The dilemma of EU11

Utilities Unbundled - Issue 15

  • Share

Meeting European Union (EU) energy targets will be harder for the countries in Central and Eastern Europe that make up the EU-11, given their starting point. Piotr Piela talks to former European Commissioner Günter Verheugen.

“These countries should not be regarded as troublemakers when they are being confronted with overly ambitious targets.”

— Günter Verheugen, former European Commissioner

EU ambitions to increase energy generation from renewable sources is a challenge for all of Europe. But for the EU-11 – Bulgaria, Croatia, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovenia and the Slovak Republic – this journey is considerably more arduous.

Our new report – Analysis of Central Europe’s Energy Sector – was commissioned by the Central Europe Energy Partners (CEEP). It argues that attempting to meet far-reaching EU targets will be economically disastrous for these countries unless urgent changes are made.

“Inevitable” trade-off between goals

The CEEP/EY report considers the EU-11’s ability to meet 2050 renewable energy targets within the framework of:

  • Stable economic growth
  • Security of supply
  • Environmental protection

Former German politician and European Commissioner Günter Verheugen says, “The CEEP/EY report finds that some trade-off between the goals in the EU-11 region may be inevitable, unless new financing mechanisms for the development of the region’s energy sectors are introduced.”

In terms of facing energy sector challenges, the EU-11 are at a “completely different starting point” than EU-15 countries, argues Verheugen. “The last decade has seen some convergence – but the EU-11 is substantially lagging behind and will be catching up for a long time.”

Notable differences include:

  • The need for large-scale modernization of energy infrastructure in most EU-11 countries
  • The EU-11’s low levels of energy efficiency, compared with the EU-15
  • The relatively higher energy prices of the EU-11, which already burden households and businesses while hampering competitiveness
  • Ongoing energy security and stability of supply issues in many EU-11 countries: some countries remain dependent on one energy supplier
  • The bigger role of coal in the energy mix of many EU-11 countries

Overly ambitious targets

Verheugen wants to raise awareness of the EU-11’s energy dilemma in trying to improve competitiveness while following a responsible climate change and energy policy. “These countries should not be regarded as troublemakers when they are being confronted with overly ambitious targets.”

Verheugen emphasizes the importance of keeping an open mind when considering a way forward: “By 2050, one or two EU-11 countries may have a very high share of renewables in their energy mix. Others, however, will still need coal or wish to explore their indigenous resources. We should assist such countries in doing so and help them in meeting environmental challenges.”

He says a closer look at shale gas extraction is needed, pointing to the huge impact of US shale gas on the global energy scene and the competitiveness of the sector in Europe.

Competitiveness must be the priority

Next March, the EU Summit will discuss Europe’s longer-term energy strategy, and Verheugen says this is an important opportunity. “The current crisis will not be tackled if we cannot achieve a much better performance of the real economy...we still lack a coherent policy approach. I hope the findings of the CEEP/EY report and next year’s summit result in a pragmatic and flexible approach, which helps improve the competitiveness of Europe more generally and of the EU-11 in particular.”

Preparations for the UN’s COP21 conference on climate change in 2015 are also an ideal opportunity for the EU-11 to make their case to the EU-27.

Verheugen believes CEEP has a big role to play here, “drawing upon its contacts with governments and EU institutions to focus efforts on reassessing the competitiveness of current energy policy.”

This is an abridged version of the full article in Utilities Unbundled.

The executive summary of the CEEP report, prepared by our Power & Utilities team in Poland, can be downloaded here.

For more information on this topic, please contact Piotr Piela.