8. EU News
EU- ETS: Euro 20bn windfall
Under Phase I of the EU’s Emissions Trading Scheme which ran up
to 2007, industries, including power generators, were allocated free
permits to emit carbon and were allowed to sell any surplus over and
above what they need to meet the emission cap imposed on them under
the EU-ETS rules, to those who exceeded their ceilings. Michael Grubb,
Chief Economist at the Carbon Trust has calculated that this practice
gave the industry windfall profits of € 20 bn p.a.
Unsurprisingly this raised eyebrows, especially since companies can
also pass the extra costs of meeting the caps on to consumers. There
have been pressures to switch to an auction of carbon permits, rather
than a free handout. And Under Phase II (2008-12), ceilings are being
reduced (see Renew 171) and it seems a small percentage will be auctioned,
although, according the Reuters ‘the vast majority will still
be handed out free’. Reuters reported that ‘News of the
vast windfall profits has generated controversy in the Netherlands and
Germany but raised barely a ripple in Britain where consumers have been
repeatedly told their rising energy bills are due to supply problems-
notably from Russia’. It may have helped win acceptance of the
scheme from companies. But it can’t go on like this, as even the
companies now seem to recognise. Reuters noted that E.ON ‘has
after a boardroom battle come out in favour of 100% auction of emission
allowances after 2012,’ and the EC’s new proposals for phase
III (2013-20) include a shift to auctioning around 60%. More on the
EC’s complex new plan in Renew 173.
* E3 International claims that around 18m ETS phase1 credits were double
Germany: 40%emission cut
The German cabinet has approved an environment Ministry plan to reduce
greenhouse gas emissions by 40% by the year 2020. ‘All economical
and social sectors will contribute’ environment minister Siegmar
Gabriel promised. ‘We have enough options and tools- but we must
also apply them with determination and we must do so quickly’
says the new study “Climate protection in Germany: 40% reduction
of CO2 emissions by 2020 compared to 1990” published recently
by the German Federal Environment Agency.
The 30-point plan will require changes to several laws which could take
up to a year to achieve and so may only take effect under the next government,
due to be elected in late 2009. Consumers are expected to play their
part with most of energy savings coming from public and private buildings,
households and transport. From 2008, funding for climate change activities
is to be increased from an annual € 700m to € 2.6bn. This
represents an approximately 200% increase in funding on 2005. The share
of renewable energy sources in electricity production will rise from
today’s 13% to 25-30% by 2030. Also, the share of electricity
generated using combined heat and power will increase by 25% by 2020,
with an annual € 750m being allocated. A switch to renewables-generated
heat will be prescribed by law. In future, 15% of energy used for heating
in new buildings will have to come from renewable energy sources. The
requirement will also apply to existing buildings when they are completely
remodernised. According to Gabriel, greater use of renewables can double
the number of jobs in the sector. Some 214,000 people currently work
in the sector. The German edition of the Financial Times called Merkel,
a conservative, ‘Germany’s greenest head of government to
date’. Economics Minister Michael Glos said ‘We aim to be
the worlds most energy-efficient country’.
* Nearly 23GW of offshore wind is to be installed along the N.German
coast by 2020
Sources: Greenprices, Reuters, Windpower Monthly, www.bundesregierung.de
Wind helps EU meet target
The European Commission says the EU will almost meet it target of obtaining
21% of its electricity from renewables by 2010- it’s projecting
that 19% of EU gross domestic electricity will come from renewables
by 2010 at current rates of progress. This success has been aided by
the record 7.5GW of wind capacity built in Europe in 2006: wind now
supplies 3.3% of EU electricity. It’s estimated that by 2020 wind
capacity will rise from its current EU level of 50GW, producing 100TWh,
to 180 GW, producing 500 TWh by 2020, and some studies say it could
supply 16% of EU electricity.
Germany remains in the lead with 21,283 MW. It should be able to meet
the new EU target of obtaining 20% of energy from renewables by 2020-
in fact it’s aiming for 30%. But the UK, and some others will
find it very hard on current plans. Source: RenewableEnergyAccess.com.
Renewable Energy Feed-In Tariffs are spreading around the EU, as the
map show, with Finland now set to join in.
Mauri Pekkarinen, Finnish trade & industry minister, has proposed
that Finland should introduce a feed-in tariff programme to promote
the adoption of renewables. He said that market-based measures were
not enough to meet the EU’s renewable energy targets. According
to the trade and industry ministry, Finland should quadruple the use
of thinning and felling waste and raise wind power capacity 20-fold
to reach the goals.
* See the Technology section of Renew 172 for more on how the REFIT
system works in Germany where it was pioneered- and the problems with
the UK’s Renewables Obligation. Our Reviews section looks at a
study of how the UK could benefit from REFIT.
Solar FIT for Italy
Last year, Italy approved new incentives to boost PV- photo voltaic
solar. It’s adopted a REFIT system and ordered all new buildings
to have PV panels on roofs to exploit its abundant sunshine- about 30%
more per sq metre than in Germany, the PV leader. Italy has amended
its solar law to align it with a German-style feed-in tariff, with guaranteed
above-market prices for PV. As a result it hopes to boost installed
PV capacity to 3GW by 2016- that’s what Germany has already.
Under the revised Italian law, PV system operators would get up to €
0.49/ kWh for 20 years, so that operators and individuals can repay
investments within 8 to 12 years- faster than the 12-16 years in Germany-
and get attractive earnings over the entire operations period, The amended
Italian law also scraps limits on annual incentives to install PV modules
and boosts subsidies for households to put solar panels on roofs.
*Italy’s power utility Enel says it will invest € 300m over
3 years to install over 35 MW of PV. But it’s also keen on nuclear.
The French power utility EDF has a price-based demand mangement system,
which cuts in when demand peaks. During the peak tariff period ‘Effacement
Jour de Pointe’ (EJP), the energy price is at least four times
as high as for the usual winter period. There are maximum of 16 EJP
days per year, notified a day ahead on the TV, internet etc.
Hungary REEEPs Hungary has became a partner in the Renewable Energy
and Energy Efficiency Partnership (REEEP). It’s the 35th country
and the 2nd in Eastern Europe to join. It aims to get 14-16% of it energy
from renewables by 2020.