Champagne corks could be heard popping in the offices of Europe's renewables lobby groups last month after EU governments signed up to what they are calling the world's most ambitious target for renewable energy -- 20% by 2020. In the cold light of day, however, much of the initial euphoria has given way to concern about whether the revolutionary changes required of the energy sector will actually be forced upon it.
At its spring summit in early March, the European Council -- made up of leaders of the 25 EU member states -- endorsed the target put forward in January by the EU's executive arm, the European Commission. It is to be achieved by setting binding targets for the use of renewable energy for each member country. Aside from a mandate for all transport fuel to contain 10% biofuels by 2020, how member states are to meet their national targets is not specified. It will be up to each of them to determine the mix of renewables in three defined energy sectors: electricity, heating and cooling, and transport.
The renewables lobby and the European Parliament had wanted to see binding targets for each energy sector. But flexibility was considered by the Commission to be key to securing governments' agreement to the overall binding target. Indeed, many within the renewables community had doubted that countries would sign up to mandatory targets which the majority of governments had always previously resisted.
The EU binding target is a major plank of the Commission's renewable energy road map unveiled in January as part of its energy and climate change package (“uåX˜äŠÊ˜·³Ç, February 2007). The huge legislative package was put together after a review and consultation on energy policy following a 2006 green paper on energy. It has the strategic objective of helping to limit the rise in global temperatures to 2¡C above pre-industrial levels and of boosting security of energy supplies.
Contrary to many expectations, heads of state agreed to nearly all the measures in the energy package. These include a 20% reduction in greenhouse gas emissions by 2020 from 1990 levels, although the EU will go further and adopt a 30% goal provided the US and other major emitting countries follow suit. They also agreed to increase energy efficiency by 20%, strengthen and harmonise the role of energy regulators, accelerate cross-border grid interconnections and bring forward priority transmission network projects including connections for offshore wind stations in Northern Europe.
There was a major sticking point, however. The Commission, strongly backed by the wind industry, proposed full separation of the network operations of vertically integrated energy companies from their generation and supply activities, an action referred to as "unbundling" in Euro-speak. But the Council bowed to pressure from the huge incumbent power majors, who have no desire to see their empires split up, and merely agreed on the need for "effective separation" of the businesses.
Comprehensive vision
The Council's call for stronger measures for renewables came just two weeks after energy ministers had ducked out of endorsing the binding target. It brings governments into line with the Commission and the European Parliament, which has long favoured renewable energy and would prefer the EU to adopt the more ambitious 30% goal straight away.
It is the first time a comprehensive package of measures has been tabled to establish a renewable energy policy in Europe, according to Matthias Ruete, the Commission's Director-General of Energy and Transport. "It is the Commission in Europe at its best; trying to put forward a comprehensive vision of where we should be going," he says. "The Commission shares the vision of the European Parliament; we need to go to the 30% target, but we do need to engage other countries."
According to the Commission, the 20% EU target will reduce fossil fuel consumption by 250 million tonnes each year at an additional annual cost of between EUR 10-18 billion. The current EU energy bill is EUR 350 billion. Under a high cost of oil scenario, however, the cost of meeting the target would fall to practically zero.
Nuclear horse trading
The German presidency achieved the historic breakthrough after a large degree of horse-trading in the run up to the summit. Earlier this year, only Denmark and Sweden openly backed Germany in pushing for the binding target. The turning point came when, in a U-turn, UK prime minister Tony Blair came out in favour, although since he is due to step down this year he will not have to oversee its implementation. The other major sceptic, France, was finally persuaded on board on the understanding that its nuclear fleet would count as a low-carbon energy source when setting its national target for green power. This provision also reassured Finland. The newer member states of Eastern Europe and the three Baltic countries, which mostly rely heavily on coal, also fell into line. Commission President Jose Manuel Barroso pointed out that the renewables goal is a joint one. "National targets must reflect national situations [to] collectively meet the overall binding target," he says.
The vote by the heads of state is welcomed by the European Wind Energy Association (EWEA). Yet the decision is only the beginning of a legislative process, points out EWEA's Christian Kjaer. "We have the target. What matters now is the legislation that follows. Its success will depend, as always, on the detail." The Commission is already getting down to work. It expects to table legislative proposals by the third quarter of 2007, detailing how the task of meeting the 20% target can be shared among member states (next story).
Kjaer points out that the proposals for national targets will need to determine what "binding" means and what the penalties will be for non compliance with those targets. He expects the Commission's proposal for legislation to include a separate section on electricity and for this to contain provisions on renewables electricity similar to those in the existing 2001 renewables directive, but with strengthened articles dealing with administrative and grid barriers.
Fair grid access is a prerequisite for a well-functioning internal market, he says. But it can only happen if ownership of transmission and production activities of energy companies is effectively separated. The rejection by the heads of state of the Commission's proposals to physically separate the two shows a "lack of commitment" to real competition, he adds. Nonetheless, the call for "effective" separation of production from supply is an improvement. "For the first time heads of state are acknowledging there is a problem," he says.
Meantime, until new legislation comes into effect -- which is likely to be a minimum of two years away -- uncertainty about the existing legal framework for renewables-generated electricity must be avoided, he stresses, voicing a major concern of Europe's renewables lobby. The move away from today's national targets for the contribution from renewables to the three energy sectors could threaten further implementation of the current successsful directive, he warns.
Target twilight
Kjaer's concern centres in particular around the requirement in the directive for member states to set, every five years starting in 2002, national indicative targets for the future share of renewable electricity. This means that this year they are due to come up with a set of targets for ten years ahead.
Officials in Brussels deny the 2001 directive will be abandoned. "Current legislation remains in place until a new framework is adopted," stresses Fabrizio Barbaso, deputy director general from DG Energy and Transport. The proposals will build on current policies, he says. "There will be no slackening off in our efforts to boost renewable energy under existing legislation."
The Commission does not underestimate the size of the task ahead. The 2001 directive, which contains indicative national goals for green electricity, has without doubt, concentrated the minds of national governments on promoting renewables, but Europe will still fall short of its existing renewables targets for 12% of energy and 21% of electricity by 2010. The Commission calculates that Europe will reach just 10% of energy and 19% of electricity by 2010.
Currently, renewables account for between 6% to 7% of EU energy and 15% of electricity. This includes 10% from large hydro, which has little scope for further expansion. Wind provides 3%. EWEA estimates that meeting the 2020 target will require some 35% of electricity from renewables. "This means that new renewables have to increase five-fold between now and 2020," says Kjaer. "We can do it but it's a lot. It all comes down to how much wind can deliver and how much biomass can deliver."
Across Europe, progress so far has been patchy. Only nine countries are on track to meeting their targets. Of all the technologies, wind is the clear success story, with a growth in capacity of 150% since 2001. Yet in 50% of EU countries wind is under-deployed, the Commission points out in a progress report that accompanies its energy strategy. It attributes the EU's likely failure to reach existing targets down to administrative barriers such as permitting new plant, over-complex procedures and opaque and discriminatory rules for grid access.
Inadequate policies
Environment Commissioner Stavros Dimas lays the blame for these barriers squarely on the absence to date of legally binding obligations. Some countries have put in place ambitious policies, he told a renewable energy policy conference in January. "But overall, national policies have been inadequate for achieving the renewables target." And they have "proven vulnerable to the whims of changing governments," he said. "I am convinced that it is essential to set binding obligations for renewable energy as this is the only way through which results can be achieved."
Now the haggling begins between individual member states and the Commission as they negotiate what each will contribute to the overall binding 20% renewables goal. The Council stipulates that the national targets should take account of countries' "different national starting points and potentials," including their existing levels of renewables and their energy mix -- such as the proportion of "sustainable use of fossil fuels" and "low carbon nuclear." Each member state will have to produce action plans for reaching their national targets -- and each must include separate targets for the proportion of renewables content in electricity supply, in energy for heating and cooling, and for transport fuel.
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