Preview 2023: Reform of EU’s fiscal rules key climate debate next year – E3G
This interview is part of a series to preview the German and European energy and climate policy year 2023. The other interviews will be published over the coming weeks.
Clean Energy Wire: Energy and climate policy in 2022 has been dominated by Russia's war on Ukraine and the European energy crisis. What impact do you expect the war to have next year at the European level and which other climate and energy topics will likely dominate the agenda in the EU in 2023?
Manon Dufour: The war in Ukraine has both propelled and put to the test the EU’s climate and energy agenda. On the one hand, the EU has increased clean energy targets and agreed measures to accelerate the deployment of renewable energy. On the other hand, the search for new gas routes and difficult negotiations around a potential gas price cap are preventing European leaders from focusing on preparing the EU for the next few winters, which will likely be tougher than this one.
In 2023, the EU will aim to look beyond the next few months, eying the next few years. First, EU institutions and governments will look to deliver concrete near-term structural gas demand and keep up momentum on the renewable energy and heat pump booms seen since the start of the year. Second, the reform of the EU’s fiscal rules will likely become the biggest climate debate of the year. The reform could allow governments to face the climate, energy, and cost-of-living crises with more spending capacity and meet the investment needs of the green transition, provided green investments are explicitly supported. Finally, the preparations for the next EU legislature will ramp up throughout 2023 and raise big questions around the need for European green industrial policy.
Chancellor Scholz's traffic light coalition has just finished its first year in office – what do you think the administration got right so far and what does it have to deliver on most urgently next year, in the European energy and climate context?
The German government´s performance on EU climate and energy policy this year has been a mixed bag. While it has played a crucial role in securing important deals at COP27 and pushed for more ambitious goals in key ‘Fit for 55’ files, it has frustrated other European governments with decisions that seemingly put Germany first, and the EU second. The German government visibly seeking compromises on sensitive political issues and taking steps to restart the Franco-German engine would go a long way in strengthening EU unity and help the block cope with the overlapping crises it is facing.
Which topics have been overshadowed by the crisis in 2022 and should receive more attention by European governments in the new year?
The EU’s emergency response has focused on managing high energy prices, increasing clean energy targets, and accelerating delivery via REPowerEU – but challenges remain to fill the 2022-2025 action gap and ensure structural gas demand reductions.
The current heat pump boom is happening despite pressures on supply chains, high energy and materials costs, limited fiscal support, scarce finance availability, and skills shortages. European governments must take concrete action to keep up momentum on the clean energy boom seen since the beginning of the year and aim to boost supply chains, grow clean jobs, and ramp up renovations.