UK and Czech Republic non-paper EUROPEAN GOVERNANCE OF EU ENERGY POLICY GOALS

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3 UK and Czech Republic non-paper EUROPEAN GOVERNANCE OF EU ENERGY POLICY GOALS 1. The October European Council agreed that a governance system will be developed to help ensure that the EU meets its energy policy goals. In addition, it outlined key principles for the system including respect for flexibility at Member State level; no unnecessary administrative burden; and predictability for investors. This note further elaborates these principles, and calls on the Commission to develop proposals for a governance system that should: a. focus on the EU s collective progress towards EU energy goals (security, sustainability and single market), and assess the coherence of measures to deliver them, rather than focussing on details of implementation at national level; b. ensure that all Member States put in place credible long term plans to decarbonise and meet their GHG targets, while remaining competitive, thus increasing predictability for investors, and encouraging Member State lead regional co-ordination; c. be light touch and non-legislative so as to respect Member State flexibility over its choice of measures and technologies, as per the European Council s Conclusions, with discussions on national plans to be conducted informally and bilaterally between Member States and the Commission; d. reduce the administrative burden on Member States compared with the current arrangements, for instance by allowing the use of existing national plans where practicable. 2. The development of the Energy Union is clearly relevant to the governance system and as discussions progress in this area, the Commission should work with Member States to identify how the 2030 governance system relates to the Energy Union and avoid any unnecessary duplications or overlaps. Focus on collective progress towards EU energy goals 3. The governance system should enable a strategic approach. It should focus on the EU s collective progress towards EU energy goals and not the precise details of implementation, (therefore respecting the principle of subsidiarity) which will necessarily be different across Member States. 4. The EU s climate and energy policy goals do not exist in isolation from each other. Measures to achieve one objective should complement and be consistent with measures to achieve others. A well-functioning internal energy market is vital to meeting low

4 carbon and energy security objectives and we must rapidly achieve its full implementation in all Member States. Many but not all of the actions required to enhance EU energy security are synonymous with those required to reduce emissions. 5. The key EU energy goals on which the governance system should focus are the implementation of an effective internal energy market, achieving the EU 2030 climate and energy goals, and increasing EU energy security in line with the EU Energy Security Strategy. The Commission should: a. monitor progress of the key measures designed to deliver policy outcomes across these areas including through monitoring a small set of key high-level European indicators (for example on share of indigenous energy sources used in energy consumption), which should be agreed with Member States and subsequently reviewed to ensure continuing relevance and alignment with a light touch administrative approach; b. take a holistic view to assess the coherence and effectiveness of these measures as a package to deliver the key energy goals; and c. report periodically (e.g. no less than every three years) to Council on the EU s collective progress towards meeting these goals, based on Member States National Plans and the European indicators. Clear long term national plans, supporting all low carbon technologies 6. The Commission has already proposed a system of National Plans as part of the governance system. Clear long term plans, overarching objectives and stable policies are needed to facilitate the massive investment required in the EU s energy sector. The National Plans should primarily set out the proposals and policies that will achieve binding national 2030 emissions reductions targets, while maintaining competitiveness. The Plans must be capable of supporting all low carbon technologies, and the governance system must not discriminate against or in favour of specific low carbon technologies or restrict Member States energy choices. Clearly the Governance system cannot require Member States to go beyond the parameters agreed at the October European Council, including by requiring Member States to set or agree to national targets in any area other than the non-traded sector (where MS targets will be set by a new Effort Share Directive). 7. The EU will need a wide range of technologies to meet its energy goals. As set out in the October Council Conclusions Member States must be able to determine the balance of policies and measures across all low carbon technologies including renewables and energy efficiency (with regard to EU-level targets) but also nuclear and CCS where they so choose in their national plans. Where necessary, they should be supported by the Commission in doing so.

5 8. The October European Council conclusions were clear that the EU renewable energy and EU energy efficiency targets will not be translated into national binding targets. Some Member States may wish to set themselves national targets for particular technologies or sectors, but the setting of national targets (other than national reduction targets for the non-ets sectors) should not be compulsory. 9. However, the National Plans must create more investor certainty and more transparency, and should include clear policies and proposals. Therefore the Plans should also include projections for how much low carbon generation (including renewable energy) and energy efficiency may result from policies and proposals to reduce emissions, while recognising the inherent technological and other uncertainties involved in projecting impacts over long periods. In this vein, Member States must have opportunities to review and adapt their plans and policies as circumstances and facts on the ground change, which is sensible when planning over such a long period. 10. The EU also needs to avoid a lock-in of high carbon technologies over the long term. National Plans should in this vein indicate how their policies and proposals for the 2020s are consistent with a cost-effective pathway to the EU s 2050 emissions reduction goal. In particular, the IPCC has suggested that CCS may need to contribute up to 22 per cent of the emission reductions that must be achieved globally by 2050 if temperatures are not to rise above 2 C. The Commission should come forward with a new CCS strategy for Europe as early as possible next year, and further development of all types of low carbon technologies (including CCS) in Europe should be supported in the governance system. 11. The National Plans should not be developed in isolation at national level. Cross-border and regional co-ordination is important to ensure greater coherence of national policies, deliver effective market integration and mitigate energy security risks. The governance system should facilitate national and regional co-ordination, although not require it, for example by encouraging Member States to consult on national energy plans with neighbouring Member States and regional groupings. A light touch system, respecting flexibility at national level 12. The October European Council was clear on the need for Member States to have the flexibility to determine the measures required to achieve binding emissions reduction targets including the freedom to determine their energy mix. Such flexibility is critical for cost-effective decarbonisation across the EU and the Commission should adopt a light touch governance system that focusses on collective delivery of EU energy goals while reflecting the need for national flexibility.

6 13. All Member States should ensure that National Plans are in place. The Commission should, in co-operation with Member States, draft high level guidance to ensure that there is a reasonable degree of consistency in the content of national plans across different Member States. This need only be sufficient to enable an assessment of collective progress, and should be significantly less prescriptive than is currently the case under the 2020 climate and energy package. The Commission should assist Member States to develop their National Plans where assistance is needed, but should adopt a light touch where Member States already have equivalent plans in place. 14. Member States National Plans should be transparent and developed in consultation with stakeholders. Member States should submit their National Plans to the Commission and as necessary hold bilateral discussions on the content of their National Plans. This should be with a view to informing a Commission assessment of the EU s collective progress towards EU energy policy goals. The Commission should report on this to the Council no less than every three years. Reducing the administrative burden 15. The Commission should ensure that the new governance system radically streamlines the existing multiple reporting mechanisms. Member States are currently required to produce a large number of plans and reports on climate and energy policies and the Commission undertakes numerous reviews of the achievement of climate and energy policy objectives. These policy objectives often overlap, yet the approach is piecemeal. Reporting cycles are not aligned, and the administrative burden on Member States is disproportionate.