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Cold reality of EU energy missteps sets in

By BO LEUNG in London | China Daily | Updated: 2022-01-12 09:10

An employee makes a coal delivery in Berlin, Germany, on Dec 3. The government is phasing out the fossil fuels but the country's shift to renewable energy needs to pick up pace. JOHN MACDOUGALL/AFP

Green transition

Sims said a key advantage of transitioning to a greater use of renewables over fossil fuels is the opportunity for countries to become self-sufficient with energy supplies and reduce dependence on fuel imports.

The Carbon Tracker, headquartered in the UK, wants to see governments accelerate the adoption of wind and solar farms to steadily decrease exposure to volatile global commodity markets.

Before the green transition can reach 100 percent, Sim notes, there is a need to prioritize the displacement of fossil fuels as quickly as possible.

"It will be difficult to achieve a 100 percent renewables electricity system, but rather than focusing on the final 10 percent of this ambition, we should currently be focusing on achieving the initial 90 percent share for renewables and go from there," Sims said.

According to a Carbon Tracker report titled Foot off the Gas, released in early 2021, a clean-energy portfolio of low carbon technologies-encompassing onshore wind, utility-scale solar photovoltaics, battery storage, energy efficiency, and demand-response elements-can provide the same grid services as gas-fired power stations.

Furthermore, in the UK and Italy, where the initial research for these reports was focused, this clean energy portfolio is already more cost-competitive than the new combined-cycle gas turbine plants that both of these countries are planning, the Carbon Tracker said.

Commenting in September on the natural gas crisis, Fatih Birol, executive director of the International Energy Agency, said the "increases in global natural gas prices are the result of multiple factors, and it is inaccurate and misleading to lay the responsibility at the door of the clean-energy transition".

The IEA, which works with countries to shape sustainable energy policies, said the soaring gas prices led electricity providers in several European markets to switch to coal for power generation. This is a trend that would have been more pronounced if it had not been for the increase in the price of carbon emission allowances on the European market.

Birol adds that the crisis is "a reminder to governments, especially as we seek to accelerate clean energy transitions, of the importance of secure and affordable energy supplies, particularly for the most vulnerable people in our societies".

He added: "Well-managed clean energy transitions are a solution to the issues that we are seeing in gas and electricity markets today, not the cause of them."

The IEA notes that gas remains an important tool for balancing electricity markets in many regions.

As clean-energy transitions advance on a path toward net-zero emissions, global gas demand will start to decline, but it will remain an important component of electricity security. The IEA said that this is especially the case in countries with large seasonal variations in electricity demand.

In 2015, many nations pledged to limit global warming to well below 2 C, preferably to 1.5 C, compared with preindustrial levels, as part of the Paris Agreement.

Last year, the European Commission, the executive arm of the EU, set a collective goal of reaching net-zero emissions for the region by 2050.

"Net zero means an end to not only unabated coal plant use but also gas, and policymakers' attentions are consequently now turning toward how this pollution source can also be tackled," Sims said. "Gas has played a valuable role during the early stages of this transition, in allowing us to push ahead with phasing out power-sector coal use, but we are approaching a point now where the rate of decline in power sector emissions from this switching process is slowing."

Sims said there is a need now to look at alternative ways to remove the remaining share of emissions from this sector over the next 15-20 years.

Possible obstacles

But ultimately switching from the use of one fossil fuel to another is very unlikely to be a long-term strategy for decarbonization and policymakers in Europe are beginning to acknowledge this realization, he said.

The road to phasing out fossil fuels in favor of sustainable energy comes with obstacles in the form of whether there will be sufficient levels of both investment and capacity from renewable sources.

Experts say resolution of the issues rests more on policy than economic or technical questions.

"The economics are pretty clear-new renewables are already cheaper investments than existing gas capacity, while renewables with storage costs will also become cost-competitive by 2030," Sims said.

Regulatory processes, however, can be extremely lengthy, he added, citing Italy, where the average process can last as long as seven years.

"The country has been delivering an average deployment rate for renewables of less than 1 gigawatt a year in recent years as a consequence, whereas they really need to be building something like 7 gigawatts annually to meet their national climate goals," Sims said.

"And this then seems to have a knock-on effect where policymakers and developers revert back to looking at large-scale new-build gas projects because they believe it's easier to build one large unit than 10 smaller wind or solar farms."

In the UK, regulatory changes over recent years to the rules governing onshore wind projects have slowed growth in some areas. That technology has been excluded for a period from eligibility for government subsidies, Sims said, under a program called Contracts for Difference.

"That has changed for this year, however, and onshore wind projects are back as eligible for Contracts for Difference funding, so we are seeing some of these barriers now being removed as policymakers wake up to the reality of the scale of work that needs to be done if their legally binding climate targets are to be achievable," he said.

Recently, the UK government relaxed planning rules governing the development of large battery storage projects, and Sims said it's these sorts of regulatory changes for developers that will help in the long run to accelerate deployment rates closer to the required levels.

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