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EU approves 6.5bn euro German carbon leakage scheme

960 640 Stuart O'Brien

The European Commission has approved, under EU State aid rules, a €6.5 billion German scheme to partially compensate energy-intensive companies to address the risk of carbon leakage from higher fuel prices resulting from the German fuel emission trading system (‘German fuel ETS’).

Germany notified the Commission of its plan to support energy-intensive companies exposed to international competition by covering part of the higher fuel prices resulting from the German fuel ETS. The scheme will cover costs incurred between 2021 and 2030. The support measure is aimed at reducing the risk of ‘carbon leakage’, where companies relocate their production to countries with less stringent emission rules, resulting in increased greenhouse gas emissions globally.

The measure will benefit companies active in sectors and sub-sectors listed the EU ETS Carbon Leakage List. Those sectors face significant emission costs and are particularly exposed to international competition.

The compensation will be granted to eligible companies through a partial refund of the additional costs incurred in the previous year, with the final payment to be made in 2031. The level of compensation is between 65% and 95% of the costs, depending on the emission intensity of the beneficiaries.

In order to maintain incentives for beneficiaries to switch to less polluting fuels, the aid amount is calculated based on fuel and heat benchmarks. The beneficiaries bear a certain share of the additional costs resulting from the German fuel ETS, corresponding to 150 tCO2 per year, for which no aid will be granted.

In order to qualify for compensation, beneficiaries will have to invest at least 50% (as of 2025 at least 80%) of the aid amount in (i) measures identified in their ‘energy management system’, setting out energy efficiency objectives and a strategy to achieve them; or (ii) the decarbonisation of their production processes.

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU’) which enables Member States to support the development of certain economic activities subject to certain conditions.

The Commission found that the scheme is necessary and appropriate to support energy-intensive companies to cope with higher fuel costs resulting from the German fuel ETS in order to reduce the risk of carbon leakage.

Moreover, the Commission considers that by making the aid conditional upon energy efficiency and decarbonisation efforts, the measure contributes to the objective of maximising the incentives for a cost-effective decarbonisation of the economy. It therefore supports the EU’s climate and environmental objectives and the goals set in the European Green Deal. Furthermore, the Commission concluded that the aid granted is limited to the minimum necessary and will not have undue negative effects on competition and trade in the EU.

On this basis, the Commission approved the German scheme under EU State aid rules.

Image by NakNakNak from Pixabay

CEBR: Risk of recession in Europe ‘rises to 40%’ as Putin turns off the gas

960 640 Stuart O'Brien

The Centre for Economics and Business Research (CEBR) estimates the risk of a recession in Europe this winter at approximately 40% as a result of Russian energy taps being closed shut as part of sanctions against the Putin regime.

Last week, Germany triggered stage two of its emergency gas plan, following a significant reduction in Russian gas exports to the Eurozone’s largest economy.

Russia’s state energy company Gazprom cut exports through the NordStream pipeline by around 60% and planned maintenance downtime July is widely considered a convenient opportunity for Putin to shut the pipeline down entirely.

The European energy crisis, which has started in the winter of 2021 and ratcheted up following Russia’s invasion of Ukraine, has thereby reached another level of escalation. The consequences of this are by no means limited to Germany. Gas flowing through the TurkStream pipeline to Bulgaria is down by 50% while exports through the Yamal pipeline to Poland have stopped entirely, making this a veritable pan-European crisis.

In the UK, too, the energy crisis could yet get worse. Rising gas prices have been a major contributor to the ongoing cost of living crisis so far. But a complete stop of Russian exports to Europe would also put the UK’s energy security at risk as the heating season starts in the winter.

While there is no Russian pipeline delivering gas to the UK directly – and indeed, the UK receives the vast majority of its gas imports from Norway – the UK is still exposed to swings in global market prices. Also, as increasing numbers of European countries are vying for a limited supply of gas from alternative sources, prices have shot up significantly.

In addition, the UK has very limited storage capacity, meaning it is less able to sit out temporary price shocks – whether these stem from Putin’s decision to turn off the gas taps or a spell of the feared ‘Dunkelflaute’ – a period of no wind and very little sunshine, preventing power generation from renewables.

The threat that Russia would use its energy exports as a weapon to exert pressure on Western countries that support Ukraine’s resistance has been clear since the beginning of hostilities, if not before. The flipside of this has been the attempt of Western allies to inflict as much economic pain on Russia as possible to make it harder for Putin to fund his war.

However, while the European Union agreed on an embargo of Russian oil at the end of last month, there was little appetite to extend similar measures to the Russian supply of gas, given the difficulties in finding alternative suppliers at short notice. Now, Putin seems intent on forcing the hand of European states, convinced that stopping gas exports will hurt Western countries more than it will cost Russia in terms of forgone foreign currency.

If gas supplies were indeed to run empty, governments will choose to shut down industrial sites first rather than reducing supply to homes. The knock-on effects on the economy therefore depend in part on the degree to which gas is used in industrial processes rather than to produce electricity or to heat homes.

In Germany, for example, industry accounted for 37% of gas consumption in 2021, a significantly higher share than in Italy at 25% or in the UK at 23%.

Despite these differences, it seems clear that in the case of European gas shortages, a severe recession will be a near certainty. This is because European countries are linked to each other not only via energy interconnectors but also through highly integrated supply chains.

The likelihood for a gas shortage emerging in Germany has been estimated at 20% in a recent joint-study by various research institutes, which is somewhat lower than a few months ago due to efforts to fill up gas reserves in recent weeks. However, from a European perspective, the risk of a recession must be estimated higher than this, given that most East and Central European countries are even more dependent on Russian gas than Germany is.

Italy and France are also on high alert as their energy supplies are equally at risk. In addition to this, a tight gas supply will lead to further increases in energy prices for consumers, adding to inflationary pressures and claiming an even greater share of households’ disposable income, which is a recession risk in itself.

Taken together, Cebr estimates the risk of a recession in Europe this winter at approximately 40%. It is therefore in everyone’s interest to use the time until winter to substitute away from gas where possible, secure additional supplies from other countries and reduce gas consumption wherever possible.

UK vs EU Energy Security Policy: What you need to know

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By David Kipling, CEO – On-Site Energy

In April 2022 the UK published its Energy Security Strategy. The key aim of the strategy is for the UK to achieve long-term independence from foreign energy sources and decarbonise the nation’s power supply. The main initiatives of the strategy are investment in nuclear generation and offshore wind, the latter being the source of hydrogen generation.

Contrasting this to EU energy security strategy (which is far more dependent on Russian gas) the EU highlights rapid action to embrace energy savings, diversification of energy supplies, and accelerated roll-out of renewable energy to replace fossil fuels in homes, industry and power generation.

UK plans are all long-term measures – it takes 10+ years to develop nuclear and offshore wind UK sees oil and gas as an important transition fuel and has set out plans to increase activity in the UK North Sea. In the meantime, CO2 reductions will be incremental at best.

EU has to act rapidly. A strong focus is on supporting energy efficiency and local renewables, which are much faster to implement.  This is also the fastest way to reduce costs and address current energy costs.

If you think about this in the context of our energy hungry industry, I think the right conclusion would be to follow the EU direction rather than wait for the long term measures. There is nothing lost by reducing consumption and using low-carbon generation to control and reduce costs.

If you would like to discuss how to be more energy efficient and use low-carbon energy generation, please contact David Kipling, CEO – On-Site Energy on 0151 271 0037 or email (

EU and Egypt to collaborate on COP27 energy transition goals

960 640 Stuart O'Brien

The EU and Egypt will join efforts to implement the Paris Agreement and ensure ambitious outcomes at COP27, which takes place in Sharm El-Sheikh in November.

The joint statement commits both parties to work together on a global just energy transition, on improving adaptation capacity, mitigating loss and damage due to climate change, and on increasing climate finance to respond to the needs of developing countries.

The cooperation will have a particular focus on renewable energy sources, hydrogen, and energy efficiency. The EU and Egypt will develop a Mediterranean Hydrogen Partnership to promote investments in renewable electricity generation, strengthening and extension of electricity grids, including trans-Mediterranean interconnectors, the production of renewables and low carbon hydrogen, and the construction of storage, transport and distribution infrastructure.

In light of the new geopolitical and energy market reality after the Russian invasion of Ukraine and in line with the REPowerEU plan, the EU and Egypt will accelerate and intensify their energy partnership. Security of gas supply is a common concern. Today in Cairo, European Commissioner for Energy Kadri Simson, together with Minister El Molla and Minister Elharrar signed a trilateral Memorandum of Understanding between the EU, Egypt and Israel for the export of natural gas to Europe.

The three parties will work together on the stable delivery of natural gas, in a way that is consistent with long-term decarbonisation objectives and based on market-oriented pricing. Natural gas from Israel, Egypt and other sources in the Eastern Mediterranean region will be shipped to Europe via Egypt’s LNG export infrastructure.

The parties will promote the reduction of methane leakage, and in particular examine new technologies for reducing venting and flaring and explore possibilities for the utilisation of captured methane throughout the entire supply chain. They will also endeavour to ensure that future investments will not cause pollution of the marine or land environment.

President von der Leyen said: “We are starting to tap into the full potential of EU-Egypt relations, by putting the clean energy transition and the fight against climate change at the heart of our partnership. I look forward to working with Egypt as COP27 Presidency to build on the good momentum from last year in Glasgow. Egypt is also a crucial partner in our efforts to move away from Russian fossil fuels and towards more reliable suppliers.”

Europe’s wind power leaders revealed

960 640 Stuart O'Brien

Poland has increased the percentage of electricity produced by wind turbines the most, with an increase of nearly 250,000% since 2000, according to data released by the EU and analysed by SaveOnEnergy.

In 2001, the European Union introduced the EC Directive 2001/77/EC, which promoted the production of electricity through renewable energy means. One such production method promoted by the EU was wind turbines.

Recently, the EU released the figures from their most recent data collection for how much electricity is produced by countries within their member states. This inspired energy experts at to investigate which countries have increased electricity production by renewable means by the greatest amount.

By comparing the percentage of electricity generated in each country by wind turbines in the year 2000, to  the latest data released April 2021, can reveal which countries have increased the amount of electricity generated by wind turbines the most

The Countries With The Biggest Increase In Wind Turbine Generated Electricity

In first place is Poland. In 2000, only 0.003% of all electricity produced in Poland was by wind turbines. The latest data set shows that the percentage in Poland has risen to 7.5%, meaning electricity produced by wind turbines in Poland has increased by 249,900% since 2000.

Second is Czechia, with an increase of generated electricity via wind turbines of 69,900%. Only 0.001% of all electricity produced in the Czech Republic was by wind turbines in the year 2000, but the most recent data set shows the percentage has increased by 0.7%.

Placing third is France. France has increased electricity generated by wind turbines by 54,344.44% since 2000, with wind turbine produced electricity rising from 0.009% to 4.9% of all electricity produced.

4. Belgium – +49,400%

5. Ukraine – +23,233.33%

6. Turkey – +21,566.67%

7. Norway – +12,900%

Rounding off the top 10, in eighth place, is Austria. In the year 2000, the percentage of electricity produced by wind turbines was 0.1%. By 2018, this number had risen to 8.8%. This has resulted in an increase of 8,700%.

Ranking ninth is the United Kingdom. Only 0.2% of all electricity generated in 2000 was through wind turbines, but by the latest data collection, it is now over 17%. The UK has shown an increase of wind turbine produced electricity of 8,450%.

Finally, in 10th place, is Finland. The percentage of all electricity generated that was produced by wind turbines rose from 0.1% to 8.3%, leading to an overall percentage increase of 8,200%.

The Rest

11. Portugal – +5,175%

12. Sweden – +3,300%

13. Italy – +2,950%

14. Ireland – +2,670%

15. Latvia – +1,700%

16. Greece – +1,375%

17. Germany – +968.75%

18. Netherlands – +922.22%

19. Spain – +780.59%

20. Luxembourg – +452.38%

21. Denmark – +287.29%

Blue chip firms push for end to petrol & diesel car sales in EU

960 640 Stuart O'Brien

EU lawmakers should set an end date for selling new combustion engine cars in Europe no later than 2035, 27 companies have said in a joint appeal, including include IKEA Retail, Sky, Uber, Vattenfall and Volvo Cars.

The open call will continue to gather support for a phase-out ahead of the review of EU car and van CO2 standards in June.

They say a fixed date will send a clear investment signal for car manufacturers, supply chains and infrastructure providers and will enable all businesses to decarbonise their vehicle fleets.

Cars and vans are responsible for 15% of all Europe’s CO2 emissions and are the single largest source (26%) of toxic nitrogen oxide emissions, which cause chronic diseases and the premature deaths of 54,000 Europeans every year. Oil costs the European economy over €200 billion a year in imports. A recent poll shows almost two-thirds of urban residents support banning the sale of new petrol and diesel cars in Europe after 2030.

Anders Kärrberg, head of global sustainability at Volvo Cars, said: “By planning to become a fully electric car company by 2030, Volvo Cars intends to set the pace in the transition to zero emission mobility within our industry. But clear governmental direction and support is also needed to accelerate this transition. In this respect, Volvo Cars is pleased to join this call for the European Commission to propose an end date on new sales of internal combustion engine vehicles within the EU by 2035. Additional measures are also needed to increase EU consumer demand for electrified vehicles, including the rapid development of a comprehensive charging infrastructure.”

Setting a CO2 target for vehicle manufacturers at 0 gram of CO2/km by 2035 would enshrine the phase-out of petrol and diesel cars – including hybrids – in law, the companies say. The Commission will propose new targets in June as part of its “Fit for 55” package of legislation, which is intended to put the EU on track to cut overall emissions by at least 55% by 2030 and reach net zero emissions by 2050.[2]

Anabel Diaz, regional general manager for Europe, Middle East and Africa – Uber, said: “Ambitious EU targets are critical for accelerating EV adoption. A phase-out by 2035 for all new vehicles sold in Europe will accelerate availability of affordable new and second-hand EVs, breaking down one of the key obstacles for high-km drivers – like those on the Uber platform – to make the EV switch which will have an outsized impact on climate. The EU phase-out target and cooperation of the entire EV ecosystem will allow for a faster transition towards more sustainable mobility which Uber supported through its own targets of becoming 50% electric by 2025 across seven cities and 100% by 2030 across Europe.”

Lawmakers should also use European, national and local measures – particularly the EU Alternative Fuels Infrastructure law – to ramp up deployment of electric vehicle charging points across the bloc, the companies say. They would also welcome support for vehicle makers and their supply chains to invest in new skills training for workers and regional transformation plans to help ensure no one is left behind in the transition to emissions-free transport. Changes to taxation are also needed to help ordinary consumers as well as corporate and urban mobility fleets switch to electric vehicles.

Julia Poliscanova, senior director for vehicles and emobility at Transport & Environment, said: “Electrification of cars and vans is inevitable for the climate, consumers and for Europe’s industrial strategy. Businesses now want clarity on the speed of the transition to plan and prepare. Only EU lawmakers can provide it by naming the date for the end of combustion engine cars and vans sales.”

Whisky distilleries take their turn in the emissions legislation queue

960 640 Stuart O'Brien

As the battle to improve air quality goes on, the UK has been rolling out the EU’s Medium Combustion Plant Directive to curb harmful emissions. So, what are the implications of this legislation for medium sized businesses in the UK? 

Over one hundred million cases of Scottish whisky are distributed across the world every year. The growth in the industry and the volume of production has seen distilleries in the UK become increasingly reliant on the use of energy to ensure their businesses can keep up with demand.

The method of production has barely changed for centuries. But, as the industry begins to switch to more sustainable practices, a shift in the energy sources used to power the distilleries is taking place.

Governmental legislation around environmental protection is also driving change, with the implementation of enforceable targets. The most relevant one to the production of whisky is the Medium Combustion Plants Directive (MCPD).

The legislation explained

The purpose of the MCPD is to limit harmful emissions being pumped into the atmosphere from boilers and other stationary combustion plants in the 1-50 MWth (thermal megawatt) range. 

MCPD will regulate the concentration levels of sulphur dioxide (SO2), oxides of nitrogen (NOx), and particulate matter (PM) within process exhaust gases, as well as implementing ways to monitor emissions of carbon monoxide (CO). The limits on the levels these plants can emit depend on their type, size, age, fuel selection and operating hours.

It’s estimated that, when fully implemented, these limits will provide a 24% reduction in SO2 and 9% reduction in NOx emission targets

Made law in 2017, the MCPD regulation covers all fuel types and sets out specific Emission Limit Values (ELVs) most plants must meet by 2025. It also means that all new-build production facilities need a permit before commencing operations.

Existing plants may not require permits and testing right now, but companies are starting to realise the benefits of converting their combustion energy sources. 

The implications for distilleries

Whisky distilleries need a consistent and uninterrupted energy supply.  A review conducted by the research team at Energy Voice, estimated that Scotland’s 122 distilleries consume almost the same amount of energy each year as 250,000 British households.

Most Scottish whisky producers are in remote regions off the national energy grid.  For this reason, alternative fuel options must come with reliability of supply, in addition to cost and environmental benefits. Distillers are switching from oil to gas, in the form of liquefied petroleum gas (LPG) or liquefied natural gas (LNG).

Tamnavulin makes the switch                                                                                              

Tamnavulin distillery, owned by Whyte & Mackay, made the decision to switch to a more cost-effective, cleaner fuel solution that is liquefied petroleum gas (LPG).

The distillery has been operational since 1966 and produces over 4 million litres of single malt whisky per year. They were keen to take advantage of fuel cost savings, but also needed to ensure guarantee of supply.  

The company’s fuel requirements were assessed, and it was determined that LPG, supplied in bulk, would meet their need to comply with legislation, and deliver significant cost savings.

LPG is a lower-carbon alternative to oil with approximately 20% lower carbon intensity. Cleaner burning, it generates less CO2, SO2, NOx and PM than oil. In addition to reducing their emission levels, a gas storage system was designed to house the bulk LPG, installing a 30T mounded gas storage tank, along with the necessary pipework. 

Tamnavulin has since benefited from a 19.7% reduction in carbon emissions, and when compared to a similar distillery operating on HFO, Tamnavulin’s SO2 levels were 767 times lower, NOx 3 times lower and PM 269 times lower.

EU mulls stricter battery legislation

960 640 Stuart O'Brien

The European Commission is proposing to modernise its legislation on batteries – delivering the first initiative among the actions announced in its new Circular Economy Action Plan.

The EU says batteries that are more sustainable throughout their life cycle are key for the goals of the European Green Deal and contribute to the zero pollution ambition set in it. They promote competitive sustainability and are necessary for green transport, clean energy and to achieve climate neutrality by 2050.

As such, the proposal seeks to address the social, economic and environmental issues related to all types of batteries.

It says batteries placed on the EU market should become sustainable, high-performing and safe all along their entire life cycle. This means batteries that are produced with the lowest possible environmental impact, using materials obtained in full respect of human rights as well as social and ecological standards. Batteries have to be long-lasting and safe, and at the end of their life, they should be repurposed, remanufactured or recycled, feeding valuable materials back into the economy.

The Commission proposes mandatory requirements for all batteries (i.e. industrial, automotive, electric vehicle and portable) placed on the EU market. Requirements such as use of responsibly sourced materials with restricted use of hazardous substances, minimum content of recycled materials, carbon footprint, performance and durability and labelling, as well as meeting collection and recycling targets, are essential for the development of more sustainable and competitive battery industry across Europe and around the world.

Providing legal certainty will additionally help unlock large-scale investments and boost the production capacity for innovative and sustainable batteries in Europe and beyond to respond to the fast-growing market.

The measures that the Commission proposes will facilitate achieving climate neutrality by 2050. Better and more performant batteries will make a key contribution to the electrification of road transport, which will significantly reduce its emissions, increase the uptake of electric vehicles and facilitate a higher share of renewable sources in the EU energy mix.

With the proposal, the Commission also aims to boost the circular economy of the battery value chains and promote more efficient use of resources with the aim of minimising the environmental impact of batteries. From 1 July 2024, only rechargeable industrial and electric vehicles batteries for which a carbon footprint declaration has been established, can be placed on the market.

To close the loop and maintain valuable materials used in batteries for as long as possible in the European economy, the Commission proposes to establish new requirements and targets on the content of recycled materials and collection, treatment and recycling of batteries at the end-of-life part. This would make sure that industrial, automotive or electric vehicle batteries are not lost to the economy after their useful service life.

To significantly improve the collection and recycling of portable batteries, the current figure of 45% collection rate should rise to 65 % in 2025 and 70% in 2030 so that the materials of batteries we use at home are not lost for the economy. Other batteries – industrial, automotive or electric vehicle ones – have to be collected in full. All collected batteries have to be recycled and high levels of recovery have to be achieved, in particular of valuable materials such as cobalt, lithium, nickel and lead.

The proposed regulation defines a framework that will facilitate the repurposing of batteries from electric vehicles so that they can have a second life, for example as stationary energy storage systems, or integration into electricity grids as energy resources.

The use of new IT technologies, notably the Battery Passport and interlinked data space will be key for safe data sharing, increasing transparency of the battery market and the traceability of large batteries throughout their life cycle. It will enable manufacturers to develop innovative products and services as part of the twin green and digital transition.

With its new battery sustainability standards, the Commission will also promote globally the green transition and establish a blueprint for further initiatives under its sustainable product policy.