“Much Room For Improvement” For Europe, Says IEA

A new report reviewing the European Union’s energy policies by the International Energy Agency, published Monday, has praised the region’s low-carbon leadership, but notes that there is still more work to be done to better integrate the EU’s energy market.

“The European Union has made progress in liberalising energy markets, and its global leadership on climate change is to be commended,” the IEA wrote in its press release announcing the report, Energy Policies of IEA Countries: European Union – 2014, before adding that “there remains more room for improvement” — such as the integration of Europe’s energy market. Currently, any integration has been limited to the north and west of the Union, and more interconnections are needed across the entire European Union before the EU will have a truly integrated, single energy network — “the basis for an ‘Energy Union’.”

“As member states adopt different energy policy choices and decarbonisation pathways towards 2030, a strong ‘Energy Union’ is needed to achieve the EU 2030 goals,” said IEA Executive Director Maria van der Hoeven. “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.

“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,” van der Hoeven added.

Reducing CO2

The report praised the European Union for reducing its carbon intensity and taking the lead in vehicle fuel economy standards, as well as highlighting the region’s 20-20-20 targets for lowering energy intensity and a massive region-wide growth in renewable energy.

IEA’s Recommendations

Among its key recommended policy actions, the IEA report calls for:

• A new commitment to the internal energy market across the EU, with an interconnected energy network and competitive retail markets to ensure:
  • in electricity, the market integration of variable renewable generation with strong co-ordination of electricity system operation; generation adequacy; and demand-side response, balancing and intra-day markets across interconnected systems.
  • in gas, access to and efficient use of gas storage and liquefied natural gas terminals and unconventional gas sources.
• Timely 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, by integrating technology, RD&D and innovation foresight.
• Enhanced EU-wide co-operation on uprates, safety upgrades, and extensions of the lifetimes of existing nuclear power plants to ensure highest safety standards and regulatory stability needed for the investment decisions in those countries that opt for nuclear energy.

Electricity Generation

As can be seen in the graph below, the EU is almost split along an almost-mirror image of electricity generation — coal and natural gas swapping out for hydro and nuclear.

Unsurprisingly, renewable energy still makes up only a small percentage of the overall mix, but as the IEA report notes, the renewable energy industry is growing and these figures will undoubtedly look a lot different in a decade.