The European Commission on Wednesday issued an action plan to cheapen energy for households and businesses and in the process accelerate the transition to a net-zero European Union economy by 2050.
The plan would cut the 27-member bloc’s fossil fuel import bill by EUR 130 billion ($136.06 billion) a year from 2030. Savings are expected to rise to EUR 260 billion per annum by 2040, according to the official text published on the Commission’s website.
To curb fossil fuel use and in turn import reliance, the plan supports displacing fossil fuels from the electricity mix with clean sources; expanding electrification; increasing grid capacity, modernizing grid infrastructure and strengthening system flexibility; and boosting energy efficiency.
“With a substantial share (28.9 percent) of the EU’s average electricity generation mix still based on fossil fuels, and transport largely fueled by oil products, fossil-fuel import costs have a significant impact on consumers’ energy bills”, the Commission said.
In 2022, the EU’s fossil fuel import bill hit a record-high EUR 604 billion. That was just a year after the figure fell to a historic low of EUR 163 billion in 2020, according to Commission data.
“While demand for natural gas declined by 18 percent between August 2022 and May 2024, the EU remains exposed to global fossil-fuel price fluctuations, with 90 percent of its natural gas demand covered by imports”, the Commission explained.
“The consequences of excessive supply dependence were evident during the recent energy crisis”, it added, accusing Russia of weaponizing gas exports.
The Commission said in the coming weeks it would put forward measures to strengthen the enforcement of REPowerEU, a strategy passed February 2023 to achieve independence from Russian fossil fuels by 2027.
The action plan announced Wednesday also addresses – besides import reliance – power market integration and system costs.
“Europe has the most integrated grid globally, but more needs to be achieved as regards interconnections, grid infrastructure, energy system integration and system flexibility to boost the integration of cheaper and cleaner energy sources”, the Commission said.
“Current estimates are that by 2030, around half of the EU’s cross-border electricity new capacity needs will not be addressed, holding back the complete integration of our energy market”, it added.
To achieve full integration, the action plan supports bridging the investment gap and mobilizing private capital, as well as simplifying regulations.
To mitigate systems costs, the plan supports lowering taxes and removing non-energy cost components from bills. It also wants to empower consumers to easily switch to a more affordable supplier, as well as to improve access to more efficient appliances. On the energy supply side, the plan hopes to reduce permitting times for clean energy projects. And while the plan wants to decouple retail energy prices from costly and volatile natural gas, it aims to ensure fair competition in the gas market and leverage EU purchasing power to get better gas supply deals while gas remains in the energy mix.
“We have already significantly reduced energy prices in Europe by doubling down on renewables”, Commission President Ursula von der Leyen said in a statement. “Now, we are going a step further with the Affordable Energy Action Plan as part of our Clean Industrial Deal.
“With it, we will achieve more predictable prices, stronger connections across Europe, and increased energy offtake. We will systematically remove remaining obstacles so that we can build a true Energy Union”.
The Clean Industrial Deal announced Tuesday presents a plan to – besides lowering energy costs – raise demand for cleaner products, grow investment in the clean transition, improve EU companies’ access to raw materials while promoting circularity, form trade partnerships and build the relevant workforce.
Source: rigzone, Published: Feb. 27