Friday, June 8, 2012

Market integration and the need for growth beyond 2020- Commission

The goal to achieve a 20% share of renewable energy by 2020 set by the European Union, can be reached only in a cost-efficient manner if all policies currently in place are implemented across all Member States and if support schemes converge. In the Communication adopted recently, the Commission is therefore calling for a more coordinated European approach in the establishment and reform of support schemes and an increased use of renewable energy trading among Member States. Moreover, the fact that investors need regulatory certainty makes crucial to start discussing the future and building a solid framework beyond 2020.

Energy Commissioner Günther Oettinger stated: "We should continue to develop renewable energy and promote innovative solutions. We have to do it in a cost-efficient way. This means: producing wind and solar power where it makes economic sense and trading it within Europe, as we do for other products and services." The Communication indicates four main areas where efforts should be stepped up until 2020 to achieve our renewable energy goals whilst being cost-efficient:

-Energy market: The Commission insists on the need to complete the internal energy market and acknowledges the need to address power generation investment incentives in the market to allow for a smooth integration of renewables into the market.

-Support schemes: The Commission favours schemes that encourage cost reductions and avoid over compensation. It also calls for support schemes to be more consistent across Member States in order to avoid unnecessary barriers.

-Cooperation mechanisms. The Commission encourages an increased use of the cooperation mechanisms contained in the Renewable Energy Directive. The cooperation mechanisms allow Member States to achieve their national binding targets by trading renewable energy between them. This means that one Member States buys for example wind or solar energy from another Member State or from a third country outside the EU. This can be cheaper than producing solar or wind in the home country.

-Energy cooperation in the Mediterranean. The Commission suggests improvements to the regulatory framework and stresses that an integrated regional market in the Maghreb would facilitate large-scale investments in the region and enable Europe to import renewable electricity.

For the time beyond 2020, the Communication acknowledges that without a suitable framework renewable energy growth will slump. Such a framework has to allow for more innovation and bring down cost to make renewables a promising sector of investment for growth. It therefore proposes to start the process on preparing future policy options and milestones for 2030. It identifies three options beyond business as usual:

-New goals for GHG (Greenhouse gas emissions) but no goals for renewable energy. ETS would be the main instrument to cut down on CO2 emissions.
-Three national targets: Renewable energy, energy efficiency and GHG.
-EU wide targets: Renewable energy, energy efficiency and GHG goals.
-The Commission stresses that it is crucial to identify 2030 milestones as soon as possible.

These should enable renewable energy producers to be increasingly competitive players in the European energy market.


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