Blog entry

Western Balkans: EUR 1 billion in EU funds to tackle the energy crisis – with gas?!

During a tour of the Western Balkans last week and at the Berlin Process Summit on 3 November, President von der Leyen made a series of statements announcing a total of EUR 1 billion in grants for the Western Balkans to help tackle the energy crisis.

The Commission has pledged to provide EUR 500 million budget support by January to support households and small and medium sized enterprises to survive energy price increases and their impact. In addition, the Commission has promised another EUR 500 million for energy diversification, renewable energy generation and gas and electricity interconnections through the Western Balkans Investment Framework.

The first question is whether this is new money at all, or whether it’s just a re-labelling of the EUR 9 billion already promised to the region as part of the Instrument for Pre-Accession. This has yet to be clarified.

It’s also unclear why no funds were announced for Montenegro, and whether funds approved in such a hurry will really be used as effectively and strategically as possible.

But whatever the source of the funds, it’s unbelievable that President von der Leyen is yet again promoting fossil gas in the Western Balkans. Thirty-six civil society organisations working in the Western Balkans have already written to her this year specifically asking the Commission to stop doing this.

The Western Balkans are not as dependent on gas as most of the EU so preventing more gas lock-in in the region is an absolute must. The idea that gas is somehow necessary as a stepping stone to decarbonisation is the product of extensive lobbying by the gas industry, not a technological or economic reality.

Gas is as much a fossil fuel as coal. It will need to be phased out in the next couple of decades, so there is no point in building expensive new gas infrastructure now. The region’s experience with coal shows that once a certain fuel becomes entrenched in the energy mix, it takes decades and decades to move away from it.

Russia’s brutal invasion of Ukraine has once again underlined that increasing reliance on imported fuels — especially from authoritarian regimes like Azerbaijan’s — makes no sense. It’s unfathomable that the EU hasn’t learned this lesson by now.

In addition, much of Azerbaijan’s gas infrastructure is partly owned by Russia’s Lukoil, so this also brings tax income and potentially sensitive information for Russia.

The European Commission often claims that gas infrastructure in the Western Balkans could be used for renewable gases in the future, but so far these are fairy tales with no evidence or studies to back them up. There will never be enough affordable renewable gases to fill large gas networks and hydrogen anyway requires different technical standards than fossil gas.

EUR 1 billion is very little even to tackle the immediate crisis with, if we look at the billions already spent on electricity imports (e.g. Serbia). If it is spent on investments which will really help households such as rooftop solar, housing insulation and heat pumps, or on tackling electricity distribution network losses, it can help. But the EU simply must stop promoting gas in the region if it wants to have any credibility in advancing a sustainable energy transition.

Europe cannot be “REPowered” if citizens are not at the centre of the transition

On 9 November, members of the European Parliament (MEPs) in plenary will vote on the European Commission’s proposal to revise the Recovery and Resilience Facility (RRF) regulation to integrate REPowerEU chapters into the existing recovery plan. The vote will be crucial in determining the direction of the energy transformation in the EU and will have a huge impact on people’s lives; while institutions are negotiating the details of the revision, the energy crisis is already affecting citizens, who are struggling to cope with the very high cost of living all around Europe.

However, it seems that once again citizens will have practically no voice whatsoever in the discussions over which investments and reforms will be enacted under REPowerEU. Concerning transparency and openness, the European Commission’s proposal for the new chapters simply replicates what was already written in the RRF regulation: vague and weak provisions on stakeholder engagement and consultations, which enabled member states to make important decisions behind closed doors, without opening plans up to public scrutiny during the preparation of the recovery plans.

Together with other civil society organisations, CEE Bankwatch Network condemned this growing tendency and called for action in a letter to the European Commission in May 2022 asking the EU to acknowledge its responsibility as a proponent of democratic governance and to open the room up for participatory democracy. Promoting a bottom-up approach and involving citizens, cities and regions is essential for moving forward to a green and just transition of our economies and societies. Despite this, we are not witnessing any positive development at the moment: REPowerEU, as it is proposed now, is another big step back for citizens’ involvement and democratic governance.

Aside from the European Commission’s proposal, the position of the Council of the EU is even more alarming. On 4 October, ministers agreed to remove any reference to consultations with stakeholders. Although we expect it to be amended in the negotiations with the parliament, this position is worrying and dangerous, as it removes democratic accountability.

What we are witnessing today is the compromise of democracy for the sake of rapidity. However, the European Parliament has the chance to reverse this trend and give the public a voice in the discussions in November. MEPs should look back at examples of successful participation during the preparation of the recovery plans, like in Bulgaria, where pressure from civil society organisations led to the removal of a very harmful measure: the coal-to-gas conversion of the Maritsa East 2 power plant.

For now, the text adopted by the committees for budgets and economic and monetary affairs on 25 October sends signals of hope; MEPs on the committees amended the proposal, adding mandatory consultations with partners and a reference to the Code of Conduct on the Partnership, which is one of the cornerstones of the Cohesion Policy. This is the only way forward: mandatory interaction with citizens and the compulsory establishment of monitoring committees.

When the 9 November plenary comes, it will be time for civil society’s voice to be heard and for REPowerEU to be fully opened up to participatory democracy. In the context of the overlapping crises that are affecting European society, institutions cannot continue to ignore people’s concerns. It’s up to the whole European Parliament to make the right move.

Energy crunch underlines the urgency of overhauling Romania’s energy plans

Like people in many other countries across Europe, Romanians are currently faced with surging fossil gas and electricity prices. Fighting to keep energy bills in check, the Romanian government intends to invest big time in new fossil gas infrastructure with the help of EU public funds. The problem is that we cannot afford to deepen our dependence on fossil gas – in Romania or elsewhere – if we want to maintain a decent standard of living in the future and fight the climate crisis.

Volatility in the energy sector, especially the gas and oil market, has broken records this year, and there’s no certainty as to when things will stabilise. Fossil gas prices in European states have increased six fold and, yet, for the foreseeable future countries are continuing to plan new fossil gas-based projects. All this while the European Commission’s latest plans in Fit for 55 and REPowerEU are meant to significantly decrease gas consumption at the European level.

We find ourselves at a crossroad of crises – energy, economic, geopolitical and environmental – and there are solutions that can address all of them. But cementing the dominant role of fossil gas is certainly not the way out of this mess.

The Romanian government has committed to paying EUR 4 billion by March 2023 to reduce citizens’ electricity and gas bills. The very same government is planning further investments to step up fossil gas exploitation, expand the distribution network and increase electricity production from gas.

If all of these planned projects go ahead, they will cost at least EUR 4.5 billion in EU funds and Romanian public money in the coming years. Most of these projects could only materialize after 2026 and would be in operation for 25 to 50 years. They would eventually encourage more gas consumption and risk a fossil gas lock-in, not only harming Romania’s nature but also worsening the climate crisis.

Investment	Financing programme	Budget (EUR million)
6,605 kilometres (km) of distribution network	Governmental programme for local development	1,536
1,870 km of gas and hydrogen mix distribution network	Recovery funds	400
300 megawatts (MW) combined heat and power (CHP) gas plant	Recovery funds	300
850 MW gas power plant	Modernisation Fund	253
475 MW gas power plant	Modernisation Fund	167.5
BRUA pipeline phase II	5th PCI list/Connecting Europe Facility	446
Gas storage	5th PCI list/Connecting Europe Facility	30
Gas storage	5th PCI list/Connecting Europe Facility	123
CHP power plant	Sustainable development operational programme	10
1,437 km of gas and hydrogen mix distribution network	Sustainable development operational programme	323.4
Neptune Deep exploitation share of public company	Participation of public company, possible EUR 16 billion of investment from Romgaz + OMV-Petrom	1,000
		4,588.9

Major planned gas projects in Romania using public funds

Investments encouraged by loopholes

At the EU level, the European Commission is caught between funding new gas projects and convincing countries to turn down their thermostats. The REPowerEU package, which was put forward upon Russia’s invasion of Ukraine, stipulates a 15 per cent voluntary reduction in gas consumption, with provisions to reduce Russian gas consumption by two-thirds by the end of 2022 and phase it out completely by 2027.

The European Commission has been arguing that the REPowerEU strategy would facilitate the diversification of fossil gas sources and should not lead to lock-in or future stranded assets. These plans also include a medium-to long-term focus on expanding wind, solar and hydrogen capacities intened to replace fossil gas consumption. Furthermore, a steep decrease of EU gas consumption is high on the Commission’s agenda.

That said, solutions should have been implemented by now, not least given that this crisis has been lasting nearly a year. More pertinently, granting space for fossil gas in almost every European funding programme has allowed Member States to make the easiest choice. Romania is just one example; Many of the EU funds in central and eastern Europe contain new fossil gas investments, contradicting the EU’s plans to expand renewables and reduce fossil fuel consumption.

Plans for the expansion of the fossil gas network will make us even poorer, given rising prices and the instability of the gas market. New infrastructure could push even more people into energy poverty without solving any of the crises we are facing.

Rather, Romania needs to prioritize investments in renewable energy. Recent plans have added an extra 7 gigawatts (GW) of installed capacity in renewable energy by 2030, but according to experts this needs to be at least 10 GW to reach the new proposed European target of 38 per cent renewables, and even more to achieve the 45 per cent proposed in REPowerEU (from the current 30.7 per cent in the National Energy and Climate Plan). Furthermore, implementation of these plans will require much greater ambition and capacity than Romania has shown for now.

Energy efficiency in building should also be prioritized. A study shows that eight out of 10 buildings in Romania need renovation, while the authorities are planning to insulate 18 per cent of the building stock by 2030. The country already had an ambitious energy efficiency target of 40 per cent, which will need to be ramped up as per new provisions in the REPowerEU strategy.

But the biggest source of energy loss in Romania is actually district heating. One third of the country’s heating plants are more than 50 years old and require major modernisation to reduce heat waste, while some still use polluting heavy oil.

We cannot afford two energy transitions. The Romanian government should focus on reducing energy consumption by insulating buildings, especially for citizens on the brink of energy poverty, improving energy efficiency in industry and directing more funds to heating using renewable energy. This doesn’t mean a decrease in the quality of life. On the contrary, revamping Romania’s energy system will provide cleaner air and better living standards while making sure we do not burn more fossil fuels.

The key fact remains that the sun is setting on oil, coal and fossil gas. Renewables have already become the cheaper option, while fossil fuel prices for gas in particular have proven extremely volatile, and their environmental costs only continue to rise. Romanian policymakers must step up the transition to a sustainable economy by investing in sustainable solutions, new technologies, and energy and resource efficiency. Fossil gas should not be expanded, but rather reduced and replaced with smart, climate-proof solutions to make Romania more resilient and prosperous. Now is the time to make the right choices.

Why we need to invest in electric urban transport while reconstructing Ukraine

For this reason, each attacked or liberated city has immediately started recovering its transport infrastructure. However, to successfully rebuild this infrastructure, municipalities are in dire need of financial support.

As of 1 June 2022, the country’s transport sector needed an estimated USD 74 billion, which is the highest amount needed in any of the major sectors for reconstruction, according to the World Bank’s Rapid Damages and Needs Assessment. These numbers would be even higher in the light of the recent events.

Ukraine’s 2030 National Transport Strategy envisages a full transition to electromobility. Private cars are the biggest polluters in Ukrainian cities, responsible for as much as 84 per cent of air pollution. Despite that, low-carbon transport was not a priority for the Ukrainian national and municipal governments before the war started. This tendency has also been visible during the ongoing reconstruction efforts. In May, the Kharkiv’s city council allowed the partial dismantling of the tram line to extend traffic lanes for cars. So far, only five cities have developed and adopted sustainable urban mobility plans (SUMPs) to raise the attractiveness, safety and security of walking and cycling.

The Draft Ukraine Recovery Plan: Recovery and development of infrastructure presented in Lugano on 4-5 July 2022 also does not sufficiently address electric urban transport, cycling and charging infrastructure for electric vehicles. On the contrary, the plan is centred around automobile traffic, supporting further dependency on fossil fuels and funnelling money into the road sector. According to Ukrainian transport expert Viktor Zagreba, the proposed plan is not in line with the EU Green Deal or the EU Smart and Sustainable Mobility Strategy.

Though on average, 50 per cent of Ukraine’s urban dwellers commute via public transport, the sector has been strongly underbudgeted and neglected, which has led to a significant deterioration of the services. However, safety, accessibility and air pollution in cities will be among the questions that war refugees will consider when deciding whether or not returning home. And all these questions lead back to the sustainability and reliability of municipal transport.

Due to the latest missile strikes, targeting mainly objects of critical energy infrastructure, Ukrainian authorities were forced to implement urgent energy saving measures. These include saving during peak hours, scheduled energy cuts and a limited use of electric public transport. While these urgent measures are well-founded now, such considerations should not compromise the long-term reconstruction of Ukraine’s urban transport system.

When considering support for the reconstruction of Ukraine’s urban infrastructure, foreign investors and donors should meet their climate commitments in terms of carbon neutrality, reflecting the green reconstruction and green principles developed by the Ukrainian civil society. Therefore, they should give the green light to electric public transport projects.

With the help of international investors and donors, Ukraine has a unique chance to build a new and comfortable urban transport system which will also make it independent from fossil fuels imported from Russia.

Bankwatch’s new video explains why electric urban transport should be a priority in Ukraine’s cities reconstruction. The city of Chernihiv is an example of how Ukrainian cities are recovering their public transport following massive destruction. The investment needs for transport reconstruction are high but can afford cities a unique opportunity to rebuild clean, green, comfortable and attractive cities.

Albania’s draft renewables law must support small producers and end incentives for hydropower

After years of providing renewables incentives only for hydropower, in 2017 Albania changed its legislation to introduce an auctions and premiums system and widen support to other technologies. It’s now updating its legislation and recently held a public consultation on a new draft law on renewable energy.

The draft contains some welcome features, such as a target for solar water heaters, but leaves too many details unclear, particularly on technology choice and the role of households and small businesses in the energy transition.

Time to stop supporting climate-vulnerable hydropower

It’s understandable that the draft law intends to leave flexibility for adjusting the scheme but it would be appropriate already at this stage to clearly exclude hydropower from receiving renewable energy incentives.

Albania is far too dependent on climate-vulnerable hydropower, which generates almost 100 per cent of domestically produced electricity, but most years still leaves the country dependent on imports. Despite adding more than 600 MW in large hydropower plants in the last decade, average generation between 2010 and 2020 barely increased due to increasingly unpredictable rainfall.

Graph showing Albania's electricity mix — Source: International Energy Agency

For years, Albania’s support scheme only supported yet more hydropower, at huge cost. According to data from the Energy Regulatory Authority (p.123), in 2021 Albanian electricity consumers paid out more than EUR 118 million to small hydropower producers and EUR 19 million more under a power purchase agreement for the large Ashta hydropower plant. This might seem like peanuts compared to Western European incentives schemes, but it’s a massive sum for a cash-strapped country and by far the highest cost in the region.

It is therefore time to redress the balance and prevent even more public money being spent on propping up climate-vulnerable hydropower while solar, wind, housing insulation and heat pumps continue to lag behind.

Do small plants need to compete in auctions?

Since 2014, EU State aid guidelines for the energy and environment sectors have stipulated the need to move to a more competitive and cost-effective incentives system for renewables, based on auctions to establish the lowest possible support prices. Electricity is then sold on the market and when the price gained doesn’t reach the bidding price, the producer receives a payment from the renewable energy operator to make up the difference. Only the very smallest plants are exempt from this approach, as it’s unrealistic for them to bid competitively in auctions, so they may continue to benefit from feed-in tariff schemes where the renewable energy operator purchases all their electricity at a price fixed in advance for a set time period (12-15 years in the Western Balkans).

As a signatory of the Energy Community Treaty, Albania too has to abide by these rules. However, its draft law on renewables doesn’t seem to differentiate between small and large plants. It doesn’t state whether plants under a certain capacity are exempt from participating in a competitive process.

In the EU the threshold is 1 MW according to the Climate, Energy and Environment State Aid Guidelines (CEEAG), except for those owned by small and medium enterprises. But it’s not clear whether Albania is planning to exempt plants below this threshold from participating in auctions or set up special auctions for them or what. If no special auctions are planned, it’s not clear what measures will be taken to ensure that small producers can benefit from support schemes at all. Or perhaps they are expected only to become prosumers with net billing, and not receive any price support at all?

The feed-in tariff phase-out needs to be clearer

In order for a premium system to work properly, a functional day-ahead electricity market is needed. Albania does not yet have this, so is taking an interim step of maintaining feed-in tariffs even for larger plants until the day-ahead market is established, but with the important difference that the price to be paid to producers will be established via auctions. The idea is that once the day-ahead market becomes functional, the power purchase agreements will be converted to Contracts for Difference and the feed-in tariff scheme will become a premium scheme.

This might be acceptable for now, but the draft law doesn’t clearly differentiate between the interim scheme and the future scheme. Unlike the EU’s CEEAG, it doesn’t prohibit feed-in contracts for plants over a certain capacity, even once the day-ahead market is functional. According to paragraph 123 and footnote 70 of the CEEAG, the threshold is now 400 kW, decreasing to 250 kW by 2026, so plants larger than this should not be allowed to receive feed-in tariffs once the day-ahead market is up and running.

The approach of continuing with competitively set feed-in tariffs even for larger plants and then converting them to Contracts for Difference may be acceptable in the short term, but only if clear deadlines are set. If a functional day-ahead market is not in place in a year or two, this new scheme needs to be reviewed anyway to check on its cost and effectiveness.

There also needs to be a clear obligation to establish the feed-in tariff price via a competitive process, at least for plants above the threshold – and even then, the question remains whether plants below the threshold can get feed-in tariffs at all and if so, how?

Heading the wrong way on bioenergy?

The draft law obliges fuel suppliers to ensure that Albania meets a target for renewable energy in transport. However, while biofuels in transport were part of the EU’s 2020 targets, this policy has turned out to be counterproductive. Increased demand for food-based biofuels requires more agricultural land. Since most agricultural land is already being used globally, new areas have to be found, which leads to deforestation, releasing tonnes of greenhouse gases. In some cases, these emissions are so high that some biofuels lead to higher greenhouse gas emissions than the fossil fuel they replace, when taking into account the whole life cycle of the crop. This is the case for biodiesel made from vegetable oils such as rapeseed, palm oil, soy and sunﬂower.

The EU’s 2018 renewable energy Directive therefore limits crop-based biofuels to the levels used by each EU member state in 2020 — a de facto freeze. The EU will also phase out high-deforestation-risk biofuels by 2030. The EU’s renewable energy Directive is currently again under revision, therefore the situation is also likely to further change.

Instead of repeating the EU’s mistakes, Albania should therefore pursue electriﬁcation of transport as well as improvement of its public transport, which would help decrease demand from individual vehicles. Pursuing biofuels as an alternative to oil products for transport is not advisable at the moment.

Likewise the draft law is unclear on the role of biomass. At minimum, Albania is obliged to follow the bioenergy sustainability criteria from the 2018 Renewable Energy Directive. However, these are widely criticised for not being stringent enough, so Albania should draw on its own experiences to set more effective criteria.

Support for heat pumps and rooftop solar needed

Given the widespread use of electricity for heating in Albania, installing efficient heat pumps would make much better use of the electricity already generated and avoid an expensive and climate-damaging gas lock-in. Combining these with rooftop solar in this extremely sunny country would help Albania leapfrog straight to a future-proof renewable energy system. Yet the draft law is unclear on the role heat pumps and rooftop solar are expected to play and whether there will be any support mechanisms for their installation. As well as the draft target for solar water heating, the law would do well to set targets for heat pumps and prosumers.

The Save the Blue Heart of Europe campaign aims to protect the most valuable rivers in the Balkans from building hydropower plants. The campaign is coordinated by the NGOs Riverwatch and EuroNatur, and is being run jointly with partner organisations from the Balkans.

100 per cent renewable electricity is a realistic and necessary target for Estonia and Europe

On 12 October, Estonia’s parliament voted to amend a law on the energy sector which increases the country’s current target for renewable electricity production. Until now, the target had been that the production of renewable energy would constitute 40 per cent of final electricity consumption by 2030. According to the new target, it will be 100 per cent. This does not mean that only electricity from renewable sources will be allowed in the grid, but that Estonia will produce at least as much renewable electricity as its annual average electricity consumption. The target for renewable energy in the final energy consumption, which also includes heating and transport fuel, will rise accordingly from 42 to 65 per cent.

Critics have questioned the rationale behind this amendment, since only one number in the law has been changed. Still, the number is crucial for renewable energy developers, as it signals that their business is in line with the country’s long-term direction and that their endeavours are welcome. It is especially important given that no new wind farms have been erected in Estonia for 10 years, and not because of a lack of interest from developers. The amendment to the law obliges both the current and future governments to quickly eliminate the barriers to the development of renewable energy. Creating additional grid connection opportunities, establishing a wind energy benefit scheme for local governments and residents, and speeding up the planning process are examples of positive steps that have already been taken or are currently being prepared.

The future is wind and solar

Currently, the share of renewable electricity in Estonia is 27 per cent of the final electricity consumption. The existing capacity of wind farms is 320 megawatts (MW) and the capacity of solar photovoltaics is 340 MW, but their potential is many times greater. The missing 73 per cent needed by 2030 should come largely from additional wind and solar power plants. The development of onshore wind farms has stalled in Estonia over the past decade, but if even a quarter of the onshore wind farms currently under development are completed, there could be 1,000 MW of wind energy production capacity in the grid by the end of the decade.

There are no offshore wind farms in Estonia yet, but they are also being developed vigorously, and by the end of the decade their total capacity could be 1,000 to 3,000 MW. Construction of solar parks has also gained momentum in recent years and will likely continue until the end of the decade, when their total capacity could be 1,000 to 1,500 MW. Altogether, this would be more than enough to cover Estonia’s own consumption, as well as export and storage.

A decisive step towards a green energy transition despite skepticism

Critics have argued that there is no point in fooling the Estonian people by saying that solar and wind farms could produce all our power. They say that in addition to wind and solar power plants, which produce electricity only when wind or the sun is available, we also need dispatchable generation capacity, which can produce electricity on demand whenever it is needed. The existing options in Estonia right now are oil shale, biomass and gas-fired power plants, and nuclear power is being considered as a long-term alternative. None of these solutions are sustainable and could lock us in fuels that are harmful for the climate and the environment. However, recent studies such as the energy roadmap for Estonia made by TaITech and Green Tiger, and the energy system model for Estonia prepared by researchers at Aalborg University in Denmark show that there is no need for fossil fuels or nuclear for dispatchable generation.

The studies used complex models to calculate how to balance electricity production and consumption in all 8,760 hours of the year. The results show that within 20 to 30 years, it will be technically possible and economically reasonable to transition to 100 per cent renewable energy not only in electricity production and consumption, but also in heating, transport and industry, and to maintain dispatchable generation capacity. In the future, these would include local biomass or biogas-fired combined heat and power (CHP) plants, pumped-storage hydroelectric plants, hydrogen fuel cells, district heating storage tanks and consumer (electric vehicle) batteries. Hence, there is no scientific basis for the belief that the possibility to produce power on demand will disappear and our energy security will be threatened by the transition to renewable energy.

The whole EU powered 100 per cent by renewables

Similar conclusions hold not only for Estonia, but also for the rest of EU Member States. Indeed, the researchers at Aalborg University have shown that all 27 EU countries can become fully decarbonised by 2050 just by using 100 per cent renewable energy. This transition would rely on an extensive roll-out of wind and solar energy, while the consumption of biomass would remain limited and based on strict sustainability criteria. Besides wind and solar, one of the most important sectors of growth will be district heating, as almost half of EU’s future heat demand (47 per cent) would be supplied by district heating (and the remaining half covered by individual heat pumps). Excess heat and low-temperature heat sources such as industrial waste heat, geothermal, solar thermal, large-scale heat pumps and electrolysis could supply 60 per cent of district heating, and the remaining 40 per cent would be supplied by CHP, waste incineration and boilers.

The study also provides an answer to the question of whether renewable energy can provide an alternative to fossil fuels and nuclear energy in sectors that are most difficult to decarbonise, such as manufacturing or transport. The answer is ‘yes’. Sixty-six per cent of the manufacturing industry’s energy consumption can be electrified and the rest can be replaced with green hydrogen, biomass or biogas. Electrification is easiest in lower temperature sub-sectors such as engineering and the food industry, whereas the need for hydrogen and biofuels is greatest in the chemical, metal and pulp industries. As for transport, the majority of passenger vehicles can be exchanged for battery-powered electric vehicles, and hydrogen or hydrogen-based synthetic fuels can provide an alternative for heavy-duty road transport, aviation and shipping. Of course, there is no need to replace the consumption of fossil fuels one-for-one in the transport sector, since the future urban space should allow for convenient movement on foot or by bike, and the possibility of remote work will reduce the need for unnecessary trips.

New solutions will bring large energy savings

At the same time, the transition to renewable energy will lead to significant energy savings as inefficient fuel burning is abandoned. According to the studies, the full transition to renewables in Europe would lead to a 40 per cent reduction in final energy demand within a couple of decades. The greatest potential for savings is in the transport sector, where energy consumption can be reduced by 50 per cent. The building sector follows, as the deep renovation of the existing building stock would lead to a 40 per cent reduction in the energy consumption of buildings. It is also possible to cut energy consumption in the manufacturing sector by more than 35 per cent with technological changes alone. As a result, people’s living conditions and health will improve, many new high-paying jobs will be created and electricity will become cheaper.

Member states need to prioritise green investments

On top of this paradigm ship, the transition will of course require unprecedented level of investments. The authors calculate a need to invest around EUR 2.2 trillion in energy efficiency in buildings; EUR 1.8 trillion in wind and solar power; EUR 1.3 trillion in electric vehicles; EUR 488 billion in electrolysers, hydrogen storage and electrofuel production; and EUR 209 billion in energy efficiency in industry. However, annual energy system costs will remain similar to today, and costs for repairing environmental damage and providing healthcare will decrease significantly. For example, healthcare costs related to air pollution would be reduced by 77 per cent.

The EU funds such as the Cohesion Fund, the European Regional Development Fund, the Modernisation Fund, the Recovery and Resilience Facility and the Just Transition Fund will provide an invaluable opportunity to accelerate investments in these areas. We urge the stakeholders in all Member States to treat these investments as a priority.

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