Session I: The Clean Energy Paradigm
meeting the climate challenge together
Jos Delbeke, Director General at DG Climate Action, at the European Commission, opened the first session of the EURELECTRIC Annual Convention. He focused on the recent Commission Communication on options for moving from the current 20% to 30% reduction target in greenhouse gases (GHG) emission reduction by 2020 compared to 1990 levels. The reason for this was primarily driven by the impact of the economic crisis on GHG emissions, resulting in lower emissions and thus lower costs in meeting the 2020 target. Considering that in the long run significant GHG emission reductions would be needed, Mr. Delbeke asked the audience “Is this the time to brush off the commitment we made?”, recognizing that “if on the one hand it is cheaper, on the other, we’re less healthy” when referring to the impact of the financial crisis.
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Mr. Delbeke was followed by Fulvio Conti, Vice-President of EURELECTRIC and CEO and General Manager of Enel S.p.A. Mr. Conti re-emphasised the importance of the CEO Declaration, signed in March 2009 by 61 CEOs from the electricity sector to commit to a carbon-neutral electricity supply by 2050. “We could have not been more timely and visionary”, he said, stressing that electricity companies stand strongly behind the commitment to increase energy security, foster investments, develop new technologies, promote energy efficiency and the rational use of energy. “In a word we are strongly engaged in the construction of our common low-carbon future”. He made it very clear that this was not a blank cheque from the industry and that, to succeed, proper support from the institutions was needed. Commenting on Mr. Delbeke’s presentation, he stressed that “Setting unilateral targets only one year after they had been set seems excessively disruptive for the large proportion of the European economy, including many electricity utilities”. While stressing the importance of having a strong set of policy decisions and actions to support industry efforts, he then concluded by recalling that, “we need to respect the investments that brought us here and that will guarantee to us the availability of the resources we need to face future investments”.
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Mr. Min Wang, Senior Advisor to the President of State Grid Corporation of China (SGCC), contributed by adding an international dimension by presenting the challenges the power sector faces in China. In particular, the growing demand arising from China’s rapid socio-economic development, the need to optimize resources allocation over a large area, the need for large-scale clean energy development, and the need of customers for diversified and interactive services will all require significant investments and restructuring in the electricity industry. To accelerate energy conservation and emission consumption, SGCC is striving to promote the construction of a strong and smart grid system. Such efforts would reduce about 1.65 billion tons of CO2 emissions in 2020 compared to 2005, therefore making a pivotal contribution to China's commitment to reduce its carbon emission per unit GDP by 40% -45% by 2020.
“We are willing to collaborate with our counterparts in Europe, to strengthen international cooperation and exchange on key areas such as UHV, clean energy, grids integration and energy storage. With our joint efforts, we will share our key breakthroughs and innovative results, and make our joint contribution to combating climate change and fostering global environmental protection”, he concluded.
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Panel Debate
In the following panel debate the speakers were joined by Michael Hogan, Power Programme Director at the European Climate Foundation (ECF), Alan Svoboda, Executive Director Sales and Trading at CEZ a.s., Martin Crouch, Co-chair of the CEER Sustainable Development Task Force and Director for European Strategies at Ofgem, and Charles E. Bayless, Retired Chief Executive at Illinois Power and Tucson Electric Power.
Mr. Hogan stated that, in order to decarbonise the power sector by 2050, “we need consistency, balance and integration”.
For consistency, he argued for the need to regulate investment in coal-fired power plants that would allow, from a given point in time, only investments with carbon capture and storage (CCS) infrastructure in place. A balanced approach for him would require 60% RES complemented by nuclear and CCS. To achieve this, a single integrated European electricity market would be required.
Mr. Svoboda stressed the importance of nuclear in the electricity mix, as it is CO2 free, does not presents problems related to security of supply, it generates very stable and predictable supply, and is scalable. “It has an attractive business case to be built without subsidies”. And on the issues of subsidies, he warned that continuing subsidising renewable in the current manner could soon generate a “renewable leakage” problem, whereby industries could relocate away from areas where the costs of high subsidies were passed-through into electricity prices.
Mr. Crouch said that, given that the best technology by 2050 was not yet clear, “the key point is integration”, and regulators would have a key role to play in the next years. “We will push for market integration, RES integration most effectively, smart grids integration and innovation”, he specified. He also argued for more predictability in the carbon market, driven by demand and supply, rather than expectations relating to political decisions.
Mr. Bayless closed the panel by sharing his views on carbon policy developments in the US. “Even if you succeed, it is not going to be very good”, he said commenting with pessimism on the outcome of the ongoing discussions in the senate, where the legislation on emission trading scheme is currently debated. While public opinion appeared to be more focused on recovering from the financial crisis than on climate change, “power companies are on board and willing to move”, he concluded.
Mr. Delbeke said, commenting on the long term trajectory to reduce GHG emissions, “we have three options: market, subsidies, or more regulations”. With the current situation having weakened the carbon market, with subsidies for renewables under pressure, with regulation betting on new technologies, he identified the range of policy issues confronting the sector.
Mr. Conti, replying to Mr. Delbeke, stressed that “we need all options together to achieve the long term carbon reduction target”. The EU carbon market needs stability and liquidity to support investments. Regulation would also be important in setting the return on investment on grids, smart meters and in promoting energy efficiency.