379 billion euros will need to be spent every year to reach the EU climate goals by 2030. Additional billions of euros in investments will be required for the 2050 goals. Where to direct the funds and how to utilise them? This was discussed by the participants in the EurActiv.com discussion on Transforming the Global Energy System: How to finance a just transition. The Polish Electricity Association is the partner of the event.
Catharina Sikow-Magny, Head of Unit Networks & Regional Initiatives, DG Energy, European Commission, said that the European Union’s climate goals indicate the direction the energy industry should follow. “It is about decarbonisation” – she said. There are appropriate legal frameworks, market, energy efficiency and security of supply rules leading to it. Ms Sikow-Magny has in this context reminded about the proposal of the European Commission assuming the integration of the management of the energy sector by the network operators to increase the number of interconnections between the Member States. “We have received the plans of individual Member States. In June we will talk about their deficiencies and what remains to be done with them” – she announced.
She stated that “no actor in the European Union may be left behind”. This was the aim of the establishment of, among others, the initiative to support the former mining regions, established by the European Commission. “This is a support for making these economies zero emission” – she added. She has also reminded of the Commission’s initiatives to counter energy poverty.
Peter Zapfel, responsible for the Emissions Trading System (EU ETS) at DG CLIMA, European Commission, has said that the Market Stability Reserve (MSR) mechanism will be influencing the prices in a way incentivising investments in energy transition. On the other hand, the trade in allowances is to provide funds for this spending. In addition, there are the Modernisation Fund that is to cause the energy transition in the energy generation sector and the Innovation Fund to support new technologies that include the CCS, energy storage and low-emission technologies in the energy sector.
Deputy Director of the Energy Department at the Ministry of Energy of Poland, Waldemar Łagoda has reminded that the energy transition in Poland will be the “biggest transformation in the sector since a century”. He reminded that the energy strategy designed by the government assumes reducing emissions through investments in renewable, nuclear and gas energy sectors. “This matter will be decided upon in the coming months” – he assured.
“The present regulations seem to be very friendly towards our plans” – admitted Mr Łagoda. “The structural funds will be directed towards low-emission technologies. We wish to move from the 80 per cent coal share in our energy mix to around 60 per cent in 2030. This will take significant investments” – he pointed out. He has reminded that Poland will also be eliminating the coal-fired sources of heating and that the EU money will also be helpful in this.
“The road to decarbonisation will depend on the fate of the energy sector” – said Dawid Klimczak, President of ENEA Trading. “Decarbonisation in Poland will cost 120-150 billion euros until 2045 depending on the calculations” – he estimated. “Poland’s energy sector welcomes the plans for investments in the energy transition. However, different players have different starting points. The changes in our sector require substantial amounts”.
“Not a single euro from the funds mentioned so far will reach the gas and nuclear sources that will be pivotal to the transition of Poland’s energy sector. Support for them should not be withheld” – appealed Mr Klimczak.
Marion Labatut, Director Policy Issues, EURELECTRIC, argued that decarbonisation of the energy sector could be completed by 2045 with 110 billion euros annually, not including the capital expenditures on the transmission grids required for the expansion of the RES. “Let us not forget about the new backup sources required for operation in situations when the renewables will not be generating” – she added. “This cannot be ignored.”
“At the end of the day, we must demonstrate that the energy transition is a viable business model. We are calling for the establishment of the Just Energy Transition Fund. The European Investment Bank has the tools for supporting investments in this area and should make use of them” – appealed Ms Labatut. “We must make sure that any source allowing emissions reduction will be qualified as sustainable” – she added. She has warned against the negative social impact of ill-conceived policies.
Piotr Arak, Head of the Polish Economy Institute has reminded that according to his calculations even 6.7 million people in Poland are facing the threat of energy poverty. “There is a need for a European fund that would allow utilising the potential of energy consumption structure transformation at households in Poland that cannot afford such an expense. This is where the energy policy meets the social policy” – he argued.
“When considering financing the energy sector we have to separate these issues. Funds for the infrastructure and those for social spending should not be mixed together” – assessed Ralf Wezel, Secretary General of German EUTurbines organisation. “The lesson from Germany shows that the energy policy must be credible and predictable. It may be improved by meeting the obligations but not by their extension in time or adding other goals that are contradictory. We have to be credible; otherwise, no one will invest in our assets”.
“The gas power plants provide fast decarbonisation” – admitted Mr Wezel. “This will not be a dependency on fossil fuels as such power plants can also be fired with biogas. We already have discussions about renewable gas. A gas-fired power plant may be adapted to burn it. Investing in gas does not lead to dependency on emissions” – he summed up.
“With the current state of development of energy storage, it is not possible to transition the entire generation to sun and wind and to abandon conventional sources. The most stable sources remain to be nuclear and coal that are not very popular with the European Union. The USA, Japan and Australia are developing clean carbon technologies” – countered director Jagoda.