Interview: Cheap carbon is least of EU's green angst-wind head

BRUSSELS Thu Mar 1, 2012 7:25am EST

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BRUSSELS (Reuters) - The European Union's credibility as a global environmental leader is at risk unless it can mend its policies to meet green goals in reality and not just on paper, the head of the European Wind Energy Association (EWEA) said.

Environmental policy-making attention this week has focused on draft EU law to improve the bloc's record on energy savings and on efforts to persuade the European Commission to prop up carbon prices, which have lost most of their value on the EU's Emissions Trading Scheme (ETS).

Christian Kjaer, chief executive officer of EWEA, said a negative consequence of cheap carbon was that it undermined the EU's green targets, but the bloc should shift its attention beyond the ETS to a decarbonized future when permits to produce carbon would be truly worthless.

"The EU says it wants to lead the world in carbon emissions. You can't go to international negotiations and say we're reducing by 2020, but actually reducing by say 11 or 12 percent by 2020, not 20 percent," he said.

He was referring to the ability of EU nations to meet a goal to cut carbon emissions by 20 percent by 2020 by buying up permits to pollute, which are cheap internationally, as well as on the EU ETS, without actually cutting emissions.

"Even if we were meeting it (the goal), scientists are saying we need to reduce in industrialized countries by between 25 and 40 percent by 2020."

EWEA figures show 60 percent of the EU's 20 percent target - i.e. 12 percent - can be met by buying allowances, meaning the real EU reduction target could be as low as 8 percent, not 20 percent.

The bloc has two other 2020 goals: increasing the share of renewables in the energy mix to 20 percent and improving energy savings by 20 percent.

Officially, the EU says it will meet the carbon and renewables targets.

Draft EU law meanwhile is seeking to address an acknowledged shortfall in the 20 percent energy saving target.

ENERGY SAVINGS COULD ADD TO SURPLUS

If approved, new law to enforce energy savings could reduce demand for carbon allowances, prompting politicians to say an improvement in efficiency has to be matched with intervention in a market already swamped by surplus permits.

"Don't defend the tool at the expense of the goal," Kjaer said.

"The ETS is good, but if you look at whether the ETS is a driver for investment in renewables, you can't finance a wind farm on the basis of whether your competitor is more expensive," he said, referring to the need for producers of polluting energy to buy carbon permits.

"If we're going to have a complete decarbonization, we're going to have to have a whole range of renewable technologies, including offshore wind. If the sole driver is the ETS, we're creating a hole."

To complement the ETS, he wants the Commission to hurry up and decide on binding goals beyond the 2020 targets and bring on infrastructure to match new green power.

So far it has road maps, which only provide an indication of how the bloc might move towards a decarbonized power sector by the middle of the century.

Another of Kjaer's demands is that the cost of wind should be compared fairly with other energy sources, chiefly nuclear, the biggest rival in carbon-free generation.

He says decommissioning costs for nuclear tend to be overlooked when assessing the relative costs.

"The myth is that it's (nuclear) cheap, the myth is that there has been a renaissance. There has not," he said. "You can meet your CO2 targets with nuclear, if you're willing to pay an obscene price for it."

British provisions for nuclear decommissioning in 2010 stood at 53.7 billion pounds ($85.78 billion), up from 22.5 billion pounds in 2000, Kjaer said.

With that, the wind industry could build 54 gigawatts of onshore wind, producing 140 terawatt hours or 41 percent of British power consumption, he said. ($1 = 0.6260 British pounds)

(Editing by James Jukwey)

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