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Enhancing the EU Power Sector: The Crucial Role of ETS and Carbon Pricing

The EU power sector is at a pivotal point, facing challenges due to low carbon pricing and competition from fossil fuels. With wind energy now contributing significantly to electricity consumption, the urgency for effective carbon pricing becomes clear. Backloading is essential to realign the market, signaling the need for emissions to be priced according to their true societal costs. The wind sector stands ready to lead, but requires a robust emissions trading scheme (ETS) to drive investment and foster a sustainable energy future.

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Enhancing the EU Power Sector: The Crucial Role of ETS and Carbon Pricing

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  1. The EU Power sector needs the ETS and backloading Pricing carbon - Pricing fossil fuels at their true cost Rémi GruetSenior Advisor - Climate Change & Environment European Wind Energy Association 1st February 2012

  2. EWEA Members – Across entire supply chain

  3. Wind share of electricity consumption Wind is a key generation technology in several EU Member States 2020 230GW - 581 TWh 16% of EU demand Source: EWEA – 2012 production from Wind compared to 2009 consumption

  4. New installations dominated by renewables New power plants coming online - EU - 2000 to 2012 (MW) RES (70%) RES (70%)

  5. The power sector needs carbon pricing • These investments were made believing there would be a strong carbon price signal • Today, some investments are not economical anymore • Utilities are shutting down gas plants • Utilities are running coal plants as it is cheaper • Cheap coal imports + cheap CO2 price • Carbon price at which it becomes economical = 40€/tCO2

  6. Why the ETS ? To price technologies at their true cost to society HEAL : health cost of coal = €43bn/year

  7. We need the ETS but the ETS needs youSurplus to 2020 makes scheme ineffective Source: EC – Impact Assessment to the backloading proposal – July 2012

  8. The economic downturn is the main factor behind the surplus • Emissions have reducedbecause of lowdemand • Electricitydemandwent down during the crisis • Steel/Cement/heavyindustry production severelyreduced • Access to international credits flooded the market • Renewables did reduce emissions, but didn’t create the EUA surplus in the ETS • The ETS design factors in 20% RES by 2020 • Renewablesdevelopmentisslightlyhigherthanforeseen • Additionalemissionsavoided/reduced of about 40 Mt • To becomparedwith a 2000 Mt surplus…

  9. Wind and PV today represent more jobs than steel and cement ? Source: EWEA, EPIA, EURACOAL, EUROGAS, EUROFER, CEMBUREAU, FORATOM

  10. Fix the ETS to push our technological advantageEU market dominated by EU manufacturer s - 2006 to 2011 Source: BTM Consulting data for 2006-2009 and MAKE Consulting data for 2010-2011

  11. Competitiveness – EU manufacturers are leading on world markets2011 - Market share per turbine manufacturers Source: MAKE Consulting data

  12. 54% EU Energy dependency , and growing… Source: European Commission - Statistical Pocketbook 2012

  13. Wind and Renewables: an insurance against rising gas prices and import costs Source: BP Statistical Review 2012

  14. Market operators expect backloading to happen!

  15. Conclusions • Backloading is needed because • Emitting technologies must be priced at their true costs • It’s a political signal to investors (avoid high-carbon lock-in) • It’s a price signal for power operation (coal/gas switch) • It’s an insurance against import price volatility and increase • The market expects it • Create the right conditions for export industries to thrive on world markets • Post backloading we need • Binding 2030 renewable targets, driving investments • A strong ETS to integrate costs, reduce emissions

  16. During this presentation EU wind turbines saved 3,600 tCO2 Thank you very much! Tel: +32 2 213 1836 M: +32 473 506 423 E-mail: rg@ewea.org www.ewea.org

  17. Global Wind - Strong development in historical markets - Start and first results in many other countries

  18. Publications For those of you who are not bored yet.... Reports Statistics publications www.ewea.org Main menu

  19. Additional content • Additional Stat slides • Additional Climate slides • How a turbine comes together • Economics of Wind • Wind and employment • Wind innovations • EU wind map • 100% Renewables by 2030 • Wind pictures

  20. Annual onshore and offshore installations (MW) 10,000 8,000 6,000 4,000 2,000

  21. Wind Resource EU15

  22. Wind Resource Offshore

  23. Yearly Renewable potential versus conventional energy reserves Source: EPIA Solar Generation 6 - 2010

  24. Matching electricity demand in California with 100% RES Source: Hart & Jacobson, 2010 – Reaching 100% renewables by 2030

  25. Global water crisis: save water with wind ! Water Intensities of Power Generation (m3/MWh) Source: http://www.vestas.com/en/about-vestas/strategy/political-affairs/water-energy-climate-nexus.aspx

  26. To what extent are you in favour or opposed to the use of the following sources of energy in (our country) ? Source: Eurobarometer 364/2011 Public Awareness and Acceptance of CO2 capture and storage

  27. Thank you very much for your attention During this presentation EU wind turbines saved 4,000 tCO2 Tel: +32 2 213 1836 M: +32 473 506 423 E-mail: rg@ewea.org www.ewea.org

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