IEA review
praises bloc’s low-carbon leadership but notes that deeper market integration
is essential to manage costs of clean-energy shift
.
The European Union has made progress in
liberalising energy markets, and its global leadership on climate change is to
be commended, the International Energy Agency (IEA) said today as it released its review of EU energy policies.
However, the new IEA report said there remains
much room for improvement. It noted that much of the integration of
Europe
’s energy market has been confined to northern and western parts of
Europe
, and that until
important
interconnections are built across the entire bloc, the EU will not have a truly
integrated, single energy network – the basis for an “Energy Union”. Moreover,
despite reforms at the wholesale level, markets are increasingly distorted by
the persistence of regulated prices and rising green surcharges and levies.
In the report,
Energy Policies of IEA
Countries: European Union – 2014, the IEA praised the EU for reducing its
carbon intensity and taking the lead in vehicle fuel economy standards. Thanks
to the implementation of 20-20-20 targets, lower energy intensity and an
unprecedented boom in renewable energies can be witnessed.
EU leaders agreed in October 2014 to ambitious climate
and energy targets for 2030. Now, the legal framework must be put in place,
with market rules for a low-carbon system.
The transition to such a low-carbon system remains challenging, as
electricity and transport sectors rely heavily on fossil fuels.
This requires the swift reform of the
EUEmissions Trading Scheme (EUETS) and
support to investment in low-carbon technologies.
“As member states adopt different energy
policy choices and decarbonisation pathways towards 2030, a strong ‘Energy
Union’ is needed to achieve the EU 2030 goals. But let’s be clear: such a union
should not represent a buyer’s cartel. Rather, it should feature an integrated
energy market and effective climate and energy policies,” said IEA Executive
Director Maria van der Hoeven.
“
To make
the most of the diversity of its energy sources, and to move towards an Energy
Union, the EU must better pool its resources within the internal energy market
to enhance both energy security and the competitiveness of its industry,” she
added.
EU electricity systems and markets need to
accommodate growing shares of variable renewable energy. At the same time, the
EU faces the retirement of half its nuclear generating
capacity in the next ten years. Decisions need to be made about uprates,
upgrades and lifetime extensions.
Energy
security must be placed at the centre of the Energy
Union.
In order to reduce dependency on
one single supplier, the EU must further
diversify gas and oil supplies, and cannot afford to reduce its energy
options: nuclear, coal and unconventional gas and oil will need to be part of
the mix.
Among its key recommended policy actions, the
IEA report calls for:
·
A new c
ommitment to the internal energy market across the EU,
with an interconnected energy network and competitive retail markets to ensure:
o
in electricity, the market integration of variable
renewable generation with strong co-ordination of electricity system operation;
generation adequacy; and demand-side response, balancing and intra-day markets
across interconnected systems.
o
in gas, access to and efficient use of gas storage and
liquefied natural gas terminals and unconventional gas sources.
·
Timely adoption
of market-based and governance rules for an integrated 2030 Climate and Energy
Framework with priority to energy efficiency, a strong EUETS, and support
to all low-carbon technologies, by integrating technology, RD&D and innovation
foresight.
·
Enhanced EU-wide
co-operation on uprates, safety upgrades, and extensions of the lifetimes of
existing nuclear power plants to ensure highest safety standards and regulatory
stability needed for the investment decisions in those countries that opt for nuclear
energy.