Energy Strategy for 2011-2020

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Energy Strategy for 2011-2020

1. Introduction and Summary

1.1 The European Commission intends to adopt an Energy Strategy for 2011-2020 and a Roadmap for low carbon energy system by 2050. It has asked the Committee to prepare exploratory opinions on these two topics as a contribution to their work.

1.2 The Committee is glad that these two topics are being developed together. Investment in the energy sector has a long life, and it is very important that the strategy for the next ten years should be working towards the longer term goals for 2050.

1.3 The Commission has published a stock-taking document "Towards a new Energy Strategy for Europe 2011-2020" as a basis for consultation. In this opinion Section 1 summarises our views and recommendations. Section 2 outlines some general themes that should be covered in the strategy. Section 3 then comments on the particular issues raised for discussion in the Commission's stock-taking document.

1.4 Over the past 200 years the world has relied mainly on fossil fuels for energy and for transport. During this period abundant sources of fossil fuels have been available for extraction at comparatively cheap prices and have enabled the developed world to achieve an enormous increase in productivity and standards of living.

1.5 Over the next 40 years however most experts agree that supplies of oil and gas will become less abundant and there will be strong competition and higher prices for the resources that remain. Coal will probably remain relatively more abundant, and there will probably be less risk of serious supply constraints during the next century. But the world also urgently needs to reduce the level of CO2 emissions from the burning of fossil fuels in order to avoid catastrophic climate change; and this applies to coal just as much as to oil and gas.

1.6 The world therefore needs to transform its energy base and its use of energy by 2050. All the various possible alternative sources of energy need to be pressed forward as fast as possible. Where fossil fuels do continue to be used it will be necessary to capture most of their carbon emissions at source for storage or reuse so as to avoid release to the atmosphere. And in every sector energy needs to be used much more efficiently than it is today.

1.7 Managing this transformation effectively is one of the largest challenges facing society and governments in the 21st century. It will require a new approach to pricing energy and energy services to ensure in particular that the use of fossil fuels bears the full cost of the CO2 burden they impose on the world, massive investment in new technologies, strong new partnerships between industry and governments to create the necessary infrastructure, and a transformation of public attitudes to the use of energy and its cost.

1.8 Countries will need to work closely together to achieve the changes needed. At the same time the transformation process will itself be intensely competitive. There will be fierce competition for access to the remaining sources of oil and gas, at the same time as new areas for competition arise in the development of alternative sources of energy and in energy efficient products and services. Countries and regions which make early progress towards greater energy efficiency and effective deployment of alternative energy will strengthen their competitive position. Those which muddle along and delay the transformation will find that their competitive position is eroded.

1.9 Europe and the European Union now stand at a critical stage in this evolution. It has strong reasons to press ahead with the transformation because it is highly dependent on foreign imports of oil and gas and is vulnerable to any constraints that may emerge on these supplies. It has also been at the forefront of growing public and political awareness about the climate change threat, and has pioneered the development of some of the alternative sources of energy that will be needed, and measures to increase energy efficiency in some of the key sectors.

1.10 But Europe cannot afford to be complacent. The transformation process has not yet built up sufficient momentum to proceed under its own steam, and could easily be severely set back by current economic difficulties and the short-termism that they induce. Meanwhile other countries and regions such as China and the USA are gearing up for rapid action. China in particular is likely to become a very vigorous competitor in the development of alternative energy sources.

1.11 It is vitally important for Europe to develop a new dynamism for the energy transformation. The EU's new energy strategy could and should provide the framework for this to be established. It should map out goals and targets, and outline the measures and structures that will be needed to achieve it. The adoption of the strategy by the Council and the institutions needs to be the occasion for mobilising a united political, business and societal will for the changes needed. It is an opportunity that must not be missed or squandered.