Joachim BALKE

Policy topics Joachim BALKE is active on

What Joachim BALKE has said (7)

• “Visibility for the industry to scale up to be able to deliver the components that are necessary to bring these investments about a lot has happened already in terms of this visibility in the context of the ten-year network development plan, notably on which my colleague Mr. Kortinas will say a bit more in a minute. At the same time, it is very important that we promote European-based grid technology and cable manufacturers. They are global leaders today, they're very well placed today, but at the same time the domestic capacity that we have, the domestic industrial capacity that we have, is by no means yet up to the challenges of the future investments that we are facing. The indications for this are clear. The cost of grid components have gone up steeply over the last years and the lead times to procure such components, in particular converters, has also gone up quite enormously. So we need to do, we need to act on many fronts. We need to act on the front of raw material access. We also need to act when it comes to increasing the skilled workforce, but I will not go more into that for reasons of time. I want to say a few things on what we've done, the initiatives that we've taken to support our industry's competitiveness. Firstly, what have we done to promote the domestic manufacturing value chain through regulation? Here I want to point to the Net Zero Industry Act, which has been adopted and which is now being implemented through delegated acts. Very important to say that all the major grid technologies are fully in the scope of this Net Zero Industry Act. We have recently adopted a communication providing information on where the EU supply of these net zero technologies comes from. We see here that third country dependencies are high, but for grid technologies we are still today quite in the forefront with our industry. Nevertheless, it is quite important to further promote the domestic upscaling and the Net Zero Industry Act enables member states in that sense to use criteria when they do public procurement that allow effectively to give a benefit to European producers when procuring such grid components. Secondly, we have taken action through the grid action plan when it comes to the question of standardization, which was also mentioned, that which is very important. Again, just to say that we fully agree that there are so much too broad variety of standards out there. This needs to be streamlined. There is an action going on as a follow-up to the protection plan of 2023 between the manufacturers and the TSOs to streamline those specifications. Then thirdly, we need common action to address what I think Mr. Tobac has called the tennis match. So the question of, you know, can producers, consumers, and public authorities sit together to give clarity on what the needs will be and how the upscaling will have to happen. In that context, our Commissioner has announced the launch of the so-called tripartite contracts on the fifth of september.”
  Sourcing of critical raw materials
• “Thanks very much to complement these comments from the energy side and I'll perhaps start with the more general comment from Mr Hedman about the need for this funding to actually benefit European companies and industry, something that we definitely consider to be perhaps the top priority objective of the whole program in the area of energy in two ways. First of all because better interconnectivity and the completed infrastructure are one of is one of the key conditions for actually ensuring a more competitive energy supply. I mean it can lower the prices of energy and that's of course super important for our companies. And secondly also because the massive build out program that will happen in this context should of course also to the extent possible be performed and done by European companies as the suppliers for this. And here I would just point to the fact that through notably through the NZEA we are trying to push also for a framework which ensures that European companies will be the ones delivering the technologies and the material for this. So this is maybe just a more general comment. Then on the some of the specific issues raised, there was a comment on potential earmarking for cross-border projects. Well let me say again that as has been the case in the past we would expect that the bulk of the funding in the energy envelope goes indeed to cross-border interconnection projects. These are a top priority under the TEN-E and for financing under the Connecting Europe Facility. This being said it is also possible as I already alluded to at the beginning to include projects which are in one Member State which reinforce the grid in one Member State into the list of projects of common interest and hence make them eligible for applying for CEF funding under certain conditions. And these conditions stipulate in particular that such projects have to have a demonstrable effect on increasing the trading capacity across borders above a certain threshold which is currently fixed at five hundred megawatt in the electricity field. So these internal reinforcements can also under certain conditions be eligible for funding but of course cross-border projects properly speaking remain the top priority. Then there was a specific question also on the possibility to finance gas infrastructure projects. This has been phased out already with the previous revision of the TEN-E regulation. We did a very thorough assessment at the time in terms of the additional potential additional investment needs in gas infrastructure and came to the conclusion that we do have a well connected natural gas infrastructure system which will serve the purpose also in view of the fact that we do of course have to gradually reduce our dependence on natural gas. We have reconfirmed this essentially when we did the assessment for the REPowerEU strategy showing that even in the case of a full phase out of Russian gas imports we are able to ensure the secure supply of natural gas with the infrastructure that we have or that is at an advanced stage of construction. So that's why we do not think it's necessary to support natural gas infrastructure going forward in brackets with the exemption of the two island Member States Malta and Cyprus which are currently not connected. Last point also Philippe commented on this, the link between the Connecting Europe Facility and in particular what can be financed going forward under the national and regional plans. Indeed we think that these need to work in a complementary manner. Interconnections can only be used if national grids are reinforced and here it's not only about the national grids at the transmission level but also at the distribution so at the more local level. These are investments which will be normally borne by the consumer who normally bears the cost of infrastructure investments in the field of electricity but given the enormous investment needs it will most likely be necessary to alleviate the burden on the consumer by using public funding and for that the national, the NRPs can be an important tool. What we have envisaged in the proposal for the NRP is a close link notably to the national energy and climate plans and this should ensure that indeed Member States use this funding also to support the development of infrastructure at local and regional level. And I would say perhaps a little bit in contrast to what Philippe said for the transport field, we will hope that this is that these type of investments will have a more important role in the next MFF than they've had in the past where with the exception of some Member States such infrastructure investments have not always been prioritized by Member States. So I think that's all from my side. Thanks very much.”
  Energy (green transition) · EU energy infrastructure integration
• “Thank you very much, Mister Chair, for the floor and thanks a lot for the invitation. Pleasure to be here. I think this is a very important debate and the members who've spoken, I think, have all underlined why this is the case. Absolute top priority in terms of making our energy transition viable and competitive, and the industrial dimension that we're talking about today specifically is really important in that context. I'll try to say in a few words why that is the case and what from the Commission side we have started to do to address this industrial dimension. I think it's clear from all the contributions that we've heard that our energy transition towards a more sustainable system will not be competitive, will not be compatible with our objectives to be prosperous and competitive unless we bring the grids up to speed. This is true for both transmission and distribution infrastructure. I will focus today on electricity, although there are also very significant investment needs in infrastructure outside of electricity. But if we look at the figures, and from the Commission side we've published a study recently on the investment needs that we see until 2040, it's clear that electricity certainly is taking the bulk of these investment needs. We have estimated that a total of 1.5 trillion euros will need to be invested in infrastructure until 2040, 1.2 trillion out of that in electricity, the rest mainly in hydrogen and also CO2 infrastructure. These in order to trigger these enormous investments, clearly as has been stated, visibility is key.”
  Energy transition (state support) · EU approach to electricity market and prices
• “Okay, thanks a lot. Then I try to reply as quickly as I can to the questions. So first, on Mister Grudler's question, indeed, I mean we will look not only at infrastructure but at other means of making the system more flexible because this is what's absolutely needed. We will do so in the context of the grid package but we will also do so in some of our other initiatives. I already mentioned the tripartite on storage and I will also mention that we are also working on an electrification strategy which will certainly look at the flexibility change challenge much more in detail. On the questions of Mr. Ehle, first of all, as regards MFF proposals, I mean we are very happy, let's say from the side of DG Energy if I can say so, to have seen a set proposal which would multiply the available finance that we have in this MFF by six more or less. So that is percentage wise the biggest increase I think we've seen in any program. I think that shows that this is a top priority for the Commission. But it is of course true that the Connecting Europe Facility targets specifically grid investments for the cross border dimension and these are only the smaller part of the total investments that we need. I mean the bigger part of investments will be in the national and specifically in the distribution grids. I fully agree on that. Now we will need other instruments to help with the financing of these investments, notably the of course much bigger national envelopes that will be part of the MFF as well. And here it will be crucial that we will manage to challenge or to incentivize Member States to use a significant part of that finance to upgrade their distribution grids and that of course includes also very important investments in digitalization. As you said, this is crucial. The digital package is indeed planned for Q4 of this year. We will review the cybersecurity legislation in this context and can of course here also provide more details if you wish. Then there was a question from Mr. Tonin on isolated areas. So I think there are two parts or the answer to this is twofold. On the one hand, we do want to connect some of those isolated Member States that we have today and notably this concerns our island Member States which still need to be fully integrated into our European grid because this will help them to decarbonize in a cost effective manner and to integrate the renewables. But it is also true that there will be some islands for which probably an integration into the connected grid will not be the efficient solution and here we need different solutions. We work on that as well in the context of our island strategy but indeed this will probably require quite targeted measures. And lastly, questions from Mr. Solhir on the saturation of grids. Again, there are two issues here. I think on the one hand, coming back to what I said in reply to Mr. Ehle, yes, I mean investments in the domestic grids remains absolutely crucial. There are also some of those investments if they have a cross border effect and benefit that we can actually promote through our 10E and CEF tools and we want to continue to do that. But of course other support mechanisms will have to be used as well. And then lastly, there is, I think, a horizontal issue which we've seen in many European countries which is indeed that the grids are saturated and that connection requests to the networks are in long queues and we have to find more intelligent ways to deal with these connection queues as an immediate measure before we manage to actually build out the grids to full capacity because that will inevitably take some time. And as part of our grid package, I can say that we also want to address this question of how best to deal with such situations of, let's say, temporary saturations of the grid and have grid Member States and grid operators to find efficient ways of dealing with these situations in a way that doesn't stall the energy transition and that doesn't stall the possibility for industry and also transport to electrify. So that's maybe all from my side in the shortness of time. Happy to reply bilaterally afterwards to questions I might have forgotten.”
  EU approach to electricity market and prices · EU policy on permitting for renewable energy projects
• “The first two of these tripartite contracts will be on offshore wind and grids and on storage, and these are specifically targeted to bring this clarity about and this concerted action of all major sites. I would also like to quickly, as a last dimension, point to the fact that we're working at the same time on technical innovation, which is also crucial. One important project in this context that we have promoted from the Union side with CHF fifty million support, financial support, is the Interopera project, which looks at developing an interoperable offshore grid that can be accessible to multiple vendors and hence be delivered in a more competitive manner. I want to finish by saying that we will look at the broader context of how to bring grid planning up to speed and also how to bring the implementation of grid projects forward in the context of the grid package that has been mentioned by some of the colleagues. We will come forward with our proposals at the end of the year and the core purpose here is indeed to improve not only the planning but also to accelerate the actual implementation of projects, which is crucial also for our suppliers. Thanks very much.”
  Off-shore renewables · EU policy on permitting for renewable energy projects
• “Thank you, thank you very much Philip and indeed I will complement this presentation with a couple of remarks on the energy side. To start off with the statement and assessment that in energy the investment needs in infrastructure will rise exponentially over the next decade, in particular for electricity infrastructure. This is for several reasons. It is on the one hand because of our need to decarbonize our energy system and to integrate growing volumes of renewables, but it is also to a certain extent cyclical because our energy and electricity infrastructure has reached a certain age where a lot of it needs to be replaced. So we have estimated that investment needs of up to six hundred billion euros will occur in this sector over the next decade or so. The Connecting Europe Facility is the dedicated instrument to support such energy infrastructure developments financially from the European budget. It is in particular the instrument which allows us to co-finance interconnections in the form of projects of common interest and projects of mutual interest. The latter are projects which connect Member States and third countries. The basis for choosing those projects, the most important ones for Europe, is the TEN-E regulation which was revised last in 2022 to align its scope with the priorities of the clean energy transition. This has meant in particular that we have phased out support for fossil fuel infrastructure and that we have included in the scope of the TEN-E regulation the possibility to support hydrogen infrastructure which we assume will have an important part in allowing us to decarbonize our infrastructure and our industry. We are also planning to propose from the side of the Commission the so-called GREX package which will include a revision of the TEN-E regulations still before the end of this year, which will in particular look at the structure in which the TEN-E regulation works and will enhance our capacity to plan infrastructure also at a European level. Trying, yep here we go. So a few words on what has been achieved with CEF in the field of energy since 2014. So under CEF One and CEF Two altogether, we've spent about eight billion euros for works and studies and have supported one hundred and twenty-four projects of common interest and mutual interest. With that amount, the majority of this funding has indeed gone to electricity infrastructure where we have co-financed interconnection capacity extension in particular to include the more peripheral parts of Europe physically into our internal energy market. One project to highlight in particular is the synchronization of the electricity system of the Baltic States with Europe which has happened at the beginning of this year, thereby ending the dependence of the Baltic States from the Russian energy system which was still in place until February this year. This has been achieved with the CEF grants of over a billion euros. Cumulatively, we have also significantly invested in the past in our gas natural gas infrastructure which has allowed us to come to a situation where we have a well-diversified natural gas infrastructure today and this has allowed us to phase out imports of Russian gas through this diversified infrastructure. The new priority is the financing of hydrogen infrastructure, first time this has been eligible last year. So the amount so far allocated are not yet as high and so far we are talking about studies but we assume that we will also go forward to co-financing the construction of hydrogen infrastructure. And then just to mention briefly the other categories, we do also finance digitalization in the form of smart grid projects, CO2 infrastructure, and last but not least projects in the field of cross-border renewables.”
  Low-carbon hydrogen · EU energy infrastructure integration
• “No, yeah thanks. Then just a few words on the specific objectives also in the field of energy. They are twofold. So on the one hand, and this has been the major part so far, we contribute to the development of projects of common interest and mutual interest. So as I mentioned, these are mainly interconnected projects but they can also include national reinforcements which are needed to enhance trade over those interconnectors which are selected under the TEN-E regulation as projects of common interest. So this is the bulk of the financing which we've done so far. And then the second priority, the second objective here under Article 3.2.b is to facilitate cross-border projects in the area of cooperation on renewable energy. These are important in order to achieve our renewable energy targets in a cost-effective manner and to allow Member States to cooperate on the achievement of those targets. Thanks Juan. Forward just quickly on the main changes compared to structural changes have already been explained by Philippe so I won't go into those specifically. For energy, the main change is certainly the increase in the proposed budget from 5.8 billion under CEF Two to almost 30 billion under CEF Three, so almost sixfold increase that we have proposed from the side of the Commission recognizing the enormous investment needs in energy infrastructure and the fact that a significant part of this will require support from the European budget from the EU budget because of its cross-border nature and the fact that Member States alone would not prioritize these projects sufficiently. The second change towards CEF Two is that we have now a single energy envelope both for the priorities of infrastructure and cross-border renewables. This again in order to enhance the flexibility of the instrument. I leave it at that. Thanks very much for your attention and back to you.”
  Off-shore renewables · EU energy infrastructure integration