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Brussels, |
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EU Citizens Asked to Pay High Energy Bills
The EU has enacted the new Directive requiring at least 42.5% of final energy consumption to come from renewable sources. Who will cover the gap between today's 21% and the 42.5% target in six years, along with higher bills indefinitely?
Timidly, the governments of the 27 have held back the ultra-green push from the European Commission and some European Parliament members, who were calling for increasing the contribution of renewable energy from the current 21% of final energy consumption to 45% in 6 years. Ministers managed to secure a reduction to 42.5% by 2030. Since renewables are undeniably more expensive than nuclear and fossil fuels used so far, citizens and companies are now destined to pay hefty bills in the future as well. Even without wars on their doorstep and without sanctions on Russia. Some prospective studies suggest that even to charge electric vehicles, energy costs will be quite high.
The EU Raises Its Ambition on Renewables
In 2018, the Directive (EU) 2018/2001 committed the 27 member states to achieve a binding target of at least 32% of energy from renewable sources as a share of total energy consumption by 2030.
However, in 2020, to address climate challenges more rapidly and reduce greenhouse gas emissions, the European Commission proposed doubling the share of energy from renewable sources compared to 2020 levels, aiming to reach at least 40% renewable energy in the energy mix by 2030.
Regulation (EU) 2021/1119, which established these new targets, also set the goal of climate neutrality by 2050 and a net reduction of 55% in greenhouse gas emissions compared to 1990 levels by 2030. Achieving all these objectives undoubtedly requires a significant energy transition, greater energy efficiency, and a substantial increase in renewable energy.
In 2023, the Directive approved yesterday presented a challenge as it pitted the ambitions of European Parliament members who sought even more ambitious goals against the governments of the 27 member states who considered the existing targets already too demanding. The compromise has resulted in raising the share of renewable energies to 42.5%, while urging governments to aim for up to 45.0%.
In the IEA's main-case forecast, it is anticipated that global renewable capacity will surge by nearly 2,400 GW, representing an impressive growth of almost 75% between 2022 and 2027. This expansion is equivalent to the entire installed power capacity of the People's Republic of China.
The acceleration of 85% in comparison to the expansion rate observed during the previous five years is primarily attributed to two key factors. Firstly, the steep rise in fossil fuel and electricity prices resulting from the global energy crisis has rendered renewable power technologies significantly more economically appealing. Secondly, the war in Ukraine has led to a heightened appreciation of the energy security advantages offered by renewable energy among fossil fuel-importing nations, particularly in Europe.
Can EU succeed?
It is difficult to predict how things will go in practice because even if energy costs are so high, due to the war in Ukraine and the sanctions imposed, that renewable sources are competitive , the European economy is at risk of recession and global demand for energy may shrink.
At the same time, the EU decision to reduce fossil fuel imports from Russia supports its energy transition policy: with fewer fossil sources consumed, renewable sources automatically become a larger percentage.
One thing, however, is certain: since energy produced from renewable sources will always cost more compared to other sources, energy bills are destined to continuously rise, potentially tripling in the biennium 2023-2024. Although we are facing an environmental benefit, the European economy will suffer from it.
Read an analysis of the new RED II Directive
At the same time, the EU decision to reduce fossil fuel imports from Russia supports its energy transition policy: with fewer fossil sources consumed, renewable sources automatically become a larger percentage.
One thing, however, is certain: since energy produced from renewable sources will always cost more compared to other sources, energy bills are destined to continuously rise, potentially tripling in the biennium 2023-2024. Although we are facing an environmental benefit, the European economy will suffer from it.
Read an analysis of the new RED II Directive
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Source: © European Union, 1995-2023
Source: © European Union, 1995-2023
