Local Power acknowledges this opportunity to give a statement to the Commerce Committee on this matter. For the most part, Local Power shares the stand of the Government (U/5/2017) and states the following:
Promoting renewable energy in the way specified in the directive is ineffective in fighting climate change. Emissions could be reduced more efficiently by emissions trading alone. However, the field of emissions trading should be extended from the current and the emissions cap restricted.
The separate objective of renewable energy steers member countries towards supporting the production of renewable energy, in part, unnecessarily and without cost-efficiency. In addition, the separate objective causes an oversupply to the electricity market and artificially reduces the price of electricity. A low electricity price level will cut back on investments in the load-following power production, which is needed as the use of renewable electricity production (wind and solar power) increases. The need for load-following power has increased the use of fossil fuel especially in countries where hydroelectric power is not available.
Renewable energy in heating to be increased
The production of renewable electricity has increased considerably faster in the EU than the use of renewable energy in heating. Incentives for using renewable energy in the heating market should be further increased because the use of fossil fuel still dominates the field. Local Power does not, as such, endorse supporting renewable energy. If, however, the State aids will continue to be made available to the member countries in the manner proposed by the Commission, they should also be allocated to the production of renewable heat in addition to electricity production.
Guarantees of origin
Extending the mandatory guarantees of origin of renewable energy to heating and cooling would introduce additional costs to the companies in the field. Benefits of the change would be debatable because consumers have fewer choices in the heating market than in the electricity market. In general, the consumer also knows or can easily find out what sources have been used to produce the heat energy of their home, for example in a specific district heating area. Heat production is especially tied to one production form in smaller area and district heating networks.
Opening district heating networks to competition
District heating is not a monopoly; it competes with the other heating forms. The mandatory regulation-based access to the district heating networks of the different production forms proposed by the Commission would introduce excessive bureaucracy without guaranteeing an increase of renewables. Renewable fuels will be and have been introduced to district heating in a more market-based manner with the help of the general instruments guiding emissions reductions (emissions trading, CO2 taxation). In Finland, many local district heating networks solely use renewable whole tree chips and administratively controlled opening of such networks would not bring any climate benefits.
Small production and energy communities
Local Power shares the view of the Government in ensuring the small electricity producers’ ability to sell the electricity they produce to the market according to the open principles. The direct consumption of own production shall also be possible. Taxation shall not constitute unnecessary obstacles to this.
The definition of energy communities proposed by the Commission can be supported in the sense that consumers living in the same property or on the same plot should be able to share their self-produced electricity with a mutual agreement. However, extending an energy community over the property or plot lines would create an opportunity to bend the licensing requirement of the electricity distribution business and to construct low-voltage networks external to the official supervision that applies to the distribution networks. This would have significant impacts on the whole current electric system and electrical safety. Therefore, a physical energy community should be defined so that it is limited to the area of one plot or property.
Biomass sustainability criteria
Local Power strongly supports the starting point of the Commission’s proposal regarding the need to proof the sustainability of forest biomass produced or harvested in the member states at the legislative level of the member state. Proving sustainability should enable utilising the existing forestry certificates (PEFC, FSC, SBP) and the principles of good forestry developed in the framework of Forest Europe. Local Power supports the proposal of the Commission, according to which the sustainability criterion requirements would not be applied to production plants of under 20 MW. Like the Government, we too consider the re-evaluation of the sustainability criteria presented for 2023 as a source of unnecessary uncertainty and too early, since the directive will probably only take effect in 2021.