”ENERGY UNION ASSUMES EUROPEAN TRANSMISSION CAPACITY”

EUROPE The EU has taken a major step forward in the creation of an integrated internal European energy market, thereby reducing the import requirement for gas. The purpose of the new energy union is, amongst others, to harmonise the energy policies of the member states and to increase transmission opportunities in Europe, between, for example, Scandinavia and Scotland. "We welcome the initiative and agree that the EU member states must reduce their impact on climate and increase their focus on energy efficiency," says Magnus Hall, Vattenfall’s CEO.

On 25 February, Mares Sefcovic, Vice President of the European Commission, in charge of the Energy Union, and Climate Action and Energy Commissioner Miguel Arias Cañete presented the framework for the energy union. The idea behind the energy union is that a common European energy policy will replace the 28 different national policies we have today.

Magnus Hall welcomes the initiative:
"Clearly, we must look carefully at the details, but the union, as presented by the Juncker Commission, is commendable. An integrated European energy market, with good interconnection capacity to keep the electricity grids stable, is an excellent way of meeting the climate challenge and reducing the EU's energy dependency. We agree that the member states must reduce their impact on climate and, at the same time, increase their focus on energy efficiency."

Political action plan
The European energy markets are facing major challenges. According to the IEA (International Energy Agency), over the next few decades, Europe will have to replace half of its total electricity generation capacity.

By 2040, half of today's European nuclear reactors will have been decommissioned. At the same time, more stringent environmental requirements will lead to the phasing out of ageing coal-fired power plants.

"At the same time, we know that the geopolitical situation could have an impact on member states' energy markets, many of which are currently dependent on imports of oil, coal and gas. In this context, it's important that Europe has a political action plan and a proper common European energy policy rather than the 28 national policies we have today," says Magnus Hall.

"In everybody's interests"
According to the European Commission, the energy union will reduce the need for investments in conventional generation capacity.

Increased trade in electricity between the member states, based on good interconnection capacity, will reduce the cost of generating electricity. At the same time, security of supply will increase due to the ability to use transmission capacity between the EU member states to combine renewable forms of energy with conventionally generated electricity.

"Sweden and the other Scandinavian countries sometimes face challenges when we generate too much electricity. Having good opportunities to transmit excess electricity to other markets which may, at the same time, be experiencing a deficit of electricity is mutually beneficial. The benefits to society are significant. Keeping the costs of sustainable energy generation and consumption at reasonable levels is in everybody's interests," says Magnus Hall. 

Global agreement
One of the energy union's intermediate objectives is greater focus on energy efficiency. There's a great deal of unexploited potential for this in the construction and transport sectors in particular.

"It may seem odd that a power company like Vattenfall is supporting an initiative of this nature but we see a great many business opportunities in helping individual households and businesses or large groups of people such as, for example, cities become more energy efficient."

Magnus Hall emphasises that it's also important that the EU's emissions trading system (ETS) continues to be a cornerstone of EU climate policy in the run-up to the climate conference in Paris in December, at which a global agreement will hopefully be reached.

"Both short and long-term measures are essential to restore the balance in the system with price levels which make a difference to investors. Vattenfall endorses the EU's implementation of the proposal to establish a market stability reserve."

"In our view, it's essential that a new global agreement is reached at the climate conference in Paris at the end of the year. Vattenfall fully endorses the EU's objective of reducing emissions of greenhouse gases by at least 40 per cent by 2030," says Magnus Hall.

More information about the Energy Union
EU Energy Union website

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