POLICY BRIEFING 04 October 2019 EUROPEAN PARLIAMENT HEARING SUMMARY Kadri Simson, Commissioner-designate for Energy Hearing of Kadri Simson, Commissioner-designate for Energy – 3 October 2019 – Joint ITRE/ENVI hearing: Kadri Simson, Commissioner-designate for Energy with her introductory statement: • she reflected the citizen concerns for tackling the issue of climate change and stressed the key role that Energy policies would play in this fight; • she complimented the work done the last five years as a great legacy to build on. However, the work was far from done, as attaining climate neutrality by 2050 was mandatory in order to prevent irreversible damage. Von der Leyen proposed the European Green Deal which would be taken forward with the supervision of Mr Timmermans; • she referred to her experience as Minister for Energy, working in the adoption of Estonia’s long-term energy action plan with a greenhouse gas (GHG) reduction target of 70% by 2030 that would see a jump in the share of renewables from 33% in 2020 to 42% in 2030; • in order to provide energy actors with certainty and predictability, the Commission would propose a European Green Deal in the first 100 days in office, with its central piece, the Climate law which would be accompanied by a Just Transition Fund. This would set the direction and the next steps would be to build on the success of the Energy Union; • she emphasised her commitment to working hard in the proper implementation of the Clean Energy Package, which would lead to a 45% GHG reduction by 2030, and underlined that there were more than 100 delegated and implementing acts yet to be adopted. Similarly, she would ensure the delivery of ambitious NECPs by end of the present year and work together with MS to reach the desired goals; • Von der Leyen had committed to a GHG reduction of at least 50% by 2030 and planned for moving towards 55% in a ‘responsible way‘. In order for this to happen, she would evaluate the way the existing energy legislation could deliver more ambitious targets and assess its possible review, as well as she would contribute to the work on the carbon border tax and the revision of the Energy Taxation directive led by Mr. Gentiloni; • further developing a properly functioning single market would be essential in the promotion of the development of renewables as she was able to contribute to as a Minister, when she worked in the synchronisation of the network of Baltic states to the continental network. She called for the completion of the Energy Union by the end of the present mandate and stressed the need to further developing energy storage as well as to ensure that the interconnectivity targets are reached; • she would focus on the gas market, which would play an important role in the transition towards climate neutrality, focused on how to develop an infrastructure that was fit for the future through the use or renewable gases, such as hydrogen, renewables and the promotion of LNG, which had subject to a fruitful cooperation with the US; • there was a significant structural challenge, 200 Billion were needed until 2030 for the investment on completing the electricity market. In this same issue, she announced the review of TEN-E by 2020; • all available instruments should be harnessed in order to attract private funding for the vast amount of future-proof investments needed, combined funding under the next MFF could reach 132.2 Billion euros; 1 POLICY BRIEFING 04 October 2019 • energy efficiency was of utmost importance, among which she highlighted the improvement of the energy performance of the building stock as a ‘game changer’ and pointed to more options to be explored for its financing; • she stressed that competitiveness had to be preserved in parallel with the transition so that special attention is paid to the energy prices for consumers and energy-intensive industries. Certain regions and sectors would experiment swift changes for which the Just Transition Fund would be instrumental in the transformation of the economies and job creation. • in her view, it was not acceptable that a 8% of European population were unable to heat their homes and wanted to make use of the Energy Poverty Observatory in order to implement its legislative provisions; • R&I was of pivotal importance for the emergence and scaling up of new green technologies and stressed her commitment to work together with Ms. Gabriel in gathering higher investments for this; • she stated her will to develop the digitalisation of energy sector with smart grids and interoperability, but also looking into AI or cybersecurity; • Europe needed to stimulate the commitment to the Paris agreement of other major emitters, she called for using energy dialogues in order to open markets for EU clean businesses and for connectivity projects; • she encouraged the Trilateral talks in Ukraine so that an agreement could be reached by the end of 2019; • finally she hoped to play her part in a ‘Europe that strives for more‘ and called for building ‘together‘ a Europe that leads the world climate action. Jerzy Buzek (EPP, PL) • the first task was the full and swift implementation of the legislative files that were passed in the last five years; • he asked Ms Simson how to facilitate green investments in low emission energy, for which he highlighted district heating, from EU and private sources, such as European Regional Fund or European Investment Bank, and how to ensure that the potential of gas is fully used in the energy transition. Kadri Simson, Commissioner-designate for Energy • she agreed that the biggest obstacle in the transition to climate neutrality was the need for investments, among which she highlighted energy efficiency, however, she was confident that the mainstreaming climate investments in the next MFF would alleviate this deficiency; • she reflected that the European Investment Bank was undergoing an analysis on its future lending procedures, which would be in the direction of becoming a ‘climate bank’ and stated her compromise to working together with Mr. Gentiloni on this. Jerzy Buzek (EPP, PL) • he emphasised on the importance of efforts to be made on regards to district heating and reflected that the proper implementation of the revision of the gas directive despite the ‘protest of Russia’ as this would play a great role in the district and individual heating of up to 15 MS. Kadri Simson, Commissioner-designate for Energy • gas was very important in the energy transition and even more so in district heating, due to its cost- efficiency when replacing coal based plants or facilities; 2 POLICY BRIEFING 04 October 2019 • in her view diversification of energy sources was the way ahead but reflected that she did not foresee natural gas playing a role in the near future but more so the case of biogases and hydrogen, and the many possibilities that sector coupling offered in heating, industrial or transport. Carlos Zorrinho (S&D, PT) • he focused on the impact on the social consequences of the energy transition, which was a priority for his political group, considered that the Just Transition Fund would be of great importance on the matter and asked Ms Simson how she was planning to support Ms Ferreira in her mission; • he wondered if the Just Transition Fund would be a stand alone policy or rather part of a bigger plan. Kadri Simson, Commissioner-designate for Energy • she reiterated that the concept just transition would be at the core of her programme as she reflected that it should be of extreme importance in coal regions or small islands, which are isolated. She stressed however, that there would not be a ‘one size fits all approach‘; • the Just Transition Fund would be presented by Ms Ferreira, but reminded that it should incorporate efforts from MS and private capital as well. The fund would be operational before the phasing out period in order to cushion the effects and create new opportunities. Carlos Zorrinho (S&D, PT) • just transition should be about bringing along regions that depend on the extraction of polluting forms of energy; • he enquired more detail on the level of ambition Ms Simson envisioned for this fund, reflected that perhaps 4.8 Billion euros would not be sufficient and wondered that loans could play in this. Kadri Simson, Commissioner-designate for Energy • the Fund aimed at the most affected regions with the phase-out of fossil fuels; • measures that would ensure the affordability of energy prices were another relevant instrument to acknowledge in this matter; • she emphasised that locally-produced renewable energy should not be more expensive than fossil fuels that had high volatility in their prices and stressed that energy efficiency should be fundamental as well. Morten Helveg Petersen (RE, DK) • she noted that renewables needed to play a bigger role, wind and solar prices had been going down substantially, allowing for them to be competitive without subsidies; • he called for further development of off-shore wind and reflected that perhaps this should need to increase fivefold and asked Ms Simson for her plans for this further development of wind energy, particularly in the North Sea. Kadri Simson, Commissioner-designate for Energy • more capabilities were needed for renewables, she connected this with public acceptance, as this was higher for offshore facilities and reflected that the best locations for onshore wind were ‘already taken’; • need for close cooperation between MS and she anticipated a cooperation mechanism that would assist in the construction of joint facilities as part of the CEF. Another formula she supported was the organisation of auctioning mechanisms, in which a host MS could partner with other MS that may not have the same possibilities, for which she highlighted the cooperation between Luxembourg and Estonia.