Legal uncertainty casts cloud over renewable energy plan

Date: 03/02/2000

By Renée Cordes

The European Commission is planning to press ahead with long-awaited proposals to boost the use of renewable energy within weeks, despite concerns that these could conflict with state-aid guidelines due to be unveiled in the summer.

A spokesman for Energy Commissioner Loyola de Palacio said this week that she intended to come forward with a revised strategy for encouraging the use of electricity generated by solar, wind and other renewable sources by next month, at the latest.

This is seen as a key element of the EU's efforts to fulfil the commitment it made at the 1997 Kyoto climate-change conference to reduce greenhouse gas emissions by 8% compared to 1990 levels by 2012.

De Palacio is expected to argue that member states should be allowed to pay direct subsidies to domestic producers of electricity generated from renewable sources without having to extend similar benefits to foreign firms. Such discrimination would, however, be outlawed once the amount of renewable energy benefiting from direct price support reached 5% of domestic consumption or by 2010, depending which came first.

Environmental campaigners have repeatedly criticised the EU executive

for delaying its proposals while it consults member states. But there is now growing concern that De Palacio's plans could be rendered meaningless by changes to rules governing state aid for environmental protection schemes being drawn up by Competition Commissioner Mario Monti.

Green groups warn that if De Palacio's proposal refers to the state-aid guidelines, which are not due to be published until June, this could create legal uncertainty for firms seeking public funding.

"We are concerned that they may put too tight a stranglehold on defining what is permissible for environmental protection," said Rob Bradley, an energy policy expert at Climate Network Europe.

A Commission spokesman admitted that uncertainty about the state-aid guidelines could pose a "problem", but declined to say whether De Palacio would refer to them in her proposals. An official in the Commission's competition department said no decisions had yet been made on the substance of the new guidelines.

The fresh question marks over the EU's renewable energy strategy are the latest twist in a long-running saga which began when former Energy Commissioner Christos Papoutsis called on member states to set national targets for domestic electricity consumption from solar and other forms of clean energy. He also suggested creating a favourable regulatory framework and increased funding for renewables both at the national and EU level. Both plans were scuppered by a dispute over how these energy types should be subsidised.

De Palacio's hopes of unveiling a new set of proposals soon after taking office were then dashed by an internal Commission dispute over how to ensure that measures designed to promote renewable energy do not conflict with those targeted at ensuring a properly functioning single electricity market.

The European Commission is planning to press ahead with long-awaited proposals to boost the use of renewable energy within weeks, despite concerns that these could conflict with state-aid guidelines due to be unveiled in the summer of 2000.