Category Archives: Energy

Proposals for the Cohesion Policy 2014-2020

The Commission has published its proposals which will frame cohesion policy for 2014-2020. The first part of the proposal sets out common rules governing the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF). The second part sets out common rules governing the three main funds delivering the objectives of cohesion policy: the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (CF).

When adopted, the legislation package will establish a common strategic framework for the ERDF, ESF, CF, the EAFRD and EMFF. A Partnership Contract will be agreed between the Commission and each EU Member State, bringing together all the country’s commitments to delivering European objectives and targets. Before funds are paid out, authorities will have to demonstrate that satisfactory strategic, regulatory and institutional frameworks are in place to ensure the funds are used effectively. The release of additional funds will be dependent on performance. Deficiencies in macroeconomic policy (excessive budget deficits, etc.) will lead to suspension of the cohesion financing. Procedures will be simplified and computerised where possible. Eligibility rules for EU funding instruments will be harmonised.

 

 

Commission Proposal for the New Multiannual Financial Framework 2014-2020

The Commission has put forward its proposal for the new Multiannual Financial Framework of the European Union for the period 2014-2020. The Multiannual Financial Framework is the main budgeting document of the EU for the seven-year period, and little can be changed once it is adopted. The proposal has to be approved by the Member States and the Parliament.

The main innovations:

1. Expenses

  • A new fund for financing infrastructure, the Connecting Europe Facility that includes a preliminary list of transport, energy and ICT projects;
  • Stronger link of cohesion financing with the Europe 2020 objectives;
  • New category of ‘transition regions';
  • New conditionality provisions;
  • Partnership contracts with each Member State to ensure mutual reinforcement of national and EU funding;
  • An integrated programme of €15.2 billion for education, training and youth, with a clear focus on developing skills and mobility;
  • A common EU strategy called “Horizon 2020″ for investment in research and innovation worth 80 billion €;
  • 30% of direct support to farmers will be conditional on “greening” their businesses;
  • €4.1 billion for the fight against crime and terrorism and €3.4 billion for migration and asylum policies.

2. Revenues

  • New own resources for financing the budget- a financial transaction tax (Tobin tax) and a new modernized VAT;
  • Simplification of the existing correction mechanisms.

You can also read the critical assessment of the proposal by Charlemagne. Real Time Brussels looks at the fierce political battles that will likely emerge in the process of adoption of the Multiannual Financial Framework.

 

Two Important Strategies for the Sustainable Development of the European Union

The European Commission has published in the recent days two communications that touch on important aspects of the sustainable economic development of the EU.

The first is a communication on renewable energy and the progress towards the 2020 targets. The communication presents an overview of the renewable energy industry in Europe, its prospects to 2020 and addresses the outstanding challenges for the development of the sector. The Commission points out that renewable energy constituting 62% of 2009 energy generation investments in the EU. Member States projections show that renewable energy will grow at a faster pace in the years up to 2020 than in the past. Combined Member States expect to more than double their total renewable energy consumption from 103 Mtoe in 2005 to 217 Mtoe in 2020. If all the production forecasts are fulfilled, the overall share of renewable energy in the EU will exceed the 20% target in 2020. The Commission suggests that whilst annual capital investment in renewable energy today averages €35bn, this would need to rapidly double to €70bn to ensure the EU achieves its goals.

The second is a communication on the commodity markets and raw materials. This communication was delayed due to the French request to include measures to improve the transparency of financial and commodity markets. The document makes an overview of developments on physical markets of oil, gas, electricity, agricultural commodities and raw materials. The Commission outlines the growing interdependency of financial and commodity markets and then outlines policy measures for the separate physical markets. The communication then outlines the Raw Materials Initiative and describes the 14 critical raw materials – those who have a particularly high risk of supply shortage and are particularly important for the value chain.

 

 

EU Flagship Initiative on Resource Efficiency Launched

The European Commission has launched a very important flagship initiative on resource efficiency under the Europe 2020 Strategy. The Commission believes that increasing resource efficiency will be key to securing growth and jobs for Europe. It will bring major economic opportunities, improve productivity, drive down costs and boost competitiveness.

The most important medium-term policy measures are:

• An energy efficiency plan with a time horizon of 2020 which will identify measures to achieve energy savings of 20% across all sectors, and which will be followed by legislation to ensure energy efficiency and savings;

• Proposals to reform the Common Agricultural Policy, the Common Fisheries Policy, Cohesion Policy, energy infrastructure and trans-European networks for transport in the context of the next EU budget to align these areas with the requirements of a resource-efficient, low-carbon economy;

• A new EU biodiversity strategy for 2020 to halt further loss to and restore biodiversity and ecosystem services in the light of pressures on ecosystems;

• Measures to tackle the challenges in commodity markets and on raw materials which will, amongst others, periodically assess critical raw materials and define a trade policy to ensure sustainable supplies of raw materials from global markets. These measures will promote extraction, recycling, research, innovation and substitution inside the EU;

• A strategy to make the EU a ‘circular economy’, based on a recycling society with the aim of reducing waste generation and using waste as a resource;

• Early action on adaptation to climate change to minimise threats to ecosystems and human health, support economic development and help adjust our infrastructures to cope with unavoidable climate change;

• A water policy that makes water saving measures and increasing water efficiency a priority, in order to ensure that water is available in sufficient quantities, is of appropriate quality, is used sustainably and with minimum resource input, and is ultimately returned to the environment with acceptable quality.

EU Energy Infrastructure Priorities for 2020

The Commission has adopted its communication “Energy infrastructure priorities for 2020 and beyond – A Blueprint for an integrated European energy network”. The main issues:

Electricity grids must be upgraded and modernised to meet increasing demand due to a major shift in the overall energy value chain and mix. Electricity generated from renewable sources, which is expected to more than double in the period 2007-2020. High-voltage long distance and new electricity storage technologies must be implemented which can accommodate ever-increasing shares of renewable energy, from the EU and beyond.

The priority projects re:

1. Offshore grid in the Northern Seas and connection to Northern as well as Central Europe.

2. Interconnections in South Western Europe to accommodate wind, hydro and solar.

3. Connections in Central Eastern and South Eastern Europe

4. Completion of the BEMIP (Baltic Energy Market Interconnection Plan.

Natural gas will gain importance as the back-up fuel for variable electricity generation. A diversified portfolio of physical gas sources and routes and a fully interconnected and bidirectional gas network are needed.

The priority projects are:

1. Southern Corridor to bring gas from the Caspian Basin, Central Asia and the Middle East to the EU.

2. Linking the Baltic, Black, Adriatic and Aegean Seas through in particular:

– the implementation of BEMIP and

– the North-South Corridor in Central Eastern and South-East Europe.

3. North-South Corridor in Western Europe.

The development and modernisation of district heating and cooling networks should be promoted as a matter of priority in all larger agglomerations.

Around one trillion euros must be invested in the EU energy system between today and 2020. Out of these investments about 200 billion euros are needed for energy transmission networks alone.

One way to do that will be via regional clusters. The Commission also proposes the establishment of a contact authority (“one-stop shop”) per project of European interest, serving as a single interface between project developers and the competent authorities involved at national, regional, and/or local level. The introduction of a time limit for a final positive or negative decision to be taken by the competent authority will be explored. The Commission also proposes the development of guidelines to increase the transparency and predictability of the process for all parties involved (ministries, local and regional authorities, project developers and affected populations).

As for funding, a number of measures are suggested:

  • Leveraging private sources through improved cost allocation, including the introduction of guidelines or a legislative proposal to address cost allocation of major technologically complex or cross-border projects;
  • Combining existing and innovative financial mechanisms that are different, flexible and tailored towards the specific financial risks and needs faced by projects at the various stages of their development.

 

 

Is the Emissions Trading Scheme Working? Report Says No

The European Emissions Trading Scheme (ETS) is the flagship initiative for curbing carbon emissions in the European Union. A new report says that the ETS is in danger not only of failing the objective for which it was set up – to secure reductions in emissions, but that it could become an environmental hindrance.

The environmental campaigning organization, Sandbag, claims that Phase II of the ETS will result in only 0,3% of reduced carbon emissions. The report blames the poor results on the free awarding of a billion surplus permits to industry and to combustion plant involved in manufacturing. According to the report the largest share of the industrial surpluses accrued to the cement and steel industries, the two sectors which have lobbied most aggressively to weaken the ambition of the scheme and to be afforded special protections from carbon prices which might harm their competitiveness. The report claims that there were distortions of competition on sectoral level: Heidelberg Cement has had a fivefold allocation advantage over its European competitors in the cement industry, while Salzgitter has had fourfold advantage against its European steel competitors. The most important recommendation of the report is to adjust Phase III caps to reflect historic emissions and to avoid contaminating the next phase with the over-allocation of the current one.

No EU Priority Status for the “South Stream” Gas Pipeline Project

Dnevnik reports that the spokeswoman of Gunter Öttinger , European energy commissioner, has said that the Russian “South Stream” gas pipeline project cannot get a priority status as a TEN-E project. The reason is that “South Stream” does not provide diversification of energy supplies.

Just a few days ago Bulgaria and Greece reportedly agreed to seek such a EU priority status for “South Stream”. It is worth also reading the overview of Bulgarian-Russian discussions on South Stream and other energy issues as provided in the European Dialogue blog.