Newsletter 03.2019

Dear reader,
Welcome to the third EUROFUEL newsletter of 2019. In this edition, we look at the development of a new vision for the heating industry, the latest progress on the EU Strategy on decarbonisation and the uncertainties related to the upcoming European elections.
As you all know, the energy policy debate at the EU level was recently dominated by the theme of decarbonisation and the measures necessary to foster a greener and more sustainable economy. This is reflected in the ongoing discussions on the EU’s Long-Term Strategy on decarbonisation, which the EU will officially submit to the UN by 2020 as required by the Paris Agreement. On the back of the Commission’s “Clean Planet for All” scenarios, the European Parliament has adopted a position endorsing ambitious greenhouse gas reductions. The Member States, however, are stuck in a stalemate, as the level of ambition differs dramatically between national governments.
In light of these political developments, the heating oil industry is committed to take up the challenge and provide its contribution towards a more sustainable and reliable energy system. Drawing a clear path for the years to come is crucial, especially taking into account the institutional reshuffle in the European Parliament and the European Commission that will take place this year. With these changes ahead it is vital to show policy-makers that the industry is ready for the coming challenges and committed to give its contributions and play a central role in future energy system.
Yours,
Dr. Ernst-Moritz Bellingen

Developing a new vision for heating oil

Heating oil is a reliable and affordable energy source today and can also play a crucial role in the transition phase to innovative and more sustainable technologies tomorrow. Communicating this message and demonstrating how heating oil can contribute, is crucial and for that reason EUROFUEL hosted a roundtable in Brussels on 26 March to discuss the ongoing energy policy developments at the European level and the role that heating oil can play in the future energy mix. Participants included Eurofuel members and representatives from other organisations (FuelsEurope, UPEI and ECFD), representing both the oil refining and distribution sectors in Europe.

After discussing on the EU’s main accomplishments in the energy sphere in the 2014-2019 mandate as well as the expected priorities of the next legislative term – such as the long-term decarbonisation strategy, energy transition and clean air – participants discussed how to position heating oil in these debates. In particular, they exchanged views on how to best update the joint brochure “Heating with Liquid Fuels” released in 2017. The brochure explains the characteristics of heating oil and the advantages it brings to consumers, with emphasis on reliability and affordability. While these two aspects remain crucial, the ongoing transformation of the energy system and the increasing criticism over the environmental performance of conventional fuels are clearly suggesting the need to demonstrate policy makers the potential of liquid fuels in the future. To this end, the update of the brochure will focus on how innovative fuels can be part of the long-term solution and will formulate a series of concrete policy asks aimed at keeping the heating oil industry as part of the solution for the future energy mix.

Title Heating with liquid fuels

 

Decarbonisation Strategy – Incremental progress at the EU level

The European institutions are continuing work on the development of a comprehensive EU Strategy on decarbonisation. While the European Parliament has agreed on a common position on 14 March, the Member States are continuing their discussions in the different Council formation. Finding agreement on the Parliament position was no walk in the park as the process risked coming to a halt as two parliamentary committees (ITRE – Energy and ENVI – Environment) tabled separate resolutions endorsing different levels of ambition and adopting diverging approaches on the decarbonisation strategy. A solution was reached thanks to a compromise crafted by six political groups in the Parliament (EPP, S&D, ALDE, Greens, GUE and EFDD). The text calls for the EU to become climate neutral “as early as possible” and no later than 2050, asking Member States to raise the medium-term greenhouse gas emission reduction target by 2030 to 55% from today’s 40%.

Discussions among the Member States have so far shown a deep divide on the level of ambition and on which technologies should be favoured in the future. While some Member States - including France, Netherlands, Denmark and Sweden - endorse the objective of carbon neutrality by 2050, others think that preserving competitiveness and growth is more important than radical climate policies. This is for example the position of Germany, who showed its skepticism of complete decarbonisation. Similarly, Central European countries, in particular Poland and Slovakia, call for a more gradual transition, due to the countries’ heavy reliance on fossil fuels. These divergencies are reflected in a set of preliminary conclusions that were approved by Heads of State on 22 March. While supporting the broad objectives of the decarbonisation strategy presented by the Commission, the text suggests that in the transition it is crucial to “take into account Member States’ specificities and the competitiveness of European industry”. Work is now ongoing at the technical level to develop a common approach, and Member States agreed to revisit the issue in June 2019. Their position will then feed into the formulation of an official EU Strategy on decarbonisation, which will be submitted to the UN by 2020 as requested by the Paris Agreement.

Uncertainties ahead of the European Elections
By the time the EU submits it decarbonisation strategy, a new European Parliament will have been formed following the European elections taking place between the 23-26 May. The latest projections, based on polls in all Member States, show a significant shift in the distribution of power in the next Parliament. The two biggest groups, the conservative EPP and the social democrats, S&D, are set to lose seats, while Eurosceptic parties in the ENF group will gain support. The current “grand coalition” between EPP and S&D will most likely no longer have a majority in the next Parliament. This means that smaller groups, such as the liberal ALDE and the Greens will gain power, but also groups on the far right. The new allocation of senior posts in the Parliament, such as committee chairs and Parliament Vice-President will see eurosceptic MEPs gain significant influence over the governance of the legislative body. If the result of the election at the end of May is similar to current projections, policy-making in the Parliament will likely become much more difficult and unpredictable. A further element of uncertainty is given by the delay of Brexit and the United Kingdom participating in the elections. This will keep the number of MEPs to 751 as it is today, putting plans to reduce the members on hold until the United Kingdom leaves the EU. The results of the election will be very relevant as they will influence the formation of the next European Commission and the future policy priorities at the EU level.

Projection of seats