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Policy News, BB200603

Green Paper published by European Commission

04.02.2007

On 8 March, the European Commission published its long awaited Green Paper on energy . The Green Paper will be on the agenda when EU heads of state meet in Brussels for the Spring Council meeting on 23-24 March.

In EWEA’s view, the Green Paper includes all the right elements, but falls short of presenting a new vision for Europe, as communicated in our press release. Overall, the Green Paper is too focused on how to act in the current energy framework and does not fully address the root of the problem: We are going to import an ever growing share of our energy at unpredictable (but most likely higher) prices in competition with the rest of the world and at unbelievable environmental cost.

Broad Member State consensus and public acceptance

The overall position of EWEA, and the other Brussels based renewable energy associations under the European Renewable Energy Council (EREC) umbrella, is that:

An EU energy policy should only address those issues where there is broad consensus among Member States and a large degree of public acceptance.

That position is also shared by the European Energy and Transport Forum, a consultative committee created by the European Commission composed of high level representatives from a large range of sectors and activities in the fields of energy and transport, as explained in last week’s Brussels Briefing.

The failed elections on the European Constitution, notably the “no”-vote from French and Dutch voters, should be a valuable lesson for policy makers. We cannot move forward with a European energy policy unless it contains the topics that a large majority of European citizens can accept and for which there is broad consensus among Member States.

Areas with a clear consensus for priority by Member States and the general public are:

  • energy efficiency;
  • renewable energy;
  • distributed generation;
  • energy infrastructure and cross-border trade; electricity and gas liberalisation and competitive markets;
  • energy diplomacy,

A EU-wide survey from Eurobarometer “Attitudes towards energy” from 24 January 2006 concluded that almost 80% of EU citizens support renewable energies as their preferred alternative to high-priced oil and gas.

When asked what the National Governments should focus on in order to reduce the current energy dependency, Europeans clearly support the enhanced use of renewable energies, particularly solar energy (41%) and wind power (31%). To respond to the energy challenges, developing the use of nuclear power (12%) scores poorly, confirming the results of an earlier Eurobarometer on nuclear waste. Somewhat surprisingly, only 8% of the French respondents would support a government focused effort on developing the use of nuclear energy to reduce energy dependence.

Turning the energy and climate challenges into a European opportunity

In a press statement, following the publication of the Green Paper, EWEA acknowledged that the purpose of the Green Paper is to initiate a long-needed public debate on two of the most serious challenges Europe is currently facing: energy supply and climate change. However, EWEA would have liked to see more visionary content.

"Two or three decades from now we will be importing 70% of our energy from a handful of countries at unpredictable prices and at phenomenal environmental cost unless we take a dramatic U-turn", said EWEA CEO Christian Kjaer. "A common European energy strategy is needed if we are to turn the energy and climate challenges into an opportunity for Europe. A fundamental pillar of such a strategy should be clean and indigenous renewable energy sources combined with energy efficiency measures".

The Commission has identified these challenges before in Green Papers, without making any significant efforts to aggressively deal with the challenge, not least because it has been difficult to get Member States onboard. The debate died and no measures were taking to follow up. It is EWEA’s hope that we will not see the debate initiated by this Green Paper suffer the same fate as previous attempts to address the issues.

EWEA believes that regardless of whether we are successful in energy diplomacy or not, we have no idea about the future cost of energy we will be paying to maintain current supply. If we are to shape our own energy future, we need to shift direction and start developing the indigenous, clean resources that are available at our doorstep – forever.

"It will be a challenge to shift our energy supply towards 100% renewables, but compared to the challenges, risks and costs of basing our future energy supply on the current structure, the challenge is insignificant," says Christian Kjaer, EWEA.

Giving the Commission the benefit of the doubt, the lack of detail and vision in the Green paper could be a result of the Commission trying not to scare away Member States from agreeing on the overall goal (from the Commission’s perspective): to make energy part of EU co-operation – a goal EWEA supports.

The Green Paper should also be viewed in the context it was developed. The Member States, i.e. the Council, has not previously been able to agree on a common energy policy for Europe and the UK has been one of the strongest opponents. That changed with the meeting among heads of state in Hampton Court last year where, suddenly, the UK changed position and supported a European approach.

Lack of long-term targets

Nevertheless, EWEA is mystified that the Commission seems to be moving backwards when it comes to long-term targets for renewables. Two years ago, the Commission referred to a target of 20% renewables in 2020 and communicated its intention to set targets for beyond 2010 in 2007. Now it refers to a “Renewable Energy Road Map” which would include consideration “of which targets or objectives beyond 2010 are necessary, and the nature of such targets”.

The European Parliament has, for many years, called on the Commission and the Council to set long-term targets. In the European Parliament resolution on the share of renewable energy in the EU from 2005, the European Parliament:

14. Stresses the importance of setting mandatory targets for 2020, which will send a clear signal to market actors, such as large-scale energy companies and the financial community, as well as to national policy makers, that renewable energies are the future of energy in the EU and part of its environmental and industrial strategy;

15. Calls on the Commission to continue to monitor closely compliance by the Member States with indicative national targets and to seek to draw up a medium-term renewable energy strategy for EU covering the period after 2010, in addition to a detailed assessment of progress in achieving the 2010 objectives and value-for-money for final consumers (including the calculation of external costs) and, finally, progress made in improving energy efficiency;

16. Recalls its resolution of 1 April 2004 in which an overwhelming majority of the House called for a 20% target for renewable energies in the EU's overall energy consumption by 2020;”

The issue of targets is being debated heavily prior to the meeting of EU heads of state in Brussels on 23-24 March. In a statement on the Green Paper, German environment minister Sigmar Gabriel criticised the Commission for putting too great a focus on energy security issues at the expense of renewable energy and climate policy. In an interview with Handelsblatt, a German business daily, Mr Gabriel said that the Commission had failed to propose targets for renewables beyond 2010 or for reducing greenhouse gases beyond 2020.

Mr Gabriel also said the EU is spending too much on outdated nuclear power and not enough on renewables. The Commission should realise that a big majority of member states - 17 of 25 - do not have any nuclear reactors and have no plans to promote nuclear energy in the future, he said.

Six priority areas

The Green Paper identifies six “Priority Areas” to meet the objectives of an energy policy based on sustainability, competitiveness and security:

1. Completion of the internal markets for electricity and gas
2. Guaranteeing security of supply and solidarity between Member States
3. A Community-wide debate on the different energy sources
4. Climate change and its compatibility with the Lisbon objectives
5. A strategic energy technology platform – Research & Development
6. A common external energy policy – energy diplomacy

Completion of the Internal Market

Generally, the European Commission is not pleased by the progress of the energy liberalisation in most Member States as the 4th benchmarking report makes painfully clear. It points out four key reasons for the lack of success in achieving a competitive market: lack of cross-border transmission links, existence of dominant, integrated power companies, biased grid operators, and the non-existence of a liquid wholesale electricity market. The Commission sees market concentration and dominant incumbents as “the most important obstacle to the development of vigorous competition”.

The Green Paper mentions five core areas that need particular attention:

1. A European Grid
2. A priority interconnection plan
3. Investment in generation capacity
4. Unbundling of generation and transmission
5. Boosting competitiveness of European industry

EWEA is concerned about the many distortions still present in the markets that would discriminate against renewable energy sources if the latter were to be made fully subject to the forces of the Internal Market.

Unfair discrimination is keeping wind power and other third parties from entering many European markets: Nuclear is shielded from Internal Market rules through the Euratom Treaty; competition in the electricity and gas markets is still very limited and highly distorted; effective cross border competition in the EU electricity markets is challenged by the existence of national and regional monopolies and oligopolies; third party access is hindered by the dominant players; vast amounts of state aid in the Community is paid to conventional electricity sources; no effective unbundling of production and transmission / distribution has been done.

Furthermore, there are few incentives for grid operators to build new interconnector capacity and extend grids. For both conventional power and large-scale renewable electricity, grid reinforcement, grid expansion and interconnectors are necessary to facilitate trade.

The EU energy mix

The Commission acknowledges that Member States are free to choose their own energy mix – a principle highlighted by the failed Constitution. However, there is “a need for the EU as a whole to have an energy mix that, overall, meets its core energy objectives”. The Green Paper suggests a “Strategic EU Energy Review” that would analyse the advantages and drawbacks of the different energy sources. It also throws up the idea of agreeing on an overall strategic objective against which the development of the EU’s energy mix could be benchmarked. As an example, the Green Paper mentions that one objective could be to “aim for a minimum level of the overall EU energy mix originating from secure and low-carbon energy sources”.

The Commission’s idea of “a minimum level of the overall EU energy mix originating from secure and low-carbon energy sources” is interesting. However, whenever the Commission talks about “low-carbon energy sources” it has a much broader definition than “renewable energy sources”, and includes nuclear and carbon capture and storage. In that context, the Green Paper seems to introduce a minimum share for nuclear power, while going soft on long-term renewable energy targets.

EWEA agrees on the need to dramatically change direction and develop our indigenous resources.

"If we are to turn the looming energy challenge into an opportunity for Europe, we must seize the opportunity created by the large turnover in generating capacity in the next two decades to secure a truly indigenous energy supply while dealing with a looming energy crisis and the threat of climate change," said Christian Kjaer, EWEA CEO.

It would be impossible to turn the energy and climate challenge into an opportunity without dramatically changing the current energy mix towards a greater use of renewable sources – the only indigenous resources we will have left in a few decades that does not add to the climate disaster and at cost that can be predictable because they have no fuel component.

Wind energy

The Green Paper makes a reference to “installed wind energy capacity equivalent to 50 coal fired power stations, with cost halved in 15 years.” It also states that “renewable energy is now starting to compete on price with fossil fuels”. It recognises the “environmental and economic advantages” of increasing the use of renewables.

The Green Paper states that offshore wind needs “positive encouragement to be realised,” and that “..the full potential of renewable energy will only be realised through a long-term commitment to develop and install renewable energy”.

Renewable Energy Road Map

The Green Paper states the intention to “bring forward a Renewable Energy Road Map”. EWEA supports the initiative in principle, but final judgment will be based on the actual content of such a Road Map. It certainly has to be way more ambitious and far more concrete than expressed in the Green Paper, not least in terms of long-term renewable energy targets, including a specific target for electricity.

Just as the Commission seems to be backing away from previous commitments on targets, it seems to have forgotten the intentions of European Heads of State’s climate change commitments. At last year’s Spring Council, European Heads of State agreed to pursue greenhouse gas reduction pathways for developed countries in the order of 15% to 30% by 2020. A reference to that agreement at last year’s Spring Council is missing from the Green Paper, but the agreed target of a maximum rise of 2 degrees centigrade in global temperatures above pre-industrial levels is mentioned.

While it seems fair to treat energy efficiency and renewables in the same section in the Green Paper, the decision to add carbon capture and storage (CCS) in the same section is an obvious mistake. Renewables – not least wind power - and efficiency are proven technologies. CCS belongs in the research section, together with other potential long-term options such as hydrogen and nuclear fusion.

R&D

References are made to the importance of “low carbon technologies”. Again, the definition is much broader than “renewable energy sources”. References are made to the FP7 and its importance for energy related research. The Green Paper calls for an “appropriately resourced “strategic energy technology platform” and the proposed European Institute of Technology, without going into details as to the more specific content. References are made to technology platforms on biofuels, hydrogen and fuel cells, photovoltaics, clean coal and electricity networks. There is nothing new in this. All these platforms have already been set up. There are no references made to the technology platforms proposed for wind energy and solar thermal.

The Paper mentions the possible need for “large-scale integrated actions” while referring to the very costly ITER and Generation IV initiatives – both nuclear related. It talks about investing in “large-scale renewable technologies” and mentions concentrated solar thermal, but not (offshore) wind energy.

In EWEA’s view, the Commission continues to neglect long-term R&D for wind energy. We have an enormously rich wind resource in the form of offshore wind energy in the seas surrounding Europe. Both in terms of offshore infrastructure and technology development, offshore wind should be seen as a strategic resource that Europe needs to develop if we are ever to achieve competitive electricity markets in Europe, a larger degree of energy independence, at lower and predictable costs and reduced environmental impacts.

"The effect of depleting oil and gas reserves will be felt long before the fields are actually depleted in the form of drastic price increases in energy supplies and, consequently, economic distress. If measures are not taken today to prepare for the transition to an economy based on new, indigenous renewable energy technologies such as wind power, time pressures and oil prices potentially far greater than the already inflated prices of today are likely to cause great economic and social upheaval," says Christian Kjaer.

Increased R&D funding is an objective established at the Barcelona European Council in 2003, which targeted an EU R&D spend of 3% of GDP. Without such an increase, it is felt that Europe can not achieve the main objective of the Lisbon Strategy to become the world’s most powerful, knowledge based economy, without sacrificing en route the sustainability pillar of the strategy.

Failure to provide sufficient R&D to wind energy would be to risk losing one of the key new global technology growth areas in which Europe has a distinct global competitive advantage today, and which could be a giant source of commercial opportunities for European companies. In 2004, European companies held an 80% share of the global market for wind turbines.

Commissioners

"The energy challenges of the 21st century require a common EU response. The EU is an essential element in delivering sustainable, competitive and secure energy for European citizens. A common approach, articulated with a common voice, will enable Europe to lead the search for energy solutions", underlined European Commission President Barroso at the launch of the Green Paper.

"The completion of the internal market, the fight against climate change, and security of supply, are common energy challenges that call for common solutions. It is time for a new European energy policy", said Energy Commissioner Andris Piebalgs.

In a speech the following day the Energy Commissioner said: “This energy challenge requires a global response: a new energy system, based on effective collaboration between producers and consumers, efforts to increase energy efficiency worldwide and a quantum leap in the production of renewable and low carbon energy. The EU is in a unique position to lead this response – it heads the world in terms of efforts to produce competitive renewables and energy efficiency and has established effective energy dialogues with both producers and consumers. However, European energy policy has to-date been fragmented and less focussed than it might be, which has certainly reduced its impact on the global scene. If Europe could agree its clearly identified energy goals and priorities and pursue them rigorously with a single voice, it can lead the new global energy agenda, not follow it. This is the fundamental reason why Europe needs a common energy policy.”

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