© Pexels/ Matej Cerkez

Europe in crisis mode: How to successfully navigate the energy and the climate crisis?

Due to the Russian invasion of Ukraine, Europe is running in crisis mode. Despite unprecedented levels of uncertainty, the strategic direction of travel for generations to come is to be set right now. Emergency energy measures and measures to spur investments in climate protection need to be designed hand in hand. Whether REPowerEU, Save Energy for a Safe Winter or Fit-for-55: reliable framework conditions remain key.

Record level prices for energy and raw materials continue to dramatically pressure Europe´s industrial base. Levers such as increasing energy supply ("every kilowatt hour counts"), significantly reducing electricity prices, improving demand management or accelerating fuel switching must be set in motion urgently to shield companies and help them make it through the crisis.

On the occasion of her annual State of the Union address, Commission President von der Leyen presented the key points of a second EU emergency regulation to mitigate high energy prices, which was finally adopted in October. It includes the introduction of a revenue cap of 180 EUR/MWh of electricity, a solidarity contribution from fossil fuel and refinery companies and measures to reduce gross electricity consumption during peak load periods. Europe is now struggling with the concrete design of possible further crisis interventions. The Commission's proposal for a third emergency package builds on more joint gas purchases, more solidarity and more gas savings, and at national level the Gas and Heat Expert Commission has presented its interim report regarding the introduction of a gas price brake in Germany.

Providing temporary relief to EU industry has turned into an issue of short-term survival. From a broader perspective, however, it is the future investment capacity and global competitiveness of EU industry that is at stake.

Industry holds on to ambitious climate protection targets

"Even if the energy crisis is so serious that nothing less than the survival of EU industry is at stake in the coming weeks, climate protection must remain a high priority." BDI President Siegfried Russwurm stressed at the BDI Climate Congress in Berlin on 22 September. "Pressing the pause button to climate policy is no option now."

Fit-for-55: Finding ways out of the crisis as a climate-neutral industrial continent

The new geopolitical and energy policy realities reconfirm the need for a technology-open transformation in all sectors and a drastic acceleration of the clean energy transition. Decarbonisation must not lead to deindustrialisation. It must contribute to the renewal of Europe as an industrial location and pave the way out of the crisis through the global future, innovation and competitiveness of its industry.

In June 2022, the European Parliament and the Council defined their negotiating positions on the first measures of the European Commission's Fit-for-55 package of July 2021. The BDI presented its priorities and core recommendations for the trilogue negotiations:

  • ETS1: Implement a forward-looking reform while not overburdening affected stakeholders
  • Carbon Border Adjustment Mechanism: Limit its scope, flank CBAM by diplomacy and resolve open issues
  • EU-ETS Aviation: Maintain its intra-European scope and exclude non-CO2 emissions without flat-rate factor
  • ETS2: Support the introduction of a new ETS for road transport and buildings
  • CO2 Fleet Regulation: Ensure an open technology changeover and flank it by the development of charging and refuelling infrastructure
  • ReFuelEU Aviation: Ensure the competitiveness of European aviation
  • Ensure consistency with further Fit for 55 and REPowerEU measures to arrive at an overall coherent package

Pragmatic green electricity criteria for renewable hydrogen

Rapidly ramping-up the European hydrogen economy and an accelerated expansion of renewable energies remain essential for achieving the EU's climate, industrial and energy policy goals.

Also, in the light of the dramatic situation following the Russian invasion in Ukraine and the associated energy supply uncertainties, renewable hydrogen should become available as quickly as possible, in as large as possible volumes and at as competitive as possible prices.

The European Commission´s REPowerEU plan includes an increased renewable hydrogen EU production target of ten million tonnes by 2030. To be able to implement the new target, sufficiently pragmatic green electricity criteria for renewable hydrogen are necessary. The European Parliament has tabled respective proposals in the context of the ongoing revision of the Renewable Energies Directive (REDIII).  In the interest of boosting Europe´s global innovation and technology leadership, national governments should now support them in the Council of the EU.