An energy policy vacuum is looming in the European Union after a firm set of policy goals for renewable energy, carbon cutting and energy saving expires in 2020.
To open up the debate on policy direction for renewable energy, the Commission has put together a communication, expected to be published officially next month.
A draft seen by Reuters early this month showed a concern with the economics and with the need to achieve free access to emerging renewable energy markets, if the EU is to retain its technological lead in green energy.
Energy Commissioner Guenther Oettinger has said he wants agreement on a new policy regime before the end of the current Commission, whose mandate expires in 2014.
An overall aim is that renewable energy should be developed in "a sustainable, market-integrated and cost effective manner".
The following are some of the main questions addressed in the draft communication and accompanying impact assessment:
What is the rate of growth?
So far renewables have grown faster than expected.
This may not continue. Factors contributing to investor uncertainty include: the lack of a target beyond 2020; a weakened carbon price; sudden withdrawals of subsidies, for instance, for solar.
Unless new policy goals are agreed for the next decade, the Commission predicts a business-as-usual scenario would mean renewable energy would increase its share very slowly, reaching 25 per cent in 2030 and just over 29 per cent in 2050.
The sector's growth declines from 6 percent per year in the current decade, to only by 1 percent per year between 2020-2050, resulting in reduced job creation and greater dependency on foreign imports.
The renewable energy directive adopted in 2009 only requires the Commission to present a post-2020 renewable energy roadmap in 2018, the communication notes, but adds the Commission senses "a growing belief amongst stakeholders that planning for the post-2020 period requires consideration already today".
For now, the only firm incentive in place beyond 2020 is a decreasing EU Emission Trading Scheme (ETS) cap by a factor of 1.74 per cent per year.
Where will the money come from?
Costs for onshore wind and solar energy have declined sharply and they are expected to be competitive in several markets by 2020, the Commission says.
"The Commission advocates moving as rapidly as possible towards schemes which expose producers to market prices and encourage cost reductions avoiding over compensation," it says in the communication on renewables.
For newer technologies, however, it predicts "certain cost effective and well-targeted support schemes will still be necessary beyond 2020".
It also argues abrupt withdrawals of subsidies in some member states have been "disruptive".
To try to ensure best practice, the Commission intends to prepare and publish guidelines on the creation, design, structure and reform of renewable energy support schemes in 2013.
Why do we need renewables?
The EU wants renewables to ensure security of supply and reduce dependence on foreign imports, as well as to cut carbon emissions.
More than half the energy consumed in the EU comes from countries outside of it, making the EU the world's largest energy importer. It imports more than 80 per cent of the oil and more than 60 per cent of the gas it consumes.
The Commission has said that last year oil imports alone cost €315 billion ($400.74 billion).
To keep climate change below 2 degrees Celsius, both the European Council of ministers and Parliament have set the objective of reducing greenhouse gas emissions by 80-95 per cent by 2050, compared with 1990 levels, but this is a political rather than a legally enshrined goal.
What are the policy options?
Future options range from business as usual, meaning no new policy framework after 2020, although the ETS, designed to cut greenhouse gases, would remain in place, to a full update of the set of targets, backed up by financial support schemes.
How much will the grid cost?
Huge investment is needed to help bring about the Commission dream of a single European market, maximising use of renewable power across borders.
Commission estimates find about €100 billion are needed for new electricity transmission lines alone.
The Commission's multi-annual budget for 2014-2020 in theory will include around €9 billion for spending on strategic energy projects, with an impact on several EU countries rather than just one member state.
This article was originally published by Reuters. Republished with permission.