Fri, 24 Jan 2014
ANALYSIS - A reduction in greenhouse gas (GHG) emissions by 40 per cent below the 1990 level, an EU-wide binding target for renewable energy of at least 27 per cent, renewed ambitions for energy efficiency policies, a new governance system and a set of new indicators to ensure a competitive and secure energy system. These are the pillars of the new EU framework on climate and energy for 2030 presented this week by the European Commission, writes Gemma Hyland.
Supported by a detailed analysis on energy prices and costs, the 2030 framework will ensure regulatory certainty for investors and a coordinated approach among Member States, leading to the development of new technologies.
The framework aims to drive continued progress towards a low-carbon economy and a competitive and secure energy system that ensures affordable energy for all consumers, increases the security of the EU’s energy supplies, reduces our dependence on energy imports and creates new opportunities for growth and jobs, by taking into account potential price impacts on the longer term.
The key elements of the 2030 policy framework set out by the Commission are as follows:
The Communication setting out the 2030 framework will be debated at the highest level, in particular in the European Council and European Parliament. It is accompanied by a legislative proposal for a market stability reserve for the EU emissions trading system (EU ETS) starting in 2021, to improve its robustness.
A report on energy prices and costs in Europe, published alongside the Communication, suggests that the rising energy prices can be partly mitigated by ensuring cost effective energy and climate policies, competitive energy markets and improved energy efficiency.
European Commission President José Manuel Barroso said: "Climate action is central for the future of our planet, while a truly European energy policy is key for our competitiveness. Today's package proves that tackling the two issues simultaneously is not contradictory, but mutually reinforcing.
"It is in the EU's interest to build a job-rich economy that is less dependent on imported energy through increased efficiency and greater reliance on domestically produced clean energy. An ambitious 40% greenhouse reduction target for 2030 is the most cost-effective milestone in our path towards a low-carbon economy. And the renewables target of at least 27% is an important signal: to give stability to investors, boost green jobs and support our security of supply".
The Renewable Energy Association and Solar Trade Association are disappointed by the lack of ambition for renewable energy in the European Commission’s proposed 2030 energy and climate change framework.
The REA and STA support binding targets for Member States as a means of sending a clear signal to industry of sustained Government ambition for renewables. The existing 2020 targets have been key to the recent growth in renewables and have been particularly valuable when negative rhetoric from Ministers has damaged market confidence in the UK.
REA Chief Executive Dr Nina Skorupska said: “We’re about to find out what happens when theoretical economics meets the real world. Theory suggests a ‘technology neutral’ approach is economically efficient. But experience shows that binding renewables targets do two things: First, they give a major long-term boost to investor confidence, helping accelerate market growth and technology cost reduction. Second, politics frequently trumps economics in the real world, and when politicians go wobbly on renewables, the targets help keep investment flowing.
“New binding targets for Member States would accelerate the cost reduction potential that is unique to renewables. Renewable generators are smaller and more numerous than fossil and nuclear generators, so the combination of greater competition and mass production leads to major cost reductions – as well as more jobs, community participation and greater resilience. Many renewables will be cheaper than nuclear well before 2030, and will be cost-competitive with fossil fuels – and no longer require subsidy – sooner with binding targets than without.”
The Government’s opposition to binding 2030 renewables targets comes as it is enthusiastically promoting the nuclear and shale gas industries. It also follows a series of damaging comments in recent months and years from certain Ministers with regard to renewables. The REA is urging the Government to demonstrate its ambition for renewables in order to send a clear signal to investors and accelerate market growth and the associated benefits: cost reductions, more jobs, community participation and greater resilience.
Dr Skorupska added: “The Government’s rhetoric on energy is very lopsided. Senior Ministers frequently trumpet the benefits of nuclear and shale gas while playing down their drawbacks. Yet they do the exact opposite for renewables – even though renewables have several of the same benefits: reducing our exposure to international energy markets, creating jobs on UK soil and increasing the tax take for HMT. It’s clear the Government envisages a major role for the nuclear, CCS and shale gas industries going forwards, but what is its vision for renewables in 2030, 2040 or 2050?”
On transport, which accounts for 25 per cent of UK greenhouse gas emissions, the Commission “does not think it is appropriate to establish new targets for renewable energy or greenhouse gas intensity of fuels used in transport”. This removes any direct incentive to decarbonise transport. Expanding renewable electricity will help electric vehicles contribute to decarbonisation, but sustainable biofuels offer more cost effective emissions savings in the shorter term. The UK is one of a number of countries having to urgently replace ageing power capacity to meet current electricity demand, let alone the significant increase in capacity required for a wide rollout of electric vehicles.
Dr Skorupska said: “Sustainable biofuels offer cost-effective emissions savings. But the Commission’s proposed framework removes the impetus for decarbonising transport, at a time when the sector is suffering from chronic uncertainty under the existing EU framework. The Government is currently consulting on advanced biofuels and how to support them, but this programme is unlikely to progress without a European framework that supports it. At the very least a decarbonisation target is required for transport, or else we will just be ignoring around a quarter of our greenhouse gas emissions until 2030.”
The Solar Trade Association is also concerned about the slowing down of renewables deployment and of the cost reductions resulting from market expansion.
STA Head of External Affairs Leonie Greene said: “It is something that Europe has agreed a 40 per cent emissions reduction target, albeit not high enough, but renewable energy stands at the heart of achieving this. From a climate perspective Europe needs to expedite, not slow, renewables deployment. From an economic perspective weakening ambition is nonsensical given the massive investments in renewables our international competitors are making. The 27 per cent renewables target is no more than the Commission expects under business as usual, so the Council and Parliament must improve this significantly if it's to have any meaningful effect.
“It’s shocking that the UK Government, one of the poorest performers on renewables in Europe, sought to squash such a valuable target. Let’s be clear, a target is not the same as public support. Solar is likely to need no public support in the next decade, but a target will provide the whole renewables industry with the confidence to invest for strong expansion going forwards. Now under this pan-EU target approach, we are likely to see a scenario where countries like Germany that take a long term perspective continue to strongly back their renewables industry into the next decade, while we fall even further behind.”
Commenting on the EU climate and energy package announced today, Greenpeace UK Executive Director John Sauven said: “After months of bickering and in-fighting the European commission has produced a set of proposals that will satisfy almost no-one. They will do little to tackle climate change and in their current form give little certainty to Europe’s once thriving but now fragile clean tech sector. They would also leave European consumers hopelessly exposed to rising fossil fuel prices, which is what drove up energy bills in the first place.
“The commission has set out its broken stall – it’s now up to Europe’s elected leaders to fix it. They must agree to cut greenhouse gases by at least 55 per cent by 2030 if they wish to play a meaningful role in a new global climate deal and help reduce the devastating impacts of extreme weather. They must also put in place a renewables policy that will give genuine confidence to those wishing to invest in Europe. Anything less will see Europe fall further and further behind the US and China in the global race for clean energy markets.
“This toothless policy, which involves no legal obligation on member states, has the fingerprints of a UK government in hock to the Big Six energy giants written all over it. David Cameron now has a clear choice ahead of him. He can go to Brussels and fight for British interests – which means supporting a genuinely binding renewables target that works for our world-class clean energy sector – or he can sacrifice the stability of the climate and the future of British industries in an attempt to buy off his party’s anti-green clique.
“Building a UK’s clean energy system will also be cheaper for consumers if we do it with our European partners. Grid interconnections, expanded markets and economies of scale will all help drive down the costs of renewable energy – whilst isolating our energy system from that of our nearest neighbours will pile more costs on UK tax-payers and bill payers.”