Another new factor is the proposal to give a boost to the eco- power market by liberalising it more quickly. As a result power companies would also be able to sell eco-power outside their area and new suppliers would be able to enter the market. This is expected to give an added boost to the supply of renewable energy and the demand for it. This point will be included in the study of accelerated liberalisation: it will be investigated whether it is possible to liberalise the renewable energy market on 1 January 2001.
Management of mineral resources
The management of mineral resources is still a significant responsibility for the government. The Energy Report has come to two conclusions:
• The policy on small fields will be continued. Within that context it is still necessary to establish rules governing the rate of gas production.
• There is no reason to revise the average production level of 80 billion cubic metres per annum set out in the Third White Paper on Energy.
A sustainable energy system
Due to the climate issue, and the consequent need to limit CO2 emissions, policy aimed at conserving energy and
encouraging renewable energy is urgently needed. The energy conservation target was recently raised (to 2%, see the Energy Conservation Action Programme) and the renewable energy target is still being maintained (5% by 2010, 10% by 2020).
Through the greening of the tax system, the Cabinet is giving a significant boost to energy conservation and renewable energy. Increases in the energy tax and the associated facilities for renewable energy are making fossil energy more expensive. Energy conservation options are profitable at an earlier stage and the price of eco-power will be only slightly higher than that of ordinary electricity.
Not long ago the Energy Conservation Action Programme was presented and discussed with the Lower House. This action programme sets out the approach to energy conservation policy for the next few years. Since it considers the implementation of policy, we shall not consider this in any more detail in the Energy Report. There is, however, good reason to go more deeply into developments in the area of CHP. Developments in the energy market are having a detrimental effect on the profitability of CHP, a technology that allows electricity and heat to be produced very efficiently. Low electricity prices are currently the main cause of the slower growth of CHP. The introduction of a new gas pricing system will also have a detrimental effect, particularly for installations with a low operating time. Further growth in CHP is very important in order to meet energy conservation targets. CHP will therefore be given extra support during the next few years. This will be done, among other things, through adjustments in the VAMIL, and continuation and expansion of the EIA.
The Energy Report takes an in-depth look at the development of renewable energy. At present the contribution of renewable energy to the energy supply in the Netherlands is still limited. It is expected that the proportion of renewable energy in the global energy supply will increase considerably during the next century. In order to be well prepared for this
development, a target of 10% renewable energy by 2020 has already been set out in the Third White Paper on Energy. This target still applies. Indeed it has become all the more topical because of the climate issue. Recently, the progress report on renewable Energy reported on the current situation as regards renewable energy policy.
Research has been conducted for the Energy Report on the development of supply and demand. From a market survey on the development of demand it has been concluded that the potential demand for renewable energy among private consumers and businesses is considerable. Even if they have to pay more for it, approximately 40% of businesses and households who are not yet buying any renewable energy say that they want to do so. Even if only one-quarter of the indicated potential is genuine, this means that more than 750,000 Dutch households and over 50,000 businesses are willing to buy eco-power at the current higher price. Efforts to continue development in demand, among other things through good marketing by power companies, will therefore be very important. Support for voluntary use of renewable energy is therefore considerable; for this reason and because the problems are concentrated on the supply side, it is not proposed to introduce a compulsory renewable share. Simply realising this potential demand could double consumption. It is necessary, therefore, for this potential demand to be converted into an actual demand.
One very significant problem exists in relation to the supply of renewable energy. If this is not resolved, the use of renewable energy will not be able to grow substantially. In concrete terms this involves problems in the location and integration of wind energy facilities, environmental regulations in the case of biomass and the cost of electricity generated using solar PV. Action is being taken in all these areas: in the case of biomass by developing new, clear emission requirements, and in the case of solar PV through efforts in the field of research and development and of demonstration projects. The renewable energy incentive, which was made available when this Cabinet first came to power, is an important source of financing for this. Special attention is being devoted to policy in relation to wind energy. In order to solve the location issue more quickly, it is being announced that locations for wind parks will be identified, legislation is being prepared to force local authorities to make the necessary space available if necessary, and the technical and administrative obstacles to offshore wind energy will be eliminated.
Finally, it is important to mention the introduction of a system of green certificates. These give customers the certainty that the energy supplied really is renewable. It also ensures that the supply of renewable energy can find its way to customers, regardless of whether they live in areas where circumstances are relatively favourable or in areas where less renewable energy can be produced. The system of green certificates will come into force on 1 January 2001.
The Energy Report also devotes some attention to the development of so-called clean fossil: a collective term used to cover a large number of options for the separation, utilisation and storage of CO2. The idea behind this is that we shall be dependent on fossil fuels for many years to come, and that their use should have minimum impact on the
environment in terms of emissions of harmful substances, including CO2. This mainly involves research and development, and in one case a demonstration project.
Appendix 1 Overview of liberalisation in Europe (October 1999)
Gas Electricity
Belgium 47% in 1999 35%
100% in 2010 100% in 2010
Denmark not yet decided 90%
100% in 2003
Germany 100% (only subject to reciprocity) 100%
Finland 90% 100%
France will adhere to the minimum in the directive at least 26%
Greece not yet decided at least 28%
Ireland 75% in 1999 28%
Italy not yet decided 30%
40% in 2002
Luxembourg in principle 43% 45%
otherwise the gas directive will be adhered to
Netherlands 45% in 2000 33%
60% in 2002 100% in 2007
100% in 2007
Austria not yet decided 27%
60% in 2003
Portugal not yet decided at least 26%
Spain 46% in 1998 46%
50% in 2000 100% in 2004
60-65% in 2003 65-75% in 2008 100% in 2013
United Kingdom fully liberalised 100%
Sweden not yet decided 100%
Appendix 2 list of abbreviations
ALARA As Low As Reasonably Achievable
AMvB General Administrative Order
APX Amsterdam Power Exchange
CDS Commodity Service System
CHP Combined Heat and Power
CO2 Carbon dioxide
CPB Netherlands Bureau of Policy Analysis
Dte Dutch Electricity Regulatory Service
EC European Commission
ECN Netherlands Energy Research Foundation
EIA Energy Investment Allowance
EIM Economic Institute for Market Research
EINP Subsidy scheme for energy supply in the non-profit sector and special sectors
EPN Energy Performance Norm
EU European Union
GC Scenario Global Competition Scenario
GNP Gross National Product
GPB Large-scale power company
ICT Information and Communications Technology
AER National Energy Council
IEA International Energy Agency
IEP International Energy Programme
IIASA International Institute for Applied Systems Analysis IPCC International Panel on Climate Change
KEMA Dutch quality control and certification organisation
LNG Liquid natural gas
MAP Environmental Action Plan
MOX Mixed Oxide
MP Member of Parliament
NMa Netherlands Competition Authority
Novem Netherlands Agency for Energy and Environment
NOx Nitrogen oxides
NRG Nuclear Research and consulting Group
OPEC Oil Producing & Exporting Countries
REB Regulatory Energy Tax
RIVM National Institute for Public Health and Environmental Protection SEP Dutch Electricity Generating Companies and Generating Board
SER Socio-Economic Advisory Council
SO2 Sulphur dioxide
Solar PV Photovoltaic conversion of solar energy
TNO Netherlands Organisation for Applied Scientific Research
UN United Nations
VAMIL Voluntary Depreciation on Environmental Investment
WEC World Energy Council
Appendix 3 quantities
1 Watt = 1 Joule/second
1 Joule = 0.239 calorie
Gtoe = Giga tonnes of oil equivalent = 4.19 x 104PJ
MW = Megawatt = 106Watt
GJ = Giga Joule = 109Joule
TJ = Tera Joule = 1012Joule
PJ = Peta Joule = 1015Joule
kWh = kilowatt-hour = 103Watt
GWh = Gigawatt-hour = 109Watt
Appendix 4 titles of position papers
In preparation for policymaking activities within the framework of the Energy Report, external experts have written a series of position papers. The tiles and authors are listed below.
• Energy Liberalisation in Europe, R. Green, Department of Applied Economics, University of Cambridge, 1998
• Liberalisering, duurzame energie en energiebesparing [Liberalisation, renewable energy and energy conservation], A.F. Correljé, Erasmus University Rotterdam, 1999 • Liberalisering van de Nederlandse energiemarkt in een Europees perspectief
[Liberalisation of the Dutch energy market in a European perspective], Arthur D. Little consultancy, 1998
• Marktwerking en Energie [Market Regulation and Energy], J.J.M. Theeuwes, J.W. Velthuijsen, SEO, University of Amsterdam, 1998
• Fossiele brandstoffen in een duurzame energievoorziening: de betekenis van CO2-verwijdering [Fossil fuels as part of a sustainable energy supply: the significance of CO2removal]. W.C. Turkenburg and C.A. Hendriks, Utrecht University, 1999
• Een keurmerk voor groene energie, Marktconforme middelen ter stimulering van duurzame energie [A quality mark for eco-power. Market-based resources to stimulate renewable energy], Nyfer, Forum for economic research, 1999
• De invloed van technologische vernieuwing op het energiegebruik in Nederland [The impact of technological innovation on energy consumption in the Netherlands], J. Cramer, University of Brabant, 1998
• Veranderingen in leidinggebonden infrastructuren en de invloed die hiervan uitgaat op de elektriciteits- en gassectoren [Changes in pipeline/cable-dependent infrastructures and their impact on the electricity and gas sectors], R.W. Künneke, Delft University of Technology, 1998
•
Voorzieningszekerheid en betaalbaarheid van energie bij liberalisering van de energiemarkt [Security of supply and affordability of energy in the liberalisation of the energy market], E.E.C. van Damme and P.H.M. Ruys, CentER, University of Brabant, Tilburg, 1999
• Niet energie, doch energietechnologie is schaars [Energy technology, not energy, is scarce], C.J.F. Böttcher, 1999
Colophon
This report was commissioned by the Ministry of Economic Affairs. Design
Op Stand The Hague Photography
Tineke Dijkstra The Hague Photo on page 13 Erik Visser Lithography
Scan Studio Heemstede Printing
Broese & Peereboom Breda Translation