Renewable energy sources (RES) are undergoing important developments at all levels in the European Union (EU). They represent a key element of the present and future EU energy strategy, due to their important contribution to the reduction of greenhouse gas emissions and environmental protection, as well as their potential as a high growth, labour-intensive sector.
Not only are Renewable Energy Sources, along with energy efficiency, crucial to the achievement of environmental targets such as the Kyoto commitments, but their indigenous and decentralised character can also contribute to increasing the security of supply in Europe, reducing dependency on fossil fuels imports and the risks associated to shortages or price instability.
Furthermore, the European renewable energy sector, which has experienced double digit growth rates over the last few years, presents a great potential for employment creation and industrial development. A wide-ranging European study, in which EUFORES participated, has quantified "The Impact of Renewables on Employment and Economic Growth" using well well-established models. The study reveals a high labour intensity per energy unit produced, particularly in the field of biomass, and foresees a net employment creation of up to 900 000 jobs by the year 2020. An important part of the RES employment would be created in peripheral and rural areas, where it is most needed.
Substantial technological developments have brought down the cost of the technologies down, towards commercial maturity. Moreover, if the external costs of energy are taken into account, such as environmental damage, price volatility, security of supply, employment creation, etc., many RES technologies are already more competitive than conventional technologies.
Nonetheless, development has spread unevenly both between different renewable technologies and between different countries and regions. Despite the technological developments, the true potential of renewables is far from being reached. For instance, in the United Kingdom off-shore wind alone could generate four times the country’s power requirement.
Many barriers are still preventing market breakthrough of renewables. The process of liberalisation has changed market conditions, by allowing customers to choose their energy supplier, but the energy market is still very distorted and this situation will persist as long as external costs resulting from the whole energy cycle are not fully taken into consideration.
It is necessary to establish a level playing field if renewable energies are to be given a chance to compete in a fair market. A new emphasis should be put on the demand side and on customer choice. For this purpose, there are three main needs: policy action to overcome existing barriers, ample communication to raise consumers awareness, and innovative market instruments that allow for the entrance of more new players.
RES are currently high on the EU political agenda. Several initiatives are being developed to achieve both a single market and a sustainable energy model.
Although there is not a single, common energy policy in the EU, the European Commission has launched several programmes and initiatives which affect renewables.
The EU strategy for RES adopted by the European Commission (EC) in a White Paper sets common EU objectives for renewables, includes an Action Plan and a Campaign for Take-Off (CTO). The targets set, a 12% share in the total energy demand of the European Union by 2010 are considered by the European Commission as "ambitious but realistic". Programmes launched include Energy within the 5th RTD Framework Programme, and the Framework Programme on actions in the field of energy, that integrates the SAVE II, ALTENER II and SYNERGY Programmes.
The Directive on the liberalisation of the internal electricity market, adopted in 1997, is also having an important impact on RES development, with resultant deregulation and liberalisation processes in many Member States creating both new opportunities and threats. On the one hand a truly liberalised market could allow electricity consumers to choose their supplier and permit individual renewable energy producers to access the market. On the other hand, liberalisation also leads to mergers, job losses, and a downward trend electricity prices. Lower price levels reduce incentives for energy efficiency, making it harder for renewables to compete. Liberalisation increases the risk for investors who then tend to focus on short term returns, preferring less capital intensive investment, which puts eco-efficient, but capital-intensive technologies at a disadvantages.
Moreover, the current market liberalisation process is incomplete as conventional energies are still being subsidised, and the market is not yet fully transparent.
The liberalisation process us spreading slowly from large to smaller players, which leads to concentration in the absence of effective regulation. Indeed, market liberalisation must be accompanied by policy development to ensure fair market access for renewables.
This concern and the need to harmonise access to the grid of electricity from renewable origin has led to a draft directive on "Electricity from Renewable Energy Sources in the Internal electricity market" (RES-E), an initiative strongly supported by the European Parliament. The RES-E directive establishes, for the first time, individual targets for RES electricity in each Member State.
Currently a variety of support mechanisms are in place in Europe, including investment aids and tax relief, tendering as in Ireland and the UK, and guaranteed prices as presently applied in Germany, Spain and Denmark. The guaranteed price system, which obliges privately owned electricity undertakings to purchase electricity from renewable energy sources at a minimum price, have so far been the most effective. A "green certificate" system is in place in Holland and Sweden, and will be taken up by Denmark in 2001. This scheme, also called green prices, basically consists of requiring that distributors include a set percentage of renewable electricity in their sales, a quota which is represented by tradable "green certificates". Since this scheme is still relatively new the effectiveness of this approach still has to be proven.
Considering these diverse approaches and in accordance with the principle of subsidiarity the RES-E directive is leaving it up to the Member States to choose the schemes they deem most appropriate to achieve the set targets. The schemes will need legal protection from the threat by EU treaty rules regarding State aids and the Free movement of goods.
The European Parliament is supporting various other political EU initiatives that could favour the take-off of sustainable energies, principally:
* the implementation mechanisms of the Kyoto Protocol, that will increasingly discourage greenhouse gas emissions, where renewables and efficiency are of the few really effective measures to achieve the commitments of the EU;
* the proposals for harmonisation of energy taxation, that aims at shifting taxes from labour to exhausting resources, especially those that produce CO2;
* the ever-delayed proposal of a EU-wide discussion on the appropriate mechanisms to include external environmental, social and economic costs resulting from the whole energy cycle in the prices of conventional energies (the internalisation of externalities);
* the proposal of the European Parliament for a European Charter for Sustainable Energy, EURENEW, to set up a common, long-term framework for their development, plus much needed implementation and assessment tools;
* the horizontal integration of the priorities of the EU in its different activities in the field of energy, environment, competitively, and agriculture.
EUFORES is supporting these initiatives by fostering institutional and political support through ample communication activities, by carrying out analysis of issues relevant to renewables, and by encouraging co-operation and involvement of institutional and market actors.
Despite the recent failure of the negotiations on climate change policy at the Sixth Convention of the Parties (COP6) in The Hague, the urgency and seriousness of the problem remains.
It is, thus, more important than ever that the EU show strong political willingness to support renewables and to break down the barriers to their market penetration. Renewable energy sources have a crucial role to play in achieving the reduction of greenhouse gas emissions and environmental protection, while ensuring the security of energy supply and contributing to economic development and employment creation.
For any further information, please, contact: eufores@eufores.org