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Ensuring secure and affordable EU energy supply

Hydrocarbon Engineering,

The European Round Table of Industrialists (ERT) has released an agenda for action on industrial renaissance. The report accentuates the importance of ensuring a secure and affordable energy supply, emphasising some key aims:

The EU’s energy and climate policy needs to be aligned with its industrial ambitions

The ERT agenda highlights that energy prices have a significant impact on Europe’s international competitiveness, the health of the entire European industrial value chain, the prospects for sustainable growth and the EU’s capacity to reduce greenhouse emissions.

According to the ERT, the EC and the Member States need to put in place a predictable and stable policy framework that supports long term investment in energy and infrastructure, and that takes full account of energy supply and production within the EU. Additionally, industry requires a secure and affordable energy supply to strengthen its international competitiveness.

EU climate policies should consider industrial competitiveness in an international context, even more as European industries and its products are key enablers for the transition to a low carbon economy, according to the ERT.

Report recommendations

  • Any climate and energy policy must be adapted to ensure that the goal to increase industry’s share of EU GDP to at least 20% by 2020 is respected.
  • The EU should advocate an ambitious international climate agreement that ensures a global level playing field for European industry.
  • The EU should focus on reducing worldwide greenhouse gas emissions generated by EU societal consumption patterns. There is no benefit for the global climate when reductions in EU CO2< emissions are outweighed by an increase in the amount of CO2 emissions of imported products consumed in the EU.
  • The EU’s 2030 target to reduce CO2 emissions must be shared among all sectors of the economy, public as well as private.
  • Cost consequences of unilateral EU climate policies should be limited as much as possible for industries exposed to global competition.

Improving the energy impact on EU industrial competitiveness

The report explains that the EU continues to have one climate policy and 28 separate energy policies. The resulting incoherence in policy decisions between the EU and individual member states not only leads to substantial and persistent differences in energy costs and prices within the EU, but also contributes to an increasing energy price differential with major competitors. Despite European industry’s global leadership in low energy intensity production, its competitiveness is impacted by the relatively higher energy price.

Report recommendations

  • The total cost of energy production and supply must be managed. This includes making intelligent use of existing assets, including nuclear where it exists, operating under safe conditions.
  • Stable and predictable regulatory frameworks for both production and networks are key, to minimise capital costs for the energy industry, thus improving competitiveness across the whole value chain, and to attract investments in energy intensive industries.
  • Diversification in energy supply is important. Europe should prioritise natural gas within the energy mix and allow the exploration of indigenous resources under safe and environmentally appropriate oversight.
  • Energy technologies that are subsidised must demonstrate that they have a credible pathway to a sustainable future. Subsidies must be shifted towards innovation in 2nd and 3rd generation technologies.
  • Energy efficiency is critical and requires continued investment and innovation for the benefit of governments, industry and consumers.
  • Substantial investment in technology innovation is necessary. Existing technologies can be applied outside the EU with better performance and economic results.
  • The EU should accelerate progress towards a harmonised regulatory framework and a truly open single market for energy.
  • The EU should coordinate the development of energy infrastructure allowing for the diversification of its energy supply, actively supporting interconnection of networks.

Adapted from a report by Emma McAleavey.

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