Steps towards a new energy economy

Leaders in the European Union clearly take climate change seriously and are taking steps above and beyond the Kyoto agreements to address what many feel is the greatest challenge facing society today. This is, of course, in striking contrast to the United States' political response to this issue. According to the most recent polls, the actions of the EU leaders reflect the concerns of the general public, although some environmental groups feel the proposals emerging from a recent EU energy summit do not go far enough.

Similar polls reveal that the American public share the concerns of their European counterparts. If the U.S. refuses to demonstrate leadership on climate change, following the example set by the EU wouldn't be such a bad alternative. (GW)

EU energy summit: a new start for Europe?

EurActiv
Tuesday 13 March 2007

The endorsement of an ambitious energy and climate-change policy by EU heads of states at their summit last week was greeted with a mix of cheerful enthusiasm and apprehension. EurActiv presents a summary of the main reactions.

Background:

The European Council on 9 March 2007 backed Commission proposals on energy and climate change, agreeing on an action plan to put in place a European energy policy by year 2009. The most significant progress was achieved in the following areas:

Greenhouse-gas reduction:

• A binding target to reduce EU emissions by 20% by 2020, regardless of progress made in international negotiations for a post-Kyoto agreement, and;
  
• a binding 30% target should other industrialised nations including the US take similar steps.

Renewable energies:

• A binding target to have 20% of the EU’s overall energy consumption coming from renewables by 2020, and;
  
• as part of the overall target, a binding minimum target for each member state to achieve at least 10% of their transport fuel consumption from biofuels. However, the binding character of this target is "subject to production being sustainable" and to "second-generation biofuels becoming commercially available".

Energy efficiency:

• Achieve the Commission’s objective of saving 20% of the EU’s energy consumption compared to projections for 2020;
  
• by 2008: Commission to make proposals for increased energy savings from office and street lighting;
  
• by 2009: Commission to make prosposals for increased energy savings from incandescent lamps and other lighting in private households.

However, the summit made little progress on the internal market for gas and electricity, saying that "full implementation of the letter and spirit" of existing legislation was to be achieved as a "first step" before going further with more radical options. In other words, the Commission’s calls for 'ownership unbundling' of network and energy-production assets of large integrated energy groups was rejected, mainly on the insistence of France and Germany.

Positions:

In what was his last appearance at a European summit, French President Jacques Chirac said that the adoption of the energy action plan was "an extremely positive result" and "one of the great moments of Europe’s history".

German Chancellor and current holder of the EU Presidency, Angela Merkel, expressed her conviction that the summit agreement on climate change and energy will "open the door to a new dimension of European co-operation in the years to come".

Merkel said that the energy action plan "will give the initial spark for a third technological revolution", describing the targets on climate change and renewables as both "ambitious and credible". "We’ll be going down completely new roads as far as technology and innovation are concerned," she predicted.

Speaking at the Institute of Political Science in Paris on 10 March, EU Environment Commissioner Stavros Dimas called the summit a "great success for the EU".

"The Summit results are without doubt a major breakthrough," Dimas said. "The agreement by the heads of state was a historic step, which will now need to be followed up by concrete policies," he added, saying that forthcoming discussions on a burden sharing agreement for individual national CO2 reduction targets as well as measures to reduce emissions from the aviation sector, fuel sector and new cars "will need to be developed and implemented".

European employers’ organisation BusinessEurope was critical of the summit decisions, saying that the "very ambitious goals" on renewables and climate change "need to be checked against the economic and technological possibilities" of European industry.

Ernest-Antoine Seillière, president of BusinessEurope, said: "We are supportive of a general increase in the use of renewable energy, but meeting this binding target must not threaten an energy supply at competitive prices. Implementation must leave all other energy options open, in particular the use of nuclear energy."

The decision for a 20% renewable energy target was welcomed by the European Wind Energy Association (EWEA) as "a powerful response to the looming climate and energy crisis". "Europe now has a real opportunity to change its energy-supply structure towards a much larger share of indigenous, renewable resources, reduced import dependence and less exposure to unpredictable fuel prices," EWEA said in a statement.

But it added that real work is now to start and called for "legal stability" for renewable energies in the long run. "Today's decision is only the beginning of a legislative process that could deliver significant results if designed and implemented successfully. A suitable legal framework now needs to be rapidly adopted in order to reach the 20% target."

EWEA further added that it was disappointed with the summit results on energy liberalisation, saying "fair grid access for new entrants" was "a prerequisite" for a well-functioning internal market. "It is unfortunate that the heads of state displayed a lack of commitment to real competition in electricity, by rejecting the European Commission's proposal for full ownership unbundling of production and transmission activities in the electricity sector," EWEA said in a statement.

The European Chemical Industry Council (CEFIC) said it "encourages Europe's striving for leadership on climate change" and believes that its products and research capabilities "can play a decisive role" in the fight against global warming.

"For example, the chemical industry is essential to the manufacture of biofuels, lightweight high-performance materials for transportation or enhanced housing insulation," CEFIC said.

However, CEFIC believes that more effort should be made to improve the EU’s CO2-emissions trading scheme, saying that, in its current form, the scheme leads to "huge" and "unjustified" "windfall profits" for energy producers at the expense of energy-consuming industries, including the chemicals sector.

"The high energy prices – which result to a significant extent from malfunctioning energy markets in combination with the ETS - pose an immediate threat to the global competitiveness of the European chemical industry", said CEFIC Director-General Alain Perroy. "This is why transitional measures for energy-intensive sectors are needed until energy markets function properly."

Environmental pressure group Greenpeace hailed the EU for taking "a front seat on climate and clean energy", calling the summit’s new greenhouse-gas reduction targets "the biggest such decision since the adoption of the Kyoto Protocol".

"EU leaders deserve top marks for pushing climate change to the top of the agenda and recommending a greenhouse-gas emission cut for Europe of 30% by 2020; other nations should now sign up and follow their lead."

However, Greenpeace joined other environmental groups in saying that the EU’s unilateral 20% greenhouse gas reduction target was insufficient to meet the challenge posed by global warming.

"It is disappointing that EU leaders didn't go further to cut down on Europe's carbon dioxide emissions," said Jan Kowalzig, climate campaigner at Friends of the Earth Europe. "Their effort is particularly tame in light of warnings from the world's scientific and economic experts."

"The targets must be translated into a shift of investments towards green technologies, rather than to nuclear power stations," said Stephan Singer, head of the European Climate and Energy Unit at WWF. "It is clear that the targets decided today will only be achieved with solid laws, measures and incentives."

Latest & next steps:

Discussions on a burden-sharing agreement for renewables and greenhouse-gas reductions will begin during 2007 with a Commission Proposal to follow later in the year.

• 6-8 June 2007: Energy Council.
  
• 6-8 June 2007: Germany to host G8 summit at Baltic Sea resort of Heiligendamm. Main topic is international climate change policy.
  
• Second half 2007: Commission to put forward proposals for an overall coherent framework on renewable energies.
  
• 3-4 Dec. 2007: United Nations annual conference on climate change (COP/MOP), Bali, Indonesia.