Somewhere between a glorified list of upcoming regulatory initiatives and a forward looking strategy, the Communication of decarbonisation of transport will be the first official position by the Commission on aligning transport and climate objectives after the publication of the White Paper on Transport. Here are some elements to keep in mind ahead of its official publication on Wednesday.
All about efficiency
The key to the future of the European transport system is expected to be based on increased efficiency – at system, fuel, and vehicle level. This includes efficiency across transport modes.
Such objective is closely linked to a reduced focus on specific types of emission; ultimately, the Commission would like to see the transport value chain optimize its energy use, while improving its CO2 and air quality performance.
Is the Communication promoting technology neutrality?
In its Communication, the Commission is undertaking a very delicate balancing act. The intent is clear that zero-emission mobility is the preferred way forward both on the vehicle and fuel side; yet the understanding remains that much needs to be done to develop technologies that will be financially attractive both to consumers, Member States and industries.
Fact of the matter is that the EU is one of the global leaders in the development of transport technologies and that a “reset” will be difficult – not to say impossible; both for operational and competitiveness issues. For this reason the Communication is expected to commend EU innovation and underline the value of bridge technologies, including more efficient internal combustion engines.
What is going to fuel the future?
According to the Commission, the future will be all about advanced energy sources. This includes advanced biofuels (central to the strategy), renewable electricity and synthetic fuels. While “well-to-emissions” are not expected to be mentioned explicitly, it has become clear that a life-cycle approach for emission savings would be the winning approach on the fuel side in order to address issues at every level of the value chain.
However, what remains to be seen is how the Commission is planning on addressing efficiency improvements and emission savings in its two relevant Directives: the Renewable Energy and the Fuel Quality Directives. Post 2020, the Fuel Quality Directive could become the governing instrument to provide a framework for the provision of incentives to produce and market low-emission, high quality, and energy efficient fuels.
The promotion of advanced low-emission fuels is also addressed from an infrastructure angle. The Commission clearly aims to put pressure on Member States and companies to speed up the roll-out of alternative fuel infrastructure both at urban and national scale. But is the message reaching investors’ ears?
“Show me the money”
The Commission understands that developing the technology to reduce emissions and creating economies of scale will require significant investment by the European transport industry, across its different value chains. By presenting its main lines of action for the coming years, the Commission aims to increase investor confidence in “promising” sectors, such as low- and zero- emission vehicles and low-emission energy sources.
Investors are expected to be supported by three financing streams: the European Fund for Strategic Investment, Horizon 2020 (for research and innovation) and the European Structural Funds (for sustainable urban mobility). These will hopefully help bridge the 3 billion euro investment gap currently required for Europe transition to low-carbon mobility.
Nonetheless, private investment will also be required. At the moment, the Commission does not provide a clear signal to its transport industry that it will support the improvement of existing technologies (which are widely accepted by consumers) in order to facilitate the transition to a low-emission transport system. In order to mitigate risk it would have been beneficial to underline the added value of putting all technologies, both new and existing, at the same footing, based on their emission reduction potential. This would increase certainty and reinforce the message that companies throughout Europe wouldn’t need to radically change their production and endure costs in order to achieve results.
What’s next?
The Communication will include an action plan with policy instruments that will support the roll-out to low-emission mobility. The Communication as a whole will be presented in the Parliament and Council and specific Commission initiatives will start to come out as of the autumn; they will cover a multitude of issues covering all modes, such as a master plan for intelligent transport systems, a proposal for the certification of CO2 emissions from heavy duty vehicles, to the Revision of the Regulation on rail for freight.
For anyone working on issues impacted by transport policy, the time to be concrete about your policy asks is now. Get your technical teams to the table and provide Commission services with data and recommendations; your objective would be to emphasise your role in the value chain, how your solutions can contribute to achieving the Commission’s objectives and what the socio-economic impact would be to potentially change your modus operandi.
Ilektra Tsakalidou, with help from Laura Rozzo and Michael Stanton-Geddes
The construction of the Nord Stream 2 pipeline between Russia and Germany has become one of the most controversial topics in European energy policy. For a majority of European policymakers and analysts, it seems hard to understand how Angela Merkel’s government can back the creation of a more secure Energy Union and a seemingly contradictory German-Russian pipeline project at the same time.
In the interpretations of many, the latter shows a lack of solidarity with Central and Eastern European countries; some even draw a causal link to the resistance of those countries to show solidarity during the refugee crisis. The reality is of course much more complex, and requires a deeper look into Berlin’s dominant mindset. Two strategic motives in German politics and the clarification of a misunderstanding around the Energy Union could help explain Berlin’s point of view.
“Cooperation on Nord Stream 2 is seen as a means of keeping a window for political dialogue open with Russia’s government”
The first strategic motive is in foreign policy. The German government is following a tradition in the country’s foreign policy towards Russia that has often been vaguely described as ‘Ostpolitik’. From the early years of the Cold War until most recently, German governments saw a dual approach towards the regime in Moscow as most promising. This included a variation in political strategy between confrontation and rapprochement on the one side, while on the other side keeping channels for dialogue and economic cooperation open.
Since the annexation of Crimea and the war in eastern Ukraine, the German government adapted its strategy and supported the sanctions regime against Russia, but with clear limitations on a predefined set of economic sectors. Trade in natural gas was clearly exempt from the sanctions, following many decades of German foreign policy tradition. The cooperation between German and Russian companies on Nord Stream 2 is therefore seen as a means of keeping a window for political dialogue open and supporting future cooperation with Russia’s government. Behind closed doors, German politicians ask why this opportunity should be blocked if cooperation on natural gas survived the worst of Cold War confrontations.
The second aspect, although discussed even less openly, is strongly connected to Germany’s national energy sector transformation and its consequences. In the early days of Germany’s ‘Energiewende’ around 2007-2008, natural gas was perceived by many as the obvious partner of renewable energies in the future. The conviction that renewables and natural gas would dominate Germany’s electricity sector for some decades bought support for an energy sector transformation from the national gas industry. Reality, of course, has proven this assumption wrong. Quite to the contrary, natural gas has lost market shares in the electricity sector and suffers from decreasing demand. This is one among a whole set of factors that turned German energy companies from big incumbents to weak competitors in the market.
Besides its outspoken support for the further deployment of renewables and more ambitious climate policies, the second part of German energy policy concentrates on protecting its suffering energy industry. In the case of natural gas, this means supporting the German gas industry in its cooperation with Russian suppliers, strengthening the German natural gas market and improving framework conditions for exporting gas to other European markets. Germany’s natural gas export of 30 billion cubic metres in 2015 underlines the economic importance of this strategic move.
“The concept of the Energy Union remains widely open for controversies”
Finally, and probably most importantly, a clarification of the big misunderstanding around the Energy Union is needed. This has a great deal to do with the strategic ambiguity of the project itself. The concept of the Energy Union was mainly perceived by the German public as a project for further greening Europe’s energy system and better coordinating energy supply structures. The energy security dimension did not receive much attention among policymakers and in the media, unlike in many Central and Eastern European governments, where the European Commission’s proposal was interpreted as a step towards reducing the EU’s dependence on Russian supplies. In Germany, however, growing flexibility in open markets remained key for guaranteeing energy security. In the German understanding, additional import infrastructures such as Nord Stream 2 would contribute to a diversification of transit options. This difference of views has not been addressed so far, and remains widely open for controversies.
The combination of Germany’s foreign policy tradition vis-à-vis Russia, its support for the German gas industry and its different interpretation of the Energy Union project can serve to explain Berlin’s support for Nord Stream 2. As long as the regulatory framework of the Third Internal Energy Market Package will not prohibit the construction, policymakers in Germany will see no means or reasons to change their position on this controversial pipeline project.
IMAGE CREDIT: Shinobi/Bigstock.com
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