Promotion of renewable energy in Baltic States

Baltic States have quite limited own energy resources. In the accession agreement with EU Lithuania, Latvia and Estonia have verified their targets to increase the share of electricity produced from renewable energy sources (RES-E) by the year 2010. Lithuania has target to increase RES-E from 3.3 to 7%, Latvia—from 42.4 to 49.3% and Estonia—from 0.2 to 5.1%. Promotion of use of renewable energy sources are among the priorities of energy policy in Baltic States. More wide use of renewable energy can make a valuable contribution to diversification of energy supply and increase of reliability of energy supply and to meeting GHG emission reduction targets. The article presents a detailed overview of the present policies and measures implemented in Baltic States aiming to support the use of renewable energy sources. The article presents a review of the present renewable situation in Baltic States and analyses policies and measures in place aiming to enhance use of renewables. The review of possibilities to use EU structural funds for the implementation of renewable energy projects in Baltic States was performed in the paper.     

The European renewable energy target for 2030 – An impact assessment of the electricity sector

The European Union set binding targets for the reduction of greenhouse gases (GHG) and the share of renewable energy (RE) in final energy consumption by 2020. The European Council agreed to continue with this strategy through to 2030 by setting a RE target of 27% in addition to a GHG reduction target of 40%. We provide a detailed sectoral impact assessment by analyzing the implications for the electricity sector in terms of economic costs and the regional distribution of investments and shares of electricity generated from renewable energy sources (RES-E). According to the Impact Analysis by the European Commission the 27% RE target corresponds to a RES-E share of 49%. Our model-based sensitivity analysis on underlying technological and institutional assumptions shows that the cost-effective RES-E share varies between 43% and 56%. Secondly, we quantify the economic costs of these variants and those which would be incurred with higher shares. The long-term additional costs for higher RES-E shares would be less than 1% of total system costs. The third aspect relates to the regional distribution of EU-wide efforts for upscaling renewables. We point out that delivering high RES-E shares in a cost-effective manner involves considerably different efforts by the Member States.     

Cost effects of international trade in meeting EU renewable electricity targets

The European market for renewable electricity received a major stimulus from the adoption of the Directive on the Promotion of Renewable Electricity. The Directive specifies the indicative targets for electricity supply from renewable energy sources (RES-E) to be reached in European Union (EU) Member States in the year 2010. It also requires Member States to certify the origin of their renewable electricity production. This article presents a first EU-wide quantitative evaluation of the effects of meeting the targets, using an EU-wide system for tradable green certificates (TGC). We calculate the equilibrium price of green certificates and identify which countries are likely to export or import certificates. Cost advantages of participating in such an EU-wide trading scheme are determined for each of the Member States. Moreover, we identify which choice of technologies results in meeting targets at least costs. Results are obtained from a model that quantifies the effects of achieving the RES-E targets in the EU with and without trade. The article provides a brief insight in this model as well as the methodology that was used to specify cost potential curves for renewable electricity in each of the 15 EU Member States. Model calculations show that within the EU-wide TGC system, the total production costs of the last option needed to satisfy the overall EU RES-E target equals 9.2 eurocent/kWh. Assuming that the production price of electricity on the European power market would equal 3 eurocent/kWh in the year 2010, the indicative green certificate price equals 6.2 eurocent/kWh. We conclude that implementation of an EU-wide TGC system is a cost-efficient way of stimulating renewable electricity supply.     

Encouraging the implementation of small renewable electricity CDM projects: An economic analysis of different options

Apart from contributing to the mitigation of GHG emissions, the deployment of renewable electricity Clean Development Mechanism projects (RE-CDM) may provide substantial local economic, social and environmental sustainability benefits to host countries. However, in spite of these advantages, a wide array of barriers prevents the realisation of these projects. They compete with other CDM options which lead to cheaper GHG emissions reductions but which do not provide as much opportunities for sustainable development in developing countries. Taking into account that, in contrast to GHG benefits, sustainability benefits are not valued in the market place and that article 12 of the Kyoto Protocol envisages two objectives for the CDM (cost-effective emissions reductions and contribution to sustainability), this market mechanism might be leading to a “market failure” in RE-CDM projects. This paper explores the different barriers affecting the implementation of RE-CDM projects and proposes and analyses several policies and measures that could be implemented to encourage their deployment by tackling those obstacles.     

Hybrid modeling to support energy-climate policy: Effects of feed-in tariffs to promote renewable energy in Portugal

Feed-in tariffs have been the main policy instrument applied in Portugal for the promotion of electricity produced from renewable energy sources under the EU Directives on energy and climate regulation. In this paper, we provide an empirical impact assessment of the economic and environmental effects of Portugal's FITs policy to promote RES-E generation. Impact assessment of policy instruments plays a crucial role on decision-making process. For numerical simulations, we make use of a hybrid top-down/bottom-up general equilibrium modeling approach, which represents a reliable tool to analyze the complex interactions between economic, energy, and environmental issues related to energy policies.Numerical simulations confirm the empirical evidence that the FITs policy implemented by Portugal was both an effective and a cost-efficient way to increase the generation of electricity from renewable energy sources and thus to achieve the national RES-E target of 45% in 2010. Results show relatively modest macroeconomic impacts indicating potentially low economic adjustment costs. From an environmental perspective, the deployment of renewable energy source results in significant carbon emissions reductions.     

Economic modelling of price support mechanisms for renewable energy: Case study on Ireland

The Irish Government is considering its future targets, policy and programmes for renewable energy for the period beyond 2005. This follows a review in 2003 of policy options that identified a number of different measures to stimulate increased deployment of renewable energy generation capacity. This paper expands this review with an economic analysis of renewable energy price support mechanisms in the Irish electricity generation sector. The focus is on three primary price support mechanisms quota obligations, feed in tariffs and competitive tender schemes. The Green-X computer model is utilised to characterise the RES-E potential and costs in Ireland up until, and including, 2020. The results from this dynamic software tool are used to compare the different support mechanisms in terms of total costs to society and the average premium costs relative to the market price for electricity. The results indicate that in achieving a 20% RES-E proportion of gross electricity consumption by 2020, a tender scheme provides the least costs to society over the period 2006–2020 but only in case there is limited or no strategic bidding. Considering, however, strategic bidding, a feed-in tariff can be the more efficient solution. Between the other two support mechanisms, the total costs to society are highest for feed-in-tariffs (FIT) until 2013, at which point the costs for the quota system begin to rise rapidly and overtake FIT in 2014–2020. The paper also provides a sensitivity analysis of the support mechanism calculations by varying default parameters such as the interim (2010) target, the assumed investment risk levels and the amount of biomass co-firing. This analysis shows that a 2010 target of 15% rather than 13.2% generates lower costs for society over the whole period 2006–2020, but higher costs for the RES-E strategy over the period 2006–2010.     

Small-scale CDM projects in a competitive electricity industry: How good is a simplified baseline methodology?

Setting baseline emissions is one of the principal tasks involved in awarding credits for greenhouse gas emission (GHG) mitigation projects under the Clean Development Mechanism (CDM). An emission baseline has to be project-specific in order to be accurate. However, project-specific baseline calculations are subject to high transaction costs, which disadvantage small-scale projects. For this reason, the CDM-Executive Board (CDM-EB) has approved simplified baseline methodologies for selected small-scale CDM project categories. While the simplified methods help reduce the transaction cost, they may also result in inaccuracies in the estimation of emission reductions from CDM projects. The purpose of this paper is to present a rigorous economic scheduling method for calculating the GHG emission reduction in a hypothetical competitive electricity industry due to the operation of a renewable energy-based power plant under CDM and compare the GHG emission reduction derived from the rigorous method with that obtained from the use of a simplified (i.e., standardized) method approved by the CDM-EB. A key finding of the paper is that depending upon the level of power demand, prices of electricity and input fuels, the simplified method can lead to either significant overestimation or substantial underestimation of emission reduction due to the operation of renewable energy-based power projects in a competitive electricity industry.     

The EU Renewables Directive—What is the fuss about trading?

Considerable argument about trading in green electricity certificates (GECs) preceded the publication of the proposed EU Renewables Directive in early 2008. The proposed Directive set a binding target of 20 per cent of EU energy to be derived from renewable energy by 2020 broken down into targets for each member state. Those arguing for trade in green certificates, called certificates of guaranteed origin (GO), included major electricity companies. However, the idea of mandatory trading was opposed by the main renewable energy industry lobby groups. The proposed Directive limited trading in accordance with the demands of the renewables industry pressure groups. Analysis suggests that if member states were forced to trade to achieve a mandatory target of 20 per cent target, then GEC prices would rise to high levels because the demand for tradeable certificates would be much higher than their supply. Trading is unlikely to improve the prospects for meeting the targets. A system of nationally based ‘feed-in tariff’ systems would not face the problems of uncertain certificate prices faced by compulsory trading in GECs.     

Linking renewable energy CDM projects and TGC schemes: An analysis of different options

Renewable energy CDM (RE-CDM) projects encourage cost-effective GHG mitigation and enhanced sustainable development opportunities for the host countries. CERs from CDM projects include the value of the former benefits (i.e., “climate change benefits”), whereas the second can be given value through the issuing and trading of tradable green certificates (TGCs). Countries could agree to trade these TGCs, leading to additional revenues for the investors in renewable energy projects and, therefore, further encouraging the deployment of CDM projects, currently facing significant barriers. However, the design of a combination of CDM projects and TGC schemes raises several conflicting issues and leads to trade-offs. This paper analyses these issues, identifies the alternatives that may exist to link TGC schemes with RE-CDM projects and analyses the impacts of those options on different variables and actors.     

Why should support schemes for renewable electricity complement the EU emissions trading scheme?

In virtually all EU Member States, the EU Emissions Trading Scheme (EU ETS) is complemented by support schemes for electricity generation from renewable energy sources (RES-E). This policy mix has been subject to strong criticism. It is mainly argued that RES-E schemes contribute nothing to emissions reduction and undermine the cost-effectiveness of the EU ETS. Consequently, many scholars suggest the abolition of RES-E schemes. However, this conclusion rests on quite narrow and unrealistic assumptions about the design and performance of markets and policies. This article provides a systematic and comprehensive review and discussion of possible rationales for combining the EU ETS with RES-E support schemes. The first and most important reason may be restrictions to technology development and adoption. These may be attributed to the failure of markets as well as policies, and more generally to the path dependency in socio-technical systems. Under these conditions, RES-E schemes are required to reach sufficient levels of technology development. In addition, it is highlighted that in contrast to the EU ETS RES-E support schemes may provide benefits beyond mitigating climate change.     

Analysing the impact of renewable electricity support schemes on power prices: The case of wind electricity in Spain

It is sometimes argued that renewables are “expensive”. However, although it is generally true that the private costs of renewable electricity generation are certainly above those of conventional electricity, that statement fails to consider the social benefits provided by electricity from renewable energy sources (RES-E), including environmental and socioeconomic ones. This paper empirically analyses an additional albeit usually neglected benefit: the reduction in the wholesale price of electricity as a result of more RES-E generation being fed into the grid. The case of wind generation in Spain shows that this reduction is greater than the increase in the costs for the consumers arising from the RES-E support scheme (the feed-in tariffs), which are charged to the final consumer. Therefore, a net reduction in the retail electricity price results, which is positive from a consumer point of view. This provides an additional argument for RES-E support and contradicts one of the usual arguments against RES-E deployment: the excessive burden on the consumer.     

Co-firing biomass with coal for electricity generation—An assessment of the potential in EU27

The European Union aims to increase bioenergy use. Co-firing biomass with coal represents an attractive near-term option for electricity generation from renewable energy sources (RES-E). This study assesses the near-term technical potential for biomass co-firing with coal in the existing coal-fired power plant infrastructure in the EU27 Member States. The total technical potential for RES-E from biomass co-firing amounts to approximately 50–90 TWh/yr, which requires a biomass supply of approximately 500–900 PJ/yr. The estimated co-firing potential in EU27 amounts to 20–35% of the estimated gap between current RES-E production and the RES-E target for 2010. However, for some member states the national co-firing potential is large enough to fill the national gap. The national biomass supply potential is considerably larger than the estimated biomass demand for co-firing for all member states. About 45% of the estimated biomass demand for co-firing comes from plants located close to the sea or near main navigable rivers and indicates the possibility for biomass import by sea transport. Thus, biomass co-firing has the potential to contribute substantially to the RES-E development in EU27.     

How important are current energy mix choices on future sustainability? Case study: Belgium and Spain—projections towards 2020–2030

Despite recent consumption decrease due to recession, European electricity sector is struggling to reach ambitious targets for reductions of greenhouse gas emissions. Our objective is to carry out a macro analysis of the energy mix in two European countries: Belgium and Spain. Life Cycle Assessments are carried for 2005 as well as for seven possible referenced scenarios to reach EU and also national legal objectives at the horizon 2020 and 2030. Ambitious renewable energy sources’ deployment plans can decrease impacts on the environment significantly as those sources replace polluting traditional sources, such as coal/lignite, oil or gas. When concentrating on projections for the future in Spain, results show that a mix with little coal and oil replaced by up to 54% of RES-E energy sources could bring environmental benefits with CO₂ emissions equivalent around 0.2 kg per kWh produced (compared with 0.54 kg in 2005). In Belgium, all future scenarios presented include more coal and gas with a limited share of RES-E; those mixes present more environmental harmful impacts (up to 0.56 kg CO₂ equivalent). This is why RES-E deployment is crucial as long as it is part of an electricity mix with reduced quantities of traditional fossil fuels.     

The Kyoto mechanisms and the prospects for renewable energy technologies

The Kyoto Protocol to the Climate Change Convention sets out legally binding emission targets and timetables for developed countries. In order to ease compliance, it allows countries to achieve their emission targets through the ‘Kyoto Mechanisms’. These mechanisms comprise International Emissions Trading (ET), Joint Implementation (JI), and a Clean Development Mechanism (CDM). This paper analyses the capacity of the proposed mechanisms of the Kyoto Protocol to promote investment in renewable energy technologies (RETs). Analysis of abatement costing studies indicates that the increasing use of renewable energy tends to be a higher cost option compared with other greenhouse gas (GHG) abatement technologies. This finding, however, does not make RETs unattractive for GHG mitigation as such because, apart from their vast technical potential to reduce GHG emissions, RETs have great capacity to contribute to other aspects of sustainable development. The extent of investment into renewable energy induced by the Kyoto mechanisms will depend on whether the rules and guidelines that are to be developed in the coming years will explicitly support renewables. The Kyoto mechanisms could be instrumental in leading to significant investment into these resources if rules are defined appropriately.     

红庙岭生活垃圾填埋气体回收利用的CDM可行性研究

对国内几个已批准的填埋气体收集利用CDM项目，在比较分析的基础上，结合福州市红庙岭生活垃圾填埋场具体情况，对该场填埋气体回收利用的CDM可行性进行研究及效益评析。结果表明：只要尽快合理地开发该项目，不仅能大大减少填埋气体的排放量，同时也减排了因替代其它能源产生电能而带来的温室气体。因此，具有同类垃圾填埋场的城市也应通过国家相关部门积极申报填埋气体发电CDM项目。     

福州红庙岭生活垃圾填埋气体回收利用的CDM可行性研究

对国内几个已批准的填埋气体收集利用CDM项目,在比较分析的基础上,结合福州市红庙岭生活垃圾填埋场具体情况,对该场填埋气体回收利用的CDM可行性进行研究及效益评析。结果表明:只要尽快合理地开发该项目,不仅能大大减少填埋气体的排放量,同时也减排了因替代其它能源产生电能而带来的温室气体。因此,具有同类垃圾填埋场的城市也应通过国家相关部门积极申报填埋气体发电CDM项目。     

Electricity from biomass in the European union—With or without biomass import

The European Union has set up indicative targets for its 15 Member States to supply 22.1% of their total electricity consumption using renewable energy resources by 2010. This paper compares two ways to achieve target compliance—either with import of biomass from countries outside the EU or without. The ADMIRE REBUS model combines cost data for electricity producing renewable energy technologies with data on the renewable energy resources available in EU and assesses the effect of the various national support policies for green electricity in the EU countries. The major finding of the study is that increased imports of low-cost biomass will significantly reduce the cost of target compliance, but would hamper the use of energy crops and further development of wind power within the EU. Despite this, increased importation of biomass can be the cost-reducing factor making the target realisable, which would justify promotion of such trade.     

Efficiency and effectiveness of promotion systems for electricity generation from renewable energy sources - Lessons from EU countries

Currently, a wide range of strategies is implemented in different countries to increase the share of electricity from renewable energy sources (RES-E). A still controversial discussion is whether quantity-driven (like Tradable Green Certificates (TGCs) based on quotas) or price-driven (like feed-in-tariffs (FIT)) instruments lead to preferable solutions for society. The core objective of this paper is to compare the perspectives of quota-based certificate trading systems for an efficient and effective increase of RES-E with FIT. The major results of this analysis are: (i) The success stories of growth in RES-E in EU member states in recent years has been triggered by FIT implemented in a technology-specific manner at modest costs for European citizens; (ii) At present, TGC systems in most countries applied show a low effectiveness with respect to RES-E deployment of less mature technologies such as solar PV (with improving tendencies in e.g. the UK or Italy with respect to certain technologies); (iii) Compared to short term trading in TGC markets the intrinsic stability of FIT systems appears to be a key element for success; (iv) Hence, currently a well-designed (dynamic) FIT system provides a certain deployment of RES-E in the shortest time and at lowest costs for society.     

Analysis of harmonisation options for renewable heating support policies in the European Union

Best practice policy design and harmonisation of support schemes for electricity from renewable energy sources (RES-E) within the European Union have been discussed controversially for years. In contrast, policies for improving renewable heating (RES-H) penetration in the European Member States and options for best practice instruments are still being developed. The objective of this paper is to analyse different levels of policy harmonisation for target compliance and the economics of renewable heating and cooling. After presenting the degree of RES-H policy harmonisation resulting from Directive 2009/28/EC, a quantitative assessment is performed of the costs and benefits of different harmonisation scenarios. This selects the obligation to use renewable heating in buildings as the common policy instrument against which the effects of harmonisation are analysed. The paper shows that economic benefits can result from implementing best practice design options for use obligations in EU Member States.     

Life Cycle Analysis of wind–fuel cell integrated system

After ratification of the Kyoto Protocol, Canada’s Kyoto greenhouse gas (GHG) emission target is 571 Mt of CO₂ equivalent emitted per year by 2010; however, if current emission trends continue, a figure of 809 Mt is projected by 2010 (Cote C. Basic of clean development mechanism—joint implementation and overview of CDM project cycle, 2003 regional workshop on CDM-JI, February 2003, Halifax). This underscores the need for additional reduction of 240 Mt. The Federal Government Action Plan 2000 aims to reduce this gap from 240 to 65 Mt (Cote C. Basic of clean development mechanism—joint implementation and overview of CDM project cycle, 2003 regional workshop on CDM-JI, February 2003, Halifax). In order to accomplish this goal, renewable energy use in all sectors will be required, and this type of energy is particularly applicable in power generation. Traditional power generation is a major source of greenhouse gas (GHG) emissions after industrial and transportation sectors (Environment Canada. Canada’s Greenhouse Gas Inventory 1990–1998. Final submission to the UNFCCC Secretariat, 2002 [Available from: http://www.ec.gc.ca/climate/resources_reportes-e.html]. Although wind energy, solar power and other forms of renewable energy are non-GHG emitting in their operation, there are GHG emissions in their different stages of life cycle (i.e. material extraction, manufacturing, construction and transportation, etc.). These emissions must be accounted for in order to assess accurately their capacity to reduce GHG emission and meet Kyoto targets. The current trend in electricity generation is towards integrated energy systems. One such proposed system is the wind–fuel cell integrated system for remote communities. This paper presents a detailed Life Cycle Analysis of the wind–fuel cell integrated system for application in Newfoundland and Labrador.The study confirms that wind–fuel integrated system is a zero emission system while in operation. There are significant emissions of GHGs during the production of the various components (wind turbine, fuel cell and electrolyzer). However, the global warming potential (GWP) of wind-integrated system is far lower (at least by two orders of magnitude) than the conventional diesel system, presently used in remote communities.