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BB200612, News in Brief

High Level Group on Competitiveness, Energy and the Environment has issued its second report: towards a sustainable energy future?

22.01.2007

Set up in October 2005 to advise the EU on future energy policy proposals competitiveness and the environment, the High Level Group (HLG) on Competitiveness, Energy and the Environment has adopted its second report on 30 October. The report focuses on a strategic energy future for Europe, investments in power generation and energy efficiency in a long term perspective (2030-2050). The HLG put forward further recommendations for building an EU energy policy based on a vision of a sustainable energy future “which will need to be low carbon, secure and competitive”.

The HLG (see Brussels Briefing July 2006) works as an advisory platform bringing together the commissioners for Enterprise and Industry, Competition, Energy and the Environment, senior representatives from European institutions (with the notable exception of the European Parliament), European industry (with the also notable exception of renewables industries) and civil society. It has already met three times in 2006 (28 February, 2 June and 30 October) and has now eight ad hoc working groups.

This second report was expected to advise the EU on the Lisbon national reform plans and on renewable energy, but mainly focused on long term energy future for Europe.

Massive investment in power generation and energy efficiency

According to the HLG report, the EU cannot continue to project its energy future on the basis of current trends. A change in trend is “necessary and has to be brought about immediately” with urgent implications for policy development, since many investment decisions have to be made soon to meet expected energy demand and to replace ageing infrastructure. For the group, the report considers that no single technology is able in the long term to meet the challenge of being the most cost-effective, zero/low carbon emitting and available internally or imported with few risks in terms of price and quantity.

In this context, the HLC calls EU and Member States to build a “comprehensive evidence based on energy strategy for its future” driven by a set of sustainable energy targets: long term greenhouse gases and CO2 emissions reduction targets; EU-wide objectives on the contributions of energy efficiency; and a shift in the energy mix. Long term predictable incentives are necessary for “massive” investments in the energy system. These incentives require an efficient regulatory framework, have to be market based and internalise externalities as much as possible. Thus, emissions trading is seen as a crucial tool to internalise the climate change externalities through carbon price.

An international approach

The HLG agreed that the EU will need to continue to demonstrate leadership in order to increase international consensus, and to build a global emissions trading system through linking up other countries, such as USA, Russia, Japan, China and India. In addition, the Commission should build further agreements and strengthen international cooperation in order to create further access to resources and develop innovative technologies.

Innovation and R&D

On innovation, the HLG recommends that the Commission should set up a strategic European Energy Technology Programme. The group believes that, as part of this, the EU should create Joint Technology Initiatives on relevant themes (e.g. renewable energies, carbon capture and storage).

The report stresses that all energy sources should become commercially viable and that market distortions in the process of development should be minimised. EWEA supports these recommendations as a realistic and practical way to deliver sustainable and competitive energy for Europe and adds that c orrecting market prices so that they incorporate all costs and benefits related to the different technology options is the best guide to rationalise investment decisions. Such rationalisation includes environmental impacts and use of common natural resources, but also other issues such as oligopoly behaviour, asymmetric information, non-market protection, etc.

In EWEA’s view, the conjunction of energy challenges that Europe is currently facing should be regarded as a historical opportunity for Europe to secure a truly indigenous clean energy supply based on renewable sources of energy. Combined with much more ambitious efficiency measures and biofuels, it is the only way for Europe to turn the looming energy and climate crisis into a competitive advantage and contribute positively to the increased welfare of our citizens.

Next steps

During the third meeting on 30 October, the High Level Group has set up two additional ad hoc groups to the 6 existing ones. Those sub-groups are charged with analysing innovation and technology perspectives in energy intensive industries in Europe (ad hoc group 7) and with providing information about the financial importance, the need and rationale for environmentally harmful subsidies (ad hoc group 8). These issues are expected to be the main items of next High Level Group on Competitiveness, Energy and the Environment meeting in February 2007.

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