an untapped potential in non-economic sectors such as in buildings. The energy efficiency directive should well complement other policies. Rather than raising the target, the flexibility for member states to use right instruments should be maintained and an enabling framework to trigger investments reinforced.