Major European economies in danger of not meeting decarbonisation targets says new report
This is Â the key finding ofÂ the Energy Transition Readiness Index 2021 (ETRI 2021), launched today, that examines energy markets in 12 European countries and assesses their readiness to promote the uptake of renewable electricity to achieve 2030 carbon reduction targets. The report has been prepared by the UK's Association for Renewable Energy and Clean Technology (REA), and sponsored by global power management company, Eaton.
The report provides new analysis of what countries around Europe have already done, and what they still need to do, and it refers particularly to the importance of attracting private investment into the flexibility assets and grid services. It is this investment that will assist national governments in the push towards a net-zero future. The countries assessed, listed alphabetically are: Denmark, France, Finland, Germany, Italy, Ireland, the Netherlands, Norway, Spain, Sweden, Switzerland and the UK.
Success in reducing carbon emissions across Europe will depend on the readiness of all countries â€“ both within and outside the EU â€“ to embrace the potential of flexibility assets to help ease the integration of renewables as fossil fuel generation is wound down. High volumes of new flexibility resources will be needed, especially in the major European economies of France, Germany, Italy, Spain and the UK, if 2030 decarbonisation targets are to be met, and markets will need reform to attract private investment in energy flexibility assets. The assets envisaged include intelligently managed EV chargers, battery and thermal energy storage as well asÂ grid-interactive data centres.
It is the second time that Eaton and the REA have assessed the readiness of European electricity markets for the energy transition. The first ETRI report was published in November 2019, and the 2021 update is timely. Earlier this year, the EU published its wide-ranging Fit-for-55 legislative package aimed at speeding up progress towards reducing carbon emissions by at least 55% by 2030, compared with 1990 levels. Countries outside the EU that have put themselves on a similar trajectory, such as the UK, were also assessed.
A key aspect of the ETRI 2021 assessment focused on the extent to which countries have adopted policies that will encourage private investors to commit funding to flexibility assets and technologies. The report concluded that there is a mismatch between ambition and action in most countries, with larger economies faring worst. It is considered that major European economies face greater challenges because they present barriers to investment in the form of rules and policies that are generally more complex, exacerbated by market design that is strongly influenced by incumbents.
Dr Nina Skorupska CBE, CEO of the Association for Renewable Energy and Clean Technology (REA), said:Â â€œThis report is not a league table, but an attempt to find out what works in some countries and why, so that learning can be shared. Denmark, Finland, Ireland, the Netherlands, Norway and Sweden all demonstrated the greatest progress in the transition to renewables and development of associated flexibility markets - they appear to be more agile and able to adapt their electricity markets. However, the major European economies France, Germany, Italy, Spain, Switzerland and the UK are faring less well.
Â â€œThe report makes three recommendations to national governments: define and quantify targets for future flexibility requirements so that associated policies and market reforms can be developed; prioritise and accelerate flexibility market reforms; and design flexibility markets to attract investment.â€'
Eaton vice-president, Cyrille Brisson said:Â â€œWe will be talking to influencers across government and industry to encourage them to take all necessary steps to achieve market reform and attract private investment. Policies and associated incentives to deliver fair, transparent, and easily accessible markets for new flexibility resources must accelerate if the energy transition is not to be put at risk. Investors are seeking stability and predictability from the market and regulatory regimes to ensure that investments with long payback periods can be funded. Â Uncertainty about the scope, timing and impact of regulatory change can deter investment, and we don't want to see that happen.â€'