E3G

The EU Strategic Energy Review

By Jennifer Morgan

2. A set of mandatory targets in the field of efficiency, cars, renewables and zero emission power plants.
Energy and climate policy must drive investment into zero and low carbon technologies; the timescale for this needs to be 2020, not 2030.

The type of signal that works at this pace is regulatory, not political. Political agreement (including targets) provides the basis for subsequent regulation but will not drive investment: political objectives must be enshrined in specific policy instruments in order to move capital.

A regulatory timetable is needed to provide investment certainty, setting out when policy instruments will be introduced to support the political objectives agreed at the March 2007 European Council:

a. Stronger efficiency target: the Energy Efficiency Action Plan, if implemented with ambition, could set the global standard for new appliances, cars and buildings. The 20% target should be increased to 30% by 2020 to set a stretch target for innovation. Achieving this target would be the most effective and efficient policy the EU could deliver, and must be matched with commensurate implementation resources within the Commission and Member States.

b. Mandatory doubling of car efficiency: cars are by far the main users of imported oil in Europe, and the fastest growing source of absolute levels of carbon emissions. No energy security strategy will have any impact unless it can reduce demand for imported oil. While biofuels have their place, the fastest and cheapest approach would be to set targets for doubling vehicle efficiency by 2015. This target could be co-ordinated with other major countries, such as China and Japan, in order to share risk, drive innovation faster and lay the foundations for global agreement.

c. Renewables targets for primary energy of at least 25%, including biofuels and renewable heat.

d. Zero emission power plants: under all scenarios for achieving energy and climate security the electric power sector is one of the first which needs to become zero-carbon. To give the strong and credible signal needed to drive large scale investment, Europe should regulate that all new-build power plants must be zero emission after 2015. Plants built before then should be “CCS ready” for Carbon Capture and Storage technology so that after 2015 they can be retrofitted, making it possible for the entire sector to be zero-emissions emissions by 2025.