Belgium’s energy challenges are more complex than supply and demand (although, with a new rolling blackout plan in the offing for this winter, that too is obviously a cause for concern). In addition to energy which is renewable, efficient and reliable, energy policy must also take into consideration a fourth factor: social acceptance. This, in short, is the quadrilemma.
Fossil fuels are a finite resource. The shift toward renewable sources of energy, such as solar or wind power, is a long-term necessity. Belgium, of course, acts within the wider European framework, and the EU has set the ambitious goal of reducing greenhouse gas emissions (GHG) by 20% and producing 20% of energy from renewables by the year 2020. But the Emission Trading System (ETS), which was intended to encourage this shift by placing a financial value on GHG emissions, is not serving its purpose. Countries have granted a large amount of emission allowances to protect their industries, and this oversupply on the market has resulted in low prices. In this wider perspective, there are also concerns about the coherence of the EU’s renewable energy policy and its alignment (or not) with climate policy.
Industry wants efficient (i.e. affordable) energy, which results in the production of electricity from the cheapest fuel. Today, due to a global oversupply of coal, coal-fired plants have become the cheapest fossil fuel technology to operate. Efficiency, in this case, not only refers to the energy source, but also to improving the performance of existing technology through innovation. Efficiency can also be gained by means of fiscal harmonization. The wholesale price of energy is only one component of the final price for end users, i.e. businesses and households. There are also taxes, network charges, etc. And currently, each country – and, in the case of Belgium, each region – has its own taxation mechanism on energy.
Energy has to be available when it is needed. The decentralization of energy production starting in the 1970s has destabilized the old system in which energy was ‘pushed’ one direction from large power stations. Renewable energy facilities are smaller and more numerous, but, more importantly in this context, they are unreliable in so far as we do not know when they will put energy into the grid. There is currently no (large scale) method to store energy produced by renewable sources, and so renewable energy, at this stage, does not diminish the need for base load production. So-called ‘smart’ grids will help to balance loads in the future, and while the EU plans to create an Energy Union, for the time being, we do not have an efficient European-wide coordination of transmission and distribution.
4. Socially Acceptable
Public opinion has a growing influence on the formulation of energy policy. This is manifested, for example, in the NIMBY (‘Not In My Backyard’) phenomenon. It takes an average of seven years to build a wind farm in Belgium, by which time the technology is already outdated. These delays are mostly caused by permitting issues – permits are, in turn, influenced by NIMBYism. It is not only that citizens don’t want wind turbines in their backyard. It is also not considered socially acceptable to import electricity from neighboring countries or to continue using nuclear power or to explore the use of shale gas.
Concerns about social acceptability hamper the government’s ability to formulate a long-term vision, but it is also the government’s responsibility to build social acceptance for a mix of energy, as we have seen in the US with President Obama’s ‘all of the above’ energy policy.
How do we balance these competing demands? This is the energy quadrilemma that Belgium is now facing.
These thoughts came from a Business@Breakfast session on energy that we held in early June. We invite you to share your views on Belgium’s energy challenges in the comments below. If you would like to contribute to the discussion on other policy topics, sign up to receive our newsletter for future event announcements.