Some facts and figures concerning “State of the Energy Union”​ taken from recent EC report

I just had a look at the 2020 report on the State of the Energy Union pursuant to Regulation (EU) 2018/1999 on Governance of the Energy Union and Climate Action and share for the convenience of interested readers a collection/summary of some interesting aspects.

Note: Selection solely based on my personal views/interests, no claim for completeness, correct summarizing, etc.

Greenhouse gas emissions

• The EU has already overachieved its target of reducing GHG emissions by 20% below 1990 levels by 2020; total EU-27 greenhouse gas emissions are at their lowest level since 1990.
• Reductions were mainly driven by emissions from energy supply; strong drop in emissions from activities covered by the EU emissions trading system (EU ETS), whereas rather sideways trend from activities not covered by the EU ETS for several years
• In 2019, overall emissions from industry and power covered by the EU ETS continued to decline (by 9.1% compared to 2018). The power sector was the main driver of this trend, with a substantial decrease in greenhouse gas emissions of almost 15%.
• Emissions from industry decreased by 2%, marking their strongest decrease in phase 3 of the EU ETS (2013-2020) so far
• The total revenues generated by the EU ETS from the auctions between 2012 and 30 June 2020 exceeded EUR 57 billion.

Renewable energy

• The share of renewables in gross final energy consumption increased to 18% in 2018 in the EU. According to projections, the EU will reach 22.8% to 23.1% in gross final energy consumption in 2020
• In 2018, 12 Member States were above their 2020 national binding targets, but five Member States remained below the indicative 2017-2018 trajectories.

Energy efficiency

• In 2018, final energy consumption in the EU fell by 5.9% compared to 2005, to 1124 million tonnes of oil equivalent (Mtoe). This is 3.5% above the 2020 final energy consumption target of 1086 Mtoe 22 and an increase of 0.2% compared to 2017
• Growth in economic activity continued to push energy consumption up in 2018 to the point where new policies and measures that Member States implemented were not sufficient to reduce energy consumption and get it back on track towards the 2020 target.
• Partial data for 2020 indicate that the COVID-19 crisis has had a significant impact on energy demand. Even if this might help meet the 2020 energy efficiency targets, it would not lead to a structural reduction in energy consumption. Rebound effects are expected as soon as the economy recovers
• Direct jobs in energy efficiency have increased steadily from 244,000 in 2000 to 964,000 in 2017

Electricity prices

• Since 2016, total retail electricity prices have been converging across Member States, but there are still sizeable differences.
• Overall, retail prices are still dominated by components that are not the result of competition but are set by regulators (e.g. regulated network charges and taxes/levies).
• At wholesale level, incumbents still hold a dominant position in a majority of Member States. In some countries, they even hold market shares above 80%, coming close to a monopoly (regulated prices often proved to be an additional barrier for competition)
• Over the last decade, retail electricity prices have risen above inflation. However, industrial electricity prices have risen below industrial price indexes, and even have fallen for larger consumers. In recent years, network charges, taxes and levies have been stable or have risen only slightly. Moreover, lower pressure of renewable levies on prices is observed at the same time as the wider use of market-based instruments that promote renewables and as the gradual phase-out of old support schemes. As a result, the end user prices were driven mainly by changes in generation and supply costs

Gas prices

• Price convergence has improved in recent years and was highest in north-west Europe. However, at European level it declined in 2019, showing higher price differences between markets on more days during the year
• Overall, retail gas prices increased in 2019 compared to 2018. However, since they follow the evolution of wholesale prices with a slight time lag, they are likely to drop again in the near future
• As for electricity markets, taxes/levies and network charges were stable or rose slightly, resulting in prices been driven by generation and supply costs changes.

Energy imports

• The EU’s energy import bill highlights its reliance on fossil fuel imports and its exposure to volatile international markets.
• The import bill rose between 2016 and 2018, reaching over EUR 330 billion per year. This reverses the downward trend from the highest peak of 2013 (EUR 400 billion)

Research & innovation

• R&D public and private spending trends in the EU are not encouraging. Member States are spending slightly less on clean energy R&I compared to previous years, while the EU’s overall public R&I investment in clean energy technologies as a share of GDP is the lowest among major economies.
• This mirrors a global trend. The International Energy Agency observes that public sector spending on low-carbon energy technologies was lower in 2019 than in 2012

Competitiveness

• The EU industry has been successful in grasping the opportunity created by increased demand for clean energy technologies. The competitiveness of the sector is outperforming conventional energy source technologies with regard to value added, labour productivity, employment growth and penetration rates.

Member States’ long-term decarbonization strategies

• All parties to the Paris Agreement were invited to communicate, by 2020, their mid-century, long-term low greenhouse gas emission development strategies but only 16 Member States have submitted a long-term strategy so far.
• Thirteen of those refer explicitly or implicitly to climate neutrality, while the other three aim to cut their emissions from 80% to 95% compared to 1990. However, a clear definition of the term used for the overall goal is often lacking, and it is often not clear whether the targets that Member States set are legally binding.