EU Ponders Scrapping 2030 Binding Renewables Targets

The European Commission is called to take a decision about its decarbonisation package by 22 January. The EU’s communication, which will comprise also the European stance on carbon market reform and shale gas, should shed some light on the position of the Old Continent about its energy strategy for the next 17 years. A target for renewable energy is the main bone of contention.   

Ministers from eight counties recently urged the European Union to set binding targets. Austria, Belgium, Denmark, France, Germany, Ireland, Italy and Portugal claimed that a renewables goal would create the certainties required by manufacturers of wind turbines and solar panels.

On the other hand, the UK is the main country asking for more leeway, dismissing the importance of such a target. London did indeed urge Brussels to avoid a definition of a market share for renewables. Ed Davey, Britain’s energy and climate change secretary, contended that the measure would increase costs while decreasing flexibility. According to British government, the proposal of the eight countries would also undermine the Emissions Trading Scheme.

Unless some reports indicate that the European Commission is expected to embrace the British position, the outcome of the negotiations is still unclear. Last week, a meeting of nine European Commissioners exposed deep divisions within the executive body of the European Union.  

All in all, what is clear is the strong mismatch between politics and economics. On a political level, gas and renewable have been depicted as competitors. On an economic level, exponents of the two industries said they don’t see any friction between their interests.

THE GAS INDUSTRY

“A majority of EU policymakers and influencers acknowledged that natural gas has a role to play in achieving a low carbon economy, but still need to be convinced. Only 28% of MEPs from Northern and Nordic countries believe gas is the ideal partner for renewables. It is really telling how badly perceived we are in Brussels,” Francois-Regis Mouton, Chairman of GasNaturally, commented in November. 

GasNaturally, which is an initiative that brings together seven organisations within the gas industry, voiced its intention to play a role in the decision-making process. 

“We need to wake up in a positive way. We need to bring up the truth,” Mouton said in occasion of the European Autumn Gas Conference in Brussels. 

According to Mouton, EU natural gas consumption went down by 9.9% in 2011 and by 2.3% in 2012, while coal consumption increased by 3.6% in 2011 and by 3.4% in 2012. Taking into consideration the parallel growth of renewables, Mouton labelled the two trends as a ‘new coal plus renewables’ paradigm.

GasNaturally is trying to prove Brussels that the decrease of natural gas consumption and the simultaneous increase of coal have negative consequences both on the environment and the industry.

“Industrial electricity prices gap is widening. It is extremely worrying for our industry,” he said in November. 

In this context, Mouton clarified how his organization plans to intervene.

“In 2014 GasNaturally has three objectives. Firstly, the organization will try to raise the profile of natural gas in the context of 2030 discussion, showcasing contribution to jobs and growth. Secondly, it aims at undermining the acceptance of the coal and RES paradigm. Finally, it intends to set the conditions for a concrete partnership with renewables,” Mouton explained. 

THE RENEWABLES INDUSTRY 

More interestingly, the renewables industry seems equally open to gas as a central part of the future EU energy mix.

“I see gas and renewables as the perfect match,” Thomas Becker, CEO of the European Wind Energy Association (EWEA), confirmed during the EAGC conference. 

Despite renewable energy accounted for 70% of all European electricity generating installations in 2012, Becker suggested that gas assets could regain momentum in the near future. 

“The slowdown in capacity installations in the last years is not an issue related to renewable energy deployment, but it is first and foremost a wrong market design that does not reflect the value of the technologies, a CO² market that has not succeeded in being a driver for investment decisions and gas price as tagged to oil index,” Becker stated. 

In this sense, Becker showed that the gas industry has still a big potential and his intervention indicated the way for a strong cooperation between the renewable and the gas industries. 

“What we should aim at is a market in Europe that recognizes the merits of gas. Namely, that is much less CO² intensive and that it is a very flexible fuel. That should be rewarded by a new regime. Gas would be then ideal with wind. Those two match ideally in a market where you need to try to lower emissions and have the necessary flexibility. I think that our two industries should push together for that,” he concluded.

That is why the contention on the centrality of gas seems more a political debate than anything else. The industries are ready to work together, showing the kind of cooperation that Brussels should aim for.

Sergio Matalucci