This week, the European Commission presented its long-expected 2030 climate and energy policy framework, whereby there will be a binding target for GHG emissions, a modest binding EU (but not at the member state level) target for renewable energy and, once again, a non-binding target for energy savings. The purpose behind the policy framework is to ensure a competitive, secure and low-carbon EU economy.
Writing in the Guardian, Ed Davey, Secretary of State for Energy in the UK was quite pleased and said that “EU members should be free to decarbonise in a way that is right for them, including renewables, nuclear, carbon capture and storage and energy efficiency.” That was his only reference to energy efficiency.
Is this the way forward? The reaction has been quite mixed, with the renewable energy and energy efficiency communities quite upset with the lack of ambition. It is hard to know what signals these targets bring and it will be interesting to know the reaction of EiD readers. There is a lot of emotion and growing ill feeling. Somehow there appears little attempt to achieve a consensus.
Concerning the non-binding energy efficiency target, one has to worry that the poor delivery of many headline programmes, such as the Green Deal in the UK, has not affected the credibility on the demand side. No doubt, regardless of the target, attention must shift to effective delivery. And for many within the energy efficiency community this is a point of frustration when it is out of their hands because too many member states are simply not taking implementation seriously enough.
Meanwhile, as the dust settles, readers should be aware that the policy package also included an energy and prices report to help better understand the market dynamics and the impact on consumers.
European Commission Analyses Energy Prices and Costs
The European Commission has released the ‘Energy Prices and Costs Report,’ which seeks to inform policy makers on recent energy price increases in Europe and their impact on energy consumers. The report describes the drivers for rising retail energy prices, with a focus on electricity and gas, and analyses how their prices have evolved in recent years in different EU member States.
The report also compares energy prices in the EU with other regions, and considers how energy prices affect energy costs for households and industrial customers, including energy intensive industries.
The study finds that while retail energy prices for households and industry increased significantly in Europe between 2008 and 2012, wholesale electricity prices fell by one-third and wholesale gas prices stayed the same, bringing wholesale energy prices in Europe to a level roughly comparable with wholesale prices in the US.
According to the report, retail energy prices increased despite lower wholesale prices for four main reasons: higher network costs, taxes, and levies; retail price regulations accompanied by high market concentration; passing of infrastructure and technology investment costs to consumers; and gaps between consumer behaviour and opportunities to reduce costs and increase efficiency.
The main recommendations in the report for controlling energy prices are to: complete the internal energy market to ensure efficient and competitive investments; increase energy efficiency; reduce energy use through product design, new technologies, changes in consumer behaviour, and demand response; develop energy infrastructure; diversify energy supply and energy routes; speak with a single European voice in negotiations with major partners; and understand and minimize the impact of European energy policies on prices, consumers, and tax payers.
The report, a response to a request by the European Council in May 2013 to conduct a detailed analysis of energy prices and costs in Europe, was released in concert with the new EU framework on climate and energy for 2030. The study was written as a contribution to the new EU framework presented by the European Commission and that will be discussed by the European Council in May 2014.
The report together with the other 2030 policy documents are available on the DG Energy website.