EU renewables target could make EUETS “redundant”

An EU target for renewable energy could undermine the EU emissions trading scheme (EUETS), and the government should try to weaken commitments, according to a leaked ministerial briefing

A ministerial paper leaked to the Guardian this week set out options to water down an EU-wide target to supply 20% of primary energy consumption from renewable sources by 2020.

The briefing, prepared by the former department of trade and industry (DTI), warns that cutting emissions could make the EUETS “redundant” by reducing demand for allowances from electricity generators, thereby lowering the carbon price.

Suggestions to weaken commitments include allowing investment in renewables outside Europe to count towards the target, allowing low-carbon sources like carbon capture and storage and nuclear power to count towards the target, or converting targets into greenhouse gas reduction goals.

Other options floated include using “statistical interpretations of the target that would make it easier to achieve” or ignoring the target and just relying on the EUETS and existing policies.

In a joint letter to the prime minister, 10 organisations including Friends of the Earth, Greenpeace and WWF slammed the attempt to “wriggle out” of the commitment and called for an “open and transparent” assessment of the 20% target.

Keith Allott of WWF questioned the DTI’s analysis of the impact of the target on the EUETS. “The whole idea that strong support for renewables will damage the EUETS is half-baked and incoherent,” he said.

He also pointed out that renewables are already factored into allowance allocations. It should be possible to adjust the cap to reflect the growth in renewables and prevent a crash in the carbon market, he said.

Officials say the UK is likely to be set a target of between 9% and 16%. Renewables currently meet under 2% of UK energy demand, while the European average is 7%. The paper claims that meeting even a 9% target would be difficult and cost around £4 billion a year by 2020.