The Article below was assigned to one of this year’s summer interns, Pei Lin, and was written with the help and close supervision of our Team. Pei Lin is about to enter her first year as an Economics and Business Economics student at the University of Amsterdam, Netherlands, in September 2023. Ultimately, it has provided an opportunity for both Pei Lin to enhance her knowledge through research, as well as to express her own ideas, interpretations and educated opinions on the matter of renewable energy in the EU. On the other hand, our Company gained insight from an informative piece of writing, which also demonstrates examples of action taken by other countries for promoting sustainability, which may also be applied to Cyprus. Ultimately, it forms a short, simple, yet useful piece of writing on a critical matter for current and future generations.
Fossil fuels are found in Earth’s crust and contain carbon and hydrogen, which can be burned for energy. In 2020, the worldwide health pandemic caused the demand for fossil energy to fall suddenly. The production method of fuel and natural gas made it difficult to reduce the supply of these energies in a short time and therefore excess supply was created, meaning that the price of fossil fuels dropped hardly. The WTI oil price (West Texas Intermediate benchmarking method) even fell to negative. However, in 2021, many countries slowly started operating again, the economy started to recover and the demand for energy resources like fuel and natural gas had a significant increase, creating excess demand.
This excess demand led to extremely high prices for energy. Furthermore, because of the start of the war in Ukraine, many countries refused to use the energy produced by Russia, the lack of supply further worsened the excess demand and resulted in doubling of the oil price in October 2021 compared to October 2020, from $82.06/bbl to $39.90/bbl. As many countries in the European Union were dependent on the energy imported from Russia, the European Union had a meeting in May 2022 about the energy used in the EU and set up a plan called the “RePower EU Plan.”
The aim of the “RePower” EU Plan was to decrease the European Union’s dependency on Russian fossil fuels, produce clean energy, diversify energy supplies and save energy. Since September 2022, Russian gas accounts for only 8% of all pipeline gas imported into the EU, compared to 41% of EU imports from Russia in August 2021. The EU also established new agreements with other third countries for pipeline imports. Apart from this, the European Commission also encouraged more investment in renewable energy, like solar and wind power. Over the last year, the electricity generated by solar and wind power is greater than gas and ensures that a considerable 39% of our electricity now comes from renewables.
There are some measures set up by the European Commission relating to renewable energy and energy efficiency, as follows:
- Increasing the EU’s 2030 target to 45% renewables in the EU mix, up from the current target of 40% (an additional 169 GW to the “Fitfor55” 2030 target of 1,067 GW).
- Introducing the European Solar Rooftop Initiative, which is anchored around a legally binding EU solar rooftop obligation for certain categories of buildings.
- Decarbonising the industry by accelerating the switch to electrification and renewable hydrogen and enhancing our low-carbon manufacturing capabilities.
Starting from 2035, as per EU legislation, there will be no new cars that produce CO2 emissions. In addition, by 2030, these cars should reduce 55% of CO2 emissions compared to the record in 2021. To achieve this target, there is a need for governments to encourage the use of vehicles that use green energy, such as electric or plug-in hybrid cars.
The Cyprus government has allocated 41% of its $1.2 billion Recovery and Resilience Plan (RRP) funds to secure Cyprus’ green transition with the necessary reforms and investments to achieve climate objectives. It includes programs for electric vehicles (EV) and has 18 double charging stations throughout the island. As part of its RRP (Recovery & Resilience Plan), the government has allocated funds for its Department of Electromechanical Services to add 1,000 charging stations in the near future. In addition, there is a scheme that offers grants to purchase electric and plug-in hybrid cars with CO2 emissions up to 50g/km, at a cost of up to €80,000 including VAT for new cars and €50,000 including VAT for used cars. The second phase of the scheme has a budget of €10m and aims to offer 2,518 grants. It follows on from last year, as the programme was deemed a success after 7,000 applications were submitted and nearly 100% have completed the process of obtaining their electric vehicle.
In other countries, such as the US and China, there is additional regulatory policy apart from subsidies. For example, there are regulatory controls/credits, where car manufacturers have the obligation to produce the same number of cars using green energy to offset the number of oil-base cars they produce. If they produce more oil-base cars, then they are subject to a fine. Cyprus could similarly adopt this fine system to some of its industries that discharge carbon, thus encouraging suppliers to use more green energy in production.
Overall, it is important to remember that more and more countries worldwide are incentivising green investment and encourage people to use more renewable energy, as this will be the main resource used to generate energy in the future. Using renewable energy will reduce the environmental damage caused by greenhouse gas emissions and provide more sustainability. In hindsight, the Corona virus pandemic and the war between Russia and Ukraine have acted more like triggering factors to help speed up a process in the EU, which was already on its way. It is now the chance for EU citizens to embrace these processes and adapt to a new way of life, which is to benefit the current, but most importantly the future generations.
BIBLIOGRAPHY:
https://cyprus-mail.com/2023/05/30/calls-for-more-support-to-buy-electric-vehicles/
https://ycharts.com/indicators/average_crude_oil_spot_price
https://ec.europa.eu/commission/presscorner/detail/en/IP_22_3131
https://www.trade.gov/country-commercial-guides/cyprus-renewable-energy-sources-res
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