healthier, happier and richer

The EU summit on 4 February was billed as an energy summit. In fact, it occurred during the on-going Eurozone crisis and faster moving events in Egypt, so politicians spent most of the time talking about these issues rather than energy. They did discuss energy briefly, but said little new or unexpected.

The conclusions, largely drafted before the summit, state that:

“Over the years, a lot of work has been carried out on the main strands of an EU energy policy, including the setting of ambitious energy and climate change objectives and the adoption of comprehensive legislation supporting these objectives.”

Well, all observers and participants would agree that there’s been a lot of work. Many would agree that the EU has set ambitious energy and climate change objectives – the EU is, after all, very keen on targets and timetables. The 20% renewables target by 2020 is quite ambitious, though can certainly be met. The 20% greenhouse gas reduction target, again by 2020, may have seemed ambitious before the recession, but isn’t now due to the decline in economic activity. It should be increased to 30%. The 2020 20% energy savings target is ambitious in that the EU is on track only to deliver half of it, though, with strong and sensible policies, the energy savings potential is far higher.

The EU has a new energy efficiency action plan due out in early March2011. This should be used to tighten up existing laws, and spend more of its existing budget on energy efficiency programmes. The EU should tighten standards for the use of energy in buildings, electronic appliances and cars. It must also focus on Combined Heat and Power (CHP). Europe wastes massive amounts of energy, because most power stations do not capture and use the heat they produce when they generate electricity. The Commission said after the summit that it would consider making Best Available Technology (BAT) mandatory for the authorisation of new energy generation capacity and renewal of existing installations. The BAT approach is, of course, open to considerable definitional debate:

• What is ‘best’?
• What is ‘cost-effective’?

Yet CHP technology is clearly available and cost effective, so should be made mandatory on new capacity.

The heads of government spent most of their (reduced) discussion of energy on energy supply rather than energy efficiency. Unfortunately, this was entirely predictable: energy efficiency just isn’t seen as sufficiently politically sexy.  They said that the internal market for energy should be completed by 2014 – another target and timetable.  They had previously had the target date of completion by March 2011, but those won’t be met, so obviously another timetable is needed.

They did better on renewables. The Commission had been calling for an EU-wide feed-in tariff, but this was rejected in favour of greater harmonization of existing schemes – an approach pushed, in particular, by the German government.  An EU-wide system isn’t necessary and, would, anyway have to operate differently in different countries, to reflect the differing renewables potential (since it makes more sense to support solar PV in southern Europe than in northern Europe). Regulatory uncertainty increases the cost of capital for developers; endless debate about a Europe-wide feed-in tariff would do this, just as the endless debate in the UK about the renewables obligation versus the feed-in tariff has done for UK developers.

Of course, the main reason why the UK has harnessed so little of its enormous renewable potential is land use planning. The summit conclusions state that:

“It is important to streamline and improve authorisation procedures, while respecting national competences and procedures, for the building of new infrastructure”.

This is basically just a nod towards an important issue. There is nothing the EU can do about land use planning approaches and decisions in member states.  It can do more about cross-border infrastructure such as electricity grids. These are essential for the full harnessing of Europe’s renewables potential, so that electricity can be transmitted when, for example, the wind is blowing in the north and the sun isn’t shining in the south.

Grid extension is also necessary, but will not be cheap.  The debate about the EU Budget from 2013 to 2020, which is likely to dominate  EU politics for many  months to come, was not on the agenda at this summit.  However, senior Commission officials later said that some of the money for agreed European projects should be raised through EU project bonds. This is a sensible approach. Infrastructure supplies guaranteed income, so is suitable for a bond approach, and the projects would be agreed, so wouldn’t give lots more power and money to the Commission, so would not upset national governments too much.

The summit conclusions say little about fossil fuels. They do say that “Europe’s potential for sustainable extraction and use of conventional and unconventional (shale gas and oil shale) fossil fuel resources should be assessed.”  There has been a lot of assessment of conventional fossil fuels, but not enough of unconventional ones, including the full lifecycle carbon footprint of shale gas. Therefore, it is welcome that the EU has at least recognised the need for full assessment.

Overall, the summit was not bad, but not nearly as good as it should have been, given the urgency of climate control. The Commission’s action plan on energy efficiency must therefore be the start of much more rapid progress.