During her five years as Energy Commissioner in Brussels, Kadri Simson faced one of the most complex and decisive periods in European energy history. The feat of cutting off Russian gas supplies; ferrying Green Deal reforms despite polycrisis; and making the energy market resilient while not neglecting decarbonisation goals. Between past, present, and future, Kadri Simson tells Renewable Matter about the legacy of a historic mandate now drawing to a close.
Commissioner Kadri Simson, what is your personal assessment of this intense legislature?
The Green Deal was already set as a political priority for this Commission, but circumstances have meant that the past 5 years have been even more significant in driving forward the clean energy transition. We have seen a paradigm shift in EU energy policy under this mandate – most notably the way we have cut ties with Russia and are no longer dependent on Russian gas. At the same time, we set the EU on track to reach climate neutrality, while tackling the worst energy crisis in decades. We are seeing a massive uptake of renewables, already taking over gas in electricity production. Further, we overhauled both our electricity and gas markets to ensure a clean transition. In the past year, we have established the first form of energy joint purchasing, which will be followed by hydrogen. All the above has taken place while the Commission has supported – and continues to support - Ukraine and provides assistance to its energy sector, which has been facing relentless sabotage by Russia.
The European climate goals of the Fit for 55 package contain several energy reforms. From energy efficiency to increasing energy renewable sources. For the European Commission, the current National Energy and Climate Plans (NECPs) are not enough to reduce greenhouse gas emissions by 57% by 2030; they will be discussed again in June. Why are member states struggling to keep up?
Overall, our assessment of the draft plans is rather positive, and our Member States are heading in the right direction. We have designed a collaborative process where we review the draft plans of the Member States so that they can revise them to fill any remaining gaps. There are a few areas where we need to see more ambition or clarity from the Member States when they present their final national plans this June. Ambition should be ramped up notably on renewables share and energy efficiency. Also, energy security is addressed very differently across the draft plans. Only some Member States provide detailed plans for diversified access to gas or low carbon energy sources. Going forward, the demand side of the electricity sector and energy storage are insufficiently covered despite the growing importance of flexibility. Regarding energy poverty, a vast majority of Member States still need to set out clear objectives and a method for the definition and assessment of vulnerable households.
REPowerEU Plan was thought of as a response to the energy crisis caused by the Russian invasion. The key word is diversification. Has Europe finally learned its lesson?
If there’s one lesson the energy crisis spurred by Russia has taught us, is not to be overly dependent on one single energy supplier. This is why we have put a lot of effort into gas supply diversification while ramping up the deployment of renewables at home and reducing energy use. Counting on a series of reliable partners has been a key part of our plan to diversify away from Russia and boost our energy security. But that isn’t enough – we need to focus on renewables deployment even more, accelerate permitting procedures, and scale up manufacturing capacities in Europe.
This is also something we have learnt with the Covid crisis: supply chains need to be more resilient to risks related to geopolitical instability, or crisis of various types. Energy security is not only about gas supplies but also about having a common gas storage policy, solidarity agreements between the Member States, better interconnections across the EU to make sure energy flows where it is most needed, and having more home-grown renewables at our disposal, while boosting energy efficiency. Under my mandate, we have worked on all these fronts, by strengthening existing legislation or coming up with new initiatives. Now, after the worst energy crisis in decades, we can safely say that the EU is in a much better place in terms of energy security. On track for a sustainable energy system and with prices back to affordable levels.
Gas is considered a transitional energy source. How far are renewables from meeting European electricity demand? Will the ambition to triple the installed capacity of renewables by 2030 succeed in decarbonising electricity consumption?
We have an ambitious renewable energy target for the EU: 42.5% renewable energy in our mix by 2030, with an ambition to reach 45%. To get there, we have put in place faster and simpler permitting procedures. We have also agreed on rules to reform the Electricity Market Design. This will help to integrate renewables into the electricity system and improve conditions for flexibility solutions such as demand response and storage. The results of our actions are convincing: the overall renewables share in 2022 reached 23%, up from 20% in 2019. Renewables experienced the most significant growth in the electricity sector, where their share in 2022 reached 41%, almost 4 percentage points higher than the previous year.
What is needed is swift and ambitious implementation of the EU rules by Member States. Earlier this year we presented our 2040 Climate Target Plan, which updates the climate and energy policy framework for 2040 in the next mandate. Renewables will be critical. We envisage a GHG emissions target of ‘90% reduction’, which will require much higher amounts of renewables. Importantly, we need the Member States to implement the jointly agreed rules. Equally, we need our industry to provide renewable energy solutions and make full use of the power we can reap from water, wind, solar, biomass, and geothermal energy.
What role will nuclear energy play in achieving European climate neutrality?
There is a renewed interest in nuclear in many parts of the world as well as in Europe, including in Member States that have previously not used nuclear energy. The Commission has long acknowledged the role of nuclear as a low-carbon source while recognising that the decision on its use remains within the discretion of each Member State, in accordance with the EU treaties. To achieve ambitious decarbonisation targets, we need to leverage fully the potential of nuclear in those EU Member States wishing to use it. At the recent Nuclear Energy Summit in Brussels, I spoke at a meeting dedicated to Small Modular Reactors and pointed out how they can complement conventional nuclear technologies and contribute to delivering at least 90% carbon emission reduction by 2040. SMRs have the potential to address all current challenges: decarbonisation, security of power supply, and EU’s strategic energy autonomy. And it is this potential that is currently being explored. But ultimately the fulfilment of the promise of SMRs relies on technology providers’ commitment to develop their projects without compromising on nuclear safety and to build strong EU supply chains alongside reliable global partnerships.
Among decarbonisation technologies, there is a lot of skepticism around Carbon Capture and Storage plants. Although the European Commission considers it a key technology for achieving climate neutrality, it is said to be too expensive and risks postponing the phase-out from fossil fuels. What is your answer?
Industrial carbon management complements the development of renewable energy sources and energy efficiency solutions and contributes to reducing our dependence on fossil fuels. We want to remove the barriers to its development, so that carbon management can be used to decarbonise Member States’ economies. ETS is currently the main incentive for carbon management, but it is not enough. The Commission will assess by 2026 if, and how, the CO2 removed from the atmosphere and permanently stored could be covered by the EU Emissions Trading System. One of the challenges will be to overcome the significant current difference between the prevailing carbon price and the cost of industrial carbon removals. Therefore, at the early stage of deployment, additional support from the EU and Member States will be required to accelerate technological learning and reduce costs further.
President Biden's Inflation Reduction Act has sparked competition with the Net Zero Industry Act on subsidies for green technologies. In your opinion, could it hamper climate multilateralism between the two countries?
There has been a lot of speculation about the effect of the Inflation Reduction Act on the EU’s clean tech industry and the Net Zero Industry Act, but we should not compare apples and pears. It is correct that a race to subsidies is a real risk for the affordability and fairness of the world’s clean energy transition. However, so far, fears have not materialised. We have not seen the EU industry close shop in the EU to immediately settle in the U.S., as some feared. If anything, the IRA has allowed the U.S. to attract more new investments – with a real boom in clean tech manufacturing, in particular as regards batteries for electric vehicles. It has brought the U.S. back into the group of countries that are driving the clean energy transition globally. We need everyone onboard, and we need to diversify value chains.
The EU’s future position on clean tech value chains will not, ultimately, depend on the incentive regime of the U.S. Global competition is undeniable. Incentives are a part of that. But the EU’s strength is somewhere else: in the stability and innovativeness of our regulatory system. In our well established financial and capital market. In our qualified workforce. In our unwavering commitment towards the clean energy transition – for decades and with a clear vision of where we want to be tomorrow, in 2030, and after tomorrow, in 2040 and 2050. This provides a clear vision to the industry as to what we need in terms of investments. Energy prices will also be a big part of our competitiveness. We have fully overhauled our market rules to ensure affordability and predictability for investors.
In conclusion, what are the most urgent critical issues that need to be addressed for a more sustainable energy market that is also fair to consumers?
The importance of energy independence. The continuous reduction of our reliance on imported fossil fuels remains key. We need to invest more in our own, cleaner, and more reliable energy systems like renewables, as set out in our REPowerEU Plan. Overall, meeting our climate targets will also be beneficial to consumers as well as businesses: the costs of inaction would be simply much higher than those of action. Citizens across Europe have in the last years witnessed the devastating effects of climate change: forest fires, floods more recently, a wake-up call to all of us in Europe that it is the eleventh hour to take decisive action and invest in green transition.
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Image: Kadri Simson
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