May 2024

A competitive Union: Energy resilience, a new Single Market, and offshore initiatives

EPICO KlimaInnovation is a non-profit and independent energy and climate policy think tank providing a platform and network for policy development. In our Monthly Policy Update, we dive into the latest and most relevant developments in energy and climate policy and share the outcomes of our events and publications.

Energy security: Instructions for a resilient EU

In April 2024, geopolitical challenges continued to shock the world and the European Union. With the worsening of the situation in the Middle East and the progression of Russia’s war against Ukraine, the topic of security remained high on policymakers’ agenda.

As the EU continues to import more than half of its energy needs, the bloc’s ability to have a stable supply of energy is rendered vulnerable by global dynamics. At the same time, major economies like China and the US are racing to lead the green industrial revolution and the development of clean energy alternatives. The considerable domestic incentives rolled out by these major players, such as the US Inflation Reduction Act (IRA) or China’s heavy subsidisation scheme, have contributed to strengthening their cleantech manufacturing. This geopolitical race can leave the EU once more vulnerable and dependent on outside actors and a secondary player when it comes to green industrialisation.

Against this backdrop, EPICO’s new publication, “An Industrial Agenda to Increase Germany’s Energy Resilience”, calls for a new European and German energy and industrial resilience framework that goes beyond the European Green Deal.

The Paper suggests ten principles to guide energy policymaking, emphasising energy efficiency, market mechanisms, and innovation, and puts forward 5 recommendations to boost innovation and cleantech manufacturing:

Future-proofing the electricity market;
Extending regulatory sandboxes;
Boosting financial and tax incentives;
Providing more guarantees;
Using regressive grants to scale new technologies.

This Policy Paper, published in April, was co-written by Bernd Weber (EPICO), Sam Williams (EPICO), Domien Vangenechten (E3G), Wei Wu (Heatrix), Stephan Hermann (Reverion), Christian Grenz (Siemens Energy), Christoph Sievering (Wuppertal Institute), Maria Leis (Breakthrough Energy), and Florian Gruschwitz (MAN Energy Solutions). It presents the outcome of EPICO’s Policy Accelerator workshops, which were held at Siemens Energy in Berlin between 9 and 12 January 2024.

Here’s a key quote:

Faced by Russia’s war of aggression in Ukraine, the subsequent energy crisis, and further fundamental geopolitical shifts, the EU must rethink its industrial and energy security strategies. To this end, energy resilience is ever more central to protecting citizens and industries. Energy resilience – as in the ability to shield the energy system from internal and external shocks – must be increasingly understood as a synonym for energy security.

Interested? DOWNLOAD the paper here.

EPICO’s work and recommendations for a strong European industrial agenda were also echoed in our latest contribution to the Wilfried Martens Centre’s 7D’s. There, we argued for a European Single Market for innovation to accelerate the EU’s transition towards climate neutrality while maintaining competitiveness.

Don’t miss it! READ our contribution here.

Single Market 2.0: How to compete with the big global players?

The Single Market is Europe’s key asset to drive the transformation forward, but it must be strengthened. On 17 April, Enrico Letta published his long-awaited report on the future of the Single Market, echoing EPICO’s call for deeper integration of European energy and industrial policy. The report suggests enlarging the Single Market to cover three additional areas: energy, telecommunications, and finance. In response to the US IRA, Letta urges Member States to give the EU progressively more power to subsidise companies.

On 18 April, following the presentation of Letta’s report, the EU27 leaders called for a new “competitiveness deal” to close the EU’s economic gap with its rivals. While the deal will only be implemented after the June elections, industrial innovation and sustainable competitiveness have also been high on the Commission’s mind lately. On 10 April, Commissioner Šefčovič issued a Communication on how to strengthen European industry, following the input of the Clean Transition Dialogues. The document details the much-praised measures that have characterised the debate at least since the publication of the Green Deal Industrial Plan.

While welcoming this renewed commitment towards innovation, EPICO’s recent blog post in reaction to the Communication suggests that the implementation of the European Green Deal at the national level should be prioritised. We also argued for a greater focus on diversifying energy sources and partners and making clean energy affordable for hard-to-abate sectors.

READ our reaction here.

Decarbonising hard-to-abate sectors, particularly the steel industry, remains a key topic for EPICO’s work. On 25 April, we hosted a consultative stakeholder workshop in Berlin, mirroring the format of our March discussions in Brussels.

Participants from the Federal Ministry for Economic Affairs and Climate Action, industry and industrial associations, academia, think tanks, and NGOs came together to discuss two main fields of action: (1) lead markets and green public procurement, (2) circular economy and material efficiency. The outcome of these discussions, together with the results from the previous workshop, will inform an upcoming publication with recommendations for the next European Commission.

Read EPICO’s Deputy Executive Director Parul Kumar’s key takeaway:

We were very pleased to host this timely discussion in the same week as the Low Emission Steel Standard labelling system was announced at the Hannover Messe. The event brought together valuable perspectives and highlighted the value of stronger policies for creating lead markets, implementing green public procurement, and improving circularity and material efficiency for steel and steel products.

Unlocking the North Sea’s offshore opportunities

On 11 April, the European Parliament adopted the gas package, setting rules for European hydrogen network planning to be overseen by Hydrogen Network Operators (ENNOH), a newly formed EU entity. A secure supply of hydrogen is essential to decarbonise hard-to-abate sectors. Recognised by the Net-Zero Industry Act as a key technology to deliver the transition, hydrogen requires a supportive financial and regulatory environment, as well as more focus on infrastructure, including for offshore grids and pipelines.

In particular, the North Sea can contribute significantly to Europe's security of supply and resilience, providing clean energy to the industrial hub in the North of Europe. Following significant regional developments in the cooperation amongst the North Sea Energy Council (NESC), the region is set to become a major site for green hydrogen production, playing a crucial role in the transformation of energy-intensive sectors. Yet, realising the North Sea’s potential demands coordinated action and strategic planning.

Taking stock of these developments, on 18 April, EPICO organised a high-level panel discussion on “Accelerating Integrated Infrastructure in the North Sea”, hosted at the UK Ambassador’s Residence in Brussels. The debate included opening remarks by Miranda Dawkins, Councillor for Trade, Sustainability, and Markets at the UK Mission to the EU and EPICO’s CEO Bernd Weber, followed by a panel discussion with EPICO’s Senior Advisor Klaus-Dieter Borchardt, Daniel Fraile, Chief Policy Officer at Hydrogen Europe, and Christoph von dem Bussche, Gascade’s Managing Director.

The discussion, moderated by FT Journalist Alice Hancock, highlighted hydrogen's dual role as an energy carrier and storage solution, crucial for enhancing energy security and decarbonising the industry. Panellists also considered the challenges of investing in infrastructure without adequate demand, the potential for repurposing existing gas infrastructure, and the importance of a supportive financial and regulatory environment.

Here's Klaus-Dieter Borchardt’s key quote from the event:

State guarantees cannot be the only solution. We should focus on spurring private investments instead by setting clear targets, solving issues like cost allocation, and giving certainty to investors. The capital markets union, mentioned in the Letta Report, could be an additional way to attract more investment into European projects.

At the end of May, EPICO will organise a Policy Accelerator on offshore hydrogen, together with high-level experts. The results of the discussion will be featured in an upcoming publication.

Spotted: EPICO in the media

On 4 April, Foresight Climate & Energy published an article on the EU’s quest away from Russian gas, with comments by EPICO’s CEO Bernd Weber. READ here.
On 12 April, Forum Magazine interviewed Bernd Weber on the potential for renewable energy in Germany. FIND it here.
On 16 April, Bernd spoke about the German Climate Protection Act (“Klimaschutzgesetz”) in an interview with WDR. LISTEN here.
On 16 April, Handelsblatt introduced EPICO’s Publication “An Industrial Agenda to Increase Germany’s Energy Resilience” in an article on Letta’s Report. READ here.
On 18 April, our publication was quoted in an article by Tagesspiegel Background. READ here.

Are you a climate and energy journalist looking for new voices to interview?

CONTACT EPICO’s Media and Communications Specialists Barbara Vanotti (EU) and Agata Gurgenidze (Germany).

EPICO is growing!

The EPICO team in Berlin has recently welcomed two new colleagues: Holly Attwell (Energy Specialist) and Agata Gurgenidze (Communications Specialist).