EU Energy Policy Blog

Given the potential for gas to yield environmental benefits at a lower cost than alternatives like renewables and CCS, allowing a gas glut to persist represents a policymaking failure. Because it requires especially costly infrastructure in the form of pipelines or LNG in order to reach consumers, the unique challenge of natural gas has always been to develop demand in concert with supply. Historically, this has never been accomplished at scale without significant government involvement. Today’s situation is no different. Governments worldwide need to support growth in global gas demand through actions in several main areas.
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The absence of federal leadership to tackle GHG emissions in the US has left the room free for regional and state level policy initiatives. These initiatives include policies to reduce and monitor GHG emissions, increase energy efficiency and promote renewable energy. In particular, Renewable Portfolio Standards (i.e., a target related to the share of electricity produced from renewable energy sources) have experienced a large success across the US. They have been adopted to date by about 30 American States. How can we explain this trend ?
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Renewable energy has been an area of considerable policy activity in the European Union (‘EU’) during the last decade. In 2009, EU Directive 2009/28/EC (the ‘second Renewables Directive’) established an overall ‘binding’ target for the EU of sourcing 20% of its energy from renewable sources by 2020, based on individual member state targets. However, one issue that looms large over the EU’s climate change crusade is the mechanism for enforcement of its own targets.
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Two neighbors, contrasting policies. The fate of coal and the potential cost of carbon emissions in the US remain ambiguous at best, which means that if you are in the coal business, you are in limbo. Canada, on the other hand, is intent on either cleaning up its dirty old coal-fired plants or, failing that, shut them down. At least that is the plan, and if you are in coal business in Canada, you know what the game plan is, even if you do not like it.
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Three interrelated developments in the world’s energy system and energy-related emissions should be recognized as critical signals regarding international action on climate change: (1) coal has been the fastest growing fossil fuel for the past 7 years; (2) the carbon intensity of the world’s total primary energy supply has been increasing in the past decade; (3) previous emissions reduction efforts have fallen short and emissions have been (and still are) rising in almost all countries in the world.
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