Achieving European growth through efficiency

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Offshore wind cost reduction, natural gas and energy efficiency are some of the solutions that the EU could use in order to achieve its ambitious targets and boost its competitiveness in the energy arena, writes Anders Eldrup, chief executive of Dong Energy

Anders Eldrup is the chief executive officer of DONG Energy of Denmark. The following was sent exclusively to EURACTIV:

"The European Union has put forward an ambitious goal to increase the share of renewable energy and become decarbonised by 2050. According to several studies, such an energy transformation away from European dependence on largely imported fossil energy will strengthen European competitiveness.

Because energy infrastructure is built to last several decades, energy companies apply a long-term perspective when making their investment decisions. This means that we already today have to think about the years after 2020. European 2030 targets for renewable energy, carbon emissions reduction and energy efficiency would help to ensure that the investment decisions made over the next five years will bring Europe closer to the goal of a greener and more competitive economy.

Bring down cost of offshore wind

One key component in Europe’s green energy future is offshore wind, which is a proven and reliable technology with a massive offshore wind potential in North-Western Europe. The task at hand is to move offshore wind up the learning curve and down the cost curve. Just as cost over the last decade has fallen sharply in the older and more mature onshore wind industry, so will costs of offshore wind power be reduced.

But, all major societal transformations require large investments. A North Sea power grid will be an important tool to reduce the overall need for investments. The need for modernisation and expansion of the grids was clearly pointed out in the Energy Roadmap 2050. A North Sea power grid would  put downward pressure on retail prices and enable all countries to benefit from sharing expensive back-up capacity for the wind power.

Natural gas as a stepping stone

On the road towards decarbonisation, natural gas is the perfect stepping stone. This was also explicitly recognised in Energy Roadmap 2050. It is a flexible fuel and carbon emissions are only half of emissions from coal plants. However,  the incentives to make gas fulfil the desired role in the decarbonisation of the European power sector do not exist.

At the moment the most profitable business case for new power generation is in new lignite coal power plants. This is mainly because emission allowances under the European Emissions Trading System are traded at a very low price due to over-supply of allowances. The low price does not offer enough incentives for energy companies to invest in low carbon technologies.

Save energy – and money

Energy efficiency is another solution that Europe could pursue towards greater competitiveness. Today, it is possible to reduce energy consumption in buildings by at least 50% with existing technologies. Energy efficiency measures are one of the main reasons why Denmark since the early 80’s has been able to grow its economy by more than 70% while energy consumption has remained stable. The directive on energy efficiency can make Europe take steps in the same direction, if European energy companies would be faced with similar savings obligation schemes as used in Denmark.

The solutions are there and with the right incentives and targets for renewable energy, carbon emissions reduction, and energy efficiency they could provide Europe with clean and reliable energy to the benefit of the European economy."

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