The Europeans seem confident they’re at a competitive advantage in the current climate and economic crisis because they’ve been playing by the (environmental) book for the past decade.
Brussels has just adopted an Energy and Climate Package (pdf) that insiders boast will set the scene for a “new global industrial revolution”. Those are the very words the European Energy commissioner used to describe the new laws which were passed April 6. Curious what this is all about?
The answer is simple. Energy security. Due to the arrival of renewable energy in the past four years, Europe has experienced what it feels like to have a say in its own energy security. And that feeling is apparently intoxicating. Everybody here in Europe knows that the network of gas and oil pipelines that lie hidden in the ground has been constructed with little else than the interests of energy companies in mind. But with the arrival on the scene of renewable energy the realization has grown that we’re no longer dependent on what the world market has to offer, the likes of which include whimsical Russian suppliers.
Within a single generation, we can give Europe a truly sustainable energy system,” writes a jubilant EU Energy Commissioner Andris Piebalgs in a publication of the Robert Schuman Centre for Advanced Studies.
Piebalgs is convinced that European companies can emulate or even surpass similar success as the US companies booked with computing revolution:
We can put the EU at the forefront of the third industrial revolution in the same way as US investment in computing put them at the forefront of the second,” Piebalgs asserts.
Woa. To judge whether this rhetoric is justified, we need to look at what’s been achieved and what the EU’s future renewable energy plans entail.
Europe has clearly put renewable energy at the heart of its energy policies. The EU’s Climate and Energy package adopted on April 6 aims for a 20-20-20 climate goal, committing the bloc to 20% emissions reductions by 2020 plus a minimum of 20% renewable energy. The 20% CO2 reduction target might be increased to 30% should the U.S. and other developed countries make a similar commitment.
At the moment the European energy mix already includes 11.5% of renewable energies (solar, wind and hydro). Germany has renewable energy legislation in place and in Austria, Sweden, Finland and Portugal the portion of renewable energy is already above 20%.
The transport sector, which is not going to be mandated to trade its excess pollution on the carbon market, will be an important part of the renewable energy effort. It is targeted to achieve a 10% use of “green fuels”to not only include biofuels but also electric vehicles and other green initiatives. Countries have to ensure that biofuels offer at least 35% carbon emission savings compared to fossil fuels. That percentage is set to rise to 45% by 2013 and 50% by 2017. As of 2017, the target will be raised to 60%.
The biofuels debate that raged in Brussels in the months leading up to April 6th clearly highlighted the important issues dominating biofuel sector globally. Until just before it reached agreement, the European Parliament battled with national governments over viable biofuels sustainability criteria. The question whether to include the impact of so-called “indirect land use” in the formula to calculate biofuels’ overall CO2 performance was a hot issue. Such indirect factors include increased CO2 emissions caused by deforestation and higher food prices as a result of shifting land from food to biofuel production. Ultimately the Europeans decided not to include the indirect land use in its formula, but the European Commission is now drawing up proposals to limit indirect land use caused by the switch to biofuel production.
Renewable energy offers companies the chance to get out of expensive deals on the carbon trading market if they end up polluting above the legally allowed maximum. The EU has been operating a carbon market since 2005. Incidentally, the new Climate and Energy package also includes a dramatic and highly needed revision of this market. In 2013, power companies will be mandated to buy all their emissions allowances (rather than getting them free) at auction. This hopefully will balance out the deficiencies of the previous scheme, in which free allocations rendered the market more or less obsolete. For other industrial sectors, auctioning will be gradually phased in, with 20% of emissions permits bought at auction by 2013 and 70% by 2020. Full auctioning will commence in 2027.
The revamped carbon market plan looks good on paper and it beats me why people will hold off until 2013 to implement the improvements. That said, for real, tangible, measurable success to materialize we need more than the European Trading System. Carbon trading will only book real results if this is a global effort in which not only European companies, but also U.S. and Chinese companies participate. The Europeans know that they need their overseas brethren for the carbon market and that also the fate of the global climate negotiations is much dependent on the U.S. Yet U.S. politics is itself not going to provide immediate guarantees. There’s a real danger that, like in the Bush era, Congress will end up torpedoeing progress of a Kyoto successor simply because there’s scarce political will to support it or support it in time. To date the U.S. Senate hasn’t even bowed over one single climate law to date.
Yet there are many ways to skin a cat. If the Environmental Protection Agency (EPA) is going to regulate carbon dioxide, which a U.S. court ordered it to do in 2007, the creation of a carbon market by similar means might not be far off. Since President Obama took office it’s become apparent that the U.S. is intent on providing leadership in matters environmental and it’s likely that no road will be left untried to achieve the adoption of a Kyoto successor to
It’s a dead-on truth that in the grand scheme of things the importance of alternative sources of energy can not be overestimated in carbon dioxide reduction efforts. The future will show us whether Europe will be the shining example of this.
China is also very much on the ball in the renewable energy effort. Like the EU it too has been playing by an environmental rule book in recent years. Beijing has achieved impressive energy intensity reduction goals, resulting in a reduced energy use per GDP of 20% in just six years between 2005 and 2010. The Chinese authorities are committed to another 20-30% reduction by 2020.
The country, which overtook the US as the world’s biggest polluter last year is also committed to increase its renewable energy to 15-20% by 2020. That is a level similar to that of the EU.
China has 14 to 16 new pilot projects on coal gasification in the pipeline, which is impressive but, just like the Europeans, the Chinese are motivated by supply reasons. The security of supply in China is not always guaranteed because it is very expensive to get the coal from the north-west to the south-east, where the industrial centers of their manufacturing are located.