By Barbara Lewis
BRUSSELS (Reuters) - The European Union needs new binding goals on renewable energy and on cutting carbon emissions to succeed green policy targets that expire in 2020, the EU's energy chief said, omitting any mention of replacing the current energy savings target.
His comments added to a debate about whether the three existing green goals should be followed by another three, with some EU nations and industry opposing what they see as too much regulation.
"I believe we need a binding target for renewable energy," Energy Commissioner Guenther Oettinger said on Wednesday, adding that national subsidy schemes were not enough to drive green energy. Oettinger also cited the need for a carbon-cutting goal, but he did not mention energy savings.
He was addressing the launch of a partnership to unite firms supporting the continued use of gas as a flexible, transition fuel to complement renewable energy, which is intermittent.
The founding members of the partnership are Alpine Energy, a subsidiary of Spanish builder FCC, Dong Energy, First Solar, GE Energy Germany and Royal Dutch Shell.
Like the EU member states, they are divided over how many targets the bloc needs after 2020.
Denmark's Dong Energy backs a more ambitious version of the existing three 2020 targets - a 20 percent cut in carbon, a 20 percent share of renewables in the energy mix and a 20 percent improvement in energy savings.
Jan Ingwersen, Dong vice president, energy markets, called on the EU to fill what he termed as the post-2020 "policy gap" and urged that incentives for gas be included in tandem with renewables.
Dong supports reform of the EU's carbon market, in which the cost of emissions permits has fallen so low that burning coal has become cheaper than gas, which is only around half as carbon-intensive as coal.
"Renewables and gas are a strong match in Europe's quest for a low-carbon and cost-efficient energy supply," Ingwersen said. "Right now, there's no business case for gas, and new coal production capacity is coming onstream in greater and faster volumes throughout Europe."
Shell cautioned against too much regulation.
"Less is more if you're talking about climate policies. The Christmas tree is too full," said Dick Benschop, president director at Shell Netherlands.
Oettinger has said the bloc needs to establish the rules for 2030 before the end of the current Commission's mandate in 2014.
Debate is expected to intensify over the coming weeks, closely linked to the arguments about how to support the EU's Emissions Trading Scheme (ETS) for carbon allowances.
On Wednesday, EU carbon allowances were trading at around 8 euros per metric ton. That compares with a record low of 5.99 euros in April and levels above 17 euros a metric ton early in 2011.
Oettinger reiterated his view that the carbon market needed long-term reforms to make it able to respond to economic shifts, such as the recession which has led to a huge surplus of permits.
"The big problem with the ETS is that nobody knows what will be happening in our economy in 2030. Do we have stagnation or recession?" he asked. "The ETS machine is market-based, but it's not flexible. It should be more flexible to market developments, to our economy."
The European Commission will present in November its vision for short-term and long-term carbon market reforms.
A short-term fix, known as backloading, would temporarily remove some of the surplus. Longer-term solutions, about which Oettinger has been more enthusiastic in public, include steps such as permanently removing allowances.
Both elements would need the approval of member states, but backloading could be agreed quickly under fast-track EU process.
A stronger ETS is also necessary to justify investment in carbon capture and storage (CCS) technology, which many argue is essential if gas is to retain a role beyond the short term.
"The problem is our ETS mechanism. There's no clear price signal at the moment, and companies and member states are in difficult times. But I'm optimistic," Oettinger said of the prospects for CCS, adding the technology for bigger projects could be achieved in the "next five to eight years".
Environmental groups have argued continued investment in gas is a mistake that will hobble the shift to renewable fuel and that CCS technology is not the answer.
"It's (CCS) always a few years in the future," Brook Riley, energy campaigner for Friends of the Earth Europe, said.
(editing by Jane Baird)