Energy policy of the European Union

The energy policy of the European Union focuses on energy security, sustainability, and integrating the energy markets of member states. An increasingly important part of it is climate policy.

A key energy policy adopted in 2009 is the 20/20/20 objectives, binding for all EU Member States. The target involved increasing the share of renewable energy in its final energy use to 20%, reduce greenhouse gases by 20% and increase efficient energy use by 20%.
After this target was met, new targets for 2030 were set at a 55% reduction of greenhouse gas emissions by 2030 as part of the European Green Deal.
Since the Russian invasion of Ukraine has begun, the EU's energy policy turned more towards energy security in their REPowerEU policy package, which boosts both renewable deployment and fossil fuel infrastructure for alternative suppliers.
The EU Treaty of Lisbon of 2007 legally includes solidarity in matters of energy supply and changes to the energy policy within the EU. Prior to the Treaty of Lisbon, EU energy legislation has been based on the EU authority in the area of the EU common market and environment.
In 2007, the EU was importing 82% of its oil and 57% of its gas, which then made it the world's leading importer of these fuels.
In 2007, only 3% of the uranium used in European nuclear reactors was mined in Europe.
Russia, Canada, Australia, Niger and Kazakhstan were the five largest suppliers of nuclear materials to the EU, supplying more than 75% of the total needs in 2009.
In 2015, the EU imported 53% of the energy it consumed.

The European Investment Bank took part in energy financing in Europe in 2022: a part of their REPowerEU package was to assist up to €115 billion in energy investment through 2027, in addition to regular lending operation in the sector. In 2022, the EIB sponsored €17 billion in energy investments throughout the European Union.
The history of energy markets in Europe started with the European Coal and Steel Community, which was created in 1951.
The 1957 Treaty of Rome established the free movement of goods. Three decades later, integration of energy markets yet hadn't taken place.
The start of an internal market for gas and electricity took place in the 1990s.

History

Early days

The history of energy markets in Europe started with the ECSC, which was created in 1951 in the aftermath of World War II. A second key moment was the formation in 1957 Euratom, to collaborate on nuclear energy. The Treaty of Rome established the free movement of goods, which was intended to create a single market also for energy.
Three decades later, integration of energy markets had yet to take place.
The 1973 oil price crisis and the 1979 oil price crisis
In the late 1980s, the European Commission proposed a set of policies on integrating the European market. One of the key ideas was that consumers would be able to buy electricity from outside of their own country. This plan encountered opposition from the Council of Ministers, as the policy sought to liberalise what was regarded as a natural monopoly. The less controversial parts of the directives—those on price transparency and transit right for grid operators—were adopted in 1990.

Start of an internal market

The 1992 Treaty of Maastricht, which founded the European Union, included no chapter specific on energy. Such a chapter had been rejected by member states who wanted to retain autonomy on energy, specifically those with larger energy reserves. A directive for an internal electricity market was passed in 1996 by the European Parliament, and another on the internal gas market two years later. The directive for the electricity market contained the requirement that network operation and energy generation should not done by a single company. Having energy generation separate would allow for competition in that sector, whereas network operation would remain regulated.

Renewable energy and the 20/20/20 target

In 2001, the first Renewable Energy Directive was passed, in the context of the 1997 Kyoto Protocol against climate change. It included a target of doubling the share of renewable energy in the EU's energy mix from 6% to 12% by 2010. The increase for the electricity sector was even higher, with a goal of 22%. Two years later a directive was passed which increased the share of biofuels in transport.
These directives were replaced in 2009 with the 20-20-20 targets, which sought to increase the share of renewables to 20% by 2020. Additionally, greenhouse gas emissions needed to drop by 20% compared to 1990, and energy efficiency improved by 20%. In included mandatory targets for each member state, which differed by member state. While not all national government reached their targets, overall, the EU surpassed the three targets. Greenhouse gas emissions were 34% lower in 2020 than in 1990 for instance.

Energy Union

The Energy Union Strategy is a project of the European Commission to coordinate the transformation of European energy supply. It was launched in February 2015, with the aim of providing secure, sustainable, competitive, affordable energy.
Donald Tusk, President of the European Council, introduced the idea of an energy union when he was Prime Minister of Poland. Eurocommissioner Vice President Maroš Šefčovič called the Energy Union the biggest energy project since the European Coal and Steel Community. The EU's reliance on Russia for its energy, and the annexation of Crimea by Russia have been cited as strong reasons for the importance of this policy.
The European Council concluded on 19March 2015 that the EU is committed to building an Energy Union with a forward-looking climate policy on the basis of the commission's framework strategy, with five priority dimensions:

Energy security, solidarity and trust
A fully integrated European energy market
Energy efficiency contributing to moderation of demand
Decarbonising the economy
Research, innovation and competitiveness.

The strategy includes a minimum 10% electricity interconnection target for all member states by 2020, which the Commission hopes will put downward pressure onto energy prices, reduce the need to build new power plants, reduce the risk of black-outs or other forms of electrical grid instability, improve the reliability of renewable energy supply, and encourage market integration.
EU Member States agreed 25 January 2018 on the commission's proposal to invest €873 million in clean energy infrastructure. The projects are financed by CEF.

€578 million for the construction of the Biscay Gulf France-Spain interconnection, a 280 km long off-shore section and a French underground land section. This new link will increase the interconnection capacity between both countries from 2.8 GW to 5 GW.
€70 million to construct the SüdOstLink, 580 km of high-voltage cables laid fully underground. The power line will create an urgently needed link between the wind power generated in the north and the consumption centres in the south of Germany.
€101 million for the CyprusGas2EU project to provide natural gas to Cyprus
European Green Deal

The European Green Deal, approved in 2020, is a set of policy initiatives by the European Commission with the overarching aim of making the European Union climate neutral in 2050. The plan is to review each existing law on its climate merits, and also introduce new legislation on the circular economy, building renovation, farming and innovation.
The president of the European Commission, Ursula von der Leyen, stated that the European Green Deal would be Europe's "man on the moon moment". Von der Leyen appointed Frans Timmermans as Executive Vice President of the European Commission for the European Green Deal. On 13 December 2019, the European Council decided to press ahead with the plan, with an opt-out for Poland. On 15 January 2020, the European Parliament voted to support the deal as well, with requests for higher ambition. A year later, the European Climate Law was passed, which legislated that greenhouse gas emissions should be 55% lower in 2030 compared to 1990. The Fit for 55 package is a large set of proposed legislation detailing how the European Union plans to reach this target, including major proposal for energy sectors such as renewable energy and transport.
After the Russian invasion of Ukraine, the EU launched REPowerEU to quickly reduce import dependency on Russia for oil and gas. While the policy proposal includes a substantial acceleration for renewable energy deployment, it also contains expansion of fossil fuel infrastructure from alternative suppliers.
The impact of inflation, particularly driven by surging energy prices, prompted around 35% of firms to spend between 25% and 50% more on energy in 2024, further encouraging investments aimed at reducing energy consumption. This aligns with the goals of the Green Deal, where energy efficiency improvements are seen as key to reducing both emissions and energy costs. ''''''

Earlier proposals

The possible principles of Energy Policy for Europe were elaborated at the commission's green paper A European Strategy for Sustainable, Competitive and Secure Energy on 8 March 2006. As a result of the decision to develop a common energy policy, the first proposals, Energy for a Changing World were published by the European Commission, following a consultation process, on 10 January 2007.
It is claimed that they will lead to a 'post-industrial revolution', or a low-carbon economy, in the European Union, as well as increased competition in the energy markets, improved security of supply, and improved employment prospects. The commission's proposals were approved at a meeting of the European Council on 8 and 9 March 2007.
Key proposals included:

A cut of at least 20% in greenhouse gas emissions from all primary energy sources by 2020, while pushing for an international agreement to succeed the Kyoto Protocol aimed at achieving a 30% cut by all developed nations by 2020.
A cut of up to 95% in carbon emissions from primary energy sources by 2050, compared to 1990 levels.
A minimum target of 10% for the use of biofuels by 2020.
That the energy supply and generation activities of energy companies should be 'unbundled' from their distribution networks to further increase market competition.
Improving energy relations with the EU's neighbours, including Russia.
The development of a European Strategic Energy Technology Plan to develop technologies in areas including renewable energy, energy conservation, low-energy buildings, fourth generation nuclear reactor, coal pollution mitigation, and carbon capture and sequestration.
Developing an Africa-Europe Energy partnership, to help Africa 'leap-frog' to low-carbon technologies and to help develop the continent as a sustainable energy supplier.

Many underlying proposals are designed to limit global temperature changes to no more than 2 °C above pre-industrial levels, of which 0.8 °C has already taken place and another 0.5–0.7 °C is already committed. 2 °C is usually seen as the upper temperature limit to avoid 'dangerous global warming'. Due to only minor efforts in global Climate change mitigation it is highly likely that the world will not be able to reach this particular target. The EU might then not only be forced to accept a less ambitious global target. Because the planned emissions reductions in the European energy sector are derived directly from the 2 °C target since 2007, the EU will have to revise its energy policy paradigm.
In 2014, negotiations about binding EU energy and climate targets until 2030 are set to start.
European Parliament voted in February 2014 in favour of binding 2030 targets on renewables, emissions and energy efficiency: a 40% cut in greenhouse gases, compared with 1990 levels; at least 30% of energy to come from renewable sources; and a 40% improvement in energy efficiency.