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Europe Galvanizes its Renewable Energy Ambitions

As we work to bring renewable energy into the mainstream of the United States, it’s easy to lose track of the remarkable progress in Europe. Progress which is – if a recent conference is any indication – on track to greatly surpass anything on the U.S. horizon. In this article, I’ll review what occurred recently at a key meeting in Berlin, and propose how the US might respond.

RE Insider – February 23, 2004 – The European Commission convened conference of European government ministries and NGOs in Berlin, Germany on January 19-21. This was the “prep conference” for Renewable Energy 2004, the intergovernmental conference of the willing that Chancellor Schroeder called for in his speech to World Summit on Sustainable Development (WSSD) in Johannesburg in August 2002, now scheduled to take place June 1-3, 2004 in Bonn. But they went far beyond preparing for a future conference. I believe that the meeting – not announced in the US – might have been one of the most significant meetings in the history of renewable energy development in Europe and, considering Europe’s leadership in renewables, one of the more important meetings ever. It was there that a new plan for 20% renewable energy by 2020 was unveiled, previewed, and distributed to the working levels of European government ministries. The 20% total energy commitment would include that 33% of Europe’s electricity, and 25% of Europe’s heating, will be generated by renewables by 2020. These are tremendous numbers. The Key Presentations The presentations were impressively orchestrated as a stage for future policymaking. German environment minister Jurgen Trittin called for Europe to look beyond its commitments for achieving 12% renewables by 2010, and adopt strategies that have been proven to work, such as Germany’s system of feed-in tariffs. He also called for international and multilateral institutions to actively embrace renewable energy for the benefit of people in the developing countries. European Parliament member Mechtild Rothe — perhaps the leading voice along with Hermann Scheer for renewable energy in Europe — then spoke clearly about the success of Europe’s “Campaign for Takeoff” in 1999-2003, the need to develop strategies for transportation fuels and heating & cooling, the importance of seeing that nuclear power cannot be a solution for Europe, the wrongness of dropping everything in favor of hydrogen which is so far in the future, the need to adopt renewable energy commitments for 2020, and the opportunity for Europe to take the world lead in renewable energy for the environmental benefits, the value of new industries and jobs, and the economic gains to be made from exports. She announced a new era for 2004-2007, to be called the “Campaign for a Sustainable Energy Europe” and called on European industry to present what it can achieve. Prof. Arthorous Zervos, President of EREC, then spoke for industry, presenting a quantitative analysis of renewable energy to date, trends, and the feasibility of achieving 20% renewable energy by 2020. This was given in a detailed presentation and printed report, all well prepared. Existing EU Target of 12% by 2010 Prof. Zervos began by announcing that the 1997 White Paper target of 12% renewable energy by 2010 can be achieved if relevant actions are taken soon. The electricity target of 22.1% renewable energy by 2010 can be met if the measures set out in a “directive on the promotion of electricity from renewable energy sources” are fully implemented and some additional measures are taken. The biofuels target of 5.75% can be met if Member States take action following the directive. New EU Target of 20% by 2020 Prof. Zervos then described the industry’s vision post-2010, saying that the new 20% target is proposed for the EU15 countries, excluding new Central and Eastern Europe countries that will be joining the EU in May 2004, which will have lesser targets. Taking all sources into consideration, the new goal will be composed of 13.0% from biomass, 2.4% from wind power, 2.1% from hydro power, 1.5% from solar thermal, and less than 1% each from geothermal and solar PV. The contribution of renewable energy sources to electricity production will be more that 33% by 2020. The amount of renewable energy capacity in 2020 is projected to be 180 GW of wind power, 109 GW of hydro power, 54 GW of biomass-fired power, 35 GW of solar photovoltaics, and 2 GW of geothermal power. Renewable energy systems will be 42% of new power generation additions in 2001-2010, increasing to 61% of new additions in 2011-2020. The contribution of renewable energy to heat production will be 25% by 2020. This will be made up from 100 million tons of oil equivalent (Mtoe) of biomass, 24 Mtoe of solar thermal, and 4 Mtoe of geothermal energy. The Benefits of Achieving the Level of 20% Renewable Energy by 2020 EREC compiled an analysis of the benefits of achieving the 20% level, showing that Europe will enjoy lower oil imports, lower emissions, a tremendous growth of jobs, and economic gains from exports. The required capital investment is estimated to be Euro 443 billion in the period 2001-2020. The societal benefits of this investment are estimated to include Euro 115.8 billion of avoided fuel costs, principally imported oil, plus saving of “externality costs” of between Euro 126.7 billion and Euro 323.9 billion. Renewable energy will contribute a 728 Mt/year reduction of CO2 emissions in 2020, representing a 17.6% decrease from total EU GHG emissions in 1990. As a result of such growth, there will be an additional 2,023,000 people in full-time employment, versus 135,000 today. Finally, Europe will enjoy the benefits of exports sales and income from its renewable energy manufacturing and service companies, especially if it can step out ahead of the US and Japan. Context and Importance of the Conference The meeting continued for two days, but was essentially done after the opening speeches. The mission had been accomplished – laying out the basis for a new policy framework, and asking European governments to be of like mind when the world governments convene in June. There were, of course, concerns raised as well. Especially, there was recognition that Germany represents the vast bulk of renewable energy development to date –14,500 MW of wind power in Germany as of 12-31-2003, and the bulk of European PV installations. The adoption of renewable energy is not uniform across Europe, and the other European countries will need to pick up the pace to achieve some sense of continental balance. So the feasibility of reaching the new goal is an enormous challenge. It is a test of the European Union’s ability to effect change in all member countries. In the early 1990s, the development of renewable energy was country-by-country. Then came the White Paper in 1997 that was written by Wolfgang Palz and his associates in the European Commission, setting the 12% goal for 2010. Now, with 20% by 2020 declared, one had the sense that there was a galvanizing consensus in the room that each of the EU member states was diligently considering how to deliver on their part of the plan. History in the Making? I felt moved by what was taking place. It seemed less like a promotion and more like a working meeting of some 500 officials seeking direction, advice, and validation of their positions. The Europeans are standing up for what they believe in, and are making commitments to deliver on their dreams for a cleaner environment and more a sustainable society. One cannot help but be deeply impressed. People such as Hermann Scheer, Mechtild Rothe, Wolfgang Palz, Roberto Vigotti, and many others who have fought for renewable energy in Europe will surely be in the history books. US Response How can the US respond? The US is blessed with abundant amounts of renewable energy resources: wind, solar, geothermal, biomass, hydro, and ocean. We have a tremendous technology base following 30 years of investment by the Department of Energy and renewable energy technology companies. And we have the horsepower to implement a renewable energy revolution for the country – corporate strengths, entrepreneurial system, venture capital industry, and project financing capacity. Why, then, does it seem so difficult? Undoubtedly, a major share of the difficulty is caused by the regionalized, fragmented character of our marketplace. Renewable resources are spread unevenly across our country. Wind power is available in vast quantities across the upper Great Plains, on mountain ridges, and offshore. Solar energy is available everywhere, but especially in the Southwest. Biomass is generally in the farming and forest regions, but also present in landfills and waste streams that can be directed to biorefineries. Geothermal energy is in the West. Hydro power is developed in the Northwest. The fact is, that regional resource availability translates into regional economics, jobs, and politics. On top of that, electricity is regulated primarily at the state level. Each state has adopted a unique set of policies for energy, electricity, and renewable energy. We have examples of everything — renewable portfolio standards, system benefit funds, state-level incentives such as tax credits, and a variety of state- and local-level renewable energy and green power purchasing programs. It is a patchwork quilt. What we need, more than anything, is a means of translating state-level policies and markets into a national policy and market. And this task is complicated by the US Constitution, which reserves federal action to matters of interstate commerce, and the general relationship between federal and state governments. The fact is, our Constitution is not the same as the charter of the European Union. But there is nothing in the US Constitution that prohibits states from acting in a cooperative manner. Already, we are seeing conferences and programs of the Western Governors, the Midwestern Governors, and the New England Governors. Perhaps our national solutions will emerge between the state governors first, on a regional basis. This could be the next phase of renewable energy policy development in the US, and can be a good response to Europe’s new commitments. New Bridges The American Council On Renewable Energy (ACORE) is continuing to build bridges to the European renewable energy community. We encourage American renewable energy advocates to go there, listen, participate, learn how they are doing it, and show our support for their courage. There are two events coming up the spring: WCRE’s “2nd World Renewable Energy Forum, to be held May 29-31, 2004 in Bonn, and Germany’s “Renewable Energy 2004” to be held June 1-3, 2004, also in Bonn. ACORE also is working to bring European renewable energy proponents here, to share their views with us. ACORE recently announced a joint venture with Euromoney – the European publisher that owns Institutional Investor Magazine in New York – to create the “Renewable Energy Finance Forum” on Wall Street, bringing many of Europe’s top bankers here to speak and to meet with our financiers. Bottom line, there is a lot to be done, and gains to be had through closer working relationships with our colleagues in Europe. About the author… Michael T. Eckhart, President of the American Council On Renewable Energy (ACORE), and President of Solar International Management, Inc., has been working in the private sector side of the renewable energy and conventional power generation fields since 1976, with Booz Allen & Hamilton, General Electric Company, Arete Ventures, and United Power Systems, Inc. He recently worked with a group of people in the US on the formation of ACORE, which is also the US participant in the World Council for Renewable Energy (WCRE).