CEESA WP4: Market Development and Public Regulation Senior Research Specialist Poul Erik Morthorst Risø National Laboratory for Sustainable Energy The Technical University of Denmark

100% Renewable Scenarios Biomass scenario. Based on 100% RES low demand, mostly biomass. Wind scenario. Based on 100% RES low demand, mostly wind High demand. Based on the 2004 energy demand, both wind and biomass.

EU Energy Policy Framework Binding targets in EU: 20-20-20 i 2020 20% reduction of greenhouse gases by 2020 compared to 1990 this target can be raised to 30% subject to binding international climate change agreements 20% of final energy consumption in the EU has to be supplied by renewable energy Existing target was 12% in 2010 and non-binding – 7% expects to be achieved 20% increase in energy efficiency by 2020 compared to a reference 10% biofuels in transport by 2020

How are the EU targets interacting? 20% Greenhouse gas reductions by 2020 CO2-quota Emission Trading System 40% Targets for sectors not covered by ETS 60%

How are the EU targets interacting? 20% Greenhouse gas reductions by 2020 ETS Renewable Energy Target non-ETS

How are the EU targets interacting? 20% Greenhouse gas reductions by 2020 Target for energy savings ETS Vedvarende energi målsætning non-ETS

How are the EU targets interacting? 20% Greenhouse gas reductions by 2020 Target for biofuels Target for energy savings ETS Renewable Energy Target non-ETS

Greenhouse gases and Renewables in EU European Emission Trading System (ETS) Covers the power industry and energy intensive industries Free allocation – Grandfathering Auctioning after 2012 – same price all over EU Reduction in allowances of 21% by 2020 compared to 2005 Non-ETS sectors 10% reduction within EU by 2020 compared to 2005 National targets ranging from -20% to +20% Renewables National targets – Denmark of 30% by 2020

National targets for renewables

A Patchwork of Support Systems for Renewables in EU “Old” EU countries “New” EU countries

Support for Biomass in different Member States

Harmonization of national support schemes for renewables Current Policy Issues Harmonization of national support schemes for renewables The most economic efficient system, including cross border trade Strong national interests in developing the renewable industry Optimized national support schemes can achieve 70% of all economic benefits National policies are needed for implementing targets

Denmark vs. EU in the Future

Conditions within the Future EU Policy Framework The Emission Trading System will continue as the core of EU Energy Policy Air and Sea transport will be included New Targets for emissions and renewables will be set after 2020 The power market in EU will gradually be liberalized One European market by 2020 coordinated by EU TSO Increased competitiveness for renewables will gradually decrease the need for support No need by 2030 assuming a CO2-price of 50 €/t and a crude oil price of 150 $/bbl

Wind power in Western Denmark

Wind power in Western Denmark Wind Power covered approx. 44% of Power consumption in January in Western Denmark

Wind power in Western Denmark Wind Power covered approx. 44% of Power consumption in January in Western Denmark … and 36% on average in Denmark

Impact on Spot Price