A look at the current state of EU energy policy, one year after Draghi's initiative.
The European Union is in the process of implementing a long-term energy plan, based on the recommendations made by former Italian prime minister Mario Draghi in his September 2024 report. The plan, aimed at addressing high energy prices and boosting competitiveness, sustainability, and decarbonisation, is expected to undergo a fundamental revision in the coming months.
One of the key areas highlighted by Draghi was the need for deeper electricity market integration. Measures to deepen this integration are planned for proposal in early 2026, with the aim of marking a genuine step towards a real EU electricity union. However, the Affordable Energy Action Plan, published by the European Commission in February 2025, has not fully implemented several proposals from Draghi's report.
The Commission has increased the funding for electricity infrastructure from €6 billion to €30 billion in the proposed EU 2028-2034 budget. This increased funding signals the Commission's intent to invest in energy infrastructure to underpin European competitiveness. The Commission is also set to propose a European Grid Package by the end of 2025, which aims to upgrade and expand grids to support rapid electrification and speed up permitting.
Another important aspect of Draghi's recommendations was the need to remove national political obstacles to the development of interconnectors and to shorten permitting times for clean energy projects and electricity grid expansion. However, these aspects have not been addressed in the Affordable Energy Action Plan.
The Commission has adopted a new State Aid Framework in July, giving EU countries greater leeway to subsidise energy for industry. This move is risky due to potential distributional implications, fostering a subsidy race, and keeping energy demand high.
Potentially significant initiatives for energy integration in Europe are on the way. The Commission has endorsed several of Draghi's proposals, but the implementation is yet to be seen. The response to Draghi's call for action on energy has been more incremental than disruptive.
The initiatives will show if Draghi's recommendations on energy will have any real lasting impact. These initiatives will represent Europe's moment of truth for energy integration. The Commission has also signed a pledge to buy $750 billion of energy products from the US by the end of 2028 as part of the EU-US trade deal.
In conclusion, the European Union is taking steps towards implementing a long-term energy plan based on Mario Draghi's recommendations. However, the success of these initiatives and their impact on energy prices, competitiveness, and decarbonisation remains to be seen.
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