On September 11, 2024, the European Commission released its State of the Energy Union Report 2024, outlining the European Union’s progress in the clean energy transition and highlighting ongoing challenges to global competitiveness.
The annual report assesses the EU’s advancements toward its energy and climate objectives, presenting a mix of achievements and obstacles. Central to the EU’s strategy is the Innovation Fund, financed through the EU Emissions Trading System (ETS), aimed at accelerating the deployment of clean technologies in manufacturing across the region. The fund has an estimated budget of €40 billion until 2030.
The European Hydrogen Bank, also funded by the ETS, has already awarded nearly €720 million to seven renewable hydrogen projects in its inaugural auction in February 2024.
Advancements in Wind Energy; Challenges in Solar and Batteries
The report highlights significant strides in renewable energy adoption. In the first half of 2024, renewable sources accounted for 50% of the EU’s electricity generation. Wind power surpassed gas to become the EU’s second-largest source of electricity after nuclear power, marking a significant shift in the energy landscape.
In 2023, the wind power sector demonstrated a €1.7 billion trade surplus, with EU exports holding a dominant 67% share of the global market. This solidifies the EU’s position as a global leader in wind energy technology.
However, challenges persist in other sectors. The lithium-ion battery industry faces a €19 billion trade deficit, despite achieving the highest production value in the EU at €21 billion in 2023—a 30% increase from 2022. This deficit grew by 21% compared to the previous year, underscoring difficulties in achieving competitiveness in critical clean technology sectors.
Similarly, the EU’s solar photovoltaic (PV) industry continues to grapple with trade imbalances. EU solar PV production reached €2.1 billion in 2023 but still recorded a trade deficit, which decreased by 13% compared to the previous year.
Other net-zero technologies also showed growth. Production values for heat pumps increased by 30%, matching that of batteries, while fuel cell output grew by 18%. Ocean energy technologies, biofuels (ethanol), and carbon capture, utilization, and storage (CCUS) all experienced growth of nearly 10%.
Despite these gains, the EU faces increasing competition in net-zero technologies in both global and domestic markets.
Policy Implementation and Future Outlook
The report underscores the urgent need to address high energy prices to bolster EU industrial competitiveness.
“We should swiftly implement the new policy and regulatory framework to address the elevated energy prices and accelerate development of infrastructure,” said Kadri Simson, EU Commissioner for Energy.
The Social Climate Fund, set to mobilize at least €86.7 billion during 2026–2032, was highlighted as a key initiative to support vulnerable households and small businesses in the transition to clean energy.
The EU’s focus will now shift to implementing recently adopted legislation and analyzing the final updated National Energy and Climate Plans submitted by Member States. These plans, which were due by June 30, 2024, aim to support the collective achievement of the 2030 energy and climate goals. The Commission urges all Member States to submit their plans promptly to enable a swift and comprehensive assessment at the EU level.
The effectiveness of these plans will determine the EU’s trajectory toward its 2030 targets and the overall success of its energy transition.
Source: Fastmarkets
