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Stavros Dimas

Member of the European Commission, responsible for environment

Achieving our climate change objectives through renewable energy

European Renewable Energy Policy Conference
Brussels, 29 January 2007

The European Commission is convinced that renewable energies are the way forward.

The renewable energies roadmap unveiled earlier this month by the Commission sets a target of 20% for the share of total energy supply to come from renewable sources.

It is not the first time that targets for renewable energy have been fixed. In 1997, the European Union set the objective of achieving a 12% use of renewable energies by 2010. In 2005 the share of renewables was only about 7%.

The reason for the lack of adequate progress has been the absence of legally binding obligations. In many Member States, national policies have been inadequate for achieving the renewables target. The progress across the European Union has generally been patchy and highly uneven. Some Member States have adopted ambitious policies, but overall, national policies have proven vulnerable to the whims of changing governments.

The renewables roadmap presented by the Commission thus proposes to establish a mandatory and European-wide target of 20% for renewable energy's share of total energy consumption in the European Union by 2020.

It proposes a new legislative framework for the promotion and use of renewable energy in the European Union. This framework would provide long-term stability and certainty for investors and the entire renewable energy industry. As a result, prices for renewable energy would come down and renewable energies will take a bigger share of the market.

Member States would be given the flexibility to develop their renewable energy supply in line with their specific renewable energy resources and infrastructure, but they would have to meet the European target.

Increasing the use of renewable energy would undeniably put us in the right direction to achieving our climate change objectives in the short and longer-term. For the first time, in fact, there is the expressed creation of a direct link between climate change and energy policies.

It is only natural that these two policy areas should work hand in hand. The proposed 20% use of renewable energies in our energy mix would significantly contribute to reducing the European Union's total emissions of greenhouse gases by 20% by 2020.

The 20% reduction of greenhouse gases is the minimum required to achieve the objective of limiting the increase of global temperatures to 2 degrees Celsius above pre-industrial levels. This is why the European Union should take this as its own target – in any case, in every scenario. But we certainly intend to continue working with all our partners to convince other developed countries to take – all together – more ambitious targets, at least up to 30% by 2020 as part of an international agreement. To be clear, 30% reduction is needed in 2020 in order to reach a 20% reduction by 2050.

Energy policy could actively contribute to achieve these results in our fight against climate change. Three are the key elements we need to focus on in this context.

The first is that we must foster competition by fully liberalising the energy market. More specifically, we need to separate the ownership of distribution networks from the production of energy. This full unbundling would in particular be beneficial for the producers of renewable energy but also for other small innovative producers of electricity or heat.

The second element we must address is to ensure that prices are fair. The failure until now to include the cost of pollution into market prices has given an economically unjustified advantage to fossil fuels compared with renewables.

It is only if costs – such as the dependence on imports, pollution, or risk of nuclear accidents – are factored into prices that renewable energy can become more competitive.

In this context, the structure of energy markets also matters. The removal of monopoly barriers such as access to the distribution grid would allow greater diversity in the provision of energy. Moreover, it would create the conditions for producers of renewable energy to have a better chance to compete.

In this respect, the EU Emissions Trading Scheme could be a good means of promoting renewable energies by making this energy cheaper compared to fossil fuels. A good example of this is the announcement, a few weeks ago, by a number of large companies in energy-intensive industries that they would invest in wind power. They said that they did this because emissions trading had made wind power cheaper than coal and natural gas.

The upcoming review of the Emissions Trading Scheme is expected to give impetus to further shift towards renewables. Including a larger share of energy production and consumption in the scheme and more auctioning of allowances would also be advantageous for renewable energy.

The third element is the need to create a support system for renewable energies. This EU-wide support scheme would need to be compatible with both the Emissions Trading Scheme and the internal energy market.

It would also need to take into account the policies of those Member States that have a well functioning policy on renewable energy.

I am convinced that it is essential to set binding obligations for renewable energy as this is the only way through which results can be achieved. However, we also need to provide Member States with appropriate instruments to implement these obligations in a cost-effective manner.

There is another point that I consider extremely important and that needs to be a cornerstone of our policies. Renewable energies are regarded as clean by nature. Solar and wind power are exemplary in this respect since they do not pollute the air, water or the soil.

However, it is important to have clear in mind that this is not true of all renewable energies and that, therefore, distinctions need to be made if we really wish to have net results at the end.

Some renewable energies, in fact, must be reconciled with their potential negative effects on the environment. The last thing I want to see is the unsustainable use of fossil fuels being replaced by the unsustainable use of renewable energy. One example for all : at certain times of the year emissions of fine particulates from biomass-fired stoves equal the level of emissions from diesel vehicles. All this needs to be taken into consideration. I am happy to say that the Commission is currently addressing the issue.

Biofuels are another type of renewable energy that can have negative effects on the environment if not managed properly. Biofuels are currently the only large scale renewable energy that can substitute petrol and diesel in the transport sector. In 2003 the European Union adopted a directive to boost the production and consumption of biofuels.

This is in principle positive. It is however imperative to distinguish between biofuels and to encourage those that have a limited life-cycle impact on the environment. If an increased use of biofuels means that more cutting of rainforest to make way for plantations is needed, then it is not acceptable.

Similarly, it is not acceptable to place on the market biofuels that have been obtained through a production process that emits as much carbon dioxide as is saved from using them. Therefore, it is imperative that any support system for the production of these fuels must discourage the use of unsustainable production practices for biofuels.

As part of the Energy Package, the Commission proposed a minimum 10% target for biofuels. Legally binding targets for the production of biofuels are necessary. However, this must be done wisely in order to ensure that biofuels are produced and used in a sustainable way. Otherwise we will not meet our targets !

The second generation of biofuels need to enter to European markets as soon as possible as they are more promising both in terms of energy potential and of the limited impact on the environment.

Accordingly, the Commission is taking measures to ensure that the carbon dioxide emissions over the lifetime of biofuels are as low as possible.

The aim is to help the market developing in a direction that will offer win-win solutions for the environment, for competitiveness and for the security of our energy supply.

I would like to echo President Barroso's inference to the fact that we are entering a "post-industrial revolution". To master the forces governing this revolution we need the right tools.

The Energy Package and the Communication on Climate Change post 2012 point the European Union in the right direction.

The proposed binding obligation of 20% of renewable energy by 2020 can be achieved but for this to happen industry and governments must play their part. The challenge is of size, but the citizens of the European Union expect us to tackle such issues as climate change and environmental degradation.

The Commission is ready to be ambitious and to address this challenge. We call on all Member States to do the same and to create the conditions to turn words into deeds.

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