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Green energy in the EU

By Dave Elliott

In January last year the European Commission (EC) suggested that the EU should cut carbon emissions by 40%. Although it’s conditional on other countries setting significant targets, it’s a bold target, leading the way forward. But sadly the EC faltered on setting ambitious specific targets for how to actually do it. It only raised the targeted share of renewables in primary energy to 27% by 2030, up from the existing 20% by 2020 target.

That is pretty unchallenging – and not mandatory. Greenpeace pointed out that it would mean that renewables growth would drop from almost 7% p.a. in this decade to under 2% in 2020-30. Moreover, it also took a while for the EC to propose an energy efficiency target for 2030, to replace the current “20% by 2020” target. One perverse issue was that higher levels of efficiency would undermine the EU Emissions Trading Scheme – the carbon price would fall as there would be less CO2 to trade! But in July last year it proposed a 30%by 2030 energy saving non-mandatory target. And it may yet be reduced. http://ec.europa.eu/energy/efficiency/events/2014_energy_efficiency_communication_en.htm

The targets set for 2020 had included national level targets, but under pressure from the UK and others, the European Commission decided to avoid imposing national renewable energy targets for 2030. Given that the UK may not even reach its quite low 15% by 2020 renewable energy target (it’s only just now passed 5%), you can see why the nation was keen to avoid new targets. A clue to what might have been expected can be found in “Implementing the EU 2030 Climate and Energy Framework – a closer look at renewables and opportunities for an Energy Union”, an EC/Intelligent Energy-backed Towards 2030-dialogue Issue Paper produced by a group of EU research groups. Within the overall EU Renewable energy target for 2030 set at 27%, it develops some indicative benchmarks, adopting the same methodology used when the EC set national targets for 2020. The UK target would, it calculates, have been 23%. http://towards2030.eu/news/issue-paper-no-2-implementing-eu-2030-climate-and-energy-framework-%E2%80%93-closer-look-renewables-and

As it is, the UK is not alone in being likely to miss its 2020 target. A European Commission-backed review has found that 14 EU member states will fail to meet their share of the 20% renewable energy target by 2020, based on current progress. The EUFORES EU Tracking Roadmap warned that Belgium, the Czech Republic, Spain, France, Greece, Hungary, Luxembourg, Latvia, Malta, the Netherlands, Poland, Portugal, Slovenia and the UK are all likely to miss their 2020 renewable energy targets. There was uncertainty over whether Germany, Finland, Ireland and Slovakia will meet their targets, but predictions show Austria, Bulgaria, Cyprus, Denmark, Estonia, Italy, Latvia, Romania and Sweden will all comfortably hit their targets by 2020. Indeed Sweden has already overtaken its 49% target: by the start of 2014 it had reached over 52%. But for the rest, the EUFORES Keep on Track! report says “in order for Member States to achieve their 2020 target, it is essential that a predictable and stable legislative framework for RES is ensured at the national level and, in particular, that any retrospective or retroactive changes to existing support schemes are avoided.” http://cleantechnica.com/2014/10/07/14-european-union-member-states-will-miss-2020-targets/ For the most recent data see: http://ec.europa.eu/eurostat/documents/2995521/6734513/8-10032015-AP-EN.pdf/3a8c018d-3d9f-4f1d-95ad-832ed3a20a6b

A key point in this context is that, with the recession and concerns about the high pass-through cost to consumers, across the EU Feed in Tariff schemes, for PV solar especially, have been cut back – in some cases retrospectively. With PV costs now having fallen, this ought to be less of a problem, and the FiTs have certainly helped push PV and other renewables on, wind especially – it’s now nearing 130 GW EU-wide. So in terms of capacity they have been a great success. However, rather perversely, the EC has indicated that it wants the EU to move away from FiTs to more market-orientated approaches, like the competitive contract auction system now being used for new renewable energy projects (but not nuclear!) in the UK. Looking at this optimistically it might be argued that some renewables are now approaching competitiveness, so they need less support. But it remains to be seen whether market pressures alone will be enough to accelerate renewables to the extent that is needed to respond to climate change, and to many it seems unfair that nuclear is not required to meet the same market tests. Is the aim to privilege nuclear?

Certainly there are issue about nuclear “state aid”: should EDF be allowed to get high-level CfD funding for 35 years along with £10 bn loan guarantees for Hinkley? The case against was put well in this submission when last year the EC said it would report on this issue: www.bartlett.ucl.ac.uk/energy/news/european-commission-consultation. And of course much hung on it – the fate of the other proposed new UK nuclear plants and any that follow across the EU. But in October last year, some say rather hastily, just before the new EC team took over, a small majority of existing European Council members said it was fine. So now the door is wide open – although Austria and Luxembourg have said they will submit challenges. And the UK has said it would counter-attack!

The EU overall approach may seem a little convoluted, but away from specific supply-side programmes, some progress is being made. For example, EU energy use has fallen nearly 10% below a 2006 peak. It has returned to levels last seen a quarter-century ago, in the early 1990s. http://www.carbonbrief.org/blog/2015/02/seven-charts-showing-how-the-eus-energy-use-is-being-transformed/   And there are some interesting new cross-EU infrastructure projects. The EC has announced €647 m to be invested in key energy infrastructure to enhance security of supply across Europe. This includes €75 m for UK projects with cross-border benefits, including electricity interconnection (enabling electricity to be transferred between countries), smart grid and gas storage projects. UK projects awarded in this round include the longest proposed subsea cable in the world, the NSN interconnector linking us to Norwegian hydro, and two interconnectors to France. ElecLink will benefit from using the existing infrastructure of the Channel Tunnel and a further cable, FABLink, holds potential to connect to future tidal generation being developed off the Alderney coast. Together these projects would almost double the power the UK is able to receive over interconnectors. The Connecting Europe Facility provides grant funding to eligible “projects of common interest”. A further window for projects to apply for funds is expected soon. A total of €5.85 bn has been allocated to Trans-European energy infrastructure for 2014-2020.

It’s all part of a wider Energy Union concept, aiming to create “an integrated continent-wide energy system where energy flows freely across borders, based on competition and best possible use of resources, and with effective regulation of energy markets at EU level where necessary”. That will aid the market integration of renewable electricity generation, which, the EC says, “requires flexible markets, both on the supply and demand side, within and beyond a member state’s borders”. It notes that “There is a need to expand the possibilities for distributed generation and demand-side management, including intraday markets, to develop new high-voltage long distance connections and new storage technologies”. http://europa.eu/rapid/press-release_IP-15-4497_en.htm  and www.e3g.org/news/media-room/eu-energy-union-vision-road-to-paris-commission

Ambitious attempts to try to put a price on carbon and let markets press for reductions, as with the EU Emissions Trading System, may not have worked, due to political conflicts within the EU (countries that are heavy coal users have resisted tight carbon caps), but pan-EU infrastructure projects like those above seem to offer something for everyone, including the UK. Though given the outcome of the UK election, with a referendum on EU membership now certain, the UK may soon be heading in another direction. Who knows what that might mean, for example in terms of climate policy and the uncertainties that surround it. I will be returning to that later. But in my next post I will  look at what the election result may mean for UK national renewable energy policy.

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