Three trends are currently driving the global electricity sector: decarbonization, decentralization and differentiation. Utilities are making significant contributions to mitigate carbon emissions, while a technology revolution is enabling decentralization of power generation and storage. And at the same time, differentiation manifests itself through consumers claiming a truly active role in the market.
The electricity industry is embracing this transition and is leading the way in decarbonizing our economies. But it cannot achieve this alone. An efficient and consistent regulatory framework must provide the correct signals for investment in this changing environment.
“Make clean affordable”: ensuring appropriate funding for the energy transition
Meeting the 2030 climate targets and reaching the objectives set out in the Paris Agreement will require substantially more renewable energy in Europe. Eliminating subsidies on fossil fuels and strengthening the carbon price signal are crucial in incentivising the transition to renewables, and ensuring that we meet our objectives. More generally, any realistic approach to climate action must answer the question of who is paying and how.
Firstly, further investment in renewables is clearly necessary. It must be sustained through non-retroactive and market-based mechanisms that can provide a stable signal for investors. Renewable-based systems, by nature, require firm and flexible back-up electricity generation to guarantee security of supply and must be coherent with the objectives of climate action. For that reason, we firmly support the European Commission’s initiative to introduce an Emission Performance Standard that excludes coal in capacity mechanisms as part of its Clean Energy Package.
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