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A cleaner, cheaper future

Energy-Irl-2012-83 Helen Donoghue, outgoing principal administrator of the Energy Strategy Unit of DG Energy tells Stephen Dineen about Europe’s transition to a low-carbon future.

“In the energy field we’re always responding to a lot of changes,” Helen Donoghue reflects. “We only have to look back to see the pattern of fossil fuel price changes since 2000 to see that the energy sector is not one in which you can rest on your laurels for a very long time.”

Donoghue and DG Energy have been doing more anticipating than responding of late. As EU political consensus on energy policy deepens, evidenced by the third energy package (adopted in 2009), the Commission is now looking towards 2050.

Donoghue was highly involved in producing ‘Energy Roadmap 2050’, an analysis of alternative pathways towards a low-carbon, secure, competitive energy system in Europe and how it can be achieved. The analysis contains five decarbonisation scenarios for achieving an 80-95 per cent reduction in greenhouse gas emissions by 2050: high energy efficiency; diversified supply technologies; high renewables; delayed carbon capture and storage; and low nuclear.

“The European Union doesn’t have any particular commitment about the mix of energies in the 2050 energy system,” she says. It has 2020 renewables and energy efficiency targets, she points out, as well as a 2050 emissions reductions target, “but we do not have 2050 targets on any particular energy.” The result is that “there’s quite a lot of uncertainty” about the post-2020 energy policy framework. The roadmap aimed to reduce this and to “demonstrate that a transition to a low carbon, secure, competitive energy system is feasible.”

Donoghue states: “Our conclusion is that in fact decarbonisation is technically and economically feasible and indeed in the long run might even cost less than business as usual [in Europe].”

She is keen to point out that the roadmap “wasn’t meant to be a one size fits all” approach, nor does the European Council want to see it as such. “It certainly wouldn’t make economic sense in the long run to look at the European energy system like that, and it definitely wouldn’t make political sense.”

The intention was to provide “an enabling framework” as energy is a shared competence between member states and the EU.

Renewables

A scenario with very high reliance on renewables “would indeed require more advanced infrastructure and more investment expenditure on infrastructure throughout the system” than other options (e.g. energy efficiency).

Regardless, as Europe becomes more reliant on renewables (a result in all decarbonisation scenarios), and they become integrated in markets, the EU will see “far more” development of renewables across the Union “and by the same token far more trade.”

Having a renewables target for 2030 or beyond “of the same nature” as that for 2020, however, is still “very much an open question,” she states. (see text box)

Donoghue highlights the proposed Connecting Europe Facility. This infrastructural investment framework includes a €9.1 billion allocation for the energy sector from 2014-2020, to encourage infrastructure with a European and single market dimension. She believes that this represents a major step forward.

Under the proposal, a Union-wide list of projects of common interest would be adopted, supported by the 10-year network development plans developed under the third energy package. The facility is expected to come into force in 2014.

Low-carbon benefits

Donoghue says that the 2050 roadmap analysis shows a future with “a lot more interdependence of member states in regions and in the European Union as a whole.”

Interdependence “is ultimately going to be good for many; it will create a lot of opportunities,” she states, citing the Irish plans to export renewable electricity to the UK.

Lower fuel and electricity costs are among the economic benefits from a low-carbon future. In the Commission’s analysis, lower fossil fuel bills arise through decreased volumes of imports and lower global fossil fuel prices than they would be in business as usual scenarios.

Under current trends and most decarbonisation scenarios, electricity prices will rise until 2030 or so and then fall.

“This really translates into far more investments in Europe, indeed locally in Ireland, and less money being paid out, notably, to fossil fuel providers,” she states.

Energy systems, towards 2050, will include “a lot more decentralised generation, development of distribution networks, [energy-using] equipment in people’s houses, in their products and in their cars.”

While people will be able to see the benefits, “there are issues about the financing of that investment.”

Donoghue, who will be a fellow in the Institute of International and European Affairs during 2012-2013, believes that “it needs to make sense for final users to make investments in better houses.” Other sensible choices are cities investing in transport and for “apartment blocks to invest in CHP, for efficient heating and electricity.”

Such investments (and resulting jobs) and lower fuel bills “are essentially the elements which make the transition in the energy system part of green growth.”

Renewables post-2020

On 6 June, the Commission published a communication on renewables policy and post-2020 options. It called for a more coordinated European approach towards support schemes and for increased use of renewable energy trading by member states. Investors need regulatory certainty, it stated, therefore a start in outlining a framework beyond 2020 is crucial.

The Commission outlined four areas needing accelerated efforts until 2020 so that renewables goals are met. The internal energy market must be completed and the question of power generation investment incentives addressed so that renewables are integrated into the market. Support schemes are needed to encourage cost reductions and to avoid over-compensation. More co-operation should happen: between member states (particularly where imports are cheaper), and in the Mediterranean (to enable EU renewable electricity imports).

The communication also outlined three policy options for 2030:

• new greenhouse gas emissions targets but no renewable energy goals (relying on the carbon market and a revised Emissions Trading System);

• three national targets (renewable energy, energy efficiency and greenhouse gas emissions); or

• EU-wide targets in the same three strands.