European Energy Studies The European Energy Transition Actors, Factors, Sectors Edited by Susanne Nies Preface by Jacques Delors LAW PUBLISHING The European Energy Transition: Actors, Factors, Sectors European Energy Studies Volume 1 A New Architecture for EU Gas Security of Supply Jean- Michel Glachant, Manfred Hafner, Jacques de Jong, Nicole Ahner, Simone Tagliapietra Volume 2 EU Energy Innovation Policy Towards 2050 Jean-Michel Glachant, Nicole Ahner and Leonardo Meeus Volume 3 The Geoeconomics of Sovereign Wealth Funds and Renewable Energy Simone Tagliapietra Volume 4 Security of Oil Supplies: Issues and Remedies Giacomo Luciani Volume 5 Shale Gas in Europe Cécile Musialski, Matthias Altmann, Stefan Lechtenböhmer and Werner Zittel Volume 6 The Globalization of Natural Gas Markets Manfred Hafner and Simone Tagliapietra Volume 7 The European Supergrid Ana Aguada Carnago Volume 8 The European Energy Union The quest for secure, affordable and sustainable energy Rafael Leal-Arcas Volume 9 Turkey and the EU – Energy, Transport and Competition Policies Ahmet O. Evin, Emre Hatipoglu and Peter Balazs Volume 10 The EU ETS and the European Industry Competitiveness: Working Towards Post 2020 Chiara Spinelli Volume 11 The Security of Europe’s Oil and Gas Supply Giacomo Luciani Volume 12 EU Energy Law and Policy: A South European Perspective Leigh Hancher and Antonis Metaxas Volume 14 The European Energy Transition: Actors, Factors, Sectors. Susanne Nies Volume 15 Transformation of EU and Eastern Mediterranean Energy Networks Leigh Hancher and Antonis Metaxas The European Energy Transition: Actors, Factors, Sectors Edited by Susanne Nies Contributors Jacques Delors Philip Lowe Sami Andoura Leonardo Meeus Antonella Battaglini Susanne Nies Klaus-Dieter Borchardt Philipp Offenberg Christian Buchel Jean-Baptiste Paquel Dirk Buschle Diego Pavia Claire Camus Thomas Pellerin-Carlin Alicia Carrasco Alberto Pototschnig Andrzej Ceglarz Konrad Purchała Olivier Corradi Laurent Schmitt Marina Cubedo Vicén Helmut Schmitt van Sydow Jos Delbeke Theresa Schneider Gustav Fredriksson Christian Schülke Christophe Gence-Creux Jesse Scott Dolf Gielen Pierre Serkine Jean-Michel Glachant Konstantin Staschus Simeon Hagspiel Frauke Thies Tom Howes Sonya Twohig Luis Janeiro Peter Vis Pascal Lamy Kirsten Westphal Maria Eugenia Leoz Georg Zachmann Martin-Casallo CLAEYS & CASTEELS 2019 © 2019 by the authors ISBN hardcover: 9789077644607 ISBN E-book: 9789077644591 The paper and board used in the production of this book is sourced exclusively from replanted forests. All rights reserved. This publication, in whole or in part, may not be copied, reproduced nor transmitted in any form without the written permission of the copyright holder and the publisher. Applications to copy, transmit or reproduce any part of this work may be made to the publisher. Published in 2019 by Claeys & Casteels Law Publishers Deventer (Netherlands) – Leuven (Belgium) P.O. Box 2013 7420 AA Deventer Netherlands www.claeys-casteels.com Table of Contents TABLE OF CONTENTS Chapter 1 Foreword by Jacques Delors, Founding President of the Jacques Delors Institute ..............................................................................21 Chapter 2 42 Authors exploring Europe’s Energy Transition: About this Book .........................................................................................................25 Susanne Nies PART 1 – SETTING THE SCENE: CLIMATE, SECURITY OF SUPPLY AND COMPETITIVENESS – INSEPARABLE ............ 33 Chapter 3 EU Climate Policy as a Driver of Change .......................................................33 Jos Delbeke & Peter Vis 1. Introduction ......................................................................................................33 2. International process ........................................................................................34 3. EU policy response ...........................................................................................40 4. Carbon pricing and the EU’s Emissions Trading System .........................43 5. Conclusion .........................................................................................................47 Chapter 4 Security of Supply: a new Focus on Electricity ..............................................51 Susanne Nies 1. Risks are changing .............................................................................................51 2. Security of supply and the scope of risks Europe is exposed to ...............53 3. The UE institutional and regulatory set up for energy security ..............55 4. Oil .......................................................................................................................57 5 Table of Contents 5. Gas: from golden age of gas to bronze and back to gold again? ..............58 5.1 Import Dependency gas: the status quo .................................59 5.2 The role of LNG for security of supply .................................. 61 5.3 Europe’s regulatory response to import dependency on gas ....62 6. Power: changing electricity paradigm and new risks .................................63 6.1 Europe’s meandering electricity geography ............................64 6.2 European blackouts and challenges since 2003 ......................64 6.3 Nuclear risks..........................................................................66 6.4 Traditional risks related to third countries .............................66 7. Always a winning bet: the first fuel energy efficiency ................................69 7.1 Managing risks in a system with variable Renewables ............69 7.2 New climate risks .................................................................70 7.3 New risks: Cybersecurity, power electronics and sector coupling ......................................................................71 7.4 Regulatory response to security of electricity supply risks ......72 7.5 Recommendations for the incoming EC and EP ...................73 Chapter 5 The Distributional Effects of Climate Policies ..............................................75 Gustav Fredriksson & Georg Zachmann 1. Introduction ......................................................................................................75 2. Assessing the distributional impact of policies ...........................................76 2.1 Income side ...........................................................................76 2.2 Expenditure side ....................................................................77 2.3 Government side ...................................................................78 2.4 Summary ..............................................................................79 3. Distributional effects of climate policies ......................................................80 4. The distributional effects of a real-world climate policy: The EU ETS .83 4.1 Allocation of free allowances .................................................84 4.2 Indirect cost compensation for electricity-intensive firms .......85 4.3 Overall distributional impact of the EU ETS ........................85 5. Non-action .........................................................................................................86 6. Conclusion and recommendation to the incoming Commission and EP .................................................................................................................88 7. References ...........................................................................................................90 6 Table of Contents Chapter 6 Innovation: a Vital Challenge for the European Energy Transition .....93 Pascal Lamy & Thomas Pellerin-Carlin 1. Innovation is vital for Europe and for the energy transition ...................95 1.1 Innovating to reduce global greenhouse gas emissions ..........95 1.2 Innovating for competitiveness .............................................96 1.3 Innovating to enhance Europe’s soft power ...........................96 2. Leading in energy innovation: EU successes and challenges ...................97 2.1 Energy sectors: where the EU leads, lags or falls behind ........97 2.2 Two cross-sector challenges for the EU .................................98 2.3 Energy-specific challenges ...................................................100 3. The UE has potent tools to boost energy R&I .........................................101 3.1 How much does the EU invest in R&I ? .............................. 101 3.2 H2020: how the EU R&I budget is being invested ............. 102 4. How to get it done: proposals to improve the European energy R&I policy ........................................................................................................102 4.1 Horizon Europe ................................................................... 102 4.2 A significantly increased EU R&I budget ............................ 103 4.3 Designing energy-related innovation « missions » ................104 4.4 The European Innovation Council ...................................... 105 4.5 Involving citizens to legitimize the EU R&I policy ..............106 5. Conclusion and recommendation to the next European Parliament and next European Commission ............................................107 6. References .........................................................................................................108 Chapter 7 Renewables Driving the Energy Transition: Europe in the Global Context ........................................................................................................................111