Eurelectric: Increase carbon pressure with ambitious electricity reform

The European Union’s is going to have to back up this week’s announcement of a 55% emissions reduction target by 2030 with some radical energy policy reform if it wants to achieve its climate ambitions.

Leaked documents suggest European Commission President Ursula von der Leyen will make the announcement on Wednesday.

While the electricity sector is setting a good example compared with industry and transportation, the rate of wind and solar generation growth needs to nearly double or even triple by 2030 to meet even the existing goal of 32% of power coming from renewables, according to trade association Eurelectric in a webinar today launching the second edition of its ‘Power Barometer’.

Renewable energy’s share of the power generation mix across the EU surged 40% during the first half of 2020, and could reach as much as 60% by the end of the decade. But unless the EU finds a way to address the big increase in imported power from surrounding countries with higher carbon intensity, its decarbonisation strategy is ‘not exactly credible,’ said Eurelectric Secretary General Kristian Ruby. “In order to meet the 2030 targets, or go even further, we must urgently remove the specific barriers holding back the progress on the ground.”

The European Commission needs to remove barriers to the development of renewables such as permitting, taxation and cost recovery measures.   

The COVID-19 pandemic has not slowed progress on working towards climate goals, said Morten Petersen, vice-chair of the European Parliament Committee on Industry, Research and Energy (ITRE).

“I’m somewhat optimistic in terms of maintaining momentum. We should and could get it right by pushing hard,” he said.

Some policy reforms will have a massive influence on decision-making, such as the ongoing consultation on the Trans-European Energy Infrastructure or TEN-E Regulation which determines the criteria to set Projects of Common Interest, the sector coupling strategy released in the summer, and the offshore wind strategy coming soon. There is a ‘big fight’ going on in the EU parliament over issues such as Rule of Law Conditionality, which ties funding to respect to the rule of law in member states, Petersen added.

While the National Energy and Climate Plans submitted by member states under the Clean Energy for All Package (CEP) project a more than doubling of renewable capacity by 2030, this will not be achieved without an overhaul in national permitting rules and an increase in dedicated staff resources, said Giles Dickson, CEO of Wind Europe. The CEP creates a ‘one stop shop’ for permitting, a two-year deadline between a new permit application and final decision, and a one-year timeframe for repowering requests, which need to be implemented in member state law.  

Further, the business model for transmission system operators should be reviewed to allow for recovery of expenditure on operational improvements such as digital and flexibility upgrades rather than simply capital expenditure, and electricity should not be taxed at a higher level than gas.

Electrification will be key to decarbonisation in other sectors such as residential heating, but to reach the required 48 million heat pumps an annual growth rate of 15% is needed, said Thomas Nowak, Secretary General of the European Heat Pump Association. “I’m sceptical that can happen,” he added.

One promising solution being discussed is to extend the European Trading Scheme to heat to provide a carbon signal. Over the course of 20 years a heat pump is cost-competitive with a gas boiler if a carbon price of €50/tonne CO2 is factored in, Nowak said.

A recording of the webinar will be available on Eurelectric’s website.