Renewables targets could undermine EUETS

The government should water down its commitments to meet European renewable energy targets which threaten to undermine the EU emissions trading scheme, a leaked ministerial briefing recommends.1

The UK will struggle to meet its share of an EU-wide renewable energy target, according to a ministerial briefing leaked to the Guardian in August.

Earlier this year, leaders agreed on a target to meet 20% of the EU’s primary energy use from renewable sources by 2020 (ENDS Report 386, pp 52-53 ). How the effort to meet the target should be shared between different member states has yet to be decided.

The briefing, prepared around the time of the energy White Paper by the then Department of Trade and Industry, thinks the UK will be set a target of between 9% and 16% because “the UK has achieved little so far on renewables, has some potential for increases in renewable deployment and is also relatively wealthy”.

Renewables currently meet just under 2% of UK energy demand. The average in Europe is 7%. The paper thinks that meeting even a 9% target would be difficult and would cost about £4 billion per year by 2020. Meeting a 15% target could cost up to £6.3 billion and a 20% target up to £22 billion.

Bizarrely, the paper complains that if the EU meets its 20% renewables energy target, it will probably over-achieve on the bloc’s headline carbon reduction target to cut emissions by 20% by 2020.

The officials caution that successfully reducing emissions could undermine the EU emissions trading scheme (EUETS).

“Emissions savings through the renewables target and energy efficiency measures risk making the EUETS redundant and prices collapse,” they say.

So instead of presenting ministers with options to boost renewables, the paper explores ways of watering down the target.

The briefing paper suggests allowing investment in renewables outside Europe to count towards the target. But this would undermine a key aim of the policy to improve EU security of supply.

Other options would be to let other low-carbon sources like carbon capture and storage and nuclear power count towards the target, or to convert the targets into greenhouse gas reduction goals.

It also proposes 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, even though it admits this “makes it uncertain how the target would be met if at all”.

The timidity of the energy White Paper published in June suggests the officials argued their case well (ENDS Report 389, pp 40-42 ). The policies it contained will only deliver 15% of renewable electricity – not energy – by 2020.

Environmental groups and renewables companies reacted angrily to the revelation. In a joint letter to the prime minister, ten 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. They estimate the UK could meet 21% of its energy needs from renewables by 2020.2“In terms of renewable energy only Luxembourg does worse in Europe than the UK,” said Philip Wolfe of the Renewable Energy Association. “The reality is that we are the laggards, despite having the continent’s best resources of wind, wave and tidal energy.”

Keith Allott of WWF was also scathing and 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. “There is a strong case for supporting emerging renewables technologies. Renewables won’t come forward at the scale we need under the EUETS alone.”

He also pointed out that a contribution from renewables is already factored into the calculations for determining the allowance allocation of the electricity generators. It should be possible, he says, to adjust the cap in subsequent phases to reflect the growth in renewables and prevent a carbon market crash.