REPowerEU: time to address our energy dependencies

(Source: European Commission)

With the REPowerEU package adopted today, we are helping to provide a common, supportive, and coordinated response to the energy implications of Russia’s invasion of Ukraine.

There are three main messages that I would like to share with you in my condition as EU Commissioner for internal market and industry.

1. The industrial dimension of unplugging Europe from Russian gas

Industry consumes more than a quarter of gas demand, sometimes with limited substitution options. That is why accelerating our independence from Russian gas requires working with industry to identify alternatives.

It also means understanding that Europe must mobilize an unprecedented industrial capacity to produce and deploy alternatives to Russian fossil fuels. More than 210 billion euros will have to be invested over 5 years to achieve our objectives. This is 10% on top of the annual investment needed to achieve the “Fit for 55” objectives.

These investments involve deep transformation of industrial processes, by investing in electrification, hydrogen, or carbon storage. They require access to more and more decarbonised electricity, more and better performing networks. All of this to be able to put on the market the clean technologies needed for our energy transition.

At each stage of the process, a new industry needs to emerge, an industrial ecosystem must be transformed, and workers reskilled.

Let’s take our electricity needs as an example. We need decarbonised and abundant electricity, which will allow us to electrify industrial processes wherever possible, and to produce hydrogen where it is needed, particularly as energy storage.

Today we have 165 Gigawatts (GW) of solar energy capacity installed. We will need more then 600 GW by 2030. And today, more than 70% of these needs are imported from a single country, China.

To ensure that Europe has the industrial capacity to meet its ambitions, and that regulatory targets also lead to job creation in Europe, we are launching an industrial alliance for solar energy. The alliance will aim to foster an innovative and value-creating industry in Europe.

We are also stepping up efforts on hydrogen. Most recently, I signed a declaration with industry to work to increase our electrolyser capacity tenfold by 2025.

In the coming months, we will have to continue our efforts in the wind energy or heat pump sectors, as these technologies are equally needed.

And, of course, we should optimise the potential of nuclear power. In the short term, by extending power plants wherever possible and safe should reduce our dependence. We can also use them to produce hydrogen. And in the longer term, by supporting an innovative and flexible nuclear sector, in particular small modular reactors.

2. Preparing for all scenarios

REPowerEU presents options to reduce Russian gas consumption by two-thirds in the short term. While we have identified ways to be even faster, provided we consider the broadest possible basket of measures, we must continue to prepare ourselves.

Because we are not immune to unilateral decisions from the Russians. I will continue my dialogue with industry to help us to work, in a coordinated and united way, on all the alternatives.

Some of these alternatives, like using coal or heavy fuel oils instead of gas for certain industrial processes, will not be very popular in the short term. But I believe we should consider all options without taboos.

3. Reducing our dependence on imported raw materials

Today’s package aims to end our dependence on Russian gas. Whether it is solar, wind, hydrogen, batteries or any other technology or component, their manufacture requires raw materials. Almost all of which come from distant, concentrated, non-European sources.

With Maroš Šefčovič and my other colleagues in the College, we are working on a legislative initiative that is up to the challenge. Because what’s the point of ending one dependency if you’re going to be locked into another one even more dramatically?

The demand for raw materials is exploding, due to the green and digital transition, but also in light of our growing defence and security needs highlighted in a separate Commission communication today. And we depend almost exclusively on imports, often from a single country. So if one of those countries is at war, bans exports, its industry is in lockdown, or there is an earthquake, we have a problem.

That is why you can expect raw materials to become a focal point of our attention and actions.

This does not mean producing everything in Europe, of course. But we must be present on all value chains, so that we can take our industrial destiny and our geopolitical choices in hand.

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