Career diplomat Maroš Šefčovič from Slovakia gave the first glimpse of what the EU’s “Energy Union” may look like during his hearing at the European Parliament on Monday night for the post of Europe’s Vice President Energy Union. Šefčovič believes in common purchasing of gas and the Southern Corridor (but opposes South Stream), regards the internal market as the backbone of the Energy Union, supports the UK’s state aid to the nuclear power plant at Hinkley Point C, believes gas and electricity can do more for transport than biofuels and said “renewables are the key to Europe’s competitiveness”.
Maroš Šefčovič is already a European Commission Vice President and it shows. He’s currently in charge of education, training, culture and youth, having joined the Commission in 2009 from his post as Ambassador of Slovakia to the EU. This is an experienced diplomat and he was no comparison to Alenka Bratušek who wasn’t even backed by her own political group, the Liberals, in the end.
Šefčovič is a Socialist, who had already been approved as the new Transport Commissioner before being upgraded and hauled back in for questioning for the Energy Union portfolio. The Socalists will be happy to have a second Vice President in the Commission after Italian foreign affairs representative Federica Mogherini. The centre-right will be happy to approve him so that their prize, new Commission President Jean-Claude Juncker, can start his mandate as planned on 1 November. The Liberals will settle for Bratušek’s replacement from Slovenia, Violeta Bulc, as Transport Commissioner.
“It is totally unacceptable [that Russia is using gas as a political weapon]. The time for a European Energy Union has clearly come.” – Maroš Šefčovič, incoming Vice President for Energy Union
MEPs from the environment, and energy, industry and research committee are expected to formally approve Šefčovič’s appointment as Energy Union VP on Tuesday. That will end the Parliament’s hearings and – assuming an endorsement by MEPs of the new package of Commissioners on Wednesday – pave the way for the new Commission to start work. With the politics done, it’ll be time for policy. And Šefčovič’s hearing was interesting in this respect because it gave a first flavour of how the Commission plans to flesh out the concept of an Energy Union. Šefčovič listed five pillars:
1) Security, solidarity and trust – With half a billion customers and €400 billion a year spent on imports, Europe is a huge energy market, yet “do we behave like that?” Šefčovič asked. “It’s time for a more assertive European energy diplomacy.” He wants energy diplomacy to be “one of the top external policy priorities” (cue for Mogherini to get involved). Yes, Europe should explore the common purchasing of gas: “I believe we must try it”. Energy mix is a national competence but more cooperation is paramount: “No member state should modify its energy system without prior consultation of its partners.”
To diversify its gas supplies, Šefčovič suggests that Brussels should focus on the Southern Corridor and not South Stream, which would constitute a new supply route but from a very familiar face – Gazprom. The EU must learn from the failed Nabucco pipeline project, Šefčovič said, by being more present in Southern Corridor countries, having more intense contacts with the building consortium and providing political and financial support.
“South Stream is suspended and with good reason – we cannot accept such a big project by a company that does not want to respect EU rules. [And] how would this project help our [energy] security in Europe? I do not see this project fulfilling this criterion.” – Maroš Šefčovič, incoming Vice President for Energy Union
Brussels will probably have to revisit the EU’s 2010 gas security of supply regulation and “we will have to work on something that goes a little bit beyond the third [energy market liberalisation] package” – more cross-border cooperation is needed, Šefčovič suggested.
Russia was for many years a strategic partner, but “partners are behaving differently”. Europe should use its market power to stand up to Russia: 52% of the Russian Federation’s budget comes from energy exports to Europe. “They need to export this energy to us.” Europe is not doing too badly, Šefčovič added: Putin wrote to 18 European leaders and got one response – from current European Commission President José Manuel Barroso.
2) Internal energy market – For Šefčovič, this is the “backbone” of the new Energy Union. He envisages “better connected infrastructure” and a fully implemented third liberalisation package. Šefčovič also became the latest Brussels face to lay a claim to Juncker’s promised €300 billion investment package for Europe – this time to finance grid upgrades. He recognises a need to remove bottlenecks and make the grid “smarter”. Innovative financing will be crucial. Yet project bonds (loan guarantees) pioneered by the European Investment Bank (EIB) have not shown impressive results so far, Šefčovič said.
“I would like to see a more engaged and assertive EIB.” – Maroš Šefčovič, incoming Vice President for Energy Union
Like Bratušek, Šefčovič is pinning his hopes for lower energy prices on completing the internal energy market – including to tackle energy poverty while growing renewables. But while a more integrated market may help prices converge, all scenarios forecast for them to rise. Šefčovič emphasised that retail prices are the real problem and suggested the answer is more interconnections and cooperation. He made only one belated mention of national taxes and levies – although this has been identified by the Commission as the biggest cause of rising prices – in that he recognises there is also a need to talk about the “structure of prices and add-ons”.
On the Commission’s recent approval of massive public subsidies for new nuclear power at Hinkley Point C in the UK – criticized by some as an affront to the internal market – Šefčovič confirmed that he voted in favour of the aid. The UK authorities made a “very convincing case” he said. It was “not about preferences for a source of energy but a clear state aid case”. Nuclear is still the second largest electricity source in Europe (after coal) and yes, “it will continue to be part of the energy mix but meeting the highest safety standards”.
3) Modulation of demand – This is important for energy security, Šefčovič said. “Energy efficiency has to be perceived more as the first energy source.” He also pointed to the benefits of greater efficiency for competitiveness and said he fully supported Juncker’s call for a 30% energy efficiency target for 2030 that would be binding at EU level.
“I’m also committed to this binding target for 30% on energy efficiency – although this will be extremely difficult to negotiate.” – Maroš Šefčovič, incoming Vice President for Energy Union
Buildings, transport and products are the three efficiency priorities, Šefčovič said. He believes in taking forward the Eco-Design Directive, which sets minimum energy efficiency standards for products, despite the backlash this law is currently facing. Critics cite it as an example of Brussels over-regulating because it targets everyday goods like vacuum cleaners and showerheads. Šefčovič defended it: “By 2020, Europe will save the energy consumption of Italy for a year [thanks to eco-design]. We need to communicate [it] better.” He suggested it should focus on products where it can really make a difference.
The incoming Commissioner also suggested it might be wise to shift from stick to carrot: “Maybe we’ve been going through too much regulation [energy efficiency]. Maybe we should think more about incentives.”
4) Decarbonisation of the energy mix – Like Bratušek, Šefčovič wants to make Europe the world’s number one in renewables. He rolled out the now familiar stats on green jobs and did not neglect the role of renewables in industrial policy: “Renewables are key to [our] future competitiveness.” Climate and economic growth must “reinforce each other,” said Šefčovič. He returned to renewables often as an “indigenous” energy source (as are coal and shale gas of course!). Yes, carbon leakage provisions must continue after 2020. And beyond that, not a single comment on the EU Emission Trading Scheme (wonderingly, there were no questions on it).
Who is going to negotiate on behalf of the EU at UN climate talks in Paris in 2015? “I can assure you I will go to Paris,” was the response. Indeed Šefčovič named it “the foreign policy event of the year”. But will he lead? The incoming Commissioner meandered on to suggest that the “most efficient” solution to this question would have to be found. In her parallel hearing by transport MEPs next door, Bulc meanwhile suggested she foresaw a role for herself in shaping the EU’s position for the 2015 talks. Others have suggested Juncker’s right hand man Frans Timmermans might end up doing the job – though new Climate & Energy Commissioner Miguel Arias Cañete and foreign affairs representative Mogherini are also clearly candidates. What is clear is that Šefčovič looks to the 2030 summit this week to spell out the climate ambitions that Europe takes to Paris.
“I’m far more optimistic about Paris. We may be able to achieve more than we thought hitherto.” – Maroš Šefčovič, incoming Vice President for Energy Union
Yet Šefčovič comes from Slovakia, a member of the Visegrad group of countries that currently opposes any 2030 targets for renewables and efficiency and views with skepticism the Commission’s proposed 40% greenhouse gas emission reduction target. Nevertheless, Šefčovič said he thought Central and Eastern European countries were realising the potential of renewables more and more. An acceptable sharing of the effort for emission cuts plus an investment fund to help them modernise their old power stations, could bring them on board to a 2030 deal this week, he suggested. Šefčovič did not neglect coal, still the biggest source of energy in Europe, he said, and with carbon capture and storage (CCS) potentially much cleaner in future.
He was quiet on transport, except for biofuels. There he said if it was up to him, there would be a swift start to negotiations between MEPs and member states to conclude proposals to tackle indirect land-use change (ILUC) from biofuels. First generation biofuels have disappointed, he said: they pushed aside food and feed production and on top of that, did not always deliver the expected CO2 reductions. He looks to second generation biofuels plus other alternatives to deliver in future.
“I believe in the next five years, especially in transport, we will see electricity, CNG and LNG and that will help us much more in tackling CO2 than biofuel use.” – Maroš Šefčovič, incoming Vice President for Energy Union
5) Research and innovation – the EU needs to step up its efforts in this field, Šefčovič said, if it wants to meet its 2030 climate and energy goals.
Šefčovič could not choose between his five pillars to pick out a number one priority for next year – they are all important he said. He impressed with some technical details, such as in responding to a question on fossil fuel discoveries in the eastern Mediterranean by citing the name of the gas field (Aphrodite) and its estimated reserves. Yet he mixed up others, confusing for example nuclear security (non-proliferation) and safety. He flattered his former colleagues – he was elected to the Parliament this spring before being nominated to stay on as a Commissioner. So late in the game and with his background, his approval was almost a foregone conclusion. Unfortunately the same cannot be said of the Energy Union. Like the banking union and single currency before it, “it always seems impossible until it’s done,” Šefčovič astutely noted however, quoting Nelson Mandela.