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Opinion: A reality check on Europe’s latest energy proposals

The European Commission has unveiled more details on its strategy to wean itself off Russian gas. Once again, ambitions are high. But the big question remains: can organisations and companies deliver amid a myriad of net-zero commitments? Our Senior Sector Economist, Gerben Hieminga, has his doubts.

A 'double urgency'

The European Commission has responded to the global energy crisis caused by Russia's war on Ukraine. It says there's a 'double urgency' to transform Europe's energy system and its reliance on the bloc's dependence on Russian fossil fuels.

The Commission proposes to enhance long-term energy efficiency measures, including an increase from 9% to 13% of the binding Energy Efficiency Target under the ‘Fit for 55' package of European Green Deal legislation.

It aims to diversify supplies further, and it's considering the development of a ‘joint purchasing mechanism' which will negotiate and contract gas purchases on behalf of participating Member States.

A massive scaling-up and speeding-up of renewable energy in power generation, industry, buildings and transport will accelerate the European Union's independence, according to the proposals, which will give 'a boost to the green transition' and reduce prices over time.

The Commission proposes to increase the headline 2030 target for renewables from 40% to 45% under the 'Fit for 55' package.

The EC's full announcement is here.

Keeping track of leapfrogging ambitions by the European Commission

If you find it difficult to keep track of the many initiatives by the European Commission (EC) aimed at tackling the climate and energy crises, you're not alone. And I'm sceptical about yet another increase in ambitions and just how companies can live up to the promises. Before we get to that, let's recap where we are right now.

The EC first presented the Green Deal with the ambition for Europe to be the first climate-neutral continent by 2050. It lays out the main building blocks for sectors to transition to a net-zero economy by 2050 and defines an intermediate climate goal of 55% emission reduction by 2030. More details followed in July 2021 with the Fitfor55-strategy.

So far, so good. All these initiatives are focused on making the economy more sustainable. Security of energy supply was not an issue. And energy was affordable too.

But concerns about supply shortages started to drive prices to unprecedented levels. The EC responded in October 2021 with the ‘Energy Price Toolbox’.

And then Russia invaded Ukraine in February this year. The affordability of energy bills, and energy security, are now a top concern for politicians, households and board members of energy-intensive companies. The EC responded with the REPoperEU package, which aims to provide companies and households with affordable, secure and clean energy. 

Today's announcement builds on those already ambitious targets. And while those ambitions are laudable, it's important we don't lose sight of reality. Let me give you five 'pinch points' which make me sceptical about just how much can be achieved. 

Read the full opinion article on ING Think