The next big project for the EU is energy

By Michaele Schreyer and Ralf Fuecks
Published: July 10 2008 18:58

The global energy system is undergoing a structural crisis. At its heart lies the need to restrain climatic change while at the same time dealing with energy security in an era of rapidly growing demand. The widening gap between rising demand for energy and limited resources of oil and gas has, together with speculation, increased fuel prices to record levels. This in turn has raised the spectre of a recession. These combined challenges pose a significant threat to international economic and political stability.
The current make-up of the European Union, with its flagging institutional reform owing to the Irish No vote, is ill-equipped to deal with these challenges. An outdated Nice treaty that does not reflect the new realities of an EU with 27 members is impeding effective decision-making, thereby undermining the EU’s role in a rapidly changing international system that is increasingly being shaped by rising powers such as China, India and Russia. The urgency for institutional reform is quite clear to everyone. Nevertheless, in times like these the EU cannot limit itself to institutional reform alone.
What is needed is a new European Community that can successfully tackle the combined challenges of climate change, energy security and sustainable competitiveness. As the former Commission president Jacques Delors has suggested, the EU needs to build an institution that can facilitate common action in this field. In comparison with the formative years of the Community – when both the European Coal and Steel Community and the European Atomic Energy Community pursued energy-oriented goals – there is a lack of common action to expand the use of renewable energy that mitigates climate change, provides energy security and increases European competitiveness by transforming its economy into an energy-efficient system.
At a time of climate change and escalating energy prices, the EU needs a European Community for Renewable Energy (ERENE) that can overcome our dependence on fossil fuels and meet the energy challenges of the new century. Such a community would create the conditions necessary to take full advantage of the EU’s climatic, geological and hydrological diversity. Thanks to this diversity the EU has the potential to meet its total electricity demand with renewable energy.
This visionary goal, however, cannot be achieved by unco-ordinated individual action by member states alone. ERENE would develop a strategy to facilitate common action for a rapid shift to renewable energy in the electricity sector. Funded by revenue from the European Emissions Trading Scheme, it would support the research, development and dissemination of new technologies, establish innovative pilot projects, promote investments in renewable energy through a common European support scheme and contribute to the development of trans-European smart grids for the integration of renewable energy into the EU’s electricity supply. It would also foster co-operation with non-EU states, particularly those with a large solar potential in the southern Mediterranean.
ERENE could be based either on the provisions for enhanced co-operation between member states under the aegis of the EU, or on a separate treaty. It would help the EU to achieve its climate and energy objectives of reducing greenhouse gases by 20 per cent and reaching a target of 20 per cent renewable energy by 2020. Moreover, it would prepare the ground for long-term targets beyond 2020. In addition, ERENE would boost the EU’s competitiveness by supporting technological development and innovation.
The EU can, by creating ERENE, become a technological leader, facilitate the creation of new “green-collar” jobs, insulate its economy from rising energy prices and be an example in the fight against climate change for the rest of the world. As such, ERENE could, after the creation of a common internal market and a common currency, be a great new integration project for Europe, emphasising the vital importance of common action for Europe’s future and ensuring that the instruments to deal with climate change and energy security are put in place. The EU needs another grand project to regain political momentum and to engage its citizens in a common European modernisation effort.
Michaele Schreyer is the former EU commissioner for budget (1999-2004); Ralf Fuecks is co-president of the Heinrich Böll Foundation, a think-tank and policy network affiliated with the German Greens
Copyright The Financial Times Limited 2008