London --
Wind and solar power producers say they're at risk of losing
investment after the European Union's executive arm scrapped proposals
for a mandatory target on renewable energy use in 2030.
The European Commission yesterday said the 28-nation bloc should
get 27 percent of its energy from renewables by 2030, up from 20 percent
at the end of this decade. Unlike the current goal, the new one won't
be split into national targets.
"It's very weak," Jacopo Moccia, head of political affairs for the
European Wind Energy Association, said in an interview today. "It was a
communications gimmick rather than a real target. How do we determine
the EU has met its target if it has no obligations on member states?
It's hard to imagine the EU will take itself to court and fine itself."
The EU is wrestling with how to reduce pollutants blamed for global
warming while keeping a lid on electricity bills that sometimes are
double U.S. levels. Companies including Vestas Wind Systems A/S, Alstom
SA, Gamesa Corp. Tecnologica SA and Acciona SA lobbied for binding
renewables targets, while the U.K. led a push against them to allow more
space for carbon capture and nuclear power.
The commission's proposal starts the debate among member nations
about energy policy to 2030. It also called for a 40 percent reduction
in carbon dioxide emissions by then, double the current aim to cut 20
percent by 2020. EU heads of government are due to discuss the program
in Brussels in March.
British View
U.K. Prime Minister David Cameron said in a letter
to Commission President Jose Manuel Barroso in December that a
renewables target would cost British consumers 9 billion pounds ($14.8
billion) a year by 2030. The commission's proposal would allow
technologies such as nuclear power, carbon capture and storage and
energy efficiency to be used in order to meet the EU's overall goal on
carbon.
"If you set rigid inflexible targets, that's likely to lead to
greater costs," U.K. Energy Secretary Ed Davey told reporters in London
yesterday. "You should be allowed to choose whichever low-carbon
technology you wanted."
Still, the decision is a disappointment to renewable energy
developers, which expanded rapidly in the last decade on the back of the
bloc's target for the technology. The share of renewable energy used in
transport, heating and power generation reached to 12.7 percent in 2011
from 8.5 percent in 2005, according to statistics included in
yesterday's proposals.
Subsidy Cuts
Germany, France, Spain, Britain and Italy all have trimmed renewable
energy subsidies in recent years after a boom in installations
translated into more costly power for consumers. Investment in
renewables in Europe fell 41 percent to $57.8 billion last year,
according to data compiled by Bloomberg.
"It's a setback, and it's going to slow what I think is increasingly
inevitable: the eventual supremacy of renewables," Jeremy Leggett,
chairman of the London-based installer Solar Century Holdings Ltd., said
today by phone. "Most renewable technology costs are systemically going
down while costs of most incumbent fossil fuels are rising."
Modeling by the commission shows that renewables would have to rise
to close to a 27 percent share in order for its 2030 carbon target to be
met, according to Davey and the European Photovoltaic Industry
Association. That makes the 27-percent goal "a non-target," said Moccia
from the wind association.
"The commission's proposal for 2030 sadly is a lame duck," Frauke
Thies, policy director for the photovoltaic association, said yesterday in a statement.
"We are now looking at the European Council to make this supposedly
binding target meaningful, by turning it into real national binding
targets."
Binding Targets
While the renewable energy target would be binding across the EU, the
commission said that "it would not be translated into national targets
through EU legislation." Instead, countries would be expected to lay out
national energy plans that ensure "strong investor certainty."
"The white paper provides the basis for a long-term commitment in
Europe, but of course we would like to see the national regulations as
well," Vestas Wind Systems A/S Chief Executive Officer Anders Runevad
said yesterday in an interview at the World Economic Forum in Davos,
Switzerland. "The next big step is to get national level targets." Davey said Britain and other nations will probably "publish ranges"
of where they expect renewables to reach, "without having to commit."
Enforcement Question
"It is difficult to see how the commission can enforce this EU-wide
binding target if the targets set by individual member states in their
national energy plans are not also binding," Mike Landy, a policy
analyst at the Renewable Energy Association, a U.K. lobby group, said today in an e-mail.
Britain, which is the leading market for offshore wind power, may
suffer slower investment because of the absence of specific targets on
renewables for 2030, said Maf Smith, deputy chief executive of the
RenewableUK lobby group.
Already, Scottish Power Ltd. dropped plans for an offshore wind plant
in December, saying it wasn't financially viable, and RWE AG abandoned
another venture a month before. SSE Plc (SSE) today indicated it has concerns about the investment climate in the U.K. and that it's reviewing its strategy.
"The result of that is lower confidence in the market," Smith said.
"It will mean the costs fall less quickly if these companies can't press
ahead, and an increase in finance costs because investors will see
increased uncertainty about this future market."
Renewable Supporters
While the U.K. opposed binding renewables goals, other countries
wanted them. Environment and energy ministers from eight nations,
including Germany, France and Italy, wrote to EU Energy Commissioner
Guenther Oettinger and EU Climate Commissioner Connie Hedegaard earlier
this month calling for a binding 2030 target.
The biggest challenge in devising the 2030 package was "this
discussion around renewables," Hedegaard said yesterday in an interview
in Brussels. "It was very important to send a strong signal to the
renewables industry in Europe that has created so many jobs in recent
years, that we still want a strong focus on renewables. It was one of
the controversial issues, but there was a strong backing."
Copyright 2013 Bloomberg
http://www.renewableenergyworld.com/rea/news/article/2014/01/renewable-energy-loses-out-in-europes-lame-duck-climate-plan
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