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HRVATSKI CENTAR OBNOVLJIVIH IZVORA ENERGIJE ( HCOIE )

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)• was founded in 1988 as the non-profit European Association for Renewable Energy that conducts its work independently of political parties, institutions, commercial enterprises and interest groups, • is dedicated to the cause of completely substituting for nuclear and fossil energy through renewable energy, • regards solar energy supply as essential to preserve the natural resources and a prerequisite for a sustainable economy,• acts to change conventional political priorities and common infrastructures in favor of renewable energy, from the local to the international level, • brings together expertise from the fields of politics, economy, science, and culture to promote the entry of solar energy, • provides the opportunity to play a part in the sociocultural movement for renewable energy by joining the association for everyone, • considers full renewable energy supply a momentous and visionary goal - the challenge of the century to humanity.

CCRES
Željko Serdar
Head of association
solarserdar@gmail.com

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HRVATSKI CENTAR OBNOVLJIVIH IZVORA ENERGIJE ( HCOIE )

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)• was founded in 1988 as the non-profit European Association for Renewable Energy that conducts its work independently of political parties, institutions, commercial enterprises and interest groups, • is dedicated to the cause of completely substituting for nuclear and fossil energy through renewable energy, • regards solar energy supply as essential to preserve the natural resources and a prerequisite for a sustainable economy,• acts to change conventional political priorities and common infrastructures in favor of renewable energy, from the local to the international level, • brings together expertise from the fields of politics, economy, science, and culture to promote the entry of solar energy, • provides the opportunity to play a part in the sociocultural movement for renewable energy by joining the association for everyone, • considers full renewable energy supply a momentous and visionary goal - the challenge of the century to humanity.

CCRES
Željko Serdar
Head of association
solarserdar@gmail.com

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HCOIE Vam prestavlja:



HRVATSKI CENTAR OBNOVLJIVIH IZVORA ENERGIJE ( HCOIE )

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)• was founded in 1988 as the non-profit European Association for Renewable Energy that conducts its work independently of political parties, institutions, commercial enterprises and interest groups, • is dedicated to the cause of completely substituting for nuclear and fossil energy through renewable energy, • regards solar energy supply as essential to preserve the natural resources and a prerequisite for a sustainable economy,• acts to change conventional political priorities and common infrastructures in favor of renewable energy, from the local to the international level, • brings together expertise from the fields of politics, economy, science, and culture to promote the entry of solar energy, • provides the opportunity to play a part in the sociocultural movement for renewable energy by joining the association for everyone, • considers full renewable energy supply a momentous and visionary goal - the challenge of the century to humanity.

CCRES
Željko Serdar
Head of association
solarserdar@gmail.com

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HCOIE Vam prestavlja:



HRVATSKI CENTAR OBNOVLJIVIH IZVORA ENERGIJE ( HCOIE )

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)• was founded in 1988 as the non-profit European Association for Renewable Energy that conducts its work independently of political parties, institutions, commercial enterprises and interest groups, • is dedicated to the cause of completely substituting for nuclear and fossil energy through renewable energy, • regards solar energy supply as essential to preserve the natural resources and a prerequisite for a sustainable economy,• acts to change conventional political priorities and common infrastructures in favor of renewable energy, from the local to the international level, • brings together expertise from the fields of politics, economy, science, and culture to promote the entry of solar energy, • provides the opportunity to play a part in the sociocultural movement for renewable energy by joining the association for everyone, • considers full renewable energy supply a momentous and visionary goal - the challenge of the century to humanity.

CCRES
Željko Serdar
Head of association
solarserdar@gmail.com

Renewable Energy Road Map by CCRES

CROATIAN CENTER of RENEWABLE ENERGY SOURCES

shares to you

Renewable Energy Road Map

Renewable energies in the 21st century: building a more sustainable future
1. INTRODUCTION
The EU and the world are at a cross-roads concerning the future of energy. Climate change,
increasing dependence on oil and other fossil fuels, growing imports, and rising energy costs
are making our societies and economies vulnerable. These challenges call for a
comprehensive and ambitious response.
In the complex picture of energy policy, the renewable energy sector is the one energy sector
which stands out in terms of ability to reduce greenhouse gas emissions and pollution, exploit
local and decentralised energy sources, and stimulate world-class high-tech industries.
The EU has compelling reasons for setting up an enabling framework to promote renewables.
They are largely indigenous, they do not rely on uncertain projections on the future
availability of fuels, and their predominantly decentralised nature makes our societies less
vulnerable. It is thus undisputed that renewable energies constitute a key element of a
sustainable future.
The European Council of March 2006
called for EU leadership on renewable energies and
asked the Commission to produce an analysis on how further to promote renewable energies
over the long term, for example by raising their share of gross inland consumption to 15% by
2015. The European Parliament has by an overwhelming majority called for a 25 % target for
renewable energies in the EU's overall energy consumption by 2020.
This Road Map, an integral part of the Strategic European Energy Review, sets out a longterm vision for renewable energy sources in the EU. It proposes that the EU establish a
mandatory (legally binding) target of 20% for renewable energy's share of energy
consumption in the EU by 2020, explains why it is necessary, and lays down a pathway for
mainstreaming renewables into EU energy policies and markets. It further proposes a new
legislative framework for the promotion and the use of renewable energy in the European
Union. In doing so, it will provide the business community with the long term stability it
needs to make rational investment decisions in the renewable energy sector so as to put the
European Union on track towards a cleaner, more secure and more competitive energy future.
The objectives set out can only be achieved by significantly increasing the contribution from
renewable energy sources in all Member States in electricity and transport and in the heating
and cooling sector. The challenge is huge, but the proposed target can be achieved with
determined and concerted efforts at all levels of government assuming the energy industry
plays its full part in the undertaking.
In particular, the failure to systematically include external costs in market prices gives an
economically unjustified advantage to fossil fuels compared with renewables.
There are other important reasons why the EU will not meet its objectives for renewable
energy. The complexity, novelty and decentralised nature of most renewable energy
applications result in numerous administrative problems. These include unclear and
discouraging authorisation procedures for planning, building and operating systems,
differences in standards and certification and incompatible testing regimes for renewable
energy technologies. There are also many examples of opaque and discriminating rules for
grid access and a general lack of information at all levels including information for suppliers,

customers and installers. All of these factors have contributed to inadequate growth in the
renewable energies sector.
The development recorded so far is made up of generally patchy and highly uneven progress
across the EU, highlighting that national policies have been inadequate for achieving the EU
target. While ambitious policies creating investor certainty have been adopted in some
Member States, national policies have proven vulnerable to changing political priorities. The
absence of legally binding targets for renewable energies at EU level, the relatively weak EU
regulatory framework for the use of renewables in the transport sector, and the complete
absence of a legal framework in the heating and cooling sector, means that progress to a large
extent is the result of the efforts of a few committed Member States. Only in the electricity
sector has substantial progress been made, on the basis of the Directive on renewable
electricity

adopted in 2001, and the targets set will almost be met. The differences in the
regimes for electricity, biofuels and heating and cooling established at EU level are reflected
in the development of the three sectors: clear growth in electricity, the recent start of solid
growth in biofuels, and slow growth rates for heating and cooling

As a further explanation, it should be noted that energy efficiency has not been as high as
expected and that overall energy consumption therefore has been higher than expected. A
considerably bigger contribution from renewable energy sources to reach the 12% target,
which is expressed as a percentage of overall energy consumption (as opposed to a share of
overall energy production) is thus required. Also, the fact that the 12% objective is expressed

as a percentage of primary energy, penalises the contribution of wind energy

, a sector which
has experienced by far the most significant growth during the period in question.
A more detailed account of the situation in the various sectors is set out below.
2.1. Electricity
In accordance with Directive 2001/77/EC, all Member States have adopted national targets for
the proportion of electricity consumption from renewable energy sources. If all Member
States achieve their national targets, 21% of overall electricity consumption in the EU will be
produced from renewable energy sources by 2010.
With current policies and efforts in place, and unless current trends change, the European
Union will probably achieve a figure of 19% by 2010. While this can only be considered a
partial success, the European Union will nonetheless come close to its target for renewable
electricity by 2010. Since the last Commission report two years ago

, renewable electricity
(non-hydro) has increased by 50%

Nine Member States

are now fully on track to reach their target, with some of them reaching
the target early. Wind energy, in particular, has made good progress and has broken through
the target of 40 GW by 2010

five years ahead of schedule. Biomass electricity has gone
from a yearly growth rate of 7% in previous years to 13% in 2003 and 23% in 2005. Biomass
in 2005 contributed 70 TWh, which means a saving of 35 Mt of CO2 and 14.5 Mtoe less fossil
fuel consumption.

Notwithstanding the progress made, this is not the time for self-congratulations. The majority
of Member States are still significantly lagging behind in their efforts to achieve the agreed
targets

.Much more needs to be done .
2.2. Biofuels
Biofuels are the only available large scale substitute for petrol and diesel in transport. Given
the precarious security of supply situation for oil (and thus for the transport sector), in 2003
the EU adopted the biofuels directive (2003/30/EC), with the objective of boosting both the
production and consumption of biofuels in the EU. Since then the Commission has set out a
comprehensive strategy for developing the biofuels sector

.
The biofuels directive established a reference value of a 2% share for biofuels in petrol and
diesel consumptions in 2005 and 5.75% in 2010. This should be compared to their share of
0.5% in 2003. The indicative targets set by Member States for 2005 were less ambitious,
equating to an EU share of 1.4%. The share achieved was even lower, at 1%. Progress was
uneven, with only three Member States

reaching a share of more than 1%. One Member
State, Germany, accounted for two thirds of total EU consumption.
In addition to the cost factor, there are three main reasons for the slow progress. First,
appropriate support systems were not in place in most Member States. Second, fuel suppliers
have been reluctant to use bioethanol (which accounted for only 20% of total biofuel
consumption) because they already have an excess of petrol, and the blending of bioethanol
with petrol makes this worse. Third, the EU regulatory framework for biofuels is
underdeveloped, particularly in relation to the need for Member States to translate their
objectives into action.
Member States are due to adopt national indicative targets for 2010 in 2007. Some have
already done so. Most of these have followed the reference value set in the directive (a 5.75%
share). Nevertheless, taking into account the disparities between the targets that Member
States announced for 2005 and the low shares that many achieved, the 2010 target is unlikely
to be achieved with present policies.
From a trade perspective, the EU maintains significant import protection on some types of
biofuels, notably ethanol which has a tariff protection level of around 45% ad valorem. Import
duties on other biofuels - biodiesel and vegetable oils - are much lower (between 0 and 5%).

If it would appear that supply of sustainable biofuels to the EU is constrained, the EU should
be ready to examine whether further market access would be an option to help the
development of the market

In any event, the key EU trade policy challenge is to find ways to promote those international
exports of biofuels that unambiguously contribute to greenhouse gas reduction and avoid rain
forest destruction. In this respect, complementing the incentive/support system described in
Section 3.5 below, certification schemes elaborated together with exporting trading partners
or producers could be a way forward. But this requires further study and discussion.
2.3. Heating and cooling
The heating and cooling sector accounts for approximately 50% of overall EU final energy
consumption and offers a largely cost-effective potential for using renewable energies,
notably biomass, solar and geothermal energy. However, with renewables today accounting
for less than 10% of the energy consumed for heating and cooling purposes, this potential is
far from being exploited.
The Community has not so far adopted any legislation to promote heating and cooling from
renewable sources. However, the 12% overall target for renewable energy sources set in 1997
created an implicit target for heating and cooling of an increase from approximately 40 Mtoe
in 1997 to 80 Mtoe in 2010
16
Whilst the directive on the promotion of cogeneration (the CHP .
Directive
17
) and the Energy Performance of Buildings Directive
18
promote efficient heating,
renewable energy in heating has grown only slowly. Biomass use dominates renewable
heating consumption and the bulk of this is in domestic wood heating. Little growth has
occurred in the use of efficient wood-burning stoves and boilers, or biomass CHP (for
industrial use), despite their potential for reducing emissions. Several European countries
have promoted other types of renewable heating, with some success. Sweden, Hungary,
France and Germany make the greatest use of geothermal heat in Europe; Hungary and Italy
lead with low-energy geothermal applications. Sweden has the largest number of heat pumps.
Solar thermal energy has taken off in Germany, Greece, Austria and Cyprus. That said,
policies and practices vary widely across the EU. There is no coordinated approach, no
coherent European market for the technologies, and no consistency of support mechanisms.
As a result of the inertia in the heating and cooling sector, even where some of the
technologies are cost competitive, the lack of an appropriate policy including targets and the
inability to remove administrative barriers and provide consumers with information on
available technologies and inadequate distribution channels very little progress has been
achieved in this sector. As a consequence, the contribution that the heating sector should have
provided towards meeting the 12% overall renewable target in 2010 is insufficient.
2.4. Overall progress towards reaching the targets for renewable energy
The 12% target for the contribution from renewables to overall EU energy consumption by
2010 is unlikely to be met. Based on current trends, the EU will not exceed 10% by 2010.
This can only be considered a policy failure and a result of the inability or the unwillingness
to back political declarations by political and economic incentives. Furthermore, the progress
that has been achieved is largely due to efforts made by a relatively small number of Member
States. This is not equitable and risks distorting the functioning of the internal market

The European Union has made most progress in the electricity sector. Here, with policies and
measures currently in place, the European Union will probably achieve a share of 19% in
2010. However, progress has been uneven across the EU, with Member States with a stable
regulatory framework performing best.
In transport biofuels, there has been some progress, particularly since the adoption of the
Directive, but not enough to reach the targets adopted. In the use of renewable energy sources
for heating and cooling there has been hardly any progress since the 1990s.
3. THE WAY FORWARD
For renewables to become the "stepping stone" to reaching the dual objective of increased
security of supply and reduced greenhouse gas emissions, it is clear that a change in the way
in which the EU promotes renewables is needed. Strengthening and expansion of the current
EU regulatory framework is necessary. It is, in particular, important to ensure that all Member
States take the necessary measures to increase the share of renewables in their energy mix.
Industry, Member States, the European Council and the European Parliament have all called
for an increased role for renewable energy sources as stated in the introduction. This section
explores a possible way forward to achieve this.
3.1. The principles
On the basis of the experience gained, a number of key principles for the future renewable
energy policy framework need to be established. With a view to significantly increase the
share of renewable energy sources in the EU's energy mix, the Commission considers that
such a framework should:
– be based on long term mandatory targets and stability of the policy framework,
– include increased flexibility in target setting across sectors,
– be comprehensive, notably encompassing heating and cooling,
– provide for continued efforts to remove unwarranted barriers to renewable energies
deployment,
– take into consideration environmental and social aspects,
– ensure cost-effectiveness of policies, and
– be compatible with the internal energy market.
3.2. An overall EU target
A policy on renewable energies is a cornerstone in the overall EU policy for reducing CO2
emissions. Since the 1990s the EU has taken various measures aimed at promoting renewable
energy, be it in the shape of technology programmes or specific policy initiatives. Policy
measures have been adopted in the form of targets, either in a political context such as the
12% renewables target of 1997, or under sector-specific legislation, such as the biofuels and
renewable electricity Directives, which also provide a set of measures aimed at facilitating the
achievement of the targets set.

In many sectors of the economy, targets are used to provide clarity and stability to industry, to
allow them to plan and invest with a higher degree of certainty. Providing targets at the
European level augments this stabilising impact: EU policy generally has longer time
horizons and avoids the destabilising effects of short term domestic political changes. To be
effective, targets have to be clearly defined, focussed and mandatory. The "12% renewables"
target is a good political target, but has proven insufficient to develop the renewable energy
sector.
The Commission believes that an overall legally binding EU target of 20% of renewable
energy sources in gross inland consumption by 2020 is feasible and desirable. Such a share
would be fully in line with the level of ambition expressed by the European Council and by
the European Parliament.
3.3. A target for biofuels
Biofuels cost more than other forms of renewable energy. But they are currently the only form
of renewable energy which can address the energy challenges of the transport sector,
including its almost complete reliance on oil and the fact that greenhouse gas reductions in
this sector are particularly difficult to obtain. Therefore the Commission proposes to include,
in the new framework, legally binding minimum targets for biofuels. A clear indication of the
future level of these targets is needed now, because manufacturers will soon be building
vehicles that will be on the road in 2020 and will need to run on these fuels.
The minimum target for biofuels for 2020 should, on the basis of conservative assumptions,
related to the availability of sustainably produced feedstocks, car engine and biofuel
production technologies, be fixed at 10%
19
of overall consumption of petrol and diesel in
transport.
To ensure a smooth implementation of this target, the Commission, in parallel, intends to
propose the appropriate modifications to the fuel quality directive (98/70/EC) including the
means of accommodating the share of biofuels.
3.4. National targets and Action Plans; putting policy into practice
Given the largely national basis for support measures in renewable energy, the overall EU
target will need to be reflected in mandatory national targets. The contribution of each
Member State to achieving the Union's target will need to take into account different national
circumstances. Member States should have flexibility to promote the renewable energies most
suitable to their specific potential and priorities. The precise way in which Member States
plan to achieve their targets should be set out in National Action Plans to be notified to the
Commission. These Action Plans should contain sectoral targets and measures consistent with
achieving the agreed overall national targets, demonstrating substantial progress compared to
the agreed 2010 renewable energy targets. In implementing the national targets in practice,
Member States will need to set their own specific objectives for electricity, biofuels and
heating and cooling, which would be verified by the Commission to ensure that the overall
target is being met.

Proposals for legislation on the overall target and the minimum target for biofuels, together
with provisions to facilitate a higher uptake of renewable energies in the three sectors,
including the necessary monitoring mechanisms will be put forward in 2007. This process
should ensure that the overall EU target is met in a fair and equitable manner and should
clearly strengthen the existing political and legal framework

3.5. Promotional policies and flanking measures
In addition to the legislative measures outlined above and their application by Member States,
the Commission will take the following action:
– propose strengthening the legal provisions to remove any unreasonable barrier to the
integration of renewable energy sources in the EU energy system. Conditions for grid
connections and extensions must be simplified. Some Member States have a panoply of
permission procedures to be complied with in order to construct renewable energy systems.
This must be reduced. Building codes normally ignore renewable energies. Red tape for
innovative small and medium-sized enterprises must be eliminated. To this effect, the
Commission will continue to stringently apply the Renewable Electricity Directive;
– propose legislation to address the barriers to growth in the use of renewable energies in the
heating and cooling sector including administrative obstacles, inadequate distribution
channels, inappropriate building codes and lack of market information;
– take further action to improve the functioning of the internal electricity market considering
the development of renewable energies. Improved transparency, unbundling, higher interconnectors capacity, all improve the opportunity for new innovative renewable energy
players to enter the market;
– re-examine, in 2007, the situation concerning Member States' support systems for
renewable energies with a view to assessing their performance and the need to propose
harmonising support schemes for renewables in the context of the EU internal electricity
market. While national schemes for renewable energy in electricity may still be needed for
a transitional period until the internal market is fully operational, harmonised support
schemes should be the long term objective;
– promote a proposal for an incentive/support system for biofuels that, for instance,
discourages the conversion of land with high biodiversity value for the purpose of
cultivating biofuel feedstocks; discourages the use of bad systems for biofuel production;
and encourages the use of second-generation production processes;
– continue to promote the use of renewable energy sources in public procurement for
fostering clean energies, in particular with regard to transport;
– continue to pursue a balanced approach in ongoing free trade negotiations with ethanolproduced countries/regions, respecting the interests of domestic producers and EU trading
partners, within the context of rising demand for biofuels;
– continue to co-operate closely with grid authorities, European electricity regulators and
renewable industry to enable a better integration of renewable energy sources into the
power grid, with particular attention paid to the special requirements related to much
larger deployment of off-shore wind energy, notably as regards cross-border grid
connections. Opportunities provided by the TEN-E scheme should be examined and work
on a European offshore super-grid should be initiated;
– exploit fully the possibilities offered by the Community’s financial instruments – notably
the Structural and Cohesion funds, the Rural Development funds, and the financial support

made available through the Community’s international co-operation programmes to
support the development of renewable energy sources in the EU and beyond;
– continue to promote the exchange of best practices on renewable energy sources, using
different information and debate platforms, such as the existing Amsterdam Forum
21
In .
the context of the Commission initiative on Regions for Economic Change, the
Commission will also establish networks of regions and cities to boost the sharing of best
practices for sustainable energy use;
– continue to internalise external costs of conventional fossil energy (inter alia by means of
energy taxation);
– reap all the opportunities offered for renewable energy by the result-oriented actions of the
forthcoming European Strategic Energy Technology Plan (SET-Plan);
– promote the use of renewable energy sources in its external energy policies
22
and favour
opportunities for sustainable development in developing countries;
– fully implement the Biomass Action Plan adopted by the Commission in December 2005
23
.
Biomass offers great potential and major benefits in other Community policies;
– continue to use the Intelligent Energy for Europe programme to help bridge the gap
between successful demonstration of innovative technologies and effective market entrance
to achieve mass deployment and to boost large-scale investment across the EU in new and
best performing technologies and to ensure that renewable energy is given the highest
priority in the sustained efforts to maximise the use of the EU research and technology
development programmes in support of zero- or low carbon energy technologies whilst
developing synergies with Member States involved in similar development.
In addition to these Commission initiatives, it should be underlined that Member States,
regional and local authorities have to make a significant contribution towards increasing the
use of renewables. Currently, Member States use various policy tools to promote renewables,
including feed-in tariffs, premium systems, green certificates, tax exemptions, obligations on
fuel suppliers, public procurement policy and research technology and development. To make
progress towards the proposed new targets, Member States will have to make further use of
the range of policy instruments at their disposal, in compliance with the provisions of the EC
Treaty.
Member States and/or local and regional authorities are in particular called upon to:
– ensure that authorisation procedures are simple, rapid and fair with clear guidelines for
authorisation including as appropriate, appointing one-stop authorisation agencies
responsible for coordinating administrative procedures related to renewable energy
sources

– improve pre-planning mechanisms whereby regions and municipalities are required to
assign suitable locations for renewable energies;
– integrate renewable energies in regional and local plans.
4. ASSESSMENT OF THE IMPACT OF ACHIEVING THE TARGET FOR RENEWABLES
The impact assessment, which accompanies this Road Map, provides a detailed account of the
various impacts of the measures set out above and compares the impacts of various alternative
policy options.
This section of the Road Map provides a brief overview of the findings.
4.1. Impact on greenhouse gas emissions and other environmental impacts
The importance of climate change has never been greater. The Environment Council of 10
March 2005 concluded that "reduction pathways by the group of developed countries in the
order of 15-30% by 2020 compared to the 1990 baseline envisaged in the Kyoto Protocol
should be considered."
Greenhouse gas emissions, including CO2 emissions, from renewable energy sources are
either low or zero. Increasing the share of renewables in the EU fuel mix will therefore result
in significantly lower greenhouse gas emissions. The additional renewable energy deployment
needed to achieve the 20% target will reduce annual CO2 emissions in a range of 600-900 Mt
in 2020
24
Considering a CO2-price of 25 €/per tonne .
25
, the additional total CO2 benefit can be
calculated at a range of €150-€200 billion. Actual CO2 prices will depend on the future
international climate regime. The breakdown of the CO2 emissions avoided is set out in the
annex.
Replacing fossil fuels also has generally positive air quality benefits. These are especially
positive in the electricity sector.
4.2. Security of energy supply
Renewable energy contributes to security of supply by increasing the share of domestically
produced energy, diversifying the fuel mix, diversifying the sources of energy imports and
increasing the proportion of energy obtained from politically stable regions. The EU will
strengthen its position on all these measures of security of supply if it achieves the proposed
share of renewable energy. Benefits are seen in all sectors and are particularly marked in
transport. One way to sum up the benefits is to look at the quantity of fossil fuels displaced by
renewable energies. Assuming the EU achieved 20% deployment of renewables, the annual
reduction in fossil fuel demand can be calculated to be 252 Mtoe from 2020 onwards. This
figure is equivalent to the total combined energy consumption of the UK, Latvia and
Lithuania. About 200 Mtoe of this saving would come from imports, including 55 Mtoe of oil
and 90 Mtoe of gas, predominantly from the Middle East and CIS countries.

4.3. Cost and competitiveness
In contrast to conventional energy sources, there has been a continued and significant
reduction in the cost for renewables over the last 20 years. As an example, the cost of wind
energy per kWh has fallen by 50% over the last 15 years while at the same time the size of the
turbines has increased by a factor of 10. Solar photovoltaic systems today are more than 60%
cheaper than they were in 1990.
Despite this, as stated in Section 2, the cost of renewable energies varies significantly
according to the resource base and the technologies concerned, but generally still exceeds that
of conventional energy sources at present

Energy market price signals remain distorted in favour of non-renewable energy sources
27
, in
particular due to the continued failure to systematically internalise external costs. Although
external costs are partially internalised through the EU's Emission Trading System, fiscal
instruments or support frameworks for renewable energy sources, current market prices are
still far from reflecting true cost. Figure 5
28
below illustrates how many renewable energy
technologies would be more able to compete with conventional fuels if external costs were
reflected in prices.

Reaching the target for renewable energy in the EU by 2020 will entail additional cost. The
size of this will depend on the finance mix, the technology choices made and the degree of
competition in the sector. Above all, however, the cost will depend on international prices for
conventional energy sources, notably oil. The annual additional cost of increasing the
contribution of renewables to the proposed share by 2020 is defined as the total costs of
generation of renewable minus the reference cost of conventional energy production. A
balanced mix of renewable technologies, combined with low international oil prices ($48),
will result in an additional average annual cost of achieving the proposed share of renewable
energy of approximately €18 billion
29
Strong research and development efforts will certainly .
lower the costs of renewable energies and thus the overall cost of this policy. The exact choice
of the technologies
30
could reduce this average cost by approximately €2 billion per year.

Marginal costs of renewable energies are often low compared to conventional energy sources,
and therefore a gradual increase in renewable energies in the wholesale electricity market will
reduce the wholesale market prices of electricity
33
The net effect on power costs to .
consumers is thus constituted of two counteracting effects. For the electricity sector, based on
the assumption of a reference spot price of €48.6 per MWh for electricity, consumer
electricity prices could be 5% higher due to the extra investment in renewable energy.
Whether or not energy efficiency measures are applied is also of key importance and the
range cited above assumes energy efficiency policies. Without these, the average annual
additional cost would increase by more than €7 billion annually. Full details of the cost
analysis can be found in the impact assessment report.
The European Council in March 2006 decided to refocus the Lisbon Strategy
34
on jobs and
growth
35
The renewable energy sector in the EU has achieved global leadership and has a .
turnover of €20 billion and employs 300 000 people
36
In order to maintain this role, the EU .
needs to continue to expand the deployment of renewable energy technologies in the EU.
Studies vary in their estimates of the GDP impact of increasing the use of renewable energy,
some suggesting a small increase (of the order of 0.5%), and others a small decrease. Studies
also suggest that support for renewable energy will lead to a small net increase in
employment. Much of the economic activity generated by support for renewable energy is
located in agricultural areas, often in peripheral regions.
Further business opportunities will arise from the export of renewable energy technology.
Traditionally the EU wind industry has held a position as the global market leader. It currently
holds a 60% world market share. Other renewable technologies are currently experiencing
spectacular growth, for example, solar thermal appliances, for which the Chinese market has
taken off and currently accounts for more than 50% of global solar thermal installations. Of
the employment created in Germany by the wind energy sector – evaluated at 60 000 full time
jobs –half is due to the export market.
With a strong renewable energy strategy the EU would be well placed to maintain its leading
role in renewable energy research, and would benefit from increased opportunities for
renewable energy technology exports

5. CONCLUSION
With this Road Map the Commission sets out an important part of its strategic vision for the
energy future of Europe. It seeks to significantly accelerate the growth in renewable energy,
and proposes that the EU achieve a contribution of 20% of its energy mix from renewable
energy sources by 2020. The Commission requests the Spring Council and the European
Parliament to endorse this target. This will require a substantial strengthening of the EU
regulatory framework. Most importantly, the Commission is convinced that a legally binding
target for the overall contribution of renewables to the EU's energy mix plus mandatory
minimum targets for biofuels are now called for. This policy will be a major step along the
road to sustainability.
Reaching this target is technically and economically feasible. Additional average costs
compared to conventional supply options will depend on future innovation rates and
conventional energy prices and would range between €10.6 to €18 billion per year. The
additional renewable energy deployment needed to achieve the 20% target will reduce annual
CO2 emission by approximately 700 Mt in 2020. The value of this significant reduction in
greenhouse gas emissions would nearly cover the total additional cost under high energy
prices. At the same time the EU will strengthen its position on security of supply reducing
fossil fuel demand by over 250 Mtoe in 2020. Until this new legislation enters into force, the
current legislative framework, notably for electricity and biofuels, will be vigorously
enforced.
No-one can predict oil prices or gas prices over a 20 years period, but it would be imprudent
not to start investing to reduce the uncertainties of the EU's energy future. To put the
principles and proposals set out in this Road Map into practice, it will be followed by
proposals for new legislation in 2007. New legislation will build on and strengthen the
existing legislative framework for the post 2010 period. Member States should engage in a
process to share the overall target in a fair and equitable manner, taking into account national
circumstances and choices, while at the same time indicating the way in which they intend to
make progress in all three sectors in accordance with the agreed target.
This policy aims to create a true internal market in which renewable technologies can thrive.
It will provide the business community with the certainty and stability it needs to make its
investment decisions while at the same time give Member States the flexibility they need to
support this policy in line with their national circumstances.
The Road Map builds on the reputation and the leading role the EU renewable energy industry
sector holds in the world. The objective is to confirm the EU as a world leader in this sector.
In view of increased global competition and the fact that other key players are putting in place
vigorous promotional policies on renewables, meeting this objective involves significant
challenges for Europe. Failing to rise to this challenge, through inaction or lack of vision,
would seriously endanger our leadership in this field, the importance of which reaches far
beyond the energy sector.
Most importantly, this Road Map provides EU citizens with the assurance they seek from
their policy makers: that the serious problems of climate change and environmental
degradation and of security of supply are being given equally serious answers.

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE
EUROPEAN PARLIAMEN

CROATIAN CENTER of RENEWABLE ENERGY SOURCES ( CCRES )

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)• was founded in 1988 as the non-profit European Association for Renewable Energy that conducts its work independently of political parties, institutions, commercial enterprises and interest groups, • is dedicated to the cause of completely substituting for nuclear and fossil energy through renewable energy, • regards solar energy supply as essential to preserve the natural resources and a prerequisite for a sustainable economy,• acts to change conventional political priorities and common infrastructures in favor of renewable energy, from the local to the international level, • brings together expertise from the fields of politics, economy, science, and culture to promote the entry of solar energy, • provides the opportunity to play a part in the sociocultural movement for renewable energy by joining the association for everyone, • considers full renewable energy supply a momentous and visionary goal - the challenge of the century to humanity.

CCRES
Željko Serdar
Head of association
solarserdar@gmail.com

The future Role of Regional Initiatives promoted by CCRES

CROATIAN CENTER of RENEWABLE ENERGY SOURCES

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL
The future Role of Regional Initiatives
1. CONTEXT
The Regional Initiatives were set up in spring 2006 by the European Regulators' Group for Electricity and Gas (ERGEG), at the request of the European Commission, as an interim step in moving from national electricity and gas markets to a single energy market. Seven electricity regions[1] and three gas regions were created.
The Regional Initiatives (RIs) have been beneficial in providing a forum for regulators, network operators and other stakeholders of neighbouring countries to discuss issues of common interest. Many of the RIs have made progress on a great variety of issues. The electricity regions have mainly focused on congestion management, balancing and transparency. The gas regions have worked on interconnection issues, interoperability, transparency, hubs and security of supply.
Five years after their set up, the Commission considers it useful to evaluate the regional initiatives with a view to assessing whether any modifications to the process, composition or governance could further enhance their effectiveness and contribution to the completion of the internal market. Such a review also fits with the entry into force of the the third internal energy market package (also called Third Energy Package)[2]. The Third Energy Package provides for new tools of European rulemaking through network codes which can be made binding by the Commission using the comitology procedure and changes the institutional architecture with the establishment of the Agency for the Cooperation of Energy Regulators (ACER).The Commission has launched a study on the regional initiatives last year.[3] In parallel, ERGEG has put forward its strategy paper on the role of the regional initiatives[4]. Also some stakeholders published their report on regional cooperation[5] and a Regional Initiatives Conference[6] was organized by the Commission and ERGEG jointly in July.
Based on the conclusions from the studies and debate, the purpose of this Communication is to seek stakeholder's views on possible options for strengthening the effectiveness of the regional initiatives going forward.
Following this communication and depending on the reactions from all interested stakeholders it might trigger, the Commission might launch an initiative based on Article 12.3 of the Electricity and Gas Regulation.[7] According to this Article, the Commission can redefine the geographical area covered by each regional cooperation structure within the context of a broader process of reform of the tasks and governance of Regional Initiatives, to which all actors, Commission, ERGEG, ACER, TSOs, Member States and stakeholders will contribute according to their respective roles and responsibilities.
2. TASKS AND PRIORITIES OF THE REGIONAL INITIATIVES
To a large extent, the Regional Initiatives have so far followed a bottom-up approach whereby each region has set its own priorities. That voluntary approach has had important advantages as it has allowed the regions to focus on their specific problems. For example, the South-South-East gas region has been able to focus on security of supply issues in the wake of the gas supply disruption in January 2009.
It has also allowed pilot testing, whereby solutions can be tested in one region before being implemented elsewhere. For example, solutions found to address problems in the volume coupling between the Danish and German electricity markets has helped create consensus towards the benefits of volume coupling.
Finally, the Regions implemented EU measures with a particular cross-border dimension. The electricity Regions, for instance, worked on implementing the requirements of the congestion management guidelines. The gas North-west region has taken forward the implementation of transparency requirements additional to those defined in Regulation 1775/2005. It is likely that progress in implementation would have been less or slower without the regional approach.
Nevertheless, the voluntary bottom-up approach also has significant drawbacks as recognized from the start[8]. There is an inherent risk of different regions implementing different solutions to similar issues without a clear perspective of integration over time. For example, if each region develops its own common auction office with its own structure, own governance etc., without taking into account convergence with similar structures in other regions, it might endanger the establishment of the internal energy market in the longer run.
The study commissioned by the Commission indicated that a lack of clear terms of reference for the Regional Initiatives, compounded by other factors related inter alia to the governance of the Regional Initiatives, has restricted the ability of the Regional Initiatives to perform the intended bottom-up approach most effectively.
Further policy guidance should therefore be given to the Regional Initiatives along the lines set out in this section.
The overarching principle should be that the Regional Initiatives should only focus on issues where they have a clear added value. Also, taking into account resource constraints, it would be preferable to focus work on a limited set of priorities for which substantial progress can be made.
a. Implementation of the EU acquis including network codes
In the past, the electricity Regional Initiatives dedicated a lot of their time on the implementation of those parts of the acquis requiring cross-border co-ordination (especially cross-border congestion, allocation of cross-border capacity and transparency). Although progress was made on these issues, the work of the Regional Initiatives has not yet resulted in Member States' full compliance with the requirements of Regulation 1228/2003. For this reason, the Commission has launched an infringement exercise in June 2010 requesting twenty Member States to implement and apply Single Market rules without delay.[9] Therefore, a first priority of the Regional Initiatives should be to accelerate the correct implementation of the Second Energy Package[10], i.e. those issues requiring cross-border co-ordination.
In the future, Regional Initiatives might have a role not only in implementing specific provisions of the Third Energy Package itself, but also in implementing legislation based on the Third Energy Package, i.e. new annexes to the Regulations and network codes. When codes will have been adopted via comitology, they will be legally binding and be part of the EU acquis. Since the adoption procedures might however be lengthy, market integration could be promoted if Regional Initiatives start implementing those elements of the network codes which can be expected to remain stable throughout the final stages of the adoption process. The Regional Initiatives should in that case ensure that early implementation does not exclude adjustments later on. Regions could move at different speeds for implementing cross-border aspects of the acquis, insofar of course that all regions meet the dates by which implementation is legally required.
Early implementation by one region might provide a useful test bed on how best to implement new codes, on the time needed to do so and practical hurdles to be overcome. Lessons learned may facilitate and speed up implementation in other regions. The work done so far in the Central-West electricity region on market coupling and in the Central-East electricity region on application of flow based capacity allocation provide good examples in this regard.
In order to avoid that individual regions interpret or apply some provisions of the acquis differently or in a manner which makes future integration with other regions more difficult, ACER should actively monitor the coherent implementation of the codes and other acquis across regions.
Electricity Regional Initiatives should collectively pursue the target of full market coupling across the EU by 2015. Market coupling is a way to foster market integration and will be easier to achieve (and thus quicker) if the countries which are still not using market coupling work together regionally in order to join the EU market coupling.
For gas, the potential role of market coupling in fostering market integration between balancing zones is to be examined in the discussion on a gas market target model. Market coupling should be aimed at by 2015 building on the work of the regulators. Necessary steps in this direction, such as making available firm day ahead capacity and joining exit and entry capacities to form one integral hub-to-hub capacity product are already under way.
For electricity, the Central West Region and the Northern Region have achieved full market coupling in November 2010. Therefore they are at the forefront for the implementation.
However, the way market coupling has to be done at the EU scale should be discussed between Regions for example at the Florence and Madrid Fora. Discussions on the method to be followed to achieve market coupling should be held as soon as possible to avoid technical problems at a later stage.
b. Regional issues: Investments in infrastructure, regional balancing and security of supply
Depending on the specific market conditions of a region, there will be a need for each region to work on issues specific to their region even though such issues may at some point become relevant for other regions as well. Against the background of overall EU energy policy, three issues are to be considered as priorities: regional investments in infrastructure, regional balancing and security of supply.
The Commission has set out its vision on infrastructure development needs in its Communication[11] "Energy infrastructure priorities for 2020 and beyond - A Blueprint for an integrated European energy network", in which it is proposed that the Regional Initiatives could play a key role in identifying infrastructure priorities for their respective regions and in coordinating cross-border investments, typically in new interconnectors. In order to promote cross border investments, investment needs must be clearly established, an appropriate regulatory framework put in place and planning and authorisation issues addressed. ACER plays an important role in facilitating cooperation between regulators on the regulatory aspects of investments decisions. Regional Initiatives can also play a facilitating role as they provide a platform of regulators, TSOs, network users and Member States, with the cooperation of the Commission and ACER, where such issues can be addressed. It should in addition remain possible to address those issues in ad hoc settings outside the scope of the Regional Initiatives where such ad hoc settings are more effective and efficient to promote cross-border investments.
Such investments can also be of particular importance in ensuring security of supply (like investments enabling physical reverse flows for gas). The Regulation on security of gas supply recognizes the need for regional cooperation.
Work on consolidation of balancing zones could be another focus for the Regional Initiatives, depending on the outcome of the discussion on the gas market target model.
Finally, regional cooperation is crucial to enhance the integrity of networks, avoid technical disruptions and blackouts, and address those effectively when they arise with minimum disturbance for users and producers.
c. Pilot testing
For issues which are not yet covered by framework guidelines and network codes, the Regional Initiatives can have an important role as test-bed for new ideas. Eventually this pilot testing might result into an initiative to develop new binding rules, e.g. via new network codes.
Regional pilot projects might be useful for the acceleration of smart grids or cross-border retail market. The European Electricity Grid Initiative set up within the Strategic Energy Technology plan (SET plan) have established a framework under which ENTSO-E has presented a detailed roadmap for the coming years. Regional Initiatives could play a useful role in the implementation of R&D projects (see the Roadmap[12]). Obviously, also on other issues, the regions should be free to engage in pilot testing, depending on specific regional needs.
3. NUMBER OF REGIONS
The electricity regions have been defined in decision 2006/770/EC which amended the congestion management guidelines annexed to Regulation 1228/2003.[13] For gas, the regions have not been formally defined in a binding decision. The gas regions resulted from informal consultation between the Commission, regulators, TSOs and other stakeholders. Practice has shown that the gas regions have managed to achieve progress in the absence of a formal decision establishing the regions and their tasks.
Going forward, two options are possible. The first option is to lay down the composition of the gas regions and their tasks in a formal decision, which has as main advantage that it would avoid discussion and uncertainty and would identify more precisely what is expected from the Member States concerned and their energy stakeholders. The second option is to continue with the informal definition of gas regions, which has as main advantage that it would allow for more flexibility in the composition of the regions over time and their tasks.
Apart from the instrument used to define the regions, the question of their composition arises. The composition of the regions should be determined in function of their tasks. If the aim of the region is to make progress on certain specific priorities, the shape of the region will have to correspond to this.
For electricity, the shape of the existing regions seems to be well suited to address the priorities proposed above and there seems to be no reason to change the composition of the current seven Regions. However, over time when sufficient interconnectors will have been developed to physically link the relevant regions, it may be appropriate to integrate the France-UK-Ireland region with the Central-West region and the Baltic Region with the Northern region.
For gas, there are sound reasons to reshape the current South-South-East region. The study commissioned by the Commission concluded that: "Due to the heterogeneity in size and differing interests of members, the Region (South-South-East) has probably suffered more than others from the drawbacks of the voluntary and cooperative approach which characterises the RIs, that is to say a certain organisational looseness and lack of commitments" . Given the importance of developing new gas infrastructure and new interconnections for the creation of the internal gas market and for security of supply reasons, the Commission proposes to split the current "South, South-East" region into three new regions for gas including the Baltic States and the Nordic countries as follows:
- New Central-South region: IT, AT, SK, SI, HU, RO, BG, EL;
- New Central-East region: DE, PL, CZ, SK, AT;
- New BEMIP region: SE, FI, EE, LV, LT, PL, DE, DK.
Reshaping the region may temporarily disrupt the work of the region on operational issues. However, it would be preferable to get the structure right and to set up new more efficient regions even if it will cost some months, rather than continuing with a structure which appears not suitable to deliver the desired results.
There are also reasons to combine Italy with the current South region (encompassing France and the Iberian Peninsula) since, for instance, this region would be the main entry for the natural gas coming from the north of Africa. The change could have a positive effect on liquidity in this new South Region. As an overlapping country Italy could help ensure the necessary coherence of both southern regions.
In addition to market design issues and the implementation of the acquis, each of the regions should focus on the development of new interconnections.
The format and membership of the current North-West region appears adequate and should not be changed.
It is important to underline that the Regional Initiatives should not exclude other formats of cooperation between TSOs, regulators or Member States, such as the North Seas Countries Offshore Grid Initiative signed by Germany, United Kingdom, France, Denmark, Sweden, the Netherlands, Belgium, Ireland and Luxembourg. The fact that a Member State is part of one region does not prevent it from working together with one or more Member States from another region, insofar as this collaboration does not go against the work of the regions.
Moreover, as also suggested by ERGEG, there are sound reasons for regions to work together on certain topics like e.g. the market coupling between Central-West and Nordic countries. However, such collaboration should not delay the work and deliverables of the regions. If one region gives the "good example", the other regions should aim at following that example (taking into account, if need be, regional specificities).
It is quite likely that the number of regions and their composition will have to be changed again over time. At least from a theoretical viewpoint, the regions will be really successful the day they are not needed anymore.
A regular assessment on the work of the regions and their composition could be done at the occasion of the Florence and Madrid fora.
4. GOVERNANCE ISSUES
1. Structure of each region
The current governance structure of the Regional Initiatives consists of three bodies. In each region, there is the Regional Co-ordination Committee (RCC) which comprises all NRAs of the region. The RCC acts as overall co-ordinator of the tasks facing the Region and provides leadership and strategy. The Implementation Group (IG) consists of NRAs and the main stakeholders. It proposes and commits to undertake concrete actions in response to the priority issues identified at the RCC level. Finally, the Stakeholder Group (SG) consists of all stakeholders.
The study on the Regional Initiatives identified the need for providing more political guidance. Very often, progress in the Regional Initiatives necessitates the involvement of governments in order to change the national legal and regulatory framework and support at the political level, e.g. for cross-border infrastructure projects. The involvement of Member States in the Regional Initiatives should also minimize the risk of a possible multiplication of fora by Member States setting up ad hoc structures outside the Regional Initiatives.
From its entry into force onwards, ACER should play an active role in the Regional Initiatives with a view to ensure effectiveness and consistency in the work of the various regions.
Also the Commission has to provide political guidance given its role to promote the establishment of the internal energy market and given its duty as guardian of the Treaties and the EU acquis. The Commission must be able to make proposals concerning any new tasks that a region should deal with.
The governance of the Regional Initiatives could be strengthened creating a Regional Steering Committee (RSC) including ACER, the Commission as well as the Member States and regulators from the region along the Regional Coordination Committee (RCC) and by enlarging the RCC with ACER and the Commission. The scope of the RSC work would be twofold : to promote and foster cooperation at regional level and provide a high level steer to the work plan for the region to be developed by the RCC in co-ordination with that of ACER, in terms of identifying the implications for political goals relating to security of supply, competitiveness and sustainability; and to boost progress on implementation of the network codes given the new role of the RIs in facilitating implementation and encouraging early implementation of other projects as well as infrastructure development at regional level. The RSC could give a high level impetus to implementation when problems arise. Pure regulatory issues would remain with the RCC.
If appropriate, the RCC and the RSC could invite the TSOs, Power Exchanges or other stakeholders to their meetings, depending on the topics and projects addressed. Such early involvement of the industry would warrant that any strategy and policy decisions are feasible and workable and would address concerns, raised in the Commission's study, that stakeholders currently are involved too late.
To complement the RCC and the RSC, the Implementation Group and the Stakeholder Group should continue to function as today.
2. Governance and coherence across regions
Not only a clear governance structure within regions is important; it is equally important to guarantee the coherence of the work across regions. So far, ERGEG regularly published coherence and convergence reports but it is not clear to what extent the reports were followed up on by the regions.
Coherence of the work of the different regions will in first instance take the form of top-down guidance, which concretely will be provided by the framework guidelines and network codes. These, in turn, will be the translation, as far as electricity is concerned, of the reference model developed by the ERGEG Ad Hoc Advisory Group (AHAG). In addition, there will be a need to verify the coherent application of the network codes across regions. If regions are working on issues which are not treated (yet) in the network codes, there is a need for overall guidance in order not jeopardise the establishment of the internal energy market.
There is no need to create an additional structure to provide for coherence across regions. First, it is a deliberate choice, both in the gas and electricity regions that certain Member States are part of more than one region. These Member States will automatically have the tendency to guarantee coherence in order to avoid implementing different solutions at different borders. Secondly, ACER will have an important role to play in this respect in addition to the policy steer provided by the Commission including through participation in the new RSC. As the Florence and Madrid fora bring together the Commission, ERGEG/ACER, the ENTSOs, NRAs, Member States and trade associations of the industry, they may also offer appropriate platforms to provide policy steer to the regions and monitor coherence. Finally, it might be appropriate that work programmes are developed for the coming year or years. The work programme should be sent to ACER that will assess the coherence of the regions' work programmes with other work programmes, Framework Guidelines and Network Codes. In case of inconsistencies, ACER shall inform the Commission so that the Commission can adopt binding rules for the Work Programme(s) concerned in accordance with the last sentence of Article 7(3) of Regulation EC (No) 713/2009. This review function for ACER should be mentioned in ACER's Work Programme. According to Article 7.3 of the ACER Regulation, one of ACER's tasks is to provide a framework within which national regulators can cooperate. Moreover, ACER must monitor the regional co-operation of TSOs (Article 6.9 of the ACER-Regulation). It thus seems appropriate for ACER, from March 2011 onwards, to take over ERGEG's role of co-ordinating the regional initiatives. As ERGEG is doing today, ACER will need to rely on its member NRAs as driving forces behind the Regional Initiatives.
Moreover, it is important that the work of the Regional Initiatives feeds into the overall work of ACER.
5. THE WAY FORWARD
This Communication has presented an assessment of the performance of Regional Initiatives and their contribution to the creation of an internal market for energy, five years after their establishment. It has set out possible directions for reviewing their role, clarifying their membership and reinforcing their effectiveness. As a staging post towards a truly integrated single energy market, regional initiatives have a key role to play in shaping up the future EU energy policy and in promoting the construction of integrated energy networks fit for the needs of the next decades.
The Commission invites the European Parliament, the Council and all interested parties to express their views on the policy orientations expressed in this paper (by 15 February 2011).
Based on this feedback, the Commission will consider possible legislative or policy initiatives to reinforce cooperation at regional level in the second half of 2011.
[1] In 2008, also the Energy Community Region was established.
[2] See www.ec.europa.eu/energy/gas_electricity/third_legislative_package_en.htm, the package is composed of Directives 2009/72/EC and 2009/73/EC, Regulations (EC) No 713/2009, (EC) No 714/2009 and (EC) No 715/2009.
[3] The study has been published on the website of DG ENER: "From regional markets to a single European market" (April 2010): www.ec.europa.eu/energy/gas_electricity/studies/electricity_en.htm
[4] Strategy for delivering a more integrated European energy market: The role of the ERGEG Regional Initiatives. An ERGEG Conclusions Paper. E10-RIG-10-04, 21 May 2010 (www.energy-regulators.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/CEER_ERGEG_PAPERS/Cross-Sectoral/2010/E10-RIG-10-04_Strategy_Conclusions_21-May-10.pdf).
[5] See for instance Eurelectric's report: http://www.eurelectric.org/Download/Download.aspx?DocumentFileID=62455.
[6] See http://www.energy-regulators.eu/portal/page/portal/EER_HOME/EER_INITIATIVES/Regional_Initiatives_Conferences/2010%20RI%20Conference
[7] See Regulations (EC) No 714/2009 and (EC) No 715/2009.
[8] Hence the preparation of annual coherence and convergence reports
[9] See press release IP/10/836, 24 June 2010.
[10] The package is composed of Directives 2003/54/EC and 2003/55/EC, Regulations (EC) No 1228/2003, (EC) No 1775/2005
[11] Communication COM(2010)677 of the 17th of November 2010 http://ec.europa.eu/energy/infrastructure/strategy/doc/com(2010)0677_en.pdf
[12] https://www.entsoe.eu/fileadmin/user_upload/_library/news/EEGI_Implementation_plan_May_2010.pdf
[13] Commission Decision of 9 November 2006 amending the Annex to Regulation (EC) No 1228/2003 on conditions for access to the network for cross-border exchanges in electricity.
More info at http://solarserdar.blogspot.com

CROATIAN CENTER of RENEWABLE ENERGY SOURCES ( CCRES )

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)• was founded in 1988 as the non-profit European Association for Renewable Energy that conducts its work independently of political parties, institutions, commercial enterprises and interest groups, • is dedicated to the cause of completely substituting for nuclear and fossil energy through renewable energy, • regards solar energy supply as essential to preserve the natural resources and a prerequisite for a sustainable economy,• acts to change conventional political priorities and common infrastructures in favor of renewable energy, from the local to the international level, • brings together expertise from the fields of politics, economy, science, and culture to promote the entry of solar energy, • provides the opportunity to play a part in the sociocultural movement for renewable energy by joining the association for everyone, • considers full renewable energy supply a momentous and visionary goal - the challenge of the century to humanity.

CCRES
Željko Serdar
Head of association
solarserdar@gmail.com

Energy 2020 A strategy for competitive, sustainable and secure energy

CROATIAN CENTER of RENEWABLE ENERGY SOURCES

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Energy 2020 A strategy for competitive, sustainable and secure energy

{SEC(2010) 1346}

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

Energy 2020A strategy for competitive, sustainable and secure energy

INTRODUCTION

The price of failure is too high.

Energy is the life blood of our society. The well-being of our people, industry and economy depends on safe, secure, sustainable and affordable energy. At the same time, energy related emissions account for almost 80% of the EU's total greenhouse gas emissions. The energy challenge is thus one of the greatest tests which Europe has to face. It will take decades to steer our energy systems onto a more secure and sustainable path. Yet the decisions to set us on the right path are needed urgently as failing to achieve a well-functioning European energy market will only increase the costs for consumers and put Europe’s competitiveness at risk.

Over the next ten years, energy investments in the order of € 1 trillion are needed, both to diversify existing resources and replace equipment and to cater for challenging and changing energy requirements. Structural changes in energy supply, partly resulting from changes in indigenous production, oblige European economies to choose among energy products and infrastructures. These choices will be felt over the next 30 years and more. To enable these decisions to be taken urgently calls for an ambitious policy framework. Postponing these decisions will have immeasurable repercussions on society as regards both longer-term costs and security.

A common EU energy policy has evolved around the common objective to ensure the uninterrupted physical availability of energy products and services on the market, at a price which is affordable for all consumers (private and industrial), while contributing to the EU's wider social and climate goals. The central goals for energy policy (security of supply, competitiveness, and sustainability) are now laid down in the Lisbon Treaty[1]. This spells out clearly what is expected from Europe in the energy area. While some progress has been made towards these goals, Europe's energy systems are adapting too slowly, while the scale of the challenges grows. Forthcoming enlargements of the EU will make this challenge even greater as the Union takes in countries with outdated infrastructure and less competitive energy economies.

The European Council adopted in 2007 ambitious energy and climate change objectives for 2020 – to reduce greenhouse gas emissions by 20%, rising to 30% if the conditions are right[2], to increase the share of renewable energy to 20% and to make a 20% improvement in energy efficiency. The European Parliament has continuously supported these goals. The European Council has also given a long term commitment to the decarbonisation path with a target for the EU and other industrialised countries of 80 to 95% cuts in emissions by 2050.

Nevertheless, the existing strategy is currently unlikely to achieve all the 2020 targets, and it is wholly inadequate to the longer term challenges. EU energy and climate goals have been incorporated into the Europe 2020 Strategy for smart, sustainable and inclusive growth[3], adopted by the European Council in June 2010, and into its flagship initiative ‘Resource efficient Europe’. The urgent task for the EU is to agree the tools which will make the necessary shift possible and thus ensure that Europe can emerge from recession on a more competitive, secure and sustainable path.

Despite the importance of energy policy aims, there are serious gaps in delivery.

The internal energy market is still fragmented and has not achieved its potential for transparency, accessibility and choice. Companies have grown beyond national borders, but their development is still hampered by a host of different national rules and practices. There are still many barriers to open and fair competition[4]. A recent study into consumer conditions in retail electricity markets indicates sub-optimal consumer choice[5]. Implementation of internal market legislation is disappointing, with over 40 infringement procedures underway on the second internal energy market package from 2003 alone.

The security of internal energy supplies is undermined by delays in investments and technological progress[6]. Currently, nearly 45% of European electricity generation is based on low-carbon energy sources, mainly nuclear and hydropower. Parts of the EU could lose more than a third of their generation capacity by 2020 because of the limited life-time of these installations. This means replacing and expanding existing capacities, finding secure non-fossil fuel alternatives, adapting networks to renewable energy sources and achieving a truly integrated internal energy market. At the same time Member States still need to phase out environmentally harmful subsidies.

The quality of National Energy Efficiency Action Plans, developed by Member States since 2008, is disappointing, leaving vast potential untapped. The move towards renewable energy use and greater energy efficiency in transport is happening too slowly. While we are broadly on track for the 20% target for renewable, we are a long way from achieving the objective set for energy efficiency.

At an international level, little heed is paid to warnings about tight oil supply in the future[7]. Despite serious gas supply crises that have acted as a wake-up call, exposing Europe’s vulnerability, there is still no common approach towards partner, supplier or transit countries. The potential for further development of EU indigenous fossil fuel resources, including unconventional gas, exists and the role they will play must be assessed in all objectivity.

Member States’ energy interdependence requires more European action.

The EU is the level at which energy policy should be developed. Decisions on energy policy taken by one Member State inevitably have an impact on other Member States. The optimum energy mix, including the swift development of renewables, needs a continental market at least. Energy is the market sector where the greatest economic efficiencies can be made on a pan-European scale. Fragmented markets not only undermine security of supply, they also limit the benefits which energy market competition can bring. The time has come for energy policy to become truly European.

The EU must remain an attractive market for companies at a time of increasing competition on energy resources worldwide. The new European energy strategy must support the integrated industrial approach just presented by the European Commission[8], in particular since energy remains an important cost factor for industry[9]. The EU must also consolidate its competitiveness in energy technology markets. The share of renewable energy in the EU energy mix has risen steadily to some 10% of the gross final energy consumption in 2008. In 2009, 62% of newly installed electricity generation capacity in the EU was from renewable sources, mainly wind and solar. However, Europe’s lead is challenged. The independent 2010 Renewable Energy Attractiveness Index[10] now cites the US and China as the best investment opportunities for renewable energy. New stimulus is needed; more than ever is EU leadership called to address these challenges.

In international energy affairs, the EU could be much stronger and effective if it took charge of its common interest and ambition. Despite accounting for one fifth of the world’s energy use, the EU continues to have less influence on international energy markets than its economic weight would suggest. Global energy markets are becoming tighter, with developing Asian countries and the Middle East accounting for most of the growth in global demand[11]. As the world's largest energy importer, the EU is likely to be more vulnerable to supply risks as a result.

The inclusion of energy policy in the EU Treaty calls for a new outlook.

We must build on what we have achieved, and be bold in our ambition.

The EU cannot afford to fail in its energy ambitions. Therefore the Commission proposes a new energy strategy towards 2020. This will consolidate the measures which have been taken so far and step up activity in areas where new challenges are emerging. It is the result of extensive debates within the EU institutions and wide-ranging public consultations.

The focus here is not on a comparative analysis of different energy sources, rather the steps which are required to deliver Europe's medium term policy objectives. Various scenarios in terms of energy mix will be presented in the forthcoming energy roadmap 2050, which will describe ways of achieving Europe’s long-term decarbonisation goal and their implications for energy policy decisions. This strategy sets out initial policy decisions which will be needed to meet our 2020 energy objectives as they currently stand. The 2050 low carbon economy and energy roadmaps will further inform and guide this programme of action and its implementation by offering a long term vision.

We urgently need far-reaching changes in energy production, use and supply.

First and foremost, the strategy underlines the need to rebalance energy actions in favour of a demand-driven policy, empowering consumers and decoupling economic growth from energy use. In particular, the transport and construction industries must pursue an active energy savings policy and diversify towards non-polluting energy sources. Beyond the Emissions Trading Scheme (ETS), the strategy should help create market conditions which stimulate higher energy savings and more low carbon investments, to exploit a wide range of centralised and distributed renewable energy as well as key technologies for energy storage and electro-mobility (notably electric vehicles and public transport).

Energy policy is a key contribution for achieving the objective of the new strategy for smart, sustainable and inclusive growth in support of a strong, diversified and competitive industrial base. In this context, Europe has to acknowledge that its industrial base is in need of all sectors across the entire value chain.

Public authorities have to lead by example. Each year, 16% of EU GDP, around € 1,500 billion, is spent by public authorities. Public procurement rules should insist on efficiency conditions to increase energy savings and spread innovative solutions, notably in buildings and transport. The potential of market-based and other policy instruments, including taxation, to enhance energy efficiency should be fully exploited.

On the supply side, the priority must continue to be the development of secure and competitive sources of energy. In the field of electricity generation, investments should lead to nearly two thirds of the electricity coming from low carbon sources by the early 2020's, the current level being 45%. In this context, priority should be given to renewable energies. The strategy must provide a framework at EU level which, while respecting national differences, would not only allow Member States to outperform their respective targets, but also ensure that the renewable energy sources and technologies are economically competitive by 2020.

The contribution of nuclear energy, which currently generates around one third of EU electricity and two thirds of its carbon-free electricity, must be assessed openly and objectively. The full provisions of the Euratom Treaty must be applied rigorously, in particular in terms of safety. Given the renewed interest in this form of generation in Europe and worldwide, research must be pursued on radioactive waste management technologies and their safe implementation, as well as preparing the longer term future through development of next generation fission systems, for increased sustainability and cogeneration of heat and electricity, and nuclear fusion (ITER).

For oil and gas, rising import requirements and increasing demand from emerging and developing countries call for stronger mechanisms to secure new, diversified and safe supply routes. As well as crude oil access, refining infrastructure is a crucial part of the supply chain. The EU is a strong geopolitical partner in energy markets and must have the ability to act accordingly.

The new energy strategy focuses on five priorities:

1. Achieving an energy efficient Europe;

2. Building a truly pan-European integrated energy market;

3. Empowering consumers and achieving the highest level of safety and security;

4. Extending Europe's leadership in energy technology and innovation;

5. Strengthening the external dimension of the EU energy market.

1. AN EFFICIENT USE OF ENERGY THAT TRANSLATES INTO 20% SAVINGS BY 2020

Europe cannot afford to waste energy. Energy efficiency is one of the central objectives for 2020 as well as a key factor in achieving our long-term energy and climate goals. The EU needs to develop a new energy efficiency strategy which will enable all Member States to further decouple their energy use from economic growth. This strategy will take into account the diversity between Member States in terms of energy needs. Energy efficiency is the most cost effective way to reduce emissions, improve energy security and competitiveness, make energy consumption more affordable for consumers as well as create employment, including in export industries. Above all, it provides tangible benefits to citizens: average energy savings for a household can amount to € 1 000 per year[12].

It is necessary to address the paradox whereby demand for more energy-intensive or new products outstrips gains in energy efficiency. It is high time that we move from words to actions. Thus, energy efficiency needs to be mainstreamed into all relevant policy areas, including education and training, to change current behavioural patterns. Energy efficiency criteria must be imposed in all spheres, including the allocation of public funds.

Efforts should be concentrated on the whole energy chain, from energy production, via transmission and distribution, to final consumption. Effective compliance monitoring, adequate market surveillance, widespread usage of energy services and audits, as well as material efficiency and recycling are all musts.

We are a long way from achieving the 20% energy savings objective. The new strategy therefore calls for reinforced political commitment to achieving it through a clear definition of the objective to be reached and strong compliance monitoring. Member States and regional and local authorities are called to intensify their work to implement adequate policies and to make full use of the available tools, objectives and indicators, with comprehensive National Energy Efficiency Action Plans.

Special attention should be given to the sectors with the largest potential to make energy efficiency gains, namely the existing building stock and transport sector. Member States have agreed to legally binding climate targets for these and other non-ETS sectors but still need to implement appropriate measures[13]. The revision of the energy taxation directive could provide steering effects with the potential of long-term efficiency gains. Measures need to be developed to speed up significantly the rate of refurbishment using energy-efficient products and technologies. In the residential sector, the issue of divided incentives between owners and tenants needs to be addressed. Regarding the substantial stock of public buildings, the authorities need to exploit all available opportunities, including those offered by EU Regional Policy, to improve the energy efficiency and autonomy of the buildings. In the transport sector, significant potentials for example in multimodal solutions, efficient vehicles and efficient driving should be tapped.

The information and communication technologies have an important role to play in improving the efficiency of major emitting sectors. These technologies offer potential for a structural shift to less resource-intensive products and services, for energy savings in buildings and electricity networks as well as for more efficient and less energy consuming intelligent transport systems[14].

The industry sector needs to incorporate energy-efficiency objectives and energy technology innovation into its business model. The ETS contributes significantly to do so for larger companies, but there is need for a wider use of other instruments, including energy audits and energy management systems in smaller companies and supporting mechanisms for SMEs. Efficiency benchmarking can give indication to companies where they stand in efficiency terms in comparison with their competitors. Efficiency, including in electricity use, must become a profitable business in itself, leading to a robust internal market for energy-saving techniques and practices and commercial opportunities internationally. A framework for wide resource efficiency would increase such savings.

The public sector needs to lead by example. Ambitious objectives ought to be set for public sector consumption. Public procurement should support energy efficient outcomes. Innovative integrated energy solutions at local level contributing towards transition to so-called ‘smart cities’ should be supported. Municipalities represent a major actor of the required change, thus their initiatives like the Covenant of Mayors should be further strengthened. Cities and urban areas, which consume up to 80% of the energy, are at the same time part of the problem and part of the solution to greater energy efficiency.

Resource-efficiency policies, including energy-efficiency investments, often have short-term, up-front costs before the medium- and longer-term benefits are felt. Tools are needed to encourage new investments in energy-efficient technologies and practices. EU financing can have a high leverage factor and innovative solutions must be developed. Innovative and carefully considered[15] uses of taxation and pricing should also be explored as tools to encourage behavioural changes or to fund investments.

The Energy Efficiency Plan to be presented in early 2011 will be followed by concrete regulatory proposals in the course of that year. It will also address the issue of financing in terms of access to finance, the availability of innovative financing products, incentives to induce energy-efficiency investments as well as the role of EU funding, in particular the structural funds, further building on existing successful examples.

Priority 1: Achieving an energy-efficient Europe Action 1: Tapping into the biggest energy-saving potential — buildings and transport The energy-efficiency renovation rate should be accelerated by investment incentives, wider use of energy service companies, innovative financial instruments with high leverage factors and financial engineering at European, national and local levels. In this context, division of investment incentives between owners and tenants and energy labelling of buildings (certificates used in the real estate market and public support policies) will be addressed in forthcoming proposals by the Commission. Public authorities need to lead by example. Energy criteria (regarding efficiency, renewables and smart networking) should be used in all public procurement of works, services or products. Programmes and technical assistance facilities are needed that build the capacities of energy services market participants to develop and structure finance for projects that target both public authorities and private actors. EU financial programmes will target energy savings projects and make energy efficiency a strong condition for allocating financial support. The forthcoming White Paper on future transport policy will present a menu of measures to improve transport sustainability and reduce oil dependence. This will include initiatives aimed at increasing the energy efficiency of the transport system, including support for clean urban mobility as well as multimodal transport solutions, intelligent traffic management and energy efficiency-standards for all vehicles, adequate economic signals and the promotion of sustainable behaviour. In this context, more efficient car-labelling systems should be explored. Action 2: Reinforcing industrial competitiveness by making industry more efficient The Commission will seek to support European industries' competitiveness through energy efficiency by widening the Ecodesign requirements for energy and resource-intensive products complemented by system level requirements where relevant. The potential effect of voluntary agreements with energy and resource-intensive industry branches should be explored. More extensive energy labelling should be introduced to ensure more comprehensive comparison between products. Energy-management schemes (e.g. audits, plans, energy managers) should be implemented in industry and in the services sector. A particular emphasis on SMEs through dedicated support mechanisms should be established. Action 3: Reinforcing efficiency in energy supply Energy efficiency, in the production as well as in the distribution, should become an essential criterion for the authorisation of generation capacities and efforts are needed to substantially increase the uptake of high efficiency cogeneration, district heating and cooling. Distribution and supply companies (retailers) should be required to secure documented energy savings among their customers, using means such as third party energy services, dedicated instruments such as ‘white certificates’, public benefit charges or equivalent and speeding up the introduction of innovative tools such as ‘smart meters’ which should be consumer-oriented and user-friendly so that they provide real benefits for consumers. Action 4: Making the most of National Energy Efficiency Action Plans The National Energy Efficiency Action Plans provide comprehensive benchmarking on energy efficiency, including measurable objectives and indicators to monitor progress, taking into account the relative starting positions and national circumstances. An annual review mechanism should feed into the Europe 2020 objective for energy efficiency. |

- 2. ENSURING THE FREE MOVEMENT OF ENERGY

Europe’s energy markets have been opened up to enable citizens to benefit from more reliable, competitive prices as well as more sustainable energy. This potential will not be fully realised unless robust efforts are made to create a more integrated, interconnected and competitive market.

Electricity and gas markets are not yet working as a single market. The market is still largely fragmented into national markets with numerous barriers to open and fair competition. Most energy markets remain national in scope and are highly concentrated, often with incumbent companies having a de facto monopoly position. Regulated energy prices further reduce competition in many Member States[16]. Given the remaining anti-competitive practice in the energy sector[17], pro-active competition enforcement, not only by the Commission, but also by Member States, is needed. Improving competition in the energy markets will contribute to setting the right incentives for the investments required and reducing their cost to what is necessary.

By introducing a legislative framework designed to promote the achievement of the 20% target for renewable energy in 2020, Europe has just taken the first step in this area. It is necessary to ensure that the legislation is fully implemented and to pave the way for large scale use of renewable energy in the decades beyond 2020. The legal framework must be properly enforced to give investors the confidence to invest in new production, transport and storage options for renewable sources. The effects of the Renewable Energy Directive will be assessed as from 2011 with a view to strengthening or extending it where and when needed.

The further development of renewable energy will continue to rely for some time on support schemes. The Commission must play its part in ensuring that these are sustainable, consistent with technological progress and not hindering innovation or competition. It must however also ensure the required degree of convergence or harmonization between national schemes as the market for renewables is moving from a local to a cross-border supply. In this context, the necessary requirements for a pan-European trade in renewable energy should be defined on the basis of best practice. Greater use of balanced, cost-effective and predictable feed-in premiums, more technology-specific support and financing instruments should be mobilized in accordance with state aid rules when applicable. In particular, retroactive changes to support schemes should be avoided given the negative effect such changes have on investors' confidence.

As the Monti Report outlined, the new challenge to 2020 is to provide the backbone for electricity and gas to flow where it is needed. Without a proper infrastructure across Europe, comparable to the means of transport of other strategic sectors such as telecommunications or transport, the market will however never deliver on its promises. Further efforts need to be made to upgrade energy infrastructure particularly in Member States that joined as of 2004 as well as in less developed regions.

Most important, Europe is still lacking the grid infrastructure which will enable renewables to develop and compete on an equal footing with traditional sources. Current projects of large-scale wind parks in the North and solar facilities in the South need corresponding power lines capable of transmitting this green power to the areas of high consumption. Today’s grid will struggle to absorb the volumes of renewable power which the 2020 targets entail (33% of gross electricity generation).

Smart meters and power grids are the keys to full exploitation of the potential for renewable energy and energy savings as well as improvements in energy services. A clear policy and common standards on smart metering and smart grids[18] are needed well before 2020 to ensure interoperability across the network.

Finally, the obligation of solidarity among Member States will be null and void without a sufficient internal infrastructure and interconnectors across external borders and maritime areas. As a major energy importer, the EU is directly affected by the evolution of networks in neighbouring countries. The construction of new interconnections at our borders should receive the same attention and policies as intra-EU projects. Such links are essential not only for our neighbours but to ensure the EU's stability and security of supply. There will be specific emphasis on the Southern corridor and the effective start of projects of European interest, in particular Nabucco and ITGI.

Investment of around € 1 trillion will be needed by 2020 to replace obsolete capacity, modernise and adapt infrastructures and cater for increasing and changing demand for low carbon energy. While investment decisions lie mainly with market players (energy companies, system operators and consumers), public policy is decisive in creating a stable and transparent framework for investment decisions. The new tools created by the third Internal Energy Market Package, including an Agency for the Cooperation of Energy Regulators (ACER) and the new Networks of Transmission System Operators for Electricity and Gas (ENTSO-E and ENTSO-G) should be fully utilised in the coming years for the further integration of energy markets. Regional initiatives[19] should serve as stepping stones towards a European market.

Infrastructure investments will continue to be financed mainly from tariffs paid by the users. However, given the scale of the investments, their nature and their strategic character, it cannot be assumed that all the necessary investments will be delivered by the market alone. The Commission will adopt a new strategy on energy infrastructure development to encourage adequate grid investments in electricity, gas, oil and other energy sectors. Provided the supply is stable, natural gas will continue to play a key role in the EU’s energy mix in the coming years and gas can gain importance as the back-up fuel for variable electricity generation. This calls for diversified imports, both pipeline gas and Liquefied Natural Gas terminals, while domestic gas networks are required to be increasingly interconnected.

Beyond the financing issue, complex and lengthy administrative procedures can be a major bottleneck. Existing rules and procedures for projects of European interest (e.g. serving security of supply, solidarity or renewables integration purposes) will need to be improved and streamlined significantly, while respecting the principles of public acceptance and existing environmental legislation. Communities at local, regional and national levels will engage more constructively in facilitating projects of European interest if these also bring concrete, shorter term benefits for them through, for example, privileged access to public funds.

Priority 2: Building a pan-European integrated energy market Action 1: Timely and accurate implementation of the internal market legislation The Commission will continue to ensure correct and timely implementation of the existing internal energy market and a forceful competition policy. For further integration of the energy market, the regulatory framework needs to be consolidated (e.g. network codes), complemented by other actions such as market coupling, target model development[20] and a robust framework for traded markets through effective transparency and oversight. If these measures prove not to be sufficient or ACER's remit too narrow, further legislative measures will be envisaged. Action 2: Establishing a blueprint of the European infrastructure for 2020-2030 The Commission's forthcoming infrastructure communication will allow Europe to identify priority infrastructure to be deployed in order to have a functioning internal market, ensure integration of large-scale production of renewables and guarantee security of supply, in line with the vision for a sustainable European energy system by 2050. By 2015, no Member States should be isolated from the European internal market. Cross-border corridors will also be covered. The 10-year network development plans of ENTSO-E and ENTSO-G will be taken forward with the help of ACER, together with all other relevant stakeholders. This exercise will build on successful regional initiatives such as the one in the Baltic region and will also include an assessment of the necessary storage facilities and climate adaptation measures, including possible future needs for CO2 transportation infrastructure in the EU. The Commission's proposal also aims at preparing the grid for the inevitable changes in demand which will ensue from energy and transport policies, such as electro mobility and an increase in decentralised as well as large scale renewable power generation. A set of policy tools will be proposed by the Commission next year to implement strategic infrastructure priorities in the next two decades. They will include a new method for defining the strategic infrastructures which will be essential for the European Union as a whole in terms of competitive energy provision, environmental sustainability and access to renewables as well as security of supply. These vital sections will be clearly identified in the overall mapping exercise and awarded a label of ‘European interest’ so that they can benefit from an improved permitting procedure and concentrated funding if necessary. Selectivity will be of the essence in this work. Network connections with third countries will be duly taken into account. ACER, ENTSO-E and ENTSO-G will be given a mandate to develop the blueprint of European electricity and gas grids on the horizon of 2020-2030. This should be followed by a longer-term vision on the basis of the energy 2050 roadmap to be presented in 2011. Action 3: Streamlining permit procedures and market rules for infrastructure developments The Commission will propose to introduce a permitting scheme applying to projects of "European interest" to improve the current process through, for example, the nomination of a single authority at national level, while respecting safety and security standards and ensuring full compliance with the EU environmental legislation. The streamlined and improved procedures will provide for more transparency and ensure open and transparent debates at local, regional and national level to enhance public trust in and acceptance of the installations. In addition, ways of positively rewarding, through enhanced access to public fund regions and Member States that constructively engage and succeed in facilitating the timely construction of projects of European interest will be explored. To establish market coupling by 2014, ACER will, within the scope of its mandate, ensure the definition and implementation of all necessary technical (harmonisation, standardisation, etc.) and regulatory issues linked to the interconnection of networks across borders; access to renewables; and the integration of new technologies. A detailed programme of action will be presented accordingly to assist the Member States in the process of rolling out smart metering/smart grids (including the issue of display of information for consumers) and encouraging new energy services. Action 4: Providing the right financing framework Acknowledging the fact that most of the infrastructure development is of a commercial nature, a methodology will be defined by the Commission to analyse the optimum balance between public and private financing (on the following principles to be applied across the Union: ‘user pays’, ‘beneficiary pays’ - in terms of cross-border cost-benefit allocation, and ‘tax payer pays’ - burden-sharing for commercially non-viable and ‘EU-wide benefit’ infrastructure). This will be defined in accordance with applicable state aid rules. For projects of ‘European interest’ which have no or poor commercial viability, innovative funding mechanisms will be proposed for maximum leverage of public support to improve the investment climate for the coverage of main risks or to speed up project implementation. The development of proper energy infrastructure is critical and urgent; it requires a broader view of new funding instruments (both public and private) as well as the mobilisation of additional resources under the next multi-annual financial framework. |

- 3. SECURE, SAFE AND AFFORDABLE ENERGY FOR CITIZENS AND BUSINESSES

A well functioning, integrated internal market benefits consumers with wider choice and lower prices. Yet, many consumers do not perceive that they are better off as a result of market opening and competition among different suppliers. Individual consumers must be aware of, and exercise, their rights under EU legislation. They should be able to take advantage of the opportunities which market opening creates and feel confident that they have access to the energy services they need in the quality and emission profile they want. The opening of markets can deliver the best prices, choice, innovation and service for consumers if it goes hand in hand with measures to guarantee trust, protect consumers and to support them to play the active role expected of them by liberalisation.

However citizens appear to be unaware of their rights under EU legislation, or reluctant to exercise them. Far greater efforts are needed to inform consumers about their rights and involve them in the internal market. Likewise, the potential for reducing energy bills through energy savings needs to be better articulated. The Citizens' (London) Forum and the Sustainable Energy (Bucharest) Forum were established with a view to improving the energy situation of household consumers and ways should be explored to make them more responsive to consumers' needs.

The competitive position of important sectors of the European economy also depends on the availability of secure energy at affordable prices. Energy, in particular electricity, constitutes a substantial part of the total production costs of key European industries, including large and small and medium enterprises.

The international market for oil supplies could become very tight before 2020, which means that it is important for EU consumers to step up their efforts to reduce oil demand. This is not happening at the moment. Consumers need to be made more aware of the necessity to reduce their consumption of fossil fuels and they need to know how they can reduce their bills at a time of rising prices. "User-friendly" smart grids, smart meters and billing can help in this respect. But consumers also need to become more pro-active. To help consumers participate in the market, measures should be put in place to raise awareness of opportunities, enhance price comparison, and facilitate the switching and improve complaint handling procedures.

Providing affordable but cost-reflective and reliable supplies to consumers is mainly the task of the internal market. A functioning internal market on the basis of sufficient transmission and storage infrastructure is the best guarantee for security of supply, as energy will follow market mechanisms and flow to where it is needed. However, safety nets are necessary, in the case of vulnerable consumers for example, or at the time of a supply crisis which market mechanisms cannot sufficiently address. The internal market is also hampered when Member States are not fully interlinked, such as in the Baltic States. The Gas Security Regulation is important in that it ensures that markets are fully prepared to cope in a crisis and that domestic consumers are protected. Furthering of interconnection amongst Member States as well as active competition enforcement by the Commission and Member States can contribute to a further diversification of supply sources particularly in those Member States which currently depend on only one or few supply sources.

Energy policy is also responsible for protecting European citizens from the risks of energy production and transport. The EU must continue to be a world leader in developing systems for safe nuclear power, the transport of radioactive substances, as well as the management of nuclear waste. International collaboration on nuclear safeguards plays a major role in ensuring nuclear security and establishing a solid and robust non-proliferation regime. In the oil and gas exploitation and conversion sector, the EU legislative framework should guarantee the highest level of safety and an unequivocal liability regime for oil and gas installations.

Priority 3: Empowering consumers and achieving the highest level of safety and security

Action 1: Making energy policy more consumer-friendly

- Active competition policy enforcement at European and national levels remains indispensible to foster competition and guarantee that consumers have access to energy at affordable prices.

- The Commission will propose measures to help consumers better participate in the energy market in line with the third energy package. These measures will include the development of guidance based on best practice in the area of switching suppliers, the further implementation and monitoring of the billing and complaint-handling recommendations, and the identification of best practices in alternative dispute resolution schemes. A price comparison tool based on a methodology to be developed by energy regulators and other competent bodies should be available to all consumers, and all suppliers should provide updated information on their tariffs and offers. Finally, further efforts should be aimed at moving focus from energy prices to energy costs by developing the market for energy services.

- The Commission will publish regular benchmark reports assessing the level of implementation of the regulatory provisions relating to consumers and the overall level of protection across the internal market. Particular emphasis will be given to vulnerable customers and to practices which enable consumers to reduce energy use.

- Efforts to improve the functioning of the retail market should be stepped up by regulatory authorities with the help of the London Citizens’ and the Sustainability (Bucharest) Fora.

Action 2: Continuous improvement in safety and security

- The safety conditions of offshore oil and gas extraction are being reviewed by the Commission in the light of the Deepwater Horizon accident, with the aim of introducing stringent measures from prevention to response and liability issues which will guarantee the highest level of protection throughout the EU and the rest of the world.

- The legal framework for nuclear safety and security will be further enhanced through the mid-term review of the Nuclear Safety Directive, the implementation of the Nuclear Waste Directive, the redefinition of the basic safety standards for the protection of workers and the population and a proposal for a European approach on nuclear liability regimes. Greater harmonisation of plant design and certification at the international level should also be actively pursued. All these measures should allow the EU to keep its leadership in safe nuclear energy and contribute to responsible use of nuclear energy worldwide.

- The same security and safety considerations will also be upheld in the development and deployment of new energy technologies (hydrogen safety, safety of CO2 transportation network, CO2 storage, etc…).

4. MAKING A TECHNOLOGICAL SHIFT

Without a technological shift, the EU will fail on its 2050 ambitions to decarbonise the electricity and transport sectors. Given the time scale for the development and dissemination of energy technology, the urgency of bringing new high performance low-carbon technologies to the European markets is more acute than ever. The EU ETS is an important demand side driver supporting the deployment of innovative low carbon technologies. However, new technologies will reach markets more quickly and more economically if they are developed through collaboration at the EU level.

Europe-wide planning and management is paramount for investment stability, business confidence and policy coherence. The Strategic Energy Technology (SET) Plan sets out a medium term strategy valid across all sectors. Yet development and demonstration projects for the main technologies (second generation biofuels, smart grids, smart cities and intelligent networks, Carbon Capture and Storage, electricity storage and electro-mobility, next generation nuclear, renewable heating and cooling) must be speeded up. Similarly, the crucial nature of innovation was highlighted in the Europe 2020 flagship on ‘Innovation Union’[21].

The resources required in the next two decades for the development of these technologies are very significant, especially when seen in the context of the current economic climate. Major projects, such as the ones over 140 GW of offshore wind power currently being planned by European utilities, developers and governments, mostly in the North Sea or the Desertec and Medring initiatives, affect several Member States. Europe-wide coordination and collaboration should include the pooling of different funding sources. All stakeholders will be expected to contribute. The Commission will seek to leverage the EU budget to raise further the overall level of funding.

The EU is facing fierce competition in international technology markets. Countries such as China, Japan, South Korea and the USA are pursuing an ambitious industrial strategy in solar, wind and nuclear markets. EU researchers and companies need to increase their efforts to remain at the forefront of the booming international market for energy technology and, where it is mutually beneficial, they should step up cooperation with third countries in specific technologies.

Priority 4: Extending Europe’s leadership in energy technology and innovation Action 1: Implementing the SET Plan without delay The Commission will reinforce the implementation of the SET Plan, in particular the Joint Programmes of the European Energy Research Alliance (EERA) and the six European Industrial Initiatives (wind; solar; bio energy; smart grids; nuclear fission; and CCS). Work will intensify with Member States to finance the activities of the Technology Roadmaps for 2010-2020 and to ensure the success of related large scale demonstration programmes such as under the New Entrants Reserve (NER300) programme[22]. Available Community funding[23] will be concentrated on the SET Plan initiatives. The Technology Roadmaps of the European Industrial Initiatives for 2010-2020 are being implemented from this year on and will be given additional support. They will be the cornerstone for the preparation of the next financial framework as regards a consolidated, regularly assessed, more efficient and focused energy research programme. In this context, the Commission will promote the development of strategic energy research infrastructures in Europe as they strongly contribute to the shortening of the distance between research and technological development. It will also pursue other avenues with great potential, such as marine renewable energy and renewable heating and cooling. Action 2: The Commission will be launching four new large-scale European projects 1. The Commission will take forward a major European initiative on smart grids to link the whole electricity grid system, from the off-shore wind farms in the North Sea, solar plants in the South and existing hydro-electric dams, to individual households, while making power networks more intelligent, efficient and reliable. 2. Re-establishing Europe’s leadership on electricity storage (both large-scale and for vehicles). Ambitious projects will be developed in the fields of hydro capacity, compressed air storage, battery storage, and other innovative storage technologies such as hydrogen. These will prepare the electricity grid at all voltage levels for the massive uptake of small-scale decentralised and large-scale centralised renewable electricity. 3. Implementing large-scale sustainable biofuel production, including in the light of the ongoing review concerning the impact of indirect land use change. The € 9 billion European Industrial Bioenergy Initiative[24] will be launched shortly to ensure quick market uptake of sustainable second-generation biofuels. 4. Providing cities, urban and rural areas with ways of making greater energy savings. The ‘Smart Cities’ innovation partnership to be launched early 2011 will bring together the best from the areas of renewable energies, energy efficiency, smart electricity grids, clean urban transport such as electro mobility, smart heating and cooling grids, combined with highly innovative intelligence and ICT tools. EU Regional Policy can play an important role in unlocking local potentials. Rural areas also have a significant potential in this respect and could make use of the EARDF that provides financial means to support such innovation projects. Action 3: Ensuring long-term EU technological competitiveness In order to lay the foundations of our future competitiveness in the face of strong international competition, the Commission will propose a € 1 billion-initiative[25] to support the frontier research needed to deliver science necessary for low-carbon energy breakthroughs. EU leadership must also be maintained in the global flagship research project ITER. The Commission will ensure effective governance (including cost containment) and industrial value creation from ITER and the European fusion programme. The Commission will develop an EU research programme for energy materials, allowing the EU energy sector to stay competitive despite dwindling rare earth resources. |

- 5. STRONG INTERNATIONAL PARTNERSHIP, NOTABLY WITH OUR NEIGHBOURS

The European energy market is the world’s largest regional market (over 500 million consumers) and largest energy importer. However, the same collaboration and common purpose that has led to the adoption of the EU’s headline energy and climate targets is not yet evident in external energy policy. Several of the challenges facing the EU — climate change, access to oil and gas, technology development, energy efficiency — are common to most countries and rely on international collaboration. Member States have repeatedly called for the EU to speak with a common voice in third countries. In practice, national initiatives do not leverage the strength of the size of the EU market and could better express the EU interest.

International energy policy must pursue the common goals of security of supply, competitiveness and sustainability. While relations with producing and transit countries are important, relations with large energy-consuming nations and particularly emerging and developing countries are of growing significance. To lift people out of poverty will require access to energy since achieving the goal of eradicating extreme poverty by 2015 cannot be met unless substantial progress is made on improving access. In order to ensure that this does not harm other policy goals, sustainable development needs to be at the core of both energy and development policy, such as proposed in the Green Paper on Development Policy[26].

New patterns of supply and demand in global energy markets and increasing competition for energy resources make it essential for the EU to be able to throw its combined market weight effectively in relations with key third-country energy partners. Europe should be in a position to rely on significant additional energy supply sources and routes by 2020.

The need for international solutions obliges us to push our agenda for decarbonisation and energy efficiency with our main partners and in international negotiations and frameworks. The ETS is a driver of international carbon markets, and further action should build on ongoing action to further develop these markets. As a frontrunner in policy development, the EU has more scope to influence standard-setting environmental issues, and to promote respect for transparent and competitive markets.

The EU already has a series of complementary and targeted frameworks ranging from specific energy provisions in bilateral agreements with third countries (Free Trade Agreements, Partnership and Cooperation Agreements, Association Agreements, etc.) and Memoranda of Understanding on energy cooperation, through to multilateral Treaties such as the Energy Community Treaty[27] and participation in the Energy Charter Treaty. It is currently negotiating with several countries new agreements including important energy provisions.

The EU must now formalise the principle whereby Member States act in the benefit of the EU as a whole in bilateral energy relations with key partners and in global discussions. Building on the legal basis in the Lisbon Treaty, which clarifies and strengthens the external dimension, the EU’s external energy policy must ensure effective solidarity, responsibility and transparency among all Member States, reflecting the EU interest and ensuring the security of the EU’s internal energy market. More effective coordination at EU and Member State level need to be put in place.

In the nuclear field, international cooperation has produced good results. This is particularly relevant since various neighbouring countries operate or, plan to operate nuclear power plants. The EU must now encourage partner States to make all existing international nuclear safety and security standards and procedures legally binding and effectively implemented worldwide. The EU is particularly well placed, as it is the first to have taken such action both in the field of safety and security and has specific cooperation instruments for this purpose.

As well as being vital for the EU's security of supply, the external dimension of EU energy policy must be consistent and mutually reinforcing with other external activities of the EU (development, trade, climate and biodiversity, enlargement, Common Foreign and Security Policy and others). There must be synergies between energy objectives and other policies and instruments including trade, bilateral agreements, and development cooperation instruments and vice-versa.

Energy security is closely intertwined with EU's foreign and security priorities[28]. Diversification of fuels, sources of supply and transit routes is essential for EU security as are good governance, respect for the rule of law and protection of EU and foreign investments in energy producing and transit countries. Moreover, EU policy will pay particular attention to safety and security of oil, natural gas pipelines and related production and transport infrastructure by combining energy policy and CFSP instruments.

In 2011 the Commission will present concrete proposals to reinforce the overall consistency and efficiency of our external energy policy, involving Member States, various external policies of the European Union and external support programmes.

Priority 5: Strengthening the external dimension of the EU energy market

Action 1: Integrating energy markets and regulatory frameworks with our neighbours

- The Energy Community Treaty should be implemented and extended to all those EU neighbours who are willing to adopt the EU market model. In this context, market integration and regulatory convergence should be pursued through comprehensive EU agreements based on the EU rules in the countries covered by the European Neighbourhood Policy and the Enlargement process, in particular in the Mediterranean region and with transit countries such as Ukraine and Turkey. Moreover, the Energy Community Treaty should be deepened by extending new acquis to the signatories to the Treaty. This approach would strengthen the participation of neighbouring countries in the internal market, while providing a level playing field and a safeguards against the risk of carbon leakage through the power sector.

- Mechanisms will be proposed by the Commission to align existing international agreements (notably in the gas sector) with the internal market rules and to strengthen cooperation between Member States for the conclusion of new ones. Proposals will also be made to set the required regulatory framework between the EU and third countries to develop strategic routes from new suppliers, notably around the Southern corridor and the Southern Mediterranean. Supply issues, including network development and possibly grouped supply arrangements as well as regulatory aspects, notably concerning the freedom of transit and investment security, would be covered.

- EU technical assistance will be mobilised for the effective implementation of the internal market acquis and the modernisation of the energy sector in neighbouring countries, while improving the coordination of support schemes provided by the EU, its Member States and the international community.

Action 2: Establishing privileged partnerships with key partners

- While pursuing diversification of import sources and routes, reinforced energy partnerships will be established by the EU with key suppliers and transit countries. They will aim at promoting key principles such as those contained in the Energy Charter Treaty (for example the freedom of transit, transparency, safety, investment opportunities as well as compliance with international law).

Action 3: Promoting the global role of the EU for a future of low-carbon energy

- Energy efficiency, clean technologies and safe and sustainable low-carbon energy should be integrated into EU and bilateral cooperation activities, particularly with major consumer and emerging economies and with global partnerships.

- The Commission will launch a major cooperation with Africa on energy initiatives in order to progressively provide sustainable energy to all citizens, in line with the Green Paper on Development Policy.

Action 4: Promoting legally binding nuclear-safety, security and non-proliferation standards worldwide

- The Commission will develop initiatives aiming at encouraging partner States to make international nuclear safety, security and non-proliferation standards and procedures legally binding and effectively implemented around the globe, in particular through reinforced cooperation with the International Atomic Energy Agency and the conclusion of Euratom agreements with key nuclear suppliers and user countries.

CONCLUSIONS

The EU is on the threshold of an unprecedented period for energy policy. Energy markets have been largely cushioned from the effects of global market turbulence in recent years as a result of liberalisation, ample supply and production capacities and adequate import possibilities. However, dramatic changes are afoot. Energy prices will be affected by the huge need for energy sector investments, as well as carbon pricing and higher international energy prices. Competitiveness, supply security and climate objectives will be undermined unless electricity grids are upgraded, obsolete plants are replaced by competitive and cleaner alternatives and energy is used more efficiently throughout the whole energy chain.

Member States and industry have recognised the scale of the challenges. Secure energy supplies, an efficient use of resources, affordable prices and innovative solutions are crucial to our long-term sustainable growth, job creation and quality of life. Member States have agreed that these challenges will be tackled most effectively by policies and action at EU level, by ‘Europeanising’ energy policy. This includes directing EU funding support towards public priorities that markets fail to meet and that bring the most European value.

The new EU energy strategy will require significant efforts in technical innovation and investment. It will foster a dynamic and competitive market and will lead to a major strengthening of institutional arrangements to monitor and guide these developments. It will improve the security and the sustainability of energy systems, grid management, and energy market regulation. It will include extensive efforts to inform and empower domestic and business consumers, to involve them in the switch to a sustainable energy future, for example by saving energy, reducing wastage and switching to low-carbon technologies and fuels. Investments in low-carbon energy production will be further encouraged by market-based instruments such as emissions trading and taxation. The new strategy will take the first steps to prepare the EU for the greater challenges which it may well have to face already by 2020. Above all, it will ensure better leadership and coordination at the European level, both for internal action and in relations with external partners.

The global energy system is entering a phase of rapid transition with potentially far-reaching implications that will unfold in the next decades. Europe has to act before the window of opportunity closes. Time is short. Thus, the Commission will present most of the proposals to achieve the 2020 goals in the coming 18 months. Discussion, adoption and implementation will be needed quickly. In this way, the EU will be better able to put in place the building blocks for the 2020 outcome – standards, rules, regulations, plans, projects, financial and human resources, technology markets, social expectations etc. – and prepare Europe's citizens for the challenges ahead.

Due to the long lead in times for energy system changes, taking action today does not guarantee that the structural changes needed for the low-carbon transition will be completed in the period to 2020, which this strategy covers. It is therefore necessary to look beyond the timescale of the present strategy to ensure that the EU is well prepared for the 2050 objective of a secure, competitive and low-carbon energy system. The Commission will therefore follow up this strategy with a complete roadmap for 2050 which will set the measures covered in this paper in a longer term and consider further and complementary steps.

[1] Article 194 of the Treaty on the functioning of the European Union (TFUE).

[2] The European Council specified: "provided that other developed countries commit themselves to comparable emission reductions and economically more advanced developing countries to contributing adequately according to their responsibilities and respective capabilities"

[3] Communication from the Commission (doc. 7110/10 of 5 March 2010).

[4] As evidenced by the Commission's Energy Sector Inquiry, Communication from the Commission of 1 January 2007 Inquiry pursuant to Article 17 of Regulation (EC)No 1/2003 into the European gas and electricity sectors - COM(2006) 851 - and the high number of investigations into anti-competitive behaviour in the sector (e.g. IP/10/494 of 4 May 2010).

[5] Study of the functioning of retail electricity markets for consumers in the European Union, November 2010.

[6] ENTSO-Electricity has estimated that the EU needs to build or renew 30 000 km of network cables in the next ten years.

[7] E.g. IEA World Energy Outlooks 2009 and 2010.

[8] Communication on an "integrated industrial policy for the globalisation era" (COM 2010) 619

[9] For example, it is estimated that electricity prices in Europe is 21% more expensive than in the United States or 197% more expensive than in China.

[10] Issue 26, August 2010.

[11] International Energy Agency World Energy Outlook 2010.

[12] COM(2008) 772.

[13] Effort Sharing Decision No. 406/2009/EC.

[14] Specific actions have been set out in the Digital Agenda for Europe, COM(2010)245.

[15] Notably with regard to the possible cumulative effects of different market based measures

[16] Report on progress in creating the internal gas and electricity market - COM(2010) 84.

[17] After the Energy Sector Inquiry revealed manifold competition problems in the energy sector, which led to the adoption of nine major antitrust decisions, the Commission continues assessing the competitive landscape in European energy markets.

[18] The European Commission has set up a smart grid task force to discuss the implementation of smart grids at the European level: http://ec.europa.eu/energy/gas_electricity/smartgrids/taskforce_en.htm.

[19] E.g. Baltic Energy Market, Mediterranean Ring.

[20] An electricity target model has been developed in the context of Florence forum, in the so called Ad-Hoc Advisory Group. The guidelines and codes to implement this target model are being prepared. A target model for gas is being developed in the framework of the Madrid Forum.

[21] SEC(2010)1161, 6 October 2010.

[22] The revised ETS directive (2009/29/EC) foresees that 300 m ETS allowances from the New Entrants Reserve (NER) shall be available to support commercial-scale CCS and innovative RES demonstration projects in the territory of the Union.

[23] Funding available under the current Financial Perspectives.

[24] See footnote 23.

[25] See footnote 23.

[26] Non-OECD countries could account for all the projected growth in CO2 emissions by 2030; however, ensuring universal access to modern energy services for all only mean a rise of 0.8% of CO2 emissions, IEA World Energy Outlook 2009 and special early excerpt of the IEA WEO 2010 for the Millenium Development Goals Summit.

[27] The Energy Community Treaty is promoting market integration but also acquis transposition and implementation in the Western Balkans and is extending the EU internal energy market to South East Europe. This is not only a framework of cooperation but a legally binding instrument to prepare accession to the EU. Other parties are joining the Energy Community Treaty: Moldova is already a member; Ukraine and Turkey are in the process of joining.

More info at http://solarserdar.blogspot.com

CROATIAN CENTER of RENEWABLE ENERGY SOURCES ( CCRES )

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)• was founded in 1988 as the non-profit European Association for Renewable Energy that conducts its work independently of political parties, institutions, commercial enterprises and interest groups, • is dedicated to the cause of completely substituting for nuclear and fossil energy through renewable energy, • regards solar energy supply as essential to preserve the natural resources and a prerequisite for a sustainable economy,• acts to change conventional political priorities and common infrastructures in favor of renewable energy, from the local to the international level, • brings together expertise from the fields of politics, economy, science, and culture to promote the entry of solar energy, • provides the opportunity to play a part in the sociocultural movement for renewable energy by joining the association for everyone, • considers full renewable energy supply a momentous and visionary goal - the challenge of the century to humanity.

CCRES
Željko Serdar
Head of association
solarserdar@gmail.com