Fit For 55

EU’s Fit for 55 revisions to include reduced gas use

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The European Commission is preparing to present, in May, details of its Repower EU program, a strategy aiming to greatly reduce Europe’s reliance on Russian energy. Until now, the plan has been limited to objectives, without specifics on how these targets could be achieved.

Further revisions of the EU’s energy and climate policy – as presented in the recent Fit for 55 package, which set a target of a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels – will be needed, through legislative revisions and directives.

The revisions could include greater tolerance for lignite and gas infrastructure, until recently treated strictly, as well as measures for an acceleration of RES and energy storage development.

As was pointed out at the recent energypress Power & Gas Forum by Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, the EU’s energy policy, concurrently managing economic, energy security and environmental concerns, is now shifting towards greater emphasis on energy security as a result of Russia’s invasion of Ukraine and the move’s wider repercussions.

Even so, the Fit for 55 objectives for 2030 are expected to be maintained, while RES targets may be raised to more ambitious levels.

The EU will also look to reduce natural gas consumption for electricity generation and heating through the use of biomethane quantities in excess of 35 billion cubic meters by 2030, green hydrogen quantities of 20 million tons by 2030, as well as energy storage system development, noted Professor Kapros, one of the architects of the EU’s energy policy.

The EU’s Fit for 55 package had originally planned for 164 bcm of Russian gas imports in 2025 and 131 bcm for 2030, but these quantities are now expected to be greatly reduced to 74 bcm and 33 bcm, respectively.

‘Repower EU’ plan aims for RES growth in place of Russian gas

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Repower EU, the European Commission’s roadmap for ending the EU’s reliance on Russian natural gas, features a key role for renewable energy, now not only expected to reduce fossil fuel-based electricity generation but to also significantly contribute to green hydrogen production, which is planned to replace natural gas in a wide range of uses.

The European Commission intends, through Repower EU, to accelerate the EU’s existing Fit for 55 plan, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels. Green electricity generation units incorporated into this framework are expected to offer annual natural gas consumption savings of 170 bcm.

Brussels plans to boost the EU’s installed wind and solar facilities by 80 GW to support green hydrogen production.

“Twenty million tons of hydrogen can replace 50 bcm of Russian natural gas,” noted Frans Timmermans, Executive Vice President of the European Commission for the European Green Deal, during the presentation of the Repower EU roadmap.

Licensing procedures will need to be simplified for the development of new RES projects, the Repower EU plan stresses.

Energy ministry-led committee working on NECP revisions

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An inter-ministerial committee headed by the energy ministry is continuing work on revisions to the National Energy and Climate Plan (NECP), the effort’s aim being to achieve the European Commission’s more ambitious climate change targets, as stipulated in the EU’s Fit for 55 package, striving for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels.

The committee has lined up meetings with top-ranked officials at related ministries, energypress sources have informed.

Formulas calculating the parameters of the revised Fit for 55 road map are expected to be implemented by the summer.

Besides the revised 2030 targets, the country’s new NECP will include climate-change targets for 2040 as well as energy-mix and energy-efficiency revisions that will be required for the achievement of climate neutrality by 2050, the same sources informed.

Industry may be spared of public service compensation cost

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Energy minister Kostas Skrekas has, for the first time, in public comments, left open the possibility of industrial enterprises being spared of paying public service compensation (YKO) amounts for a five-month period covering November to March, as part of an effort to reduce industrial energy costs.

“We will assess the public service compensation account’s revenues and, if deemed necessary following the five-month period, will gradually impose these charges,” the minister noted at an event focused on industrial energy cost.

Speaking at the same event, Giorgos Xirogiannis, deputy general manager of SEV, the Hellenic Association of Industrialists, underlined the problems faced by industrial producers as a result of the sharp rise in energy costs.

Greek industry is currently 20 to 30 percent less competitive than European industrial enterprises, the SEV deputy noted.

He raised a series of energy cost-related issues that need to be addressed, including the YKO surcharge added to electricity costs, distribution costs and energy taxes.

Investments in renewable energy infrastructure and networks need to be accelerated in coming years for the achievement of a favorable energy mix balance, the SEV official added.

Also, the impact on the cost of energy of the EU’s “Fit for 55” package, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels, needs to be discussed, the SEV deputy added.

 

Offshore wind farms, storage, RES licensing, climate in bills

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Two legislative initiatives by the energy ministry, one for climate change rules, the other for a second round of RES licensing simplification revisions, development of offshore wind farms, and a framework for the installation and operation of energy storage units, will be presented at a cabinet meeting today.

The country’s climate rules will make official Greece’s target for a 55 percent reduction in carbon emissions by 2030, compared to 1990 levels, aligned with the EU’s new and more ambitious “Fit for 55” climate-change package.

Greece’s legal framework on the climate will also propose a binding road map for the achievement of net-zero emissions by 2050, also in accordance with EU objectives.

As part of the RES licensing simplification procedure’s second round, the energy ministry has proposed the introduction of letters of guarantee, worth sizeable amounts, for RES connections to the network, the aim being to subdue excess investment plan applications, but will enable investors to have their say through public consultation before any decision is made.

 

NTUA study surveying energy price effect on green objectives

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The European Commission has commissioned the National Technical University of Athens’ E3 Modelling department with the task of examining scenarios on the EU’s ability to achieve ambitious green energy goals in the event that natural gas, fuel and CO2 emission prices remain high.

The NTUA had also been commissioned to conduct research that served as the basis for most of the twelve legislative proposals forwarded by Brussels for its Fit-for-55 climate-change framework, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels.

Early findings produced by the latest NTUA survey have shown that the swiftest possible market penetration of renewable energy sources will not cause further problems linked to the higher energy prices at present but, instead, create favorable conditions for a return to market equilibrium, energypress sources informed.

Swifter market entry of RES units and their full induction into the private-sector market as an energy supply base for customers represents a positive response to the higher natural gas prices, Pantelis Kapros, Professor of Energy Economics at NTUA pointed out in a recent article. The impact of a faster RES entry, however, will not be felt immediately but will require two to three years to produce results, he added.

EU raises RES energy-mix target for 2030 to 40%

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A new and more ambitious EU climate-change package, dubbed “Fit for 55” and just presented by the European Commission, has increased the EU’s RES energy-mix target for 2030 to 40 percent from the previous goal of 32 percent.

The package includes measures covering climate change, energy, land usage, transportation and transboundary taxation, their ultimate aim being to reduce greenhouse gas emissions by at least 55 percent by 2030, compared to 1990 levels.

The measures are seen as crucial for the establishment of a more environmentally friendly energy system, given the fact that energy production and usage account for 75 percent of carbon emissions in the EU.

European producers anxiously await CBAM details in ‘Fit For 55’ plan

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European industrial producers are anxiously awaiting the details of the European Commission’s Carbon Border Adjustment Mechanism (CBAM), part of the “Fit For 55” climate-change package of measures being presented today, which could greatly influence their energy costs.

Whether the introduction of the CBAM system – designed to introduce transboundary taxes on non-EU countries regarded as making a lesser effort, than the EU, to combat climate change – will be combined with a continuation of free carbon emission rights for certain industrial categories, or spell their end, is a crucial detail for producers active in sectors such as aluminium, cement and steel.

The latter scenario would prompt a sharp increase in energy costs for many energy-intensive producers, and could lead to further closures of industrial plants in Europe.

Latest reports suggest free carbon rights for selected industrial categories, as a cost-offsetting measure, will be maintained until at least 2025 or 2026.

The termination of the carbon cost-offsetting measure would require EU industrial producers to cover emission right costs for their entire production, in other words, sales within the EU and exports beyond, a dreaded prospect that would devastate European industry exports.

In the aluminium sector, for example, the termination of carbon emission cost offsetting measures would result in a 60 percent increase for every ton produced, making business beyond the EU impossible.

EU ‘Fit For 55’ climate package to bring about many changes

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To be presented today by the European Commission, the EU’s upcoming “Fit For 55” package of climate-change measures, setting stricter and more ambitious objectives for a 55 percent carbon emission reduction by 2030, compared to 1990 levels, will bring about a series of revisions.

These will include changes to the Emissions Trading System (ETS) and fuel taxation, as well as the introduction of new taxes and a Carbon Border Adjustment Mechanism (CBAM), promising transboundary taxes on non-EU countries regarded as making a lesser effort, than the EU, to combat climate change.

It still remains unclear if consumers or polluters, or both, will cover the cost of the “Fit For 55” measures.

Heating and transportation costs are expected to rise considerably over the next few years, according to a Euractiv report.

The package’s draft proposes an expansion of the ETS into the heating sector, for buildings, as well as into transportation, as a disincentive restricting high-polluting practices, including use of diesel.

The CBAM is expected to be launched on a three-year trial basis, beginning in 2023, before it is officially implemented in 2026.