The EU needs more public investment in energy infrastructure to fight climate change

In an opinion adopted at the September plenary, the European Economic and Social Committee (EESC) says that in order to achieve the energy transition and climate goals, massive public investment is needed. It proposes skimming the windfall profits and applying a "golden rule" to finance infrastructure investment.

The EU needs to address the climate crisis through a threefold approach: mobilising adequate funding, engaging its citizens and the private sector, and strong political leadership.

The message sent by the EESC own-initiative opinion drafted by Thomas Kattnig and Lutz Ribbe, and adopted at the September plenary, is clear: to meet increasing demand for electricity and achieve the climate objectives, the EU must invest more in smart and renewable energy systems and storage infrastructure, and everybody must play their part.

According to the conclusion of the federation for the European electricity industry, Eurelectric, the EU must double investment in the electricity grid to EUR 55 billion per year and increase the budget for building clean generation capacity to EUR 75 billion per year.

We need massive public investment in order to meet the energy transition and climate goals. This is essential for ensuring security of supply, tackling energy poverty, keeping prices affordable and creating jobs, said Mr Kattnig.

Designing a well-functioning energy market

The bloc's rate of public investment in clean energy technologies needed for decarbonisation is the lowest among the major economies and puts the EU's competitiveness at risk.

A good tool to speed up the energy transition is streamlining permit-granting procedures in the area of renewable energy and establishing "go-to areas" for such projects. In this context, it is all the more important to determine as accurately as possible what simplifications apply in the "go-to areas".

With regard to the future organisation of energy systems and energy infrastructure, all consumers must play an active part: households, businesses and energy communities must be involved in developing smart energy systems. It is also important to create incentives to enable civil society to participate in the energy transition and to finance it.

The new future scenario is characterised by a prevalence of renewable energy, more decentralised production and increased on-site consumption. Market design and regulation must be adapted to this new reality, create the necessary conditions for the various players involved and ensure adequate consumer protection.

For this reason, the EESC supports the Commission's intention to improve the design of the electricity market, and is strongly in favour of market assessments to analyse the behaviour of all potential players, stressing that it is important to carry out a comprehensive impact assessment prior to making any proposals.

In order to design a well-functioning energy market, it is key that the Commission assesses the advantages and disadvantages of public and private ownership and/or private financing of energy infrastructure, said Mr Ribbe.

Skimming of windfall profits and "golden rule" for public investment

A concern for the EESC is the potentially dangerous destabilising effect on society brought about by the extremely high profits of energy companies on the one hand, and increased energy poverty caused by energy price surges on the other.

This is why the Committee proposes that these windfall profits be skimmed off with the help of taxes, passed on as financial compensation to energy consumers and used for the expansion of renewable energy production and the necessary grid infrastructure.

However, in order not to discourage energy companies from investing in low-carbon solutions, such taxation should be defined very sensitively. In this regard, the EESC calls on the Commission to propose measures without further delay.

The Committee also recommends exempting projects associated with the European Green Deal and energy independence from any rules that hamper such public investment, i.e. applying the so-called "golden rule" for public investments, in order to safeguard productivity and the social and ecological base for the well-being of future generations.

All in all, the issue here is about who will be in charge of key infrastructure in the future. In the EESC's view, the energy grid, given the primary public interest, should be defined by public ownership that is committed to the common good and eliminates existing inequalities.

Background – The EESC package of own-initiative opinions on the energy transition

The Committee has set energy transition as a priority topic for 2022 and, on this matter, is drawing up a package of own-initiative opinions which will feed into the umbrella opinion "A strategic vision on energy transition to enable sustainable development", scheduled to be adopted at the October plenary session.

The EESC package on the energy transition is composed of the following opinions:

TEN/770 – A strategic vision on energy transition to enable the EU's strategic autonomy

SOC/717 – Tackling energy poverty and the EU's resilience: challenges from an economic and social perspective

CCMI/190 – Role of carbon removal technologies in decarbonising the European industry

INT/979 – SMEs, social economy enterprises, crafts and liberal professions Fit for 55

NAT/859 – Energy and digital transition in rural areas

ECO/583 – Climate Adjustment Fund financed by Cohesion and NGEU

REX/550 – Geopolitical impact of energy transition