?Historical agreement? by EU member states on greenhouse gas emissions and renewable energies: ?The Stress Is on Energy?
18 Apr, 2007 12:47 pm
Christian Egenhofer reviews for Scitizen the recent EU agreement on greenhouse gas emissions and renewable energies. He is a senior fellow and general lecturer at the University of Dundee, Scotland (UK) and researcher at the Center for European Policy Studies.
This decision, which was taken by the European Council at the beginning of this month is part of a broader reorientation of EU energy and climate change strategy. It’s important to note that the stress is on energy. This strategy is not being first presented as a climate change strategy. The overall package adopted by the European Union is presented as an energy policy reorientation.
The various elements in there are to increase the security of supplies, so there is a question of import dependence. There are risks associated with import dependence, which are said to increase up to 70%. Most of these imports come from Russia. At the same time there is an issue that the energy prices, the global oil prices, have been increasing. When we look at the fundamentals of the energy outlook, most would expect that global oil prices are reasonably high for all kinds of reasons.
There are also political reasons involved.
The third element of this is of course, climate change and reduction of greenhouse gas emissions. Within this framework the EU has put up a package of measures. The crucial point in this has been on renewables. Renewables are sometimes said to increase security supply, because they are domestic sources. Therefore, they reduce the import dependence. The real driving force for these renewables is that you need to deploy the technologies, biomass, solar technology…, in order to get the cost of these technologies down. Some of them are pretty close to being economic at current oil and gas prices, but some are less. By 2050, 2030, these technologies will be the future technologies that will allow us to reduce greenhouse gas emissions.
How will this target be distributed among the 27 nations within the EU?
The key issue is the distribution of these targets. We have to start by looking at the hierarchy of the targets. The renewables target is not the only target that is set. There is a target for energy efficiency, there is a target for reducing greenhouse gas emissions, but there is also a target to have 12 carbon capture ready coal plants deployed by 2020.
It has been decided is that the EU has to reach a greenhouse gas emissions reduction target, which has to be somehow distributed between the member states. The same applies for the renewables targets. The European Council has not made a definitive decision on how to allocate the responsibilities for meeting them. It is clear, overall in the EU, that these targets will be met when the market will be there.
Now there is a political question on how to allocate this target. You have to consider on the one hand, what is the resource endowment. For the countries that don’t have a lot of wind, it doesn’t make much sense to invest in wind. Those that don’t have much sun shouldn’t be investing in solar. So member states will have to design strategies of what they can realistically do.
Another element of all of this is of course, who pays for that? There are support systems in place. This means that those countries that are a bit poorer, especially the new member states, will certainly ask and will probably get some support from the old EU member states, which are a bit richer. It may be just as well that the new member states take on a bigger target.
Several countries within the EU, like France, want to promote nuclear energy to meet their objectives. What role will nuclear energy play in this new energy policy?
That is a difficult question. It cannot be really answered for the EU as such. Within the different member states, the economic and political acceptability, though those two go together, will be very different. I'm surprised if some member states wouldn’t try to go the nuclear route. Others will probably prefer renewables, and again those who are currently based on coal will be very much attracted by carbon sequestration or renewables.
The French have been right in insisting that nuclear energy, if they continue with the nuclear program, should be taken into consideration. I would not think that the nuclear is so much simply a matter of government, it is a matter of market. It is actually a question of whether investors find the nuclear option, with all its political reasons, sufficiently attractive for investing into. You could talk about putting down a lot of money for forty years and get pay-offs over a very long period. Other technologies of course have a shorter payback period, and are therefore by definition less risky for investors.
Early this month, the International Biofuels Forum was launched. In addition, Brazil and the United States have discussed a partnership on Ethanol technology. How heavily is the European Union investing in biofuels?
There is also a target on biofuels which is 10 percent across the board. Most people would agree that biofuels will be a big part of the climate change solution, but also a big part of the energy security question.
What is interesting from the EU persective, is that it has been clearly stating that it wants to promote the second generation biofuels. The EU has made a clear decision to support second generation biofuels, which compared to the first generation biofuels, such as biodiesel or bioethanol, have a far better carbon balance. The second generation biofuels are actually reducing greenhouse gas emissions by twice as much as the first generation. In that sense, the EU has embarked on the right road, but also we have to see partly the biofuels debate is fuelled by relabelling agricultural subsidies from support for agrocrops to bioenergy crops.
Do you think this biofuel policy should be linked to the European agricultural policy?
It is already linked, as subsidies are shifted from food crops to energy crops. This is already happening in the US even much more clearly. Regularly ahead of elections, the biofuel lobbies make their voices heard, and the politicians tend to comply with their requests. It's very clear that the biofuel strategy is very closely linked to the agriculture policy.
Would you say this is a historical agreement?
It is a certainly a historical agreement in the sense that it is the first time that the EU has managed to integrate, at least in general terms, the energy security and climate change dimension. It shows a perspective in 2020 in 2030 how these challenges could be met. Of course, this is only the beginning. We still don’t have, coming back to the initial question, a burden sharing agreement for the greenhouse gas emissions, nor for the renewables. What now counts is whether the words will be followed up by deeds, and that member states actually deliver what heads of governments have promised. That is a very big battle, because there are vested interests and a lot of money involved. In that sense the history is waiting for us in the future.
Interview by Gilles Prigent and Christopher Le Coq
Christian Egenhofer is a senior fellow and general lecturer at the University of Dundee, Scotland (UK) and researcher at the Center for European Policy Studies.