Piebalgs faces storm over support-measures

The future of support mechanisms to promote renewable energy will be one of the most hotly contested issues in the European Commission’s proposal on energy produced from renewable sources, expected to be published on 5 December.

Currently, member states use a range of instruments to encourage the development of renewables. They include tender schemes, feed-in tariffs, tradeable green certificates, tax and financial incentives, and investment support. The German system is possibly the best model of the feed-in tariff approach. Thanks to guaranteed fixed prices for energy from renewable sources, the share of renewables in Germany’s energy mix has tripled, rising from around 3% in 2000 to 10.5% in 2006. Germany produced 20,000 GWh from wind power alone in 2006.

Under the tradable green certificates system, when electricity from a renewable source is produced it is given a green certificate. Quotas for energy from renewable sources can be imposed on energy companies and large energy users so they have an incentive to buy green certificates.

But there are sharp differences between energy producers and the conventional energy producers over the approach that should be taken to help the EU achieve its target of 20% of energy from renewables by 2020.

Andris Piebalgs, the European energy commissioner, has said that he wants a "flexible" approach which would allow member states to choose from a range of support mechanisms rather than seeking to harmonise systems across the EU. He says that he will propose EU-wide trading of certificates.

Oliver Schäfer, policy director at the European Renewables Energy Council (EREC), warns that Piebalgs’s flexible approach could undermine existing systems. He questions whether any member state would exceed its target for the share of energy from renewables, saying: "There’s not going to be anything to trade." He also says that forcing member states to trade certificates would undermine public acceptance of current support mechanisms. "German consumers would not accept to pay for virtual certificates for wind power in Ireland," he says, adding that there is support for the higher prices guaranteed by feed-in tariffs. This is partly because the public can see other benefits such as local job-creation from wind farms.

In a position paper, EREC says that while there is a need to set criteria for support mechanisms on a European level, this would not require a member states to change the principle of an effective existing support scheme.

The conventional energy producing industry, not surprisingly, takes a different view. Daniel Cloquet, a director responsible for energy policy at the employers’ association BusinessEurope, says that industry "can’t live any more with 27 national support mechanisms". The association is calling for "harmonised support measures moving away from subsidies and feed-in tariffs because they can lead to competitiveness problems". Cloquet points out that the German government has exempted intensive energy users from the added cost of feed-in tariffs. Instead, there should be a move to market-based instruments which would lead to the optimisation of production from renewables in the most favourable locations. He also stresses the need to take advantage of new technologies as they become available as well as major investment in research and development.

With support from member states such as the UK for a new market-based mechanism for the trading of green certificates and positive noises from Piebalgs, it seems safe to assume that this will form part of the Commission’s package in December. The Commission may at least endorse this mechanism as the way forward even if a precise plan for setting it up only emerges later.

The future of support mechanisms to promote renewable energy will be one of the most hotly contested issues in the European Commission’s proposal on energy produced from renewable sources, expected to be published on 5 December.