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Updating EU’s Climate and Energy Policies: Czech Republic

The National Energy and Climate Plans (NECPs) were introduced in 2019 and had the goal to encourage Member States to address issues such as energy efficiency, renewables, greenhouse gas (GHG) emissions reductions, interconnections and research and innovation. All in an intertwined and standard manner that would boost regional cooperation.

In 2020, when the Commission delivered its first assessment, for renewable energy, the combined commitment by EU countries was estimated at 33.1-33.7 per cent, above the renewable energy target of at least 32 per cent (as of 2023, that target has been increased to 42.5 per cent).

This was then, before the consequences of the COVID-19 pandemic spread to every country, before record-high energy prices were registered globally and before the Russian aggression on Ukraine generated supply disruptions all over the world, especially in Central and Eastern Europe.

Although over the years countries focused more on energy security (for example, by increasing imports of liquified natural gas from different sources) and affordability (for example, by creating State subsidies to increase renewable energy installed capacity and decrease the overall electricity costs for households and companies), it is still essential for governments to focus on sustainability and climate change.

According to the latest report from the UN Intergovernmental Panel on Climate Change (IPCC) in March 2023, the challenges associated with global warming have become “even greater” due to a continued increase in greenhouse gas emissions – with “insufficient” pace and scale of the current and planned measures to tackle climate change.

Thus, reviewing the NECPs (whose first drafts are expected by June 2023) represents an incredible opportunity for CEE countries. A recent report by EMBER showed that CEE could deliver 200 gigawatts (GW) of wind (onshore, plus 100 GW offshore) and solar by 2030. Estonia’s new Plan is already being considered a very strong one, with a much bigger focus on the green transition, devoting 59 per cent (up from 41.5 per cent in the original plan) of the available funds to measures that support climate objectives. Will other countries from CEE follow or miss this opportunity?

Czechia must accelerate the rollout of renewable energy

In its recommendations for the NECPs’ revisions, the Commission has urged Member States to set higher ambitions to speed up the green transition to climate neutrality and reinforce the resilience of the energy system in line with the Climate Law, Fit for 55 package and REPowerEU.

The Commission noted that Czechia has reduced its net GHG emissions in 2020 by 40 per cent, compared to 1990. However, the country’s high reliance on Russian fossil fuels necessitates an accelerated rollout of renewables and energy efficiency investments and diversification of its supply sources. Currently, Czechia’s 2030 goal for renewables is 22 per cent (compared to the current 17.3 per cent). For the Commission, this level of ambition is quite modest and a broad range of technologies, including solar, wind, geothermal, renewable hydrogen and sustainable bio-methane could be developed further.

“For the first time we will have a target of climate neutrality by 2050 at the level of the Czech Republic clearly stated in the NECP,” Pavel Zámyslický, Deputy Director General of the Section of Climate Protection at the Ministry of the Environment tells CEENERGYNEWS. “The new LULUCF [land use, land-use change and forestry] and ESR [Effort Sharing Regulation] targets will also be included. The targets for renewables and energy efficiency are still under discussion and we are aiming at a fair contribution towards achieving the Fit for 55 targets on the EU level.”

Source: SolarPower Europe.

According to SolarPower Europe, the country has a vast solar potential but the PV target appears underwhelming and much more should be done. In fact, while the country’s Recovery And Resilience Plan (RRP) includes investments for the construction of 270 megawatts (MW) of photovoltaic power in companies, this represents only a modest fraction of the total installed wind and solar power capacity and is by far not sufficient to meet the increased level of ambition. Therefore, significant additional investment volumes in renewables are essential.

“To accelerate the rollout of renewable energy we have already significantly ramped up the investment support for renewable energy,” continues Mr Zámyslický. “We are working on removing the remaining barriers and simplifying permitting, for instance through new rules for energy communities. There are currently ongoing processes aimed at speeding up permitting procedures and establishing the go-to areas for renewables. Other important bottlenecks, which need to be addressed, are the capacity of the grid to connect new intermittent sources and the capacity of the market to supply the renewable solutions.”

Among other challenges identified by the Brussels-based association, there is the overall general lack of support for large-scale solar, due to the fact that the past feed-in tariff regime granted very generous subsidies to large-scale PV projects. Since new utility-scale projects have not been built in the last 10 years, new projects might face public acceptance concerns. Finally, the sudden increase in demand for solar in the Czech Republic has led to a shortage of skilled workers. While this already forms a bottleneck for installers, recently, grid connection became a problem as well. 

The cost of the energy transition

Funding possibilities are actually enormous if we think that Czechia’s RRP represents a total amount of 7 billion euros in support in grants (which is around 3.2 per cent of the 2019 GDP).

However, the Commission has noted that specific challenges remain at both national and regional levels. The two largest funding sources (other than the RRF, there are also over 21 billion euros from the cohesion policy funds), will require increased capacity and efficient procedures to prepare and successfully implement public sector investment projects, especially regarding the digital transition (which goes hand in hand with the green one).

A financing measure that has been greatly used by the Czech Republic (a bit more compared to other CEE countries) is the Modernisation Fund, whose first payments were made by the European Investment Bank earlier in 2021. In 2022, approximately 1.2 billion euros were devoted to fund the construction of small photovoltaic power plants in municipalities with up to 3,000 inhabitants, so to create and develop the concept of energy communities. Now, following the reform of the EU emission trading system (EU ETS), the Fund will also expand to other areas and it will be increased up to 21.5 billion euros by 2030.

The Czech Republic also held the Presidency of the Council of the European Union in the second half of 2022 facing energy and climate-related challenges first-hand and it achieved some major successes. For example, during the fourth extraordinary meeting of the Energy Council in November 2022, a majority agreement was found on one emergency proposal for the Council Regulation laying down a framework to accelerate the deployment of renewable energy. It also achieved a very fast adoption of a general approach to the proposal for the Energy Performance of Buildings Directive (EPBD) which included a part of the amendments from the May REPowerEU package on solar energy in buildings. Thus, the country is well aware of the challenges ahead of us but also of the solutions and of the importance of concrete targets and action plans to achieve our climate ambitions.

Before the final NECP will be submitted (in June 2024) there is still one year during which much more work can be done to implement energy efficiency measures, accelerate the deployment of renewables and find ways to not leave anyone behind.

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