IEA: EU Leading Climate Change, Energy Policies, Needs to Increase Energy R&D Funding
September 11, 2008 // Published as a news service by IHS
The International Energy Agency (IEA) reviewed the energy policies of the European Union (EU) that shape the energy use of almost 500 million citizens in 27 EU member countries.
The IEA released their findings in the report IEA Energy Policies Review: The European Union - 2008.
Among its key findings, the review welcomes the EU Commission's climate and energy package proposed in January 2008. It recommends to pursue implementation of this package while increasing energy efficiency throughout all sectors of the economy.
According to IEA, the EU should furthermore guarantee that European energy markets will be open, transparent and competitive in the future and become more consistent in its relationship with relevant supplier nations.
The level of spending for R&D must be urgently augmented to reflect the importance of technology in addressing growing energy challenges.
Energy and Climate
In January 2008, the EU Commission presented its climate and energy package which features legislative proposals on CO2 burden sharing and on the post-2012 period of carbon trading under the EU Emissions Trading System (ETS).
The commission also seeks to promote the development of carbon capture and storage (CCS) and proposes national renewable energy targets, including biofuels, for each member state.
According to IEA, these proposals will require sustained action and significant levels of investment to become reality. If the proposals are successfully implemented, they will result in a transformation of the way the EU produces and uses energy.
"The commission should be bolder in enlisting the help of the market to achieve the targets more cheaply, by pursuing them on the European level," said Nobuo Tanaka, IEA executive director. The current proposal to allow member states to restrict trading of renewable electricity certificates until 2020 is likely to considerably increase the cost of achieving the targets for all energy users in the EU.
Market Liberalization
EU energy market liberalization will not only provide consumers with more choice, but also ensure that costs are distributed in the most economically efficient manner, said IEA. This policy will benefit the environment by furthering integration and interconnection, thereby increasing the opportunities for clean energy sources such as wind, which will benefit from stronger cross-border interconnections.
"Exposing consumers at all levels to cost-reflective prices will also encourage them to use energy in a sensible manner and thereby increase energy efficiency," said Tanaka. "[T]he proposals on unbundling will help drive the development of a truly European energy market and the European Commission should continue to pursue them."
External Energy Policy
"Developing and managing relationships with important supplier nations is critical for continued security of supply," said Tanaka. He pointed out that "the European Commission [EC] has undertaken laudable work in this area, for example through the establishment of supplier-consumer dialogues such as the EU/[Organization of the Petroleum Exporting Countries] OPEC meetings."
Many EU member states prefer to maintain their bilateral relationships with supplier countries, which may affect the strength of the EU to act as a single entity. The European Commission and the other institutions of the EU should consider creating a more central role for themselves at the union level in these supplier relationships, to ensure that the full weight of the EU is considered, said IEA.
Energy R&D
To address the energy and environmental challenges the world is facing, investment in energy R&D will have to increase significantly, said IEA. The level of EU energy R&D spending is currently foreseen to be € 5.1B billion between now and 2013, compared to € 9 billion for information technology.
According to IEA, R&D should furthermore be managed in a strategic manner, to ensure that it is in line with the goals that are pursued. The EU is doing well in addressing the strategic management, which it has reinforced by developing the Strategic Energy Technology Plan in 2007, a comprehensive plan to accelerate energy technologies for a low-carbon future. But it is facing a serious challenge in the area of fund availability, said IEA.
The current Framework Programme allocates € 1.95 billion, or almost 40% of the energy funding, to nuclear fusion, a technology that is only expected to contribute after 2050. It will be important for the achievement of the EU climate change goals that this funding allocation is revised and that funding for non-nuclear energy R&D is increased significantly, said IEA.
Source: International Energy Agency (IEA).