Newsletter 1.2020

Dear reader,

Welcome to the first EUROFUEL newsletter of 2020. In this edition, we look at the formation of the new European Commission and the launch of the European Green Deal. The latter puts Europe at the forefront in the battle against climate change proposing a comprehensive set of policies aimed at transforming EU’s economic model.

As often mentioned by European Commission Vice-President Frans Timmermans, the energy transition requires a “paradigm shift” in the ways our economies are structured, and the Green Deal represents Europe’s vision to drive this transformation. The newly elected European Commission guided by Ursula von der Leyen has indeed put the fight against climate change at the centre of its agenda.

The measures proposed under the Green Deal support ambitious emission reduction targets while increasingly promoting renewable energy. It is no secret that this approach puts more pressure on conventional fuels, including heating oil. 2020 will therefore be a year of dramatic change as the European Union will introduce the policy framework setting the basis for the decarbonisation of our economic systems.

In light of these disruptive transformations, it is crucial for the heating oil industry to live up to the challenge by keep developing innovative fuels while demonstrating policy makers – both at national and European level – that these solutions can be part of the future energy system.

Yours,

Dr Ernst-Moritz Bellingen

The new European Commission

After a lengthy and complex process, the new European Commission has been established taking office on 1 December 2019, one month after schedule. The delay has been caused by the European Parliament, who has fully used its scrutiny powers over the nomination of the Commission. Rejecting the designation of the Commissioners designated by France, Hungary and Romania, MEPs forced Ursula von der Leyen to appoint new nominees who were then approved by the Parliament. This therefore led the European Commission to postpone its planned start to early December.

The team pulled together by the Commission President Ursula von der Leyen features experienced politician as well as representatives from the business community. An example is the French Commissioner Thierry Breton. After an experience in the French government as Finance Minister and a successful business career, the Frenchman will be in charge of revamping European industry and promoting the digital economy across the continent. As Commissioner for the Internal Market, Breton will oversee an extensive portfolio, ranging from industrial to space and defence policy. As described in his mission letter, one of the challenges for Breton will be to ensure that all parts of European industry contribute to the objective of a climate neutral economy by 2050. Important to note is also the role that Frans Timmermans will play in the next five years. As European Commission Executive Vice President, the Dutch will be in charge of implementing the European Green Deal, holding therefore a key position in shaping EU’s environmental and climate agenda. While Timmermans will coordinate the overarching framework of the Green Deal, other Commissioners will directly manage some of its components. When it comes to energy policy, this role will be played by Kadri Simson. Formerly Estonian Economic Affairs and Infrastructure Minister, the new Commissioner for Energy is tasked to work on the implementation of energy efficiency and renewable energy legislation as well as promote the deployment and investment in clean energy. Simson will also support Italian Economic Affairs Commissioner Paolo Gentiloni in the review of the Energy Taxation Directive. The new European Commission will therefore pursue a very ambitious climate and environment agenda through a set of progressive policy initiatives.

The European Green Deal

The European Green Deal, presented by Ursula von der Leyen to the European Parliament on 11 December, is the symbol of the European Union’s ambition to fight climate change. Launched only 10 days after the installation of the European Commission, the Green Deal is a comprehensive policy initiative defining EU’s vision and plans to transform European economy for a sustainable future. The Green Deal includes a series of policy measures with a detailed timeline of when they will be proposed.

green deal

One of issues relevant for the heating oil industry is the EU’s objective to increase its climate ambition for 2030 and 2050. In practical terms, by March 2020, the European Commission will propose a European Climate Law enshrining the 2050 climate neutrality objective in legislation. By summer 2020, the Commission will then present an impact assessed plan to increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50% and towards 55% compared with 1990 levels in a responsible way. To this end, by June 2021, the European Commission will propose the revision of a set of legislative measures including the Energy Efficiency Directive and the Renewable Energy Directive.

Another instrument to further promote renewable sources and cut emissions will be the revision of the Energy Taxation Directive. This action has been endorsed also by Member States in early December: gathered in the Economic Council, EU Finance Ministers agreed on a set of conclusions calling  on the European Commission to start a revision of the Energy Taxation Directive. The rationale behind the revision of the Directive is to ensure that the EU energy taxation framework supports the transition towards to climate neutrality. Member States ask to enlarge the scope of the law to new energy products and technologies as well as avoiding to the extent possible specific tax reductions and exemptions. After completing the revision process, the Commission is expected to present a proposal of a new Energy Taxation Directive by June 2021.

Beyond promoting renewable energy and emissions’ reductions, the Green Deal insists also on the importance of supplying clean, affordable and secure energy. In this area, the European Commission will present in 2020 measures to help achieve smart integration promoting the role of renewable sources and produce a guidance to assist Member States in addressing energy poverty. Energy efficiency interventions will be prioritised in this regard, and the Green Deal invites Member States to engage in a “renovation wave” of public and private buildings. To stimulate energy efficiency, the Commission will rigorously enforce the legislation related to the energy performance of buildings, starting with an assessment in 2020 of Member States’ national long-term renovation strategies. In parallel, the Commission proposes to work with stakeholders on a new initiative on renovation in 2020.

To ensure that the transition does not leave specific economic sectors or regions behind, the Commission will present a Sustainable Europe Investment Plan to help meet the additional funding needs. As part of it there will be Just Transition Mechanism, including a Just Transition Fund to be launched in January 2020.

As described above, the European Green Deal will have an impact on all the economic sectors and in particular on conventional energy carriers. While the actual implementation of the measures included in the Green Deal will be extremely complicated and therefore take years, Europe has embarked in a comprehensive transition bound to transform the entire economy. This urges our sector to take bold initiatives allowing the heating oil industry to innovate and live up to the upcoming challenge.