The Crucial Role of Government Policy and Partnerships in Decarbonisation

The Renewables Report; Lily Regardsoe talks to Tove Feld

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As the urgency for climate action escalates, the dialogue surrounding decarbonisation has intensified.

Tove Feld is an energy expert with impressive credentials; NED for Stockholm Exergi, Polytech, NEXEL, DHI, Venterra Group, The Renewables Infrastructure Group Limited, Yara International and Cloudberry Clean Energy.

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She spoke clearly and candidly about why government policy and partnerships are vital for achieving decarbonisation goals.

The conversation touches on the dual approach of utilising both subsidies and carbon taxation, the importance of local content, energy security and the synergy between affordability, sustainability and energy independence.

The conversation highlighted the necessity for government support and consistent policy frameworks to facilitate the development and implementation of green technologies.

Early-Stage Innovation

Tove stressed the importance of establishing test sites and facilities for emerging energy technologies. The wind industry is a pertinent example, showcasing how testing environments were essential for de-risking new solutions.

“In the beginning wind needed subsidies and “a scheme where you actually had governments pushing for certain sites to be developed, even though it wasn’t the best business case in the beginning. But in order to get sufficient scale, because economy of scales makes these technologies, actually effective in the long term”

Startups and developers often lack the resources to create their own test sites, making government-sponsored or publicly accessible facilities crucial. These spaces allow for rigorous testing of individual components, which are vital for innovations involving new technologies.

Political Stability

Funding and incentives aren’t the only role governments need to play, the discussion delved into the impact of political stability on energy initiatives. With numerous general elections and changes in government across Europe, the need for consistent and transparent policy-making has never been more critical.

Stop and Go Scenario

Fluctuations in government support can lead to a “stop and go” scenario, creating uncertainty in the market that deters investment.

Consistency is key.

Without reliable policies, attracting capital for the supply chain becomes increasingly challenging.

“Consistency is key in this area because otherwise you experience a ‘stop and go case’ when you have consistency “then you can also get the capital market to invest in the supply chain”

Partnerships are key to growth

Tove highlighted the collaborative relationship needed between industry and government.

For instance, the development of hydrogen infrastructure relies on both parties to ensure that necessary pipelines and transport mechanisms are in place. This interdependence is necessary for governments to provide, not only regulatory support but also active participation in facilitating infrastructure development.

Partnerships are also key to growth — not just between the public and private sector, but also between private industry leaders. Large companies must make strides towards energy transition, creating synergies and thereby accelerating the process of boosting economies of scale.

“It’s better for everyone … in order to get economies of scale, you need not one company to be successful, but a whole range of companies to be successful. And in order to deliver on the energy transition, it’s also a matter of numerous technologies. It’s not one technology can do it by itself.”

The duel strategy of balancing Incentives and Taxation

Subsidies and carbon taxation are two sides of the same coin. While subsidies can encourage immediate changes, carbon taxation provides a necessary nudge for those hesitant to adopt sustainable practices. This dual strategy is essential: taxation not only generates revenue but also incentivises behaviour change across a broader demographic, making it clear that the shift to a low-carbon economy benefits everyone. By implementing both policies in tandem, governments can drive a more comprehensive transition toward decarbonisation.

The Energy Trilemma

The conversation also touched on the “energy trilemma” — the challenge of balancing energy security, sustainability, and affordability. Governments face the daunting task of ensuring that energy remains accessible and affordable while simultaneously transitioning to greener technologies. Importantly, these three objectives are interconnected; advancements in one area can drive progress in others. For instance, investing in renewable technologies can reduce long-term costs, making green energy more affordable and widely available.

Legislation and permitting

Another key stage is how governments set the level of confidence around licenses and permitting. Another main cause of uncertainty for emerging technologies is the lack of assurance on granting permits/licenses to progress to that next stage of growth.

“At the moment, the biggest uncertainty is whether you get a permit to build your plant if not then you can’t attract investors, then you can’t make all the deals, or build for partners”

Governments need to understand the power they hold in the energy landscape, instead of looking at the success or failure of one technology, assessing the whole energy economy and its interconnectivity is critical for overall success. An obstacle at one stage of the development cycle may prevent the suite of technologies necessary to achieve energy transition.

Collaboration Between Industry and Government

To effect meaningful change, communication is essential across governments and industries in order to align their objectives. Setting clear targets is crucial, but achieving those targets requires collaboration. Industries must work alongside governments to develop and scale innovative technologies. Pilot projects serve as critical testing grounds for new ideas, enabling stakeholders to gather data and refine approaches before wider implementation.

Conclusion

The energy transition in Europe is intricately linked to the actions of governments. Consistent policies, supportive test environments and collaborative efforts with the private sector are vital in promoting innovation and driving progress of green technologies. By leveraging the dual approach of subsidies and carbon taxation, prioritising local content for energy security and promoting collaboration between public and private sectors we can create a sustainable future.

Green Executives would like to thank Tove Feld for her industry insights and time.

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