In focus: EU energy policy for energy independence

In this interview, Pierre Schellekens, Director for Energy policy: strategy and coordination at the Commission’s Directorate-General for Energy, talks about how the REPowerEU plan has contributed to an important shift for the EU’s clean energy transition and energy independence and how the revised National Energy and Climate Plans will become a real coordination tool for EU energy policy.

What impact will the REPowerEU plan have on the security of supply in Europe and what are the main constraints to replacing fossil fuel imports?

I think REPowerEU will have a long-lasting impact on the EU’s security of energy supply.  Since the REPowerEU plan was presented in May 2022, there has been a real evolution of the energy policy debate, and more generally of the political debate. I remember very well the time when the energy transition and security of supply were more contradictory than complimentary. It was often argued that we should go for the energy transition (with a main focus on the roll out of renewables), but we still needed fossil fuels to guarantee our security of supply.  I think we have now seen a fundamental shift – and our energy transition policy has also become a policy of security of supply.

"The energy transition encompasses more than just climate policy, or an environmentally led agenda. While these remain fundamental objectives, there is now a broader understanding that the energy transition is actually the way towards true energy independence for Europe."

From that perspective, REPowerEU with its focus on accelerating this transition – and diversifying supplies, etc. will have a long-lasting effect: it has contributed to changing the political mindset.

Concerning the primary constraints of replacing fossil fuel imports, there are still many challenges to overcome. While significant strides have been made in power generation, unresolved issues remain in areas such as energy use and transportation. However, it is important to note a number of encouraging signs. For example, by the end of last year, more than 20% of all new registered cars in Europe were electric! That's a remarkable figure.

I recall when at last year’s EUSEW (EU Sustainable Energy Week), the deputy minister of energy of Ukraine was keen to underline that renewables are energy independence. I thought that was a very powerful message. REPowerEU has sped up the transition and strengthened our autonomy.

Is the EU supporting investment to reduce our dependence on gas?

Yes. Investments in renewables and energy efficiency have been eligible for EU funds for a long time, spanning at least two decades, if not longer. The support has come notably through the structural funds, the Connecting Europe Facility, but also through research programmes. This is arguably taking on a higher profile now, with the Recovery and Resilience Facility.

Much of the funding is rather scattered through many different EU funds. We have calculated that there are at least eleven EU funds financing energy investments. There is merit in considering what the most efficient way to organise the funding would be.

At the same stage, we should not lose track of the fact that 80-85% of the necessary investment in the clean energy transition needs to come from the private sector. So, in global terms, we need to look at how we can use the available public funds to leverage that private investment – or to cover areas where the private sector sees only limited potential benefits. One leverage option here is financial instruments. I think we need to come to terms with the fact that the EU budget provides a relatively modest contribution but can be highly influential if used well to channel the direction of overall investment. There are many examples of where this is already working – such as the Energy Efficiency Financial Investment Group (EEFIG) and the Investors Dialogue on Energy.

But the impact of energy on inflation is calming down. After almost 2 years of price volatility, the wholesale price of gas seems to be close to pre-crisis levels. How do you expect that market to evolve in the coming months?

Market commentators seem to be adamant that we are entering a period of much greater stability than the last couple of years – with prices lower, but not as low as before the summer of 2021.

Let’s not forget that we started 2022 importing more than 40% of all our gas imports from Russia, knowing that we import 90-95% of our gas consumption. Today, we are down to some 6-7% of Russian pipeline gas and maybe 20 billion cubic metres (bcm) of liquefied natural gas (LNG). That is a reorientation of trade flows in the field of energy that is completely unheard of in such a short time. It was politically justified, it was the right policy, but it was a very daunting task.

Looking at it now, we did it without any major problems with the security of supply. Yes, there were higher costs. That was unavoidable, but there were no blackouts in Europe.

This time last year, there were strong question marks by market analysts as to – even though there was the political will - whether it would be possible to reduce this overdependence so quickly.

Today, it can be seen as a success, and the market fundamentals are quite good. We brought down demand, we have more gas in storage than ever before at this time of the year, and we have access to gas on global markets, mainly LNG, of course. Norway has become our leading supplier, but others such as Algeria, USA and Azerbaijan have stepped up too.

So, all of that together leads to a situation where the market is pretty confident about how the EU handles this. And that also has an impact on the prices, in particular on the volatility of the prices and then on the level of the prices.

To what extent do you think the EU actions and measures on energy prices made a difference last year?

Well, first of all, I think we kept political coherence. There was a common action, there was a common political will. EU countries did not run off in different directions, there was a common line and what I think was very important, as a market signal.

Secondly, the EU actions and measures were very focused on reducing demand and getting more energy to Europe, so that also had a direct impact. But then, of course, we should never underestimate that at the end of the day, the ones that actually reduce demand are households and also industries. So, there has been an effort at different levels - but I think it would have been difficult to do this in a coordinated way without EU action. Doing it in an uncoordinated way would have cost us much more. We underestimate the value of the EU internal energy market. We have been able to meet demand, albeit a smaller demand than normal, because we have a functioning common market. Others were able to link up to ensure that supply was able to match demand. I am convinced that, had it not been for the internal market, we would have had at least regionalised or localised blackouts last year.

EU countries have to update their national energy and climate plans this year. What will be the most important changes?

National energy and climate plans (NECPs) were introduced by the Regulation (EU) 2018/1999 on the Governance of the Energy Union and cover the period 2021 -2030. They were designed so that EU countries outlined how they intend to meet their climate targets for 2030 (for renewables, energy efficiency, etc) – so that these targets could be achieved at the EU level. In the field of climate, you have the ETS (EU Emissions Trading System), the effort-sharing regulation, etc. which form part of a much more established legislation, with measures, mechanisms and deadlines. But in the field of energy, the Governance Regulation, and the ensuing NECPs, were very much the tool to meet the EU-level objectives. 

The NECP revision comes at a crucial point in time. Today the NECPs need to really encompass the broader aspects of energy policy. Five years ago, security of supply, while obviously a pillar of the energy union, was not a dimension covered in the plans. Today, it has become a very important aspect for all EU countries. The policy has evolved, and elements such as energy infrastructure, the internal energy market but also energy poverty and helping vulnerable consumers have gained importance. All of these issues need to be part of a broadened NECPs.

Many of last year’s emergency measures were taken citing Article 122 of the EU Treaty (TFEU) – meaning that the European Parliament was not involved. Do you think that might have any sort of legacy in the Commission’s relations with the Parliament – or the way decisions are taken?

No, I don't think so. I think there is a legacy, of course, in the sense of what we do with the emergency measures. Some of them are contained in the Electricity Market Design proposal, and will therefore become permanent aspects of EU energy policy. So from that perspective, yes. But certainly not all

I think it was extremely important we had the possibility to act swiftly last year. The ordinary legislative procedure would have been very difficult. We would not have been able to face the challenges with the same level of efficiency. Not because there's not a sense of responsibility in the European Parliament, but simply because these different steps take more time. We were in a situation where we needed to act quickly. I think it was done in a responsible way - by making it clear that these were temporary measures, and that this way of acting is not a pattern for the future when we return to a more stable situation. But the Parliament also showed a strong sense of responsibility, by understanding that this was needed in these circumstances.

For the future, we should of course, as far as possible, avoid Article 122 TFEU and go back to the normal procedure where the Parliament and Council fulfil their respective roles as co-legislators in whatever legislation is agreed upon. Article 122 TFEU is certainly a bold and efficient tool, but one to be used in exceptional circumstances. And last year we faced these exceptional circumstances: our main supplier of gas could not be trusted.

If you look beyond energy policy in the very broadest sense, was there anything in particular that struck you about how everything functioned last year and the EU response?

I have been here in Brussels for a long time. And every time there is a crisis you have the doomsday prophets that foresee the end of the EU. We had it with the financial crisis, we had it with previous economic crises, and we had it with this energy crisis – the prediction that everything will unravel. About Brexit for example, they said that this would be the end of the EU – with a domino effect. There is only one constant in all of this – and that is that the doomsday prophets always get it wrong. 

"The EU has a very strong capacity to act under crisis. I would argue that last year’s response to the energy crisis was to some extent even better than during the euro crisis or the financial crisis."

For one, the different forms of crisis that we have faced over the last years – have, I think, improved the crisis-facing capacity of the EU. Then there was a political commitment to this crisis that went even beyond what we have previously seen. We have a war on European soil, and there is a very strong commitment to actually rise to the occasion and be what the EU is - a forceful geopolitical actor and a force for geopolitical stability in Europe. So there was in effect a commitment that went beyond ‘just’ dealing with the financial or economic issues. There was something very, very essential. This was a historical task. And everyone stepped up. That made it a slightly different crisis than the other ones I have seen during my career in the Commission.

Related links

• Action and measures on energy prices
• Electricity Market Design
• REPowerEU plan
• National energy and climate plans (NECPs)
• Connecting Europe Facility (CEF)
• Recovery and Resilience Facility (RRF)
• European Sustainable Energy Week 2023