Slides presentate in occasione del Seminario "The Energy transition in Europe: different pathways, same destination? organizzato da Edison in collaborazione con WEC Italia il 29 maggio 2013 a Roma - TWITTER #NRGstrategy

1. The EU Energy Policies: straight ahead or time to
steer the wheel?
Christian Egenhofer
Associate Senior Research Fellow, Centre for European Policy Studies (CEPS)
Visiting Professor, SciencesPo (Paris), College of Europe (Bruges & Natolin), Guido Carli
LUISS University (Rome)
Hotel Majestic, Rome, 29 May 2013
Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu
THE ENERGY TRANSITION IN EUROPE: DIFFERENT PATHWAYS, SAME DESTINATION?

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu
2007/08 Climate and Energy Package was meant to set
out long-term framework to address EU energy and
climate challenges
1. Climate change
2. Security of Supply
3. Competitiveness

3. 2007/08 Climate & Energy Package
• “Increase security of supply
• Ensuring the competitiveness of European industry and
the availability of affordable energy;
• Promoting environmental sustainability and combating
climate change”
“… to transform Europe into a highly energy-
efficient and low greenhouse-gas-emitting
economy …”
“Europe 2020” Strategy (Mission Statement
Barroso II Commission)
2030 framework for climate and energy
policies

4. Improved energy
efficiency
Improved energy
efficiency
Promotion of new
technologies, growth
and jobs
Promotion of new
technologies, growth
and jobs
Affordable and
competitive prices
Affordable and
competitive prices
CompetitivenessCompetitiveness
Adequate energy
infrastructures
Adequate energy
infrastructures
Grid StabilityGrid Stability
Diversification of fuels,
supply countries and
routes
Diversification of fuels,
supply countries and
routes
Security of energy
supply
Security of energy
supply
Development of
alternative energy
sources
Development of
alternative energy
sources
Reduction of energy
consumptions
Reduction of energy
consumptions
Reduction of emissionsReduction of emissions
SustainabilitySustainability
European Commission “2030 framework”… “must ensure progress towards
three objectives”
Source: European Commission (DG Energy)

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu
The (new) EU in search of a new consensus
1. Economic crisis undermines EU climate ambition (20% target =
almost reached) + not in line with 2 C target, international finance, EU
decarbonisation … ETS etc.
2. New EU is more heterogeneous (GDP per capita ranges from 274% to
45% of EU average)
3. Industrial competitiveness matters more
4. US energy prices (vs EU prices)
5. EU share of global emissions is fast falling & no global climate
change agreement in sight
6. EU energy prices go up
7. Old framework must be renewed

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu
The 2007/8 Climate and Energy Package was adopted within a unique political
constellation
- Consensus within and between EU Institutions (European Council, European
Commission, European Parliament, certainly for EU-15)
- Strong and committed leaders (‘positive EU cycle’)
- Economy on track
- Expectation of a Global Agreement
- EU dominated by EU-15 (?)
Lessons
Interactions between different policies exists (irrespective of targets). Existing
mechanism (i.e. linear reduction factor, ex-ante Impact Assessment, three
targets) were not sufficient to address interactions

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu
• Industrial policy benefits (technology leadership, export-led growth, green
jobs/growth/ economy etc.) have lacked evidence
Lessons (2)
• Regulation works, e.g. car efficiency standards, regulation for houses …
• Least-cost policy (ETS) faces political obstacles while high-cost policy is
successful
• Carbon price is indispensible but not ETS !
• We know what works! We have experiences with hybrid instruments.

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu
Lessons Learned (3)
• Importance of national/local energy and other policy choices have been
underestimated (German energy transition, UK price floor, contract for
differences, nuclear policies ….)
Continuity but no roll over

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu
Is there an issue?
What is main issue?
• Climate change policy? (carbon pricing)
• EU energy policy? (Renewables)
• Investment economics ?
• Member states exert national/local energy
choices (Art. 194 II Lisbon Treaty)? (Energy
transition) ?

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu
Issue is price of energy
• European or national prices ?
• Real or published prices? Transparent or non-
transparent?
• Sustainable or non-sustainable energy?
• Short-term or long-term vision?

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CEPS Energy M arkets Forum
Key challenges and potential remedies to address
Challenge M easures/ remedies To be dealt
with in Work
Programme
1 Spill-over effects of national
energy choices (e.g. loop
flows, negative prices)
Reveal divergent national preferences
regarding the future energy mix and
point to increasing constraints
resulting from the EU framework
WP 1
Increase regional coordination and
cooperation
WP 1
Incentivise greater cross-border TSO
cooperation (e.g. cross-border re-
dispatching)
WP 1
Facilitate international exchange
between national governments,
regulatory authorities, TSOs & DSOs
and energy market participants
All WP
2 Electricity network expansion
(How to optimise electricity/
energy networks?)
Improve methodologies to allow for
cross-border cost-benefit allocation
WP 1
Identify and build institutional
capacity to address distributional
effects, i.e. deal with winners and
losers
WP 1
Identify ways (for TSOs) to better
incorporate DSO related flexibility
WP 2
Develop new ways of improving
public acceptance of cross-border
infrastructures or those with a
significant cross-border impact, for
example by authoritative analysis or
other means
WP 2

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Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium
www.ceps.eu

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