Regulators pose threat to EU green energy and industry

December 16, 2013 by  
Filed under Green Energy News


* Commission expected to announce formal probe on Wednesday

* Some say investigation alone will shatter confidence

* Carbon targets seen as too weak to encourage investment

By Barbara Lewis

BRUSSELS, Dec 16 (Reuters) – A formal enquiry by EU
regulators into German energy subsidies, expected this week,
threatens to hand heavy industry a multi-billion euro bill and
jeopardises Europe’s shift to green energy, campaigners and
lawyers say.

Across the European Union, subsidies to help achieve an
overall 2020 target to get 20 percent of energy used from
renewable sources have been blamed for pushing up fuel costs.

On Wednesday, the European Commission is expected to
announce an enquiry into Germany’s management of subsidies as it
executes its Energiewende, or transition from fossil fuel and
nuclear to renewable power.

To help them deal with costs, thousands of German intensive
energy users have been exempt from a green surcharge ordinary
customers have to pay. The Commission, the EU executive, is
examining whether that was unfair and should be paid back.

A 51-page letter from the Commission to the German
government seen by Reuters spells out concerns that the waiver
was unlawful state aid.

No-one from the German government was immediately available
for comment. Hans Juergen Kerkhoff, president of Germany’s Steel
Association, said the discounts merely served to balance out
distortion in global competition and were not illegal aid.

The final outcome still might be benign. Germany could be
cleared or just asked to meet certain conditions in order to
fall in line with EU internal energy market and competition
rules.

But the enquiry alone into one of the most sophisticated
green energy laws could shatter investor confidence in renewable
energy, such as solar and wind, across Europe and it could drag
on for months or even years.

HALT TO THE ENERGIEWENDE?

Doerte Fouquet, a Brussels-based lawyer at Becker Buettner
Held, said the implications went far beyond the industry waiver,
which the new German government would tackle.

“The problem is that with such a state aid investigation
decision, the whole renewable energy system may break down. This
could immediately affect running projects,” she said.

The European Renewable Energies Federation (EREF), which
represents green energy, has urged the Commission to reconsider.

“With an opening of a full investigation procedure, the
German Energiewende would come to a halt with immediate effect,”
Rainer Hinrichs-Rahlwes, EREF president, wrote in a letter to
the European Commission.

Some of the green campaigners who are urging a rethink on
the investigation, also oppose British plans to fund new nuclear
generation, to be built by EDF, which are also subject
to Commission scrutiny.

Britain says it needs carbon-free nuclear power if it is to
generate enough energy and also to lower emissions.

Like some renewable energy, nuclear is not affordable
without help, but nuclear is a mature energy form, whereas
renewables are getting cheaper as experience grows.

Both energy forms make more economic sense in the context of
a high emissions-cutting goal.

The risk is that both EU emissions and green energy targets
are becoming less effective as incentives for investors to put
money into new projects. Uncertainty over the Commission
investigation would add to a lack of policy direction.

Debate so far on 2030 targets, expected to be published in
January, has focused on a 40 percent emissions cut versus 1990
levels, and a 30 percent renewable target.

Although double the existing 2020 goal, 40 percent would
require very little new effort as Europe has already nearly met
its 20 percent target.

Some academics accuse the Commission of ignoring science.

Kevin Anderson, energy and climate change professor at
Britain’s Manchester University, said the European Union must
aim to cut emissions by around 80 percent by 2030, if it is
sincere about capping global warming at the 2 degree limit it
has said is needed to avoid the worst consequences.

Anderson, who has advised the British government on energy,
has written to Commission President Jose Manuel Barroso accusing
the Commission of working “in a vacuum of scientific evidence”.

A Commission source said it was policy not to comment on
individual letters, but all views were taken into account.

(Additional reporting by Foo Yun-chee. Editing by Jane
Merriman)

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