Opinion of the European Economic and Social Committee on  Renewable energy sources
Date: 2005-12-15
Institutions: European Economic and Social Committee
Subjects: ESC opinion, energy policy, energy supply, renewable energy, security of supply

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Opinion of the European Economic and Social Committee on ‘Renewable energy sources’

(2006/C 65/20)

On 10 February 2005, the European Economic and Social Committee, acting under Rule 29(2) of its Rules
of Procedure, decided to draw up an own-initiative opinion on Renewable energy sources.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 24 November 2005. The rappor-
teur was Ms Sirkeinen and the co-rapporteur was Mr Wolf.

At its 422nd plenary session of 14 and 15 December 2005 (meeting of 15 December 2005), the European
Economic and Social Committee adopted the following opinion by 142 votes to 1 with 2 abstentions.

The EESC has recently been adopting important opinions (1) on key
energy issues. The emphasis so far has been on individual forms of
energy and their sources. The strategic aim of this series of opinions,
which is concluded by this opinion and the opinion (TEN/212) on
traditional fossil fuels — coal, oil and natural gas — is to provide a
solid basis for establishing workable and realistic options for a future
energy mix. A subsequent opinion ‘The energy supply of the EU:
strategy for an optimal energy mix’ will
these
opinions together.

then draw all

Energy policy in the EU needs to address three main
1.3
satisfying
challenges: ensuring security of energy supply,
economic needs and reducing effects on the environment.
Security of supply in the EU faces the challenge of a high and
growing dependence of external energy resources. In order to
secure the basic needs of citizens at affordable prices and the
competitiveness of industries, energy prices should not be artifi-
cially driven up by political decisions, but should however
provide incentive to adequate investments in the energy sector.
Environmental concerns need to be addressed cost-effectively,
by including external costs into energy prices and with the
need for global competitiveness in mind.

1. Introduction

Usable energy (2) is the mainstay of our contemporary
1.1
way of life and culture. Its ready availability opened the door to
our present-day standard of living. The need for a secure, inex-
pensive, environmentally sound and sustainable supply of
usable energy is at the heart of the Lisbon, Gothenburg and
Barcelona European Council decisions.

1.2 We witness a fast growth in global demand, mainly in
newly industrialised and some developing countries, of limited
fossil energy resources. A large part of the supply comes from
areas where normal market or political rules do not apply, and
energy is increasingly getting into political focus. Prices are
unstable and the trend is rising. As to the environmental
aspects of energy, some competitors are less concerned than
others,
in particular regarding the potential effects on the
global climate. Fossil energy is the subject of a separate opinion
by the EESC, prepared in parallel with this one.

(1) See: Promoting renewable energy: Means of action and financing instru-
ments (OJ C 108, 30.4.2004), Nuclear Fusion (OJ C 302, 7.12.2004),
The use of geothermal energy (OJ C 108, 30.4.2004).

(2) Energy is not actually consumed, but merely converted and, in the
process, used. This happens through conversion processes such as
coal combustion, the conversion of wind energy into electricity, and
nuclear fission (conservation of energy; E = mc2). However, the
terms ‘energy supply’, ‘energy production’ and ‘energy consumption’
are also used.

In several opinions,

1.4
the Committee has noted that
supplying and using energy puts a strain on the environment,
presents risks, depletes resources and involves the problem of
In technical terms,
external dependence and imponderables.
none of the potential future energy supply options and technol-
ogies is perfect. None is wholly free of damaging environmental
impacts. None is sufficient to cover all needs, and it is difficult
to adequately gauge their long-term potential.

1.5
In order to ensure a sustainable energy future, Europe
must, firstly, utilise the existing potential for better energy effi-
ciency. The EESC is preparing an exploratory opinion (demand
by the EU-Commission) on this issue. Secondly, renewable
energy sources have a role of preference to play as they are by
definition sustainable. They can be locally produced and as
such they do not emit greenhouse gases, thereby contributing
both to security of supply and combating climate change.
However, in the foreseeable future they cannot alone cover all
needs. The EESC will start working on an opinion on the future
energy mix of Europe, based on findings from its opinions on
different sources of energy.

The subject of this opinion is the current situation and
1.6
potential for development of the following renewable energy
sources: small-scale hydro-electricity, wind energy, biomass,
solar energy and geothermal energy. This is in accordance with

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the definition of renewable energy sources in the directive on
electricity from renewable energy sources,
leaving out large
hydropower, which in technical terms is clearly renewable and
also normally included in energy statistics under renewable
energy.

2.4 Whilst there is a long-established cultural tradition of
harnessing the energy of flowing or dammed inland bodies of
water, use of marine currents, waves and tidal flows is still in
the development phase. An opinion could be devoted to these
aspects at a later stage.

1.7
The opinion will examine the main features of these
technologies from the point of view of energy policy (security
supply-demand balance),
of energy supply, diversification,
economic policy (cost effectiveness,
competition between
different energy sources, support arrangements) and environ-
mental policy (emissions, Kyoto Protocol), and will assess the
contribution they could realistically make to a future energy
mix.

1.8
The use of hydrogen is a new energy technology which
attracts much attention and expectation. As an energy carrier it
could provide a solution to the problem of electricity storage
(from unsteady electricity sources). Hydrogen can be produced
from natural gas, a fossil primary energy carrier which is in
high demand for other purposes, or from water with a high
input of electricity. Much R&D is still required to possibly
conceive a safe and cost efficient hydrogen economy. Fuel cell
technology is often linked to the efficient use of hydrogen, but
in principle it can function on other fuels, including processed
renewables. These possibilities are not specifically explored in
this opinion, but they need further attention.

2. Development of Renewable Energy Sources (RES)

2.1
According to EU Commission statistics from 2002,
roughly 1100 TWh of renewable energy is used in EU-25, out
of the total primary energy consumption of nearly 20 000
TWh. This represents a 5.7 % share for renewables. Out of the
total electricity generation of 3 018 TWh, renewable sources
represent 387 TWh, which translates to a share for renewables
close to 13 %.

2.2
The EU has taken an active leadership role in developing
renewable energy sources, with indicative targets set to increase
the share of RES in the total energy mix from 6 % to 12 % and
in electricity from 13 % to 21 % for EU-25. According to EU
Commission's interim estimates, these targets will probably not
be fully met, but nevertheless the progress achieved has been
impressive. There is general consensus on the need for a steady
increase of RES in the energy mix and on the continuing need
for economic support.

2.3
The use of wind energy has seen enormous growth rates
in the past few years, despite coming under increasing criticism
recently on both environmental and economic grounds. Mean-
while, the growth in the use of biomass has remained below
expectations while its use is already significant today.

The level of utilisation of renewable energy sources
2.5
varies widely between Member States, depending on natural
circumstances and on national energy policy choices. Also the
development of their use in response to EU policies varies
greatly, as do the measures by which the Member States
enhance their increased production and use. The Directive
2001/77/EC on Electricity production based on Renewable
Energy Sources (RES-E) leaves the organisation of support to
renewables to Member States, without any attempts to harmo-
nise the support mechanisms. This is not conducive for an effi-
cient internal market (see 5.6).

Support to renewable energy sources is justified for stra-
2.6
tegic reasons of security of supply and climate policy. It can
also be seen in the light of internalising external costs, as a
compensation for lack of internalisation or support directed
now or earlier to some traditional energy sources (3). Support is
not supposed to distort markets when directed to activities far
from the competitive stage.

Vested interests may slow down changes and hinder fair
2.7
competition in the energy markets. This includes governments'
need of a stable tax or other revenue. Some energy sources, in
particular oil products, are heavily taxed in the EU.

3. Principal characteristics and potential of various renew-

able energies

3.1 Small Hydro

3.1.1
Recent growth and development. Hydro generation
can be divided in large and small hydro production. Small-scale
hydro production (SHPP; smaller than 10MWe) resources are
plentiful in the European Union and a considerable potential is
still available (nearly 6 000 MW in EU-15 alone). Total small
hydro capacity in service at the end of 2003 EU-15 was esti-
mated at about 10,700 MW.

Role in electric systems and implications for
3.1.2
networks. Ideal for electrification of isolated sites, SHPP also
contribute to national electric power production when they are
connected to the electricity grid. Access to the grid is the first
and most important step in allowing independent producers to
operate effectively in the market.

(3) In some Member States (Germany) all energy use – with very few

exceptions – is subject to taxation (Öko-Steuer).

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3.1.3
Economics, including support systems. SHPP have
been technically feasible for centuries, and given a favourable
site, it can be economically attractive. The investment costs in
EU (2001) varies between EUR 1 000/kW in Greece and Spain
to EUR 6 000/kW in Germany, and average production costs
varies between EUR 1,8 cents/kWh in Belgium to EUR 14 cents/
kWh in Austria.

3.1.4
Availability and role in security of supply. SHPPs
are a secure source and can contribute to security of electricity
supply. SHPPs have the ability to generate electricity instantly,
to supply both base-load and peak-load electricity, have a long
lifetime, are relatively easy to maintain and have a very reliable
and mature technology.

3.1.5
Environmental performance. Small hydropower is a
clean resource, and does not involve combustion, therefore
avoiding polluting emissions. Nevertheless, it has a local envir-
onmental impact, notably due to the construction work and
changes in the aquatic environment, for example due to weirs
which obstruct the migration of fish, but measures for reducing
or eliminating these impacts are available and applicable.

Prospects for future growth and role. The first
3.1.6
objective that was set for 2003 was not reached (12 500 MW).
Concerning 2010 objectives, European SHPP capacity should
be found in the neighbourhood of 12 000 MW if the average
annual growth rate of the last four years is applied. This figure
is also going to be below the targets stated by the European
Commission's White Paper.

3.2 Wind power

The guarantied capacity of wind energy (capacity credit) clearly
changes with the season. For instance, in Germany, from the
total installed wind power capacity of 36 000 MW foreseen for
2015, the capacity of approx. 1 820 MW to 2 300 MW can be
considered as guarantied for
the coverage of maximum
seasonal load (at a level of reliability of energy supply of 99 %).
This corresponds to a share of approx. 6 % of installed wind
power capacity. The needed amount of wind-related regulation
and reserve power depends on the quality of short term wind
power prediction and the resulting deviation between predicted
and actual values of wind power feed-in.

3.2.3
Economics, including support systems. As electri-
city production is highly dependent on wind conditions,
selecting the right site is critical
to approaching economic
viability (see however 3.2.2). Power production costs of wind-
generated electricity have fallen steadily as the technology has
developed. A cost reduction of over 50 % in the last 15 years
has occurred for electricity from wind power. Presently wind
power is approaching price competitiveness with other fuels.
For example,
in the UK onshore generation presently costs
3,2p/kWh (the wholesale price of electricity is 3p/kWh). The
additional cost of making up for intermittency (eg back-up
power)
is 0,17p/kWh, as long as there is only 20 % wind
power or less on the grid.

3.2.4
Availability and role in security of supply. The
increased use of wind power in Europe has resulted in fluctua-
tions now also occurring on the generation side due to the fluc-
tuating character of wind power in-feed, thereby increasing the
demands placed on control and bringing about rising grid
costs. To guarantee stable grid operation despite the high vola-
tility of wind power in-feed, transmission system operators
depend on the most accurate possible forecasts of expected
wind power generation.

3.2.1
Recent growth and development. Wind power is
today the fastest growing electricity generation technology. In
specific locations with favourable conditions it may even
become
enforced support. Annual
growth rates of more than 35 % between 1996 and 2004 have
made Europe the leader in wind energy. At the end of 2004
the installed capacity of wind power nearly reached 35 GW in
the EU 25 and more than 47 GW worldwide.

cost-effective without

The foreseeable further expansion of wind energy in Europe
means that in future, it will be necessary to pay more attention
than before to supply reliability when designing new wind
energy plants. Due to the massive and ongoing new expansion
of wind power, it has become increasingly difficult to guarantee
the stability of the electricity supply — particularly in the event
of a power failure. Future offshore developments may provide
much higher equivalent hours, compared to onshore wind.

3.2.2
Role in electric systems and implications for
networks. The intensive use of wind power is associated with
significant operational challenges. The availability of wind
power cannot be guaranteed in most regions at all
times.
However, this disadvantage can be largely offset by managing
demand for power
renewable
energy sources such as biomass, biogas, hydroelectricity and
solar power, and also by developing new storage media.

in combination with other

3.2.5
Environmental performance. Wind turbines cause
virtually no pollution or emissions during their operation and
very little during their manufacture, installation, maintenance
and removal. Whilst wind energy is a clean technology, it is
not free of impacts on the environment. The main issues are
visual impacts.

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Prospects for future growth and role. According to
3.2.6
the latest projections from the European Commission,
it is
expected that wind power in Europe could reach a total of
about 70 GW by 2010. Looking further ahead, EWEA (Euro-
pean Wind Energy Association) has adopted a target for a total
of 180 GW to be reached by 2020, of which 70 GW would be
located offshore. By 2010 this is expected to account for 50 %
of the net increase, and up to 2020 for just over 70 %.

represents

States. Biomass can originate from a number of locations or
resources — forest, agriculture or waste streams. Wood from
forestry and wood-based industries
the largest
resource, and procurement logistics from forest to bio-energy
plants are subject to major improvements. Decentralised use,
especially of timber from the thinning out of plantations and
wood waste from wood chip manufacturers, for heat and elec-
tricity production and for the manufacture of wooden pellets
represents an excellent opportunity to boost regional economic
activity, create jobs in rural areas and reduce imports of crude
oil into the EU. There are, however, concerns about over-stimu-
lating energy use of biomass to the detriment of other, non-
supported uses.

3.3 Biomass

Recent growth and development.

3.3.1
In 2001, total
biomass use for energy purposes was 650 TWh. To achieve the
RES 12 % target 860 TWh more are needed by 2010. Each
sector has to contribute: electricity 370 TWh, heat 280 TWh,
and biofuels 210 TWh. This would lead to a total biomass
accumulated energy production of about 1500 TWh in 2010.
This additional biomass production can only be achieved in the
short term with strong and targeted measures and actions in all
three sectors. The share of liquid biofuels for transport in Euro-
pean consumption is estimated at 1 % today. However, this
figure looks likely to rapidly grow because the EU has set
respective objectives of 2 % and nearly 6 % for the years 2005
and 2010 through a specific directive. Biofuels should be
mainly used in agriculture and forestry, and also, in view of
their biodegradability,
in water transport, and in other areas
where they can bring particular environmental benefits, e.g.
densely-populated areas where much of the bus public trans-
port network already runs on bioenergy.

3.3.2
Role in electric systems and implications for
networks. Biomass electricity can be produced by energy
crops, agricultural and industrial biomass waste or through
fermentation of biomass to biogas in combined heat and power
plants. Biomass power plants have the ability to provide base-
load capacity.

is the leading renewable sector

3.3.5
Environmental performance. Wood is the renewable
energy that can be best substituted for fossil fuels, and, more-
for primary energy
over,
production in Europe. Its use in the form of energy contributes
to combating global warming since, unlike for fossil energies,
the combustion-emitted carbon dioxide is reabsorbed by the
growing forests.
Incineration of wood-based biomass emits,
however, some additional pollutants if not properly filtered.
There could be a risk that intensive cultivation of particularly
fast-growing and/or high-yielding biomass varieties will have a
considerable influence on the sensitive regional — or if the
for the cultivation of biomass is
felling of primary forest
considered — even global environmental and nature-protection
balance.

Prospects for future growth and role. Substantial
3.3.6
industrial participation is essential
in all but basic research
activities if biomass energy is to contribute effectively to the
EU's policy objectives.

Economics,

3.3.3
incl. support systems. The cost of
generating biomass varies depending on the type of technology
used, on the size of the power plant and on the cost of the
biomass fuel supply. There are different systems and various
levels of support for biomass in European countries (in 2003).
Fixed price systems range from 3 to over EUR 10 cents/kWh
and compensations from levies or certificate prices vary from
EUR 0,6 cents/kWh to over EUR 8 cents/kWh.

3.3.4
Availability and role in security of supply. The
biomass potential in Europe is regarded to be big and not yet
used sufficiently. This is clearly the case in some Member

Biofuels. It is under dispute (4), whether in all cases a
3.3.7
net energy gain or even a net environmental benefit can be
obtained from liquid biofuels, when balancing the invested
energy from e.g.
fertilizers, agro-machinery, processing etc.
with the potential energy gain from the produced biofuels. On
the other hand, studies commissioned by the Commission
show an overall positive balance, but obviously the net result
differs from one crop to another. The Committee recommends,
to clarify this point, e.g. by conducting further
therefore,
studies on this question, as the issue of dealing with the high
global oil dependence is so high on the political agenda.
Another pertinent question in need of penetration is the EU
security of supply and related economic and trade aspects of
increased use of liqiud biofuels.

(4) David Pimentel and Ted. W. Patzek, Natural Resources Research

Vol. 14, No 1, 2005.

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3.4 Photovoltaics

3.4.1
Recent growth and development. In 2003, an addi-
tional 180 MWp of photovoltaic installations was put into
service in the EU, bringing total European capacity up to about
570 MWp. Furthermore, an ever greater share of this installed
capacity is now connected to the power grid: Grid-connected
installations now represent 86 % of the total cumulated Euro-
pean capacity.

3.4.6
Prospects for future growth and role. Total capa-
city in the region of 520 MWp was expected in the European
Union for the end of 2003. By the end of 2004 in Germany,
800 MWp was in place, after growth of 94 % over the year,
well in excess of the 650 MWp objective in the ‘Campaign for
Take-Off’. Future European Union installation capacity is esti-
mated at approximately 1 400 MWp in 2010. Forecasts made
by the EPIA (European Photovoltaic Industry Association) are
much more optimistic. The European Commission scenario of
3 000 MWp at the end of the year 2010 is altogether attain-
able, but its success depends above all on the political will of
each Member State.

3.4.2
Role in electric systems and implications for
networks. The most popular type of solar PV system for
homes and businesses in the developed world is grid connected.
Connection to the local electricity network allows any power
so produced to be sold to the utility.

3.5 Solar thermal

Otherwise, if completely independent of the grid, the system
needs a battery to which it is connected enabling the use of
normal appliances without mains power. Typical off-grid appli-
cations are industrial applications such as repeater stations for
mobile phones or rural electrification.

incl.

support

Economics,

3.4.3
systems. At present,
investment costs, which are still relatively high, are one of the
major barriers to the development of PV markets in the short
to medium-term, although a downward trend in the prices of
systems can be observed over time as production volumes rise,
and innovative steps forward in the use of the technology are
constantly made. However, on average, the price of modules
has fallen by ~5 % per annum over the last 20 years, and is
projected to continue to fall, while still being in the range of
EUR 0.5/kWh. The current capital cost of a typical installed
photovoltaic system ranges from EUR 5/W to EUR 8/W, thus
making photovoltaic electricity at present by far the most
costly form of renewable energy.

3.5.1 R e ce nt g r ow th a nd de v e lop me n t.

technical potential

is a key issue in
The enormous potential of solar thermal
moving the heating and cooling sector towards sustainability,
reducing environmental impact as well as energy imports. The
total
is estimated at 1,4 billion m2 of
collector area, resulting in an annual solar yield equivalent to
nearly 700 TWh/year. The market in the EU has more than
doubled compared to the mid 1990s and is three times bigger
than in the late 1980s. Between 1990 and 2001, the average
yearly market growth has been 13.6 %. Since 2000, the market
has clearly passed the mark of 1 million m2 newly installed
collectors per year. After a significant contraction in 2002,
mainly originated in Germany, a new peak over 1,4 million m2
was reached in 2003. The use of solar thermal energy is, so far,
very unevenly spread in the EU, with Austria having a high
coverage while some Mediterranean states — though climati-
cally favoured in this respect — have had hardly any develop-
ment and in others (e.g. Greece)
its use is widespread. This
cannot be explained by a lack of economic viability.

3.4.4
Availability and role in security of supply. Solar
radiation provides a huge amount of energy to Earth. The total
amount of energy, which arrives from the sun at the earth
surface within the space of a year, is equal to approximately
10 000 times the annual global energy consumption. PV can
contribute to increase the security of electricity supply in all
cases: grid connected systems, stand-alone systems or hybrid
systems.

3.4.5
Environmental performance. While generating solar
power involves none of the polluting emissions or environ-
mental safety concerns associated with conventional generation
technologies, the production of photovoltaic cells is related to
technologies which use also poisonous substances. Certain
environmental and landscape problems associated with plants
located in open country do not apply to plants installed at or
on existing buildings.

3.5.2 R ole i n e le c tr i c syste ms a nd i mp li ca t i ons for

ne twor ks.

Thermal energy can only be transported where district heating
systems exists. There is yet no direct impact of solar thermal
systems on the electric system. Converting solar heat into elec-
trical energy by Concentrated Solar Thermal Energy systems
(‘Solar Troughs’ or
large scale mirror and
focussing technology to produce high-temperature heat to be
converted in electricity) is just leaving its R&D-Status (5) and
entering the demonstration and commercialisation phase with
some plants in Spain.

‘Solar Towers’,

(5) http://europa.eu.int/comm/research/energy/pdf/cst_en.pdf.

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3.5.3 E conomi c s, i n cl. su p p or t syst e ms.

thermal mainly competes with conventional heating
Solar
systems based on fossil fuels or electricity. Compared to those,
it has a high ratio of investment costs (90 % — 99 % of the
total costs) but rather low running costs. The total cost of a
typical solar domestic water system for a one family house is in
the range of EUR 700 — EUR 5 000. Well-designed solar
thermal systems currently produce/replace heat at prices in the
range of EUR 3-9 cents/kWh. Given the current prices of elec-
tricity, oil and gas and expected increases, such systems could,
in combination with modern, well insulated storage systems,
become widely available for water heating and heat production.

3.5.4 A va i la b i li ty a nd r ole i n se cu r i ty of su p p ly .

The theoretical solar energy potential is immense. However, the
practical potential of solar thermal energy is restricted by both
technical and socio-economic factors. Also, during cloudy
winter days, when heat demand is at its peak, the energy is
least available.

3.5.5 E nvi r onme n ta l p e r for ma nc e .

Solar thermal energy cause virtually no pollution or emissions
during their operation. The impact is higher during their manu-
installation, maintenance and removal. Whilst solar
facture,
thermal energy is a clean technology, it is not free of impacts
on the environment.

3.5.6 Pr osp e c ts for fu tu r e g r ow th a nd r ole .

If the intensity of policies to support solar thermal will remain
unchanged, it is expected that the area in operation at EU level
will grow by almost 12 % annually. Assuming constant growth
rates, then half of the growth in absolute terms will take place
between 2010 and 2015. Solar thermal power will grow
rapidly in the solar belts of Asia and Africa when the oil price
stays as high as presently (around 60$/barrel).

3.6 Geothermal

3.6.1 R e ce nt g r ow th a nd de v e lop me nt

3.6.1.1 Electricity

Only five European countries possess the natural resources
needed to produce electricity from geothermal energy with

reasonable efficiency. At the end of 2003, installed geothermal
capacity in the European Union for electricity production was
820 MWe. More than 96 % (790 MWe) of this installed capa-
city is in Italy.

3.6.1.2 Heat

The production of heat
from geothermal energy can be
obtained in two very distinct ways. The first consists of directly
exploiting the aquifers whose temperature is included between
30°C and 150°C (so-called low and medium energy applica-
tions). The second way to produce heat uses geothermal heat
pumps. Total installed capacity for the low energy geothermal
sector in the European Union was estimated at 1 130 MWth,
i.e. 7,5 % growth with respect to 2002.

Role in electric systems and implications for
3.6.2
networks. So far, geothermal electricity can contribute to elec-
tricity generation only in areas where geothermal potential
exists.

3.6.3
Economics, incl. support systems. The exploitation
of geothermal energy is regarded as a high risk investment. In
the
case of
proportion of investment in each phase can be strongly influ-
enced by conditions specific to the site.

in an electricity generation plant,

investment

Investment costs and operating costs for heat production vary
considerably between countries and between type of use, as
well as depending on the characteristics of the resource (local
local heat demand and heat
geological
consumption pattern (such as district heating systems, or indi-
vidual or building geothermal heat-pump systems). Representa-
tive costs in European countries are in the following ranges:

conditions),

the

— investment costs vary from EUR 0,2 — 1,2 million/MW

— production costs vary from EUR 5 — 45/MW.

3.6.4
Availability and role in security of supply. The
thermal energy of the earth is immense, but without very deep
drilling (technology, cost) only a tiny fraction can be utilised.
So far the utilisation of this energy has been mainly limited to
areas of geothermal anomalies, in which geological conditions
permit a carrier to transfer the heat from deep hot zones up to
the surface. Hot dry rock (HDR) resources or other deep-dril-
ling (3 to 5 km) technologies (see 3.6.6) which are currently
under research are hoped to open new areas in the production
of electricity within the next decade.

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3.6.5
Environmental performance. The increase in deploy-
ment of geothermal energy could have a large, positive net
effect on the environment in comparison with the development
of fossil fuels. Environmental problems arise during geothermal
plant operation. Geothermal fluids (steam or hot water) usually
contain gases such as carbon dioxide (CO2), hydrogen sulphide
(H2S), ammonia (NH3), methane (CH4) and trace amounts of
other gases, as well as dissolved substances whose concentra-
tions usually increase with temperature. Sodium chloride
(NaCl), boron (B), arsenic (As) and mercury (Hg) are,
for
example, a source of pollution if discharged into the environ-
ment. Sealed coaxial heat-pipes avoid transporting of these
substances to the surface.

biomass and other renewables would reach roughly 8,6 % of
primary energy use and 17 % of electricity generation by 2030.
This scenario does not take into account the effects of EU
renewables policies introduced in the first years of this century

4.2
The International Energy Agency IEA forecasts a world-
wide doubling of electricity demand by 2030, most of this
occurring in developing countries. Renewable energy sources
will increase their contribution from 2 % up to 6 % globally by
2030. In OECD countries, the share of renewables will increase
from 6,4 % in 2000 up to 8 % by 2030.

Prospects for future growth and role. First electri-
3.6.6
city: Efforts, notably in Austria, should bring the European total
up to around 1 GWe. In order to supply energy which is tech-
nically useable
generation in particular,
geothermal reservoirs have to be located sufficiently deep. As
this takes place at depths of at least 2½ km, but preferably 4-
5 km or more, costly deep drilling is necessary.

electricity

for

The second European objective concerns the production of
heat. Forecasts are based on an average growth of 50 MWth
per year. All of these efforts should bring the sector up to
8 200 MWth, markedly higher than the targeted 5 000 MWth.
Low surface heat pumps, often considered to belong also to the
heading ‘Geothermal’, however, have a large potential for effi-
cient low-temperature applications like heating of buildings etc.

The strategy should give appropriate emphasis to the R&D
measures which are required to develop geothermal energy,
until it becomes possible, in the context of a changing energy
market, to provide a more accurate estimation and evaluation
of the long-term costs and the achievable potential of such
technology.

4.3
The IEA has also developed scenarios for electricity
production from renewable sources, predicting that Europe will
industrialised world in developing renewables.
lead the
According to their ‘reference scenario’, the share of renewable
electricity in OECD Europe would amount to roughly 20 % by
2030. If a full range of policy tools now under consideration
are employed in Europe,
the share of renewable electricity
could approach 33 % by 2030 (‘alternative scenario’). This would
undoubtedly require a full range of support policies to be used
to their full extent.

The European electricity industry association EURELEC-
4.4
renewables,
TRIC produces
including hydro, would increase from roughly 16 % in 2000
(in EU-15) up to 22,5 % in 2020 (in EU-25), including Norway
and Switzerland.

scenarios where the share of

4.5
The European Renewable Energy Council EREC has
recently published its own vision, aiming for 50 % share of
renewables in the global primary energy consumption by
2040. EREC also envisions that 80 % of the global electricity
generation would be based on renewables by 2040.

4. Views for the future role of renewable energies up to

2030-2040

The World Energy Council estimates that renewables
4.6
will play a rather marginal role on a global scale on short term,
but their importance will increase in the long term. WEC does
not support any compulsory targets for renewable energy.

4.1
The EU Commission has outlined energy scenarios up to
2030. According to the Commission's ‘European Energy and
Transport — Trends to 2030’ (6) publication,
the share of
renewables under baseline conditions, including wind, hydro,

(6) EU-Commission, Directorate-General

for Energy and Transport,

January 2003.

Summarising from the above scenarios,

4.7
it can be
concluded that the various bodies usually forecast a rather
gradual change in fuel consumption, with the notable excep-
tion of EREC, which forecasts a rather revolutionary vision for
the future.

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17.3.2006

4.8
The European Parliament has (September Plenary) voted
on a report on renewable energy, which includesa proposal for
an EU target of 20 % of renewables in 2020.

4.9
The Commission will publish its communication on the
state of play of the RES-E directive before the end of 2005.
This will include an estimate of reaching set targets by 2010
and possible proposals for further action, including on harmo-
nisation of support schemes in Member States.

from the environment through heat pumps — a technology
with huge potential — hardly receives any attention in EU
renewable energies policy. Equally surprising, little attention is
given in RES development to solar thermal panels for hot
water production — again a technology that is much closer to
market conditions in large parts of Europe. The EESC considers
that even today there are considerable areas of use where fossil
energy can economically be replaced by renewable energy for
heating purposes.

5. Conclusions

The previous chapters have shown that

5.1
renewable
energy plays an important role in Europe's energy mix and
holds considerable potential to increase its share in both total
energy consumption and production in Europe. Many forms of
renewable energy are particularly well suited for small-scale
local solutions.

require

economic

Renewables

support, because

5.6
at
present many RES technologies cannot yet compete in the
market. However, changes in the global energy markets, in par-
ticular increased prices and price volatility of especially oil, as
well as concerns over security of supply changes the situation
for renewables. The potential they offer for innovation and,
after successful market entry, new business and workplaces is
of increasing importance. EU as a frontrunner in renewables
technology can also stimulate global success of business in this
sector.

5.2
No one energy form or sector can meet the overall
demands of the enlarged European Union and the growing
demands worldwide. The EU needs a balanced energy mix,
tying in with the objectives of the sustainable development
strategy. Renewables have the potential to become a significant
element of this future energy mix, but many problems need to
be solved before this potential, which has also been foreseen by
the European Commission and Parliament, can be tapped. The
EESC is currently drawing up a separate opinion on the energy
mix.

5.7 While enhancing the use of renewable energy creates
positive possibilities for new business and specific employment,
it can, if wrongly managed, also become a burden on big parts
of the economy, in particular consumers and energy intensive
industries. Policies that contribute to ever higher energy prices
can be dangerous in a situation, where all efforts have to be
to competitiveness,
directed to the Lisbon Strategy,
economic growth and overall employment in Europe on a
sustainable track. While high oil prices hit all economies on the
globe, excessive electricity prices may hurt in particular the EU-
25.

i.e.

5.3 Much of Europe's RES development is based on inter-
mittent sources like wind generation and photo-voltaic panels
which adds to, rather than replaces, generation capacity and
network needs. This raises issues about transmission reinforce-
ments and operational aspects of ensuring security of electricity
supply. While general consensus does not yet exist on the
potential extent to which intermittent sources can be absorbed
by the electricity system, the limit of 15 % to 20 % of the total
electrical energy contribution is often cited. Beyond this limit,
only additional storage technologies (e.g. hydrogen) could help.

5.4
The issue of dealing with the global oil dependence is so
high on the political agenda. The Committee therefore recom-
mends to further study the questions of net energy gain and
from liquid biofuels, based on
net environmental benefit
different crops. Also the issues of EU security of supply and
related economic and trade aspects of increased use of liquid
biofuels need serious attention.

5.5
Technological development is required to make use of
the full potential of renewables. The extraction of heat or cold

Some of the current national support schemes tend to
5.8
interests and the
be very costly, putting both consumers'
competitiveness of European industries
risk. Support
at
schemes and network costs, assuming the EU renewables objec-
tives will actually be reached in 2010, represent an increase of
13 % in wholesale electricity prices, or even 25 %, if support
levels — which are already applied in Germany — were actu-
ally required in order to reach the target. Including estimated
network and regulation costs further raises the figure to 34 %.
The resulting equivalent cost per ton of avoided CO2 is esti-
mated at EUR 88, EUR 109 and EUR 150 respectively.

5.9
Support mechanisms have hence to be carefully consid-
ered and designed. They must be efficient and cost-effective,
delivering the desired results at
least cost. Some forms of
renewables which are already close to market prices hardly
need any support, while others require still only support for

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C 65/113

R&D measures. In the case of biomass, non-supported uses of
the products from limited land areas have to be taken into
account. Rise in generic (mainly fossil) energy prices gives
reasons to re-evaluate the needs and levels of support. Particu-
larly important are the effects of the EU emissions trading
scheme, which as such has already caused rising electricity
prices. To achieve the identical aim, double or overlapping
measures have to avoided.

5.10 While support schemes are required for new technolo-
gies to ripen and enter the market, they cannot be indefinitely
maintained.
Influences on employment have to be carefully
considered in order not to create jobs that will be lost when
the support is ended.

5.11
The EU RES-E Directive leaves the organisation of such
support to Member States. This has led to an incoherent and in
some cases market-distorting patchwork of support mechan-
isms. The result is a loss of synergies and in parts of the EU a

lack of market incentives and drivers, while elsewhere arise
unnecessarily high costs. Most of this could be avoided through
a common European approach. The EESC addressed this
problem already in its opinion on the RES-E Directive (see foot-
note 1). While an ideal common European solution does not
yet seem to be at hand, the choice of national support schemes
seems to slide towards more use of green certificates. As experi-
ences accrue the issue has to be further studied and developed.

5.12
After the initial ‘pioneering’ phase there is a definitive
need to reassess EU policies for renewable energy sources. The
changing situation in the global energy markets with high and
volatile prices, effects of related EU policies and measures, in
particular emissions trading, and the Lisbon strategy goals have
to be taken carefully into account. Focus has to be set on
ensuring a steady long term development by concentrating on
R&D and technology development.

Brussels, 15 December 2005.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the ‘Green Paper: Mortgage Credit in
the EU’

(COM(2005) 327 final)

(2006/C 65/21)

On 19 July 2005 the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the Green Paper:
Mortgage Credit in the EU

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 11 November 2005. The rapporteur was Mr
Burani.

At its 422nd plenary session (meeting of 15 December 2005), the European Economic and Social
Committee adopted the following opinion by 97 votes in favour with 1 abstention.

1. Summary of the position adopted

that mortgage credit markets in the EU differ to a considerable
extent and that each has characteristics of its own.

The Green Paper on mortgage credit

1.1
for residential
properties in the EU forms part of the policy of integrating
financial
is
currently being considered by the sectors concerned.

services at European level. The Green Paper

1.2
The Committee, while agreeing with the aims proposed
by the Commission, takes the view that full integration will be
difficult to achieve in the short term. It must be borne in mind

1.3
In the Green Paper the Commission raises a number of
questions, which the Committee endeavours to answer. The
first series of questions concerns consumer protection: on this
point the EESC asks that the codes of conduct be drawn up by
the associations of European financial institutions in consulta-
tion with consumer associations, checked by the national