Small Portugal Thinks Big – and Very Green! (Part 2 of 2)

By Camille Serre and Alexander Ochs

In the first part of this blog, we reported on Portugual’s excellent results in the development of renewable energy and provided insight into supportive policies that have been implemented over the last decade. Now let’s look at Portugal’s ambitious goals for the coming years.

Prime Minister Jose Socrates set ambitious renewables targets in the National Energy Strategy 2020 – Wikimedia Commons / José Goulão

It’s important to note that Portugal isn’t “going it alone.” The European Commission plays a decisive role in setting targets for each Member State via its 2009 Renewable Energy Directive. Portugal is expected to reach a 31-percent share of renewable energy in its gross final energy consumption by 2020. Also, the European Emission Trading Scheme (ETS) encourages participating countries to cut their emissions of greenhouse gases and therefore move from fossil fuels to renewables, by requiring energy producers and energy-intensive companies to meet strict carbon dioxide emissions targets and to purchase additional permits for overshooting them.

New York Times contributor Elisabeth Rosenthal, citing International Energy Agency (IEA) figures, notes that “last year, for the first time, [Portugal] became a net power exporter, sending small amounts of electricity to Spain.” Inspired by these good results, Portugal set more ambitious targets in its National Energy Strategy (ENE 2020), adopted by the Council of Ministers on April 15, 2010. The country now aims to reach a 45 percent renewables share in its electricity production by the end of the year, and a 60 percent share by 2020.

The main focus of Portugal’s renewable policy will remain on wind power, a dynamic industry that represents a source of revenue and creates green jobs. The electricity operator Energias de Portugal even invests in wind farms located in the U.S. Midwest.

Prime Minister Jose Socrates’ government wants to improve the reliability and efficiency of Portugal’s renewables supply. Renewable energy production is often challenged by natural flows – including the common criticism that the sun doesn’t always shine and the wind doesn’t always blow, even in Portugal. By the end of the year, the government will set up a system to monitor ongoing energy demand and potential supply from various available renewable sources.

What is driving Portugal to undertake such changes? One factor, of course, is the fact that the country does not possess any noteworthy fossil fuel resources, as illustrated by 2007 IEA data. Yet in 2005, the bulk of Portugal’s gross electricity was generated by three fossil sources: coal (32.7%), natural gas (29.2%), and oil (18.9%). The country is therefore heavily dependent on imports that place a high toll on the national budget—amounting to 86 percent of spending in 2006, according to the European Renewable Energy Council (EREC). In its ENE 2020 strategy, Portugal aims to reduce fossil fuel imports 70 percent by 2020 and cut its energy import balance 25 percent, saving some US$2.55 billion.

Perhaps most interestingly, “so far the [renewable energy] program has placed no stress on the national budget,” according to the IEA’s Shinji Fujino. And, in order to address initial local conflicts due to the intense development of wind power plants, a unique mechanism has been set up. Under the current feed-in tariff legislation, municipalities that host wind farms benefit from additional financial support in the form of a 2.5 percent share of the monthly remuneration paid to local wind project operators.

What can the United States learn from Portugal’s experience? The two countries differ in critical ways. For instance, the U.S. federal system has led to great variations in the energy mix and status of renewables development across the 50 states. Some states still rely almost exclusively on fossil fuels. However, the potential for renewables in all U.S. states is immense, and roadmaps for their deployment exist. The key lesson from Portugal’s experience is the need for political will to “walk the walk” on renewable energy. If there is true leadership from the government, there is no limit to the country’s ambitions.

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