The Future of Energy in Europe

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I just spent an interesting morning at the European Future Energy Forum in London. The opening panel debate—titled “Movers and Shakers”—included representatives from European governments, industry and NGOs. A full line-up can be found here.

The conversation was fast-paced but seemed to orbit around what will happen if the next round of international climate negotiations—scheduled for Cancun from Nov. 29 to Dec. 12—fails.  Of course, several of the government ministers protested that an agreement was still possible. “Cancun can!” Portuguese Vice Minister for Energy and Innovation Carlos Zorrinho rather hopefully declared. But most of the other panelist seemed to feel that a binding agreement in Cancun was out of reach.

If that is the case, what lies in store for the future of  energy in Europe, a region that has traditionally been a leader in environmental issues? Danish Minister for Climate and Energy Lykke Friis said that European leaders now need to change the terms of the debate in Europe. She said that, by offering a jump to a 30% reduction in carbon emissions by 2020 as a bargaining chip at the Copenhagen talks, European citizens failed to see that such a bold cut could actually be a good move, even without reciprocity from the U.S., India, or China.

“We need to make argument now that [such a cut] would be in the interest of green growth and energy security,” she said.

But while continent-wide agreement on such an ambitious increase in European-wide carbon-reduction commitments may be out of reach—Poland and Italy, particularly, have resisted such a move—there are other ways that European cooperation could help cleantech, said Portugal’s Zorrinho. Portugal has become the continent’s leader in renewable energy. Fully 45 percent of Portugal’s electricity  come from renewable sources, up from 17 percent just five years ago. Land-based wind power has increased sevenfold in that time.

“One of our main frustrations is that we can’t export renewable energy to other countries,” he said, citing infrastructure problems. “That’s a critical issue in Europe.”

Some industry leaders in the forum expressed desire for a pan-European incentive scheme for cleantech, instead of the current national patchwork of tariffs, green certificates, grants and tax benefits. The concern is that such inconsistency of incentives means that renewables are not properly targeted—for example, wind turbines are erected where they receive the most subsidy, rather than where there is the most wind.

David Howell, the British Minister of State for Commonwealth said that such a uniform European policy “would be nice, but it’s not going to happen” because of political difficulties. He said it was up to states to encourage innovation on their own. But he worried throughout the dicussion about the prospect of higher energy prices being passed on to consumers. “You boys have to got to get your costs down!,” he said, addressing cleantech industry exists. He said that gas is probably going to get very cheap in the coming years, placing even more pressure on renewables to compete.

The overall feeling from the 90 minute discussion was that Europe, having given up on leading the international community to agreement on binding emission targets, now hopes to lead by example—showing how individual states and industry can work together to make renewable technology attractive both economically and environmentally. And let’s not forget, Europe is still far ahead in the game. The 20:20:20 targets (a 20% cut in greenhouse gas emissions, a 20% increase in renewable’s share in the energy mix, and a 20% cut in energy use) is a global model.

Tomorrow I’ll be back with a report from a panel on low carbon financing across Europe. VC funding for cleantech is sagging in the U.S.; is it the same in Europe?