EU Recovery Plan Offers Great Chance: IEA (Update)

(Adds remarks from IEA, EC at webinar)

While great strides have been made in the European Union (EU)'s carbon emissions, greenhouse gas emissions from transport are still rising and the use of energy in buildings remains fossil-fuel intensive, said the International Energy Agency (IEA) as it launched a report on the EU published June 25.

The report comes out every five years, but its arrival very soon after the EU Green Deal – which, as he addressed a webinar hosted jointly with the EU commissioner for energy, Kadri Simson, the IEA boss Fatih Birol said was about the economy and job creation, as well as energy – made this edition especially timely. 

The IEA is working with the EC and member states to design policies to repair the economic damage of the Covid-19 crisis while making their energy systems cleaner and more resilient.

Simson said that every euro spent on the recovery would be a euro well spent. Jobs, the export of technology and electrification would be beneficiaries of the move to a decentralised, digitalised and circular economy. she said, promising also a roadmap for hydrogen: “A clean transition is at the heart of the recovery.” She said the IEA analysis will be of great help as the EU strives to hasten the existing 2030 carbon reduction targets.

The IEA maintains that stronger policies are needed, particularly with regard to the carbon price and regulatory risk, and the energy sector needs to be at the heart of those efforts, as it accounts for 75% of EU greenhouse gas emissions. Birol said the European Commission's "massive [€750($830)bn] recovery plan" was "a real opportunity to boost economic activity, create jobs and support the long-term transformation of its energy sector.”

He said that the top three priorities generally for the IEA over the coming three years were energy efficiency in buildings, industry, food manufacturing and so on; the acceleration of new or modernised energy networks incorporating renewable energy; and speeding up work in solar, wind and other renewable forms of generation.

Half the EU's nuclear power generation capacity is being retired over the next five years unless decisions are taken to extend the lifetimes of the plants, which provide a major part of the continent’s low-carbon electricity. and this will  jeopardise the EU’s chances of reaching its low-carbon emissions targets, as the existing plants are “a cheap source of zero carbon CO2. Taking them out would create difficulties,” he said. While this and the reduction of coal-fired capacity would benefit gas demand, the share of imports will grow, says the IEA, presenting risks to security of supply.

Different states have different energy policies and approaches to decarbonisation, so the IEA report concludes that strong co-operation will be needed under the framework of the National Energy and Climate Plans. Hydrogen electrolysers and lithium-ion batteries could potentially be game-changers both for the EU and globally, Birol said.

The IEA report also pointed to the risks of renewable energy and cyber warfare to security of supply: "In particular, EU electricity systems and markets will need to accommodate growing shares of variable renewable energy. At the same time, risks such as extreme weather and cybersecurity threats are intensifying the challenges for designing and operating electricity systems."

It has been calculated that much of the EU' apparent emissions reductions over the last 30 years may be tied either to the industrial collapse in eastern Europe when communist regimes toppled; or to carbon leakage, whereby the EU imports goods that were made overseas by heavy industry and so did not contribute to the EU emissions.