An overview of Bruegel’ scholars insight on Energy Union

Bruegel scholars have made agenda-setting contributions to the debate on Energy Union. These proposals are central to the Juncker Commission’s declared goals towards sustainable growth. Here we present an overview of their analysis so far.

Energy Union has climbed to the top of the policy agenda as Europe struggles to find convincing answers to its economic and geopolitical problems. The Commission proposals focus on five dimensions: energy security, an integrated energy market, energy efficiency, decarbonisation of the economy and research and innovation. Bruegel’s scholars have made substantial contributions to the overall framework as well as to these five broad areas.

The Energy Union Framework

In September 2014 there were detailed Memos to the new Commissioners for Energy and Climate Change, setting out where Europe stood and what the new Commissioners’ priorities should be. These were swiftly followed in October by the paper Elements of Europe’s Energy Union, which brought together innovative policy suggestions related to energy security, innovation and emissions. The structure and content of this report are very similar to the Commission proposals for Energy Union, released a few months later.

Supply security

Bruegel’s scholars offer context and foresight on issues such as the geopolitics of Russian gas imports, the potential for new pipelines from the south-east Caucasus, and new resources in the southern Mediterranean. The EU will be a net energy importer for the foreseeable future, so energy security depends on both the stability of existing sources and the diversification of supplies with new partners or technologies.

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Internal energy market 

Bruegel’s scholars call for active intervention in energy markets at the European level, and make concrete policy proposals. A functioning single market in energy could be an excellent way to make Europe’s energy cheaper, its supply more resilient, and renewable sources more viable. However, distribution bottlenecks and differences between national regulatory frameworks make progress towards truly integrated markets for gas and electricity slow.

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Energy efficiency 

Bruegel’s scholars investigate the kinds of regulation most effective in promoting energy efficiency, and whether these moves should be made at European or national level. Ambitious energy efficiency targets to reduce demand are part of the EU strategy for emissions reduction.

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Emissions reduction

Bruegel’s scholars analyse the EU’s emissions targets and emissions trading system (ETS). ETS was a bold and innovative attempt to reduce total emissions, but it now requires major reform to ensure long-term effectiveness. As the world negotiates a replacement for the Kyoto protocol, ETS has been weakened by falling energy demand and the initial over-allocation of credits.

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Innovation in low-carbon technology

Georg Zachmann, Bruegel Research Fellow, argues that there are three ways to encourage innovation in low-carbon technology: pricing carbon, supporting the deployment of as-yet uncompetitive technologies, and backing research and development. Bruegel scholars assess the policy options.

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