Speech by EU Energy Commissioner Andris Piebalgs at the EU-Mediterranean-Gulf Conference in Brussels on October 9, 2009: Renewable Energy: Developing a Green Energy Market.
Brussels, 9 October 2009
Introduction
Ministers, Ladies and Gentlemen,
It is a great pleasure to join you today to discuss how to maximise our efforts to develop renewable energy just a few weeks away from the important climate change conference that will take place in Copenhagen.
The recent financial crisis and consequent economic slowdown is forcing governments to prioritise even more than is usually the case.
But I am strongly of the view that the crisis should be seen as an opportunity to accelerate the building of a cleaner, more secure energy future. By increasing our use of renewable energy, we help revitalise our economies. Renewable energy should be seen, therefore, as one of the answers to the current economic crisis.
Security of supply
The Commission has estimated that fulfilling its goal of a 20% share of renewable energy in 2020 in the EU will save between 600 and 900 million tonnes of CO 2 a year and reduce European annual fossil fuel demand by over 250 million tonnes of oil equivalent – a hefty contribution both to meeting our climate change goals and to reducing our energy import dependence.
The renewable energy framework
The new renewable energy Directive creates a stable framework for the promotion and development of renewable energy sources.
One of the first steps in establishing this framework is the creation of Member States' national renewable energy action plans, due by June 2010. In these plans, Governments will layout their plans for the development of renewable energy and how they will reach their legally binding targets for renewable energy by 2020. Each of the 27 Member States has a different individual target for renewable energy, depending upon their different starting points and their per capita wealth. But all Member States are required to do significantly more than they do now. In devising these national action plans, Member States will have to think carefully through the all the stages of renewable energy development. Which technologies should be promoted? Which policy instruments would be best? Where will finance come from? How can administrative barriers be removed? The Member States' action plans for renewable energy should answer all these questions.
The European Union is at the same time contributing substantial sums of money from its budget to the renewable energy sector: facilitating a re-orientation of EU structural funds, making grants to contribute to the building of energy networks and providing over € 500 million to offshore wind projects in particular. On top of that we are reallocating funds in the Intelligent Energy Europe Programme and the Research Framework Programme. This week the Commission launched a Communication on Investment in Low Carbon technologies. This Communication makes a very strong case for increased funding for research into the most promising low-carbon technologies. From an institutional perspective it is important that we are able to quickly re-orientate the use of Community funds to meet our political priorities. Such a re-orientation should happen all the way down the line, in the Member States as well.
I am stressing the new renewable energy Directive, but I should emphasize the role of climate change policies in supporting renewable energy. The EU's ambitious emissions reductions targets demonstrate our determination to lead from the front in tackling climate change. Having a price on carbon within Europe has already provided a clear and additional encouragement to the development of renewable energy. As we work towards reaching agreement at Copenhagen, the climate change issue only further highlights the need for international action to develop renewable energy.
The International market in renewable energy
Establishing a price for carbon globally, or at least in key regions of the world, spreads the incentive to develop low carbon alternatives, such as renewable energy. The Kyoto Protocol's "Clean Development Mechanism" is an example of the carbon markets encouraging the development of low carbon alternatives outside of Europe. In creating the EU's emissions trading system within Europe, we have considerably expanded the demand for CDM credits, and encouraged the development of renewable energy projects around the world.
You may already know that the new renewable energy Directive adds to these incentives. It creates co-operation mechanisms, which can be used by Member States to develop renewable energy beyond their own borders. This can allow the EU to reach its renewable energy targets more cost effectively.
The provision of the Directive that, I believe, interests many here is the one that provides for renewable energy from third countries to be counted towards an EU Member State's renewable energy target for 2020. This is the first time that such a legal provision exists.
There are actually two "categories" of third country in this context. One is countries that, while not EU Member States, are countries of the EEA (plus Switzerland) or parties of the Energy Community Treaty. They can use all of the Directive's co-operation mechanisms in the same way as Member States, as long as they adopt the Directive and commit to binding renewable energy targets of similar ambition to the EU Member States.
For other third countries, such as most of those of the Mediterranean Region, imports of energy have to be physically delivered to the EU, which pre-supposes the existence of interconnectors. Such renewable energy production also has to be "additional", which basically means produced by new installations or capacity.
For both these types of imports of renewable energy from third countries, there must be EU Member States willing to support the development of renewable energy outside their own territory. But these pre-conditions are achievable, and I would welcome the use of these new provisions. I am sure that there will be a number of Member States interested in developing collaborative projects with neighbouring countries.
North African & Middle East Considerations
Let me turn to our energy relationship with the broader Middle East and North Africa, which is so important to the EU. Energy is a key component of our structured dialogues with most countries in the Mediterranean, as well as with the Gulf Cooperation Council and OPEC.
The EU is supporting a range of bilateral and regional energy projects in the Mediterranean that sustain our partners' own efforts. My colleague Benita FERRERO-WALDNER has mentioned some of these earlier, so I don't need to repeat them here.
Our continuing support of these programmes stems in large part from decisions we took together in the EUROMED Energy Cooperation during the Ministerial meeting in Cyprus in December 2007. On that occasion Ministers agreed an extensive Action Plan for 2008-2013. We decided to concentrate our efforts in three main areas:
The first area was to ensure improved harmonisation of energy markets and legislation and to pursue the development of regional energy markets. We agreed that we need realistic scenarios regarding energy policy, reform agendas and longer term priority objectives. We also need better tools, such as demand and supply forecasts and monitoring systems.
The second area we identified was promotion of a sustainable development in the energy sector. We foresaw strategies and institutional capacity build-up which would strengthen partner-countries and build on the experiences of the EU, amongst others.
Thirdly, we agreed to develop initiatives of common interest in key areas such as infrastructure extension, investment financing and to focus on improvements of the Mediterranean as one regional market and two sub-regional electricity and gas markets.
In my view the principles that we agreed upon in Cyprus in December 2007 were forward-thinking and relevant. I would encourage that we continue and intensify efforts in this direction, and that we notably strengthen the regional approach.
Today, only a minor part of electricity generation in the Middle East, North Africa and the Gulf comes from renewable energy. And it is, in fact, the Middle East – together with China and India - that is projected to have the steepest increase in global energy use. According to some forecasts the consumption in the wider Middle East is foreseen to double from 2005 to 2020.
All countries around the Mediterranean and neighbouring the EU have clear incentives to develop renewable energy. It can start being built relatively quickly without prohibitively expensive up-front expenditure. Indeed, renewable energy can be developed on a small decentralised basis that lends itself to gradual and affordable progression. Once built, renewable energy capacity such as solar and wind entail no fuel costs, unlike coal-, gas- or oil-fired power stations. Renewable energy is thereby protected from fluctuations in fossil fuel prices that can create such uncertainty and put strain on economies. And for those countries that do have an abundance of oil or gas, renewable energy can diversify not just the energy mix, but the economy too, as well as prepare for a carbon-constrained future.
I think everyone will have heard about the exciting development in Abu Dhabi at Masdar City, which will be the world's first carbon-neutral, zero-waste, city. This will be where IRENA, the new global Agency for renewable energy, will have its headquarters. I am taking the necessary steps to ensure that the EU fully participates in IRENA's future development, and I congratulate the United Arab Emirates for having won the contest to host IRENA.
Good possibilities exist to build-up trade relationships with EU Member States in the renewable energy sector. The topic has started to be addressed – witnessed for instance in recent discussions around the Mediterranean Solar Plan and the DESERTEC project. There are big ideas, visions and some major opportunities for international cooperation.
Let me mention also the Mediterranean Super Grid in this regard. The Commission is currently studying the various technical interconnection options, and will make proposals on how best to proceed within the next year.
Conclusions
One fundamental lesson based on experience is that a successful development of renewable energy relies on strong political determination and is based on a combination of factors. First, there must be a long-term vision on the role of energy in sustainable development. Second, a regulatory, institutional and incentive framework is needed. And third, an "open market" approach is needed to attract investments, stimulate technology transfer and provide skilled jobs.
Altogether, the driving forces for renewable energy policies are embedded into the stable policy and regulatory framework. As the EU Member States develop their plans and ideas for meeting their targets, we can foresee a growing European market for renewable energy. We expect costs to come further down and market risks to decline. I believe this framework lays a solid foundation for establishing a global renewable energy market that encourages trade, generates economic growth in the wider region, and sets us firmly on the path to a low carbon economy. In conclusion, I would like to underline our strong commitment to work closely with you to achieve this goal.
I wish you a fruitful discussion today. Thank you for listening.
