Nov 23

Uncertainty is Harder than Energy Policy Rules for Utilities

Businesses and people can adjust to change, but they need to know what that change it. Seems pretty basic and obvious, right? Well, the same is being said by European utilities: they can adjust to “ambitious” climate change and energy regulations, but they need to know what they are, soon.

Utilities make investments with 30+ year time horizons for equipment and plants. They are struggling with what energy investments to plan for and implement in the next several years and decades with the uncertainty about what legislation and regulations are coming. Will it be a better investment to build more coal power plants or invest in smart grid, efficiency and wind production? It all depends on the energy and climate change rules. The utilities are saying they do not mind ambitious regulations to cut heat-trapping gases, just tell them what they are. Then, they can plan and move forward.

Utilities Urge Europe to Propose 2030 Targets for Carbon, Efficiency (Bloomberg full article):

Three European utilities urged European Union regulators to propose an “ambitious” climate and energy package for 2030, setting binding targets for emissions reduction, energy efficiency and renewable sources.

“The power industry requires long-term predictability of the EU’s commitment on the decarbonization of the energy system, in order to make the necessary investments in technological innovations and the low-carbon energy supply chain to bring down the costs,” Dutch energy company Eneco Holding NV, Denmark’s Dong Energy A/S and U.K.’s second-largest electricity producerSSE Plc (SSE) said in a statement today.

The 27-nation EU has a binding target to reduce greenhouse gases by 20 percent in 2020 compared with 1990 levels and wants to limit them by as much as 95 percent by 2050. In a policy paper published earlier this year the European Commission, the bloc’s regulatory arm in Brussels, said the most cost-effective way to reduce pollution would be to cut carbon discharges by 40 percent in 2030 and by 60 percent in 2040.

The commission document, known as the EU low-carbon roadmap, also showed that carbon-dioxide discharges may fall by 25 percent by 2020 compared with 1990, as long as the EU steps up energy-saving measures.

‘Significant Policy Gap’

“The European power sector should do its share by investing in a secure, affordable and carbon-neutral power supply in Europe by 2050,” Eneco, Dong Energy and SSE said.“Current EU policies will not allow the EU to meet its objective of 80-95 percent emissions reduction by 2050. The coalition believes that this is largely due to the significant policy gap between 2020 and 2050.”

The price of carbon allowances in the bloc’s emissions trading system, known as the ETS, may fall if new policies lead to “dramatic” energy efficiency gains, Bloomberg New Energy Finance said in April. Permits for delivery in December traded at 9.04 euros ($12.24) a metric ton on the ICE Futures Europe exchange in London today, down 37 percent this year on concern that the market is oversupplied.
The ETS is a cornerstone of Europe’s climate initiative, putting limits on more than 11,000 utilities and manufacturing companies, including Germany’s biggest utility EON AG and the continent’s largest oil company Royal Dutch Shell Plc. It leads to a cap in 2020 that would be 21 percent below 2005 discharges.
The commission is due to present next month a plan for the bloc’s energy sector by 2050. The policy paper will focus on decarbonizing the EU economy after 2020 while guaranteeing competitive markets and security of supply, Philip Lowe, director general at the commission’s energy department, said last month.
Eneco, Dong Energy and SSE are “asking for more clarity over the medium-term and encouraging the European Commission to present an ambitious Energy Roadmap 2050, which addresses the current discrepancy between long-term energy and climate objectives, mid-term milestones and current short-term policies,” according to the statement today.

About the author


Energy Blogger

The world is changing! BioFuel, Solar and Wind Energy are necessary to fill the energy needs of our World. I want to be part of this change and I want to be informed. This blog is my scratch book, my collection of interesting news, projects and events.

Twitter: @newenergy_blog

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