How the EU has managed the unprecedented challenges in the energy policy landscape by equipping the EU with a regulatory framework to pursue the clean energy transition is described in the State of the Energy Union report, published by the European Commission (“State of the Energy Union Report 2024 shows EU progress to ensure secure, competitive and affordable energy for all“).
The Commission points out that the EU has managed to withstand critical risks to the security of its energy supply, regain control of the energy market and prices and accelerate the transition towards climate neutrality.
In particular:
- Renewable energy production breaks new capacity records. In the first half of 2024, half of the EU’s electricity generation came from renewable sources.
- The share of Russian gas in EU imports has fallen from 45% in 2021 to 18% by June 2024, while imports from trusted partners such as Norway and the US have increased.
- Natural gas demand between August 2022 and May 2024 fell by 138 billion cubic meters.
- The EU reached its 90% winter gas storage target on 19 August 2024, well ahead of the 1 November deadline.
- Energy prices are more stable and remain well below the peak levels of the 2022 energy crisis.
- EU greenhouse gas emissions fell by 32.5% from 1990 to 2022, while the EU economy grew by around 67% over the same period.
- Internationally, the EU led the global initiative to triple renewable energy capacity and double energy efficiency as part of the transition away from fossil fuels, which was endorsed by all parties at COP28 in Dubai.
Progress in RES
According to the report, significant progress has been made in the field of Renewable Energy Sources.
Wind power overtook natural gas to become the EU’s second largest source of electricity after nuclear, and by the first half of 2024 renewables produced 50% of EU electricity. In 2022 EU primary energy consumption resumed its downward trend, falling by 4.1%.
However, according to the Commission, energy efficiency efforts will need to be further intensified in order for the EU to achieve its target of reducing final energy consumption by 11.7% by 2030. Further improvement is needed, especially in the electrification of heating equipment in all levels and renovation rate of buildings.
Enhanced efforts are needed to address high energy prices. This is key to improving the competitiveness of EU industry and accelerating investment in Europe’s integrated infrastructure networks, which are essential to electrify the European economy.
The national plans
The report reminds that all Member States must submit their final updated national energy and climate plans as soon as possible to ensure the collective achievement of the 2030 energy and climate targets.
The assessment of the draft updated NECPs published in December 2023 shows that Member States have taken a step in the right direction, but this is still not enough to reduce net greenhouse gas emissions by at least 55% by 2030 and must take into account the Commission’s recommendations for their final plans.
The Commission has also published a report on the functioning of the Energy Union Governance and Climate Action Regulation (“Report on the functioning of the Governance Regulation“), which concludes that the Regulation plays an important role in keeping the EU on track to meet its targets for 2030 by making planning and reporting more coherent, comprehensive and simpler.
New and emerging challenges will need to be addressed in the future, such as the current ambition gap in renewable energy and energy efficiency targets, increasing energy poverty, the difference in energy prices compared to other global competitors and the risk of new strategic critical dependencies. They will require a decisive political response and a step-change of efforts at EU and Member State level, through more coordination, market integration and joint action.
Support for Ukraine
The Commission in its report recalls that the EU continued to stand by Ukraine in the midst of relentless Russian attacks on its energy system. The synchronization of the Ukrainian and Moldovan grids with the Continental European Grid has helped to stabilize Ukraine’s electricity system, and the capacity for electricity exchanges has now reached 1.7 GW for commercial trade. It also allows Ukraine to benefit from emergency imports. By 31 July 2024, over 40% of all donations from Member States were dedicated to the energy sector, with the total contribution of the Union Civil Protection Mechanism estimated at over €900 million.
The Ukraine Energy Support Fund (UESF) has also mobilized over EUR 500 million until June 2024. In addition, the EU Ukraine Facility of EUR 50 billion will provide consistent funding to help Ukraine’s recovery and sustainable economic growth by 2027.
Strengthening energy security and competitiveness
The authors of the report point out that EU manufacturers face increasing competition in net zero technologies in global and domestic markets. The Report recalls the importance of the Net-Zero Industry Act and the Critical Raw Materials Act, alongside electricity market design reform to address these challenges.
The report also recognizes the need to build on partnerships with industry to accelerate the development of net-zero technologies and strengthen the EU’s manufacturing base. Industry alliances such as the European Battery Alliance, European Clean Hydrogen Alliance, Solar PV Industry Alliance, Renewable and Low-Carbon Fuels Industrial Alliance and Alliance on Small Modular Reactors will play an important role. The Commission’s clean transition dialogues with industry and social partners will support the implementation of the European Green Deal.
The Innovation Fund, with its estimated budget of around €40 billion by 2030, also plays a crucial role. The European Hydrogen Bank, funded by the EU Innovation Fund ETS, is up and running and has completed a successful first round of EU tenders awarding nearly €720 million to 7 renewable hydrogen projects in Europe.
Empowering consumers in the clean transition
With new energy market legislation, such as the revised Electricity Market Design, the most vulnerable will be better protected from disconnection. In the event of a gas price crisis, Member States can introduce measures to protect consumers and ensure access to affordable energy and basic social services. This includes interventions in price regulation at the retail level to protect consumers from excessively high prices.
The Social Climate Fund will also be a key instrument, to mobilize at least €86.7 billion for the period 2026-2032, to be financed from ETS revenues and at least 25% from Member States’ co-financing. The Fund will support structural measures and investments in energy-efficient renovations, access to affordable and energy-efficient housing, clean heating and cooling and the integration of renewable energy sources, as well as mobility and zero- and low-emission transport. There is also an option to provide temporary direct income support.
