Joint Committee on Transport and Communications debate -
Thursday, 8 May 2014

EU Energy Policy: European Commission

Chairman

I remind members to turn off their mobile telephones. The purpose of the meeting is to engage in a discussion on EU energy policy with Mr. Eric Mamer, deputy head of cabinet in the office of Mr. Günther Oettinger, the EU Commissioner for Energy. The meeting has been arranged as part of Europe Week in the Oireachtas as a means of greater promotion of and engagement with European affairs. A meeting on the topic of European energy policy is particularly pertinent given the committee's proposal to undertake a series of meetings on the possibilities for renewable energy in Ireland. It would be very helpful to place that discussion in an EU context.

On behalf of the committee, I welcome Mr. Eric Mamer. I draw the attention of those attending to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, they are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Opening statements submitted to the committee will be published on our website after the meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. I ask Mr. Mamer to make his opening remarks.

Mr. Eric Mamer

I thank the Chairman. I am delighted to be invited here to present to the committee on European energy policy and, in particular, discuss the links between European energy policy and the Irish context. In view of the time available, I will keep my statement short to leave as much room as possible for debate with the honourable members.

In the invitation the committee sent me, the central issue referred to was the 2030 framework for energy and climate policies. It is indeed topical since the Commission adopted a very important communication on the issue on 22 January 2014, which was only a short time ago. The objective of the Commission's communication was to set out for discussion by Heads of State and Government, the European Parliament, national authorities and parliaments what we consider to be the proper strategy to adopt beyond 2020 looking forward to 2030 in terms of climate and energy policy. Members will remember that in 2008, Heads of State and Government set a framework for 2020.

It set out three targets, one for a reduction of greenhouse gas emissions of 20% compared with 1990, one for the share of renewable energy in European consumption also of 20%; and one for energy efficiency gains compared with a baseline also of 20%. We have now started to gather experience on how policies put in place to reach these targets are functioning and to draw the lessons from that so as to be able to set out the proper framework for 2030.

Hence, following intense discussions in the Commission, the proposal is instead of three targets which are more or less at the same level to have one overriding central target which is greenhouse emission reductions. There the Commission believes that the most efficient scenario in line with reducing greenhouse gas emissions by at least 80% in 2050 is to set the target for 2030 at a 40% reduction compared with 1990 levels.

From that central objective are derived the objectives or targets for the other two areas, or derives an objective for renewable energy. There the Commission proposed to have a target at the level of the European Union of a 27% share of renewable energy in energy consumption. On energy efficiency, for the moment we have not yet set a policy as to whether we should have a target or measures, or a combination of both. However, the communication clearly states that on a path to a 40% emissions reduction we would need to have gains of 20% when it comes to energy efficiency.

These are the kinds of headline figures that are now at the centre of the debate. The member states' parliaments now need to discuss whether this is the appropriate level of ambition and whether this is the appropriate way of going about it because there are significant differences compared with the existing framework to 2020. The central one is that whereas for greenhouse gas emissions we will propose to have binding targets at national level, for renewable energy we will no longer propose to set national targets. We want to see what targets, plans and objectives member states are setting for themselves and adding all those up we wish to reach the 27% renewable energy directive target.

This means that if some member states are very ambitious, others may need to make less of an effort. This recognises that there have been certain difficulties with the current framework. This is because setting a fixed objective by member states for the development of renewable energy has in some instances led to support schemes that are seen as more costly than what could have been achieved based only on strategies that aim at reducing greenhouse gas emissions. This is because we have the ETS market that actually trades these carbon certificates which obviously act as an incentive to produce less CO2 and therefore produce greener electricity, greener heating, etc., which is seen as a natural driver for the increase in renewable energy.

The idea is to focus our attention on greenhouse gas emissions and the rest will be organised in such a way as to reach that central objective. However, why have we said that we need to have at least an EU-level objective for renewable energy? It is because, as the members are very well placed to know, energy is an infrastructure-led business that needs to be organised and planned in particular when it comes to investment. Therefore we cannot leave market actors completely in the dark when it comes to investments that need to be made now for infrastructure that will still be operating in 2030 and beyond. They need to have a clear view of where the European Union is going when it comes to the type of energy that is produced in Europe and hence the 27% renewable energy objective. Why is this set at 27%? It is because in our scenarios 27% is regarded as optimal level of renewable energy required in order to reach the 40% reduction.

Let me add a few words on the other two objectives that are at the forefront of our thinking when it comes to defining the framework for 2030. The first is competitiveness. There have been many complaints from industry and certain quarters of society as to the cost incurred in moving towards this decarbonisation of the European economy and society. Developments outside Europe show that whatever we do there can be developments that lead to an increase in the competitiveness gap between Europe and the rest of the world. This is the whole issue of US shale gas and the effects it is having on US competitiveness and therefore also on investment decisions that are made in favour of sites located in the US to the detriment of European industry.

The second consideration at the forefront of our minds, in particular given the crisis in Ukraine, is security of supply. This is also particularly relevant for Ireland, which is at the top of the league table when it comes to external energy dependency. Having a framework in place that promotes the development of indigenous energy resources can help reduce energy dependency. This is at a time when Europe's own oil and gas resources are progressively declining leaving us increasingly dependent on external energy sources of oil and gas, as we see at the moment in Ukraine, for example, where we can become hostage to geopolitical developments that are largely outside of our control. Developing a policy that allows us at the same time to reduce the energy intensity of our economy and our society and develop our own indigenous energy resources is very positive and needs to be supported.

Another advantage is that it can lead to a shift in expenditure from imports - we spend €1 billion every day on energy imports - to investments. While these investments are often frontloaded and seem expensive at the beginning, in the long run they can lead to significant savings. This is the sort of general philosophy of the framework we have set out. In March the European Council welcomed the Commission's proposal and has set October as a deadline to come to an agreement on the main characteristics of the framework.

I will stop there and I would be very happy to answer members' questions.

Chairman

I thank Mr. Mamer. Could the target of reducing greenhouse gas emissions by 40% by 2030 and the required contribution of the various sectors to do that cause a conflict? Solving one problem may cause another. For instance, it would have an impact on agriculture in Ireland where there is a need for food security and increasing food production.

Could this have a negative effect on development or on maximising the potential for agriculture in Ireland? The need to protect the environment must also be considered, as must the cost of renewable energy to replace the reduction in carbon use. I am sure Mr. Mamer is aware of the significant controversy here currently about wind farms, the height of pylons and whether to put cables under or over ground and the effect the proposed development would have on the environment if it goes ahead as proposed.

Mr. Mamer mentioned the current situation in Ukraine and the Russian supply of gas, and spoke about the need for a long-term structure to avoid the dangers in that regard. Will he outline the danger that exists if the gas is switched off in the morning? What would the implications be for Europe and for Ireland?

Mr. Mamer also gave the figures for the targets. How does Ireland rate compared to other European countries in regard to meeting its targets for the reduction in greenhouse gas emissions?

Mr. Eric Mamer

Let me start with the last question first. I understand that Ireland is doing very well when it comes to the target on renewable energy and has overshot the first intermediary target which was set at 5.6% of renewable energy. Ireland has a very ambitious target for renewable energy by 2020, of 16% of consumption, starting from quite a low base. The road ahead poses significant challenges and will require significant investment, but for the moment the path seems to be positive.

It is slightly less so when it comes to meeting the target on greenhouse gas emission reductions, particularly in areas outside of the emissions trading system, ETS sector, namely, in all areas not linked to energy production and industry. Projections up to 2020 show that Ireland will have a slight reduction compared to the base line, but not as much of a reduction as required to meet the target. Ireland is not alone in this predicament. Approximately half of the member states are in this situation, based on the latest data available. This shows the difficulty in terms of organising the whole system in such a way that it produces the required results

In regard to the role of agriculture, it is clear this is a sensitive issue, particularly for Ireland. Agriculture is probably the most difficult area across the board when it comes to determining the requirements needed in the agriculture area and what agriculture can bring to the overall reduction in emissions. According to the data I have, the agricultural sector would have to reduce its emissions by approximately 25% by 2030 in order to contribute its share to the overall reduction in emissions. This is a significant contribution, approximately the same reduction as required from the industry sector. It will take quite an effort to achieve this.

I believe the debate will continue over the coming months as to what is required in order for this to happen and how we can take into account the special circumstances of specific countries with a large agricultural sector in the context of this policy and the impact it has on the overall target. I have not come here with a solution, but have come to make a clear statement that we are fully aware of the centrality of this theme when it comes to the discussion with Ireland. I am sure that in the coming weeks - as there will now be a series of meetings with Irish representatives and the European institutions - the subject will be thoroughly debated.

On the pros and cons of renewable energy, let me make it clear that the debate on pylons is not limited to Ireland. The country my Commissioner knows best, Germany, is also in the middle of a lively debate regarding the transmission lines that will be required from the North Sea, where there is the best potential for offshore winds, to the main consumption centres in the south of Germany where the big industrial companies operate. There is heated debate there on the requirement to build these transmission lines, with some constituencies, such as Bavaria, saying they do not want wind energy from the north, but want to produce their own energy.

My Commissioner's view on this is very clear. We need to have both decentralised and centralised energy production and the relevant grids that go with them, in particular in countries that have a significant share of industry. However, if we do not have transmission lines, every region must be autocratic when it comes to energy production, but that will not work on the European scale. This does not mean there is no space for local energy production. This is something we promote, particularly when it comes to heating or photovoltaic panels on roofs in regions with a favourable environment. There must be a rational effort to ensure we produce renewable energy where it is available and competitive in the medium term and then bring it to the consumption centres.

That said, we also recognise that the voice of local communities must be heard. This is foreseen in Ireland's national legislation and in the European legislation. We believe debate must take place in a national context in order to determine the best choice for the country, because there is no one size fits all solution for this. In certain cases, it is a question of money, particularly in the context of deciding whether a country is willing to invest the extra funds required in order to bury the lines. In some instances this is not a technical possibility and in some there may be different ways of organising energy production so as to avoid it.

We do not have a standard answer. We recognise the difficulty of the issue, but we also say that if we are serious about large scale production at European level, it is clear we are going to have to use the renewable energy potential where it is. When we look at the map of Europe, we see this is in part on the outer rim or offshore, off the shores of Ireland, Germany, the UK, France, Spain, etc., while consumption is very much inland. Therefore, we have to organise the flow, particularly when it comes to energy.

In regard to the crisis in Ukraine and the implications for the European Union and Ireland, even in the coldest moments of the Cold War, Russian gas continued to flow to Europe. Therefore, we are working on the basis that the Russian Federation will do everything it can to remain the reliable partner it has been when it comes to delivery of energy to Europe. For the moment, despite all the difficulties in Ukraine, there has been no interruption of gas flow to Europe. However, we believe we need to be prepared. Since the last crisis in 2009, when there was some impact on some member states, we have been doing considerable work to reinforce interconnection in Europe so as to allow gas to flow, not just from the east to the west, but from the west to the east.

Six of our most vulnerable member states depend 100% on Russian gas. As a result, they require access to new sources of gas. This can only happen if the pipelines we have in place allow for the transfer of gas - be it liquified natural gas, LNG, or Russian gas that has been sold to Germany or Poland and then transferred on to the south east of Europe or the Baltics - from west to east.

I am less knowledgeable with regard to from where Ireland gets its gas. I believe, however, that it may come in part from Norway and that some of it takes the form of LNG.

Chairman

At what time is Mr. Mamer obliged to depart?

Mr. Eric Mamer

I must leave by 1.15 p.m.

Chairman

That is fine.

Deputy Michael Colreavy

I welcome Mr. Mamer and Mr. Claridge and thank them for attending. I am Deputy Michael Colreavy and I am a member of Sinn Féin, which is one of the Opposition parties. I represent a small constituency, Sligo-Leitrim, in the north west. The constituency will soon comprise Sligo, Leitrim and parts of Donegal and Cavan, all of which are under the most immediate threat from fracking. If they have time at some point, I would love our guests to visit the region to witness its beauty. When they see it, they might well ask why it is being considered as suitable for fracking. I hope Mr. Mamer and Mr Claridge will take up my invitation because they would be most welcome.

It sometimes seems that there is a disconnect between the EU's stated strategy and the decisions and actions taken by the Commission and individual member states. In that context, let us consider the position with regard to climate change targets. If only 25% of the oil and gas resources that have been identified were to be extracted and used, we would breach the targets we have set in respect of climate change. Despite this, exploration companies are being paid to seek out new sources of gas and oil. Climate change is not just a European problem, it is a global one. As a result, worldwide action is required. I am of the view that the EU could be a leader in the context of ensuring that such action is taken. If we are seriously concerned about the welfare of future generations, there must be a more logical link between the targets set by the EU and individual member states and the actions and choices we make. The nub of the problem is not potential sources of supply, rather it relates to distribution and control of costs. I do not believe we are making sufficient efforts at present, particularly in the context of non-renewable sources. I would appreciate our guests' opinions on that matter. The EU has a responsibility to the citizens of its member states to control the costs they must bear in the context of energy prices.

The second question I wish to ask is similar, but not identical, to that posed by the Chairman. Ireland is considered critical, from a clean, green perspective, in terms of its contribution - both within the EU and on a worldwide basis - to food security. We are extremely proud of that fact. Is it wise for the authorities here to even consider allowing hydraulic fracturing to proceed, particularly if there is a chance that it might threaten the reputation of our agrifood business? We spent years building up that reputation and, as already stated, our agrifood sector is critical to food security throughout Europe and across the globe. No one would seriously consider allowing fracking on the Amalfi Coast, particularly as fracking would lead to it becoming an industrial wasteland. The area in which I reside is Ireland's Amalfi Coast but, unfortunately, without the sunshine and with a bit more rain. However, we have nice green grass there.

I understand the EU Commission recently signed a comprehensive trade agreement. It may be an unintended consequence but that agreement appears to make it easier for energy companies to take legal action against countries which seek to protect their citizens and environmental rights from potentially damaging oil and gas extraction. One company has already taken action against a state in Canada which was seeking to protect citizens' rights. Was the EU Commission aware of that risk when the trade agreement was signed? If, as appears to be the case, that risk is real, is there any scope for the EU to close the loophole in the agreement even though it may have already been signed?

On greenhouse gas emissions, one of the reasons Ireland has a good reputation for food is because cattle here are fed on grass. We should not be penalised for doing what we do well. We should be penalised if we make bad choices and decisions but we should not be penalised for rearing grass-fed cattle which are much sought after throughout the EU and the rest of the world.

Chairman

If Mr. Mamer answers those questions, I will then allow everyone else to make their points in order that we might ensure that he leaves on time at 1.15 p.m.

Mr. Eric Mamer

I thank the Chairman. On fracking, the exploitation of shale gas, shale oil, etc., I wish to make it crystal clear that the treaty foresees that it is a prerogative of member states to decide what sources of energy they wish to exploit or not exploit. It is, therefore, absolutely not in the power of the Commission to inform a member state that it either must or must not exploit shale gas. There are two European countries - France and Bulgaria - which have permanent bans in place in respect of any sort of fracking. The Commission is not really in a position to answer questions on this matter. In view of the fact that different member states have different attitudes to the opportunities presented by the exploitation of shale gas, the Commission made a recommendation to member states - on the same day on which it adopted the 2030 communication - on what it believes to be best practice when it comes to the overall environmental assessment of possible shale gas and oil exploration and exploitation. I should actually refer to the possible use of fracking technology because it is that on which the recommendation focuses in addition to what should be done when specific projects are considered in terms of environmental impact assessment, the provision of information to the public on the sorts of chemicals that might be used, risk assessment, etc.

It is clear that this is a matter for national debate. We are not at all saying that shale gas is the solution to Europe's problems. The Commissioner for Energy has stated that in view of declining North Sea reserves and the EU's increasing dependency on energy - particularly gas - from external sources, there is scope for well-managed demonstration projects in areas where there is acceptance for such projects among the locals in order to determine both the potential of shale gas and the conditions under which it might be exploited at a later stage.

We are not in the business of telling member states whether they should go for nuclear energy, shale gas, etc., and this should be an entirely Irish discussion.

There is an issue of EU responsibility for control and distribution of costs. On the same day we adopted the framework, we also adopted the first ever report on the price or cost of energy in Europe, based on the best available data at our disposal, both for households and for industry. We considered the energy component, transmission and distribution costs and taxes. I invite committee members to read the report as it demonstrates clearly that apart from gas for industry, where there is a link between declining consumption and declining costs, for electricity in households and industry, as well as gas for households, consumption has stayed relatively flat but costs have been increasing. That is not because the energy component is more costly but a result of transmission and distribution costs, as well as related investments. In certain instances, taxes have increased. We have put these findings squarely in front of national governments at the Council-----

Deputy Michael Colreavy

Could we get a copy of that report as I do not recall seeing it?

Mr. Eric Mamer

Of course. I have a copy and can provide the reference after the meeting.

Chairman

We can circulate it.

Mr. Eric Mamer

It is correct that there is a very important debate to be had in this respect, and this refers back to the comment I made before of how we can ensure that we shift the financial burden from imports of energy - money going to suppliers outside the EU - to investments which in the short term may seem more expensive but will benefit European industry and create jobs. In the long run that will lead to better controlled costs for industry and citizens.

Another question concerned the comprehensive trade agreement with Canada but I admit I am not a specialist in trade questions. I do not have the exact clauses of the treaty. We will revert to the committee in writing on that.

Deputy Noel Harrington

I thank Mr. Mamer and Mr. Claridge and I welcome them before the committee. In reviewing the current targets to 2020, how much of an improvement has come about as a result of the slower economic activity throughout the European Union, as well as technological advances? I refer particularly to the reduction in greenhouse gas emissions, more renewable energy use and energy efficiency. How is better technology helping this issue? Do the witnesses have an opinion on the cost of investments? Is there a good return on investments in those areas?

With regard to the strategy to 2030, binding targets have been set to reduce greenhouse gas emissions and non-binding objectives have been set for renewable energy. That places Ireland at somewhat of a disadvantage, particularly when considering the effect of binding targets for greenhouse gas emissions in the agricultural sector. That sector will have the greatest difficulty in trying to achieve targets of reductions of up to 20%. In other countries in the European Union, a greater proportion of greenhouse gas emissions may emanate from energy and transport, and they can be dealt with more easily through greater use of technology and investment from Horizon 2020 European funding, for example. In agriculture it would not be that easy to achieve that target. Is there any conflict between the EU Commissioner for Energy and the Commissioner responsible for agriculture in this respect?

The figure of €1 billion per day has been mentioned for the importing of energy to the European Union, and Ireland would be at the top of the list of importing countries because it is vulnerable to shocks. We require greater investment in renewables, energy efficiency and a reduction in emissions. Ireland will be one of the more difficult countries in which to achieve those goals.

Deputy Helen McEntee

I thank the witnesses for the presentations. It is logical to set targets. Renewable energy is self-explanatory and although fossil fuels will not disappear in this or the next generation, I would like to think we can plan for the future. It was indicated that it is no longer proposed to set member state targets but if something is not mandatory, people may not put in the same effort. Are there any provisions in place if member states do not commit fully to this process? What if everybody decides not to bother?

The Chairman mentioned wind turbines and pylons. Unlike Deputy Colreavy, there are no proposals for fracking in my area but there is a proposal for 400 kV lines and wind turbines two to three times as high as any we have yet seen in the country. Many members of the public are against this but what is the European opinion on this? The figure was mentioned of €1 billion per day spent on energy imports. Does that relate mainly to renewable or non-renewable energy? If Ireland is to reach the 2020 targets, will we see much of a saving in that cost? Will the money to be spent on infrastructure cancel out such savings in the long run?

Deputy Ann Phelan

I welcome the delegation. There is no doubt that the energy area is complex, stretching across other sectors that not only make up our economy, but even our society. I will touch on points raised by other Deputies by referring to the setting of targets, and particularly non-binding targets on member states. Rather than having non-binding targets, it may be better to set realistic targets which could be really achieved, rather than setting them so high as to cause much debate or deliberation, meaning the issue must be constantly revisited. Perhaps we could lower the targets slightly to achieve a realistic aim. With regard to pylons, there is a significant-----

Chairman

I do not wish to interrupt but there is a vote ongoing in the Chamber. Could the Deputy put her questions as Deputy Griffin also has some questions?

Deputy Ann Phelan

Yes.

My difficulty is that the citizens themselves do not feel part of the debate about climate change, renewable energy targets and so forth. They think this is the preserve of big energy companies and big developers who are coming in and cannibalising their environment for big profits. That is where the argument about the infrastructure is being lost. Individuals in their own homes do not make the connection between turning on the light switch and where the energy comes from. They think there is somebody off in the distance making a big profit from this at their expense. I am not sure how we get that across the line.

I also ask the witnesses to give their opinion on the nuclear industry in the context of climate change. Apparently nuclear power is now being viewed as one of the quickest, most efficient ways of reducing our emissions.

Deputy Brendan Griffin

The year 2030 is 16 years away but 16 years ago, in 1998, a lot of the technologies that we are using now were not even known about. Do the witnesses expect that new technologies yet to be invented will play a significant role in the future? What will that mean for Ireland vis-à-vis other European countries in terms of opportunities?

Chairman

I am afraid we have only two minutes remaining as a vote has been called in the Dáil. Perhaps the witnesses could send on some answers if they cannot provide them now.

Mr. Eric Mamer

I think we can be quick. In terms of new technologies, these will be required if we are to reach our objectives, particularly in the area of energy storage. There cannot be vast amounts of renewable electricity if there is no storage system to balance out the intermittency. We have research programmes that are looking into this area as well as into new generation technologies. Marine power in particular is an area where Ireland will certainly have a role to play.

The setting of realistic targets for member states is a central issue. We are not in the business, I hope, of setting unrealistic targets. We believe that a 40% reduction in greenhouse gas emissions and a 20% increase in renewable energy can be achieved if we make the proper investments. There is a clear link between the level of ambition one sets and the level of investment. Had we not set such targets, it would be a free for all. If what member states propose does not add up to the ambition level then the Commission will reserve the right to step in and negotiate with the member states in order to have them set targets which are compatible with the EU-level objectives.

On nuclear energy, as with fracking, the Commission does not decide; member states make those decisions for themselves. About half the European Union is in the business of nuclear energy with the other half not involved. It is clear that in certain countries like the UK and France it is seen as a major source of low carbon energy and those countries are pushing forward with that. We just want to make sure that it takes place in the best possible conditions.

Deputy McEntee asked about the €1 billion spent per day and that is mainly for oil, gas, coal and so forth. Renewable energy up until now has mainly been produced and consumed locally. This issue is very well known in Ireland in the context of the midlands project, for example. On the EU's role in terms of public acceptance, it is a very difficult debate. Some citizens are really starting to feel the pinch, as we saw in the UK over last winter and as we see in southern parts of Europe which are experiencing more and more droughts. It is a question of how we collectively, that is member states and the Commission, can make the clearest possible argument on the long-term consequences. I agree that it is a very difficult debate to conduct in the midst of a deep economic crisis when peoples' attention is focused on other matters.

Chairman

I apologise but we must conclude now. If Mr. Mamer wishes to send on further details to the committee, he is welcome to do so. This committee will be preparing further reports on the issue of energy and will probably have further contacts with the Commission in the future. I thank Mr. Mamer and his officials for being with us today. We have had a very engaging and informative debate.

Mr. Eric Mamer

I thank the committee for the invitation and am happy to have had the opportunity to engage with members today.

Chairman

I would also like to thank Mr. Jonathan Claridge for attending. The meeting is now adjourned.

The joint committee adjourned at 1.05 p.m. until 9.30 a.m. on Wednesday, 14 May 2014.