October 31, 2012
One would have thought that with its decade-long emphasis on clean energy, illustrated by the EU 2020 objective of generating 20 percent of its energy and 30 per cent of its electricity from renewable sources, the EU would also have a competitive renewable industry. But after a hopeful start this has turned out to be an illusion.
During the past 20 years the EU has progressively abandoned its global leadership in photovoltaic power – to China. The few once leading companies have closed down or are struggling to survive, due to fragmentation, lack of scales and high production costs.
The decision by SIEMENS will doom expectations for solar thermal power, seen as one of the pillars of the “DESERTEC” Scheme, which is hoped to contribute up to 20 per cent to European power consumption by the middle of the century.
In wind energy, especially off-shore, EU companies continue to compete fairly successfully against Chinese, US and Indian rivals, thanks to still superior technology.
The EU has not cared much, if at all, about the state of the industry, allowing national fiefdoms and subsidy schemes to flourish, some of them so generous as deprive companies from the necessary competitive pressure.
As long as oil and gas prices remain much lower than those of renewable energies, business finds little interest in investing in renewable energy. The extremely low C02 prices (€ 6-8/ton) are insufficient to neutralise the cost differential between fossil and renewable energy.
In the race between competing technologies wind continues to be the winner. Solar PV comes second, especially in regions with intense and continuous solar radiation. Thermal solar power generation, which had seemed to be the most promising technology 20 years ago, has become expensive compared to PV that now also offers better economic storage. Biomass has become less attractive because of its negative by-effects, which has obliged the EU to radically curb its use as a “clean fuel”. Hydro power remains, of course, the cheapest and most reliable technology, but there are no major unused sites left in the EU; and climate change will make hydro power less reliable.
Attention will focus increasingly on wave and tidal power, for which European coastal areas offer good prospects. However, technologies still being in a pilot phase, it would be prudent not to count on them for a substantial contribution to European power supply.
Despite all shortcomings, Europe has no alternative but to develop its renewable resources in view of “de-carbonising” its society by the middle of the century.
In its paper on “Renewable Energy: a major Player in the EU Energy Market” of June 6th 2012, the Commission has rightly reiterated its commitment to renewable energy as one of the three strands of the EU energy & Climate strategy, but without making concrete proposals on how to achieve that.
This is what I would propose for the coming 15 years.
Fix a 40 percent renewable power target until 2030 for all utilities. This should be feasible and necessary in view of the EU headline goal of transforming Europe into an essentially carbon-free society by the middle of the century.
Raise the C02 reductions under the EU emission trade regime from 1.74 per cent to at least 2.50 per cent annually to obtain a substantially higher C02 price, which should make renewable energy more competitive with fossil sources.
Double EU R&D expenditures for renewable energies to some € 1 billion annually, which is indispensable to maintain Europe’s technological advance.
Oblige member states to extend their renewable energy support to suppliers from other member countries, thus extending the single energy market to renewable and remove the existing distortions.
Encourage the consolidation of the renewable energy industry and make it more competitive globally.
Eberhard Rhein, Brussels.