CrisisWatch

EU ministers seek compromise over energy-as-usual framework for 2030

The policy debates held at the Environment and Energy Councils on 3 and 4 March were dominated by concerns about energy prices and the competitiveness of Europe’s industry. The states comprising the Visegrad Group, joined by Bulgaria and Romania, remained rock-steady against renewable and energy efficiency targets and called for further lowering of the 40% reduction target or postponing any decision on this. The Member States favouring three more ambitious and nationally binding targets (primarily Germany, Austria, Denmark, Portugal) chose to lower their expectations. They sided with the UK’s compromise proposal, which sets a 27% target for renewables, on the condition that this would never be translated into national RES targets. The Greek Presidency appeared to aim at feeding the European Council of 20-12 March with only broad guidelines, thus essentially postponing tough decisions indefinitely.

As a result, the ministers bypassed the recent forward-looking decision of the European Parliament, which called for three binding targets at the Member State level. The centre of the negotiations rolled back to the proposal presented on January the 22nd by EC President Jose Manuel Barroso, Energy Commissioner Guenther Oettinger and Climate Change Commissioner Connie Hedegaard, which has been  argued against by environmental groups and has been denounced as anemic, conservative and myopic.

The European Parliament’s decision and the prospects for a strong and clear 2030 energy framework have been opposed by powerful industry lobby groups, such as Business Europe, and member states promoting a business-as-usual “industrial renaissance”, such as Italy. In a statement praising the Commission’s January 22 proposal, Business Europe, tacitly threatened with “investment leakage” and urged the EU “to make sure that Europe will not be once again a lone frontrunner without followers”. Implicit in this criticism is the argument that climate change policies and the development of renewable energies are responsible for the high energy prices in Europe, thus compromising the competitiveness of the European industry. Yet, the Commission’s own impact assessment and the communication on “Energy prices and costs in Europe” have proven these arguments wrong:

  • The three targets (renewables, energy efficiency and greenhouse gases) lead to average electricity prices of 178 €/MWh, compared to 179 €/MWh in the case of the single greenhouse gas target.
  • The three targets are expected to create 568,000 more jobs, save € 18 billion annually from the reduction of fossil fuel imports and lead to a lower carbon price in 2030 (11 €/tn vs 40 €/tn) compared to the single greenhouse gas target.
  • Despite higher energy prices, Europe is indeed competitive in manufacturing globally as the Real Energy Unit Cost (REUC) in the manufacturing sector in Europe is lower than in Russia, China and the US and higher only when compared to Japan.
  • Electricity costs are likely to continue to increase until 2020, due to rising fossil fuel costs coupled with necessary investments in infrastructure and generation capacity, not due to the development of RES. On the contrary, any subsequent stabilisation and even slight decrease in energy prices will be the result of the replacement of fossil fuels by renewable energy.

Energy intensive industries and especially energy utilities, which have thus far chosen not to invest in clean energy, are locked in a climate polluting energy model, heavily dependent on fossil fuels. Since the breakout of the economic crisis, the shift to a clean energy model has received relentless attacks on the shaky grounds that Europe urgently needs a quick and dirty economic recovery at all costs.

According to Jason Anderson, WWF’s Head of European Climate and Energy Policy, “the financial and economic downturn that began in 2008 has had a marked effect on the commitment to keeping up the pace of clean energy development. Political attention has shifted to the short-term need to stabilise economies, and with capital more scarce, roll-backs in government support programmes make investment more challenging. ¶ Powerful forces who have been losing out in the clean energy revolution are pushing back, relying on the economic situation as a ready stick to prop up their arguments. Some of them clothe their position as an alternative vision of decarbonisation – wait for renewable energy technologies to get cheaper, relying in the meanwhile on a sort of middle-ground of somewhat better use of fossil fuels. ¶ Similar thinking is seen in the European Commission’s new 2030 white paper, which envisions halving the recent pace of renewable energy growth between 2020 and 2030, leaving much of the heavy lifting for subsequent decades.

Reporting for CrisisWatch: This email address is being protected from spambots. You need JavaScript enabled to view it., Climate & Energy Policy Officer at WWF Greece.

Last modified onSaturday, 03 January 2015 13:53
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