EU Energy Policy Blog

The megawatts invested in capacity to produce electricity from renewable energy and the megawatts/hours produced from this capacity are growing faster than expected within the European Union. That is definitely good news for climate change mitigation. However, what about the cost of such policy? Evaluating the cost of renewable sources within the energy mix is not an easy task. A key ingredient that needs to be considered is the intermittency of renewable energy sources. It affects the financial balancing of the electricity industry where fossil fuel plants are to be built and operated to replace intermittent sources at dates they are not producing.

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In its February 15 report ‘Resurging North American oil production’, Citigroup’s analysts claimed that the shale gas boom was set to morph into a shale oil boom. The report said: “The concept of peak oil is being buried in North Dakota, which is now leading the US to be the fastest growing oil producer in the world. The belief that global oil production has peaked, or is on the cusp of doing so, has underpinned much of crude oil’s decade-long rally (setting aside the 2008 sell-off)”.

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Forget the gloom about fossil fuels. True, oil is scarce; granted, coal is dirty – but natural gas is clean and plentiful. In terms of local air pollution, gas burns very cleanly indeed. In terms of greenhouse gases it emits half what coal does, per KWh generated. Unlike oil, or even coal, the world’s gas reserves are expanding dramatically. The coming decades could be a golden age for natural gas, as the International Energy Agency explored in a recent report by this title. However, it is doubtful that Europe will share in this new gas era.

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On March 12 the CEOs of Airbus and of eight other European aviation and airline companies urged the leaders of France, Germany, Spain and the UK to solve a dispute with the US, China, India, Russia and 23 other countries over the inclusion of foreign airlines in the European Emission Trading Scheme (ETS) that was extended to the air industry on January 1, 2012. The European CEOs warned that the dispute could lead to foreign retaliation in the form of suspensions or cancellations of orders for European aircrafts that would cost jobs to Europe.
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The volume of unused allowances in the European emission trading scheme (EU ETS) will likely rise to 2.7 billion tonnes by 2013/2014. Nevertheless – the carbon price has remained for many years near 15 €/t because market participants bank unused allowances for future use. At the end of 2011 the carbon price declined to 7 €/t. This is often interpreted attributed to lower expectations about future scarcity in the EU ETS. We offer an additional interpretation. Continue reading »

Renewable energy resources, according to the European Wind Energy Association (EWEA), are poised to meet over half of EU’s electricity demand by 2030. In a statement released in mid-January 2012, Justin Wilkes, EWEA’s Director of Policy, said that the EU had already achieved the 21% target set in a 2001 directive for the end of 2010 by generating somewhere between 665-673 TWh from renewable resources, or 21% of total EU consumption of 3,115-3,175 TWh in 2010.
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