The final agreement on the Renewable Directive

A. first Strategic Energy Review: the 20/20/20

targets

B. 2nd Strategic Energy Review: An EU

Energy Security and Solidarity Action Plan

A. Climate change effects (3)A. Climate change effects (3)

a. World energy demand (3)a. World energy demand (3)

Source: World energy outlook 2008

a. World oil reserves (2)a. World oil reserves (2)

Source: World energy outlook 2008

A. Population growth – overall A. Population growth – overall (1)(1)

Year World Population (thousands) Medium variant

1980 4 451 470

1985 4 855 264

1990 5 294 879

1995 5 719 045

2000 6 124 123

2005 6 514 751

2010 6 906 558

2015 7 295 135

2020 7 667 090

2025 8 010 509

2030 8 317 707

2035 8 597 050

2040 8 823 546

2045 9 025 982

2050 9 191 287

Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2006 Revision and World Urbanization Prospects: The 2005 Revision, http://esa.un.org/unpp, Monday, November 24, 2008).

Source: World energy outlook 2008

a. World oil reserves (3)a. World oil reserves (3)

Source: World energy outlook 2008

1960-1969: 9, 371970-1979: 1, 981980-1989: 0, 981990-1999: 0, 622000-2009: 0, 49

Ratio discovery/production

b. Oil reserves per capita (1)b. Oil reserves per capita (1)

Source: World energy outlook 2008, World Energy outlook 2007,Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects

it is assumed in this graph that the 2007 world oil reserves are estimated at 1.3 trillion barrels, the oil demand in 2008 is around 31724 million barrels, it increases by 1.3% per year and the world population increases from 6.6 billion in 2007 to 8.8 billion in 2040.

Projected World Oil Reserves in Barrels per Capita

0

50

100

150

200

2010 2015 2020 2025 2030 2035 2040

years

ba

rre

ls p

er

ye

ar

pe

r c

ap

ita

F. Car ownership (1)F. Car ownership (1)

Source: Vehicle Ownership and Income Growth, Worldwide 1960-2030, Joyce Dargay, Dermot Gately and Martin Summer, January 2007

F. Car ownership (3)F. Car ownership (3)

Source: Vehicle Ownership and Income Growth, Worldwide 1960-2030, Joyce Dargay, Dermot Gately and Martin Summer, January 2007

Years USA cars/1000pers China

Cars/1000 pers

India

Cars/1000 pers

OECD Europe

Cars/1000 pers

1960 411 0.38 1 80

2002 812 16 17 498

2030 849 269 110 725

Years USA total vehicles (millions)

China total vehicles (millions)

India total vehicles (millions)

OECD Europe total vehicles (millions)

1960 74.4 0.2 0.4 29.18

2002 233.9 20.5 17.4 243,4

2030 314 390 156 358,9

IntroductionIntroductionWhat is in the package?What is in the package?

• Overall Communication

• Revision of EU Emissions Trading System (the ETS)

• Effort sharing in non ETS sectors

• Directive on promotion of renewable energy, report

on renewable energy support schemes

• Directive on carbon capture and storage, and

Communication on demonstration plants

• Revised environmental state aid guidelines

• Accompanying integrated impact assessment

GHG Target:

-20% compared to 1990

-14% compared to 2005

EU ETS-21% compared

to 2005

Non ETS sectors -10% compared to 2005

27 Member State targets, stretching from -20% to +20%

A shared A shared effort effort between between sectorssectors

The European Path towards 2020 in The European Path towards 2020 in climate and renewableclimate and renewable

• 20% GHG reduction compared to 1990

– Independent commitment

• 30% GHG reduction compared to 1990

– In context of international agreement

• 20% renewables share of final energy consumption

• 10% Renewable energy in transport, with

– production being sustainable

– second generation biofuels commercially available

A shared effort - Cost efficient A shared effort - Cost efficient achievements of the GHG and Renewables achievements of the GHG and Renewables

targetstargets

• Allocating targets between sectors and Member States on the basis of pure cost efficiency causes high compliance

0.00.10.20.30.40.50.60.70.80.91.0

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Cum

ulati

ve C

ompl

ianc

e Co

st (%

)

Cumulative GDP/capita in %MS in ascending order of GDP/capita

Gini coefficient = 0.19costs compared to GDP for poorer Member States

• Package approach is to increase fairness but foresees policy instruments to achieve cost efficiency

Cost-effectiveness Fair distribution

Solution:

Fairness: differentiate efforts according to GDP/capita• national targets in sectors outside EU ETS• national renewables targets (partially – half)• redistribution of auctioning rights (partially – 10%)

Cost-effectiveness: introduce flexibility and use market based-instruments (EU ETS, transferability of Guarantee of Origin for renewables, access to JI/CDM)

A shared effort:A shared effort:Approach EU packageApproach EU package

A Fair shared effortA Fair shared effort

• The package requires all Member States and sectors to take action to reduce GHG and increase renewables

• The package create a competitive level playing field

• The package distributes costs more fairly between Member States

-0.10.00.10.20.30.40.50.60.70.80.91.0

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Cum

ulati

ve C

ompl

ianc

e Co

st (%

)

Cumulative GDP in % MS in ascending order of GDP/capita

Renewable energy

• Security of Supply • Sustainability • Climate Change abatement • Shift towards a new energy mix • Decentralised Energy supply • Regional and green industry development• Encouragement of households and industry to

save energy and to take care of own supply in sustainable way

Why Renewables?Why Renewables?

The renewables The renewables DirectiveDirective

1. Sets mandatory national targets for renewable energy shares, including 10% biofuels share in transport, in 2020

2. Requires National Action Plans, 3. Gives flexibility for Member States to reach part of their target

through 1. Statistical transfer2. Joint projects between Member States and third countries with

existing or planned interconnector capacity (under certain conditions and provided RES energy reaches the EU) )

4. Encourages joint Support mechanisms between MS5. Sets clear rules for disclosure quality of Guarantees of origin6. Requires reduction of administrative and regulatory barriers,

improvements in provision of information and training and improves renewables’ access to the electricity grid

7. Creates a sustainability regime for biofuels

5%

5.3%

1.1%

2.6%

9.1%

6.7%

2.4%

7.4%

5.6%

5.8%

7.2%

6.3%

4.6%

1.6%

2.5%

4.6%

3.2%

4.5%

6.1%

5.2%

2.3%

2%

3.5%

1.8 %

4%

5.6%

8.2%

0%

Additional effort weighted by GDP per capita

RES share in 2005

Flat rateincrease of 5.5%

BEBGCZDKDEEEIEELESFRITCYLVLTLUHUMTNLATPLPTROSISKFISE UK

EU-27

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

5.5%

0.7

4.7%

1.4

7.5%

1.5

Figures adjusted byearly starter bonus

2.2%

9.4%

6.1%

17.0%

5.8%

18%

3.1%

6.9%

8.7%

10.3%

5.2%

2.9%

32.6%

15%

0.9%

4.3%

2.4%

23.3%

7.2%

20.5%

17.8%

16%

6.7%

28.5%

1.3%

39.8%

EU package:EU package:Effort Member Effort Member

States States RenewablesRenewables

National action plansNational action plans

• Sectoral targets now set by Member States

• Measures adequate to achieve the targets including planned development of biomass resources

• Provides policy stability for investment

Administrative reformsAdministrative reforms

Reforms, or requires reforms of administrative and regulatory barriers to the growth of renewable energy

• simplification and streamlined procedures

• planning authorities to consider renewable energy and district heating and cooling systems

• minimum levels of renewable energy in building codes for new or refurbished buildings

• promotion of energy efficient renewable energy

• Certification regimes for installers; mutual recognition

Grid accessGrid access

Improves renewables’ access to the electricity grid

• Repeats existing access conditions given in 2001/77/EC

Requires Member States

• to provide priority access to the grid system for electricity from RES

• to develop grid infrastructure

• to review cost sharing rules

BiofuelsBiofuels

Sustainability criteria for biofuels :• GHG savings – minimum of 35%

• No raw material from sensitive areas (old forest, grasslands, protected areas)

• No conversion of wetlands and continuously forested areas

• EU biofuels must meet “cross compliance” environmental rules

Consequences of not meeting the criteria:• Don’t count towards targets; no public support/tax breaks

Member States to give a bonus in their biofuel obligations to biofuels from wastes, residues, cellulosic and lignocellulosic material

Impactsfrom the package

What are the benefits of the package?What are the benefits of the package?

• The ultimate goal: avoid the cost of climate change impacts: 5-20% of global GDP (Stern)

• Large scale innovation in the energy sector

• First mover advantage, aiming for technological leadership in low carbon technology

• Significant energy efficiency improvements

• Energy security: reduction of oil and gas import of €50 billion per year (at $61 per barrel of oil)

• Reduced air pollution giving significant health benefits

• Reduced need for air pollution control measures: €11 billion per year in 2020

• Worldwide energy gap in 2020 calls for min. ~5TW of Renewables (IPCC)

Renewables Role as Climate supporter will be strengthened

Emissions avoided through the useof renewable energy sources in Germany in 2007

22.5 million t 34.0 million t 20.1 million t

19.3 million t

2.4 million t

0.5 million t

0.9 million t

14.3 million t

0 10 20 30 40 50 60 70 80 90

Fuels

Heat

Electricity

CO2-avoidance [million t]

Hydropower Wind energy Biomass Photovoltaics Geothermal energy Solar thermal energy Biofuels

79.0 million t

20.7 million t

14.3 million t

Total: approx.114 million t from this approx. 57 million

t through the EEG

Version: March 2008; all f igures provisionalSource: BMU according to Working Group on Renew able Energies / Statistics (AGEE-Stat)

The future a combination of big and small or The future a combination of big and small or just small vs just big? Source “Future Energy just small vs just big? Source “Future Energy

Systems in Europe” commissioned by EP Systems in Europe” commissioned by EP STOA and carried out by ETAG 2008STOA and carried out by ETAG 2008

Reaching a final agreement on the Renewable Directive

Overview on National Support schemesOverview on National Support schemes

Harmonisation and coordination of Harmonisation and coordination of National Support MechanismsNational Support Mechanisms

Can be a good instrument to help smooth transition and target reaching To be studied and elaborated jointly between StatesTask is challenging: example: Spain and GermanyIn Spain, solar-thermal power plants play an especially important role as a result of that country's abundance of sunshine. Energy from the sea is also of special importance and receives special rates.Germany, on the other hand, has differentiated more strongly in the areas of offshore wind, structurally integrated photovoltaic systems and various biomass applications

(Source Feed In Co-operation)

Renewable Energy Investment Potential in times of Economic Crises

Current Global CrisisCurrent Global Crisis

I’ve never seen financial insiders this spooked — This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created. The bottom line is that policy makers left the financial industry free to innovate — and what it did was to innovate itself, and the rest of us, into a big, nasty mess.” (Paul Krugman in 2007)The new Renewable Directive may indeed become one of the best tools for Member States to recover economically and socially and to shift towards sustainability in energy and away from dependency

Sustainable Energy Policy - at the heart Sustainable Energy Policy - at the heart of the healing processof the healing process

The RE plus Efficiency sector could be at the forefront of economic dynamism for recovery in all Member StatesThe effort consumers or state aid programmes pay to receive the benefit of RES looks like a quantité négligeable in view of the current bail outs paid from public money to banks and industry worldwide. In November 08 financial rescue initiatives in the US alone reached $8.5 trillion ( Bloomberg News) RE industry guarantees qualified jobs, regional development, real income, shift to sustainable energy supply and consumption, energy independence –

Currently about 2.3 million people worldwide work either directly in renewables or indirectly in supplier industries (Worldwatch Institute)

UN EP (WorldWatch) Green Jobs Report 2008- UN EP (WorldWatch) Green Jobs Report 2008- the key drivers of green employmentthe key drivers of green employment

Global market volume for environmental products and services currently about $1,370 billion (€1,000 billion), projected $2,740 billion (€2,200 billion) by 2020.Forward-thinking government policies needed. Important for providing funding of green projects; overall goal- and standard-setting beyond the time horizons typical in the business world; providing infrastructure that private enterprises cannot or will not create; and creating and maintaining a level playing field for all actors. Key policies include: Phase out subsidies for environmentally harmful industries, shift those funds to renewable energy, efficiency technologies, clean production methods, and public transport.Fix the current shortcomings inherent in carbon trading and Kyoto Protocol related innovations like the Clean Development Mechanism Tax Reform. Scale up eco-taxes, such as those adopted by a number of European countries, and replicate them as widely as possible. Eco-tax revenues can be used to lighten the tax burden falling on labour while discouraging polluting and carbon-intensive economic activities.

Effects from the packageEffects from the package

• EU showing leadership in climate change• EU on a path towards a low-carbon economy• Cost-efficiency and fairness at the heart of

the package • A significant effort, but future benefits far

outweigh the costs• Will deliver important economic, energy

security and environmental co-benefits, also in the short term

• http://ec.europa.eu/environment/climat/climate_action.htm

• http://ec.europa.eu/environment/climat/future_action.htm