Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

Examples of objectives are:- change in the mix of energy sources, e.g. increasing the share of renewable sources in the energybalance, with a view to achieving the objective - international, European and national – of reducinggreenhouse gas emissions;- modernisation of the existing plants for energy production, e.g. for reasons of environmentalprotection;- reduction of energy imports through substitution by local or renewable sources;- increased energy production to cover growing demand.Regulatory frameworkThe development of renewable energy is a central aim of the European Commission’s energy policy 41 ,with the objective of reducing carbon dioxide (CO 2 ) emissions, which is a major Community objective (inorder to meet the Kyoto agreement). Other Community targets are: increasing the share of renewableenergy in the energy balance in order to enhance sustainability, improving energy efficiency 42 , improvingthe security of energy supply by reducing the Community’s growing dependence on imported energysources 43 .The European Commission’s ‘White Paper for a Community Strategy’ (COM(97)599 final) sets out astrategy to significantly improve the share of renewable energies in gross domestic energy consumption inthe European Union by 2020 (EU targets stated on January 2008: 20% renewable energy, 10% biofuelsand 20% energy efficiency), including a timetable of actions to achieve this objective in the form of anAction Plan 44 . The proposed auctioning of carbon credits for the energy sector under the EuropeanUnion Emission Trading Scheme (EU ETS) 45 is also an important part of European energy policy.In this framework the European Parliament and Council Directive 2001/77/EC was adopted with the aimof promoting the electricity produced from renewable energy sources in the internal electricity market andcreating a basis for a future Community framework. The Directive states indicative national targets for thecontribution of electricity produced from renewable sources to gross electricity consumption by 2010. Insummary, the guiding principles of the aforementioned Directive are as follows:- quantified national targets for consumption of electricity from renewable sources of energy;- a national support scheme (including any incentives) plus, if necessary, a harmonized support system;- simplification of national administrative procedures for authorisation;- guaranteed access to transmission and distribution of electricity from RES.Other numerous directives dealing with energy production and renewable energy sources are detailed inthe box below.41See also the following web site: http://ec.europa.eu/energy/res/index_en.htm42Increase by 20% until 2020 compared to 1995.43Renewable energy sources are expected to be economically competitive with conventional energy sources in the medium to long term.44The main features of the Action Plan include internal market measures in the regulatory and fiscal spheres; reinforcement of thoseCommunity policies that have a bearing on increased penetration by renewable energies; proposals for strengthening co-operation betweenMember States; and support measures to facilitate investment and enhance dissemination and information in the renewable energies field.45In January 2005 the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) commenced operation as the largest multicountry,multi-sector Greenhouse Gas emission trading scheme world-wide, and as a major pillar of EU climate policy. The scheme is based onDirective 2003/87/EC, which entered into force on 25 October 2003. In January 2008, the European Commission proposed a number ofchanges to the scheme, including a centralized allocation system (no more national allocation plans), a turn to auctioning a greater share of permitsrather than allocating them freely, and inclusion of the greenhouse gases nitrous oxide and perfluorocarbons. Also, the proposed caps foresee anoverall reduction of greenhouse gases for the sector of 21% in 2020 compared to 2005 emissions.111