The World Energy Review : A New Europe special issue

8/3/2019 The World Energy Review : A New Europe special issue

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December 2011| 5.00 A New Europe Special EditionIssue # 965

EUROPENEW

MIDDLEEAST

THEWORLD ENERGYREVIEW


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nyone who follows worldpolitics will not needtelling of the importanceof energy, and access to en-ergy sources, such as oil or

gas reserves, continue to inform strate-gic, geopolitical thinking from worldgovernments.

Europe, with its close proximity toboth Russia and Central Asia, as well asNorth Africa, is understandably at thecentre of things in this regard.

On the one hand, instability in the

wider world has in recent years forcedEurope, in particular the EuropeanUnion, to examine and develop indige-nous sources of energy; fuel for homes,industry, transport and agriculture in theform of renewable energy, wind, solar,tidal and the like. But growing demandand consumption has led to very realfears of environmental degradation, fromthe likes of biofuels, and an increase incarbon emissions though increased elec-tricity use.

The articles presented in this specialedition reflect the concerns and positionsof various European stake holders, frompoliticians, to activists to industry. The

EU, with its 2020 targets has laid out itsintentions for combating wasteful energyuse, as well as promoting diversity ofsources and the build-up of renewables.

As Herbert Reul, Chair of the EuropeanParliaments Industry, Research and En-ergy Committee writes, energy policy

will surely contribute to climate protec-tion but it is by no means a subtopic ofclimate policy. Security of supply issuesand an affordable energy supply for ex-ample are core elements of energy policyat all levels.

But is it doing enough? Several pieces

in this edition look at the progress madeso far by the European institutions, as

well as the member states, in ensuringthat climate and energy targets producetangible results, and dissident voices fromtop European NGOs here present chal-lenges to policy, and offer a reminderthat in the current political and economicclimate, certain policies, such as on en-ergy efficiency targets, can often findthemselves taking a back seat amid manyconflicting debates.

Looking at the wider world, and to Eu-ropes relationship with some of its nearneighbours, Kjetil Tungland (14) and

Konstantin Simonov (15) both, in differ-ent ways, look at EU-Russia relationsthough energy, in this case gas policy, andhow it can affect top-level decision-mak-ing. Pages 16-18 take things a little far-ther geographically, and take a look athow Europe and the United States of

America differ in their approach to en-ergy policy.

Few can doubt the growing importanceof China on the global scene, and energyis no different.

As the worlds biggest manufacturer ofsolar and wind energy, but also a massiveenergy consumer, the country has ambi-tious plans for the future, and on page 19,

Song Zhe, Chinese Ambassador to theEU, outlines some of those plans as partof Chinas 12th five-year plan. Finally,Christophe Pausch takes a look at howthe energy needs of some of the worldspoorest people can be met (22).

We hope that the reader will find thisspecial edition informative, that it willhelp contribute to what is already a ro-bust debate, and that, as we move into anew year, Europe, and the world, will gosome way to establishing policies that

will sustain the global population as itcontinues to grow and develop.

But growing

demand and

consumption has

led to very real fears of

environmental degradation,

from the likes of biofuels,

and an increase in carbon

emissions though

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2011 New Europe all rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmittedin any form by any means, electronic or otherwise, without the permission of New Europe.

ISSN number: 1106-8299

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nnual policy tracker high-lights five instances of de-clining environmentalstandards in memberstates.

Several European Union member statesre failing to implement the kind of poli-ies that will enable the EU to meet itslimate goals, according to a new report.The latest edition of the EU Climate

Policy Tracker, which examines energy

nd environmental policy across the EUhas found that five member states havedeclined in policy standards since lastyear. On a more positive note, nine havencreased, while the rest have stayed more

or less the same.The report, which has been complied

by the environmental NGO, WWF, andenewable energy consultancy ECOFYS,racks the impact of EU and domesticnvironmental legislation across variousectors; electricit y supply, industry, build-ngs, transport, agriculture, forestry, and

general policy.Member state policies are graded on a

cale ranging from A down to G, mirror-ng the scale by which the energy effi-iency of products are graded.According to its findings, five membertates, Bulgaria, Ireland, the Netherlands,

Slovakia and Spain are all under-per-

forming when it comes to environmentallegislation. This can be contrasted with

Austria, Denmark, Finland, Hungary,Portugal, Romania, Slovenia and Sweden,

who have improved in the past year.According to Jason Anderson, Head of

Climate and Energy Policy, WWF Euro-pean Policy Office, there are two mainmessages to be taken from this years re-port; firstly, that close to 50% of environ-mental legislation now comes from theEU, policies that member states are freeto go above and beyond, and secondly, thefact that certain EU cornerstone policesneed to be improved; chief amongst thesebeing the energy trading scheme (ETS),improved standards in car production andeco-design and better guidance for reno-

vation in the energy performance ofbuildings directive.

While, he says, standards in transport

are going up, new policies to close gapsin existing policies are needed, particu-larly a concrete legal agreement on long-term targets beyond 2020, a greaterambition for energy savings for 2020 tar-gets, laws explicitly targeting the redesignof products, legislation on freight trans-port, and a long-term climate perspectiveon agriculture policy.

While close to 50% of environmentalpolicies come from EU legislation, con-tinues Anderson, there is a certain levelof scepticism towards the EU, for exam-ple from eastern Europe. But, he says,member states are on the whole display-ing a wide range of policy actions, eventhough in many cases they are doing theminimum amount required by laws fromBrussels.

The average score across the Union,

according to the report, is E. Good ac-tions are taking place in a spotty way,

Anderson says.The 2011 policy tracker comes as EU

discussions on the energy efficiency di-rective continue, which sees memberstates split on the overall level of ambi-tion of efficiency, and whether or not tointroduce legally-binding measures ortargets.

The political will to push forward on

this is tepid according to Niklas Hhne,Director of Energy and Climate Policy asECOFYS Cologne, despite it being asignificant policy area that will have sig-nificant impact. in addition, he says thatcurrent EU energy ambitions, includingthe 1205 roadmap, display a low-level ofplanned ambition.

Global willingness depends on anawareness of the urgency, opportunities andresponsibilities that exist . A lot of countries

were following the lead of the EU beforeCopenhagen [the global climate summit in2009], with regards to targets and the like.Now, the will is lacking. But it should beseen for what it is: an opportunity for boost-ing the economy, an opportunity that can beseen in the real world. And that should bethe role of the EU, to push ahead with its2050 plans.

Several European Union memberstates are failing to implement the

kind of policies that will enable the EU tomeet its climate goals


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oth the European Commis-sion and the European Par-liament have been very activethis year in terms of energypolicy. Numerous own ini tia-

tive reports and Commission communi-cations or legislative proposals werepresented, debated and some, likeREMIT, also adopted. Currently work iscontinuing on the energy efficiency di-rective (more than 1800 amendmentshave been tabled!), the infrastructurepackage, external energy policy, offshoreoil and gas drilling, ITRE will draft anopinion to MiFID, we are still awaitingthe energy roadmap 2050. Next year weexpect communications inter alia on thecompletion of the internal energy marketand on renewable energies.

At the same time, with an ever increas-ing amount of EU legislation and EUregulation, we need to pay more and moreattention to unintended side effects and

interactions between EU rules as well asbetween EU rules and national rules al-ready in place. Let me provide just twoexamples. The Commission, in its reply toquestions raised by ITRE members onthe impact assessment admits that "themodelling exercises carried out in prepa-ration of the [energy efficiency directive](...) were not (...) conclusive regardingpossible impacts on the price of ETS al-lowances" and thus intends to furthermonitor the situation.

Thus we know that increasing energy ef-ficiency will reduce energy consumption -and thus reduce CO2 emissions - but wedo not know to what extent this will in re-turn have an impact on emissions pricesunder the ETS directive. Indeed, onemodel comes to the conclusion that theimpact will be dramatic. But then, what

does "monitoring" mean? Does the Com-mission intend to set allowances aside andintervene in the market? Would such apolicy driven interference undermine thetrust into the Commission and the marketinstrument the EU has set up? What is theprimary intention of the Commission? Isit to lower CO2 emissions or to securehigh revenues for Member states? Suchdoubts of course have a negative impact oninvestment decisions in the EU and shouldtherefore be dispelled as soon as possible.

The second example concerns the in-teractions between national policies andEU instruments. The ETS directive al-lows trading in CO2 certificates. Thus if

a Member state reduces its emissionsquicker than others, it may sell the sur-plus certificates to others. Thus the verysuccessful and expensive German supportscheme for renewable energies has helpedreduce CO2 emissions in Germany - but,due to the tradability of certificates, notnecessarily in the EU! In a global ETSsystem, that the EU is striving to, such in-teractions will be even greater. I firmly be-lieve that it will be essential in the futurethat the Commission pays more attentionto such interactions also with national oreven global instruments in the impact as-sessments.

Another question concerns the regula-tory depth of EU legislation. From thecurrent debate on the draft energy effi-ciency directive (EED) it is clear thatMember states are not willing to accept

mandatory targets and many also refuse toaccept mandatory instruments. The debateon the EED is far from over of course andit is impossible to predict the outcome. Butone option might be to rather imposebinding targets and leave the choice of in-struments to Member states in accordance

with one of the main guiding principle ofthe EU: "United in diversity".

One of the central questions remainsthe one of our future energy mix. I amcertain the energy roadmap will alsotouch upon this subject. CommissionerOettinger, during his visit in the ITREcommittee on 23.11.2011 made it veryclear that increasing the target for renew-

able energies under the current treaty would require unanimity between theMember states - and that this was not re-alistic given the large differences in theirenergy mix and the different potentials.Gas then is said to play a vital role in thetransition to a low carbon economy, re-placing coal and oil. But without tappingthe potentials of shale gas, this is likely tofurther increase our energy dependence.

This leads me to another topic: Diversi-fication. Diversification is not only aboutenergy sources but also about supplyroutes. Now everybody has heard aboutNabucco. The project has been advocatedat EU level for many years and still en-counters many problems, not least the un-resolved conflict about the status of theCaspian Sea. But few are aware of the factthat we are to preclude the import of oil

from Canadian tar sands. Alberta has how-ever the second largest oil reserves in the

world. In terms of security of supply sucha ban would be nothing less than a fiasco.

The completion of the internal energymarket also encounters numerous prob-lems that we need to tackle.

The new Commission proposal on en-ergy infrastructure for example foresees adramatic reduction in time for authorisa-tion procedures.

Indeed, quite often they take more thenyears, far too long given the many chal-lenges we face, not least the inclusion ofintermittent renewable energies. Further-more many Member states have yet failed

to implement the third internal marketpackage and thus deprive their citizen ofnumerous additional rights enshrined inthis package. Parliament therefore pressesthe Commission to closely monitor thesituation and, if necessary, to open in-fringement procedures.

Consistency in energy regulation, a vi-sion of the future that leaves room fornew technologies, an open and rationaldebate on energy issues are key to ensur-ing an affordable and reliable energy sup-ply in the future.

Energy policy will surely contribute toclimate protection but it is by no means asubtopic of climate policy. Security ofsupply issues and an affordable energysupply for example are core elements ofenergy policy at all levels. And their im-portance will grow in the future.

With an ever

increasing amount

of EU legislation and

EU regulation, we need

to pay more and more

attention to unintended

side effects and

interactions between EUrules as well as between

EU rules and national

rules already in place


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he current crisis has broughtto the forefront one of thebasic structural weaknesses ofthe Greek economy - its inef-ficient growth model, which

did not manage to develop the country'somparative advantages, despite being one

of the richest in natural resources in Europe.Renewable energy sources are just one char-cteristic example. Greece has only recentlytarted to develop its tremendous potentialn wind, sun and geothermal energy.The creation of the Ministry of Environ-

ment, Energy and Climate Change twoyears ago intended to signal the prioritisa-ion of "green growth" in the government's

plans. Since then, Greece has committed toxceeding its RES target for 2020 and in-ensified efforts to speed up and simplify li-ensing processes and to tackle bureaucracy.

For the whole Europe - and especially forGreece - the development of RES is crucialnot only to tackle climate change and securenergy supply, but also for economic growthnd job creation.In this context, the idea was born to pro-

duce massive amounts of solar energy inGreece and export it to countries with lowerolar potential, such as Germany. The firsteferences to this idea were in fact made byhe German Finance Minister, Wolfgang

Schuble, who supported the prospect ofxporting solar energy from Greece to Ger-

many as a concrete example of cooperationand a beneficial project for both countriesand the EU as a whole. Later, Commis-sioner Oettinger, also expressed his supportnoting that "in Greece houses have PV pan-els mounted on both sides of the roof, whilein Germany on only one".

The idea is simple and smart. Investing ingeneration of solar energy in Greece, acountry where the sun shines a lot - 50%more than Germany - would yield morekilowatt hours in comparison with the sameinvestment in a northern country. ForGreece the investment would create new

jobs and a strong domestic PV industry. The

importing country would be able to achieveits renewable energy target at a lower cost.

The savings could in turn be invested in asector where that country has a competitiveadvantage. This translates to more GDPgrowth for all the countries involved.

The aim of the project is to produce up to10 GW of solar energy generated electricityby providing potential investors with "turn-key" fully licensed projects in specific state-owned site locations, free of anyadministrative and bureaucratic barriers.

The 10 GW of planned PV capacity ex-ceeds daytime national energy demand and

will make available a significant amount ofenergy for export to third countries. The ex-ports to EU Member States can take theform of physical and statistical transfers,until the appropriate infrastructure is con-structed, according to the cooperation

mechanism provided for by Article 6 of theRenewable Energy Directive(2009/28/EC).

"Helios" is more than a project betweentwo EU countries. Constructing the infra-structure for the physical transfer of energyis a catalyst for the EU's strategic priorityto create a single European energy market.

The Greek government in association withthe Joint Research Centre are currently in-

vestigating various scenarios to allow thephysical transfer of electricity to Germanyand other interested countries. From a pre-liminary assessment there are four alterna-tive routes - through the Western Balkans,

the Eastern Balkans, mainland Italy and anew sub-sea interconnection via the Adri-atic Sea. The latter alternative is especiallyattractive as it could provide an efficient in-terconnection capacity of up to 10 GWusing the HVDC technology, which guar-antees minor only losses on transfer. Thisalternative would in the long term alsoallow for the transfer of greater amounts ofrenewable energy from Italy, as well as fromNorthern Africa.

The European Commission has recentlyput forward its energy infrastructure pack-age, which sets interconnection priorities forthe EU and proposes a new financing facil-ity. In the short term, among the EU prior-ities proposed is the interconnection ofcentral and south-eastern Europe to assistmarket and RES integration. In the longterm the goal is the construction of elec-

tricity highways. The "Helios" project is aperfect fit for these priorities. Upgrading re-gional interconnections in south-easternEurope would allow the transfer of solarpower and would at the same time lay thefoundations for the creation of an integratedregional electricity market interconnected

with central Europe and an electricity high-way from the South to the North.

The "Helios" project is a characteristicexample of synergies in the framework ofthe European Union to develop the differ-ent characteristics and potential of its re-gions. In the North Sea plans for massiveproduction of wind energy and the con-

struction of the Super Grid to bring it tomainland Europe have started with the co-operation of many countries. The samemodel could be duplicated in the South.

At times of crisis it is evident that there will be many challenges in the develop-ment of such ambitious projects. However,

we need to commit ourselves to not al-lowing the crisis jeopardise the Union'sstrategic choices and move forward withdecisiveness to facilitate and speed up ourexit from the crisis. At a time when divi-sions within Europe are widening, devel-oping projects of common interestreminds us of the great added value of theEuropean Union and the need for closercooperation. European citizens expect theEU and the Member States to prove thatgreat crises entail great opportunities andnot only great difficulties.


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s I contemplate COP17 inDurban, I reflect on previ-ous COPs and the timethat has passed so quickly.

As if it were yesterday, Iemember the frustrations 2 years ago in

Copenhagen over the proceedings andhe lack of results in. This was followed ayear ago by the excitement in Cancunover the adoption of the text within theormal procedure of the United Nations.

Since then the European Union (EU)has not stood still. Despite the enormousiscal and economic problems, sustainable

development has remained the focus ofoncrete initiatives. In times of economicrisis, it becomes more difficult yet more

urgent to consider environmental needswithin an energy policy.

Every EU document on developmentndicates that the green economy is the

best possible solution to the crisis. Theobjectives of the EU 20-20-20 targetswere:

A 20% reduction in greenhouse gasemissions A 20% share of renewable energysources by 2020

A 20% reduction in primary energyuseDespite our economic woes, we are

now prepared for a 30% reduction inmissions by 2020 if other comparableconomies would adopt similar environ-

mental commitments. Since energy sup-ply at an economic price is essential forhe EU's economic recovery, steps must

be taken carefully when deciding energyegislation in this far reaching area. Easy

options can lead to added problems -uch as replacing coal with gas and thenncreasing gas dependency. We must alsoecognise that within the EU family, we

have strong and weak members and theoptions for some are simply not availableo others. After 2013 the new seven-year EU

budget will come into force, and this is the

time to prepare many sectoral strategies. The "green" component remains a

major factor in everything icluding: Industrial policy, Business development, Energy policy Research policy, Cohesion and Agriculture.In addition, we are drafting a strategy

for sustainable development up to 2050,aiming to reduce our emissions to be-tween 80% and 95%. This is under prepa-ration for the EU to lead the climatenegotiations.

The EU has very often been the driv-ing force in international negotiations,and it is for this reason a leader in envi-ronmental policies. This also economi-cally problematic as we have internationaltargets but no international agreements.So the most environmentally responsiblecountries risk weakening their globaltrade positions . In 2011 the EU stood al-most alone in the desire for a globallybalanced, decisive and legally binding in-ternational action. China, as the largestgreenhouse gas emis sions producer, is notrequired to reduce emissions under theKyoto Protocol, while the U.S. has noteven ratified the Kyoto Protocol eventhough they remain responsible for 18%of global CO2 emissions. Japan, Canadaand Russia have indicated that they donot intend to honour the Protocol in the

future. In such circumstances, our uncon-ditional commitment to continue withthe second period of the Kyoto Protocol

would thus cover only 11% of globalemissions. What impact would a reduc-tion of such a small proportion of emis-sions have on the global rise intemperature?

Consequently, any commitment of theEU at this year's negotiations will not beunconditional. What do we expect? Theshort answer would be: the implementa-tion of the arrangements, concluded inCancun, but to be more specific :

1. We expect the D urban conference to

adopt a roadmap for adopting a legallybinding international agreement to re-duce greenhouse gas emissions on aglobal level. The industrialized countries

will have to adopt mutually comparableburdens. This new agreement would haveto be adopted no later than in 2015 and

would have to enter into foce no laterthan in 2020 ;

2. We expect to reach agreement onhigher ambitions of other countries.

Their current plans to limit global warm-ing to 2C are getting close to only 60 %of the target. There is in fact a wide gapbetween the Cancun commitment inprinciple and the actual assumption ofburdens by individual countries ;

And iin practical terms that requires: An agreement on a common account-ing system of measuring emissions to

ensure reliable and comparable data An agreement on monitoring, report-ing and supervising the implementa-tion measures, in short, transparencyand credibility Progress in arrangements to reduceemissions in the maritime and airtransport Technical corrections to the KyotoProtocol, which will enable its environ-mental integrity An agreement on the contribution ofdeveloped countries to the climatefund. In the years 2010 2012, 30billion should have been accumulated,

and even more every year after that,and in 2020 the amount was expectedto be as much as 100 billion.Sometimes I feel as if I live in a kind of

virtual European environmental ideology.As if my colleagues and I are light yearsaway from the reality of unemployed menand women of Europe, from the entre-preneurs whose services go unpaid andfrom the languishing banks which cannotfinance innovative commercial projects.Unfortunately, other options, such asmore efficient processes, better use of re-sources and promotion of creativity in thedirection of sustainable society, arenowhere to be seen. Will the world beable to achieve "normalcy"? Can we againlive in harmony with nature?

Can we once again become a part ofthe Earth, or will we remain its invaders?

The EU hasvery often been

the driving force ininternational

negotiations, and itis for this reason a

leader inenvironmental

policies


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ne of the defining chal-lenges of our century ishow to achieve new andbetter economic growth

which significantly re-duces social, economic, ecologicaldeficits, in particular by cutting resourceuse and GHG emissions. The EU hasgone some way to reduce its GHG emis-sions, but this is not sufficient to tacklethe deficits. It is importing over half ofits energy and wasting about a of theenergy it consumes. This comes withconsiderable costs: every year, the EUspends over 350bn on energy imports

while wasting more than 110bn worthof energy [Note: EU is halfway].

The EU decided that by 2020 it wouldget 20% of its energy from renewablesources and save 20% of its energ y. Bind-ing targets help focus policy makers at-tention and shape investment behaviours:they can be true engines of economicgrowth. The European renewable energysector with its binding target and com-prehensive regulatory framework cur-rently employs over 1.5 million people,annual investment in the sector averages35bn and represent over 60% of invest-ments in new power installations. Thiscontrasts with the energy efficiency sec-tor: with no binding target and a piece-

meal regulatory framework, the sectorsgrowth potential remains largely un-tapped and the EU is currently on trackto achieve less than half of its energy sav-ings target.

In an effort to address this situationand make the case for an EU energy pol-icy that puts equal weight on reducingenergy use, energy efficiency stakehold-ers decided to join forces. They created

The Coalition for Energy Savings , agathering of 23 business, professional andenvironmental organisations. The Coali-tion believes that stepping up energy ef-ficiency policy to deliver substantialenergy savings is long overdue, and seesthe new Energy Efficiency Directive as aunique opportunity for Europe to bringits 20% energy saving target within reach,putting it on course for a sustainable, ef-

ficient and renewable energy visionfor 2050.

Indeed, the Energy Efficiency Direc-tive proposal, which tackles many of thebarriers that stand in the way of energyefficiency, is the right place to do so. Butas the Coalitions assessment of the en-ergy saving impact of the proposed effi-ciency measures, the Gap-o-meter,shows, the Directive as it stands wouldonly close part of the remaining gap tothe energy savings target (delivering upto 114.5 Million tonnes of oil equivalents(Mtoe) while the gap is 190 Mtoe).

The Coalition believes that closing thegap is possible and that the energy sav-

ings target can be achieved if measuresthat will unlock investments are

strengthened and binding national en-ergy saving targets that provide pre-dictability and investment certainty areset.

There is often talk of energy efficiencybeing the low hanging fruit of thebroader energy debate. While it is true,non-market barriers, like split incentivesand perceived risks of upfront invest-ments prevent energy consumers to pickthe fruits Publicly organised financingand regulatory interventions have provensuccessful to overcome such barriers andleverage private investment. Efficiencyobligations on energy suppliers as pro-posed in the EED generate stable invest-

ment and guaranteed energy savings bycreating a market for energy efficiency

services and energy efficient goods. Theyare already being successfully imple-mented in 5 EU Member States, 3 Statesin Australia and 24 States in the US.

The Coalition will build on its uniquepolitical and technical credibility pro-

vided by the cross-cutting nature of itsmembership to convince decision makersof the many benefits of energy savingsand support policy makers in the designof policies that will save energy whilestimulating growth. Throughout the leg-islative process around the Energy Effi-ciency Directive, The Coalition willorganise a number of high-level eventsnotably on the employment benefits and

financial incentives of energy efficiencypolicies. It will act as a catalyst on behalfof its EU wide Members by raisingawareness and building capacities tostimulate targeted regulatory action atEU level.

Not only is energy efficiency the sensi-ble thing to be focusing on at times ofeconomic hardship thanks to the savingson energy use and energy bills, but it isalso a key to stimulating the economythrough investment and job creation.Earlier this year, the European Commis-sion estimated that achieving the EUs20% energy savings target by 2020 wouldgenerate financial savings of up to 1000 per household every year, create upto 2 million jobs, and reduce annualgreenhouse gas emissions by 740 milliontonnes.

Not only is energyefficiency the sensible

thing to be focusing onat times of economic

hardship thanks to thesavings on energy use and

energy bills, but it is also akey to stimulating the

economy throughinvestment and job creation


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e shouldnt investin energy effi-ciency because itsbad for economicgrowth, Markus

Pieper, Member of the European ParliamentMEP), recently said. All right, he was speak-ng in German and maybe the EU Parliamentsnterpreters were having a tough day. But theyant have got it completely wrong. He did sayaving energy is a bad thing.

Mr Piepers opinions are important, be-ause he is the European People PartysEPPs) lead MEP on the draft Energy Effi-iency Directive (due to be adopted next

ear). And the EPP of course are the top boysn the EU Parliament at the moment, with ahird of the seats. So presumably he repre-ents the opinion of a lot of people.

Piepers gaffe for surely thats what it is s probably rooted in the instinctive associa-ion many of us have between energy effi-iency and rationing. But energy efficiency

has nothing to do with rationing. Quite theontrary. Saving energy will speed up eco-

nomic recovery, not hinder it. Defending EUCommission analyses is not something anyNGO watchdog does gladly, but in this casewe have to say that the Commission has builtup a solid case that saving energy is good forconomic growth, jobs, the environment andots of other important things. They call it

less is more and reckon, for instance, thatthe 20% by 2020 energy savings target willsave Europe 220 billion every year.

Lets put that number into perspective. LeMonde recently added up the French gov-ernments emergency economy measures for2012. They came to annual savings of 11 bil-lion. Now set this against Frances fair share ofthe 200 billion: more than two times more at

25 billion per year. Its common sense really,and Mr Pieper should have the savvy to see it.Improving Europes energy efficiency meanscutting oil and gas import bills (we importover half of our energy). It means spendingless to run a business and heat a house.

Perhaps we can all Mr Pieper, policy-makers and NGOs agree in this case withMichael Douglass famous line in Wall Street:

Greed is good, ladies and gentlemen.Twisted morals, maybe, but it fits. Energy ef-ficiency is the kind of greed that means

warmer homes, less CO2 emissions andmore money to spend on other, more excit-ing or more useful things than energy.

Can we agree on that, Mr Pieper?

This article first appeared on the efficiency1st blog.

uropean energyministers met inBrussels on 24 No-

vember amid the

ongoing row overthe introduction of binding tar-gets for energy efficiency as partof the EUs plans for a carbon-reduced Europe for 2020.

Ministers are gathering in theEuropean Council to present a setof progress reports on how mem-ber states can best meet the chal-lenge of reducing energy use by theend of the decade. Energy effi-ciency, one one of the key parts ofthe EUs 20-20-20 plans for a car-bon-reduced future, along with a20% reduction in greenhouse gasemissions and a 20% increase inthe use of renewables, has off-latebeing sidetracked from Europesclimate plans in the wake of the fi-nancial crisis.

The European Parliament, cur-rently processing a report on thesubject authored by Green MEPClaude Turmes, is pushing forfirm commitments; not only alegally-binding 20% efficiencytarget, but also a set of binding

measures to help achieve that tar-get. Effectively, this means oblig-ing energy companies to changetheir business models, while atthe same time finding a way topay for energy efficiency adjust-ments without it coming fromthe government budget, as out-lined in article 6 of the report.

Certain member states, such asDenmark, and, to an extent, theUK, have done this, others, saycampaigners, are simply failing tosee the possible benefits for eco-nomic stimulation that a shift tomore efficient business modelscan bring.

In contrast to the parliament,the European council are reject-ing the concept of both binding

targets, and binding measures,such as energy auditing, witheven relatively sympathetic coun-tries, like France, Germany andthe UK, preferring to persist withtheir own domestic targets ratherthan see them expand on a Euro-

pean level. The commission sitssomewhere in the middle, mostlikely favouring a binding target,but not so keen for bindingmeasures.

However, according to thecommissions own figures, be-tween 108 and 118 milliontonnes oil equivalent (mtoe) canbe saved in 2020 alone with a20% efficiency reduction. Theproblem is that EU memberstates continue to fail to see thebenefits of such savings, and gen-erally like the concept, but con-tinue to fret over how they can befunded.

Even the commissions ownanalysis, which suggests gross do-mestic product goes up as energy

consumption goes down, largelyfalls on deaf ears, as governmentsfocus on issues such as buildingrenovation, and wonder how theycan sell it to the public. Essen-tially, say those who want bind-ing targets enforced, the

commission is failing to makeclear narrative links between eachof its concepts, inadvertently al-lowing confusion to grow uparound who is obliged to do whatin the fight against climatechange.

It doesnt help that both theparliament and commission aresomewhat divided also. The

Turmes report is currently con-sidering amendments, and, fol-lowing the passing of the 7November deadline, no fewerthan 1,810 had been received, aparliament record. The centre-right EPP group, whose mem-bers are amongst the most criticaland unsure of how to progress,have submitted the most; in once

case a single MEP put in 135amendments with others submit-ting around 100 each. By way ofcontrast, the combined environ-ment committee, which also hasan input into proceedings, sub-mitted in total 400 amendments

for consideration.DG Energy is also divided on

this, with commissioner GntherOettinger, said to be essentiallyhappy to go with what the mem-ber states want. Meanwhile, hisDirector-General, Philip Lowe,has been recently expressing hisdissatisfaction with the situation.

So far, there has been no dateyet set for a committee vote, al-though most likely it will be be-fore the end of January. Afterthat, assuming the institutions gofor a first reading agreement, tri-alogue discussions will begin inMarch. Adoption is not expecteduntil 2013.This article first appeared on NewEurope Online www.neurope.eu


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arbon offsetting, nuclearenergy, large hydroelec-tricity plants, carbon cap-ture and storage, agrofuels.False solutions, all touted

as convenient answers to the challenge ofclimate change. Their salesmen are out inforce at the UN climate negotiations.

But, whilst they all fail to address theproblem, and divert precious investmentsand political attention from real solutionsfor curbing climate change and sourcingcleaner energy, agrofuels are one of themost deceptive masquerading as greenbut responsible for significant social andenvironmental damage, and highergreenhouse gas emissions to boot.

Higher food prices and food pricevolatility, land grabs , displaced communi-ties, deforestation and biodiversity lossare no longer worst case future scenarios,they are here and now. Its no wonderthat development and environmental or-ganisations, including Friends of the

Earth Europe, are up in arms about Eu-ropes plans to triple its agrofuel use by2020.

Here are some facts: The World Bank estimates that in

2010, 21 to 35% of over 50 millionhectares of land grabbed, mostly in

Africa, was for agrofuels with some ofthe worlds most vulnerable communitiesconned and dispossessed in the process.In Mali, of the 500,000 hectares of landrecently leased or negotiated, more than40% involved crops for agrofuels like sug-arcane and jatropha: taking away landand water from food production in acountry plagued by hunger. Poor small-holders with insecure land tenure, pas-toralists, and indigenous populations areparticularly vulnerable. Bad governanceand irresponsible companies, yes. But,

also a consequence of our over-consump-tion and agrofuels demand.

Almost all analyses cite the boom inagrofuels, driven by political targets, as amajor factor pushing both food pricesand food price volatility upwards, spread-ing hunger. It stands to reason: the shockof expanding agrofuels creates extra de-mand on land and crops in an alreadytight supply and demand situation,strengthens the link between food pricesand oil, and excites food commodityspeculators. In June, the IMF, FAO,

World Bank and seven other notable in-stitutions concluded in their advice to theG20 that food prices are substantiallyhigher than they would be if no biofuels

were produced, such that G20 govern-ments [should] remove provisions of cur-rent national policies that subsidize (ormandate) biofuels production or con-sumption. Brazil, Indonesia and Ger-many all major agrofuel producers - weare told, were quick to shoot down thisproposition when it came to the negotia-tions.

European Commission researcherscalculate that over 80% of biodiversity

will be damaged in areas of natural habi-tat that are converted to farmland a s a re-sult of EU agrofuels targets. Rapidlyexpanding the hectares of agrofuel feed-stocks, like soy and palm oil, is a major

driver of deforestation in Latin Americaand South East Asia; soy and sugarcaneare rapidly pushing the agriculture fron-tier into precious, wildlife-rich savannahslike Brazils Cerrado.

The EUs targets to expand agrofuelswill do little to reduce the growing cli-mate impacts of Europes transportation and, where they rely on biodiesels likepalm, soy and rapeseed oil, will actuallyincrease emissions more than normal fos-sil diesel. If the EU does not address thecarbon accounting loophole from indi-

rect land use change in the RenewableEnergy Directive the cost of carbonabatement with agrofuels would bearound 2,500 per tonne of CO2. The10% target for transport in the Renew-able Energy Directive cannot with anysincerity be considered a climate mitiga-tion measure.

But wait. There are sustainability crite-ria to curb these side effects, right?

Wrong. None of the documented effectsabove are currently prevented by the EUssustainability safeguards which donteven take into account major social prob-lems or knock-on impacts, such as of theland rights of communities or higherfood prices. Schemes that certify theseecocidal commodities as sustainable onlyserve to mislead the public and defamethe good name of sustainability. Funda-

mentally, the scale of demand is the p rob-lem. The only sustainable option for peo-ple and planet is to reduce ourconsumption of these commodities.

Its not hard to see why many of ourdecision makers are keen to believe thesalesmens promises on agrofuels. Theyfurther subsidise Europes agriculture in-dustry whilst offering the illusion ofdoing something green, without the needto confront the powerful car industry orEuropes gluttonous driving habits. Ar-guably they may offer Europe some en-

ergy security but only marginally, andat the expense of food insecurity.

So what is to be done? Here the re-freshing answer is that Europes demandfor agrofuels is generated by a purely po-litical fabrication: an artificial marketthat would not exist without subsidies ortargets. Closing the carbon accountingloophole in indirect land use change, ashundreds of scientists have recom-mended, would help to make the policymore honest in its carbon claims and de-mote the most climate damaging feed-stocks. A decision to drop the targets andsubsidies would wean us off this false anddistracting solution. Much cheaper andmore effective ways exist to generate gen-uinely sustainable transport solutionsthat can actually reduce greenhouse gases.

These must be pursued with urgency.

Amongst

several false

solutions on

offer at the Durban

climate talks,

agrofuels are the

most deceptive


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he EU 2020 vision for Eu-rope to grow out of the eco-nomic crisis is built in largepart on a revolution in theEUs approach to energy, de-

cribed by the European Commission asthe life blood of our society. Develop-ng a fully-integrated, secure and low-arbon internal energy market is now a

mainstream objective of EU policy.To help this process, at the end of 2011

he European Commission will adopt anEnergy Roadmap setting-out differentcenarios for the path forward for Europeo build low-carbon, secure and compet-tive energy systems up to 2050. Givenhat almost 80% of the EUs greenhouse

gas emissions are energy-related, effectivedecarbonisation of Europes energy sys-ems will be necessary to deliver the ob-ective of reducing overall greenhouse gasmissions by 80-95% by 2050 (comparedo 1990 levels).The pressure to get this right is con-iderable. Europes ability to meet the

2050 climate and energy targets will inarge part depend on the policies and in-estment decisions of the next 5-10 years.

The Commissions own projections showhat current energy policies whichtretch only to 2020 will deliver barely

half of the 2050 target.Earlier this year the International En-

rgy Agency (IEA) posed the question aso whether we are entering a Golden

Age of Gas. This question is particularlyelevant to Europe. Gas, as the lowest-mission fossil fuel, is certainly well-

placed to be the short-term beneficiary oflimate change mitigat ion policies. How-ver the longer-term outlook to 2050 is

more uncertain. Supply disruptions,dwindling domestic gas production andn increasing reliance on imports - the

Commission has identified that under a

business-as-usual scenario Europes im-port dependency for gas will rise to 73-79% of consumption by 2020 and to81-89% by 2030 - have up to now con-spired to create lukewarm political sup-port for gas, and thus one of the mainfocuses of EU policy is on supply diversi-fication in order to secure its energy sup-ply.

Large-scale exploitation of unconven-tional gas resources such as shale gas inthe US has had a dramatic impact onglobal energy markets, and there is stronginterest in understanding its potential toplay a similarly transformational role inEurope.

Poland is the Member State which hasgranted the most exploration licenses.

Further explorations have been under-taken or are ongoing in Germany, Swe-den and the United Kingdom, whereshale gas resources have been found to besignificantly larger than previouslythought. And Spain has recently also re-

vealed the existence of a gas reservoir ca-pable of covering Spanish gas demand forfive years.

Shale gas exploration has provenhighly-controversial, and Member Stateshave very different positions on the issue.

While France has imposed a moratorium,Germany is divided and Poland is enthu-siastically pressing ahead. Indeed Poland,the current EU President, has called forshale gas to be designated a commonEuropean project to be prioritised under

the EUs energy infrastructure develop-ment programme.

The European Commission hasavoided taking a firm position on shalegas. However it has commissioned a legalstudy to assess the appropriateness of theexisting EU legal framework for uncon-

ventional gas. The study, originally due inOctober 2011 but still not published,looks at experiences in four MemberStates (Poland, France, Germany andSweden). The Commission has also in-structed the European Chemicals Agency(ECHA) to identify which registered

substances (under the REACH Regula-tion) are used in shale gas exploration.

And DG Climate Action has recentlylaunched a call for tender to conduct astudy "Climate Impact of Potential ShaleGas Production in the EU". The overallobjective of this study, to be carried outin 2012, is to provide state of the art in-formation to the Commission on climateimplications of possible future shale gasproduction in Europe.

A number of MEPs including Envi-ronment, Public Health and Food Safety(ENVI) Committee Chair Jo Leinen have called for EU measures to restrict oreven ban shale gas exploration. Both theENVI and Industry, Research and En-ergy (ITRE) Committees will draft own-initiative reports on shale gas. It can beexpected that they will quite differ. TheITRE Committee will look at all sorts ofaspects of shale gas, presumably taking amore balanced view towards shale gas ex-ploration, based on facts and figures.

And is that not exactly what Europeneeds: An unprejudiced analysis of its re-sources, imported and indigenous ones,and their benefits? Shale gas cannot beignored any longer. A scientific studycommissioned by Polish think tank theKosciuszko Institute comes to the con-clusion that even if European shale gasexploration and production costs are 50%

higher than in the US, gas prices may stillbe lower than with Russian gas, whichcurrently accounts for a quarter of theEU's supplies.

The decision whether to frack or not tofrack should be made based on an objec-tive assessment against certain criteria.

Will it lead to decreased dependence onexternal energy suppliers? Will it lead tonew markets, promoting competition andcreating jobs? Will it help the EU toreach its low-carbon energy objectives?

Provided these questions can be an-swered positively on the basis of soundcost-benefit analysis and on the basis ofenvironmentally-sound exploitation, andprovided a single internal gas market willbe finally completed, shale gas could be-come a significant alternative to Russiangas supplies in Europe.

Large-scaleexploitation of

unconventional gasresources such as shale gas

in the US has had adramatic impact on

global energy markets,and there is strong

interest in understanding

its potential to play asimilarly transformational

role in Europe


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rojecting what the future hasin store remains one of scien-tists favourite pastimes. Thechoices that Europe makestoday regarding its energy

mix will have a long lasting impact asthe International Energy Agency warnedearlier this month, now is the time to act.

Following the Fukushima crisis inJapan, Germany and Belgium have com-mitted to a progressive nuclear phase-outand Italy has frozen its plans for nuclear

energy development following a publicconsultation. As the International Energy

Agency pointed out in its latest WorldEnergy Outlook, natural gas, alongsiderenewable sources are becoming increas-ingly important to balance the Europeanenergy mix and fill the gap left by the ex-pected drop in nuclear energy as a fuelsource.

In this context, the development of theSouthern Gas Corridor (SGC), aiming tobring diverse energy supplies via a newtransport route to Europe, becomes ofparamount importance. Transporting gasby pipeline remains one of the easiest andmost cost-effective alternatives and theEU is right to set this goal as a priorityfor diversification of gas supply.

Tapping into the abundant resources inthe Caspian basin will enhance European

energy security by providing an alterna-tive to gas from Russia and Northern

Africa. Yet, to realise these benefits, it isimportant to choose the right pipeline forEurope.

In the weeks before the year-end, theShah Deniz consortium, led by BP PLCand Statoil, is expected to announce the

winning project that will open this newroute in the Southern Gas Corridor totransport the supplies from the ShahDeniz II field in the Caspian sea. Theconsortium is currently considering threepipeline projects, assessing criteria suchas financia l deliverabilit y, operability, en-gineering design and scalability.

The recently signed transit agreementbetween Turkey and Azerbaijan has

opened a direct route for the transport ofCaspian gas supplies to the EuropeanUnion, without the need for a dedicatedpipeline. A milestone of historical im-portance, the agreement will facilitate theimplementation of the Southern GasCorridor and has only made the Trans-

Adriatic Pipelines bid more realistic andpragmatic.

TAP is well-positioned due to itsunique characteristics, above all, scalabil-ity. The only gas on sale today and avail-able from Shaz Deniz II is 10 billioncubic metres (bcm) and this is the gas

that TAP proposes to bring to Europeanconsumers in the first phase. Yet, as ad-ditional gas volumes come on-streamafter 2017, TAP is the only pipeline thatcan double its capacit y to 20 bcm by sim-ply adding compressors along the route.

While bigger pipelines struggle to maketheir numbers add up TAPs proposal isrealistic, commercial and the most strate-gic option for Europe.

That said, while supply diversificationremains critical for Europes energy fu-ture, this goal should not be achieved atany cost. In todays challenging economic

climate it becomes more evident thanever that investments should be as cost-effective as possible.

The right pipeline for Europe shouldnot require government subsidies, EUgrants and, above all, contributions fromthe European taxpayer. From all the op-tions currently on the table only onepipeline meets this requirement and thatis TAP.

It is heartening to see that more andmore stakeholders understand this real-ity, and see the value in a smaller, cheaperand commercially sound alternative foropening the Southern Gas Corridor.

With financial budgets under strain,practical and cost-effective projectsshould take precedence over grand, yetunsustainable dreams. Our security of gassupply depends on it.

Tapping into the abundant resources in

the Caspian basin will enhance European

energy security by providing an alternative to

gas from Russia and Northern Africa


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he energy policy of Russia andEurope keeps surprising us.European officials have selecteddiversification of suppliers astheir main target convincing

hemselves of the assumption that reducingdependence on Russian natural gas is themost efficient solution of problems of Euro-pean energy security.

Russian authorities are very much offendedby distrust of the Europeans and suggesturning Russian energy supplies towards Asia,n particular China. Negotiations on naturalgas deliveries to China through the Altai gaspipeline seem very symbolic in this regard.

The matter is that it is to connect Chinand deposits in the Nadym-Purtazovsky dis-rict of the Yamal-Nenets Autonomous Areahat have been the main resource base of ourupplies to Europe over the past few decades.To call things by their proper names, it ap-

pears that the policy of the EU and Russiawill directly lead to a catastrophe. Both theEuropeans and Russians will lose.

Lets consider the risks of the EU and Rus-ia. It is hard to say what the precise level of

natural gas consumption will be in the EU in2020. Lets simply list the main drivers ofgrowth in its demand. The first factor is thend of the nuclear renaissance. Germany

decided to shut down all nuclear plants; if nu-lear energy is fully replaced by natural gas,his will increase the demand for natural gas

by 35 billion cubic metres in Germany alone.The second factor is a budget crisis in the

EU. It questions plans of development of theenewables energy sector that rests on subsi-

dies. Previously the EU maintained it follow-ng the end-justifies-the-means principle butnow the European Union has to save on suchxpenses. Thus, many projects promoting en-rgy generation on the basis of renewableources will be cut. There are only four coun-ries in the EU that can currently boast rela-ively serious level of renewable energy

production (at least at the level of five milliononnes of oil equivalent): Germany, Spain,taly and Great Britain. Spain and Italy areacing default; Great Britain is in a serious

budget crisis that already triggered politicalunrest, while Germany is expected to become

financial saviour of Europe. Under suchonditions they will have to forget about their

original plans on renewables development.The third factor concerns tougher ecolog-

ical requirements that will make them de-crease the coal industry contribution that willbe substituted by the gas powered energygeneration sector. Another important factoris the EUs domestic gas production. It willbe going down, which is a very alarming signfor the Europeans.

Since the beginning of the 2000s naturalgas consumption in EU-27 has grown 14%,

while production has been regularly droppinghaving lost over 36% or 64bn cubic metersover the past 10 years. On the whole, that de-crease was offset by growth in production andsupplies from Norway. The total output inEurope and Turkey became less than 10bn

cubic metres lower. However, Norway is notamong world leaders in proven natural gas re-serves BP ranked it only 17th in 2010.

There is a high possibility that already thisdecade Norway will be shelved.

There is no ground for Europe to expect apossibility of imports of a shale gas revolutionfrom the USA in the next decade. There areseveral crushing arguments against such anopportunity. There is no free land in the EUto conduct constant horizontal drilling. TheEU does not have enough water for hydraulicfracturing. Finally, the EU will have to buildinfrastructure linking shale deposits to the gassupplies system. Shale gas may play its rolebut not in the next ten years.

Norway may increase production by 2020but not more than by 15bn cubic metres.

There were big expectations concerningnorthern Africa, but the Arab Spring ruled

them out to a great extent. So, the outputgrowth in northern Africa should not be ex-pected. There is also Nigeria but its politicalrisks are immense. No pipeline from thiscountry will be laid in the next ten years; con-struction of new LNG plants has not beenlaunched there either.

Iran is under sanctions that will be liftedonly after its political regime changes; how-ever, the regime proved its steadiness and eventhe Arab Spring did not affect Iran. There arehopes for 15bn cubic metres of natural gasfrom Iraq that is starting to restore its oil andgas industry after the war. But this countryneeds natural gas to improve the domesticelectrical energy production, which may con-sume the whole associated gas produced. It is

doubtful that Turkmenistan will be connectedthrough the Caspian Sea otherwise this willmean serious drop in Russias influence in theCaspian Sea region (up to the level of com-pletely ignoring its opinion) and withdrawalof China from this region that already con-siders Central Asian gas its own. Actually thisis Central Asia where Europe sharply feelscompetition for natural gas against China,

which may become a major trend in the nextdecade.

This means that in reality only Azerbaijanremains out of all potential suppliers forSouthern Corridor. This state can raise natu-ral gas supplies by launching the second phaseof Shakh Deniz. But this poses a lot of ques-tions. Russia is also bidding for this gas sug-gesting a higher price. But Azerbaijan wouldlike to have a direct access to the Europeanmarket; besides, it counts on exchanging its

natural gas for Europes support in theNagorny Karabakh issue. Yet, the potential ofgrowth in Azeri gas deliveries to the EU canbe estimated at 10bn to 15bn cubic metres.

And it does not matter what pipeline projectwill be finally implemented.

Europe does not want to resort to Russiasservices, which leaves it no choice but to con-sider the world LNG market. There are manyspeculations about LNG but not quite manyinvestment decisions made. Over the past two

years the LNG topic has been promotedmainly by Qatar. But Qatar decided not tomake any investment decision on new proj-ects until 2014. It is hard to predict what willhappen after that.

Now, lets consider Russia. Swapping the

European market for China is fraught withhuge financial losses for Russia. China is notready to pay the same price as the EU. More-over, currently we are offering natural gas toChinas western provinces that do not reallyneed it. They already receive gas from Turk-menistan; the two countries have recentlysigned a new contract on expanding suppliesby another 25bn cubic metres. There is de-mand for natural gas in Chinas easternprovinces where we originally wanted to de-liver 38bn cubic metres but the East pipeline

was gradually removed from the agenda ofRussian-Chinese talks.

Thus, the conclusion is rather simple. Re-fusing Russian natural gas will generate hugerisks for Europe. Replacing the EU market

with the PRC will create risks for Russia. Themain task today is to avoid making a mutualmistake.

Since the beginningof the 2000s naturalgas consumption in

EU-27 has grown 14%,while production has beenregularly dropping having

lost over 36% or 64bn cubicmeters over the past 10

years


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arlier this year, in the Euro-pean Parliament, I was hon-oured to address theEuropean Energy Forumunder the chairmanship of

Giles Chichester MEP. For an American,this was both daunting in prospect andmost pleasant during the event. My cho-sen topic was the same as the title of thisshort article and my first reaction wasone of national pride that others shouldthink we have an energy policy in theU.S. Not to be thrown off course by thiscompliment, I began to compare and

contrast what has been happening re-cently either side of the Atlantic Oceanregarding energy, the environment, exter-nal dependency and economic recovery.In U.S. energy think ing, everything starts

with oil: its cost, availability and growingimport dependenc y. Looking at the trendin this graph, it is clear that somethingmust be done to reverse it.

So it is hardly surprising that the U.S.Energy policy is built first on the need todecrease imported oil by:

Increasing automobile fuel efficiencystandards

Increasing use of domestically pro-duced biofuels

Substituting electrical and alternativefuel vehicles for petroleum fueled ve-hicles, and

Increasing domestic production of oiland natural gas

Next in the priorities is to decreasecosts of energy for consumers by:

Improving automobile fuel efficiencystandards

Improving domestic appliance andbuilding energy efficiency standards

Subsidizing improvements in energyefficiency

Finally, the policy is aimed at increas-

ing the use of renewable and other cleanenergy by:

Increasing the use of solar, wind andgeothermal energy

Increase the use of clean coal and Encouraging new construction of

nuclear power plantsThe attentive amongst you may have

noticed no mention of CO2 reduction orany kind of carbon policy. That is no ac-cident in the policy, nor is it a mistake onmy part. In 2010, Congress was unable toagree on a legislative proposal to estab-lish a policy on managing emissions ofCarbon Dioxide and four years earlierthey were equally unable to agree on aRenewable Energy Portfolio Standard forelectricity production. Then, as we lookat today and the future, it is clear that thenational concerns over deficits are likelyto dominate any consideration of new en-

ergy related expenditures. This has beenand remains a sharp division between

The White House rhetoric of whatshould be done and the ability to work

with the United States Congress in orderto implement specific actions.

So now when I look at the energy pol-icy initiatives for the European Union, Ido see significant differences especiallyregarding environmental issues comingfrom energy options. So why have thetwo policies developed in such a different

way? Perhaps this was born out of theway the EU embraced the Kyoto Protocolfrom the beginning in 1997 which wasthe same year The EU Energy WhitePaper included Environmental protec-tion at local and global levels as one ofits three pillars.

Although the U.S. signed the Kyotoprotocol at the end of 1998, it has never

been ratified resulting, at best in our latearrival at discussions of the impact ofgreenhouse gas emissions. Then if youconsider what any emission reductionpolicy would need - seeing it through isproblematic simply because the U.S. hasabundant coal and natural gas reserves,significant regional differences in renew-able energy source availability and atransmission system that faces numerousand immense challenges to distribute re-newable energy. Such a policy wouldmean high costs now and higher costsforever. Not an easy policy to set in timesof economic recession and with signifi-cant elections every 2nd year.

Perhaps the moral issue should becompelling since the U.S. has 5% of the

world population and generates 25% ofthe global CO2 emissions.

This figure shows how that situationhas developed over the two centuries. Ahard trend to reverse in a decade or two.

The problem, however, is not just oneof environmental morality. Certainly in

the U.S. there are some significant prob-lems to overcome in the electricity sectorif Kyoto-encouraged policies are to beadopted. The decentralized electricitymarket is dominated by investor ownedutilities which makes implementing pol-icy changes difficult. There is also a trendin parts of the U.S. to a deregulated elec-tricity market that has made it more dif-ficult to build new generation. Finally,smaller market capitalization for manyutilities makes major capital investmentsmore difficult.

So, in conclusion, whilst the EU energypolicy seems to be environmentally based,that of the U.S. is clearly economicallybased. Major shifts in U.S. policy or newenergy related initiatives are unlikely inthe next 18 months due to the focus oneconomic issues in the U.S. and upcom-ing elections in 2012.


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ith the end of the yearapproaching, it istime to take stock,look ahead and hopefor a better future.

At a global level, 2011 will go down onistory as the year we realised we couldo longer take energy for granted. Withhe United Nations poised to launch thenternational Year of Sustainable Energy,

we can already foresee that in 2012 dis-ussions will focus on clean energy andustainabi lity. As we get closer to 2020,he need to cut down on energy expendi-ure mainly by increasing energy savingss becoming even more pressing. If weook even further, we should already startaying the foundations for smart citieswhich are able to maintain and increasehe level of comfort of their inhabitants

while significantly cutting energy.But the 20-20-20 reductions target is

othing new. In fact, that clock startedicking long ago. However while theeadline may seem wel l into the future, it

s just eight years from now. Will the EUe ready to achieve a 20% cut in emis-ions of greenhouse gases , a 20% increasen renewables and a 20% reduction in en-rgy consumption in eight years time? Ifo, how? The future lies partly in tech-ology. In this case, however, there is one

mportant caveat. The technology able toontribute to energy efficiency gains isot a thing of the future; it already exists.

We just have to implement it.The energy citizenIn the quest to empower consumers to

ontrol their energy consumption, weeed to provide them with the device

which will allow them to effectively un-erstand their use patterns and energy

expenditure. As Dr. Sarah Darby, re-search fellow at the EnvironmentalChange Institute at Oxford University inthe UK said, we are saying goodbye to theenergy consumer and encouraging theenergy citizen.

While consumers will be the bearers ofchange, if we are to achieve a safe, secure,sustainable and affordable energy supplyfor Europe regulatory support is para-mount. Europe will not unleash its fullenergy potential until Member Statesmodernise the energy infrastructure andtake concrete actions such as acceleratingsmart metering roll out. The reasoning issimple: the achievement of all of theseambitious energy and environmental pol-icy goals relies on the grid. The transfor-mation into a truly smart grid dependson inserting intelligence to those sectionsthat need i t the most. Right now, the dis-tribution network is blind from the sub-station to the home or building, yeteverything that will allow us to achieve

those 20-20-20 targets depend on havinginformation and control exactly there:micro-generation, electric vehicles, anddemand response

The Energy Efficiency Directive pro-posal is a good start, but it needs to bemore concrete in the areas of meteringand consumer information. The proposalsays that energy efficiency and consumerbenefits should be taken into considera-tion when establishing minimum func-tionalities and deploying smart meters,but this is still too vague. European pol-icymakers should take a practical ap-proach and remove ambiguity.Legislation ought to ensure that thesmart metering systems installed in Eu-rope have the appropriate functionalitiesto promote and achieve energy efficiencyincreases. Otherwise, the maximum ben-

efits from deploying this technology willnever be achieved. That is the beauty ofsmart metering, that as long as the sys-tem is equipped with the appropriatefunctionalities, benefits occur all alongthe value chain, from the generator, thenetwork to the consumer.

Regulators should continue pressing

for technology which enables people totake an active role in controlling theirconsumption. Latest figures from aVaasaETT Global Energy Think Tankstudy on pilot projects around the worldindicate that the display of almost real-time energy consumption data on in-home devices led on average to an 8.7%reduction in energy consumption. Lowerbut still significant reductions of 5%-6%on average were achieved through en-hanced, more informative bills and accessto usage data on websites. The differenttypes of dynamic pricing mechanismsused in the pilots and rollouts have allshown that energy loads up to 16% canbe shifted (peak clipping) for the ben-efit of consumers and utilities.

To make a real difference when itcomes to reducing consumption and em-

powering consumers, the European Par-liament and the Council should make thenecessary changes to make the energy ef-ficiency directive truly effective. Firstly,there should be a clear definition of smartmetering and the functionalities thatbenefit consumers and facilitate energyefficiency. The current EU legisla tion put

requirements in place for Member Stateswith regard to smart metering, but lacksa clear definition of what exactly isneeded. Also, based on the informationgleaned from the VasaaETT study, therequirements for consumer feedback onenergy use and costs need to be sharp-ened. Feedback should be, as the EU reg-ulators recommend, from two sources,but one of these should be direct feed-back in the form of an In-Home Display,that gives accurate and timely informa-tion on energy consumption and costs.

All these changes will help towardsmeeting the 20-20-20 goals. If reducingenergy consumption is one of our New

Year resolutions, we need the necessarytools to keep them warm all year roundand not just when such pledges are inseason.

Legislation ought to ensure that

the smart metering systems installed in

Europe have the appropriate functionalities

to promote and achieve energy efficiencyincreases


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nergy is the key material basisfor human survival and devel-opment. Upon entering the21st century, profoundchanges have taken place in

the global energy structure with matters re-lated to global environment and energy sup-ply, security, and efficiency becoming moreand more pronounced. It has become widelyrecognized across the world that effortsshould be made to increase energy effi-ciency, explore clean energy, protect ecolog-ical environment, and implementsustainable development.

As a major energy producer and con-sumer, China is faced with grave challenges

in securing supply, protecting environment,and addressing climate change as the coun-try moves quickly in economic develop-ment. The Chinese government has madeestablishing a secure, stable, economical andclean modern energy industry as a key pri-ority in the countrys 12th Five-Year Plan.

According to the plan, efforts will be madeon five aspects.

First, conservation. We will accelerate theshift of economic and industrial structure,intensify the development of circular econ-omy, increase energy efficiency, and put inplace as soon as possible energy conservingand environment-friendly industrial struc-ture, growth pattern, and consumptionmodel.

Second, diversification. In order to en-courage energy complementarity, while wecontinue to pursue the orderly development

of traditional energies, we will alsostrengthen the development of renewableresources, steadily promote nuclear powergeneration, and work for moderate growthin alternative energy.

Third, technology innovation. We will in-centivise innovation and technologicalprogress in the energy sector, step up the de-

velopment of clean energy, and explore newavenues to develop energy resources.

Fourth, environment protection. We willwork actively to encourage the developmentof the energy sector in line with environ-ment protection and promote an energyconserving and environment-friendly cul-ture that attaches equal importance to eco-nomic development and environmentsustainability.

Fifth, mutually beneficial cooperation.We will strengthen cooperation with the in-ternational community on the basis ofequality, mutual benefit and win-winprogress.

The European Union has a highly matureand advanced energy sector. As an impor-tant force in the international energy mar-ket, the EU plays an essential role inpromoting clean energy resources and low

carbon economic development. Over thelast 30 plus years since the establishment ofour diplomatic ties, energy sector has con-stantly remained the most important, activeand effective area of cooperation betweenChina and Europe. Our cooperation hasdemonstrated four distinct characteristics.

First, a comprehensive mechanism. The

China-EU Summit has played an impor-tant role in guiding the bilateral coopera-tion in the energy sector, and the China-EUEnergy Cooperation Conference and theChina-EU Energy Strategic Dialogue to-gether constitute an effective platform forpractical cooperation.

Second, extensive coverage. Our cooper-ation covers strategic discussions, scientificresearch, technology development, practicalcooperation, education and training. Gov-ernment agencies and the private sectorhave forged a favourable partnership tomake common progress.

Third, effective results delivery. Through30 years of cooperation in energy trainingprograms, we have together trained over5,000 people through eight training centresin China. Our cooperation has rewarded usleading capability in carbon capture and

storage and near-zero emission. The CleanEnergy Center established through our co-operation will have much to contribute toenergy conservation and emission cut.

Fourth, mutual reinforcement. Chinascooperation with the EU and memberstates is complementary towards each other.

The two sides have enjoyed substantial co-operation under the framework of ITER.Nuclear energy cooperation between Chinaand France is constantly making head-ways,and collaboration between China and Den-mark and others in renewable energies hascreated new highlight in our energy coop-eration.

Looking ahead, China and Europe sharea huge potential in energy cooperation. Thecombination of Chinas 12th Five-Year Plan

and Europes 2020 Strategy will create newspaces of cooperation in market, capital,technology and management. Urbanization

will certainly become a new area of growthin our energy cooperation. We are confidentthat as both China and Europe move tomeet the climate change, our complemen-tary strength will help foster new progressin the market of low-carbon technology andnew energy.

We believe that a fair, just, stable andorderly international energy marketmechanism serves the fundamental inter-est of both China and Europe. Energy co-operation is an important bond tostrengthen China-EU relations. China is

willing to work more closely with Europeto upgrade practical cooperation in theenergy sector and to deepen China-EUrelations.

Looking ahead, China and Europe share a

huge potential in energy cooperation. Thecombination of Chinas 12th Five-Year Plan andEuropes 2020 Strategy will create new spaces of

cooperation in market, capital, technology andmanagement


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ith $51.1 billion in-vested in 2010, a 30%increase in investmentcompared to 2009,China is now a cen-

ral player regarding renewable energy. In

particular in the photovoltaic solar sector,he overall production of models for this

kind of power plants have exceeded the 8GW (GigaWatts) throughout the whole2010 year in China.

Consequently, more than half of theotal production of solar panels has comerom China last year. This productionolume is quite extraordinary, confirminghat China's mentality is geared towardsenewable energy and attests the emer-

gence of an almost incontestable leader-hip in China.China's Five-Year Plan 2011-2015 also

demonstrates that China is aiming toaise the proportion of renewable energynd is foreseeing to implement its 40-

45%carbon intensity reduction target firstnnounced in Copenhagen and recentlyormalized in the Cancun Agreements.

In the framework of the new Five-YearPlan, China will adopt a 17.3% energyintensity reduction target and by 2015China should add 38 GW of nuclearpower capacity (nowadays it is equal to10 GW), 140 GW of hydropower capac-ity (nowadays it is equal to 200 GW) and90 GW of wind power capacity. In orderto achieve these targets China is prepar-ing itself to launch a huge investmentplan in the energy sector, which could in-

ject an estimated $753 billion in the development of alternative energy in thenext decade.

It is easy to guess how important it is

for the EU Member States to try to in-crease the cooperation with the Chinesecolossus in the development of technolo-gies with low energy consumption in par-ticular by investing in China. China isindeed open to European investors.

The aim is to attract investments fromsmall and medium enterprises that have astrong expertise in the green technologysector in order to have an exchange oftechnological know-how, which is usefulnotably for improving environmentalconditions.

Indeed, if China keeps developing atthe current rate of growth, the number of

vehicles on China's roads will more thandouble to at least 200 million by 2020.Moreover according to a study, if China'seconomy continues to expand rapidly andrely heavily on coal and other fossil fuelsuntil the middle of the century, its powerdemands could exceed what the entireplanet can withstand.

This perspective leads both China andthe EU to the conclusion that a new andsustainable model of growth is essentialand should encourage European compa-nies to have a stronger foothold inChina's growing clean technology mar-ket. In this framework, the EuropeanCommission encourages the EU MemberStates to move towards the Chinesegreen economy by implementing a set ofconcrete actions such as the developmentof instruments or packages of policies

which are meant to facilitate the setting-up and the activity of European smalland medium enterprises in China.

Various bodies on the EU side play in-deed a crucial role: the European UnionChamber of Commerce in China(EUCCC), the EU Chambers of Com-merce and Eurochambers.

It is easy to guess how important it is for the

EU Member States to try to increase the

cooperation with the Chinese collosus in the

development of technologies with low energy

consumption, in particular by investing in China

This article originally appeared in New Europe's - 2011 Greening Economies: China special edition


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y 2050, Asia will have morethan five billion people, whilethe European Unions shareof the global population willdecline from 9% to 5%. An-

nual economic growth in Asia over thepast 30 years has averaged 5%. Its GDP isprojected to increase from $30 trillion toabout $230 trillion by 2050. The balanceof power in the twenty-first century isshifting in social, economic, and, ar-guably, political terms from west to east.

Western anxieties about a loomingAsian century stem largely from theprecedent of twentieth-century geopoli-tics, in which the West dominated less-

developed nations. But this dynamic isoutdated, and Asia would suffer as muchas the West from any attempt to emulatethe British and American empires of thenineteenth and twentieth centuries.

As Asian economic growth has in-creased, consumption in the region hasalso risen. Multinational companies and

Western countries both of which standto benefit greatly from Asias increasingconsumption have encouraged Asians toaspire to a Western standard of living,

with its high energy usage, electronic toys,and meat-heavy diet. Asian governmentsseem willing partners in this one-dimen-sional approach to development, and areeager to lead global economic growth. Yetit is neither desirable nor possible for

Asians to consume in the way that West-erners do, and Asian governments should

face up to this reality.In previous centuries, Western eco-

nomic growth was characterized by acomparatively insignificant minority hav-ing unfettered access to resources, and wasthus built on fueling consumption. This

was, after all, the idea behind colonialism,

which succeeded economically by under-pricing resources or even obtaining themfor free.

But the planet simply cannot supportfive billion Asians consuming like West-erners. The earths regenerative capacity

was exceeded more than 30 years ago, andwe now use 30% more resources than theplanet can sustain. Although we know thisto be the case, the vast majority of West-ern economists and institutions continueto encourage China and India to consumemore.

Asian governments must reject thistrend, but, having been intellectually sub-servient for so long, it is not clear thatthey will. Western governments, for theirpart, must stop being intellectually dis-honest. Indeed, they must openly ac-knowledge the impossibility of supporting

demands for ever-higher material con-sumption in Asia without irreversiblychanging our planets climate and re-source pool. Trade relations are far lessimportant than establishing a dialogue be-tween the West and Asia that addresseshow to live within limits.

For example, Western leaders concernedabout climate change must understandthat economic instruments like emissionstrading are not a panacea. For Asia, re-source management must be at the centerof policymaking, which may include Dra-conian regulations, and even bans. Other-

wise, resource shortages will push upcommodity prices and create crises infood, water, fisheries, forests, land use, andhousing, thereby leading to greater socialinjustice.

The West must help Asia to challengethe idea that consumption-led growth isthe only solution, or even a solution at all.

And Asia must adopt three core principlesto avert environmental and social crises.First, economic activity must be second-ary to maintaining resources. Second,

Asian governments must take action to

re-price resources and focus on increasingtheir productivity. Third, Asian statesmust recast their central role as being todefend our collective welfare by protect-ing natural capital and the environment.

All of this implies that Asian govern-ments will need to play a far greater rolethan officials in Europe or America inmanaging both the macro-economy andpersonal consumption choices, which willrequire very sensitive political choices re-garding individual rights, as well as poli-cies that powerful business interests many of them Western will resist.

Asian governments will sometimes needto set strict limits on resource use andhave the tools to ensure that society re-spects these limits. They should begin, for

example, by stressing that car ownershipis not a human right. The debate aboutrights must emphasize constraints, not theutopian definitions of Western politicians.

These policy options fly in the face of Western liberal-democratic orthodoxy.But Western policymakers should notreact negatively to these sorts of policychoices made by Asian governments, normisconstrue them as anti-capitalist oranti-democratic. The West must realizethat its consumption-led economic systemhas exhausted the worlds resources, andthat it is not a viable option for most

Asian countries, whose governments mustemploy different political methods to cre-ate more equitable societies.

But Western policymakers should not react

negatively to these sorts of policy choices madeby Asian governments, nor misconstrue them as

anti-capitalist or anti-democratic


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n 1997, the United NationsFramework Convention on Cli-mate Change (UNFCCC)adopted the Kyoto Protocol anagreement among signatory

tates to reduce greenhouse-gas emis-ions. In 2012, however, the Clean De-velopment Mechanism, a system of

arbon credits in which each credit rep-esents a countrys right to emit one tonf carbon dioxide (CO2), is set to expire.

While policymakers struggle to extend it,arbon-finance specialists are seeking

market-driven alternatives. Progress onhe issue has stalled: at the last two UN-

FCCC conferences in Copenhagen andCancn, members failed to arrive at angreement on emission cuts.Reduction, or mitigation, of CO2

missions is not easy. It is also expensive.The typical measures carbon capturend sequestration (CCS), energy conser-ation, and greater reliance on renewablenergy sources like solar and wind arell costly enterprises, often out of reachor poorer countries, where air pollutionan be a serious problem.But recent climate science may offer

hope. Research indicates that black car-bon (the soot from inefficient combus-tion in stoves , fires, engines, etc.) belongsto a class of substances that have an ex-tremely high global warming potential.In particular, black carbon absorbs sun-light and radiates heat, thereby meltingice and snow.

Black carbon in the atmosphere alsocauses respiratory ailments, as Asiancities such as Shanghai, Bangkok, andManila have shown. Fine soot particlescan penetrate the upper defenses of therespiratory tract and settle deep in thelungs. Children, the elderly, and people

with heart and lung diseases are at high-est risk.

These substances exacerbate climatechange, but they linger in the air only for

short periods and are easy to remove.Black-carbon reduction thus offers de-

veloping countries an opportunity to mit-igate climate change at a fraction of thecost of full CO2 reduct

Documents

The World Energy Review : A New Europe special issue