New EU energy and climate policy needs to be revived before 2014

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Günther Oettinger in the interview, published on 29 May in the European Energy Review, confirms that the emissions trading system (ETS) on its own is insufficient to generate adequate investments in renewable energy. With a price at around €6 per tonne of CO2, this is understandable. For this reason the Commission is considering alternative measures to further the development of renewable and other low-carbon energy sources.

To reach desired levels of electricity generated from renewable energy sources, Oettinger is open to the idea of setting a binding renewable target for 2030, which he argues is necessary for investors’ long-term strategies and security. Acknowledging differences in different Member States, he suggests a system with burden-sharing to make the targets reachable.

“Some member states are engaged, such as Germany, Austria and Denmark, whereas others have own strong positions – for example France is nuclear and Poland is coal”, he states, adding that the latter two will be a challenge. To circumvent the political problems particularly in these countries, he suggests different targets in different countries, and gives examples of 20% for Poland, 60% for Denmark, 45-50% for Austria and 40% for Germany.

The low-carbon energy policies in force in the EU today are the result of discussions which started in 2002 and resulted in the 20-20-20 targets set in the EU climate and energy package from 2007. The targets require a 20% reduction in greenhouse gases below 1990 levels, that 20% of EU energy consumption is from renewable resources and a 20% reduction in energy use compared to projected levels by improved energy efficiency, all by 2020. In addition to these targets, the emission trading system provides an instrument to drive the low-carbon transition in Europe.

10 years after the last discussions started, the Commissioner thinks it is time to revive the EU energy policy discussions. He says these discussions must be concluded under the current Commission and the current Parliament, which means before June 2014 when the next parliamentary elections are held.

He argues that the national governance of long-term renewable energy strategies and targets “are disadvantages for a successful next step to more renewable energy in the European energy mix”. He wants to coordinate national regulations and state aid for renewable energy on an EU level and to come to bi- and trilateral agreements between different Member States. This is exemplified by the need for a common electricity grid in the North Sea – “a European, not German, Danish or British sea” – joint electricity storage between Switzerland, Austria and Germany, and increased connections to solar energy projects in Greece.

The emissions trading system, which he refers to as a “no doubt non-bureaucratic and market oriented instrument”, will be reactivated in a pragmatic way over the next few months. To achieve the necessary increase in price, set-asides are his preferred option, either permanently or for some years.

While a focus on CO2 emissions is important, he argues it is not sufficient. If only focusing on emissions, through targets and prices, the low-carbon energy options will still include coal with CCS and nuclear, something that he is not fully supportive of. He wants specific measures to promote renewable sources, which is the underlying reason for considering new 2030 renewable energy targets.

Simultaneously he emphasises the importance of CO2 capture and storage (CCS), both for coal and gas. Coal is welcome in the energy mix, but only with CCS and not at the same level as today, and while gas is acceptable unabated in the short term, it will require CCS from 2035.

“We need CCS, but at the moment it is difficult”, he says. The Commission hopes to have a CCS communication out before the end of this year to respond to some of the challenges, and functioning demonstration projects by 2015.