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Does Europe need a renewables target? – yes, but it should be defined in terms of innovation

February 8th, 2014 by Georg Zachmann, Research Fellow, Bruegel

The discussion on whether the EU needs a new renewables target beyond 2020 is gaining traction. The proponents argue that a target for 2030 would give the visibility needed for long-term investments all along the value chain (e.g. into network and storage infrastructure). That is, without a firm political timetable for the roll-out of renewables, the cost of deployment might be much higher. The opponents of firm deployment targets argue that having such targets under an emission trading system is overly costly (e.g., Robert Stavins) and that artificially high demand is creating excess rents in those parts of the value chain where supply is slow to react.
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European power utilities: under pressure?

January 22nd, 2014 by Koen Groot, Clingendael International Energy Programme

The European power sector is challenged by a series of developments. These range from planned changes to the institutional environment and the functioning of the market, to unforeseen external shocks like the decline of demand as a result of the economic and financial crisis and the German decision to completely phase out nuclear energy after all. The challenges also include the unexpected results of foreseeable developments, such as the impact of renewable energy sources (RES) on business models terms of profit margins and system requirements.
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The French Disconnection: reducing the nuclear share in France’s Energy Mix

January 15th, 2014 by David Buchan, Oxford Institute for Energy Studies

France has entered into a national debate about its energy transition to meet its long range target to reduce CO2 emissions by 75 per cent by 2050, while maintaining security of supply and the competitiveness of French industry. It is a muddled debate, because the trigger for it is an electoral commitment by President François Hollande to reduce the nuclear share in the country’s electricity mix from over 70 per cent today to around 50 per cent by 2025, a commitment that few people in France – and maybe not even the president himself – regard as sensible or feasible to carry out to the letter. Indeed the origin of the commitment is almost an accident of electoral politics. And the national debate has done little to clarify the issue. Continue reading »

Who Gets Big Subsidies? Not Renewables

January 5th, 2014 by Fereidoon Sioshansi, EEnergy Informer

Renewables often get blamed for getting big subsidies. As reported in the Dec 2013 issue of this newsletter, Europe’s biggest 10 utilities recently called for an end to all renewable subsidies. Those who dislike subsidies on fiscal or ideological reasons must be reminded of two facts that are not widely known: Virtually all forms of energy extraction and production receive some form of subsidy, tax break or other incentives; and the biggest culprits are not renewables but fossil fuels.
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Making the internal electricity market work

December 20th, 2013 by Martin Godfried, University of Amsterdam

At first glance, the integration of the internal electricity market seems to be on track. However, when taking a closer look it is clear that without an extra effort, much of the work done over the last decade may be at risk.
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The Gains And Pain Of Energiewende

December 2nd, 2013 by Fereidoon Sioshansi, EEnergy Informer

Germans, as everyone knows, are an efficient lot. Once they put their mind to it, they deliver results. For some time, Germany has been on the path of increasing its reliance on renewables – the marching order was further fortified when Chancellor Angela Merkel decided to immediately shut down half of the country’s operating reactors following the Fukushima disaster in 2011 and hastily phase out the remaining ones by 2022.
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A Proposal for Reforming an Electricity Market for a Low-Carbon Economy

November 8th, 2013 by Raphael Heffron, University of Stirling

The UK is currently reforming its electricity sector. This gives rise to some pertinent questions: Do the reforms go far enough and can more reforms be expected in the near future?

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How Much Should Self-Generators Pay For The Grid?

November 1st, 2013 by Fereidoon Sioshansi, EEnergy Informer

That is among the questions being asked not just in the US but nearly in any country where self-generation, in one form or another, already is or is likely to become cost-effective. It is also a key question in the context of the net energy metering (NEM) debate in the US or generous feed-in-tariffs (FiTs) that are being scaled back in the EU and Australia.

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Empirics of energy competitiveness

October 10th, 2013 by Georg Zachmann, Research Fellow, Bruegel

The loss of competitiveness because of elevated energy costs is concentrated in a limited number of sectors. The cost of subsidising energy-intensive companies might be greater than the benefits. Continue reading »

French early plant closure and nuclear cutbacks

September 30th, 2013 by François Lévêque, Ecole des mines de Paris

Unlike Germany, France has not decided to phase out nuclear power. But it plans to close the Fessenheim nuclear power plant, in Alsace, ahead of schedule. It has also made a commitment to reduce this technology’s share in its future energy mix. Underpinning these decisions we find the same factors as in Germany: a party built around combating nuclear power; a more acute perception of nuclear risk in the aftermath of the Fukushima-Daiichi disaster; electoral competition; and political alliances which make allowance for risks as perceived by the general public, not as calculated by experts. Just as in Germany we shall see that decisions on targets and the exit schedule have been based mainly on approximation, without paying much attention to economic factors. Continue reading »