EU ponders trading to fire up renewable energies

The Commission may push for increased cross-border trade in renewable energy as part of upcoming proposals to promote the uptake of non-fossil energy sources in the EU to 20% by 2020, EURACTIV has learnt. The renewable energy industry is sceptical of the idea, however, saying that it would discourage investment.

EURACTIV spoke with Matthias Ruete, Director General of the Commission’s Energy and Transport directorate, concerning the Commission’s strategy for encouraging the uptake of renewable energies in the EU.

• Trading renewable certificates?

While Ruete stressed that the Commission is “not at all at the end of [its] thinking” on the issue, he pointed to the possibility that the EU executive may push for “some mechanism of trade to allow the development of markets and competition also in the area of renewables”. 

The system would allow member states with limited renewables potential to buy certified credits from member states with a higher share of renewables-based electricity (RES-E) production, allowing countries such as the Czech Republic to increase their share of renewables. 

Ruete believes that such a system could also “be a good innovation driver and can also help to develop lead markets”. 

Renewables trading is not a new concept in EU law: article 5 of the 2001 renewable electricity directive obliges member states to provide a ‘guarantee of origin’ for renewable electricity produced on their territory, in order to “facilitate exchanges” of RES-E, both within and between member states. 

A future trading system would be based on the guarantees of origin principle but would feature an increased volume of cross-border RES-E trade in order to reach an overall EU renewables target of 20% by 2020.

But the European Renewable Energy Council (EREC) warns that “so far those Member States which are calling for the introduction of a flexible trading mechanism only expressed an interest in buying, not in selling,” the group said in a position paper dated 1 October.

EREC is concerned that “a trading mechanism may produce a disincentive in some member states for domestic investment: If trading is allowed, several member states will reduce their efforts and count on buying ‘guarantees of origin’ abroad at the latest possible stage”.

• Measuring potential: a tricky issue

A renewables trading system, if implemented, would be at least partially based on the renewables ‘potential’ of each member state, meaning the amount of electricity or heat each member state is able to produce from renewable sources to meet the 2020 target. 

Measuring member states’ potential is a controversial issue. According to Ruete, “we have to face the fact that a number of member states just do not have the potential to develop renewable energies internally, and some member states would have a potential only at an extremely high cost”. 

EREC disagrees strongly, and is pushing for an across-the-board increase in RES-E production of 13%. “All scientific evidence shows that in any [EU] country an increase of 13 percentage points is feasible”, the group said in its 1 October position paper.

But neither the Commission nor EREC have published specific data, evidence or studies to support their assessment of member states’ potential. 

According to Ruete, the Commission has several “sophisticated” models, that “allow us to have a relatively good vision of the potential of the member states”. 

But Ruete also added that measuring potential is “sometimes controversial”, as it is not only a matter of gauging the hydro, wind or solar potential of any one member state, but that there may be “political or environmental opposition at local level” to additional wind power generators, for example.

Nonetheless, Ruete believes “you have to have a vision of what the EU could deliver under conditions where renewable energies would be everywhere as the accepted energy and where there is no ‘nimby’ [‘not in my backyard’] attitude”.

• Avoiding endless debates

As an alternative, the Commission may chose to side-step the debate on member states’ potential altogether in order to avoid lengthy and controversial discussions. “The renewables industry has realised that a lot of the different models that we have, to all intents and purposes, lead us into a situation of arguing about a lot of details”, Ruete said. 

“How far the Community will go in terms of determining the actual targets on the basis of potential – this is still a very open question,” he added.

An alternative would be to maintain and promote existing schemes that have led to an increase in renewables. “There should be a possibility for member states that existing structures, which have worked well, such as national feed-in tariffs, can be preserved, especially if they further innovation policy”, Ruete said.

Ruete is confident that the Commission will find a workable compromise in time. “We still have till the 5th of December, so we still have quite some time to decide on where we are going”, he said.

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