The 53 page policy document, published in late November as a "Communication from the Commission," is titled "Energy for the Future: Renewable Sources of Energy." It endorses the European Wind Energy Association's recently revised target of 40,000 MW of installed wind power capacity by 2010 and incorporates this figure into its primary scenario for future energy use. Furthermore, the document proposes that 10,000 MW of the wind goal be installed under a publicly funded "campaign for take-off" of all renewable energy sources to enable them to reach desired levels of market penetration. Specific reference is made to offshore wind energy in connection with the campaign.
The Action Plan is expected to be adopted by energy ministers of member states in the spring. Its aim is to provide a "harmonised framework" for national policy initiatives to meet a series of pan-European goals for renewable energy sources which are outlined in the document. The White Paper refers to Commission plans for a Directive to achieve this. Currently, though, the plans have apparently not advanced further than "examining closely the different schemes [for stimulating a market for renewable energy] proposed or introduced by the member states."
Without a harmonised policy for market stimulation of renewables, there is a risk of "significant trade distortions not related to efficiency," warns the Commission. A number of different policies now operate in the EU, some of which are listed in an annexe to the White Paper. They range from capital subsidies in several countries, to mandated premium prices in Germany, to tax breaks in Holland and Denmark, to obligations for a percentage of renewables content in electricity supplies in the UK. Trade in "green power" credits also started in the Netherlands this month.
Wind's average annual installation growth rate has been 36% over the past five years, and has now reached an annual rate of 1 GW a year, states the Commission. Even if the growth rate suddenly stagnated, wind power would still reach 18 GW of installed capacity by 2010, it adds, given that installed wind capacity in Europe is currently about 4500 MW. On "the strength of these trends" the White Paper describes as "ambitious" but "realistic" the contribution of 40 GW of wind power estimated by the European Wind Energy Association (EWEA) in its plan for development of renewable energy sources for the EU by 2010. This allows for a halving of the current 36% growth rate.
Should the target of an additional 36,000 MW installed capacity be met -- and the growth of other renewables follow the White Paper's documented scenario -- wind can look forward to supplying some 2.8% of the EU's electricity in 2010, an increase of 2.6% on its 1995 share. With a total renewable energy sources contribution to EU electricity production estimated at 23.5% in 2010, wind's 2.8% share would place it third in a renewables league table topped by hydro at 12.4%, followed by biomass at 8%. Meeting this percentage target will, however, require a twenty fold increase in production from the 4 TWh generated in 1995 to 80 TWh in 2010. In comparison, biomass will only require a ten fold increase from 1995's 22.5 TWh to its targeted 230 TWh in 2010, while hydro, with limited potential for expansion, is expected to add only 48 TWh to its 1995 total of 307 TWh by the target date.
Moreover, at 72 million tonnes per year, wind's contribution to the reduction of CO2 emissions will be bettered only by the massive 255 million tonnes per year promised by biomass development.
wind win scenario
Doubling the share of renewables in the EU's energy balance amounts to contributing one-third of the EU's 15% reduction target on 1990 levels of CO2, the formal negotiating position adopted prior to the climate summit in Kyoto. In line with the EU's strategy at Kyoto, the White Paper emphasises the "win win" potential of renewables development and the focus remains firmly upon the economic benefits of pursuing ambitious CO2 reduction targets.
Estimating that doubling the current percentage share of renewables use would require a net investment of some ECU 95 billion over the period 1997-2010, the Commission claims that failure to encourage the growth of renewables will mean missing an "important development opportunity" for the European economy as a whole. Doubling the use of renewables within the EU, it is claimed, would not only reduce CO2 emissions by 402 million tonnes per year, it would add an extra ECU 17 million to the EU's annual income from exports, reduce imported fuels by 17.4% and shave ECU 3 billion off the annual fuel bill from 2010.
Achieving a 12% energy share for renewables would also create between 500,000 to 900,000 new jobs the Commission estimates. Should the 40 GW wind power target be met, between 190,000 and 320,000 of those new jobs would be wind related, according to figures supplied by EWEA and accepted by the Commission.
Although published to coincide with Kyoto and intended partly to demonstrate "the technical feasibility and economic manageability of the Union's negotiating mandate," the paper insists that its 12% "indicative objective" will remain in place whatever the precise outcome of the Kyoto conference. "An indicative target is a good policy tool," the Commission believes, and gives "a clear political signal and impetus to action."
However, the Commission has at this stage declined to take up the European Parliament's recommendation made during the Green Paper debate that targets for renewable energy production be set for individual member states. Instead the member states "will be asked to report to the working group the feasible contribution they can realistically make to the 2010 target." Rather than having targets set for them they will "have to encourage the increase of RES according to their own potential" and "define their own strategy." The 12% figure is an "overall objective" the Commission insists, and the White Paper "a political, and not a legally binding tool." Still, reference to the Commission's intention to propose a (binding) Directive in the White Paper is clear, even though it is only briefly mentioned in the body of the document and excluded from its "Preliminary Indicative Action Plan for RES 1998-2010."
In order overcome the obstacles frustrating the market "take-off" of renewables, which the Commission believes are primarily the high initial capital investment, the invisibility of external costs in traditional fuel cycles, and institutional barriers, a range of policy options is put forward. These include a pricing system based on avoided costs plus an eco tax; guaranteed grid access for renewables; and the co-ordination of financial measures to ensure fair competition. Noticeable in this respect is the absence of any mention of trade in green power certificates as a means of market stimulation, a central point of the Green Paper discussion which preceded the White Paper's publication (Windpower Monthly, June 1997).
Fair access for renewables to the electricity market is singled out as a "critical step" towards RES development. "The basis for a Community legal framework largely exists," the Commission reports, "and its implementation will have to provide for the necessary degree of legislative harmonisation," the paper states. Various schemes for ensuring that priority is given to the dispatch of electricity generated from renewable resources will be "examined closely" in order to formulate a Directive aimed at the "creation of a true single market for electricity." The EU has already passed a Directive to this end which is due to come into force from February 19, 1999. It is unclear if the White Paper is referring to a possible amendment to this Directive, which is now being "transposed into national law" and already allows governments to give renewables "dispatching preference" in electricity supply systems. The White Paper would seem to be suggesting that this clause be made into a separate and binding Directive, for proposal in 1998 -- if necessary.
Financial measures for encouraging the market penetration of renewables are also considered in some detail. The paper rejects the "green tariff" schemes where customers pay a premium price for electricity generated from renewable resources as "not sufficient, nor appropriate in all cases." It notes that tax exemption or reduction on renewable energy products is among the additional proposals for legislation and amendments to existing Directives that it intends to make before the end of 1998. The paper adds that if progress towards the 12% target is seen as unsatisfactory by the end of the year 2000, "the necessary proposals" for EU-wide action "will be put forward" .
Other financial measures to be examined and possibly promoted include "golden" or "green" funds. In these schemes, funds are held in private bank accounts attracting lower interest rates, the difference being passed on by the bank to renewable energies investors in the form of discount rates. The potential of public renewable energy funds managed by regulated agencies will also be examined, as will that of soft loans and special facilities from institutional banks.
KEY ACTIONS campaign
While reaffirming that the "positive effects of competition" remain key to the development of renewables, the Commission also makes provision for granting investment aid in appropriate cases "even when they exceed the general levels of aid laid down in guidelines." Such investment aid will be required by the series of "Key Actions" intended to back-up the policy options and promote renewables market penetration. These include a "specific campaign" to support 10,000 MW of large wind farms in "less favourable and unconventional locations" such as offshore.
Estimating that the total investment costs of the 10,000 MW will be in the order of ECU 10 billion ECU, the paper budgets for a 15% public expenditure of ECU 1.5 billion, or ECU 10 million a year, adding that "no public financing will be needed for the 30,000 MW remaining installed capacity provided that a fair access to the European grids for the wind turbines is guaranteed."
The "Key Action" on wind comprises one element in the Commission's proposed "campaign for take off of renewables," which is budgeted at ECU 20.5 billion for 1998-2010, of which ECU 4 billion will come from the public purse. In addition to the 10,000 MW installed capacity for wind, the campaign will include the creation of 1,000,000 PV systems, 10,000 MW of biomass, and projects for renewable energy integration in 100 communities. Together it is estimated these projects will result in a saving of ECU 3.3 billion in avoided fuel costs to 2010, and external benefits in the order of ECU 2 billion per year.
Throughout the White Paper the emphasis is placed on initiatives such as the "campaign for take-off" intended to help renewables achieve a significant market penetration by overcoming the obstacles that prevent them fulfilling their technical potential. As such the paper is long on carrot, and short on stick. It is no coincidence that the final section on the implementation of the action plan is one of the shortest in the whole document. On the implementation of its proposals the Commission has little to say beyond a promise that "Communications" every two years will be produced "in order to evaluate the success of the strategy and recommend a revised direction and/or new actions if sufficient progress in the penetration of renewables does not appear to be made."
Should the Commission's ambitious objective prove anything more than "indicative," the wind community can look forward to a period of massive expansion.