IEA director: ETS reform should have started yesterday, not in 2017

Maria van der Hoeven, executive director of IEA. [EWEA/Flickr]

The EU and its member countries must learn the lessons of the 2020 Climate and Energy package, and realise the only way to meet the 2030 targets is through better policy coordination, and a governance and monitoring framework. Reform of the EU Emissions Trading System is vital for hitting both 2020 and 2030 targets and is long overdue, International Energy Agency executive director Maria van der Hoeven told EURACTIV. 

Maria van der Hoeven is the executive director of the International Energy Agency (IEA), a global organisation that promotes clean energy and energy security among its member countries. She was Dutch Minister of Economic Affairs from 2007 to 2010 before joining the IEA in 2011.  She spoke to EURACTIV deputy news editor James Crisp.

EU member states committed to targets to reduce their greenhouse gas emissions and increase energy efficiency and renewables by 2020. Will they meet them?

I think they took the lead in 2009 with the 2020 targets. What we’ve seen is the fast deployment of renewable technologies in Europe was very important. It has brought down global renewable costs, not only in Europe but everywhere else as well.

I think this is a very positive. We’ve seen the EU vehicle fuel economy standards are effective in the EU and they are in step with other large economies, if not ahead of them.

Now the renewable growth rates are much faster in emerging economies, so the share of the EU in the global renewable energy market is falling. It’s not that there’s no growth anymore in the EU, but the other economies are growing faster.

And then we have the EU Emission Trading System reform, and I think it is absolutely necessary and it could lead to new opportunities for the EU.  But the point is when are they going to do that? How quickly are they going to do that? And what will be the result of that?

I hope that there will be some results announced in 2015 in Paris. But I don’t think that’s aligned with their scheme.

Have the member states delivered on the 2020 targets?

Let me put it in a different way, they are still delivering.

Are they delivering effectively?

When you look, for instance, with what is happening with the EU ETS, in my view, in our view, the reform should have been started yesterday, and not in 2017.

The free allowance system has sometimes been abused in the past. Allowances were given to facilities which didn’t really exist…

Maybe, I can’t comment on that.

The EU renewables market grew exponentially after the 2020 targets were set…

It has been the case, but the point is that while the generation was growing exponentially, the integration of renewables into the grid did not.  

The second thing is that sometimes the cost went too high and became a burden to some countries.  We have seen some retroactive measures, for example, in Spain and Italy, which really led to a loss of confidence in investors. 

That really emphasises the need for these interconnections, so you can have a bigger market. When you look into the Germany success story, it is a success story because they can use the grids of their neighbours when they need to transport this electricity.

Has the EU lost its competitive advantage in renewables?

The point is in the past Europe was the fast growing renewables continent. It’s still growing, but now other countries are growing faster.

It’s important that Europe keeps investing in research and development and deployment, because that will help Europe to come back and remain a leader. Maybe not in generation, but in the development space.

All the EU leaders characterised the targets in the 2030 Climate and Energy Package as ”ambitious” – are they ambitious targets?

They are ambitious. They are very ambitious. Now the question is how they are going to be achieved. Who is going to deliver? And I don’t think it is fair to put everything on the plate of the European Union. Because the EU is the countries, they have to deliver as well.

Are they too ambitious?

That’s not what I am saying.  The question is it’s not only on the EU and the European Commission; it’s on the member countries.

About 2030, I really do hope that they learn from the experience of the 2020 package. That showed when you have multiple EU wide targets with different national and EU instruments and you want to meet them that requires coordination, coordination of national policies and alignment with the EU internal energy market, competition and industry policies and between the member states and the EU.

Now when I look at 2030, there is not a governance framework in place and you need that.  Because otherwise how can EU-wide targets be delivered in the absence of national targets, and how can energy market and public support work together to deliver these goals? You need to have a governance framework and a monitoring framework. Otherwise it’s very difficult to see whether these targets will be met or not.

But if you are going to be really ambitious, why not set binding targets?

Well, ask them.

Well, I have asked some of them. The UK said it wanted to have authority over its own energy mix.

You can have your own national targets and see to it they are in line with the EU targets, while having authority over your own energy mix.

Not everybody in the EU has the same renewable energy sources. Not everyone has the same amount of sun, wind or geothermal, biomass or hydropower.  You cannot do it with one single target, the same for everybody, but you need to have a mechanism to ensure you meet the targets and leave room for national governments to manoeuver. But at the end of the day they have to deliver.

Spain and Portugal wanted a 15% interconnection target as part of the package. You mentioned the importance of interconnectors. Would the IEA support such a target?

We are not going to say things like that, but what we do say is that if you don’t have the right interconnectors in place, it is very difficult to complete your internal energy market for electricity. Spain and Portugal is not a one off issue. There is a need for interconnection in many places.

Do you think the Ukraine crisis has led to too much focus on gas and gas infrastructure rather than electricity through renewables?

I think both are needed. You need to focus on both as part of your internal market.

It’s important to realise that diversification in the gas market is necessary. It’s not good to put all your eggs in one basket and to be too dependent on one supplier. The imports from Russian gas are to stay for many many decades to come. But on the other hand it is very good to look at other sources of supply, such as the Mediterranean, look into domestic gas, look into shale gas, and see to it that you better utilise your energy capacity.

Read>>EU dependent on Russian gas for ‘foreseeable future’, warns IEA

Is the EU still a global leader in climate change after the agreement between the US and China to tackle greenhouse gas emissions?

The interesting thing is that it was thanks to the EU that the costs of renewables came down.  It was a steep learning curve and other countries are now using that experience.

It’s the first time that the two biggest emitters and the two biggest economies in this field have said something together. And for the first time ever there are ceilings in the Chinese proposition. That hasn’t been done before. 

How will this deal turn out in reality? We will have to wait and see. They are two very different countries. When something in China is said from the top, it happens. It’s not always like that in the case of the United States. The US was always averse of binding targets.

I am really very curious to see how this will develop but it is an encouraging sign that these two have said something together.

What would you like to see happen at this week’s international climate talks in Lima?

I would like to see a good result in Paris next year [at a UN global climate conference to reduce greenhouse gas emissions to limit the global temperature increase to 2 degrees Celsius above pre-industrial levels, and I hope Lima will help that happen.  

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