Use of EU Policy Initiatives to Promote RE-based       Electricity Generation in MENA Countries       Concept and Thought ...
The RCREEE interim secertriat has intiated a studyon one of themost promosing areas for EU-MENA cooperation which wouldcot...
► Climate Change / Global Warming Concerns and Response        ●   UNFCCC and Kyoto Protocol flexible mechanisms targeting...
Present RE Technologies and Cost      ● Based on international costs, and      ● Considering a benchmark of 5 € cents / kW...
► Long term economic                 Over and above 10 € cents / kWh                    • off – shore wind power          ...
Initiatives and Tools of Potential Support to RE in MENA and       their Limitations    General Initiatives and tools    ►...
► RE financial support schemes      ● Feed – in tariffs → as a price driven method      ● RE quota obligations on supplier...
► Schemes of potential use by EU to support RE in MENA      ● Euro-Med wide feed-in tariff would require extensive market ...
●   Tradable Green Certificates (TGC) scheme would have the         following advantages:-        ▬ Allows selling and buy...
► New Prospect ● A recent EU Directive opens the door for RE electricity imports from   MENA countries to EU Member States...
● Consequences     ✔ Delay the potential use of TGC from MENA.     ✔ Incompatible with rationale behind TGC of unbundling ...
► Emissions Trading Initiative    ● Developed in EU in three phases         1. 2005 – 2007             for 3 years (ended)...
●   CDM CERs are also accepted in phase 3         ✔ But there are restrictions on using CERs within phases 2&3, or an     ...
EU – MENA Cooperation Initiatives & Tools ► Barcelona Process     ●    Launched in 1995 marking the start of active EU–MEN...
► European Neighborhood Policy - ENP     ●   It created the European Partnership Instrument – ENPI – succeeding          M...
Financial and Technical Cooperation Support ► European Investment Bank - EIB     ● One of the most important investors in ...
► Global Energy Efficiency and Renewable Energy Fund – GEEREF –      or “Patient Capital” → Fund for Funds     ● Rationale...
► Technical Cooperation Towards Energy Market Integration     ● EC   supports several projects with a key objective of Eur...
► R & D Cooperation, FP7 - Energy     ●   EU Framework Programme 7, Theme 5 : Energy, main objective is         to support...
The Mediterranean Solar Plan (MSP)     ● Considered the flag ship project for Union for Mediterranean       Initiative ann...
☀   Phase 2, 2009 – 2010 → pilot phase                    Immediate action plan                    Carrying out first seri...
● Solar energy utilization as a key element in achieving MSP & EU –        MENA RE goals     ● Special attention should be...
Preliminarily Conclusion ► Even if adding all available financial support initiatives and tools,     they will fall extrem...
Lessons Learned and Recommendations for Proposed   Instruments ► Present EU – MENA cooperation initiative and tools are di...
► Initiatives implementation should be Evaluated & closely monitored     ●    Initiatives should be translated into specif...
►        Newer studies should be always related to older studies         achievements     ● Studies   should build on each...
► Consequences of EU – MENA Ambitious RE Targets     ●Present   targeted RE cooperation is quite complex                  ...
Need for Road Map approach rather than straight forward     action plans        Should address          ✔ roles of stakeho...
► Use of RE Electricity in EU Requirements     ● Very     recent EU Directive allows such use for compliance purposes,    ...
► Use of TGC from MENA in EU Requirements     ● An   issue that should be addressed seriously                  Need to fos...
► Use of CERs within EU ETS Requirements     ● Need     to have more flexible rules and a compromise between CERs         ...
► The important role of RCREEE to support MENA RE efforts and     EU – MENA cooperation     ●   Can contribute significant...
► Financial Support Indispensable Role     ●A   key element for success if not the most important exclusively     ●   Inno...
Recommendations in Brief     ● Need   for integration and harmonization in all levels particularly for          electricit...
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Session1 eu policy_initiatives_to_promote_re_based_electricity_generation_in_mena_countries_ georgy_rcreee

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Transcript of "Session1 eu policy_initiatives_to_promote_re_based_electricity_generation_in_mena_countries_ georgy_rcreee"

  1. 1. Use of EU Policy Initiatives to Promote RE-based Electricity Generation in MENA Countries Concept and Thought Inputs to Policy Discussion By: Eng. Rafik Youssef Georgy Supervised By: Eng. Samir Hassan1
  2. 2. The RCREEE interim secertriat has intiated a studyon one of themost promosing areas for EU-MENA cooperation which wouldcotribute significantly to those objectives, that is RE-basedelecricity generationThe importance of developing EU-MENA RE cooperation to thebenefit of both sides due to geographical proximity, commonshared interests and for the complrmentary energy rolesEU the largest energy consumerNENA one of the largrst RE resourcesA major driver is the need for combating climate change andprotecting our globe invirronment
  3. 3. ► Climate Change / Global Warming Concerns and Response ● UNFCCC and Kyoto Protocol flexible mechanisms targeting GHG emission reductions ● EU ambitious targets for emission reductions and EU ETS Overall EU target: 20% reductions by 2020 compared to 1990 levels, as previously endorsed by the March 2007 EU council and modified lately in December 2008 to achieve the same ratio compared to 2005 levels EU RE ambitious target of achieving “ A binding share of 20% of RE sources in the overall EU energy consumption3 by 2020”.
  4. 4. Present RE Technologies and Cost ● Based on international costs, and ● Considering a benchmark of 5 € cents / kWh, ● Hence we can distinguish between ► Economic / near (short term) economic / relatively competitive with conventional Around that benchmark • small & large hydro • on – shore wind power • biomass power Provided that resources and markets are favorable4
  5. 5. ► Long term economic Over and above 10 € cents / kWh • off – shore wind power • solar electricity generation, including Solar thermal & PV But, R&D, learning curve & economy of scale would turn them into quite economic and competitive across a shorter term We shall concentrate on those RE technologies having abundant potential for electricity generation in MENA and allowing considerable export to EU5
  6. 6. Initiatives and Tools of Potential Support to RE in MENA and their Limitations General Initiatives and tools ► EU – RE Targets Initiative ● EU Council on March 2007 approving a target of “A binding share of 20% of RE resources in overall EU energy consumption by 2020”. ● On 23 January 2008 EU published a proposal for a formal Directive confirming 20% RE target and breaking down the 20% overall target into individual Member States binding targets6
  7. 7. ► RE financial support schemes ● Feed – in tariffs → as a price driven method ● RE quota obligations on suppliers and/or consumers mostly with tradable green certificates (TGC) → as a quantity driven method ● Tendering various schemes ● Tax incentives Financial support schems vary to a great deal among EU countries Harmonization is not expected to take place soon as judged by EU7
  8. 8. ► Schemes of potential use by EU to support RE in MENA ● Euro-Med wide feed-in tariff would require extensive market reforms, harmonization and far reaching energy markets integration Not to be considered in the 2020 time horizon Potential should addressed on long run ● Favorable potential for use of green certificates to support RE electricity generation in MENA8
  9. 9. ● Tradable Green Certificates (TGC) scheme would have the following advantages:- ▬ Allows selling and buying environmental benefits regardless of where actual production has taken place ▬ Can be traded across countries boundaries ▬ Can overcome physical electricity transfer restrictions ▬ Eliminate the need that supply and demand of RE occur on the same time In brief, it allows shifting investments to where RE electricity can be produced most efficiently at the lowest and most feasible costs.9
  10. 10. ► New Prospect ● A recent EU Directive opens the door for RE electricity imports from MENA countries to EU Member States ● Nevertheless, the directive sets conditions on counting such RES–E as a measure of compliance of the EU state, that electricity has been actually and physically transferred to EU grid. ● Inter - connections between EU and MENA with the scale and size anticipated for large exports would only be achieved most probably on the long run. ● However, the Directive allows potential counting provided that interconnection is planned on firm and concrete basis where:- ✔ Construction most have started by 2016.10 ✔ Construction must become operational by 2022.
  11. 11. ● Consequences ✔ Delay the potential use of TGC from MENA. ✔ Incompatible with rationale behind TGC of unbundling actual production and consequent environmental benefits to allow cost effective use of RES – E to be produced in the most favorable locations, But also accepting TGC from MENA into EU energy market would pose other challenges at least from the harmonization and regulatory stand points11
  12. 12. ► Emissions Trading Initiative ● Developed in EU in three phases 1. 2005 – 2007 for 3 years (ended) 2. 2008 – 2012 for 5 years coinciding with Kyoto protocol (operating presently) 3. 2013 – 2020 post Kyoto (planned) ● Presently covers over 10000 installations responsible for 50% of CO2 emission and 40% of the total GHG emissions. ● It is a cap and trade system ✔ Overall EU emission reduction percentage targeted is divided into Member States various emission percentage targets depending on development status and GDP per capita of each state. ✔The EU emission reduction target for 2nd phase is 6.5% below 200512 levels → generally more than Kyoto targets
  13. 13. ● CDM CERs are also accepted in phase 3 ✔ But there are restrictions on using CERs within phases 2&3, or an upper limit not to exceed 50% of the EU wide reductions over the period 2008 - 2020. ✔Further restrictions on quality are being introduced ✔Restriction on use of CERs to be dependant on forecasted scenarios for development of worldwide new agreements post Kyoto . ► Understandable but ● RE CERs are high quality ● would limit use of CERs in phase 3 more than expected13
  14. 14. EU – MENA Cooperation Initiatives & Tools ► Barcelona Process ● Launched in 1995 marking the start of active EU–MENA cooperation on the regional level ● Creating MEDA I & II as the financial instruments (MEDA I allocated funds 3.435 billion Euro) ● Encouraging achievements, but Lower than expected achievement particularly in terms of actual disbursed financing compared to allocated / planned ≈ 30% for MEDA I14
  15. 15. ► European Neighborhood Policy - ENP ● It created the European Partnership Instrument – ENPI – succeeding MEDA for 2007 – 2013 period ● Also succeeded other EU financial instruments for non – MENA, e.g. TACIS for Eastern Europe ● ENPI is presently the only financial instrument for ENP so far addressing MENA, Eastern Europe and the Baltic Lower financing allocations targeting MENA compared to previous MEDA in spite of potentially larger overall allocations where out of 11 billion Euro, only 0.5 – 1 is allocated to MENA, considering also ERDF Considerably lower than needed for supporting ambitious EU– MENA cooperation RE goals15
  16. 16. Financial and Technical Cooperation Support ► European Investment Bank - EIB ● One of the most important investors in energy ● Investing ≈ 23.7 billion Euro on energy between 2002 – 2006, but only 3 – 3.6 billion Euro on RE (about 13%), if including hydro ● Things have changed in favor of RE lately where RE financing exceeded 30% during 2007 But EIB still relatively constrains financing long term economic project so far. ● Needed innovative financing mechanism to support EU – MENA ambitious RE goals16
  17. 17. ► Global Energy Efficiency and Renewable Energy Fund – GEEREF – or “Patient Capital” → Fund for Funds ● Rationale is that despite apparent benefits of RE & EE, particularly environmental, their projects continue to face difficulties in raising sufficient financing for investment ● Financing gaps concentrated mainly in the area of risk capital particularly in the developing countries ● The aim is to set up global public – private partnerships that avail and offer new risk – sharing and co – funding options ● The EU commission issued a communication to EU council of that respect in October 2006. But so far limited financing ≈ 100 – 200 M Euro17
  18. 18. ► Technical Cooperation Towards Energy Market Integration ● EC supports several projects with a key objective of Euro – Med energy markets integration, e.g. MED – REG, MED – ENEC, MED – EMIP ● MED – EMIP, Mediterranean Energy Market Integration Project addresses EU – MENA energy integration as a key topic Of close relevance to targeted EU – MENA RE cooperation goals and addressing energy issues of:- ▬ Information collection and dissemination / web portal management ▬ Policy dialogue and energy strategies & policies ▬ Inter – intuitional networking, coordination and cooperation ▬ Human resources development and technical assistance in capacity18 building
  19. 19. ► R & D Cooperation, FP7 - Energy ● EU Framework Programme 7, Theme 5 : Energy, main objective is to support research in order to develop energy systems into more sustainable, secure and competitive ones ● It would and should have a major role in RE technology and know – how transfer to MENA countries Needed to support targeted RE plans19
  20. 20. The Mediterranean Solar Plan (MSP) ● Considered the flag ship project for Union for Mediterranean Initiative announced by France and supported by EU ● It will encompass all other RE technologies, e.g wind ● Aims to tap the huge MENA solar potential to enable:- Satisfying local needs Export considerable RE electricity amounts to EU ● 3 phases for implementation:- ☀ Phase 1 for preparation:- Mobilizing all interested actors Identifying technologies and cost Mobilizing all interested actors in 2020 time frame20 Addressing needed organization structures
  21. 21. ☀ Phase 2, 2009 – 2010 → pilot phase Immediate action plan Carrying out first series of pilot project in MENA 20 – 30 MWp PV, 50 MW CSP & 100 MW wind Enable specifying needed administrative procedures, conditions of financing, local sale and export of RE electricity to EU ☀ Phase 3, from 2011 - 2020 Large scale realization of considerable and increasing amount of RE electricity Can be, potentially, considered a common pool for EU – MENA RE cooperation and/or a major step forward21 supporting other initiatives
  22. 22. ● Solar energy utilization as a key element in achieving MSP & EU – MENA RE goals ● Special attention should be given to CSP and PV ● Probably CSP will start to take over on the medium term hence PV on a longer term But a lot of work remains to be performed A wide and complex initiative such as MSP would start by developing a ROADMAP rather than specific projects for implementation.22
  23. 23. Preliminarily Conclusion ► Even if adding all available financial support initiatives and tools, they will fall extremely short of matching RE ambitious goals for EU – MENA cooperation‼ ► Considering the installation of 20 GW RE electricity generation by 2020, this would require between 60 – 100 billion Euro‼ ► and would even require more for larger capacities ► What would be the lessons learned than can be drawn in view of previous EU – MENA cooperation? It is important to develop thoughts about potential tools that can be used to support achieving ambitious RE targets of envisaged EU – MENA cooperation23
  24. 24. Lessons Learned and Recommendations for Proposed Instruments ► Present EU – MENA cooperation initiative and tools are diverse and cover wide range of RE fields ● Considered an advantage as allowing MENA a variety of options and alternatives that cover many areas. ● Nevertheless, duplication and overlapping can be noticed. ● Anticipated ambitions RE plans, e.g. 20 GW or more of solar electricity to be exported from MENA to EU → Requires minimum level of coordination, integration and streamlining to optimize the use of resources.24
  25. 25. ► Initiatives implementation should be Evaluated & closely monitored ● Initiatives should be translated into specific fields of implementation along with quantifiable targets ● Also should allow developing action plans along with adequate monitoring mechanisms. MEDA financial instrument of Barcelona as an example ► Present ENPI, that replaced MEDA, funds cannot cope with ambitious RE targets of EU - MENA It is even less generous than MEDA, and the bulk of allocations is for Eastern Europe and new EU members25
  26. 26. ► Newer studies should be always related to older studies achievements ● Studies should build on each other and accumulate achievements. ● Older studies in some instances were not comparable to results and achievements ● Not catching all benefits and realizing full scope of proposed actions of older studies may have lead to repetition New studies should address barriers confronted older studies achievements to present solutions as part of new studies.26
  27. 27. ► Consequences of EU – MENA Ambitious RE Targets ●Present targeted RE cooperation is quite complex Involve many states both in EU & MENA Multidisciplinary ✔ adequate technology selection, e.g. CSP, PV, Wind, other ✔ issues of grid interconnections, e.g. HVDC ✔ considerable financing required and the need for innovative mechanisms ✔ cost – benefit analysis issues ✔ the need to develop selection criteria in every area ✔ the need to well- define stakeholder roles27
  28. 28. Need for Road Map approach rather than straight forward action plans Should address ✔ roles of stakeholders ✔ elaborated and recommended options ✔ development phases ✔ well defined follow up and monitoring mechanisms ✔ possible gaps and short comings ✔ feed back for adjustments and possible correction ✔ adequate level of flexibility to provide even for modification of some intermediate goals ✔ how to estimate and allocate necessary funds & tools28 ✔ developing a master plan for actual implementation
  29. 29. ► Use of RE Electricity in EU Requirements ● Very recent EU Directive allows such use for compliance purposes, but With a restriction that use is pending on actual transfer, hence There is a need to remove such constraint at least on the short to medium terms until interconnection issues are resolved ● Hence that calls for the use of TGC as a means of unbundling actual environmental benefits and actual generation location29
  30. 30. ► Use of TGC from MENA in EU Requirements ● An issue that should be addressed seriously Need to foster more energy market common rules and an ever developing degree of integration Need for changing the closed inward – focused RES – E market in EU Need to address adequate regulatory frames ● EUcan benefit from fossil fuel saved in MENA due to use of RE until interconnection becomes a reality30
  31. 31. ► Use of CERs within EU ETS Requirements ● Need to have more flexible rules and a compromise between CERs and EAUs use ● It is important to differentiate between lines of focuses between EU and MENA Emissions reduction is a priority for EU Also important for MENA but comes after the overriding priority of economic development, increased employment and welfare ● If EU will become reluctant, MENA countries would even become more reluctant to contribute to emission reduction efforts31
  32. 32. ► The important role of RCREEE to support MENA RE efforts and EU – MENA cooperation ● Can contribute significantly in supporting various cooperation areas, technical, financial and regulatory and propose relevant ● It targeted activities permeates all aspects of cooperation ●Should act as a policy think tank for policy and tools formulation and development in support of RE diffusion.32
  33. 33. ► Financial Support Indispensable Role ●A key element for success if not the most important exclusively ● Innovative financing mechanisms very important ● EIB important role → softer loans and better conditions in financing RE ● GEEREF concept of patient capital to be expanded to be expanded ● Grants would be absolutely necessary to cover incremental cost of RE33
  34. 34. Recommendations in Brief ● Need for integration and harmonization in all levels particularly for electricity markets ● Need for developing a Road Map ● Need for better defining goals and phases of implementation across time ● Need for adapting some EU Directives particularly those addressing RE goals compliance, use of TGC and use of CERs within EU EMS ● Need to support technology transfer ● Need to secure adequate financing as well as corresponding competent tools and mechanisms34

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