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EU Commission: Energy Union Factsheet

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Hydrocarbon Engineering,

The European Commission has released a factsheet outlining the aims and benefits of the Energy Union.

Why is the Commission proposing an Energy Union now? Why do we need an Energy Union?

The European energy system faces an ever more pressing need to ensure secure, sustainable, affordable and competitive energy for all citizens. Excessive dependence on a limited number of supply sources, especially for natural gas, leaves countries vulnerable to supply disruptions. We must reduce our dependence on fossil fuels and reduce greenhouse gas emissions, and the affordability of energy and the competitiveness of energy prices are of increasing concern to households and businesses.

What does the Energy Union include?

The Energy Union is based on the three long established objectives of EU energy policy: security of supply, sustainability and competitiveness. To reach these objectives, the Energy Union focuses on five mutually supportive dimensions: energy security, solidarity and trust; the internal energy market; energy efficiency as a contribution to the moderation of energy demand; decarbonisation of the economy; and research, innovation and competitiveness.

What is the Energy Union proposing for the diversification of sources and suppliers?

The EU imports 53% of the energy it consumes. Some countries depend for their gas imports on one main supplier. Diversification of energy sources and suppliers is a key means of improving our energy security. Exploring new supply regions for fuels, exploring new technologies, further developing indigenous resources and improving infrastructure to access new sources of supply are all elements that will contribute to the increased diversification and security of Europe's energy sector. In this context, and as far as gas is concerned, the Commission will develop a resilience and diversification package for gas, which in particular will include a revision of the Security of Gas Supply regulation. As regards diversification work is ongoing as regards the Southern Gas Corridor, the development of a strategy to better use the potential of liquefied natural gas and storage, and the establishment of liquid gas hubs with multiple suppliers in Central and Eastern Europe as well as in the Mediterranean.

Will the Commission propose a European energy regulator?

The Commission will consider how to strengthen the European energy regulatory framework so it can better govern the increasingly integrated European energy system. The Commission considers that EU wide regulation of the single market should be strengthened through a significant reinforcement of the powers and independence of ACER. This is necessary for it to effectively oversee the development of the internal energy market and the related market rules as well as to deal with all cross border issues necessary to create a seamless internal market.

How is the Commission going to leverage investment in energy infrastructure?

Energy infrastructure is typically financed by the market and through tariffs paid by the users of the networks. Only a small number of infrastructure projects in Europe will need grants under the Connecting Europe Facility (CEF) to go ahead. These are projects that are not commercially viable, but are necessary because of the externalities they provide: security of supply, solidarity or technological innovation.

Many other projects could make use of other financing methods that provide more leverage than the grants/direct financial aid. This is the case for the financial instruments which are part of the CEF but more so for the European Fund for Strategic Investments (EFSI) which will be a very important instrument complementing the CEF in order to finance energy infrastructure projects in Europe. It will help where financing for projects is not available from other sources on reasonable terms accepting a higher risk profile.

Will the Commission propose energy taxes?

The framework strategy for the Energy Union does not include any new initiatives relating to energy taxation at the EU level. The Commission encourages Member States to take a fresh look at energy taxation both at national and European level. National taxation policies should strike the balance between providing incentives for a more sustainable energy use on the one hand and the need to ensure competitively priced and affordable energy to all consumers on the other. It will produce biennial reports on energy prices, with an in depth analysis of the role of taxes, levies and subsidies, in order to create more transparency on energy costs and prices.

Responding to the publication of the Energy Union strategy, UK Energy and Climate Change Secretary Ed Davey said: "The UK has been at the forefront of work to secure a coherent EU energy and climate policy and this strategy will benefit British consumers by bringing bills down, boosting energy security and providing a more cost effective route to a low carbon economy. But to meet all our goals, the EU must do more to support all low carbon technologies, including nuclear power and carbon capture and storage, alongside renewables and energy efficiency. We will continue to make the case for the ambitious but flexible energy union Europe needs to prosper and reduce the dependency on Russian supplies."

Read the Energy Union Factsheet in full here.

Adapted from press release by Rosalie Starling

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