The European Union’s proposed €750 billion recovery plan from the coronavirus crisis will need to acknowledge national differences on clean energy in order to succeed, a senior EU official has said.
The European Commission will take account of “the different starting points of member states” when modelling the costs and benefits of raising the EU’s 2030 climate goals, said Artur Runge-Metzger, director at the energy department of the EU executive.
Regional differences – such as winter heating needs – will weigh on the final decisions over national recovery plans that countries must submit in order to tap into the recovery fund, he said.
“What is important in Europe is flexibility to make sure that in the end we deliver decarbonisation and climate neutrality in a manner which is as cost-efficient as possible,” the EU official said.
“What is also clear is that there are various pathways” to decarbonise energy by 2050, Runge-Metzger told a EURACTIV online event last week, referring to the EU’s goal of reaching net-zero emissions.
The European Commission tabled a recovery plan from the coronavirus crisis at the end of May, proposing to borrow €750 billion and redistribute the money in the form of grants and loans to member states hardest hit by the pandemic.
EU leaders meet this Friday to hold a first exchange of views on the proposal, which broke a major taboo in Europe by proposing that the Commission borrows large sums on the capital markets on behalf of the 27 EU member states – bringing the EU one stop closer to a fiscal union.
Success hinges on member states
Under the proposal, 25% of all funding would be set aside for climate-friendly expenditure such as renewable energies, electric mobility and building renovation projects. And a “do no harm” principle applying across the EU budget and recovery fund should in principle exclude EU funding for fossil fuels and nuclear.
But the Commission did not put forward a detailed spending progamme, inviting governments to apply instead for EU recovery funds by submitting national “Recovery and Resilience Plans” that will be vetted by Brussels and the other 26 EU member states.
And even though a minimum of spending is expected to go towards green projects, the success of the recovery at EU level will largely depend on the member states themselves, Runge-Metzger admitted.
“It is true that the recovery relies on the proposals of member states,” Runge-Metzger acknowledged, saying “the biggest chunk of money is going to be channelled via member states budgets” through the proposed “Recovery and Resilience Facility”.
“But of course member states in their own programmes should focus on the right things,” he added, drawing attention to the National Energy and Climate Plans (NECPs) that the 27 EU governments were expected to submit by the end of last year.
The wide scope for national governments to design their own recovery plan came as a disappointment to many clean energy campaigners who expected a detailed spending programme for the EU’s proposed €750 billion fund.
An early draft of the EU recovery plan, seen by EURACTIV, contained specific financial envelopes for renewable energies, hydrogen, clean mobility, and building renovation.
But the Commission finally opted for looser spending rules in order to increase the chances of winning approval for its borrowing plan, which needs the unanimous backing from all 27 EU member states before coming into force.
In Finland, the parliament’s constitutional law committee has already fired a warning shot, saying the European Commission’s plan may be in breach of EU treaties.
“Without a doubt the success depends on the implementation at national and, in particular at local level,” said Johannes Hahn, the EU’s budget commissioner who spoke at a Brussels event last week.
‘No time for reinventing the wheel’
Even though there is wide scope for EU countries to design their own plans, Runge-Metzger also said there were “a number of obvious areas” where the need for a short-term economic stimulus coincides with long-term climate objectives.
And national plans that meet those requirements are likely to get quicker approval from the Commission, he said.
“One of those areas is energy efficiency and the renovation of buildings,” he pointed out, saying renovation programmes can have a “major implication immediately on the labour market”.
The same applies to clean technologies like wind turbines, solar panels, and electric mobility, which are all mature and can provide “an immediate stimulus to the economy,” Runge-Matzger said.
Another “untapped area” in the agriculture sector is the production of biogas, which “can be rolled out today and has immediate impact on growth and jobs,” he said.
What the Commission will do next is to “scrutinise” the list of projects submitted by member states and prioritise those which “will be most impactful in the short term” while meeting long-term climate goals.
“We don’t have time for reinventing the wheel,” Runge-Metzger said. “Things need to come out of the drawer – I think that is important in order to fast forward the whole transition towards climate neutrality.”
Support for flexible approach to recovery
Other speakers at the EURACTIV event supported the Commission’s proposed “flexibility” with national recovery programmes, saying it will increase the sense of national ownership.
The EU recovery plan “gives member states a chance to develop their own industries and businesses without the feeling that it’s imposed on them from above,” said Martin Porter, from the Cambridge Institute for Sustainability Leadership.
And even though Poland, Germany or France choose to invest in different areas depending on their national priorities, they’re all pulling in the same direction which is climate neutrality, he added.
“Whether it’s in hydrogen, electric vehicles, heat pumps, solar power or offshore wind – the mix differs. But the general direction is compatible with the Green Deal,” Porter said.
What’s important, he insisted, is to make sure national plans are ambitious enough to accelerate the transition to a climate-neutral economy.
“Whether it is yet sufficient is a question we’ll keep coming back to,” Porter said, highlighting “a gap” between the EU’s climate goals and commitments made in the National Energy and Climate Plans (NECPs).
The need for flexibility was also underlined in a study by AFRY, a management consulting firm, which recently produced a study exploring energy decarbonisation pathways for 2050.
The study, published in April, found that up to 62% of EU energy demand could be met with clean electricity by 2050 – significantly higher than the 53% share put forward by the Commission in its own long-term projections for 2050.
Electrification and smart grids
A higher electrification rate, in turn, would allow a reduction in carbon emissions of up to 59% by 2030 – higher than the Commission’s envisaged 50-55% range for 2030, and much higher than the EU’s current 40% target.
“Decarbonising the European energy system by 2050 is ambitious, but possible,” read the AFRY study, conducted on behalf of Spanish utility firm Iberdrola.
Doing it “implies an important electrification of the transport and heat sectors in order to allow for a very high penetration of renewable generation and reduce the share of unabated gases in the energy balance,” the study added.
Another highlight of the study “is that you need to deliver smart grids for both pathways” – even when low-carbon gases are added to the energy mix, said Richard Sarsfield-Hall, a senior manager at AFRY who presented the paper during the EURACTIV online event.
This is because digitally-enabled energy grids allow “flexible charging” for electric vehicles and “flexible heat” solutions to be deployed on a larger scale, Sarsfield-Hall said.
Another prerequisite is to reinforce cross-border electricity interconnections in order to take full advantage of windy or sunny weather conditions in neighbouring countries, he said.
“It’s the decarbonisation of heat which is the big challenge,” Sarsfield-Hall said. And the solutions there will vary depending on geography and climate conditions, he pointed out, saying electrification makes more sense in southern countries while hydrogen and low-carbon gases will work better in northern areas.
“It’s about what works for your country, your geography and your existing infrastructure. There is no point in saying you’re going to decarbonise with a lot of electrification and then not spend any money on getting the grids up to standard,” he said.
[Edited by Benjamin Fox]