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Policy News, BB200610

Green Paper for Sustainable, Competitiveness and Secure Energy: Recommendations from the European Wind Energy Association

22.11.2006

The 24 of September marked the end of the official period in which EU citizens, organizations and stakeholders were allowed to submit their opinions on the content of the Green Paper for a Sustainable, Competitive and Secure Energy, launched by the European Commission earlier this year.

The European Wind Energy Association (EWEA) has submitted a position paper which expresses its views on the key energy policy matters contained in the Green Paper in more depth. This position paper is the result of several months of work of experts from the wind industry (EWEA members) and has been unanimously approved by the Board of the association.

EWEA welcomes the debate opened by the Green Paper on critical matters, such as the urgent need for investment, increasing dependency on fossil fuels, rise of global energy demand, climate change, non-competitive energy markets, etc. In EWEA’s view, the Green Paper includes all the right elements in the description of the challenges that Europe is facing, but fails in offering a more visionary content in relation to the future of energy supply structure.

In the old structure of utility monopolies, the system was always securing excess generating capacity, knowing that the costs of new build would be passed on to consumers through utility mandates from governments. This situation is rapidly changing andspare electricity generating capacity is at a historical low in Europe, demanding a vast amount of investment - around one trillion euros according to the Green Paper. Complementing the investment in capacity is a need for a complete overhaul of the European grid infrastructure. Such a task is also required to carry through the cross-border trading envisaged in a competitive internal market, and for the new East-West dimension.

The conjunction of these circumstances should be regarded as a unique opportunity to make a dramatic change in Europe’s approach to secure its energy supply, rather than as a structural economic disadvantage. In EWEA’s opinion, the main objective of an EU energy policy, as proposed by the Green Paper, should be to use the chance created by the large turnover in electricity generating capacity to secure a truly indigenous clean energy supply based on renewable sources of energy.

The Green Paper recognizes that there remain substantial barriers which prevent the creation of truly competitive European markets for electricity and gas. A priority line of action to attain effective competition is to ensure that full legal and ownership unbundling between transmission/ distribution, production and trading activities takes place and that enforcement measures can be used if it is not the case. This would imply the reform of EC Directives 54/2003 on the electricity market and of 55/2003 on the natural gas market. Prior to that, the Commission has to make sure that all Member States at least implement, in spirit as well as in practice, what has been agreed until now.

Another strategic issue is the reinforcement and extension of interconnection capacity, which will have to accommodate the further development of renewable electricity generation. The existing guidelines for European energy networks can provide a good framework for upgrading the European grid infrastructure; also the nascent trans-national grids must be prepared to absorb offshore wind power. The Priority Interconnection Plan should make sure that these aspects are addressed.

EWEA supports the establishment of a European energy regulator as a means to ensure the creation of a well-functioning liberalized energy market.

In relation to the proposed European Grid code, it is clear that the numerous and frequently changing codes often contain overly costly and challenging requirements for the wind energy sector. In addition, they are developed in a non-transparent manner by vertically-integrated power companies, in direct competition with smaller operators. In EWEA’s view, such requirements should only be applied if there is a true technical rationale for them.

In terms of diversifying the energy mix, it seems obvious that the only way to ensure that Europe promotes climate-friendly diversification of energy supplies is to dramatically increase the share of renewable sources and combine such efforts with measures to increase end-use efficiency.

EWEA asks for an overall long term target of at least 20% EU energy demand to be covered by renewable energies in 2020, split into sectoral targets for electricity (35% by 2020) heating (25%) and biofuels (12%). Long-term targets are needed to maintain investors’ confidence and to signal direction to policy makers and civil society. In turn, sectoral targets are essential because they reflect the different nature of the various renewable energy technologies, as well as their divergent requirements in terms of infrastructure planning, support legislation and monitoring tools. The logic of an overall long-term target stems from a bottom-up approach in which concrete sectoral targets at national level are built first, ending in an overall figure; given the limited possibilities to “swap” one renewable energy resource from one sector to the other (except in some types of biomass). It makes no sense providing a headline figure of 20% without the supporting calculations of how this can be split among the main sectors of electricity, heating and biofuels and providing those sectors with individual targets. EWEA is also in favour ofmaking national energy targets mandatory up to 2010 with an EU directive.

As it has been correctly pointed out by the Green Paper, offshore wind can make a fundamental contribution to the overall goal of increasing the EU’s energy self-sufficiency, by providing large-scale power to different countries. For this to happen, some issues have to be solved, for instance those related to grid extension and reinforcement and to R&D in fundamental areas. In general terms, a European policy for offshore wind energy, in the form of an action plan, is needed. In this field, the European Commission has to build upon the main conclusions of the Copenhagen Strategy for an effective deployment of offshore wind energy technology.These include the “one-stop shop office approach”, the convenience of defining division of responsibility among different layers of the public administration in Member States, the need for long term grid planning, the importance of more efficient consenting procedures which build on past experience and are in proportion to the scale of the project, the need to ensure good quality assessments, and the establishment and use of marine spatial planning instruments to arrive at optimal site selection.

EWEA supports the EU Emissions Trading Scheme (ETS) as a potentially powerful tool to meet the agreed targets for GHG emissions, but acknowledges that it has some limitations. In particular, its current design does not guarantee per se the leveling of the playing field between polluting and clean technology; it cannot replace environmental taxes/ CO 2 taxes and will not secure the internalisation of the majority of external costs. In the light of recent Community reports, such as the first independently verified emissions data, released in mid-May this year, it is evident that there has been an overallocation of permits during the first period, a situation that must be solved in the short term with the second NAPs under discussion. EWEA believes that the ETS should include more sectors in the second stage (2012 onwards), such as aviation and road transport as well as 100% auctioning of the emission allowances in order to overcome the obvious distortions of the current design. Binding measures for sectors not included in the Directive need to be shaped.

Reducing costs of renewable energy options, especially in the case of wind energy is one of the main targets for the sector. Effective cost reduction can only be achieved in a balanced combination of implementation and innovation. Sufficient R&D budgets and efforts should be guaranteed and go hand-in-hand with a stable implementation policy to gain economies of scale. EWEA is staking a claim for a fair share in European R&D programmes, notably FP7 and proposes that the historic amounts of funding for the various energy technologies are taken into consideration when allocating R&D funds.

On 19 October 2006, the wind energy sector will launch a wind energy technology platform (TPWind) that is to become the indispensable forum for the crystallization of policy and technology research and development pathways. This initiative should be used as a basis when deciding how to allocate existing fundsamong different priorities. The proposed “Strategic Energy Technology Plan” could assist in achieving better co-ordination and complementarities among RES efforts, provided that balanced representation of the different sectors is ensured.

Finally, EWEA believes that the EU should play a more active role in spreading a sustainable energy model to third countries as part of its energy diplomacy. It is important that renewable energy and energy efficiency priorities are incorporated into bilateral discussions with third countries/ trade blocks, given Europe’s leadership on those fields. Increasing their global deployment will benefit the EU in terms of employment and economic prosperity. The renewable energy sector should be formally consulted through existing platforms to make sure that the key points are covered in the negotiation processes.

In his speech on the 22 nd of September 2006, on the occasion of the Public Hearing on a European Energy Policy that took place in Brussels, Commissioner Piebalgs announced the list of outputs that will come out of the Green Paper, due before the end of this year. These are:

- An EU Strategic Energy Review.
- A long-term Renewables Roadmap.
- An Internal Energy Market Review and the final results of the Sectoral Competition Energy Enquiry.
- A Priority Interconnection and Infrastructures Plan.
- A Communication on Sustainable Coal.
- A Communication on Nuclear Energy in the EU.
- An Action Plan on Energy Efficiency.

In addition, a Strategic Energy Technology Plan which “re-orientates and co-ordinates spending on the existing research money” will be presented in 2007.

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