Will Andrews is senior vice president at FTI Consulting Brussels and heads several energy projects in the public affairs practice. He contributed this piece in exclusivity for EurActiv.
"In the midst of an existential crisis, the EU’s recently-released Energy Roadmap 2050 represents a rare opportunity for the bloc to demonstrate unity, vision and leadership. It certainly doesn’t lack ambition: the Commission’s stated objective is to reduce overall greenhouse gas emissions by over 80% by 2050 compared to 1990 levels. However the recent history of EU energy initiatives makes it impossible not to approach the road ahead with considerable trepidation.
Initiative? There’s loads of that...
Looking at the European Commission’s 2050 vision might very well remind you of the old joke: “Well, sir, if I were going there I wouldn’t start from here.” The barriers to achieving decarbonisation on this scale, a number of which are highlighted in the roadmap, are immense.
One of the thorniest challenges will be upgrading Europe’s inadequate energy infrastructure, which will require mobilising considerable investment capital. The Commission has estimated that €1 trillion of energy investments will be needed over the next decade. Of that, around €200 billion is required for the construction of gas pipelines and electricity grids.
To help facilitate these investments, in October 2011 the European Commission proposed a new regulation to boost the creation of infrastructure projects of “Common interest” for Europe as a whole. These projects would benefit from enhanced permitting procedures as well as access to EU funding under the Connecting Europe Facility – package designed to provide funding to projects of European significance which would otherwise not be commercially-viable.
Over the past year the Commission has launched several initiatives to mobilise private-sector investment. In 2010 it launched a pilot of the Project Bond Initiative, allocating €230 million from the TEN and CIP funding streams to energy infrastructure projects, which it estimates could help mobilise €4.6 billion of private investments, focusing on 5-10 pilot projects.
Do national governments truly have the EU’s back?
Given the inherently medium-to-long-term nature of these investments, a major challenge to overcome will be the conflict inherent between the need for stable, long-term policy and the short-termist pressures faced by elected governments. This is illustrated particularly acutely by current problems in negotiations on two pieces of legislation with important consequences for realising the 2050 vision.
First, the Energy Efficiency and Savings Directive, proposed in June 2011. This included a number of far-reaching provisions, such as an obligation for all energy distributors to achieve annual energy savings equal to 1.5% of their energy sales volume and a requirement for 3% of public buildings to undergo energy efficiency renovations every year.
However, no progress has been made in negotiations on the directive due to fundamental disagreements over many provisions between national governments, which we shouldn’t forget have so far refused to allow the 20% energy efficiency target for 2020 to become binding.
Similarly, negotiations have broken down altogether over revisions to the Energy Taxation Directive. The Commission proposed to shift the focus of taxation from volume onto energy content and carbon dioxide emissions in order to stimulate uptake of low-carbon fuels. Many EU countries oppose the revision entirely, while the Polish presidency has called for the concept of taxing according to carbon content to be abandoned altogether.
The fact that energy remains a national – rather than EU – competence has resulted in a stream of decisions which undermine efforts to realise a common energy vision for Europe, let alone a unified single energy market. Germany’s unilateral move away from nuclear represents perhaps the most striking example, but there are many others. The diverging approaches taken by European governments to shale gas exploration, which threaten a major row in Brussels about how, if at all, it should be regulated, are a major headache for the Commission given the prominence of gas in its roadmap.
This reluctance by governments to be good European citizens was amply illustrated by the Commission’s announcement in September 2011 that it had sent letters of formal notice to the vast majority of member states for non-implementation of the market liberalisation laws of the third energy package (17 member states for electricity market rules, 18 for gas).
Dwindling public support
There also remains the issue of ensuring continued public support for the necessary reforms. New energy installations are continually dogged by expensive and time-consuming challenges from the communities that will be affected by them. The general public does at least appear to be technology-neutral, directing its ire with equal fervour against wind farms, carbon capture and storage facilities and shale gas drilling sites.
A Eurobarometer survey on public attitudes to Carbon Capture and Storage (CCS) published in May 2011 gives revealing insights in this respect. Of the 13,000 citizens interviewed across 12 countries, 60% felt that CCS should be compulsory for all new coal-fired power plants. Nevertheless, in familiar nimby fashion an even higher proportion stated that they would be “slightly” or “very” concerned if a CO2 storage facility were to be located within 5 kilometres of their home.
This is, however, not the complete picture. Closer analysis reveals that the more familiar people were with CCS technology the less worried they were at the prospect of living near a storage facility. Conversely, those people who felt most concern were those who did not believe in the effectiveness of the technology or who felt it would not benefit them personally.
This illustrates the supreme importance of public education and engagement efforts to win support for large-scale energy infrastructure construction, and highlights the widespread failure of policy-makers and energy companies to do this effectively.
The roadmap’s conclusion that decarbonisation is both possible and cheaper over the long-term than business-as-usual is strikingly supported in the International Energy Agency’s World Energy Outlook 2011, which estimates that for every $1 of investment in the power sector avoided before 2020, an additional $4.3 would need to be spent after 2020 to compensate for the higher emissions. This top-line message may prove to be palatable to leaders of the EU’s member states, none of whom will be around in 2050 to be judged against this objective.
However, it remains to be seen whether in a time of austerity the Commission will be able to persuade national governments to take the tough decisions needed over the next 3-5 years that will ultimately shape Europe’s road to 2050."