Dear Ambassador,
Dear Ms. Friis,
Dear Christian,
Dear Mr. Böttzauw,
Ladies and Gentlemen,
Thank you for the warm welcome. I am pleased to get the chance to present Germany's vision for a competitive Europe powered by renewable energy here today.
Achievements to date
First of all, let me say that our achievements in the energy sector in the last EU legislature have been great. Through a joint effort, we have managed to tackle the energy crisis following Russia's attack on Ukraine.
With the European Green Deal, we agreed on a historic strategy which sets the course for climate neutrality in the EU in 2050. By now, we have made considerable progress in transforming our energy system.
Through the Fit for 55 package, we have laid the foundations to reach our 2030 energy and climate targets: We strengthened ETS 1, agreed on a new emissions trading for heating and transport, and introduced the Social Climate Fund to cushion the social impact.
We also increased our targets for renewable energy and energy efficiency, accelerated permitting for the deployment of renewable energy and agreed on a new energy market design.
As a result, renewable energy generation in the EU breaks new records. In 2023, we jointly installed 56 gigawatts of new solar capacity, and 16 gigawatts of new wind capacity. In the first half of 2024, 50 percent of the electricity generation in the EU came from renewables.
But this does not mean we can sit back and relax. The new Commission is facing huge challenges and must act now to foster economic development and competitiveness while continuing to push for zero carbon.
Draghi report
Against that background, we welcome the timely publication of Mario Draghi’s report on the future of European competitiveness.
We essentially agree with its main result: Despite generally good starting conditions, the EU is falling behind global competitors, especially China and the USA, in terms of growth and productivity.
A joint effort of historic proportions is needed to improve the EU's global competitiveness, while maintaining social cohesion and staying on track for the Green Transition.
To tackle this challenge, Draghi rightly emphasises the need to fully realise the internal market in order to exploit its full potential. We also agree with his call to close the innovation gap in Europe.
Most importantly for the topic of today’s conference, the report links the strengthening of the EU’s global competitiveness with the green transformation and our decarbonisation goals.
In that sense, Draghi highlights the importance of a rapid and extensive expansion of renewable energies and grid infrastructure.
Competitiveness triad
This leads me directly to the core of what I want to talk about today.
Europe is at a crossroads and we must let renewable energy lead its way. Our European economy needs affordable and decarbonised electricity very fast and in large amounts. Europe cannot compete with US gas prices.
Only a strong focus on a ramp-up of renewable energies and grid expansion can pave the way to a competitive, sustainable European economy and industry. This is closely linked to job creation and fair and prosperous living conditions for European citizens.
Renewable energies allow for a fair transformation. First, many more citizens and firms produce electricity. We now have millions of energy producers in Germany rather than only a handful in the past. Renewables allow citizens to produce their own electricity and share it.
Second, renewable energies are the only way forward to bring down energy prices to allow for a just transition where using energy is not a privilege of only a few.
Let me be clear: Nuclear is no alternative. In the EU, the Commission projects in the Impact Assessment of the 2040 Climate Communication that nuclear capacity falls until 2040 by around 30 GW, even if plans of some of our neighbour countries are fulfilled.
Renewables will increase until 2040 by around 1,400 GW [!]. Globally, the IEA projects the share of nuclear energy to fall from 9% to 8% of electricity supply until 2050 in the Net Zero Emissions scenario, while renewable energies cover around 70% in 2050.
Therefore, we see the future of European competitiveness in the “competitiveness triad”, that is:
- Fast and vast amounts of renewable energy (electricity and hydrogen)
- Demand flexibility plus storage to maximize the use of electricity when it is cheap, and
- An infrastructure upgrade to transport cheap renewable electricity and hydrogen across Europe.
These need to be the priorities of the Commission for its Clean Industrial Deal. We ask for implementation of these priorities by the Commission as follows:
Fast and vast amounts of renewable energy
As I just mentioned, the Commission's impact assessment for 2040 shows that investments into 1,400 GW of new renewables are necessary for decarbonising our economy. These massive investments will not fall from the sky – they call for investment certainty.
The Commission's task is to set an ambitious 2040 climate target and a reliable 2040 Energy Framework based on the 2030 framework. It must include an EU renewable energy target for 2040 with flexibilities for Member States that have come far on the pathway to decarbonisation.
As a starting point, the Commission must fully impose the 2030 framework and develop an EU Top- up-tender for the 2.5% gap.
Permitting
We also expect the Commission to propose a new Renewables and Energy Infrastructure Acceleration Directive within the first 100 days to permanently speed up permitting and planning of renewables and energy infrastructure.
This should include measures for hydrogen and district heating. For example, hydrogen networks are not covered by the Renewable Energy Directive. Yet, this infrastructure is crucial to enable investments into the transformation of our industry, so we need to apply the acceleration measures for all energy infrastructure.
Demand flexibility and storage
With the increase in renewables, Europe will benefit from increasing hours with very low electricity prices and Europe’s competitiveness will depend on maximising exploitation of these hours.
The interplay of the various new players will need to be orchestrated by a new, smart and innovative system. We ask the Commission to come up with an EU Flexibility Roadmap to address that paradigm shift and remove all structural barriers and disincentives to flexibility.
Another focus of the Commission should be on updating the EU framework on grid charges to incentivise flexible consumption and value locational choices while ensuring internationally competitive prices for industries. Technical standards need to support flexibility – particularly for new, flexible consumers such as electric cars, heat pumps and hydrogen, and for power plants.
Infrastructure upgrade
European cross-border energy infrastructure is the key to giving industry and households all over Europe access to cheap offshore wind energy, solar power from Europe's South and hydropower from its mountains. It is the backbone of a socially sustainable energy transition.
We therefore ask the Commission to develop a Grid Union. This should include an upgrade of the Ten Year Network Development Plan framework that facilitates cross- border infrastructure planning.
We also need an upgrade in EU financing for cross border energy infrastructure for electricity and hydrogen. This should include additional funding both for the CEF and for the EIB.
Energy Efficiency
Energy transition is not only about transforming energy production and maximising deployment. It also means reducing energy consumption to meet production and demand in an increasingly electrified economy.
We therefore ask the Commission to develop a 2040 Energy Efficiency Framework to boost investments in energy efficiency. It should include new heating standards, a heat pump action plan and a renovation initiative. The Commission should also develop a new EU Energy Efficiency Platform.
Energy Communities
Energy communities can become an important and socially sustainable contributor to our energy transition.
We ask the Commission to develop an Energy Community Initiative with an action plan to incentivise the formation of renewable energy communities. This Initiative shall empower citizens and municipalities directly to become part of the transformation.
Regulatory hurdles for renewable energy communities need to be decreased and EU funding should be readily available.
We are currently preparing to implement the requirements of the amended Internal Electricity Market Directive on energy sharing into national law.
The regulation is intended to enable end consumers to share renewable electricity using the electrical grid. This is the next step after having introduced the possibility to share renewable electricity within buildings with the solar package I.
Green hydrogen
Producing green hydrogen can become a key competitive advantage of European industry. But this will only be possible if we increase our European efforts to ramp up green hydrogen. This must go beyond the hydrogen infrastructure upgrade I mentioned before:
We ask the Commission to create a pragmatic framework for the production of green hydrogen. This includes the amendment of the delegated act for hydrogen. Due to slow market development, we need an extension of the phase-in period for the additionality and temporal requirements.
Furthermore, an hourly approach in the Low Carbon Delegated Act to measure GHG emissions and the renewables share in the electricity mix should be applied.
At the same time, we need realistic, project-based reporting of upstream Methane emissions for low-carbon hydrogen production. This way, we can ensure a level playing field for renewable hydrogen and avoid gas greenwashing and gas lock-in.
We also need to reform the European Hydrogen Bank’s tender conditions with a new focus on competitiveness of industry, to ensure fair cross- border access to green hydrogen and to reform the bidding limit for auctions as a service. The European Investment Bank needs to update its funding to support investments into green hydrogen.
The Commission should also advance new instruments, for example green lead markets, to secure the offtake of hydrogen and lay the ground for investment decisions along the entire value chain.
Offshore
We cannot overestimate the potential of offshore energy for our energy transition. Our seas are a true powerhouse – but we need joint efforts to use them right.
Therefore, we ask the Commission for an Offshore Support Framework and an Offshore Financing Facility. These two instruments are needed to lay a stable foundation for vast investments into offshore projects.
They are especially important for multilateral cross-border offshore projects – so far, these projects have proven very difficult to plan, co- ordinate and finance.
Financing
Speaking of financing, one of the new Commission's most important tasks will be to translate financing's central role into action. As I said in the beginning, we will need massive investments to accelerate our energy transition while at the same time ensuring competitiveness of our
industry.
As I mentioned before, the funding under the Connecting Europe Facility as well as from the European Investment Bank need to be adequately equipped and the terms of the programmes updated and access simplified.
The State aid framework needs to be made fit for the speed & scale of investments needed and allow for fast-track approval for the necessary investments.
We will also need to update the Multiannual Financial Framework to reflect our transformation goals. It should especially foster support for green investments and cross-border projects.
It is important, however, to exclude nuclear energy from all EU funding. In that regard, we disagree with Draghi’s report, which equally treats renewables and nuclear as “clean energy”. Renewable energy has a significant cost and sustainability advantage over new nuclear energy.
I am aware that Denmark’s – and the Nordics’ in general – position towards increasing the EU budget is more ambivalent. I am confident that we will find common ground as we further discuss these issues with our fellow European member states.
Bidding Zones
Another important condition for a competitive industry is a stable investment framework in the electricity sector. For Germany this includes a stable bidding zone configuration.
I would like to clearly emphasize that Germany is committed to maintaining the single German-Luxembourg bidding zone.
Expanding our grid is the structural answer to reducing bottlenecks. We need more grid to distribute and use affordable renewable electricity throughout Europe. Germany is committed to massively expanding its grid. Currently 13.000 additional kilometres of transmission grids are planned.
In the meantime, redispatch will continue to play an important role to manage congestion.
But: We have realized that grid expansion and redispatch alone are not sufficient in the future. More locational signals are needed in order to address two challenges:
Firstly, we need to provide better incentives for siting decisions, in order to locate demand closer to the renewable electricity supply.
Secondly, we need to provide better local signals so that dispatch and consumption decisions take the regional grid situation into account.
We are committed to establish more local signals in our electricity market. There are various ways to achieve this goal, such as regionally differentiated and time-varying grid fees and introducing regional signals in funding programmes.
But splitting our bidding zone is not on the agenda. The secondary EU laws are clear: each Member State decides about its bidding zones. Our decision in this regard maintains.
Crisis resilience and further reduction of RUS energy imports
Please allow me to raise one last aspect of our future European energy system: The need to further reduce energy imports from Russia, which is closely connected to Europe’s capacity to resist future energy crises.
Since the RUS war of aggression against the UKR RUS energy imports into the EU have fallen substantially.
The EU’s gas demand fell by 18% between August 2022 and May 2024. RUS gas share in EU imports has fallen from 45% in 2021 to 18% in June 2024, while imports from trusted partners such as NOR and USA have increased.
However, RUS energy imports of fossil origin into the EU continue to represent the largest share of Russian imports into the EU in terms of value.
Regarding our joint efforts to diversify energy imports and enhance energy security, we need to continue to systematically reduce the import of all fuels (gas, oil and radioactive material) from Russia.
It is important to agree on joint measures in the field of energy policy outside the area of sanctions in order to reduce dependence on RUS energy imports.
We encourage COM to work out a roadmap and a plan on how to reduce our dependence on Russian energy imports as quickly as possible, while ensuring monitoring of progress.
Europe needs to prepare better against energy shocks such as 2022.
A new EU framework for European crisis reserves should improve electricity resilience and “trust in trade” for crisis situations.
Safe and secure grid operation is a prerequisite for a reliable energy supply for industries and needs to receive more attention in the EU Network Codes to become ready for future challenges:
Regional coordination in this field needs to become operational, fit-for- purpose and ready for the future. System stability needs to be closely coordinated and addressed by a joint framework.
GER-DNK energy cooperation
Let me conclude by saying a few words about the bilateral energy relation of our two neighbouring countries. Denmark is not only a very close partner in the EU but also in bilateral energy cooperation.
Especially our Bornholm Energy Island project is a milestone for international cooperation, leading the way to a future meshed grid and a European Green Power House.
We are very pleased that in our cooperation spirit we continue to cooperate in the North Sea. The project of connecting 4 GW in Danish waters to Denmark and Germany could be another important step towards a Green Power House in our waters.
We also work closely together with Denmark in the North Seas Energy Cooperation (NSEC), where we agreed to publish a joint offshore tender schedule for the coming years [by 2030 joint tender pipeline of almost 100 GW; NSEC goal of 300 GW in 2050].
The successful offshore cooperation between our two countries could support our future hydrogen cooperation by planning sufficient electricity generation capacity in view of potential hydrogen exports or by directly including offshore electrolysis in our cooperation projects.
In July 2024, the German cabinet adopted the Hydrogen Import Strategy. It is a further instrument to deepen our cooperation within the EU and beyond. The planned cross- border hydrogen pipeline between Germany and Denmark is one of the most central hydrogen projects with our European partners.
To further deepen energy cooperation with our Northern neighbours, we look forward to hosting the Third North Sea Summit in June 2025 in Hamburg.
And of course, we look forward to continue our successful bilateral cooperation on energy issues with Denmark.
Outlook
Let me sum up: the energy agenda for the next Commission is ambitious, and it is pressing. We cannot afford to have our economy lose its rank in international competition.
Therefore, the Clean Industrial Deal should continue and further develop the European Green Deal as a comprehensive transformation agenda for climate action, competitiveness, growth, innovation and economic sovereignty.
Germany is prepared to work together with the Commission and our fellow Member States to uphold these principles within an ambitious 2040 climate and energy framework.
We need a strong Commission to enforce implementation of Member States’ goals, for example for renewable energy. The NECPs and the Commission’s assessments are key for this and need to be strengthened.
There is a lot of work ahead and these were just some elements. We are glad to know that Denmark is one of our most important like-minded partners in many of these aspects.
Together, let us get to work!