EU energy policies have for too long favoured national-level providers and regulation. For Europe to successfully transition to renewables, upcoming reforms must empower energy actors on the local level.
The French President Emmanuel Macron has stated his will to rebuild a Europe that is “sovereign, united and democratic.” In times of rising populism and internal divisions across EU countries, this basically means reconnecting Europe with its citizens. Uniting the continent and regaining people’s trust in European integration has never been more relevant. In fact, building a European Renewable Energy Union with regions, cities, municipalities, and indeed citizens at its core could be the vehicle to work towards this goal. Regional cooperation can fill the ambition gap between national energy strategies and a standardised EU-wide approach. Moreover, a strong, inclusive and ambitious EU energy policy, that enables cities, regions, and small actors to play their part in the energy transition, could provide a fresh vision for Europe’s future direction.
The upcoming new EU roadmap for 100% emission cuts by mid-century, expected to be set out by the European Commission in accordance with the Paris Agreement, will require a massive transformation of Europe’s economy, with a new decarbonisation trajectory for 2050 and sectoral targets in electricity, transport, heating and cooling, and agriculture. The Commission´s proposed Clean Energy Package for All Europeans, adopted in November 2016 and currently being negotiated in the European Parliament and the Council, integrates a number of legislative measures that set the framework for future EU energy policy. It will profoundly impact how electricity is produced, transported, consumed, and traded across borders, as well as how it is linked to other sectors such as transport, water, waste, and IT, in order to provide the best environmental, economic and social benefits for European citizens. This reform will shape, to a great extent, the EU’s credibility as a leader in green innovation and sustainability.
Empowering cities and municipalities
While the legislative proposals support Member State collaboration on renewable energy development and the cross-border interconnection of transmission grids, they overlook the potential role of municipalities and regions. However, local actors are essential in building a European Renewable Energy Union.
An example that illustrates this potential is the Smart Energy Union Emmen Haren. The Dutch municipality Emmen and its German neighbour Haren are planning to build a cross-border interconnection between their local renewable energy markets to become carbon neutral. A direct exchange of electricity between the two regions could be the first step towards a new type of electricity market: a market where communities and small producers trade their own energy via digital platform. Such micro-level cooperation could bring various advantages for European citizens: community-owned energy sources, keeping revenues in the region, reducing transport costs through local production and consumption, cheaper energy, and the emergence of new businesses. The project Smart Energy Union Emmen Haren is a living example of the untapped potential that micro-level cooperation can unlock in accelerating Europe’s energy transition.
One of the greatest challenges that Emmen and Haren face is conflicting national regulations on interconnection. According to European law, only the national transmission system operator can to transport electricity across borders on the high-voltage grid. As it stands, the legislative proposals currently under negotiation will not allow local distribution system operators to build interconnections on the medium-voltage grid between two countries. Current European and national energy legislation has a long way to go to meet the challenges of the technological transformations in the energy sector.
While the current regulation is based on centralised, large-scale, and often nationalised power systems, enhanced regionally or locally distributed generation and better demand-side response is needed to integrate renewables. With the rise of microgrids, sub-national regional cooperation is crucial for keeping pace with technological innovations in the electricity sector. Furthermore, the digitalisation of the power system will create more peer-to-peer electricity networks that will allow household owners of solar panels, for example, to sell surplus electricity to their neighbours.
Making national and local policies click
According to energy distribution experts, the largest impediments to a rapid evolution of local networks are contradictory and divergent national regulatory frameworks. Depending on their respective national policies, the autonomy of the distribution system operators varies from country to country. In addition, the different support schemes, permission procedures, and administrative rules on either sides of borders pose significant obstacles to cross-border interactions between neighbouring regions or municipalities. Despite European funding of cross-border projects, these funds are in most cases out of reach for local actors, due to co-financing and the complexity of applying and reporting.
However, it is exactly these local actors that catalyse change across sectors, including electricity, transport, and environment. Many cities such as Madrid, Paris, and Copenhagen have been driving forces behind the development of new low-carbon solutions in the transport sector. Local actors are on the frontline of innovation and push cooperation with other actors, such as transmission system operators, regulators, and national governments. Small towns and municipalities lack political and financial support, even if they push national governments to be more ambitious in their targets. This is the case of the Polish town of Karlino, which envisions more ambitious green energy policies at the local level, but would need stronger support from Europe to make them a reality, due to national constraints.
Including an obligation to incorporate dialogue between government at all levels in the new Governance Regulation of the Clean Energy Package could make the energy planning and monitoring more inclusive and responsive to local challenges. It would also benefit from the local success stories and practices on the ground. The new regulation aims to establish a permanent multi-level energy dialogue platform, gathering regional and local authorities, civil society actors, the business community, and investors to discuss different energy scenarios and shape national energy and climate plans. This is already a step in the right direction. It is now essential that Member States institutionalise this dialogue in the legislative framework. The market integration of small actors such as low-size municipalities and energy cooperatives could be further strengthened in the new package through targeted support mechanisms, improved access to EU funding for small and medium towns, and special exemptions, as well as priority grid access and dispatch, for citizen cooperatives and small renewable energy producers.
Making regional cooperation a reality
A very concrete and promising tool to support local actors in border regions is the European Grouping of Territorial Cooperation. This legal entity can be set up by Member States, associations, or regional and local municipalities to enable them to team up and deliver joint services across borders, without requiring an international agreement to be made by national parliaments. In the context of renewable energy, this kind of group can provide sub-national frontrunner regions with the flexibility needed to adopt a specific regulatory framework for a cross-border territory. Municipalities and regions could set up this legal entity to attract funding for cross-border areas, which would enable them not depend on decisions made at the national level. In this way, they could bring benefits directly to local communities without the need to involve national governments. This could simplify complex administrative procedures and enable local and regional actors to develop long-term strategies in stable regulatory environments.
Aiming to strengthen regional development during its EU Presidency, Luxembourg launched proposals to improve the European Grouping of Territorial Cooperation tool by allowing cooperating cross-border regions to set legislation for a specific area or project. Two municipal entities on either sides of a border could negotiate a specific regional legislative agreement that could be reviewed by national governments before it becomes binding. While it would not deprive Member States of sovereignty, it would allow regions to “pull legislation from one side of the border to the other” and become “living laboratories”. The improved tool would provide legal certainty to bottom-up initiatives, ensure better control over outcomes, accelerate the adoption of new rules, and promote cross-border experimentation. The European Commission is starting to recognise the tool as an innovative solution and has included it in the recent strategic communication on boosting growth and cohesion in EU border regions. For these concrete suggestions to bear fruit, they must be turned into a legislative proposal, for example, through incorporating them into the EU cohesion policy package.
In a Europe that is close to its citizens, EU institutions should be seen not only as regulators but rather as enablers that bring together actors from different levels, promote an interactive and institutionalised dialogue, and provide simple financial support to small towns, municipalities, and community-owned projects.