We Europeans today use almost twice as much energy as in 1980. On this trend, we are going to find it difficult to avoid a major energy crisis with electricity cuts and petrol or gas shortages.
The energy challenge is among the greatest tests that Europe has to face. Our economic competitiveness in world markets depends on reliable energy supplies and the availability of energy products and services at affordable prices. And we also have to act right now if we are to prevent global warming. At the same time, Europe must contend with increasing competition around the world, especially now that emerging powers like India and China are demanding a much larger share of the world's energy resources. The EU’s growing dependence on imports from third countries is a matter of great concern, with 85% of the oil we use coming from outside Europe and 65% of the gas. Recession, the absence of a global agreement on climate change, competing demands for energy from developing countries and the relatively high price of renewable energies together create a daunting task for Europe’s policymakers.
Over the coming 20 years, we in the EU need to invest around €1,000bn – a cool trillion – in energy. If we invest wisely we can develop new energy sources, expand supply networks, boost renewable energy use and cut energy consumption significantly. But to do so means taking some bold decisions right now.
The European Commission is proposing an ambitious strategy to give real backbone to the single energy market and to "Europeanise" national energy policies. Because the energy decisions taken by one country have an impact on the others, the EU’s fragmented national energy markets undermine security of supply and fair competition. Energy investment can only be profitable and efficient in a continental-scale marketplace, and that means Europe must have a common energy policy that serves the joint policy objectives of improving competitiveness, sustainability and security of supply.
Five policy pillars suggest themselves. First, there is all the untapped energy-saving potential. The EU’s commitments to reduce our emissions drastically and increase energy efficiency by 20% by 2020 mean that limiting energy demand could have an immediate impact. Average energy savings per household could amount to €1,000 a year, but that means putting more effective tools in place. The Commission this year proposed a new energy efficiency action plan as well as the energy savings directive. The aim is to identify innovative actions now and in the longer-term in buildings and transport. Our priority is to focus on public authorities who can lead by example and apply energy efficiency to public procurement.
The second goal is to fully integrate the single energy market. Only an EU-wide energy market offers the economies of scale needed to justify the huge investments now needed. The barriers that still impede energy flows within the EU, threaten not only the single market but both the industrial competitiveness of Europe and even the energy needs of its citizens. And because fair competition and free access need to be guaranteed, the appropriate EU legislation has to be applied. First, though, adequate infrastructure is sine qua non, and it’s now high time that energy should have the pan-European infrastructure that sectors like telecommunications and transport have had for many years. By 2015, no EU member state should be outside the European internal energy market, so we now have to concentrate on concrete projects that will deliver an inter-connected market, new power generating capacities, an "intelligent grid" and the large scale production of generally available renewable energy at competitive prices. We also need to build new import pipelines like Nabucco to diversify and strengthen our gas supplies and here the EU has a vital role to ensure these investments are made by creating the leverage needed to make them attractive.
All of these efforts should have as their primary focus their impact on Europe’s citizens. Energy policies have to be more consumer-friendly, which means more transparency and information. I would like to see tools like the consumer checklist being improved and applied more widely.
And I would also like to develop a European reference framework to help EU member states and regions accelerate the market uptake of technologies. We in Europe have some of the world's best renewable energy companies and research institutions, and we need to keep this leadership. As well as the implementation of the strategic energy technology plan, we have launched a few large scale projects with strong European added-value. These include smart grids to link the whole electricity grid system to individual households, and give better access to renewable sources of energy and the 'smart cities' innovation partnership that is to promote integrated energy systems at the local level.
Looking to the global energy picture, the EU should clearly become the favoured partner in international negotiations. The present situation where external suppliers can "divide and rule" is untenable. The EU is the world's largest regional energy market, with its 500m people accounting for a fifth of all energy use and importing on average around 3m tonnes of oil equivalent every day. The EU is also the biggest economic trading bloc, so we should better exploit our geopolitical weight in the world. Already it’s worth pointing out that every time the EU has spoken with one voice – for instance on international nuclear cooperation – it has led to results. But Europe needs a mechanism to coordinate its efforts and send coherent messages to our main partners. The integration of our own energy markets with those of our neighbours is a must, contributing both to our security and theirs. Now we need to go further and aim at building key strategic partnerships so as to strengthen our position in difficult negotiations and secure our international leadership.