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Ros Donald

Ros Donald

20.01.2014 | 4:30pm
EU policyCould renewable energy trading solve the EU’’s 2030 ambition problem?
EU POLICY | January 20. 2014. 16:30
Could renewable energy trading solve the EU’’s 2030 ambition problem?

High gas prices and crippling economic problems have left European countries unwilling to renew binding requirements to increase renewable energy generation in 2020. But critics say the likely alternative – an overall target with no country-specific requirements – offers no incentive for countries to up their game. Could a platform for trading renewable-sourced energy rekindle member states’ enthusiasm for country-level targets?

Mapping 2030

EU-wide renewables targets come under its 2020 package of climate and energy pledges. Member states have agreed to a 20 per cent reduction in emissions on 1990 levels, a 20 per cent increase in the amount of energy generated by renewables (split up on a country-by-country basis), and a 20 per cent increase in energy efficiency – all by 2020.

Policymakers have committed to extending the measures to 2030 by the end of next year. On Wednesday, the commission will announce its agreed combination of targets with a new white paper. And although this is expected to include a binding promise to reduce emissions by 40 per cent, another binding, country-level renewables target looks less likely.

While countries like Germany and Denmark want to see the target extended, the UK and Poland argue renewables shouldn’t be privileged over other low carbon technologies such as nuclear power.

Current energy trends are working against those who want to see a 2030 target.  For example, reporting after an EU energy conference, Channel 4 news anchor Jon Snow recounts country delegates’ enthusiasm for developing nuclear power, shale gas and even highly-polluting coal in response to rising gas prices in the EU – and equal appetite for scrapping renewable energy targets.

Supporters of the target are fighting hard, however. Two European Parliament committees have voted to keep the target and eight European ministers recently called for a binding commitment in a letter to the commission.

Compromise

A recent report in European Voice suggests a compromise may emerge: The EU looks set to announce an overall target requiring renewables to supply 24 to 27 per cent of the EU’s energy. But there will be no country-specific targets, meaning how much countries contribute to this figure will be up to them.

The reasoning goes that renewable energy heavyweights such as Germany and Denmark will shoulder most of the burden. Meanwhile, countries like the UK would have the flexibility to pursue emissions cuts with strategies like ramping up nuclear power.

Critics say it won’t work, however, arguing that without country-specific incentives, renewable energy development in the EU will stagnate. A spokesperson from Greenpeace tells European Voice the proposal “…is just smokescreen from the commission to cover up its intention to hit the brakes on renewables”.

Incentivising targets

EU delegations haven’t lost hope yet that the package could include country-specific targets, however. In fact, the current 2020 package  contains a mechanism that some sources argue could provide sufficient incentive for countries to accept another set of targets and carry on increasing renewable energy capacity.

Under a mechanism called statistical transfer, EU member states already have the power to meet their renewable energy targets by buying renewable-generated energy from their neighbours.

So technically, the UK could fulfil its current requirement to source 15 per cent of its energy from renewables by importing wind-powered electricity from Germany, for example. In fact, the UK government has considered doing precisely that with a consultation in 2012, exploring how “flexibility mechanisms” such as trading and joint projects could make reaching the renewables target more cost-effective.

Sources suggest a platform for trading renewable power might persuade that are close to achieving their 2020 target to carry on developing more renewable capacity and support further targets. For example, both Romania and the UK are close to meeting their pledge but oppose a further one because they wish to be able to develop technologies such as nuclear power.

The benefits of working with other countries to increase renewables’ penetration into the energy market could potentially be significant. A 2009 report from consultancy Poyry says using flexible mechanisms like statistical transfers could save the EU â?¬17 billion by 2020. In its consultation, the government also points out such measures could also encourage interconnection between countries, making production and consumption of renewable energy more efficient.

A way to go

But flexibility mechanisms haven’t been popular so far. There is currently no market or platform for trade in renewables and few countries have expressed an interest in trading. The mechanism still requires countries to be proactive about developing extra renewables capacity, with no guarantee at present that anyone will want to buy their surplus, according to a study by a group of German energy organisations examining cooperation proposals in the EU renewables market.

In addition, few EU member states expect to have a surplus of renewable energy. What’s more, countries tend not to know whether they will be in surplus or deficit until the last minute, Poyry consultant, Ali Lloyd, quoted in Environmental Finance, says.

All this means turning a good idea into a concrete proposal will take some work. The German authors point out that the current rules provide a lot of flexibility, but at present tend to favour ad hoc, short-term agreements. They say: “in the case that member states want to use [statistical transfers] as a reliable cooperation instrument in 2020, they should negotiate long term agreements at an early stage.”

Steering member states toward agreeing to renewable energy targets will take some persuading. Renewables trading could offer a potential lifeline to those who still want binding country-based pledges, but proponents will have to work fast to flesh out the proposals.


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