Looking Beyond EU Energy Policy

on September 15, 2014 at 2:00 PM


For Europe energy has always been at the top of its political agenda but despite the many achievements in strengthening its infrastructure and diversifying its suppliers, the EU remains vulnerable to energy shocks and disruptions to energy supplies.

One could argue that it is inevitable as the EU is a highly import dependent country. Today the EU imports 53% of the energy it consumes, from crude oil (almost 90%), to natural gas (66%) to a lesser extent solid fuels (42%) as well as nuclear fuel (40%), and its dependency is increasing.

While I do not question the need for a robust common European energy policy, I would like to place the discussions into a wider context. Energy is a natural resource, like water, raw materials, soil and biodiversity, like all natural resources energy concerns need to be addressed within a wider holistic strategy.

The new millennium has marked a clear turning point. After centuries of real decline, resource prices started to increase dramatically and are more volatile than ever. Today the EU external energy bill represents more than €1 billion per day (around €400 billion in 2013). Prices will continue to increase as world population grows and becomes richer, creating demand-side pressure and leading to greater global competition for resources. We are already seeing it today. Regular access to supplies is at increasing risk.

The global population rises by more than 200,000 every day – that’s a city the size of Brussels every 6 days, or a new Germany every year. With the pressure it places on the already fragile resources such as land, water, food, feed, fibre, raw materials and energy the situation is not likely to improve. If we carry on with business as usual, by 2050 we will need three times more resources than we currently use. Yet more than half the ecosystems these resources depend on are already degraded, or are being used beyond their natural limits.

In the long-term EU energy security is inseparable from its need to move to a competitive, low-carbon economy.

Global resource constraints mean that we have no choice but to rethink the way our economy functions, the way we produce and consume, the way we live. This implies a fully systemic change and innovation not only in technologies but also in organisations, societies, behaviour, finance and policies. Energy efficiency and renewable energies have a very important role to play in energy policy. In the long-term EU energy security is inseparable from its need to move to a competitive, low-carbon economy. Today the EU is the only major economic actor producing more than 50% of its electricity without greenhouse gas emissions . We must indeed continue in this direction.

New environmentalism

New Environmentalism is about making sure that we make that change now, in a managed way, rather than when we hit environmental limits. What we want is an economy that recognises that the environment is a vital base for all economic activities, and that therefore we must exploit our planet’s natural resources in sustainable ways.

We are looking to create a more sustainable economic system where what we produce, consume and throw away is reintroduced in the economy as the precious and valuable resource that it actually is. With the right mix of tools this transition can become a real economic opportunity creating new markets and job opportunities, but also contributing to reducing the EU’s co-dependency on external sources of energy and raw materials. We are aiming at doing more with less.

The investments required to adjust to these trends and maintain the medium-term competitiveness of our economies can represent an economic opportunity, and certain sectors are particularly promising in this respect. A reduction of the total material requirements of the economy by 17% could boost GDP by more than 3%, and employment in the EU by around 2.5 million.

Energy demand in the building sector, responsible for about 40% of energy consumption in the EU and a third of natural gas use could be cut by up to three quarters. Meeting the 20% EU energy efficiency target will result in 371 Mtoe primary energy savings. Using resources more efficiently is also a smart way for citizens to change lifestyle and live healthier lives.

Living in a sustainable way should become our way of life. The time has come to start that green transition that we have been putting off for too long. This will require introducing smart legislation and creating real incentives to involve and engage public administrations, businesses and civil society both at European and national levels.

Today we need a new revolution. This new revolution is what I call “new environmentalism.”

As policy makers we must help our business sector keep ahead of the curve in adapting to this global megatrend of increasing resource competition and constraints. We need to build predictability and confidence of business in the medium term in order that they are ready to invest in the short term. Green growth provides a clear public policy and business logic both for short term stimulus and investment, and for responding to the megatrends of population growth and resource pressures which will increasingly define our future competitiveness.

We are not starting from scratch

This is why the EU has placed the efficient use of resources at the centre of its 2020 growth strategy. The overarching objective is to mainstream environmental concerns across all policy areas, making sure that environment and economic policies go hand in hand. The biggest challenge ahead of us however is the change in mentality.

Legislation alone will not be sufficient. Civil society and business will have to play a key role. We will need to abandon old habits, systems, infrastructures and policies and redefine new ones that will allow us to live within the limits of our planet and obtain more value from less.

Our economies are locked into the resource intensive industrialisation and post-industrialisation growth paths of the past centuries. We are locked-in to our resource intensive ways, to our old industrial patterns of production and consumption. Everything from our infrastructure to our financial systems, from our consumer habits to our business models are inherited from the industrial revolution. Today we need a new revolution. This new revolution is what I call “new environmentalism”.

Mankind’s challenge is to turn the creativity and innovation that so successfully exploited natural resources to provide us with health and prosperity, to rolling out those benefits to billions more people, in ways that exploit resources less and cause less environmental pressure and damage.

Originally Published in Global Energy Affairs September 2014 Issue. Permission for re-publication granted by Global Energy Initiative.

Janez Potočnik is the Commissioner for the Environment within the European Commission.