We are just into the second month of 2014 and controversy has already raised its head.

Towards the end of January, the European Commission (EC) released its much-awaited Energy & Climate Package, its policy framework that establishes targets up to 2030. Two of the goals of particular interest in my opinion are the 40 per cent reduction in greenhouse gas (GHG) emissions (compared to the 1990 level) and an EU-wide binding target of 27 per cent for renewable energy.

Neither on the surface appears to be anything new compared to the Commission’s previous Energy & Climate Package, except the targets are a bit higher. However, as the old adage says, “the devil is in the detail’.

Contrary to its predecessor, the 2030 Energy & Climate Package makes a significant distinction by not setting binding renewable energy targets for individual Member States, keeping the target purely at the EU level.

A press release from the EC, released after the announcement, said: “An EU-level target for renewable energy is necessary to drive continued investment in the sector. However, it would not be translated into national targets through EU legislation, thus leaving flexibility for Member States to transform the energy system in a way that is adapted to national preferences and circumstances.” – read current economic climate.

Clearly this would give EU countries that still have electricity generation systems heavily reliant on fossil fuels, and coal in particular, some breathing space in terms of transitioning their systems to lower-carbon alternatives, so I’m sure that countries like Poland breathed a sigh of relief when they saw the framework.

Another potentially interesting aspect of this policy framework arises because it essentially uncouples the GHG emissions reduction target and the renewable energy target at the national level, i.e. unlike the renewables target individual Member States will have to set mandatory targets for GHG emissions reduction.

Thus, could this new EU framework actually provide the long-awaited policy impetus to kick-start the commercialization of carbon capture and storage (CCS)?

The Carbon Capture & Storage Association in the UK certainly is optimistic. In a statement it said: “It is absolutely critical that Europe sets an ambitious target for emissions reductions for 2030. This must remain the cornerstone of the EU’s response to climate change and will be vital in driving future investment in all low-carbon technologies, including CCS.”

It also recommends that the renewables target is either dropped or expanded into a sustainable energy target which includes CCS, providing Member States with the flexibility to meet targets at the lowest cost to consumers.

However, this is unlikely to happen because subsequently MEPs in the European Parliament voted in favour of not only having a mandatory renewable energy target for each Member State, but increasing the target to 30 per cent at the EU-level.

Although the parliamentary vote is not binding it clearly sends a strong signal to EU governments ahead of next month’s heads of government summit, where the EU’s climate and energy targets for 2030 will be debated – I anticipate the debate being a heated one. Read our analysis of the situation on p.4-5.

Another recent example of what some see as EU meddling in Member State affairs is this month’s request by the EU’s antitrust chief Joaquin Almunia for the UK government to clarify why state aid is needed to build its new Hinkley Point C nuclear power plant.

Almunia’s comments follow a challenge by the EC at the end of last year against the British government’s assertion that power price guarantees and state-backed loans for the £16 million ($26.5 million) Hinkley Point C project are legitimate aid. In response, the UK government tried to reassure by saying the Commission’s announcement “is standard for large investment projects and was always part of the process for Hinkley.” However, this latest intervention may raise serious doubts over whether the deal will be able to progress under its present terms.

Looking at the wider picture, the new nuclear-build programme is a centre-piece of the UK’s energy strategy, so what would it mean if the Hinkley Point deal fell through? Could it potentially derail the whole electricity market reform process and energy strategy?

alt   Dr. Heather Johnstone
Associate Publisher
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