Why Europe needs a common energy market and an integrated energy policy

Building the European Energy Union

1. The European Union is moving towards the completion of an integrated energy market and the development of a common energy strategy. A common framework on energy will allow Europe to take advantage on different levels – geo-politics, environmental protection, competitiveness and market integration. In particular, the benefits of achieving the Energy Union are mainly related to:
   • Promoting the shift from national markets to a single energy market.
   • Strengthening security of energy supply and prioritizing the strategic interconnections needed.
   • Integrating energy and climate change policies and taking a leadership position in the global negotiations on climate change (i.e., in the forthcoming COP 21 in Paris).
   • Maintaining and enhancing the competitiveness of European industrial value chains.
   • Protecting energy consumers and encouraging them to a more active and aware role.
2.  Energy has been at the heart of the European Commission’s legislative action over the last 20 years:
   • The three Energy Packages of the Commission (1996-2009) focused their intervention especially on EU energy market integration and liberalization.
   • Since the 2009 Climate and Energy Package, the European Union has also integrated the pillars of energy and environmental protection.Following the “20-20-20 Plan”, in 2014 the European Council adopted a new policy framework with ambitious decarbonisation targets to be met by 2030: at least 40% reduction of greenhouse gas emissions compared to 1990 levels; at least a 27% share of renewable energy sources (RES) in gross final energy consumption; and at least a 27% reduction in final energy consumption compared to estimates. The 2030 framework also proposes a new governance framework based on national plans and a set of key indicators to assess progress over time.
3. With the “Framework strategy for a resilient Energy Union with a forward-looking climate change policy” (February 2015), the European Commission outlined an action plan for its energy strategy based on five mutually-reinforcing and closely-interrelated dimensions:
   1. Energy security, solidarity and trust.
   2. A fully-integrated internal energy market.
   3. Energy efficiency as a contribution to moderation of energy demand.
   4. Decarbonization of the economy.
   5. Research, innovation and competitiveness.The goals and guidelines contained in the Energy Union framework strategy provide a solid foundation and have the merit of integrating the cornerstones of energy and environmental protection.

4. The future challenges of the Energy Union need to be addressed adopting a holistic approach. In fact, EU initiatives on energy have followed an incremental logic but have lacked a comprehensive and coherent approach open to the external aspect of competitiveness and capable of including all the perspectives related to energy and other connected policy areas (i.e., foreign policy, industrial policy, etc.). This has brought about some distortions and imbalances in the internal energy market.
5. Starting from the five key areas identified by the European Union, we have formulated a set of proposals and policy recommendations that address the key future challenges of the Energy Union regarding the following aspects:
   • Governance (allocation of responsibilities and powers for rule-making and goal-setting between the EU and Member States).
   • Market design (definition of the technical rules and criteria under which market participants interact).
   • Infrastructures (definition and development of key infrastructure, as enabler of markets development).
   • R&D (schemes to promote and finance energy-related technological development and R&D).
   • Investments and financing, which cuts across all the above-mentioned areas.