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A European Commission Perspective on climate-related

investment in Energy

Dr. Karl Kellner, DG ENER, European Commission

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The EU 20-20-20 targets by 2020

Reduce greenhouse

gas emissions by 20%

Increase share of

renewables to 20% 100%

Reduce energy

use by 20%

-10% Current trend to

2020 -20%

20%

Current trend to

2020

Current trend to

2020

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Mind the gap!

1678 Mtoe

-20%

objective

status

today

1842 Mtoe business

as usual

1474 Mtoe Projections from 2007

Projections from 2009

20% Energy saving objective

* Gross inland consumption minus non-energy uses

Pri

ma

ry e

nerg

y c

on

su

mp

tio

n*

(Mto

e)

2020

1400

1450

1500

1550

1600

1650

1700

1750

1800

1850

1900

2005 2010 2015

GAP

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Benefits of meeting the 20% efficiency target are enormous

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Barrels of oil we do

not have to import

per year

Money saved at

conservative 73

EUR/barrel per year

Primary energy savings in 2020

=

368 Mtoe

=

2.6 billion

193 billion

EUR

= GDP of Portugal in current prices

(2010)

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Costs of not filling in the gap are too high

» Imports of 1.4 billion barrels of oil result in EUR

107 billion not being invested in EU economy

» Construction of 550 coal power plants and

accompanying infrastructure

» EU GDP will lose the net positive impact of

energy efficiency of at least EUR 34 billion

» 400 000 jobs will not be created

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6

Energy Efficiency Directive – direct and avoided costs

-600

-400

-200

0

200

400

2011-2015 2016-2020 2021-2025 2026-2030

Billio

n €

'08

Costs for investment in energy efficiency Costs for investment in power and steam generation and distribution Energy expenditureTotal energy system costs for stationary uses

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And can even return money to the state: Success stories in IRL ( + DE + FR + EE+..)

.SEAI Home Energy Saving (HES) scheme » Over 100.000 homes since 2009 » Net benefit for society between €106 million to

€518 million (depending on CO2 and energy prices)

» Support for 3000 full-time jobs in 2010 » Household savings average €450 per year » Every € spent delivers a net benefit of 5 € to

society! Source: Economic analysis of residential and Small-business energy efficiency improvements, Sustainable Energy Authority of Ireland, September 2011

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What is currently available at EU level?

. Cohesion policy funds (2007-2013): » 4.8 billion € for energy efficiency, RES 4.7b€, TEN-E 0.2 b€,

(up to) 4% of ERDF can be re-allocated to EE in housing . Intelligent Energy Europe Programme (2007-2013):

» 735 million € for ‘soft’ energy efficiency/renewables projects . ELENA Facility: » 97 million € for technical assistance to mobilise investments . FP7 ( Research Framework Programme) : 2.3 b€

. European Economic Recovery Programme (EEPR) : 4b€ (infrastrucures, offshore wind and CCS incl. "unspent" in 1st phase

. European Energy Efficiency Fund (EEE-F): » 265 million € for investments +20 million € for technical

assistance (TA) + 1.3 m€ for awareness raising (EPEC)

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What will be available at EU level?

.Next Multi-Annual Financial Framework (2014-2020) proposals: » Cohesion funding to allocate some €17 billion to

energy efficiency and renewable energy (doubling current allocations)

» Horizon 2020: €6.5 billion is to be allocated to research and innovation in "Secure, clean and efficient energy"

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Renewable Energies Policy after 2020: „Business as usual“ is not an option Renewables Communication of 6 June 2012

• Launch of process for future policy options and

milestones for 2030, in particular :

• smooth RE integration into Internal Energy Market (IEM)

• support schemes,

• increased use of "Cooperation mechanisms" and

• infrastructure essential incl storage, decentral/smart

• Three strategy options: new GHG goal, three national

binding targets and EU wide targets (for three sectors)

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Beyond 2020 : Energy Roadmap 2050 .Reference document for all future initiatives .Long-term and system wide perspectives .Relation to Europe 2020 Strategy: kick-start –

long-term sustainability of energy system transition

.Guidance from Council, Parliament – would reduce policy uncertainty, notably for investors

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Trio of objectives continues to make

sense

.Investment expenditure up, BUT external fossil fuel

costs down compared to current policies scenarios .Where are the increases in investments?

- Demand side, far more than supply side - transport,

buildings (60 b€ p.y until 2020), appliances etc.

- Power plants (RE 2/3) and grid (more than 100 b€

p.y. until 2020 )

- Extra grid investments – mainly distribution level(2/3) .Green growth & jobs within EU, quality of life

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0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

2005 2030 2050

REF CPI EE DST high RES delayed CCS low Nuclear

Decarbonisation

brings substantial

fuel bill savings in

2050 with respect

to 2005 and

Reference/CPI

Compared with

CPI the EU

economy could

save between

518 and 550 bn €

in 2050 through

decarbonisation

under global

climate action

Savings are

largest in the high

RES scenario

EU: External Fossil Fuel Bill (in bn € of 2008)

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No Regret options: EE,RES,infrastructure

- Focus on energy efficiency ( EED etc)

- Focus on renewable energy sources

- moving further centre stage

- Delivering on growth & jobs

- Internal energy market increasingly important

for RES development

Communications on RES and on IEM, 2012

15 Source: European Commission |

Share of Renewable Energies in energy consumption reaches 2050 at

least 55 % and will be 45 % points (ppt) above the current share of about 10 %.

Energy Roadmap 2050: Renewables is „No Regrets“-Option Share of renewable energies in energy consumption %

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- Focus on Infrastructure .New sense of urgency and collective responsibility .Energy infrastructure proposals 2010, 2011 – proactive planning, support of European public good investments ("Connecting Europe Facility", 50b€ fund of which 9,12b€ energy) .Engaging society

Energy infrastructure proposals 2010, Oct.2011 .High public and private investments is crucial –

e.g. Pilot Project Bonds, RTD / deployment c

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Reliance on markets .Low-carbon, energy efficient options emerging on supply and demand sides .Cost-effectiveness calls for well-designed markets open to these resources, integrated across Europe, with cost-reflective prices .Support – targeted, proportionate, include phase-out provisions .Interventions by MS – coordination increasingly important

Communication on IEM 2012

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Thank you !

http://ec.europa.eu/energy/renewables/index_de.htm

http://ec.europa.eu/energy/energy2020/roadmap/index_en.htm