Papoutsis spares eco-friendly fuel schemes

Date: 07/01/1999

By Chris Johnstone

Energy Commissioner Christos Papoutsis will tread cautiously later this month when he unveils proposals to harmonise national support for renewable energies in an attempt to stop unfair competition.

The European Commission has long argued that an EU-wide framework is needed to prevent distortions in the electricity market after the sector takes the first steps towards liberalisation next month.

It fears that some companies could be given an unfair competitive advantage if renewable power receives more help in one country than another, allowing them to sell what amounts to subsidised power across borders, or if renewable energy generators are able to shop around across borders for more than one subsidy.

However, lobby groups following the debate say Papoutsis' proposal, which is due to be presented to the full Commission later this month, shies away from demanding early changes to national regimes for supporting renewables. Instead, they say, he will seek his colleagues' support for leaving the current national regimes unchanged until 2005, while attempting to push those countries which are lagging in promoting renewables to boost their efforts.

Countries will also be set a target of meeting at least 3&percent; more of their energy needs from renewables by 2005, with all member states required to generate up to 5&percent; of their energy from such sources as wind, solar, biomass and hydroelectric by that date.

Papoutsis will also argue that large hydroelectric plants, which are already able to compete with conventional forms of energy such as oil, coal and nuclear power, should not be given more support.

The Commission has set a target for renewables to provide 12&percent; of the EU's power needs by 2010, up from an estimated 7&percent; now. But support for renewables differs widely across the EU.

While electricity companies in Germany are forced to buy large amounts of renewable energy and pay premium prices for it, the UK uses levies on other sources of energy to subsidise renewable power. Renewables satisfy more than 20&percent; of Denmark and Austria's power demands but less than 5&percent; of the UK's needs.

Commission figures show that the contribution of renewables, including large scale hydroelectric power, has actually fallen in the UK, down from 2.16&percent; of total electricity production in 1994 to 1.64&percent; in 1996. German renewables production has also fallen over the same period, down from 4.57&percent; in 1994 to 4.39&percent; in 1996.

Strains in the existing national systems to support renewables have already begun to show. Danish producers of wind energy have complained that they cannot sell power across the border to German producers and the UK claims that France has attempted to duck the British levy on other sources of power aimed at promoting renewables by classifying all its exports as renewables.

Environmental campaigners argue that continued support for renewables is essential and there is no need to impose an EU framework now.

Examples of national support programmes for renewable energy

Austria: financial support fund, investment aid for efficient plants, 3&percent; purchase obligation.

France: purchasing obligation on Electricité de France, subsidies for biomass investments, tendering for wind power.

Germany: guaranteed prices paid by electricity companies.

Italy: guaranteed prices, obligation for renewables to make up 20&percent; of total power production.

Netherlands: guaranteed prices, tax refunds, green labels, investment subsidies, green pricing funds.