The Green Deal – creating sustainable solutions
Oesterreichs Energie sees the European Commission’s Green Deal as the core package of measures designed to meet climate targets at the European level. It is now essential that the European Union creates a framework to achieve its goal of a climate-neutral economy by 2050, and companies quickly begin to implement the related measures. In many respects, the Clean Energy Package has already set out the basic principles for the electricity sector.
In order to hit climate and energy targets, the energy industry will have to make significant investments in the expansion of renewable generating stations, storage facilities and network infrastructure in the coming years.
Additionally, maintaining a high degree of supply security must be a major priority, in view of the planned exit from coal-fired generation and the growing significance of erratic generation. The value of guaranteed capacity and balancing out seasonal fluctuations (hydro, storage, gas and renewable gas) must be considered and acknowledged appropriately.
Furthermore, we strongly welcome the provision of substantial funding for research and development on innovative technologies (such as carbon capture technologies and sector coupling).
Climate neutrality by 2050
Oesterreichs Energie welcomes the new Commission’s ambitious goal of making Europe the first climate-neutral continent by 2050. We believe that the pioneering role which the EU is determined to play also involves gaining the support of global partners in the fight against climate change. Austria’s electricity sector is ready and waiting to play its part. This will include increasing renewable generation, as well as modernising and expanding network infrastructure and storage capacity. The economic viability, social acceptability and technological feasibility of the plan also need to be considered. In this context, considerable effort and investment in innovative technologies will be necessary in order to truly decarbonise the entire economy – and as things stand, a technological quantum leap will definitely be required in order to stand a realistic chance of achieving this target.
Oesterreichs Energie advocates more rigorous pricing of CO2 emissions at the European level in sectors that are not subject to the ETS and so far have only made a minor contribution to hitting climate targets. To this end, a CO2-based system of levies should be implemented for all energy sources (creating a level playing field for all energy sources on the basis of absolute emissions). Through the ETS, thermal generation is already making a financial contribution to achieving climate targets that is in line with its level of emissions. Therefore, doubling the burden on thermal generation and combined heat and power (CHP) plants in addition to the current ETS must be avoided at all costs. Electricity is heavily taxed in relation to its benefits in terms of energy efficiency and emissions, which is why electricity should not be put under any additional pressure by a prospective CO2 pricing system. Income from the ETS and from CO2 pricing should be clearly earmarked for the financing of measures aimed at cutting emissions and reducing possible negative distribution effects.
Plan to increase target for CO2 reduction from 40% to 50-55% by 2030
Die The Austrian electricity sector is committed to meeting the national energy and climate target of generating all electricity from renewable sources by 2030 and achieving climate neutrality by 2040.
It should be noted that these targets were only recently adopted as part of the Clean Energy Package following long and hard negotiations and are now due to be transposed into national law. Implementation of projects in practice can only be addressed once transposition has been completed, so this will take some time. Consequently, the electricity industry is in favour of realising targets that have been agreed before new ones are determined. The instruments set out in the Governance Regulation to support the implementation of the Renewables Directive and the Energy-Efficiency Directive provide a framework within which the member states can contribute to achieving the targets for renewables and energy efficiency by means of their national energy and climate plans (NECPs). The level of ambition of an adjustment to the 2030 targets should strike a balance between all member states, meaning that they take past achievements into account and are set out in the NECPs.
The extensive use of electricity in the transport and heating sectors is an essential function of sector coupling/integration. It will be the key to successfully boosting efficiency while at the same time increasing the share of renewables in the energy balance. Renewable energy forms (hydro, wind, photovoltaic and biomass) as well as industrial use and the injection of renewable gas (such as hydrogen and biomethane) into the gas grid will pave the way for decarbonisation in other sectors. This will require closer integration of the various sectors’ infrastructure, always keeping technical feasibility and economic viability in mind, in order to continue ensuring the necessary security of supply.
The positive effects of sector coupling will mainly be seen in the following areas:
- CO2 reductions across various sectors
- Integration of renewable generation
- Efficient use of energy infrastructure
- Security of supply
- Balancing seasonal fluctuations
In order to capitalise on the benefits of sector coupling, electricity will have to be converted into, for example, gaseous energy forms. Each type of conversion must avoid creating additional financial burdens, as these limit the advantages of sector-coupling technologies. Instead, levies and taxes should be based on final consumption and the related emissions.
Significant investment necessary
Substantial investment will be required in order to achieve the objectives of Europe’s Green Deal. Estimates suggest that additional investment of EUR 260bn will be needed in order to reach such climate and energy targets by 2030. This is equivalent to 1.5% of European GDP in 2018. Both the public and the private sector will need to be mobilised in order to bring this about, and the Green Deal will trigger investment of EUR 1tn up to 2030.
In autumn 2020 the Commission is due to present its strategy for a sustainable funding mechanism, which will enable the private sector to make a greater financial contribution to this green transformation. Green bonds are among the measures expected to be announced.
Austria’s electricity industry is ready to make the necessary investments, and our association’s members are hard at work drawing up plans and projects that will shape the future of renewable energy supply. In order to hit the government's target of achieving fully renewable energy supply by 2030 (in terms of the national balance), approximately 28 TWh of additional renewable generating capacity will be needed. According to rough estimates, Austria’s electricity industry will have to invest around EUR 50bn, which will be more or less evenly split between extending renewable generating capacity, storage including pumped storage, and necessary network investment at all grid levels.
Ambitious expansion targets must be met within a little over ten years in accordance with the energy and climate policy goals. The continent’s investment plan for a future-proof Europe is the first step in this direction. It will be vital to allocate funds to the various funding sources, and make these as accessible as possible to the electricity sector while also keeping red tape to a minimum.
The electricity sector will need comprehensive support when it comes to turning research findings into detailed and effective business models and market offerings. In this regard, Oesterreichs Energie welcomes the new Innovation Fund. The members of the association are in a position to submit projects related to this instrument, although this will require the definition of different categories in the call for tenders.
Oesterreichs Energie welcomes the European Commission’s increased emphasis on financing sustainable projects and the key role it attributes to the financial system. Many of the measures required for transforming the energy system (such as significant expansion of renewables, sector coupling and storage capacity) are not currently financially viable and require additional funding. Private capital must be mobilised in addition to public funds. We see the introduction of standards for classifying sustainable products as a positive move towards ensuring that investment is aimed at boosting sustainability. Overregulation and the associated higher costs should be avoided; existing systems (such as the Global Reporting Initiative) provide a good foundation. Regarding the platform to be established under the Taxonomy Regulation, we call for more balanced membership of the group of technical experts, the majority of whom are finance specialists. One third of the members should come from the real economy. Our experts are more than willing to play an active part and to share the electricity sector’s specialist technical knowledge. Oesterreichs Energie is strongly opposed to classifying nuclear energy as a sustainable energy source under the Taxonomy Regulation.
The European Commission has proposed a European Climate Pact that brings together regions, local (energy) communities, civil society, industry and schools with a view to promoting changes in attitudes. In order to safeguard Europe’s standing as a business location, the pact must achieve an appropriate balance between the participants’ contrasting interests in the approval procedure. Assessment of the substantive and formal prerequisites for approval must take into account whether the necessary investments are in the public interest, as well as the corresponding degree of supply security, and the process must be accelerated while also protecting the rights of the various parties involved.
We believe that the energy sector, politicians and the public should join forces at both the national and European level, as this is the only way to ensure that the continent becomes a climate-protection leader.
Transforming the transport system is one of the most important levers for achieving climate goals. In contrast to the energy sector, the transport industry has not yet made an appropriate contribution to reducing greenhouse gas emissions. In Austria, transport generates the largest proportion of total emissions (of sectors outside the ETS), at about 46%. Private vehicles account for around half of this amount. Emissions attributable to transport have risen steadily by around 72% since 1990. Therefore, an effective and sustainable energy transformation will require massive decarbonisation and efficiency gains in the transport sector. In the view of Oesterreichs Energie, the regulations on CO2 fleet thresholds are a powerful tool for promoting competition on the e-vehicle market.
E-mobility will have a vital part to play in achieving climate and energy targets, as it can make a decisive contribution to decarbonisation as well as to improving energy efficiency. The European Commission estimates that one million public charging points and e-filling stations will be needed by 2025 for the continent’s 13 million zero- and low-emission vehicles.
This will require a series of accompanying measures, including the following essential aspects at European level:
- Facilitating cross-border e-mobility initiatives: EU regulations regarding VAT treatment of roaming by creating a mini one-stop shop.
- Standardised charging equipment on vehicles: Europe-wide and international norms and standards are an essential prerequisite for successful market penetration and will also enhance investment certainty. Transparent EU standards for vehicles are imperative in order to get the e-vehicle market moving.
- Moves towards a Europe-wide solution for recording, signing and forwarding charging-process data.
- Assessing potential improvements to the de minimis rules in order to drive the changeover of vehicle fleets.
Review of the Energy Infrastructure Regulation
Remodelling the energy transformation will change the requirements for infrastructure and system security, and this must be taken into consideration when reviewing the Energy Infrastructure Regulation. More specifically, this means that the revised regulation must be compatible with the 2030 energy and climate goals, and with the long-term goal of climate neutrality by 2050; it must also address investment in the expansion of renewable generation and storage facilities, e-mobility and grids, and simplify approval procedures. The scope of the regulation should be extended with regard to the definition of “cross-border projects” to include “projects with significant cross-border impact”.
Introduction of a carbon border adjustment
The industry welcomes the introduction of a cross-border CO2 balancing system, as this places the focus of attention on protecting European businesses and their products – businesses must not be at a disadvantage against imports from third countries which do not have comparable taxes or levies on CO2. Extensive research in the form of impact assessments and cost/benefit analysis will be required beforehand.
Review of the Energy Taxation Directive
In connection with the review of the Energy Taxation Directive, the energy industry believes that the double system charge applied to pumped storage – which is a particularly important topic for Austria – should be addressed and abolished. As far as storage technology is concerned, care should be taken to ensure a level playing field for all of the different technologies. Pumped storage is the most widespread electricity storage technology (accounting for 96% of installed global capacity in 2017), but in parallel the use of battery storage for stationery applications is increasing sharply.