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Title:
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Optimising the road to a low carbon competitive energy sector in Europe
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Author(s):
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Published by:
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Publication date:
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ECN
Policy Studies
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15-12-2011
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ECN report number:
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Document type:
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ECN-O--11-070
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Other
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Number of pages:
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Full text:
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15
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Download PDF
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Abstract:
In the strategy for competitive, sustainable and secure energy the European Commission stressed the urgency of far-reaching changes in energy production, use, and supply. The stated priorities are energy efficiency, integrated markets, energy security, innovation and external actions. In March 2011, an energy efficiency plan was proposed with measures leading to 20% efficiency improvement in 2020. The Commission also launched the Roadmap for a Low Carbon Economy in 2050. In December 2011, the European Commission launched its Energy Roadmap 2050. This paper will evaluate their optimality for the three basic goals: competitive, sustainable and secure.
The key question addressed in this essay is: Do current and envisaged EU energy and climate policies allow for optimal introduction of new energy technologies towards a globally competitive, sustainable and secure energy system?
The key findings are:
• To ensure an affordable future energy supply and combat climate change, a global transition of the energy sector is needed. Europe has to make its choices in that global context. This process will take several decades and will be surrounded with many uncertainties.
• Reinforcing and expanding the European emission trading scheme (ETS) to include other sectors and regions in coming decades is the preferred element in a robust regulatory framework. Stable and higher carbon prices are an essential condition for low carbon investment planning and many other Member State policies. When prices are high and stable the market will seek the most cost efficient mix.
• Renewables and energy efficiency are important solutions for the long run. Assuming the ETS will be significantly strengthened overall EU targets and policies for renewable and efficiency beyond 2020 have to fit within the ETS framework.
• If renewable energy and energy efficiency targets for separate MS and sectors are set, they need to be flexible in order to avoid suboptimal economic outcomes. After 2020 a new harmonised and flexible EU approach is needed to address technological and cost uncertainties.
• Innovation policies need to be enhanced complementary to the regulatory framework. They should be based on a technologically and economically sound long-term perspective. They should focus on comparative advantages of the EU and its Member states.
• Large, unprecedented upfront investment is required, which can only be induced by building confidence among investors, consumers and authorities. First movers in new energy infrastructures need customized policy support.
The EU energy roadmap has to be adjustable to global economic, structural, technological and policy developments. Thus, it will provide guidance for investors, consumers and governments.
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