EU Makes Big-Time Commitment to Single Energy Market

The EU Council has made a commitment to completing the EU Single Energy Market by 2014. EPA/BGNES

The leaders of the EU institutions and 27 member states have declared anew their commitment to massive investment into the much anticipated Single European Energy Market.

At their summit in Brussels Friday, the EU leaders including Bulgarian PM Boyko Borisov agreed that "major efforts" were needed to bring up to date Europe's outdated energy infrastructure such as natural gas transit interconnections and modernization of the electricity grids.

The final statement after the summit issued by President of the EU Council Herman Van Rompuy does not mention the cost of this "major effort" but the European Commission estimates the needed investment in energy infrastructure to cost EUR 1 T by 2020, mostly from private sources.

The Commission is expected to report with more precise estimates in June 2011. The EU has set for itself a "20-20-20" goal: a 20% cut in emissions of greenhouse gases by 2020, compared with 1990 levels; a 20% increase in the share of renewables in the energy mix; and a 20% cut in energy consumption

The EU is the world's largest regional energy market - 500 million people and 20 million companies. Europe sends 2.5% of its GDP overseas each year for energy imports but should rein that in, European Commission President Jose Manuel Barroso told leaders at the EU's first energy summit. That equals to EUR 270 B a year for oil and EUR 40 B euros for gas. 32% of its oil imports and 40% of gas imports come from Russia.

The EU leaders have in effect vowed to complete the EU's internal energy market by 2014 and to diversify EU's energy supply.

"Safe, secure, sustainable and affordable energy contributing to European competitiveness remains a priority for Europe. Action at the EU level can and must bring added value to that objective... No EU Member State should remain isolated from the European gas and electricity networks after 2015 or see its energy security jeopardized by lack of the appropriate connections," the leaders said in a statement released after their morning discussion.

The leaders stressed that the EU needs "a fully functioning, interconnected and integrated internal energy market", saying that the internal market should be completed by 2014.

According to the European Commission, a truly integrated EU energy market could contribute to 0.6-0.8% GDP increase for the Union and create five million jobs by 2020.

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