Renewables: the Only Path to a Secure, Affordable and Climate-Friendly Energy System by 2030
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RENEWABLES: THE ONLY PATH TO yths about nuclear energy M A SECURE, AFFORDABLE AND CLIMATE- FRIENDLY ENERGY SYSTEM BY 2030 Author: Uwe Nestle – Co-author and final editing: Silvia Brugger European energy policy is facing major challenges. In order to and social burdens; they also reduce energy import dependency tackle the climate crisis, a dramatic reduction in greenhouse and hence increase energy security, strengthen local economies, gas emissions is essential. At the same time, security of sup- and create jobs. While fossil fuels and nuclear power will become ply and affordable energy for a competitive economy must more expensive, renewable energy will become cheaper. This is be ensured. Many conventional power plants in the European even more true if the external costs are factored in. Together Union are old and will need to be replaced or modernised in with a reduction of energy consumption by increasing energy ef- the coming years and decades. In the light of these challenges, ficiency, total energy costs for European industries and citizens economic and environmental goals sometimes appear to require could even fall. Choosing the renewable path thus pays off in the opposite paths of action. medium and long term. This paper demonstrates, however, that an expansion of renewable Ambitious and nationally binding 2030 targets for emission energy sources is the only path to a secure, affordable and cli- reductions, renewable energy deployment and energy efficiency mate-friendly energy system until 2030 and beyond. Renewables are necessary to ensure an energy transition for a European not only drastically reduce emissions and other environmental Union for Renewable Energy. 15 Rue d’Arlon, – B-1050 Brussels – Belgium T +32 2 743 41 00 F 32 2 743 41 09 E [email protected] W www.eu.boell.org Renewables: The Only Path to a Secure, Affordable and Climate-friendly Energy System by 2030 Commissioned and published by the Heinrich-Böll-Stiftung, European Union Author: Uwe Nestle Co-author and final editing: Silvia Brugger Abstract: Economic and environmental goals sometimes appear to require opposite paths of action. This paper demonstrates, however, that there is a single solution to Europe’s threefold challenges of achieving climate protection goals while ensuring security of supply and affordable energy for a competitive economy: an expansion in the share of renewable energy. Renewables not only drastically reduce emissions; they also create jobs and offer real medium- and long-term savings to the European economy. Heinrich-Böll-Stiftung Commissioned and published by the Heinrich-Böll-Stiftung, European Union, Brussels Author: Uwe Nestle Co-author and final editing: Silvia Brugger Printed in Belgium, April 2014 © The authors, the Heinrich-Böll-Stiftung, European Union, Brussels All rights reserved English proofreading and language editing: Katy Nicholson Print production: Micheline Gutman Cover picture: © Shutterstock D/2014/11.850/1 This publication can be ordered at: Heinrich-Böll-Stiftung, European Union, Brussels 15 Rue d’Arlon B-1050 Brussels Belgium T (+32) 2 743 41 00 F (+32) 2 743 41 09 E [email protected] W www.eu.boell.org CONTENTS Executive Summary 4 Policy Recommendations 5 1 The Challenges Facing European Electricity Supply 6 2 The Need for the Renewal of the Energy Infrastructure 8 3 The Failure of the Existing Electricity Market 9 4 Production Costs for Renewable and Conventional Power Generation 13 5 The Hidden Costs of Conventional Energy: Environmental Damage 18 and Conventional Subsidies 6 The Additional Costs of Balancing Renewable Energy Fluctuations 20 7 Further Advantages of the Expansion of Renewables 23 8 Documents Accompanying the EC White Paper on A 2030 Framework 24 for Climate and Energy Policies List of Abbreviations 27 References 27 4 RENEWABLES: THE ONLY PATH TO A SECURE, AFFORDABLE AND CLIMATE-FRIENDLY ENERGY SYSTEM BY 2030 EXECUTIVE SUMMARY European energy policy is facing major to become more expensive and for renewables challenges. In order to tackle the climate crisis, to become cheaper, it is likely that most renewa- a dramatic reduction in greenhouse gas (GHG) bles will cost less than conventional energy in the emissions is essential, while also keeping in mind future (Chapter 4). This is even more true if the the considerations of security of supply and afforda- external costs of climate damage or insurance bility. The energy sector is of the utmost importance against the risk of nuclear accidents, for example, in this respect, given that energy consumption is by are factored in (Chapter 5). The need for back-up far the largest source of GHG emissions (Chapter 1). systems for variable renewables such as wind and A reduction of energy consumption by increasing solar does not change this calculation. There are energy efficiency is the greatest and easily accessi- a number of inexpensive technologies with huge ble source of cost reduction. Furthermore, there is potential, the use of which would represent only excellent technical potential for change within the a small share of total electricity production costs power sector, as well as relatively small GHG reduc- (Chapter 6). tion costs. Many conventional power plants in EU Member States are old and will need to be replaced Often forgotten, but very much worthy of or modernised in the coming years and decades. emphasis, is the fact that a rapid expansion of re- This will require sizeable investment, which will newable energy sources has a number of important influence future energy prices and costs – with or advantages. Besides reducing GHG emissions and without climate protection policies. This is both a other environmental and social burdens, renewa- challenge and a great opportunity. If the necessary bles reduce energy import dependency and costs, modernisation of Europe’s energy infrastructure, in increase energy security, strengthen local econo- particular power plants, electricity grids, and heat- mies, and create jobs (Chapter 7). ing systems, is undertaken in a climate-friendly manner, additional costs can be avoided. On the The documents accompanying the White other hand, conventional modernisation based on Paper on a 2030 framework for climate and energy fossil and nuclear energies will lead to high envi- policies presented by the European Commission ronmental costs, and potentially to costly stranded at the end of January 2014 show that while energy investments (Chapter 2). prices will continue to rise, this increase will not be due to renewables. Nevertheless, it is impor- While it is clear that investment in new and tant to note that the Impact Assessment of the environmentally sound power plants is essential, Commission presents misleading figures that electricity markets in many Member States are make renewables appear more expensive than failing to send the economic signals necessary for they are in reality. In particular, the cost estimates investment. Additional funds are needed if invest- for nuclear power plants featured in the impact ment is to be made, whether in conventional or assessment are far too low, while those for solar renewable plants (Chapter 3). In order to decide PV are much too high. In the event that realistic to facilitate new conventional power plants or cost estimates were used, it is highly likely that renewables, the full costs of the new installations a renewable strategy would prove to be much need to be compared. A number of studies show cheaper to implement than a conventional strat- that onshore wind energy – soon to be joined by egy (Chapter 8). Together with energy efficiency solar PV – is no more expensive than conventional measures, total energy costs for European indus- power. Since the trend is for conventional energy tries and citizens could even fall. 5 POLICY RECOMMENDATIONS 1. Nationally binding targets for renewable 5. Electricity grid planning should be based energy result in stable regulatory conditions that on long-term national targets for renewables deliver investment certainty and thus contribute to that help identify the infrastructure needed for decreasing the cost of renewable energy technolo- a transformation to a renewables-based energy gies. Ambitious and binding EU-wide and national system. Other forms of flexibility, beyond grids, 2030 targets for emission reductions, renewable en- such as demand-side management should be con- ergy deployment and energy efficiency are necessary sidered during the process of grid planning. to achieve ambitious climate goals and to ensure a cost-effective energy transition in Europe. 6. Instead of building new conventional pow- er plants, flexible, controllable generation and 2. Support schemes and a stable framework demand capacity at a comparatively lower in- for investments in renewables will also be neces- vestment cost should be fostered. These back-up sary beyond 2020. The feed-in tariff for renewable options include demand-side management, ret- energy sources has proven successful to support rofitting generators in existing hydropower plants, emerging and existing technologies and to bring biomass-fired power plants, existing emergency down costs of renewable power generation. generators, batteries, and other new storage op- Regional differences as well as individual coun- tions. Together with renewable energy sources tries’ starting points should allow for Member such as wind and solar power, they can fully substi- States to decide on their respective support tute conventional fossil and nuclear power plants scheme design, depending on the technology, size at a lower total cost. and national market conditions and their adapta- bility to technological and price developments. 7. External costs such as environmental dam- The upcoming Guidelines on Environmental and age caused by energy consumption should be Energy State Aid should provide sufficient flexi- fully internalised. The principal objective of the bility for Member States to decide upon the most EU Emissions Trading Scheme (ETS) is to inter- adequate type of support instrument. nalise the external costs of GHG pollution. However, the carbon market does not work prop- 3.