Europe a green-energy basket case

August 10, 2013 by  
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Instead of a model to emulate, Europe has become a model of what not to do

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August 10, 2013

Stephen MurgatroydEDMONTON, AB, Aug 10, 2013/ Troy Media/ – EU member states have spent about €600 billion ($882 billion) on renewable energy projects since 2005, according to Bloomberg New Energy Finance. This funding was intended to help green energy achieve commercially-competitive status and make a significant contribution to lowering carbon emissions and reducing the “threat” of climate change.

But now, most European governments are backing off this strategy. The most recent shift came from the Czech government, which has decided to end all subsidies for new renewable energy projects at the end of this year. Almost all EU member states also have begun the process of rolling back and cutting green subsidies.

There are many reasons for the change in strategy.

Take the case of Spain. Because it failed to control the cost of guaranteed subsidies, the country is now saddled with €126 billion of obligations to renewable-energy investors. Now that the Spanish government has dramatically curtailed these subsidies, even retrospectively, more than 50,000 solar entrepreneurs face financial disaster and bankruptcy.

Germany is another interesting case. During the past year, the wave of bankruptcies in solar has devastated the entire industry, while solar investors have lost almost €25 billion on the stock market. And now that Germany plans to phase out subsidies altogether so as to stabilize energy costs, its solar industry is likely to disappear by the end of the decade.

More than half of the world’s solar panels are installed in Germany. Yet for many weeks in December 2012 and January 2013, Germany’s 1.1 million solar power systems generated almost no electricity. To prevent blackouts, grid operators had to import nuclear energy from France and the Czech Republic – Germany closed its own nuclear plants in favour of solar – and power up an old oil-fired power plant in Austria.

It gets worse. Almost 20 per cent of gas power plants in Germany have become unprofitable and face shutdown as massively subsidized renewables flood the electricity grid with preferential energy. To avoid blackouts, the government has had to subsidize uneconomic gas and coal power stations so that they can be used as back-up when the sun is not shining, the wind does not blow and renewables fail to generate sufficient electricity.

The EU is also quietly rolling back its renewable agenda, which EU leaders now accept has been raising energy prices across the Continent. At a summit in Brussels in May, European leaders indicated that they intended to prioritize the issue of affordable energy over cutting greenhouse gas emissions with the focus on stabilizing (and possibly lowering) energy costs.

The EU summit signaled that Europe intended to restore its declining competitiveness by supporting the development of cheap energy, including shale gas, while cutting green energy subsidies. Europe, The Washington Post recently suggested, “has become a green-energy basket case. Instead of a model for the world to emulate, Europe has become a model of what not to do.”

Given that the link between CO2 emissions and climate is weakening in the light of actual evidence (as opposed to models of these relationships) and that the global economy continues to struggle, economics is trumping ideology as many always said it would. Rather than seeing peak oil or peak coal, we are in fact witnessing the decline of the commitment to supporting renewable energy and for good reason.

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