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Renewable Energy Developments in Europe and the EU Targets

Renewable Energy Developments in Europe and the EU Targets. Dr. Paolo Frankl Head, Renewable Energy Unit International Energy Agency. Convegno “Le Incentivazioni alle fonti rinnovabili e gli obiettivi europei: analisi e proposte” GSE Rome , 27 April 2009.

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Renewable Energy Developments in Europe and the EU Targets

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  1. Renewable Energy Developments in Europe and the EU Targets Dr. Paolo Frankl Head, Renewable Energy Unit International Energy Agency Convegno “Le Incentivazioni alle fonti rinnovabili e gli obiettivi europei: analisi e proposte” GSE Rome, 27April 2009

  2. Drivers for an energy transition and long-term global objectives Current trends and EU targets Need for effective and efficient policies Impacts of the current crisis and outlook Contents

  3. WEO 2008 Energy-related CO2 emissions 45 550 450 Gigatonnes Policy Policy 40 Scenario Scenario Nuclear 9% CCS 14% 35 Renewables & biofuels 23% Energy efficiency 30 54% 25 20 2005 2010 2015 2020 2025 2030 [Source: WEO 2008] Reference Scenario 550 Policy Scenario 450 Policy Scenario Current trends in energy supply and use are patently unsustainable, economically, environmentally and socially In both 550 and 450 policy scenariosenergy efficiency and renewables account for more than 75% of total CO2 emission reductions 7

  4. Renewable share of global electricity in WEO2008 450 policy scenario 1% 100% 1% 9% 18% 16% 4% 5% 40% 15% Wind 75% 22% Other Renewables Biomass & Waste 20% Hydro 18% 50% Nuclear 6% Gas Oil 19% Coal 25% 2% 41% 21% 0% 2006 2030 [Source: WEO 2008] Renewables account for 40% of global electricity in 2030

  5. The Challenge: EU Targets • 20/20/20 Targets by 2020 and burden sharing • 10% of energy from RE in transport [Data Source: RES EU Directive Proposal, 2008 ]

  6. Current Trends in EU27 - Electricity Indicative RES-E target: 34% by 2020 [PRIMES Policy Scenario] [Data Source: Reference Scenario WEO 2008]  Effective and efficient policies are needed to achieve the objective

  7. Global Renewable Energy Markets and Policies Programme (GREMPP) • Comparative assessment of effectiveness and efficiency of renewables support policies in OECD countries plus Brazil, Russia, India, China, South Africa (BRICS) • Chosen policy effectiveness indicator on a yearly basis: Incremental RE generation in a given yearRemaining additional realisable potential (by 2020)

  8. Achieved (2005) and Additional realisable mid-term potential (2020) for RES-Electricity Achieved (2005) and additional realisable mid-term (up to 2020) potential for RES-Electricity by country (OECD+BRICS) – in absolute terms (TWh) Source: IEA & EEG, 2008

  9. Effectiveness IndicatorWind on-shore Average 2000-05 vs. average 2004-05 Source: IEA & Fh-ISI, 2008

  10. Effectiveness & EfficiencyWind On-shore 2005 (OECD & BRICS) 18% EU Countries Non EU OECD BRICS ? ?? ? 16% 14% 12% 10%  Effectiveness Effectiveness indicator 2004/2005 8% 6% 4% 2% 0% 0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00 16,00 18,00 -2% Annualised renumeration in [US cent / kWh] Efficiency Source: IEA & Fh-ISI, 2008

  11. Effectiveness & EfficiencyWind On-shore 2005 (OECD & BRICS) Long-term predictable incentives(FIT or FIP)+Appropriate framework Higher risk (TGC)+Non-economic barriers Source: IEA & Fh-ISI, 2008

  12. Effective policies only in a limited set of countries Sometimes depending on specific technology Perceived risk, more than profit, is key to policy effectiveness & efficiency Price support can not be adequately addressed in isolation; non-economic barriers must be addressed concurrently Grid barriers Administrative barriers Social acceptance issues Other barriers (e.g. training, information, financial, etc.) Effective systems have, in practice, frequently been the most cost efficient Move beyond ‘FIT vs TGC’ debate Both systems show success and failures depending on specific country framework and/or technology Main Lessons Learnt

  13. Recent TrendsPolicy Effectiveness IndicatorWind and PV [Data Sources: IEA Deploying Renewables and Renewables Information, 2008 ]

  14. Recent TrendsNon-Hydro Renewable Electricity [Data Sources: IEA Renewables Information, 2008 ]

  15. Remove non-economic barriers to improve market functioning Establish predictable support framework - to attract investments Set up transitional incentives decreasing over time – to foster and monitor technological innovation and move towards market competitiveness Ensure specific support in function of technology maturity to exploit potential of large RET range With increasing mass-scale RET penetration impact on overall energy system must be taken into account Key Principles for Effective Renewable Energy Policies Continuity Certainty

  16. Fostering RE’s transition towards mass market integration 4. Technology-neutral competitionTGC, Carbon trading (e.g. EU ETS) Mature tech (e.g. hydro) 3. Shared/imposed market risk, guaranteed minimum but declining supportFIP, TGC (technology banding) Market Deployment Low cost-gap (e.g. wind onshore) 1. Development RD&D financing, capital cost support, investment tax credits, rebates, loan guarantees 2. Stable, low-risk, shelteredFIT, FIP, Tenders High cost-gap (e.g. PV) Prototype & demo stage (e.g. 2nd gen biofuels) Time Development Niche markets Mass market [Source: Adapted from IEA Deploying Renewables, 2008 ]

  17. Impacts of the crisis 5% Growth 59% Growth $155bn $148bn 58% Growth 68% Growth $93bn $60bn $35bn 2004 2005 2006 2007 2008 5xincrease from low level by around between 2004 and 2007 10%of global energy infrastructure spend But the top-line hides what is happening in the past few quarters Source: New Energy Finance, 2009

  18. RE policy framework is improving in several EU countries, including Italy However, additional efforts needed to achieve targets and improve effectiveness and cost-efficiency Recognise major potential of RETs Focus on coherent implementation of key policy design principles Address non-economic barriers, in particular in the current economic downturn conjuncture Conclusions

  19. Economic crisis must not make us lose focus on long-term goal of a more secure and sustainable energy future Energy technology is key to this future An integrated and strategic policy approachis required that bridges the short to the long-term Initial emphasis on energy efficiency Roadmaps and international co-operation Increasing RD&D funding for new technologies Tailored deployment policies, including for renewables Clean Energy New Deal can provide win-win benefits Recommendations Nobuo Tanaka, IEA Executive Director G8 Environment Ministers meeting, Siracusa, Italy22 April, 2009

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