In this interview, Paula Pinho, Director for Just Transition, Consumers, Energy Security, Efficiency and Innovation at the European Commission Directorate-General for Energy, talks about how the EU is securing the energy and critical raw materials needed for the shift towards renewable energy and the importance of energy efficiency as a structural solution to the just energy transition.
Following last year’s Russian full-scale war in Ukraine and high energy prices, the EU implemented several emergency measures to guarantee energy supplies for consumers during the critical winter months. Are we as well prepared this year and for the future? How do EU actions on energy security help to ensure EU strategic autonomy?
We are at least as well prepared as last year. Fortunately, the situation has changed a bit. We are no longer purely in an emergency situation, whereas last year everything was urgent and we did not know what the next day would bring. Last year's very intensive work has really borne fruit and I'm so proud of the results.
At the recent launch of the International Energy Association’s Energy Outlook, IEA Executive Director Fatih Birol referred to the EU’s gas storage being completely full. That’s the result of our measures. We introduced a first, and unprecedented, regulation on gas storage which sets out specific milestones for Member States to fill their storage facilities incrementally throughout the year, not just during the summer.
We also managed to significantly bring down gas demand by 18% compared to the average of the past 5 years. We believe that a big part of that is the result of structural measures - and these will stay in place. This means we will be able to continue to simply consume less, which is also our objective, if it doesn't mean destroying industrial output, and we have good signals in that sense.
It's also great to see that everyone contributed, from industry to households. When we look at reduction in gas demand, the contribution from households and industry is 50/50 - so it's really something that pulled everyone together.
We also need to bear in mind that while we were very busy dealing with an emergency, we also continued to negotiate structural measures. For example, we managed to set a new, even more ambitious, target for energy efficiency. The new legally-binding target is to reduce our final energy consumption by 11.7% by 2030, compared to the projected figure for 2030. The new target entered into force on 10 October 2023.
It demonstrates that this is not just something that was done because it was an emergency (we were missing 155 billion cubic meters of gas from our main supplier - Russia), but that there is also structural work being done to enable more long-term changes. We practically compensated for all the missing gas from Russia and this is a huge achievement in itself, especially bearing in mind how quickly we managed to do it. Not even the most optimistic supporter of the European Green Deal would have imagined that we would manage this in such a short space of time.
So, the short answer is yes, we are prepared for winter. I hesitated to give this reply last year. Every time I was asked ‘are we prepared?’, I would only say ‘we are preparing’. This year, I think we are prepared but we really cannot just sit back and relax. Our infrastructure is critical and because of that, it remains at risk and we cannot exclude the possibility of bad things happening to critical energy infrastructure. We hear now that the recent incident with the Baltic Interconnector was an accident - whatever the reason was – if our infrastructure is exposed, we can all of a sudden lose the means to supply the stored gas. So, we cannot lower our guard. The Directorate-General for Energy is maintaining a very high level of monitoring and preparedness. For instance, we know that storage facilities are now full, but we cannot afford to just use up all the gas during the winter. As at the end of last winter, we still need to have a big buffer to allow us to go through into the next heating season. Therefore, we are already preparing for winter 2024-2025.
By accelerating renewables, are we not replacing our dependence on fossil fuels by another dependence, namely on imports of clean technologies and critical raw materials?
As we proceed in our journey towards becoming the first climate-neutral continent in the world, critical raw materials are the quintessence of energy security, not only in the future, but already today.
As far as the European Commission is concerned, we have been betting on the diversification of our energy supply for years. Now, with regard to critical raw materials, we have to do even more and faster to really make sure that we diversify our sources of energy. That's the objective of the Critical Raw Materials Act which we put forward earlier this year.
'With critical raw materials - as with gas and oil - we need international suppliers. The key here is making sure that we work with as varied a number of suppliers as possible, learning the hard lessons from our overdependence on a single supplier.'
The so-called ‘Critical Raw Materials Club’ is precisely aimed at that - identifying where the resources are and with whom we can team up. At the same time, we need to ensure from the outset that the ‘circularity’ of the critical raw materials is considered so that we can make best use of supply chains that are sustainable.
‘Competitiveness’ is the word of the day. Already before the war in Ukraine we were disadvantaged in terms of international competitiveness, one reason being that our energy prices were already then higher compared to those in the US, China and other countries. The unprecedented peaks of high prices became a serious issue as they aggravated this disadvantage. We cannot afford to lose the EU’s industrial leadership and capacity, which brings countless jobs and growth. So, to the trilemma of ensuring a secure, sustainable and fair energy transition comes the additional challenge of how to make sure that EU competitiveness is also ensured in such transition.
This feeds into another initiative of the European Commission, where the Directorate-General for Energy has been directly involved. Here, I refer to the Net-Zero Industry Act, which is about creating the right conditions to be able to develop the manufacturing of some of the clean energy technologies here in Europe. And let us be clear: this is not about protectionism. In fact, it is not possible to progress on the transition to clean energy without resorting to the global market for clean energy technologies. We simply need, at the same time, to improve the conditions for manufacturing and the signals and incentives, regulatory and otherwise, in the EU. Otherwise, we risk losing out in terms of competitiveness. That is crucial and that's why competitiveness is now so much on everybody's minds.
Do you have the feeling that renewables get more coverage than energy efficiency?
Oh yes, it is a fact and it's understandable. Firstly, renewable energy is so much easier to visualise than energy efficiency. With renewables, you think of wind turbines, you think of solar panels. Energy efficiency, on the other hand, is not just less visually translatable, it's also less visible in terms of gains, right? It's more difficult to show that I've gained in efficiency in my home because I've now replaced my gas boiler with a heat pump. So, it's always more difficult to make the case for energy efficiency and inevitably, ‘out of sight, out of mind’. And yet energy efficiency is an absolute no-brainer, and the clean energy transition will simply not be possible without it. We therefore need to find ways in which we make energy efficiency more tangible, more visible. And here, let me throw a question: Why would we not reflect the share of energy efficiency in the energy mix of a country or the EU, as we do for any other source of energy? This should be rather easily feasible!
Ironically, this was a silver lining in the energy crisis. All of the sudden, faced with a crisis, actors across the economy discovered the potential and benefits of energy efficiency.
For me, the most telling example is when industry representatives tell me that they discovered, because of the prices and the crisis, that there was potential for efficiency gains in their production or manufacturing processes that they had fully ignored until last year because gas was cheap, so why would you even consider looking into alternatives? They discovered that by just replacing one step of the process, or by making a small adjustment, which is by the way not that costly taking everything into consideration, that you can make important efficiency gains. At the same time, I hear citizens referring to the benefits of energy efficiency in their homes, be it in electrical appliances or the way they heat the house, that they discovered over the past year.
So, that is my hope - that some of these discoveries mean that there are changes to our energy demand and use which are structural and are here to stay beyond the crisis. That also explains why many more people and stakeholders across the value chain are speaking about energy efficiency. Which again, is not just about demand reduction, because that always has a bad connotation – ‘asking me to reduce my demand is asking me to sacrifice my comfort, or sacrifice my industrial output’. That's not energy efficiency; it's reducing demand, but it's not the efficiency gains that you can find everywhere. So it is a positive story and one which we need to emphasise and focus on.
How has the energy crisis influenced energy poverty in Europe?
We already had a recommendation on energy poverty from 2020, but so much has changed since that it needed to be updated. We published an updated Commission Recommendation, as part of our latest report on the State of the Energy Union 2023.
Unfortunately, as a result of the crisis, energy poverty really increased. We're now talking about 40 million people impacted by energy poverty last year alone. That's 9.6% of the EU population, so close to 1 person in 10 is affected by energy poverty. This is huge. Clearly, more needs to be done, including at EU level, to address this.
Therefore, in our various pieces of recent legislation, we have catered for this concern. Take, for example, the reform of the Electricity Market Design. It includes measures that will more easily enable, for instance, energy communities and energy sharing, which will bring structural benefits over time. Also, in our emergency legislation we wanted to make sure that those in energy poverty can benefit from the EU financial assistance that is out there.
We have a new piece of legislation, the Regulation establishing a Social Climate Fund, which foresees that the revenues from the extended Emissions Trading System (ETS), and which now include transport and buildings, will also eventually benefit energy poor and vulnerable consumers.
To give some examples where we're really trying to tackle energy poverty. Here, I would like to mention the Energy Performance of Buildings Directive (EPBD), which is currently subject to a very heated debate. Here, we're very much insisting that at least the worst performing buildings need to be a priority when it comes to renovation, insulation and benefits from any possible financial assistance at EU or national level. Not only is this the low-hanging fruit in terms of renovations, but also, most often, these are the homes of those who do not have the capacity to buy heat pumps or solar panels by themselves.
For all these reasons, we wanted to update the Energy Poverty Recommendation and also identify what more can be done in Member States.
With buildings, we always need to put things into context and perspective. When we talk about the decarbonisation of buildings, we’re talking about 40% of energy consumption in the EU. That alone should be enough to understand that there can be no energy transition and no decarbonisation of our energy system without more energy-efficient buildings.
'Buildings present huge potential and it's an absolute must to tackle their energy consumption and their greenhouse gas emissions which represents about 33% of total emissions in the EU.'
The EPBD was last revised in 2018 and needs to be updated. This can involve more stringent and specific requirements, to help us progress on the decarbonisation of buildings. It's clear that buildings play a major role in achieving a climate-neutral continent by 2050 and a 55% reduction of greenhouse gas emissions by 2030.
With the current directive, the renovation required to maximise the potential of the EU’s building stock has not happened as fast and as intensively as we need. The revised directive should also distinguish between residential, public and commercial buildings - because of course, the more you touch private residential buildings, the more difficult it becomes - and the more the debate can become politicised by scare stories about compulsory renovation requirements. So, we were very careful to distinguish between these 3 main categories and be stricter on public and commercial buildings, rather than on residential buildings.
One last question – you’ve been working in energy for a number of years. When you look back at last year’s crisis, are there 1 or 2 good things that came out of it which you were not expecting?
Absolutely. As you say, I’ve been working on energy policy for quite some years – and also on energy security by the way (that is one of the files I did from the very beginning). I would never ever have imagined, for instance, that a country like Germany, with 50% of their gas imported from Russia, would be able to, within a year, effectively phase it out and look for alternatives.
This would not have happened without a crisis, it's very fair to say. Again, we're paying the price, but the ironic thing is that the crisis has accelerated the energy transition in ways that we would never have dreamt of before.
The other thing was to see the level of solidarity among Member States and, again, not just among EU countries, but solidarity in society at the end of the day. The crisis and lack of gas affected individual countries, their industry and people differently, but everybody stood alongside each other. What we saw was totally unprecedented, like speed with which Member States accepted and enacted new EU legislation, although they were affected in very different terms, but everyone was behind the effort, despite different interests.
So, it's incredible. I think it was a big moment of real EU integration. But I really hope we don't need another crisis to make meaningful progress in our journey to decarbonisation of the energy system!
- Publication date
- 14 November 2023
- Directorate-General for Energy