The EU is discussing how far and how fast it can take regional cooperation among Transmission System Operators (TSOs). The European Commission and Parliament want to give entities for regional cooperation more independence and power, while Member States and TSOs want ultimate power to remain at national level. An upcoming conference on 16 October led by ENTSO-E (representing European TSOs) and Coreso (a regional entity) – and supported by Energy Post – will explore the next phase in network cooperation in the EU.

European transmission system operators (TSOs) are no strangers to cooperation: they have worked together for decades to keep Europe’s electricity system up and running. Nevertheless, there is always room for improvement. 4 November 2006 proved a turning point: on this day, a Saturday, Europe suffered a major blackout. Millions of people across the continent were left without power after what was meant to be the routine disconnection of a power line in northwest Germany.

It was in direct response to this that TSOs set up the first regional grid cooperation entities, Coreso (based in Brussels) and TSC (Munich), in 2008. They have since been joined by SCC (Belgrade, 2015), a Nordic RSC (Copenhagen, 2016) and a Baltic RSC (Tallinn, 2016).

Jean-François Gahungu, CEO of Coreso, tells Energy Post in an interview that 4 November 2006 taught TSOs two important lessons. One, there was a need for more proactive coordination – “It’s necessary to exchange some information throughout the 24-hour day” – and two, TSOs needed a regional vision of the European network.

The latter is particularly important with the push for a single European power market and the rise of renewables, Gahungu emphasised; variable renewables such as wind and solar bring new uncertainties for the grid, with consequences over the border.

Network codes: the big challenge

Coreso and its sisters were called Regional Security Coordination Initiatives (RSCIs), later simplified to Regional Security Coordinators (RSCs). Why “security”? “[Because] RSCs are contributing to the security of the grid by organising coordinated activities between TSOs,” explains Gahungu.

The European Commission loved the idea. So much so, that it decided to incorporate an operating framework for the new entities into its network codes, a series of legally binding rules to govern the operation of European power markets. The significance of this is that it transformed the RSCs from voluntary to mandatory structures, effectively requiring all TSOs to cooperate for the first time.

In theory, that’s all the Commission did – it did not set out to change the RSCs’ objectives or their organisation. In practice, Gahungu says that the biggest challenge that RSCs face today is implementing these new rules. “The big challenge for TSOs in the short-term is not the Clean Energy Package [and its power market design proposals]. It’s the implementation of the network codes.”

To really take regional cooperation to the next level requires more cooperation not only among TSOs but also between TSOs, regulators and policymakers. To this end, ENTSO-E has proposed the creation of Regional Energy Forums

There are two network codes directly relevant to RSCs: one on capacity allocation and congestion management and one on system operations. The first – the CACM guideline – sets out methods for calculating how much space market participants can use on cross-border lines without endangering system security.

The second – the SO guideline – specifies what TSOs should do in managing their grid, including making regional coordination a legal requirement. The guidelines require the development of new, regionally relevant methodologies defining coordination processes that need to be approved by regulators and then implemented. The deadline for all this is 2022.

“It’s a big challenge because the network codes really go into a lot of detail,” Gahungu says. The new rules impose a formal pan-European framework on what has until now grown in an organic way. The energy transition complicates matters. “The IT capacities and the data – even the processes to create that data – to model wind availability for example, do not necessarily exist [among the TSOs],” he explains. The enormity of the IT challenge is one reason why it has a dedicated session at the 16 October conference.

Clean Energy Package: ROCS, RSCs or RCCs?

At the same time, the EU is in the middle of negotiations on a new power market design, part of which is deciding on the next step in TSO cooperation. “This is actually the first issue we are tackling [in the market design talks],” a representative of the Austrian EU Presidency tells Energy Post. It was on the agenda of negotiators when they met on 11 September and will be again at their next meeting on 18 October.

The power market reform is part of the EU’s Clean Energy Package. Austria hopes to broker a deal on this by the end of the year.

There are two big parts to the debate over how to take regional cooperation to the next level. One is tasks – which new tasks should regional entities take on? – and the other is governance – how much of an independent authority should the regional entities become?

The #PowerCoordinationEurope conference on 16 October will explore the next phase in regional cooperation among TSOs in Europe. It is being organised by ENTSO-E and Coreso in conjunction with the Austrian EU Presidency, the Florence of Regulation and Energy Post. It is the second edition of a conference created last year to study TSO cooperation.

Keynote speakers include EU Climate and Energy Commissioner Miguel Arias Ca ñ ete as well as the President of ENTSO-E, Ben Voorhorst, and CEO of Coreso, Jean-François Gahungu. Individual sessions will delve into a day in the life of an RSC, the link between markets and operations, and potential new services, innovations and the transformative power of digitalisation. See the full programme and register here: https://www.powercoordinationeurope.eu/

On both issues, the Council of Ministers (i.e. Member States) – and TSOs – are arguing for an “evolutionary” approach. The European Commission and Parliament would like to see a more radical shift – although the Parliament too has backed away from the Commission’s more far-reaching proposals.

The Commission raised hackles with its original plans. They called for Regional Operational Centres (ROCs) to be created. The idea was reportedly that these would be bigger, better RSCs, but many interpreted it as a proposal to sideline the existing RSCs. Certainly the new acronym didn’t help, since system “operation” is really the core of what TSOs do. The ROCs proposal could have been seen as a first step towards independent regional system operators.

Instead, the Council wants to retain “RSCs” while the Parliament proposes to rename them Regional Coordination Centres (RCCs). That’s because they will cooperate on issues that that go beyond security of supply, MEPs say.

Authority vs service provider

There are two tasks where Member States feel strongly that national TSOs should retain the lead: crisis management and balancing responsibility (including both the size and procurement of balancing reserves – this is about renewables integration). On the former, Member States argue that national governments and TSOs ultimately remain responsible for security of supply. Moreover if there is a crisis, the response would be bottom-up.

Where the Council is ready to move towards MEPs is on a bigger role for regional entities in identifying additional transmission capacity needs. MEPs – like the Commission – tend to see a relatively stronger role for the RSCs across the board.

On governance, the Council rejects the notion that “the regional entity would almost be like a legal authority that gives out orders to TSOs,” in the words of the Austrian EU Presidency representative. Rather, they see TSOs and RSCs working together in a “spirit of mutual problem-solving.” What this means is that – as has been the case so far – RSCs can make suggestions but TSOs call the shots. “We recommend and the TSOs decide,” explains Gahungu.

“An RSC seeks to give the most neutral, objective advice,” he continues. “[But] we do not have the local expertise on what exactly can be done in the field. RSCs should remain advisory because TSOs have the data and the responsibility for security of supply.” The Coreso CEO concludes: “If TSOs used the full potential of RSCs as innovation incubators, definitely we could reach another level of efficiency.”

“We want to create new entities with new statutes and new decision-making procedures, that are truly independent from the national TSOs”

The Commission and Parliament take a different view: “So far, RSCs are commercial entities working as service providers to the TSOs,” explains Florent Marcellesi, the Spanish Green MEP who is part of the Parliament’s team leading work on the issue (he took over responsibility for market design after fellow Green Claude Turmes left to join Luxembourg’s government). “That’s far from the logic we’d like to see. We’d like to see them distinct from national TSOs in their governance structure. We’d like to see them issue recommendations and decisions, and those decisions would be binding over national TSOs even if not in their national interest.”

“It’s very clear that the regional entity needs to have some degree of independence from the TSO and its interests. It has to make recommendations which take into account the entire region,” the Austrian EU Presidency representative acknowledges. “But the expertise and knowledge of TSOs has to be taken into account.”

Regional Energy Forums

Whatever compromise Commission, Council and Parliament reach, the Clean Energy Package will take the institutional framework for regional cooperation to the next level. “The overall objectives and target we are moving towards are not so different,” insists the Austrian EU Presidency representative. “The difference is in the speed with which we’re approaching them.”

Both Council and Parliament are looking into the possibility of giving regional entities additional new responsibilities further down the line, to cope with ever greater levels of interconnection and renewables.

MEP Marcellesi however, insists that there is quite a fundamental difference in the current talks: “We want to create new entities with new statutes and new decision-making procedures, that are truly independent from the national TSOs. That’s the most important step change. And that’s what Council doesn’t want: it wants to keep the existing RSCs.”

TSOs argue that to really take regional cooperation to the next level requires more cooperation not only among TSOs but also between TSOs, regulators and policymakers. To this end, ENTSO-E has proposed the creation of Regional Energy Forums.

EU policymakers say they’re an interesting idea for the future, but could be a challenge to implement. Some were suspicious of the proposal’s timing, suggesting that it was meant to bury the discussion on RSCs by focusing on new structures to increase cooperation between regulators and politicians instead.

In any case, in the Clean Energy Package, the Commission has already proposed to enhance cooperation among regulators and give them more direct oversight over RSCs. In parallel, there was an attempt to increase political cooperation through a new governance regulation in the Clean Energy Package – finalised in June – but this was fiercely resisted by Member States. “What we have in the end is very loose and minimalistic,” says Marcellesi. “Member States didn’t want regional cooperation at the political level.”

The climate change challenge is not technical nor even economic, but a matter of enacting the right policies, writes Silvio Marcacci, Communications Director at San Francisco-based think tank Energy Innovation. Based on new research, Marcacci outlines the the types of policies that are the most effective.

The world’s scientists estimate we have a decade to reduce global greenhouse gas emissions, prevent dangerous levels of global warming beyond 2° Celsius, and avoid the worst impacts of climate change – but there’s no single silver bullet solution.

As government officials and other policymakers determine how to meet emissions reductions commitments pledged under the Paris Agreement or reach clean energy deployment and decarbonization goals, they need to be able to identify which policies work and how to design those policies.

It’s a daunting challenge, and each day that passes makes the challenge ahead more difficult, but the technologies, policies, and strategies to meet it exist today: Energy Innovation’s new book Designing Climate Solutions: A Policy Guide for Low-Carbon Energy finds that 10 policies applied to the 20 largest-emitting nations, can meet the 2°C target.

Policy contributions to meeting the 2°C global warming target. (Analysis done using data with permission from the International Institute for Applied Systems Analysis) ENERGY INNOVATION

Doing the math on emissions

The vast majority of GHG emissions come from a handful of countries – nearly 75% of global greenhouse gas emissions are generated by just 20 countries. Energy use (power plants, vehicles, and buildings) or industrial processes (cement or iron and steel manufacturing) is the predominant source of emissions in these countries, so focusing efforts accordingly can drive the fastest emission reductions.

The top 20 emitting countries are responsible for roughly 75 percent of global emissions. (Graph data reproduced with permission from CAIT Climate Data Explorer, 2017. ENERGY INNOVATION

The Paris Agreement, signed in 2015 by 189 countries responsible for nearly 99% of the world’s GHG emissions, committed each country to reduce emissions over the next 10-30 years. If these targets are met, they would move the emissions curve a third of the way toward the 2°C target, and if existing policies and the Paris pledges are extended to 2100 with the same ambition, the emissions curve moves about 80% of the way to a 2°C pathway.

Pledges made as part of the Paris Agreement get us partway to the 2°C pathway. (Graph data reproduced with permission from Climate Interactive and Climate Action Tracker) ENERGY INNOVATION

Even if the United States withdraws from the Paris Agreement, commitments from remaining countries still cover more than 80% of the world’s current emissions – without counting pledges from U.S. states, cities, and businesses to meet the Paris goals.

Many policymakers understand the need to reduce GHG emissions, but need data to evaluate available policies. Different policies are best suited for different circumstances, and some policies look good on paper but fail to perform in the real world. Despite this, a practical consensus about successful policy is emerging, and can generally be classified as one of four types, each of which reinforces the others:

• Performance standardsimprove new equipment and help capture savings that economic signals cannot because of market barriers.
• Economic signalscan be highly efficient and encourage the uptake of more efficient equipment driven by performance standards.
• Research & development (R&D)and supporting policies lower the costs of performance standards and economic signals by pushing new technologies to market and lowering the costs of existing technologies by removing deployment market barriers.

A portfolio of policies including these four policy types is the most effective, lowest-cost way to drive down GHG emissions. Properly designed, they reinforce each other through system dynamics that emerge organically.

Reducing power sector emissions

The power sector is responsible for 25% of annual GHG emissions, or about 12 billion tons of CO₂ emissions. This is expected to grow to nearly 18.9 billion tons by 2050, comprising roughly 30% of annual GHG emissions in 2050. Without additional policies, the power sector will be responsible for 28% of cumulative emissions through 2050.

The emissions growth is largely caused by increasing amounts of coal and natural gas for power generation. For example, the U.S. Energy Information Administration projects global coal electricity generation will grow from 8.1 terawatt-hours (TWh) in 2010 to 11.1 TWh in 2050, while global natural gas electricity generation will grow from 4.6 TWh in 2010 to 11.1 TWh in 2050.

Reducing power sector emissions involves using low- or zero-carbon technologies to produce power and reduce electricity demand, and the best policies for increasing carbon-free power generation are renewable portfolio standards and feed-in tariffs. Complementary power sector policiesencouraging utilities to pursue cleaner options and reduce electricity demand are also important, as are policies that reduce demand by improving the efficiency of energy-consuming products (e.g., appliances). In total, smart power sector policies can contribute at least 21% of the reductions needed to meet the 2°C target.

Reducing transportation sector emissions

The transportation sector generates more than 15% of annual GHG emissions, with the most recent data showing about 7.5 billion tons of CO₂emissions in 2014. This number is expected to grow to more than 9 billion tons by 2050, and without additional policies the transportation sector will be responsible for 14% of cumulative emissions through 2050.

Transportation’s emissions growth is largely due to increasing car ownership and freight transport: Passenger travel demand is expected to more than double between 2010 and 2050, and freight transport is expected to increase nearly 60% over the same period. Without action, the vast majority of this demand will be met with petroleum fuels, causing emissions to grow.

Reducing transportation sector emissions requires improving the efficiency of vehicles produced and average efficiency of vehicles sold, increasing the share of electric vehicles sold, and providing alternatives to owning and driving a vehicle through smart urban planning.

Decarbonizing the transportation sector is an important element of any climate strategy, with significant co-benefits such as reduced particulate pollution and lost time due to traffic. Together, smart transportation sector policies can contribute at least 7% of the reductions needed to meet the 2°C target.

Reducing building sector emissions

Our buildings are responsible for 8% of annual GHG emissions, or about 4 billion tons of CO₂ emissions. This total is expected to grow to between 5-6 gigatons by 2050, and without policy solutions, the building sector will be responsible for 8% of cumulative emissions through 2050.

Buildings and appliances are also significant drivers of electricity demand. For example, buildings are responsible for 54% of global electricity demand, and that share is expected to grow to nearly 60% by 2050. When electricity emissions attributable to the building sector are included, its share of global GHG emissions increases to 20% and grows to 26% by 2050, largely due to a growing building stock filled with more energy-consuming technologies.

Reducing building sector emissions requires improving the efficiency of building equipment (e.g. air conditioning and heating equipment), the thermal efficiency of buildings, and the efficiency of appliances used in buildings. Decarbonizing the building sector and reducing electricity demand are essential emissions reductions strategies, and building codes and appliance standards can achieve at least 5% of the reductions required to meet the 2°C target. This can rise to an even higher share later on, because higher efficiency standards take years to reach full effect.

Reducing industrial sector emissions

The industrial sector, including agriculture and waste, is responsible for 38% of annual global GHG emissions, with CO₂e emissions of about 19 billion tons. Emissions are expected to grow to more than 42 billion tons by 2050. Without additional policies, this sector will be responsible for 49% of cumulative emissions through 2050. The industrial sector is also responsible for roughly 44% of global electricity demand, although that share is expected to fall to about 36% by 2050.

Industry sector emissions can be broken into two categories: emissions from fossil fuel combustion for energy use and process emissions (released in industrial processes such as cement clinker manufacture and metallurgical coal coking). Non-energy emissions in agriculture and waste also fall under process emissions, and the share of industrial process emissions is significant. At least 10 billion tons of CO₂e per year come from industrial processes: about 5.2 billion tons of CO₂e per year from agriculture, 1.5 billion tons from waste, and 3.2 billion tons from more traditional manufacturing-related processes.

Reducing industrial sector emissions requires improving industrial production efficiency, thus lowering energy demand, and eliminating industrial process emissions. Heavily decarbonizing the industry sector is essential – industrial energy efficiency improvements can achieve 16% of the necessary reductions to meet the 2°C target, and reducing process emissions can achieve at least 10% of the necessary reductions.

The decarbonization role of cross-sector policies

In addition to sector-specific policies, cross-sector policies are crucial to decarbonization. Carbon pricing is one of the most important decarbonization policies and operates across multiple sectors, delivering large emission reductions. Similarly, support for R&D is critical to lowering long-run decarbonization costs, and typically targets technological breakthroughs in different economic sectors.

These policies are essential for cost-effective economic decarbonization, and although carbon pricing’s effect is directly related to the price or emission cap used, strong carbon pricing set at the social cost of carbon can achieve 26% of the emission reductions necessary by 2050 to hit the 2°C target.

Challenges in making assumptions about R&D achievement and spending make explicitly modeling R&D’s emissions reduction effect difficult, but R&D breakthroughs lower the costs of meeting the 2°C target and reduce the number and strength of policies needed. For example, decades of R&D coupled with strong policies driving deployment mean building new zero-carbon electricity generation like solar and wind turbines is cheaper than running existing fossil fuel generation in many parts of the country. The history of research-based cost declines coupled with well-designed policy shows how R&D fits together with other policy types to drive down costs and accelerate the clean energy transition.

How to win on climate

Climate change requires action as soon as possible to limit emissions and avoid exceeding 2° C of warming. Policymakers around the world have committed to reducing emissions, laying the foundation for deeper emission cuts that put the world on a trajectory to a lower-carbon future. The key now is in turning these pledges into reality—with laser-focused, well-designed policy.

We have the technology today to rapidly move to a clean energy system – and the price of that future, without counting environmental benefits, is about the same as a carbon-intensive one. So the challenge is not technical, nor even economic, but rather a matter of enacting the right policies and ensuring they are properly designed and enforced.

Editor’s Note

Silvio Marcacci is Communications Director at the San Francisco-based think tank Energy Innovation.

This article was first published on Forbes.com and is republished here with permission.