Winners and Losers in the EU- Climate Package

Many countries have an intense debate about their opportunities to meet the new obligations in the EU Climate and Energy Package, especially the part that deals with the required quota of renewable fuels. Sweden and Latvia have lobbied heavily, claiming they have already a great deal and have a high share. Poland has dug their heels into the ground, wishing to expand, rather than reduce, the use of coal. Some of the reactions are clearly rhetorical to show their own voters “we are defending your interests.” However, where are the real winners and losers?

Begin at the right end

The first observation is that the targets can be met with two actions. One is to increase the use of renewable fuels, the other is to reduce the use of energy by improving energy efficiency. This is why it is such a pity the Commission has dropped the 20% target for energy efficiency improvements.

Firstly, because energy efficiency is the cheaper way to improve the system. Secondly, because a lower energy intensity opens for use of fuels with lower density. Thirdly, because of the leverage effect efficiency improvements have on fulfilment of the target. Sweden and Latvia, for example, can meet their target without adding one more kWh of renewables if they instead go for full efficiency improvement with 20%. See the diagram below!

Two sorts of stress

Extending the analysis, we find two sorts of stress on the countries. One has to do with the domestic capacity mainly competence and sites. There are several countries that have to ramp up their markets considerably to be able to meet the requirements, here measured by the times their market will have to grow (the x-axis). Together, they do not represent a large volume of the entire market, but would certainly be interesting for the more skilled countries (and their companies) to woo.

The second stress is the financial one for those countries that will have a high share of the total European market (the Y-axis.) No surprise these are also the big countries in Europe and they already have a domestic market to lean on. A further analysis, for anyone to do, would be to consider if, for example:

· should Spain go for more wind?

· the German market for PV could be used as inspiration and as suppliers.

One country stands out as special having both types of stress and that is the UK!

What remains to be seen in the process to come is whether countries will spend their best efforts to act for improvement of the energy systems and, as Mr. Barroso has put it, make European Industry the leaders of the climate business, or to fight for the requirements and challenge the U.S. for championship in backwardness.