Organizational Change
European Commission Releases New Clean Energy Package, But Is It Enough?

Yesterday, the European Commission (EC) announced it will begin phasing out coal subsidies and reduce carbon emissions by 40 percent by 2030 under a new clean energy package.

The EC’s 1,000-page document outlines a series of legislative proposals and measures designed to help the EU meet its Paris Agreement climate goals. The proposals include plans to increase energy efficiency levels by 30 percent by 2030, accelerate clean energy innovation, renovate Europe’s buildings and step-up the coal phase out.

Entitled “Clean Energy for All Europeans,” the package also contains measures aimed at increasing the deployment of decentralized energy generation and storage to enable more European residents to become “energy citizens.”

EU climate chief Miguel Arias Cañete said: "Our proposals provide a strong market pull for new technologies, set the right conditions for investors, empower consumers, make energy markets work better and help us meet our climate targets.”

“Europe is on the brink of a clean energy revolution. And just as we did in Paris, we can only get this right if we work together. With these proposals, the Commission has cleared the way to a more competitive, modern and cleaner energy system. Now we count on European the Parliament and our Member States to make it a reality."

In 2015, clean energies attracted global investment of over €300bn. By mobilizing up to €177bn of public and private investment per year from 2021, the EU promises that this new package will deliver 1 percent increase in GDP over the next decade and create 900,000 new jobs.

Maroš Šefčovič, EC vice president in charge of the Energy Union, added, “Today's package will boost the clean energy transition by modernizing our economy. Having led global climate action in recent years, Europe is now showing example by creating the conditions for sustainable jobs, growth and investment."

“Today’s proposals touch upon all clean energy related sectors: research and innovation, skills, buildings, industry, transport, digital, finance to name but a few. These measures will equip all European citizens and businesses with the means to make the most of the clean energy transition.”

European businesses and industry experts, on the other hand, aren’t as confident. Many criticize the package, which still needs to be approved by the Council of Ministers and the European Parliament before entering law, for erring too much on the side of caution. They claim that as it stands, it isn’t ambitious enough to kickstart the kind of clean energy revolution needed to successfully address the issue of dangerous climate change.

“A number of important measures will help make Europe’s energy transition work better, such as opening markets up to demand-side flexibility,” said Johnathan Gaventa, director at the environmental think tank E3G. “There is little in the package, however, that will drive a radical transformation of the energy market on its own. It will now be up to national governments and the European Parliament — along with citizens, communities, businesses and investors — to pick up the reins.”

Unlike in their 2020 targets, the EC’s target of 27 percent renewable energy by 2030 is non-binding at the national level, a decision that has caused considerate skepticism, as a lack of a common framework could result in a disparity between member states’ engagement with targets.

For countries such as Spain that have already gone above and beyond the 27 percent, there is a lack of incentive, while renewables remain low on the priority list for countries such as Poland, which relies on the coal industry to generate 80 percent of its power. This time around, the Commission proposes establishing an Energy Union Governance body, which will monitor the progress of Member States towards the 2030 target.

A number of European businesses view the lack of a common framework as problematic and likely to discourage investment in the transition to renewable energy, with fears that the focus for investment opportunities in clean technologies will shift to the US and China.

Prince of Wales’s Corporate Leaders Group (CLG) director Jill Duggan said, “Member states must take early and ambitious action if they want to secure investor confidence. For many businesses … the move from member state targets under the 2020 package to an EU-only target feels like a big backwards step. Without strong, determined coherent leadership on renewables policy by the EC, we risk a lost decade for renewables in Europe, setting back our long-term plans.

IKEA’s solar global business leader, Alejandro Castro Pérez, agrees: “It’s too unambitious and not coherent enough — corporate planning suffers from this lack of ambition and too much uncertainty. If the EU were to get ahead of the game, IKEA could solve issues and implement policies at a much faster rate. We are failing to get the advantage from having a central EU body.”

Meanwhile, the package also confirms plans to phase out coal subsidies delivered through capacity mechanisms. In the future, member states will have to deliver market reforms and demonstrate the need for a capacity mechanism before they will be allowed to introduce one into their energy system. Additionally, there will be an emissions limit to subsidies, only rewarding capacity providers for energy emitting less than 550 grams of CO2 per kilowatt-hour.

The EC is also promising action to boost energy innovation, targeting decarbonizing buildings, clean energy innovation, affordable energy storage solutions and electric mobility.

This, much like the lack of a common framework, has been under fire by campaigners, who are now calling on Parliament and the Council of Ministers to raise the bar. Chief executive of Wind Europe, Giles Dickson, said there is still much work to be done.

“If Europe is going to deliver on its goal to be number one in renewables, the Commission’s proposals have to be further developed,” he said. “Crucially, member states have to produce meaningful national plans that map out how they are going to deliver their energy transition.”