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Commission approves support for production of electricity from renewable sources in Ireland

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The European Commission has approved, under EU State aid rules, a scheme to support electricity production from renewable sources in Ireland. The measure will contribute to the EU environmental objectives without unduly distorting competition.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This Renewable Electricity Support Scheme will contribute to Ireland’stransition to a low carbon and environmentally sustainable economy, in line with the European Green Deal and our State aid rules.”

Ireland intends to introduce a new aid measure, called the Renewable Electricity Support Scheme (“RESS”), to support electricity production from renewable sources, including solar photovoltaic and wind. The RESS will contribute to the EU renewable energy target and will help Ireland reach its national target to transition away from fossil fuels and reach a share of 70% of renewables in its electricity mix by 2030.

The RESS, with an estimated total budget of between €7.2 billion and €12.5 billion, will run until 2025. During this time, aid for the production of electricity from renewable sources granted under the RESS will be allocated through auctions. All eligible technologies will compete for subsidies in these auctions, which should ensure the cost-effective achievement of renewable electricity targets by encouraging competition. However, Ireland has justified preferential treatment for a small quantity of energy from solar, as well as from offshore wind on the basis of the longer term potential of these technologies for the country.

Successful applicants of the RESS will receive support over 15 years in the form of a premium on top of the market price. The competitive auctions through which the aid is granted will set a ‘strike price’. When the market price is below this ‘strike price’, beneficiaries will be entitled to receive payments equal to the difference between the two prices. However, when the market price is above the ‘strike price‘, beneficiaries will have to make payments equal to the difference between the two prices. These payments will be returned to Irish consumers in the form of reduced electricity bills.

To help build public acceptance and support for Ireland’s ambitious renewable energy targets, the RESS includes specific forms of support for projects developed by renewable energy communities and for communities that host projects supported by the RESS. Projects developed by renewable energy communities will benefit from grants and loans to support the development of their projects, and will participate to auctions in a special category in order to ensure that a certain number of these projects is successful. The communities hosting projects supported by the RESS will benefit from a fund to which all RESS beneficiaries will contribute to and that will invest in certain technologies and ‘sustainable goals’ including education, energy efficiency, sustainable energy and climate action initiatives in the area surrounding the RESS projects.

Ireland has also developed a detailed plan for evaluating the RESS, including in particular a full analysis of the costs and benefits of the innovative measures supporting the renewable energy communities.

The Commission assessed the scheme under EU State aid rules, in particular under the 2014 Guidelines on State aid for environmental protection and energy.

The Commission found that the aid is necessary and has an incentive effect, as electricity prices do not fully cover the costs of generating electricity from renewable energy sources and only renewable technologies that need public support to be a viable investment will be eligible for support under the RESS. The aid is also proportionate and limited to the minimum necessary, as the amount of aid will be set through competitive auctions.

Therefore, the Commission concluded that the Irish RESS is in line with EU State aid rules, as it promotes the generation of electricity from renewable sources, in line with the European Green Deal, without unduly distorting competition.

Background

The Commission’s 2014 Guidelines on State Aid for Environmental Protection and Energy allow Member States to support the production of electricity from renewable energy sources, subject to certain conditions. These rules aim to help Member States meet the EU’s ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market. The Renewable Energy Directive established an EU-wide binding renewable energy target of 32% by 2030 and identified the potential for renewable energy communities to support the achievement of ambitious renewable energy targets.

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The world needs to build on the growing momentum behind carbon capture

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After years of slow progress, technologies to capture carbon emissions and store or reuse them are gaining momentum, a trend that will need to accelerate significantly for the world to achieve its energy and climate goals, according to a new special report released by the IEA today.

The report, CCUS in Clean Energy Transitions, is being launched at an IEA online event opened by Prime Minister Erna Solberg of Norway, whose government announced a major funding commitment this week for a new carbon capture project that can help tackle emissions from Norway and neighbouring countries.

Carbon capture, utilisation and storage (CCUS) is the only group of technologies that contributes both to reducing emissions in key sectors directly and to removing CO2 from the atmosphere to balance the emissions that are the hardest to prevent – a crucial part of reaching the net-zero emissions goals that a growing number of governments and companies have set for themselves.

Part of the IEA’s Energy Technology Perspectives Series, the new IEA report is the most comprehensive global study on CCUS to date. It assesses the state of play of CCUS technologies and maps out the evolving and expanding role they will need to play to put global emissions on a sustainable trajectory. It includes a detailed analysis of CO2 emissions from power and industrial facilities in China, Europe and the United States and potential for storing them.

“The scale of the climate challenge means we need to act across a wide range of energy technologies. Carbon capture is critical for ensuring our transitions to clean energy are secure and sustainable,” said Dr Fatih Birol, the IEA Executive Director.

“In order to develop and deploy carbon capture and storage as a technology for the future we need investments in solutions and facilities in many regions and countries,” said Prime Minister Solberg. “CCUS will be necessary on a global scale if we are to meet the Paris Agreement. And we must start now.”

“Norway has been a global leader in researching, developing and implementing carbon capture technologies, as demonstrated by its major funding commitment this week to the impressive Longship project, which can help not just Norway but other European countries reduce their emissions,” Dr Birol said. “The IEA is delighted and honoured that Prime Minister Solberg is taking part in the launch of our new report that will help inform policy-making on CCUS around the world.”

Plans for more than 30 commercial CCUS facilities have been announced globally in the last three years. And projects now nearing a final investment decision represent an estimated potential investment of around USD 27 billion – more than double the investment planned in 2017. This portfolio of projects is increasingly diverse and would double the amount of CO2 captured globally.

The report sets out the four main ways that CCUS technologies contribute to clean energy transitions:

  • Tackling emissions from existing energy infrastructure such as power and industrial plants;
  • Providing a solution for some of the most challenging emissions from heavy industries like cement and chemicals, as well as from aviation;
  • Offering a cost-effective pathway for low-carbon hydrogen production in many regions;
  • Removing CO2 from the atmosphere.

Although CCUS facilities have been operating for decades in certain industries like natural gas and fertilisers, they are still at an early stage of development in key sectors such as cement. These are the areas where CCUS technologies are particularly important for tackling emissions because of a lack of alternatives.

 “Action from governments will be essential for establishing a sustainable and viable market for CCUS,” Dr Birol said. “But industry must also embrace the opportunity. No sector will be unaffected by clean energy transitions – and for some, including heavy industry, the value of CCUS is inescapable. As our new report demonstrates, the IEA is committed to leading CCUS analysis and policy advice worldwide – and to bringing together governments, companies and other key players to work together to achieve our shared energy and climate goals.”

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World Economic Forum and IRENA Partner for Sustainable Energy Future

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image credit: IRENA

The President of the World Economic Forum, Børge Brende, and the Director-General of the International Renewable Energy Agency (IRENA), Francesco La Camera, signed a Memorandum of Understanding (MoU) alongside the 75th session of the UN General Assembly and the Sustainable Development Impact Summit.

The Forum’s Energy Transition Index has found that, without urgent stakeholder action, COVID-19 will compromise the transition to clean energy. And IRENA’s Post-COVID-19 Recovery Agenda shows that while renewables have proven their resilience throughout the crisis, targeted policy action and investment in energy transition can leverage socio-economic benefits while staying on course towards a fully decarbonised system by 2050. This MoU brings together two international organizations to collaborate and advance a sustainable energy future through the adoption of new technology, financing and ambitious policy frameworks. It aims to advance the necessary global energy transition, decarbonise hard to abate sectors, scale up the deployment of clean technologies and enhance the energy literacy of decision-makers and the public.

“Countries need to significantly raise their level of commitment towards environmental sustainability, leveraging diverse policies, technologies and financing options,” Brende said. “Formalising this ongoing partnership during the Sustainable Development Impact Summit is an important step in strengthening the mission of our organisations. It brings together the knowledge, insight and innovation expertise of IRENA with the Forum’s global network to ensure these higher commitments are realised in the near term.”

“The energy transformation is at the heart of economic recovery,” La Camera said. “Renewable energy offers a way to carbon neutrality by mid-century, aligning short-term policy and investment decisions with our medium- and long-term objectives of the Sustainable Development Agenda and 1.5°C goal of the Paris Agreement. International cooperation is vital to support business and the public sector in their efforts to reach our climate goals. This reinforced partnership combines IRENA’s leading expertise on energy transition with the Forum’s proven record of success in driving change through public-private dialogue in pursuit of a global energy system that is fit for the future.”

“The Forum and IRENA have worked together for several years to support the energy transition,” said Roberto Bocca, Head of Shaping the Future of Energy & Materials, World Economic Forum. “This MoU strengthens the collaboration between our organisations to further accelerate and shape the trajectory of the energy transition ensuring it is sustainable, inclusive and supports the economic recovery following COVID-19.”

The past decade has seen rapid transformations as countries move towards clean energy generation, supply and consumption. Coal-fired power plants have been retired, as reliance on natural gas and emissions-free renewable energy sources increases. Incremental gains have been made from carbon-pricing initiatives.

The current state of the sector is described in the World Economic Forum’s Energy Transition Index 2020. It benchmarks the energy systems of 115 economies, highlighting the leading players in the race to net-zero emissions, as well as those with work to do. This year’s report flagged that COVID-19 could threaten the rate at which economies adopt more sustainable power. Sweden tops the overall ranking for the third consecutive year as the country most ready to transition to clean energy, followed by Switzerland and Finland. There has been little change in the top 10 since the last report, which demonstrates the energy stability of these developed nations, although the gap with the lowest-ranked countries is closing. The United Kingdom and France are the only two G20 economies in the top 10.

The Forum’s annual Sustainable Development Impact Summit brings together almost 2,000 leaders from around the world to scale up solutions that address the economic, social and environmental challenges of our time. Heads of State, CEOs, and leaders from civil society engage in dialogue to initiate, accelerate and scale-up entrepreneurial solutions that advance sustainable development goals. The summit takes place virtually from 21-24 September.

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The Netherlands is well prepared to reduce CO2 emissions

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The Netherlands is taking a well-balanced approach to its plans for a rapid transition to a carbon-neutral economy that will support strong growth and energy security, according to a new energy policy review by the International Energy Agency.

To drive this ambitious shift, the Netherlands has focused its energy and climate policy on cutting greenhouse emissions, with targets to reduce emissions by 49% by 2030 and by 95% by 2050 from 1990 levels. In June 2019, it adopted a national Climate Agreement that was developed through a process involving diverse groups from across Dutch society that worked together to define policies and measures aimed at achieving these targets.

“The Netherlands’ Climate Agreement shows broad social and political commitment to its energy transition and serves as an excellent example of how collaborative policy-making can lay the framework for ambitious targets,” said Dr Fatih Birol, the IEA’s Executive Director. “The IEA looks forward to supporting the government as it implements its plans.”

The Netherlands faces notable challenges, the IEA policy review highlights, since its economy remains heavily reliant on fossil fuels and has a concentration of energy- and emission-intensive industries. The IEA report welcomes the steps the government is taking to address these challenges. These include the introduction of carbon pricing for industrial emissions and a competitive subsidy programme that supports a wide variety of emission reduction technologies. It also applauds the government’s leadership in supporting electric vehicles through incentives to purchase them and significant investments in charging infrastructure.

“I congratulate the Netherlands for developing a broad policy framework with robust measures to drive emission reductions in all sectors,” Dr Birol said. “The balance of ambitious targets and competitive support measures will help drive a cost-effective energy transition.”

The IEA report highlights new energy security challenges the Netherlands is facing. In line with its climate targets and in response to safety concerns over earthquakes caused by natural gas production, the government plans to end production from the Groningen gas field by mid-2022. Gas from Groningen covers a large share of the Netherlands’ heating and industrial energy demand and is a key source of regional gas supply.

The government is taking firm measures to reduce natural gas demand, both domestically and in cooperation with neighbouring countries. At the same time, it is taking a leading role in developing a market for low-carbon hydrogen to partly replace natural gas and drive emission reductions in hard-to-decarbonise sectors like industry and heavy transportation. This is complemented by support for carbon capture and storage, which is also aimed at lowering industrial emissions.

“The Netherlands has a clear vision for reducing its dependence on natural gas while protecting energy security,” Dr Birol said. “In addition, its commendable leadership on low-carbon hydrogen will help drive cost reductions that are needed for this important technology to play a key role in accelerating clean energy transitions around the world.”

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