Wednesday, February 01, 2012

E.C. seeks more power over member-states' energy policy as Europe misses renewables targets

Günther Oettinger wants a pan-European energy market
Günther Oettinger believes lack of consistency and cooperation across Europe is the problem, and that more power in Brussels is the solution

European Energy Commissioner Günther Oettinger called yesterday for decisions on energy markets, security and renewable energy to be taken away from national governments and made in Brussels, as he admitted that Europe did not meet its 2010 renewable energy targets.

“These are strong arguments for giving [the EC] those powers,” Oettinger said in a speech to European policymakers. “In the next decade you would give greater value, or decide on a higher value for renewable energy in the [EU] energy mix.”

His call was supported by the President of the European Parliament, Martin Schulz, who said that European security and autonomy could only be achieved through more integration.

Under Article 194 of the Lisbon Treaty, individual EU member states have authority over their choice, use and structuring of energy resources.

In many countries this authority is jealously guarded because it is seen in terms of national security or as being politically useful during elections.

Several of them have still not transposed, or have only partly transposed, the the European Unions third energy package, intended to harmonise European markets into national. Furthermore, the energy mix of every state is qualitatively different.

Mr. Schulz acknowledged, however, that in the short term there would be no changes to Article 194. “The [energy] choice is made by member states and they are right to choose and we cannot get rid of that. But the right to choose your energy mix is a problem and we're going to have to talk about it a lot,” he said.

Renewable energy targets missed

Part of the reasoning behind the call is concern that the "20% by 2020" renewable energy policy goals will not be met.

Member states have just submitted their first reports to the European Commission outlining their progress towards meeting the targets, and most, including the U.K., missed them for 2010, as did the EU as a whole.

Only Denmark, Germany, Hungary, Ireland, Lithuania, Poland and Portugal expect to achieve their 2010 targets for renewable energy in electricity generation; and, only Austria, Finland, Germany, Malta, Netherlands, Poland, Romania, Spain and Sweden expect to achieve their targets for renewable energy in transport.

The European Commission said yesterday that it believes 2020 targets will only be achieved if member states fully implement their national renewable energy plans and more finance is available, which is not happening fast enough.

Oettinger believes lack of consistency and cooperation across Europe is the problem, and that more power in Brussels is the solution.

But Commissioner Oettinger's ambition doesn't stop there.

He also said yesterday that he wants to open talks on energy with Turkey in the current accession talks, and to enlarge Europe’s energy community to take in countries around its borders including Ukraine, Moldova, Georgia, Norway, Switzerland, Albania, Serbia, Montenegro and the Maghreb.

“Energy does not stop at the borders of the EU,” he stated.

Greater cooperation

Oettinger explained in his speech that he wants to see improved cooperation between member states and better integration of renewable energy into the single European market.

"We have to invest much more in renewable energy and we need smart, cost-effective financing. If Member States work together and produce renewable energy where it costs less, companies and consumers and the tax payer will benefit from this," he said.

To meet the renewable energy target, a doubling of annual capital investments in renewable energy is required throughout the continent, from €35bn per year to €70bn; this amounts to over one trillion euros between today and 2020.

Oettinger's Department says this will require "a substantial use of national support schemes", which "ought to be as cost-effective as possible".

A study released yesterday by the Department shows that, while different financial instruments are used in all Member States to develop renewable energy (grants, loans, feed in tariffs, certificate regimes etc.), "their management needs to be improved".

In an apparent jibe at the UK's recent policy about-turns it says: ″Retroactive changes to support schemes in particular must be avoided given the negative effect such changes have on investor confidence".

Once again it reiterates that investors need “greater coherence, clarity and certainty".

There are already three existing mechanisms which favour cooperation on energy between states:
  • "Statistical transfers" whereby one Member State with a surplus of renewable energy can "sell" it statistically to another Member State, whose renewable energy sources may be more expensive
  • "Joint projects" whereby a new renewable energy project in one Member State can be co-financed by another Member State and the production shared statistically between the two
  • "Joint support schemes" whereby two or more Member States agree to harmonise all or part of their support schemes.
The Commission says it will assess in 2014 the effective functioning of the cooperation mechanisms.

UK progress

The UK has so far not taken advantage of these cooperation mechanisms.

Its own Renewable Energy Directive Progress Report, submitted in December, shows that at the end of 2010 (the latest data available) 3.3% of its energy came from renewable sources.

Greg Barker, Minister for Climate Change, said yesterday he believed that this meant the UK is "currently on track to meet our first interim target of 4% over 2011-12".

The report adds: "we know the rate of deployment will need to be further increased to ensure we the meet the interim targets towards the end of the decade".

It is transport which is the particularly difficult area. 83% of the U.K.'s renewable fuel for transport is imported biodiesel, contributing to 3.3% of all the U.K.'s road fuels being renewable. The target is 5% by 2014.

In the latest example of action by individual states towards meeting the Directive's targets, Poland, notorious for its reliance on coal for electricity, announced yesterday that it will adopt a target of 15.5% renewables in its energy mix by 2020.

It said it is to switch support for investment in biomass, old hydropower plants and on-shore wind farms to solar energy, biogas plants, offshore wind generation and small hydropower units.

Deputy Economy Minister Mieczyslaw Kasprzak said he wanted to simplify and improve the support mechanism for renewables.

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