January 26, 2008
New Renewable Energy Requirement For European Union

Here's a reason to be bullish on wind turbine sales. The European Commissions proposes to require 20% of total European energy from renewables by 2020.

As a means of achieving this the Commission wants to boost energy production from renewable sources to 20 per cent of the EU total, from the current level of 8.5 per cent. It also aims to ensure that 10 per cent of all vehicle fuel comes from biofuels by 2020.

I think the biomass transportation fuels requirement is unwise because it is going to result in a lot of habitat destruction. The EU mandarins are trying to work around that effect by placing restrictions on where biomass energy comes from. But their attempts to prohibit biomass fuels from future forest clearings isn't enforceable. All that the producers of sugar cane ethanol and palm oil biodiesel have to do is tear down new areas for use to grow crops for food and use the old areas to grow crops for biofuels. Plus, Brazil, Indonesia, Malaysia and similar countries can always sell the crops from the newly cleared areas to China and India.

The problem is that any increase in demand for biomass energy crops drives up total demand for crops and inevitably causes more land to be cleared for agricultural uses. Even if the EU bans biomass energy imports from whole countries that still doesn't prevent that demand growth. If the EU buys more biofuels from, say, Brazil while banning imports from, say, Africa and South East Asia all that'll do is drive Chinese demand away from Brazil and toward those latter areas. The EU's rules will not reduce total demand for land to grow biofuels crops.

Britain has been given a lower goal to reach but a harder goal from where Britain is now.

Britain has been set the ambitious target of producing 15 per cent of its total energy from renewables by 2020, up from 1.3 per cent on the 2005 figure.

Note this rule does not allow the European countries to achieve it by using nuclear power even though nukes do not emit the carbon dioxide the fear of which is the motivation for the rule in the first place. That's dumb. France's 50 or so nukes make it a much lower emitter of carbon dioxide. Those nukes also make the French net exporters of electric power to neighboring countries.

Britain might pay 15% to 20% more for electricity from expensive offshore wind towers.

The investment required to get Britainís energy supplies anywhere near the target mean that electricity prices are likely to rise 10-15 per cent by 2020 even before other inflationary factors are taken into account.

Will this regulation really increase costs above where costs might otherwise go? I am doubtful. The critics of this regulation ought to step back and look at bigger energy market trends. Price increases for electricity might be unavoidable for another reason: declining natural gas production could make electricity much more expensive. Russian natural gas supplies can't be relied upon and their costs will probably rise very substantially in coming years. So a government mandated shift toward renewables might turn out to push the European electric power industry in a direction it needs to go anyway.

The real flaw I see in this proposal is that it leaves out nuclear power. A European level regulation that let nuclear power satisfy part of the requirement might allow a reduction in fossil fuels usage at a lower cost.

Electric power is the easiest form of energy to shift over toward renewables.

Britain generates nearly 5% of its electricity from renewables, but less than 2% of its overall energy needs. Because it is far easier to increase renewable electricity supplies, the government expects that wind power especially will have to deliver the lion's share of the target, with renewables generating as much as 35-40% of all electricity within 12 years.

British families might end up paying about $1400 per year more per family. Ouch.

The European Commission claimed the package would cost the average European citizen £115 a year. Britons will pay far more because the country lags in the green energy stakes.

Open Europe, a Eurosceptic think-tank supported by Marks & Spencer boss Sir Stuart Rose, said a typical family would be paying a £730 levy by 2020.

That figure originally came from a British government report.

Josť Manuel Barroso, the EC president, claimed it would cost every European £2.20 a week, but a Eurosceptic think-tank pointed to a leaked government document which stated the package could cost UK households up to £730 a year. However, the EC said the measures were a vital step in the fight against global warming and other countries must now join the effort.

The real costs will depend heavily on the rate of technological advance in wind, solar, waves, and other technology areas for renewables.

Britain is looking at 10,000+ more wind turbines to satisfy this regulatory requirement.

The number of wind turbines on land in Britain is likely to grow from just under 2,000 now to 5,000, according to the British Wind Energy Association. But the really substantial increase will be in offshore wind, with turbines installed in the seas around Britain's coasts likely to increase from just under 150, to about 7,500.

Share |      Randall Parker, 2008 January 26 02:41 PM  Energy Policy

Bob Badour said at January 26, 2008 3:14 PM:

Omitting nukes is a bigger mistake than it seems on the surface: The target will discourage new nuke development because that would increase the amount of other renewable sources needed to be built.

In the end, this will cause higher electricity prices and a smaller economy due to less readily available energy.

Jake said at January 26, 2008 4:25 PM:

They do not have a prayer of reaching 20% renewable energy. Germany has already determined that wind farms use more energy than they create because of the need to have standby power. Plus the environmentalists will never let governments build near enough wind farms to come close to their goals.

If they don't have a crash program to build nuclear power, they will have tragic energy shortages and massive unemployment.

The brain drain that the EU countries are currently experiencing will change from a flood to a tsunami.

aa2 said at January 26, 2008 7:04 PM:

I'm from Canada and we are really enjoying the influx of a small portion of that brain drain from the EU. German engineers, Hungarian engineers, MBA type Brits, and all kinds of Euro tradesmen.

Rob said at January 26, 2008 10:03 PM:

Hey Randall,

This is pretty neat if it really works: headgear that stimulates neural growth, they think for alzheimers, but maybr it could make normal people brighter


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