Friis: Growth starts with EU energy community

Lykke Friis.jpg

The EU started out with energy, as a coal and steel union, and 50 years later the bloc needs to draw up a new common energy policy as a precondition for growth, Danish Energy and Climate Change Minister Lykke Friis told EURACTIV in an interview.

 Lykke Friis is Denmark’s energy and climate change minister.

She was speaking EURACTIV Managing Editor Daniela Vincenti-Mitchener.

To read a shortened version of this interview, please click here.

The European Commission has just released a proposal making the case for moving to a unilateral 30% cut in EU greenhouse gas emissions by 2020. However, faced with member states' opposition, Climate Action Commissioner Connie Hedegaard, a Dane herself, seemed to backtrack on her initial commitment to push the EU towards that target. She now says that the next step should be to analyse the impact of upgrading the target in some individual countries. Meanwhile, going for 30% could incite countries to invest more heavily in the green economy and boost competiveness. Do you think we are having the right kind of debate?

I think we will have to separate the two debates. The debate that we are having right now, about the EU's position in the run up to Cancún; and the other debate about changing Europe's overall economy in a more green way, to transform ourselves into a low-carbon society. These are two different kinds of debate, I would argue. The first debate is right now. The other debate is also linked to overall policy questions regarding the EU's 2050 plan for transformation.

Right now, I completely support the Commission's communication, which says that we should not at the present stage debate whether we should move to 30%, we should make more analysis about this and particularly look, as you mentioned, at the question of what would be the implications for the various countries – and we support that 100%.

There will be a debate about this in October as far as I've understood. First there will be debate at the next Council meeting, next week on 11 June, and then we will debate it again in October.

I think it is very important to say that we are in the middle of very important international negotiations and the EU should maintain the ability to move to 30% as an important bargaining chip in those negotiations. But that is also completely in line with the Commission's overall policy. It will not solve the problems of climate change in the world – Europe's overall strategy is to get others to step up their game as well.

We should not play that card now. We should use it when we get to the end game of Cancún.

Yes, but that 'card' didn't seem to work in previous negotiations …

I agree, but that's not an argument for saying that it will not work this time.

Maybe it should be amended. For Europe to maintain leadership, shouldn't the EU change its strategy?

Not necessarily. There are many other issues that you could look into with the European Union, such as how do we manage to speak with one voice – that is also part of the overall strategy on how to increase the influence of the European Union.

Personally, what I always think is very, very important in the negotiations is that we live up to our various promises regarding 'fast-start' finance. This will also play a major role as a confidence-building measure with regard to the European Union's overall credibility and our chance of persuading developing countries that we mean what we say.

I think that is a crucial, crucial element of the ongoing negotiations, but to say that it will have an impact upon the negotiations – upon China or the US – if we now in the middle of nowhere move to 30%, I simply do not see that as being a realistic scenario.

That this should be the convincing argument to get new movement in the negotiations – on the contrary, we should maintain that pressure on the rest of the world by having that card to play when we get to Cancún.

Realistically, what can we expect from Cancún? Talks in Bonn are ongoing as we speak. Tell us about the feeling of the Danish government, which has been significantly involved in past negotiations and indeed is still heavily involved. Is there enough momentum to actually deliver an international, legally-binding agreement?

Well it's very clear that with Copenhagen there was so much hope – 'Hopenhagen' to use that expression – and a lot of negotiators and ministers were suffering 'climate depression' after Copenhagen, there's no doubt about that.

Now I think we have moved ahead, particularly we have managed to agree on the calendar of the negotiations, the two additional meetings, agreement on the new head of the UNFCCC [United Nations Framework Convention on Climate Change] process, Christiana Figueres Olsen, and there was also agreement at the last meeting in Bonn that the two chairs were able to draft the negotiation texts, which drew upon the Copenhagen Accord.

So now, you could say we are back in business with regard to the actual climate talks. I would say it is still too early to say, the jury is still out, with regard to Cancún. Denmark, as the COP [Conference of the Parties] president, is trying to develop the GPS system together with the Mexicans so that we are in time for Cancún. It will be very much up to them what the goal for Cancún should be.

Our hope is still obviously that we are able to agree on a legally-binding deal, but I can see that this will be difficult looking at the overall situation in many countries. But if it is not possible to agree on the best-case scenario, we should make sure that in Cancún we agree on a number of important deliverables that we can then use as important steps towards South Africa.

This could be deforestation, adaptation: it could also be on transfer of technology – though that's not as likely – but we should definitely focus on getting the deliverables right in order to get to the next step.

Technology transfer will probably be difficult …

It's probably more likely to be deforestation and finance, particularly with fast-start, that we can get going even before Cancún.

For a long time, we thought that if the US were to pass a climate bill, it would pave the way for an international, legally-binding agreement. But it seems that even if the US manages to pass green legislation, the fact that an international treaty needs a greater degree of support in Congress to be passed makes success even more doubtful. That’s one of the stumbling blocks.

The other is that the financial crisis has prompted talks about restructuring international governance, which was also called for in the context of the perceived failure of the Copenhagen conference.  In your view, is there a way out of this constant push for an international agreement? Should we consider bilateral or sectoral agreements?

Well, I would say that at the moment, we are 'in the air' on the way to Cancún and we are in the cockpit together with the Mexicans. And while you are in the air, it is not the right time to look inside the engine.

So it is not for the Danish COP presidency at the present time to launch a debate about whether one should look into other possibilities, bilateral deals, sectoral agreements, or whatever. We are focused 100% on getting to Cancún and getting the best result possible. What happens afterwards is a completely different debate. We can't really launch that debate at the present stage.

Personally, I am 100% convinced that we do need a globally-binding deal. We need to put a price on carbon, and at this stage there is no need to give up and say this is not possible. We have seen movement after Copenhagen, we managed to agree on the Copenhagen Accord and over 120 countries have signed up to it. There are clear building blocks that can eventually go into a deal and negotiations have just been re-launched.

So this is not the time to say we can't agree on anything because if that's the approach, then obviously you can't agree on anything. You have to build up the pressure in the run-up to Cancún.

In order to avoid a rerun of the 'climate depression', as you called it, do you think that just a deal on deforestation will be enough? What would you deem a success for Cancún?

That is what we are debating with Mexico, and I think if there is one thing we learned from Copenhagen, it is that expectation management is important. It will be for Mexico to figure out how ambitious they want to be and we will help them all the way. We will obviously not come forward and say where the level of ambition should be – that is up to Mexico.

And I suppose it is also up to developing countries…

Absolutely, but it is obvious that at a certain stage, Mexico, as the incoming COP presidency, will have to develop a game plan for Cancún.

Coming back to the European picture and how we are going to restructure our energy supply markets, there was a ministers' meeting recently [31 May] in which you discussed the 'energy action plan' for up to 2020. There is a case for doing whatever necessary to boost growth in Europe. What do you think Europe's action plan should focus on to help boost growth?

I think you are absolutely right – this action plan, and energy and climate policies, should be seen as a way to exit the crisis. That is a challenge. We should win the debate about the transformation of our society to move into a more low-carbon age, as a way to improve our broad economy. It should be part of the defining edge of our competitiveness that we actually manage to transform ourselves.

Denmark has published a concrete proposal – a position paper – with regard to the upcoming action plan, in which we highlight for example doubling investment in R&D and demonstration projects, focusing more on energy efficiency and getting going with the smart grid system.

Personally, I am convinced – even more so after the debate we had on Monday [31 May] – that we have come full circle: the EU started out with energy as a coal and steel union, and now we are back to basics: it's once again energy policy.

I think it is very thought-provoking that when you travel through Europe, the roads do not stop at national borders, nor do telecommunications systems, but our energy system usually stops at the borders. So that's one of the core challenges for the European Union, to develop a 'supergrid' system.

This could also be a precondition for our transformation into a more low-carbon economy, where you could also have a division of labour with renewable energy: you could have lots of wind energy in the north of Europe and solar energy in the south (Desertec and so forth), combined into one grid system. This would be one of the visions and ideas that I hope will come out of the action plan.

Is this vision backed by all member states?

Well, we had a first, initial discussion, so I guess you can't judge from that, but I would say that [Energy] Commissioner [Günther] Oettinger is very much pushing the infrastructure question.

We will obviously have to have a debate at the end of this year and the beginning of next year on how to finance such a grid system: how much can you leave to business or public/private partnerships, how much is dependent on the EU budget, national budgets – that's obviously where you would have 'judgement day'.

We are not there yet, but I think it is important to say that this is what we need in Europe and this is also a precondition for growth in Europe, if we get the system to work.

You alluded to the European Coal and Steel Community. Some people advocate a common energy policy – would that call for another change to the EU Treaty? The present row over whether we should change the EU Treaty to tackle the shortcomings of the euro zone shows that leaders have not been looking at the long-term picture with the Lisbon Treaty. Do we have the right tools in the Treaty to push for a common energy policy without any change?

Whether the treaty needs to be changed due to the overall economic situation is a completely different discussion. But to say that we need to embark on an intergovernmental conference because of energy policy, I must say that this is the first time that I have really heard that argument.

We just changed the legal base, in the Lisbon Treaty, and frankly we've had a permanent intergovernmental conference since 1989, where the European Union has spent most of its time on changing the treaties.

Now we need to get down to action, using the various treaty bases we've agreed upon, so I don't think that this where we see the major stumbling blocks for agreeing on a common energy policy. That's more of what we have just debated: for instance how do we finance the supergrid system, how do we get more competition and liberalisation in the energy sector. These are the core challenges, but you don't need to change the treaty to move ahead there.

You talked about finance. Progress towards a low-carbon economy demands huge investment. In the present economic situation that is surely a challenge. Is there a way to get around this stumbling block?

There is no doubt that there will be initial costs for this transformation. You simply just have to say that, otherwise you are not giving a frank picture of the challenge.

But that said, we also have to say very frankly that the status quo is also an illusion – because there is no status quo. Because if we do not transform ourselves, we'll end up paying lots and lots of money to energy-producing countries. They have more fossil fuels, so we need to invest in the future in terms of renewable energy, the supergrid system and so forth.

So we have to develop a plan at the same time as we exit the crisis, which is not easy but is the challenge we have to face when we debate climate change and the energy action plan.

Do you think we need better budget coordination, so that we become more effective in allocating financial resources to the right investment in the right places?

You could definitely say that with regard to renewable energy. I very much hope that we will be able to agree on boosting the EU budget for green technology. But I also hope that eventually we agree on coordinating, including the various research councils – one of the areas we would like to focus on.

That's also a possibility for getting a big bang for the euro by actually coordinating, so it's definitely something one should not exclude right away – on the contrary.

Some big companies are starting to realise that the regional level is more dynamic that the national level when it comes to boosting investments in new sources of energy. You come from a country that embarked on a low-carbon economy many years ago. Do you feel that this is maybe a solution – to act at local level and then come up with grander strategies?

You mean at the regional level as such? Well… we have seen many interesting case studies – I heard about a Spanish case study earlier today about transformation in the Navarra region, just to give you one example.

There is no need for us to go at the same speed. We see that that is already part of overall thinking – that we should use the different kinds of energy that we have. Again, in the north, wind is very powerful, whereas it's more solar in the south.

I think there is a lesson to be learned from the Danish case, that if you transform yourself early on then you can also get a competitive edge. 11% of Danish exports are now in 'green tech', so this is part of the Danish economy and very much the sector that will be able to determine whether in the future Denmark will be a winning nation or the opposite.

So there is a lesson to be learned, that we need to transform ourselves on time – particularly now we see that that lots of other countries, such as China, are investing immensely in energy efficiency, for example wind turbines. You could say there is a 'green race' going on and we have to make sure that we don't lose it.

Is Europe aggressive enough in this 'green race'? That could be the catalyst to actually push Europe – don't go to 30% because of climate change, but because of the green race.

Yes, but we are back where we started basically, where I indicated that there are two debates.

Yes … but the two debates converge.

They converge, but it is a question of timing – one debate is about international negotiation, and another debate is about the transformation of Europe as such.

Frankly, I am personally convinced that it would be in the interests of Europe, in order to maintain its competitiveness in the green race, to step up its game. And frankly I could imagine that it will be more than 30%, but that will be due to other arguments rather than the actual negotiations. This will be the debate we will be having when we get to the overall plan of transforming the EU for 2050.

As you may know, the Danish government has set up a climate commission that will prepare a report on how Denmark can become independent of fossil fuels. This report will be published on 28 September and will also try to develop an end target for this transformation.

It will then have to be transformed into a political agreement in the Danish parliament on how Denmark – as one of the first countries in the world – is able to become independent of fossil fuels and live up to that goal. We are not speaking about reducing our carbon by 20-30%; we are talking about completely different numbers, so that is a very good case study.

But dealing with the actual ongoing negotiations is a completely different story.

Do you think that other European countries are moving as quickly in that direction?

It's a question of how you do it – the Brits have set up a climate law, the Germans have set a clear target for reducing their carbon emissions by 40%, so you definitely see lots of national initiatives that are important.

If we had a debate now, I fear we wouldn't be able to agree on anything, but why have the debate now? Let's have it when it will actually be relevant – that will be in October and is exactly what is proposed by the European Commission.

Where do we stand on the supergrid in the North Sea? How much progress has been made?

Well, you could say that this is part of the vision – we need to develop the North Sea countries' offshore grid and there is a big challenge to integrate wind power into the electricity systems in the near future.

The challenges on integrating wind power into electricity systems in the near future are more likely to be handled like today with conventional technology, but probably with a possibility to be elements in a future offshore grid.

We see some clear progress with regard to the Danish-Dutch interconnector project, called COBRA. And we still hope that the Kriegers Flak project will be able to be implemented – we plan to build a common offshore wind farm together with the Germans.

We have also had the interconnection of our system. That goes back to my point about energy systems stopping at the borders, so this is part of our overall supergrid strategy.

One question about the Reflection Group on the Future of Europe, which you quit when you replaced Connie Hedegaard as Danish energy and climate minister. Now that the report is out, do you regret having left? What would you have said differently?

That I can answer very easily. I haven't had the time to read the report! I read the summary on, but it is clear that with work like that, the endgame is really where you want to get your various ideas across and I missed the endgame. I would have loved to be there, but I had other commitments.

Last question…imagine it is 2020. What kind of Europe do you see?

I see an energy system that doesn't stop at national borders, one that puts us in a situation where we have cheaper energy than we would have had otherwise.

It would be green energy to a much larger extent than we do today, one that puts us in a situation where we can maintain our position in the green race and be less dependent on countries that do not necessarily share all our values.

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