The European Union should adopt binding energy savings targets and look into launching a new trading scheme to encourage businesses to use renewable energy sources, Denmark’s prime minister said on Friday.
Anders Fogh Rasmussen told Reuters the 25-nation bloc, struggling to reduce rising dependency on imported gas and oil, should follow Denmark’s example as it develops a common energy policy at a time of high fuel prices and growing global demand.
“The problem is we will get more and more dependent on imported fossil fuels from politically unstable regions of the world,” he said in an interview just before an EU summit with President Vladimir Putin of Russia, the EU’s main gas supplier.
“Denmark serves as an example that we can succeed in reducing this dependence on imported energy,” Rasmussen said. “It serves as an example that you can combine economic growth and energy saving.”
Denmark is the only EU country that is a net exporter of energy and has kept consumption flat over the last 25 years even as its economy has grown by 50 percent, he said.
Low wastage and big investment in renewable energy sources such as wind farms have contributed to that success. Mandatory targets in both renewables and energy efficiency, Rasmussen said, were key to producing the same results throughout Europe.
The bloc’s executive, the European Commission, proposed a plan this week laying out ways the EU could reduce energy use by 20 percent by 2020, but it did not include mandatory targets.
“We have to take initiatives now,” the Danish leader said, citing forecasts that the bloc’s import dependence could rise to 70 percent by 2030 if action was not taken.
ANOTHER TRADING SCHEME
Denmark’s proposal, which Rasmussen sent this week to EU leaders and Commission President Jose Manuel Barroso, calls for a binding energy savings target of 1.15 percent annually up to 2017 for the bloc as a whole and each member state individually.
It also asks the Commission to study the launch of markets that would trade certificates based on energy savings and renewable energy use.
The EU already has an emissions trading scheme which sets limits on the amount of carbon dioxide (CO2) factories can emit and forces them to buy or sell permits to pollute depending on whether they overshoot or undershoot their targets.
But the system has encountered teething troubles in setting targets that create scarcity and help the environment.
The trading concept could be applied to energy efficiency, Rasmussen said. Goals would be set for how much energy savings a business must achieve, and certificates would be issued to represent those targets, which companies could then trade.
The same would apply for renewable energy. Governments could issue certificates based on targets for how much renewable energy businesses would have to use, and companies could buy or sell them based on whether they meet their goals.
“It’s a question of political regulation to set the target and market mechanisms to set the price, and through that you can politically achieve your goal and you can economically make sure that you get value for money,” Rasmussen said.
Businesses, however, are likely to chafe at more regulation and Rasmussen acknowledged that Denmark’s proposals – which he hopes will feed in to a decision on a common EU energy policy next March – may not be welcomed by all member states.
Still, he said the whole EU could do better at energy savings, especially the mostly ex-communist central European states that joined the bloc in 2004, and leaders may see Denmark’s own success as a blueprint for the rest of the bloc.
“I think we have a strong case,” he said. “We hope that we can agree on a very ambitious common energy policy in March.”
By Jeff Mason and Paul Taylor
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