Martin SCHÖPE Federal Ministry for the Environment, Nature Conservation and Nuclear Safety Berlin, 5th October 2007

Implementing EU Integrated Climate Change & Energy Policy up to 2020 – Sharing the Efforts

7th Inter-Parliamentary Meeting on Renewable Energy

Martin SCHÖPEFederal Ministry for the Environment,

Nature Conservation and Nuclear Safety

Berlin, 5th October 2007

Renewable Energy: Developments and Perspectives

2

• Climate change: limit temperature increase to 2°C>-30% GHG emissions / at least -20% GHG

• Energy security: reduce import dependence

• Competitiveness: innovative industries > 20 % Renewable Energy (2005: 6.5 %) > Saving 20% of EU’s energy consumption

EUROPEAN COUNCIL 2007Historical decision up to 2020: -30/-20% / + 20% / + 20%

3

RE development in Germany

RE future targets and perspectives in Germany

Some elements for the new EU Directive for RE

Contribution of renewable energy sources to energy supply in Germany 2000 - 2006

6.3

3.9

0.4

3.8

6.6

8.0

2.6

6.0**5.8

12.0

0

2

4

6

8

10

12

14

Share of RE in total PEC Share of RE in total grosselectricity consumption

Share of RE in total FEC forheat

Share of RE in fuelconsumption for road

traffic

Share of RE in total FEC(electricity, heat, fuels)

[%]

2000 2001 2002 2003

2004* 2005* 2006*

RE - renewable energies, PEC - primary energy consumption, FEC - final energy consumption* All figures provisional** From 2003, new data from the Energy Statistics ACT (EnStatG) incorporatedSource: BMU-Brochure " Renewable energy sources in figures – national and international development-" Version: June 2007


6.3

3.9

0.4

3.8

6.6

8.0

2.6

6.0**5.8

12.0

0

2

4

6

8

10

12

14




traffic


[%]

2000 2001 2002 2003

2004* 2005* 2006*


6

Electricity Generation from RE

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

[GW

h/a]

Hydropower Wind energy Biomass* Photovoltaic Geothermal energyElectricity generation from::

7

• Priority access for RE to the power grid• Priority transmission and distribution • Obligation of grid operators to purchase

the electricity produced from RE• Fixed price (“tariff”) for every kilowatt

hour produced from RE for 20 years

The Instrument:Feed in Tariff System: EEG (I)

8

EEG (II)• Equalisation of additional costs for electricity

from RE between all grid operators and electricity suppliers

• All different types of RE are considered and tariffs are differentiated by source and size of the plant

• Annual decrease (-1,5% - -6,5%) due to technical development (degression)


6.3

3.9

0.4

3.8

6.6

8.0

2.6

6.0**5.8

12.0

0

2

4

6

8

10

12

14




traffic


[%]

2000 2001 2002 2003

2004* 2005* 2006*


10

Heat supply from RE

51.613 50.951 54.314

72.259 76.01483.900

2.960

3.400

70.34654.62655.326

1.2791.037857

1.626 1.955

2.465 2.573

2.000

1.586

1.384

1.5581.532

1.4831.4471.4331.429

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

100.000

1998 1999 2000 2001 2002 2003 2004 2005 2006

[GW

h/a]

Biomass(inl.biogenic waste) Solar thermal Geothermal energy

11

The Instrument: The Market Incentive Program (MAP)

Supports of 2000-2006:

• Investment grants and loans for 2000- 2006: 827 Mio. €

• Investment volumes of the promoted measures: 6,5 Billion €

Balance of 2006:

• conveyances: about 160 Mio. €

• Investment volumes: about 1,6 Billion €


6.3

3.9

0.4

3.8

6.6

8.0

2.6

6.0**5.8

12.0

0

2

4

6

8

10

12

14




traffic


[%]

2000 2001 2002 2003

2004* 2005* 2006*


Contribution of renewable energy sources to fuel supply in Germany 1991 - 2006

28,9

33

18,6

00

10,8

50

8,26

7

5,68

3

3,6172,583

2 52 103 258 310 517 827 1,033 1,343

3,573

1,936

484

2,047

7,416

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

[GW

h]

Biodiesel Bioethanol Vegetable oil

Sources: BMU-Brochure " Renew able energy sources in f igures – national and international development-" Version: June 2007provisional f igures

14

Biofuels: Fiscal regulations

• Until 31.7.2006 all biofuels were exempted from energy taxation

• High value of energy tax exemption: - tax rate on diesel fuel: 47 Ct/l - tax rate gasoline: 65 Ct/l

• Driver for change of support system were tax expenditure losses

• System change from 1.1.2007 from price regulation (by tax exemption)to quantity regulation (by quota system)

15

Quota on biofuels

• quota system starts 1.1.2007• based on energy content• sub-quotas - remain valid also after 2009• current share is more than doubled until 2015:

2007 2008 2009 2010 2011 2012 2013 2014 2015

Diesel fuel 4.4% 4.4% 4.4% 4.4% 4.4% 4.4% 4.4% 4.4% 4.4%

Gasoline 1.2% 2.0% 2.8% 3.6% 3.6% 3.6% 3.6% 3.6% 3.6%

Total quota 6.25% 6.75% 7.0% 7.25% 7.5% 7.75% 8.0%

16

Emissions avoided through the useof renewable energy sources in Germany in 2006

0 10 20 30 40 50 60 70 80

Fuels

Heat

Electricity

CO2 reduction [m t]

Hydropower Wind energy Biomass Photovoltaics Geothermal energy Solar thermal energy Biofuels

68.1 m t

12.7 m t

20.7 m t

total: 101.5 m t

Sources: BMU-Brochure " Renew able energy sources in figures – national and international development-" Version: June 2007provisional f igures

Results of RE (I): Saved CO2 emissions

Total turnover with renewable energy sources

in Germany in 2006 Total: approx. € 22.9 billion

Biomass;€ 9,100 m; 39.8%

Wind energy;€ 5,650 m; 24.7%

Hydropower;€ 1,280 m; 5.6%

Geothermal energy; € 590 m; 2.6%

Solar energy;€ 6,240 m;

27.3%

Sources: BMU-Brochure " Renew able energy sources in f igures – national and international development-" Version: June 2007provisional f igures

Results of RE (II): New industry

18

Results of RE (III): Employment

1.800

9.500

25.000

56.700

64.000

4.100

9.200

35.000

91.900

73.800

0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000

Geothermal energy

Hydropower

Solar energy

Biomass

Wind energy

2006: ca. 214,000 employees

2004: ca. 157,000 employees

19

RE future targets and perspectives

Comprehensive energy and climate change programme(Meseberg, August 2007)

Objectives for RE for 2020 • Electricity generation: 25-30% EEG continues• Heating: 14% Incentives + obligation• Biofuels: 17% Quota / Blending

RE Target 2020: 18-19% (FEC)

20

German RE-Electricity Production 1990-2030

0

20

40

60

80

100

120

140

160

180

200

220

240

260

Stro

mer

zeug

ung

[TW

h/a]

Wass er EEG-relevant Wind Land Wind of fshore Biomasse Solarenergie Geothermie nicht EEG-relevant

Wind Land

32%

Biomasse

22%

nicht EEG-

relevant

16%

Wasser EEG

3%

Wind offshore

19%

Geothermie

2%

Solarenergie

6%Wind Land42%

Wind offshore0%

Biomasse22%

nicht EEG-relevant

27%

Wasser EEG6%

Solarenergie3%

Ge othermie0%

2020

2006

19

37

74

92

156

249

0

20

40

60

80

100

120

140

160

180

200

220

240

260

Stro

mer

zeug

ung

[TW

h/a]

Wass er EEG-relevant Wind Land Wind of fshore Biomasse Solarenergie Geothermie nicht EEG-relevant

Wind Land

32%

Biomasse

22%

nicht EEG-

relevant

16%

Wasser EEG

3%

Wind offshore

19%

Geothermie

2%

Solarenergie

6%Wind Land42%

Wind offshore0%

Biomasse22%

nicht EEG-relevant

27%

Wasser EEG6%

Solarenergie3%

Ge othermie0%

2020

2006

19

37

74

92

156

249

Source: EEG-EB, BMU Entwurf, Stand Juni 2007

21

Additional EEG-Costs 1990-2030

Entwicklung der erwarteten Differenzkosten und der EEG-Umlage für Haushalte (pro Person* und Monat)

Preisbasis 2007

0,00

0,50

1,00

1,50

2,00

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

EE

G-U

mla

ge [€

je M

onat

]

0,0

1,0

2,0

3,0

4,0

5,0

6,0

EE

G-D

iffer

enzk

oste

n [M

rd. €

]

Wasserkraft Wind Land Wind offshorePhotovoltaik Biomasse Geothermie

EEG-Umlage und Differenzkosten für

"Hauptvariante"

EEG-Umlage und Differenzkosten für

Variante "ext. Kosten"

* Haushalts -St ro mverb rauch p ro Kop f ca. 1.700 kWh / Jahr Quelle: AG Energ ieb ilanzen, EWI-Prog nos 2 0 07

Development of the estimated differential costs and the additional EEG-Costs for households ( per person and month, basis 2007)

22

Benefits of RE

Example of Germany, 2006:• 5 bn EURO: Lower Wholesale price for

electricity• 0.9 bn EURO: Savings of Fuel imports• 3.4 bn EURO: Avoided damage from

climate change and air pollution

23

Starting points for EU-Policy

1. RE-Share 2020: 20%!

2. All Member States have to exploit their potentials, all technologies are required

3. New Directive has to be compatible with successful MS policies and instruments

4. No disruption of markets

24

How do we get there?

Green X balanced scenario projection of renewable energy growth (GW h, EU25)

0

500

1.000

1.500

2.000

2.500

3.000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Biofuels

Solar thermal heating

Wind offshore

Wind onshore

Tide & wave

Solar thermal electricity

Photovolta ics

Geothermal heat & heatpumps

Geothermal electricity

B iomass, biogas,biowaste - H

B iomass, biogas,biowaste - E

Hydro

Source: COM Communication on RE-Roadmap

25

Additional RES-E penetration 1997 - 2005

Source: Fraunhofer ISI

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

AT BE DK FI FR DE GR IE IT LU NL PT ES SE UK CY CZ EE HU LA LT MT PL SK SI BG RO

Add

ition

al R

ES-E

gen

erat

ion

1997

-200

5 as

sha

re o

f gro

ss e

lect

ricity

dem

and

in 2

005

[%]

Feed-in systems

Quota Systems

Tax Incentives

26

Policies for the three sectors

• Biofuels: based on consumption („placing on the market“ through blending / quota obligation)

• Heating/Cooling: based on production• Electricity: based on production

• Additional consumption element “Compensation”/”Trade”/”Balancing”

27

“Mandatory” Trade (1)

• RE producer can sell their GC/GoO to any other market actor or Member State:

– Phyical RE power has to be integrated in the „exporting“ MS system

– RE share is counted against the „importing“ MS target

28

„Mandatory Trade“ (2)

1. Mandatory Trade of GC/GoO destroys Feed-in Tariffs when applicable in parallel

2. Countries with low cost potentials/ technologies will lose that potential

3. Additional costs• Case of Germany:

~ 4 Billion €/α 2020 for Germany > Trade ~ 40% more expensive> Loss of public acceptance

• EU-wide: 100 Billion € up to 2020

29

„Mandatory“ trade (3)

30

“Voluntary” Trade

• Pending on Government agreement and criteria:(similar to the existing RES-E Directive)> Trade after the national target is reached

(interim targets)> time period for the purchase (life time?)> Technology differentiation

• Compatible with existing national policies

31

“Balancing Model” Financial Equalisation/Compensation

Idea:Equal sharing of the additional costs in all MS

1. MS with strong RE increase receive a compensation (according to the average of the additional costs)

2. MS with slow RE increase participate in the additional costs and benefit in accounting for their target by the amount of financial participation

> Separation of RE generation from additional costs(Example: EEG)

32

Balancing (2): Lowest Costs Balancing of costs on the basis of a harmonised premium: 15 € / MWh (for all RES-E sources)•corresponds approximately to 1/3 of the total transfer costs •good approximation for the ratio of national and international benefits

Example for new RES-E generation in the EU-27 until 2015:Total Payments: 43 bn € ./. 480 TWh (RE) = ca. 9

ct/kWhEU Transfer: 7.2 bn € = ca. 1.5 ct/kWh

(=„premium“)

7.2 bn € ./. 3500 TWh (total Power) = ca. 0.2 ct/kWh (add. costs for each consumer)

33

“Balancing Model” (3)Benefits:

1. Compatible with existing policies in MS2. Encourages allocation at the best locations3. Starts immediately 4. This model complies with the internal

market rules5. New EU Agricultural Policy ?

NO! Introduce a degression rate

34

Essential elements of the new EU RE

Make (national) instruments strong!• Sector targets, interim targets• Priority connection for RE - electricity • Sustainability criteria for bioenergy• Sufficient level of support• Streamlining planning procedures• Sanctions for non-compliance

35

Conclusions (1)

• Balancing Model and „voluntary“ trade with MS agreement can complement existing policies– Both can be combined (interim targets)

• Balancing Model redistributes imediately• GC/GoO exchange will start later

36

Conclusions (2)

• Interrelation of RE expansion with GHG reduction policy:

– Consideration of RE share within calculation of EU ETS

– But separate policy instruments:CO2 price is not sufficient for 20 % RE target

37Thank you for your attention !

Porto

20%

7%

Together we can make it. The future is promising!

http://www.bmu.de/pressemitteilungen/aktuelle_pressemitteilungen/pm/39884.php

Documents

Martin SCHÖPE Federal Ministry for the Environment, Nature Conservation and Nuclear Safety Berlin, 5th October 2007