Press remarks by Commissioner Vălean and Commissioner Simson at the informal meeting of EU transport and energy ministers

Remarks by Commissioner Vălean:

Thank you very much to both ministers for organising this debate on transport and energy. Two sectors which are more than interlinked nowadays. A face of one sector influences the face of the other, so this is a really important moment to talk together.

Decarbonising the transport sector depends on having alternatives to fossil fuels. We need sufficient supplies of renewable electricity, sustainable biofuels, clean hydrogen, and other renewable and low-carbon fuels. And the key word in this sentence is ‘sufficient’. Demand for mobility is growing, which is a good thing because this means more economic prosperity.

The Commission has no preference for how fossil fuels are replaced. That is for the market to decide. But what we do insist on is having sufficient alternatives to reach our emissions targets. The Commission can help coordinate the supply, distribution, and demand issues. We set out how we plan to do this in the Fit for 55 package of proposals of 2021, which is now in the hands of the Swedish presidency and I have my high hopes on you to get it through.

The Alternative Fuel Infrastructure Regulation, for example, promotes supply and distribution. Its provisions will result in a minimum of 1 million electric charging points on our roads by 2025, and over 16 millions by 2050.

Building recharging infrastructure will get us closer to our goals, and I am happy to see that transport companies are also willing to invest in this type of infrastructure. But we will still need more electricity production and better distribution. Our data show that electricity demand for electric vehicles will increase total electricity consumption in the EU by at least 2% by 2030.

We also need to gradually build up demand for sustainable fuels, in particular for ships and planes.

For this we have our ReFuelEU Aviation proposal in the package. We hope it will boost the use of renewable, low-carbon fuels for planes and FuelEU Maritime will do the same for ships.

For aviation, we want fuel suppliers to distribute increasing quantities of sustainable alternative fuels to EU airports, and to make sure that airlines use it – we ask them to blend traditional fuel with increasing amounts of sustainable alternative fuels, starting from 5% in 2030, and rising to 63% in 2050. This would reduce aviation emissions by around two thirds by 2050.

But again, to get there, we need, by some estimations of the industry, seven additional renewable and low carbon fuels production plants across the EU by 2030, corresponding to an increase in production capacity of 2.2 million tonnes of renewable and low carbon fuels per year. The increasing production capacity needs to increase over time. By 2050, we estimate that 104 production plants will be needed across the EU.

So, alongside regulation, we also need to invest in physical production, so that we have enough green energy to meet demand. Importing is not straightforward, in particular for hydrogen. Plus we don’t want to create new dependencies. Instead, we need to ramp up production here in Europe, and quickly. This will require collaboration across the entire value chain, which we have initiated by creating a Renewable and Low-Carbon Fuels Alliance, to complement our Hydrogen Alliance.

Let me end by reminding everyone that we will need significant investment to go from ambition to reality. Our assessment before the Green Deal showed investment needs for the vehicles and the infrastructure needed for low-carbon mobility to be around EUR 130 billion per year up until 2030.

This is no small amount, which is why we are providing an unprecedented level of funding for the European transport sector. Through the Connecting Europe Facility, Cohesion Funds, InvestEU Fund, Horizon Europe and the Innovation Fund, we have allocated nearly EUR 100 billion for this financial period (2021-2027) to support the development of the transport system.

This was doubled with the adoption of the Next Generation EU budget, and in particular through the Recovery and Resilience Facility. Under this Facility, it is estimated that the Member States have dedicated more than EUR 90 billion to transport investments and reforms.

With the transport and energy sectors working together, a regulatory framework to support supply is on its way, and with good financing, I am confident that we are on the right path to securing our energy supply and reaching our emissions targets.

Thank you.

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Remarks by Commissioner Simson:

Thank you Ebba, good evening.

I want to start by thanking you, Ebba, and Andreas, for the splendid organisation and for the great idea to organise a joint session between energy Ministers and transport ministers. I am delighted to be here.

We discussed several important topics, but I want to mention three in particular.

First, coming almost at the end of the winter, and one year after the Russian invasion of Ukraine, this meeting has been a timely opportunity to review how far we have come in ensuring Europe’s energy security.

I have debriefed the Ministers about the progress made to overcome the gas crisis and to phase out dependency from Russian fossil fuels.

In this short space of time, the change we have witnessed in Europe’s energy system has been remarkable.

The numbers speak for themselves.

Russia is no longer the first gas supplier for Europe, replaced by the United States and Norway.

In twelve months, Russian pipeline gas supplies dropped from 155 bcm to 62 bcm.

Our LNG imports, in contrast, have increased from 80 bcm in 2021 to 135 bcm in 2022.

At the same time, Member States have cut gas demand by 19% between August and January. In other terms, Europe has managed to reduce gas consumption by 38 bcm.

Our gas storage remains high, with over 62% filling.

All of that happened while the clean energy transition accelerated. In 2022, Europe has installed almost 50 gigawatts of new renewables capacity, mostly in solar and wind.

Today, we can say that Russia’s energy blackmail has failed. We expect to end the heating season with over 50% of our storage filled. Gas market prices remain high, around 50 euro per MWH, but much lower than the peak levels reached last year.

By many standards now Europe is more energy secure, less dependent from Russia and stronger than it was one year ago.

But my message to the Ministers has been clear: our policies worked, our unity has been preserved, but the test is not over. We have just won the first battle, and there is still a long fight ahead of us.

There is no room for complacency. We need to continue our work on diversification, renewables deployment, energy demand reduction and storage.

Our voluntary 15% demand reduction target expires by the end of March. We consider continuing demand reduction a no regret option. It is key to ensure our preparedness for the next winter and for reaching the 90% storage target by 1 November.

We have also exchanged about the importance of protecting our critical infrastructure from any external threats.

Following the sabotage of the Nord Stream pipelines we need to take any threats seriously and increase our level of preparedness.

The second point I want to mention concerns the reform of the electricity market design, which the Commission will present by mid-March.

The current electricity market design has not been the cause of last year’s high electricity prices.

But for the way it works, it has not been able to protect consumers from the effects of the gas market crisis.

It has become clear that we need to complement short-term markets with a more important role of long-term instruments, to shelter consumers from price volatility and give credible price signals to renewable investors.

We need also to unlock opportunities for distributed resources, coming from renewable communities and self-production, and to incentivise innovative forms of back up, like demand reduction and flexibility needed to balance variable renewables.

The key direction of the reform will be to reduce the dependence of the electricity bills from the price of gas and to make our electricity framework fit for an energy system where in 2030 70% of electricity will come from renewables.

We want also to reinforce the rights of consumers so that they have access to better information and a greater variety of offers.

We are working at full speed on the reform. Our public consultation ended two weeks ago, with over 1,300 responses, which shows the level of expectations for this reform. I have taken note of the points made by the Ministers, of where they see problems and solutions, and I will feed this in the final preparation of the proposal.

Finally, I want to mention the competitiveness of our industry in the clean transition. The global clean-energy transition is opening incredible business opportunities for clean-tech manufacturing. Europe leads the way in several sectors. But in others we are vulnerable or exposed to risks coming from long supply chains.

Our industry is also under pressure because of the high energy prices, and of the policies of offers and incentives in other parts of the world.

We will discuss the EU response to these challenges tomorrow, and I will present the Commission analysis and the forthcoming Net Zero Industry Act and the Critical Raw Materials Act.

Finally, I welcome that Ukrainian Minister Galushenko joined us today. We appreciate very much his efforts at national level to maintain a functioning energy system despite the war and the reckless Russian attacks against civil power infrastructure. Europe will continue to stand by Ukraine, for as long as it takes. We have discussed concrete ways for the EU to continue show its solidarity in the coming months.

On all these points, I am glad to see that this Council remain united and determined to face the challenges ahead.

Thank you.