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EEA: Renewable energy sector moves from toddler to teen

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The European Environment Agency (EEA) has published an article looking at how the renewable energy sector has developed over the last ten years. It describes how the sector has grown from being “a largely ignored toddler” to become “a wilful teenager”. Decisions that can help it mature further will depend on understanding what has nurtured its growth so far, says the EEA.

In an article posted on its website, the EEA describes how the first decade of the twenty-first century started with a ground-breaking and ambitious proposal: mandatory targets for renewable energy across the EU. Some European countries had been active for years in the sector and were confident of meeting their targets. For others, the targets necessitated significant upgrades of political, administrative and planning procedures in order to cope with wholesale changes. “This was an important milestone in the renewable energy sector's development,” says the EAA. “It demonstrated that the European Commission had the mandate and the will to implement directives tackling a sector that is extremely sensitive at Member State level.”

Despite the European Commission’s commitment, the EEA warns how targets for renewable energy cannot succeed if isolated from other factors. “Developing and integrating renewable energy is, by nature, more complex and challenging than fossil fuel installations,” it says, and therefore policymakers have introduced a string of legislation across related sectors.

Importance of ETS

One of the most visible outcomes is the creation of the European Emission Trading Scheme (ETS), the biggest and most successful of such trading system in the world. While there has been considerable controversy about the way in which allowances have been allocated, the fact that more than 40 % of EU greenhouse gas emissions are covered — and potentially controlled — is a huge achievement, says the EEA. In 2012, EU policy development will take another important step forward with the inclusion of aviation into the ETS, along with auctioning of at least half of the permits.

By allocating a price to carbon emissions, the ETS delivers large indirect benefits to the renewables sector, strengthening the underlying economics of renewable energy installation. Nonetheless, the EEA warns that this trend will only continue if the cap decreases and the value of carbon increases.

Other legislation that has helped create a supportive environment for investment includes minimum taxation of fossil fuel products, a European Energy Policy, agreement on a target to limit the increase in average global temperatures to less than 2 °C and, more recently, an emphasis on new energy technologies as a way to stimulate the economy. There is also the ongoing programme in competitiveness and innovation, which continues to deliver practical projects supporting renewables at all scales across Europe.

The EEA also explains how external issues have played their part in indirectly supporting the sector. Russia provided a great boost to domestic energy production when it turned off gas supplies to Ukraine in 2006, causing ripples of anxiety across Europe and influencing the Energy Security and Solidarity Plan. The oil price spike of 2007 also provided a timely reminder that oil production is subject to the laws of physical geology rather than just supply and demand, concentrating the minds of even the most sceptical politicians and decision-makers.

By 2005, says the EEA, renewables accounted for about 6 % of total energy consumption in the EU. Looking further ahead, the EU has set a legally enforceable target of generating 21 % of domestically produced energy from renewables by 2020. “As we pause for breath at the end of a decade of frenetic activity, it is worth recognising these achievements for what they are,” it says.

Along with target setting, the EU has undertaken complementary work on the internal market to increase competition and trade in energy. Initial legislative measures were unsuccessful but a stronger set of regulations should improve the situation from 2011. “Without a transparent and effective system of international energy competition and cooperation (yes, these two can operate in parallel), large renewable energy developments will be left with no clear market for their energy and investment will be stifled,” says the EEA.

Meanwhile, the Agency stresses that issues related to the energy grid are particularly important. Indeed, in many EU Member States grid capacity is the main bottleneck in the system and without continuing European interest in the matter the situation will worsen. “With that in mind, it is heartening to see progress through a number of public-private partnerships, such as the Mediterranean Solar Plan, the Desertec project and the North Seas Countries Offshore Grid,” comments the EEA. “These kinds of initiatives will help encourage much needed private investors into the sector. And they demonstrate the coordinated approach and intergovernmental support that will be needed for successful grid development across the continent.”

Environmental safeguarding

The EEA, too, has played its own small part in this decade of development. As we enter an era of increased environmental scrutiny of all developments, it is only right and proper that renewable energy is subject to the same provisions of environmental safeguarding required by other energy developments. The Agency says that it plays the role of a "critical friend" to the industry, providing technical guidance to policymakers, researchers, businesses and citizens on the environmental impacts, both positive and negative, of renewable energy developments.

“Over the last ten years we have published a significant body of resource assessments and analysis on most renewable technologies,” it explains. “Our work in the sector continues into 2011 with another look at the consequences of strong bioenergy growth, examining the potential for hydropower in Europe, and exploring the issues facing the European grid under scenarios of large-scale renewable deployment.”

A new decade of opportunities

As the new decade starts, sets out the EEA,the EU has demonstrated its continued appetite for energy development with the publication of its infrastructure priorities. Denmark, Portugal and Spain have all embraced wind energy, and for Denmark and Spain in particular, this has led to a significant export market in wind technology. Finland, Sweden and others can consider their vast forestry reserves as a renewable resource for the rest of Europe, the Norwegian pumped hydro storage facilities can act as the energy storage reservoirs for much of the continent, and the Mediterranean states have ample sunlight offering strong investment opportunities.

“In the last two years, more capacity has been added to the renewables sector than any other. Over the last ten years, wind ran a close second to gas for net installed capacity. From north to south, east to west, Europe's renewables sector is developing,” concludes the Agency. “And although this rapidly-growing, renewable energy teenager can expect some hard knocks as it takes its place in the world alongside oil, gas and coal, there is no doubt that it is here to stay.”

In order to plot the key milestones in the development of the renewable energy sector over the last decade, David Clubb of the EEA has designed a time glider, setting out all the key legislative, political, commercial and R&D factors affecting the renewable energy sector since 2000 on a clear, interactive timeline.

For additional information:

European Environment Agency

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