Full interview with Jean-Claude Steffens, Director of Environment & Innovation, Suez-Tractebel 

 

Mr Steffens, you are responsible at Suez-Tractebel for innovation and environment at group level. An area that encompasses both these concerns is renewable energy. Could you tell me, from the perspective of a big energy company, where you see the potential for renewables?

I think that the term 'renewables' covers things that are widely different. Take wind energy, for example: this is a well proven technology, but it only delivers power 25 per cent of the time. This means that you have the problem of intermittent power. This problem cannot be solved from one day to the next.

On the other side, you have photovoltaics, for example. The costs here are so high that it is only reasonable in very special cases to employ this technology.

Then again, there is biomass, which is very promising, as it is sustainable, but it is not intermittent. You can use it in combination with other fuels in combustion.

All these factors make me think that with renewables, we will have a similar landscape as for electricity, i.e. a mix of all the available sources. From an investment and research point of view, Tractebel is looking at all the possibilities.

Is the 12 per cent target as it was set out in the Renewables Directive realistic?

In my view, it is not possible to speak of a target separately from discussing costs and prices. This means that you have a marginal renewables curve that says that if you want 12 per cent you come to certain costs. The price will be high. At the moment, in Belgium, the subsidies for renewables make up about three times the price of wholesale electricity. This means that the full price is four times the normal price. So overall, I think that for a target of 12 per cent, we would be looking at a 15 to 20 per cent increase in wholesale prices. This will be directly or indirectly passed on to the consumer.

Is it realistic to assume that some renewable energy sources might be viable in the short to medium-term so that they do not have to rely too much on public subsidies?

To my knowledge, within 30 years, the price for renewable electricity will not decrease to match the price of traditional electricity if it was to be of the same quality. You might have cheap wind electricity, but the intermittent power also has a price on the market.

I would like to move on to a very different but no less topical issue, which is the one of emissions trading. How effective do you think emissions trading can be in reducing emissions in Europe to meet the Kyoto targets?

I think that emissions trading and the inclusions of projects such as JI [joint implementation] and CDM [clean development mechanism] in the system is by far the best way we have to limit emissions in greenhouse gases in industry. Electrabel, Tractebel and Suez have all been committed to the model of emissions trading since it was first introduced and we are committed to making it work.

However, the problem is that while the general principle is very good, we are now approaching the last few months before the start of the system in 2005 and it is only now, at the last minute, that the details are being fixed. They can spoil all the benefits from the good principles. We are now at this turning point. What we see is that for the first period [2005-07], it is too late to make any investment to reduce the quantity of greenhouse gases emitted per kWh. All you can do is change the merit order of the power plants. This means that you would in the future run the gas-fired power stations before running the coal-fired power stations, although coal is cheaper. This is because you have to add on the carbon price, and coal produces double the amount of emissions than gas.

This is the only possibility the power industry has to react to emissions trading. The problem is that we cannot make any investment decisions according to this. Within one year, it is impossible to shut down a coal-fired power station and build a gas station instead. The ti meline is too long for this: if we decided to do this now, the new station would not be up and running before 2008/2009. By then, we're already out of the first period.

So, what would have been preferable from an industry point of view?

The industry should have known the quotas three years before the start of the system. We don't even know how many credits we get, and we will only find that out in September.

Other industries have the same problem, with the difference that they don't have any choice. If you have a cement factory, you only have one sort of technology to chose from, and you have to run it. So, we think that for the other industries, delocalisation, or at least rearranging production will be the only means they have to comply.

What are the main existing question marks?

One question that is still open is the one of the total volume of quotas allocated to industry. Another problem is that JI/CDM inclusion directive, which modifies the emissions trading directive to include the JI [joint implementation] and CDM [clean development mechanism] mechanisms of the Kyoto Protocol, has still not gone through (see

EEurActiv 24 July 2003andE18 March 2004for details on the 'Linking Directive'). We don't know if this will come into force for the first period of the system. And what happens if the Kyoto Protocol does not enter into force? This would mean that CDM would not exist as it would not have any legal basis.

So all in all, there are still too many political uncertainties.

Thank you very much for this interview.