Sluggish renewables investment poses challenge to EU energy plans

Renewables investment in Europe is sluggish. [Wendell/Flickr]

European investment in renewables has dropped by half since 2011, but the EU remains “well on track” to hit its 2020 target of boosting the sector by 20%, the European Commission said today (1 February) as it launched its second report on its Energy Union strategy.

The EU has promised to make itself the “world number one in renewables”. But while European investment dropped to €44 billion, global backing for renewables has increased to more than €260 billion.

In 2014, there was a 16% renewables share in the bloc final energy consumption and an estimated 16.4% share in 2015, in 2014 renewables generated 27.5% of the EU’s electricity, the European Commission said. This is expected to climb to 50% by 2030.

But the EU accounts for just 18% of total global investment, a drop from almost 50% six years ago. The Commission said new finance would have to be unlocked to reach the €379 billion needed every year to reach the EU’s climate and energy targets.

Energy Union boss Maroš Šefčovič said the massive investment gap made it particularly important to avoid stranded assets, such as infrastructure, which could supply more energy than the market demands.

It said that the expanded Juncker Plan could help raise more capital. The cost of renewables was dropping and becoming more competitive, said the executive. Solar modules prices dropped by 80% between the end of 2009 and end of 2015.

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The EU holds 30% of patents in renewables across the globe, which could spur future investments and lead to an uptick in the economy, the Commission said.

The State of the Energy Union report assesses Europe’s progress on the plan, which aims to reduce its dependence on imports and fight climate change.  Increasing efficiency and renewable will help reduce demand and global warming pollution. The Juncker Commission analysed progress made up to 2014.

The Commission vowed to put “energy efficiency first” in the flagship strategy.  Today the executive said it was optimistic that the EU would hit its 2020 efficiency goal but warned that it would require sustained effort from member states.

The EU has reduced its final energy consumption, which means use by households and businesses, to below the 2020 target. But primary energy consumption, which also includes generation sectors and distribution, loses remains below the 2020 goal.

Final energy consumption dropped by 11% from 2005 to 2014. In 2014, the bloc used 1063 million tonnes of oil equivalent, 2.2% below the 2020 target of 1086 Mtoe.

The EU’s total consumption in 2014 was 1507 Mtoe, 1.6% above the 1483 Mtoe goal for 2030. Primary energy consumption increased slightly from 2014-15 but dropped by 12% from 2005 to 2014.

Greenhouse gas emissions

The EU has binding 2020 targets of a 20% increase in renewables and efficiency above 1990 levels.  EU leaders agreed 2030 targets of at least 27% in October 2014, ahead of the 2015 UN Climate Change Conference in Paris.

In Paris, world leaders committed to cap global warming at no more than two degrees above pre-industrial levels.

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The success of the landmark deal, which entered into force in November, led the European Commission to increase the 2030 renewables target to 30% in draft legislation.  The revised 2030 targets are being scrutinised by MEPs and member states before becoming law.

Increased renewables and efficiency levels will contribute to the EU meeting its targets for cutting greenhouse gas emissions.  In 2015, renewables contributed to reducing emissions by 436 metric tons of CO2, the same as Italy’s emissions.

Over 2005 to 2015, lower levels of energy consumption helped to cut GHG emission by around 800 million tonnes of CO2 in 2014, almost equal to Germany’s emissions that year.

The bloc has already overshot its 2020 GHG goal of 20%, cutting 22% of emissions, which has led some campaigners to criticise the target as too low. The EU has a 2030 GHG reduction target of at least 40% compared to 1990 levels.

Energy security

The Ukraine crisis exposed the EU’s dependence on Russian gas and gave impetus to the plan. The EU imports 53% of all the energy it consumes at a cost of more than 1 billion a day.

Last year renewables made a €16 billion saving on fossil fuel imports, which the Commission said would rise to 58 billion – the GDP of Luxembourg – in 2030.

Greater efficiency reduces import demand. A 30% 2030 efficiency target would save €70 billion in fossil fuel import bill and cut gas imports by 12%, compared to a 27% target, according to Commission analysis.

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Positions

Wendel Trio, Director of CAN Europe, said, "The global energy transition is accelerating, but in the EU renewable energy development is flatlining. Worryingly, the current slow pace of renewable energy development will be cut by more than half after 2020, because the 2030 target is set too low. The EU used to be a leader in renewable energy development, but now it risks missing the ongoing energy revolution, losing its benefits and lagging behind other economies for decades.

Aligning the energy transition with the Paris Agreement will require more ambitious climate and energy targets, strong legislation, and additional measures such as deadlines for phasing out fossil fuels.”

Giles Dickson, chief executive officer of WindEurope, said, "The Council and the European Parliament need to start working seriously on the Commission’s proposals.  The Member States also need to start defining in their National Energy and Climate Plans how they will deliver the transition at national level.  And that means all Member States.

To meet the targets for 2020 and 2030, there are two challenges: replacing fossil fuels in transport and heating with electricity; and making sure it’s clean electricity. The Commission is on our side. They want CO2 emissions from transport to fall by 70% in 2050. This represents a huge opportunity for the wind industry. It’s time to start integrating heating, cooling and transport into the electricity system."

Emmanuel Desplechin, Secretary General of ePURE, said, "The European Commission's renewable energy report card confirms that the EU is falling behind in its climate policies for transport. Many Member States are nowhere near on track to meet their obligations for at least 10% renewables in transport by 2020. One big reason for what the report calls ‘slow progress’ is that the Commission keeps downshifting on its policies on biofuels -- which offer significant greenhouse-gas savings. That policy instability has undermined Member States' abilities to use renewables in transport.

The problem would only get worse under the Commission's new proposal to phase out conventional biofuels like European ethanol -- which has 64% GHG savings compared to petrol and is an essential tool for decarbonising EU transport. EU ethanol is produced sustainably by European farmers, is available at scale and works in existing infrastructure and cars. Europe needs policies that promote its transport decarbonisation goals with solutions that work today and also encourage investment in advanced biofuels technology."

Background

The Energy Union has made renewable resources its top priority. Its focus it to improve the environment, environmental security, economy and stimulate innovation. It has set out goals for reducing greenhouse gas emissions by 2020— almost all EU member states have surpassed the goal for 2020, and by 2030 greenhouse gas emissions should decrease by 40%.

Further Reading