Europe's climate and energy outlook - Now that the ink on COP 21 is dry

Turning wish lists into practical policies

The COP21 Paris Agreement marked a long-awaited turning point for global cooperation on climate change. Yet how the burden will be shared between countries and how they will reassess their climate and energy policies is uncertain. Despite the political momentum, weakening global economy and low fossil fuel prices risk discouraging governments from delivering on their commitments and investing more in clean energy. Europe’s climate action is facing an EU ETS carbon price now at 20-month low, the introduction of the market stability reserve is threatened by Polish legal actions and EU member states are still divided over the need to review the 2030 climate pledges.

• With four years to go until the Paris agreement enters into force, what are the chief risks and challenges?
• What are the implications of the Paris outcome for the public and private sectors investment and planning?
• What is the most cost-efficient way to reduce global emissions while preserving competitiveness and a level playing field in trade? What is the outlook for a global and economy-wide carbon price?
• What can be done to overcome the deadlocks in the EU ETS reform and eventually restore the effective price signal?
• What post-2020 policies and measures are needed to decarbonise sectors not covered by the EU ETS?

Reconciling consumers interests with industry needs 

New technologies and behaviours are shaking up the global energy status quo, disrupting traditional business models, transforming the ways energy is produced, distributed and consumed, and altering citizens’ interactions with energy. Renewables self-generation, cleantech crowdfunding, digitalisation, in-home energy storage, smart meters and grids, low-carbon mobility not only promise to increase productivity and cut CO2 emissions, but are also expected to reduce energy bills, create jobs, reduce countries’ reliance on fuel imports and optimise energy supply. The quickening pace of energy innovation is such that many technologies are commercially viable faster than predicted, yet markets still struggle to catch up and to reap the benefits this ‘new normal’ promises.

• What shifts in business models will succeed in this disruptive environment, and can all sectors benefit from these transformations?
• How can new technologies transform the oil and gas industry sectors, and can they blur the traditional boundaries of the energy sector in a cost-efficient way for consumers, businesses and society?
• How should markets be redesigned to adapt to technological advances, low-carbon imperatives, and pressure from customers in a way that safeguards the EU’s competitiveness and growth?
• What should the EU energy research, innovation and competitiveness strategy look like for Europe to be the world’s leader?
• Where will the funding for smart technologies and infrastructure come from and how can technologies be made accessible to a wider public?

Long-term solidarity versus short-term self-interest

Making energy supply reliable is among the main pillars of the EU’s Energy Union. With this in mind, the European Commission proposes new measures to improve states’ cooperation, develop new infrastructure projects, and strengthen its role in international gas buying agreements. Yet the EU continues to rely heavily on only a few suppliers, pays high import costs, and lacks adequate investments and interconnections. “National interests” prevail when deciding on energy-mix choices, protecting industrial competitiveness and negotiating international deals. The 28 national electricity markets are still fragmented, with aging infrastructure that is unsuitable for a low-carbon transition.

• What is the silver bullet to boost energy security: energy efficiency, low-carbon technologies, storage, new networks and interconnections, decentralised energy, capacity mechanisms, or others?
• Which projects of common interest make economic sense, and which are strategically crucial? How can the much-needed South East Europe’s energy security infrastructure be financed?
• Could falling global energy prices and the emergence of alternative producers and supply routes be transformative?
• The scaling-up of renewable energy and the integration of renewable power into the electricity market are crucial, but what barriers still stand in the way?
• What are the prospects for renewables playing a greater role in heating and cooling?