Low carbon energy

 
The EU Commission is currently preparing a number of different strategies and roadmaps concerning future energy and climate policies as part of flagship initiative for a resource-efficient Europe. An Energy Strategy for year 2020 was published end of 2010. A long-term energy strategy − Energy roadmap 2050 − will be released at the end of this year. In addition, the Commission published on 8 March 2011 an action plan on energy efficiency and a long-term roadmap for the transition towards a competitive low-carbon economy by 2050.

According to the Commission, the transition towards a competitive low carbon economy means that the EU should prepare for reductions in its domestic emissions by 80% by 2050 compared to 1990. The Commission’s analysis suggests that domestic emission reductions of the order of 40% and 60% below 1990 levels would be the cost-effective pathway by 2030 and 2040, respectively.

Major, sustained investments requiredVarious forms of low carbon energy sources, their supporting systems and infrastructure, including

• smart grids,
• passive housing,
• carbon capture and storage,
• advanced industrial processes and
• electrification of transport (including energy storage technologies)

are key components which are starting to form the backbone of efficient, low carbon energy and transport systems after 2020.

This will require major and sustained investment: on average over the coming 40 years, the increase in public and private investment is calculated to amount to around € 270 billion annually. This represents an additional investment of around 1.5% of EU GDP per annum on top of the overall current investment representing 19% of GDP in 2009.

In order to achieve these tremendous investments, the policy framework for companies must be favourable. This means that investment conditions must not be weakened by additional taxes and other costs. In addition, the cost burden imposed on energy intensive companies the tightening emissions trading scheme must be compensated or redirected towards investments, in the form of investment aids for example.

Current 2020 targets for renewable energy:
challenging target for FinlandThe climate change and energy package approved in December 2008 includes a framework directive for increasing the share of renewable energy by 20 % in 2020, in accordance with the March 2007 European Council decision.

This overall target differs from one member state to another. Finland has to increase the share of energy from renewable sources in final consumption by one third, from the 2005 level of 28.5 % to a rather challenging share of 38 % in 2020.

The implementation of the renewable energy directive is likely to not lead to a reduction in emissions in the most cost-efficient way. At the same time, the EU’s emission reduction targets and measures (e.g. the emissions trading scheme) weaken the competitiveness of European energy-intensive companies in international markets.

Wind power Nevertheless, the Finnish government has set a target of increasing the wind power production to 2500 MW (currently less than 200 MW) by year 2020. To achieve this target, a new feed-in-tariff system for wind power, for electricity and heat from biogas, and for forest residues used in CHP plants has just been launched (from 25 March 2011 after the approval of notification by the Commission).

BioenergyAlready before the new feed-in-tariff, Finland is one of the leading countries in the world in the use of bioenergy. The use of bioenergy could be further increased while ensuring the sufficiency of biomass as a raw material for the forest, food and chemical industries both for traditional and completely new products.

Nuclear powerNuclear power is a form of energy that does not produce emissions. Alongside energy efficiency and the use of renewables, nuclear power plays an important role in controlling carbon dioxide emissions in Finland.

Finland’s carbon dioxide emissions were reduced considerably when nuclear energy was introduced in the late 1970s. Without nuclear power Finland’s annual carbon dioxide emissions would be up to 20 million tonnes more.

The introduction of a fifth nuclear reactor in 2013 will further reduce annual emissions. In addition, decisions-in-principle on Finland’s sixth and seventh nuclear reactors have been approved by the Parliament on 1 June 2010. The low operating costs of nuclear power make it ideal for the production of basic energy.

After the nuclear events in Japan, Finnish as well as European utilities have begun a process to re-assess the safety of their nuclear power plants, as part of a broader approach of continuous safety assessment and enhancement.

During the years, Finnish nuclear plants have gone through plenty of safety improvements, and back up procedures have been added later on to original constructions. In Finland, the natural conditions are quite favourable due to the solid base rock and shallow Baltic Sea. In addition, the final disposal of nuclear waste is already solved, and the use of underground final disposal storage is due to start already in 2020.

EK’s views:

EU policies must be fully integrated and therefore coherence between the different roadmaps 2050 must be guaranteed. These papers must also be in line with the Commission’s industrial policy, i.e. strengthen the conditions for production in Europe. The most important question regarding EU energy and climate policy must be: how to secure the supply of energy at a competitive cost. Energy prices in Europe are higher than in many of our major economic partnering countries. This weakens the competitiveness of European energy-intensive industries in particular and increases the risk of “carbon leakage”. In Finland, this is even more critical because a greater share of the Finnish GDP comes from energy-intensive export industries compared to the EU average. To be globally competitive, companies must have equal operating conditions regardless of where they are located. International comparability must therefore remain the condition for targets and measures also in long-term strategies and their implementation. The cumulative costs of all EU energy and climate policies and their impacts on the competitiveness of European industries should be regularly evaluated. Competitiveness proofing must become an integral part of the 2050 energy strategy as well as any new initiatives. Overlapping targets and measures form barriers to achieving targets most cost-efficiently. A diversified energy mix is considered important in Finland. An essential part of this is nuclear power, which is indispensable in meeting the future needs for energy demand, competitive prices and climate change mitigation.