March is a stress test for the European Green Deal. European and national leaders can endorse it as part of the solution to the current crisis, and send a clear political signal of increased ambitions for the Fit for 55 Package.
The invasion of Ukraine by Russia raises the importance of understanding and managing the deep entanglement between energy, security and geopolitics. EU and national leaders will have to show strong leadership to actively shape Europe’s course of destiny, not just respond to incredibly tragic events.
While discussions on fiscal reforms and European Green Deal delivery were expected to accelerate in March, the top priority is now to tackle all implications from this tragic conflict. Leaders must recognize the three are closely connected. As the EU keeps spending significant public resources on Russian gas despite the agreed sanctions, the ongoing conflict has exposed the tremendous leverage Moscow has over Europe through its energy exports. The urgency of accelerating the transition away from dependency on fossil fuel is indisputable.
Traditional (geo)political and economic paradigms in Europe and beyond have shifted dramatically in the past few days. The decisive and quick political response from the Union has led to sanctions never seen before. EU and international countries have made efforts to overcome misalignments and send clear government signals. This is a promising start, but a lot is ahead of us.
EU leaders can turn this moment into a watershed point for Europe and its Green Deal delivery. For the EU to emerge from these tectonic shifts as a strong geopolitical actor, it will need to show how to effectively make use of the European Green Deal to deliver a fossil-free energy system, for itself as well as for its partners around the world. Fast-tracking some elements of the Fit for 55 Package is Europe’s best chance to do that.
The IEA recommendations have confirmed that the EU can cut around 6% of its gas imports from Russia (23 billion cubic meters) already before next winter by using energy efficiency and fuel switching measures. Bottom-up country analysis suggests this is possible in the Netherlands and Italy alone. Policy decisions must be taken urgently to deliver a paradigm shift.
The Commission’s communication on energy prices on Tuesday 8 March has set the right tone and direction of the debate throughout March. Redefining energy security to include both supply and demand measures is a good first step, but actions to fast-track energy efficiency and renewable energy deployment in the short term are still necessary. The European Green Deal is at the core of the EU’s security strategy as a crucial tool to decrease gas demand reduction more steeply than ever before. It is now imperative to avoid additional lock-ins into long-term contracts as a short-term response to the supply shortage.
Secondly, an Informal Summit in Versailles on 10-11 March will offer the opportunity to link the immediate energy paradigm shift with the broader agenda. Stepping away from Russian fossil fuels implies taking a leap towards EU resilience and geopolitical clout. A new economic model is necessary to finance this shift and ensure that Europeans do not experience the perfect storm of inflation, energy prices and supply chain kinks. The Fit for 55 Package then needs to accelerate the enhanced transformation of the EU energy system away from fossil fuels. For example, there is a need to focus on prices and security of electricity markets that transition to net-zero.
The ENVI Council on 17 March will finally provide the opportunity to tackle more structural challenges. The recent IPCC report raises awareness on the importance to tackle structural issues next to policy changes. In particular, it identifies poor governance (i.e. “that lack the institutional structures, political will or accountability toward their citizens”) as a risk factor to protect against climate impacts. Strengthening the resilience of climate action via robust national ownership of the energy transition will be even more important and urgent in the current circumstances.
To conclude, the European Council on March 24-25 will be a closing meeting of an intense political month. We should expect disruptions on the agenda, which was meant to focus on the energy price crisis response. There are still too many unknowns to foresee where we will be by then, but the timing will certainly remain crucial. A second extraordinary Energy Council is also planned for March 28.
The March European Council will set the direction for the upcoming quarter when decisive policy progress has to be secured before the changes of Presidency in July. EU leaders should give a clear political mandate to their ministries to do whatever it takes to strengthen EU resilience and pathway towards climate neutrality.
The article has been sourced from E3G and can be accessed here