Brussels, 02/12/2014 (Agence Europe) - The European Union has made progress in liberalising energy markets and its global leadership on climate change is to be commended but there remains much room for improvement, the International Energy Agency (IEA) says in its 2014 report on EU energy policies, released on 1 December. The IEA warns, too, that the planned energy union must not be a buyers' cartel, a reference to the proposal for common purchase of gas.
In its report, the IEA calls in particular for “new commitment” from the EU to integrate its internal energy market. In the electricity sector, the EU must improve its interconnections, which have hitherto been confined to its northern and western areas. In addition, alongside the wholesale market reforms already made, the EU must also improve the situation on the retail markets, which are increasingly distorted by the persistence of regulated prices and rising green surcharges and levies. The EU will also have to meet two imperatives: firstly, accommodate growing shares of variable renewable energy and, secondly, take key decisions (updating its regulatory framework and the safety of its nuclear installations and extending the lives of its power plants) while facing the removal of half its nuclear generating capacity in the next ten years.
In the gas sector, the EU must guarantee access to and efficient use of gas storage and liquefied natural gas (LNG) terminals and unconventional gas sources. To reduce dependency on one single supplier, the EU must further diversify gas and oil supplies, and cannot afford to reduce its energy options: nuclear, coal and unconventional gas and oil will need to be part of the mix, the IEA says.
While praising the EU for reducing its carbon intensity and taking the lead in vehicle fuel economy standards through its 2020 energy climate framework, the IEA recommends swift adoption of market-based and governance rules for an integrated 2030 climate and energy framework, with priority to energy efficiency, a strong EU ETS, and support to all low-carbon technologies.
“A strong 'Energy Union' is needed to achieve the EU 2030 goals. But let's be clear: such a union should not represent a buyer's cartel. Rather, it should feature an integrated energy market and effective climate and energy policies”, warned IEA Executive Director Maria van der Hoeven. “To make the most of the diversity of its energy sources, and to move towards an Energy Union, the EU must better pool its resources within the internal energy market to enhance both energy security and the competitiveness of its industry”, she added. (EH)