EU Commission to adopt green aid guidelines

Greens, environmentalists, warn of impact on renewables; industry more sanguine

EU guidelines to govern state subsidies granted for environmental purposes and which are due to be adopted by the European Commission tomorrow are flawed and could seriously hit investment in renewable energies, Green MEPs and environmentalists have warned. Renewable energy producers have given the rules a warmer reception.

The guidelines are expected enter into force in January and will set out which kinds of state aid are likely to be authorised. Their introduction has already been delayed once, and strong member state opposition to early drafts from competition commissioner Mario Monti have forced the text go through several amendments (ENDS Daily 11 July).

Most concern has focused on the fate of renewable energy subsidies under the new regime (ENDS Daily 23 March). Early fears that the rules would close off all payments after just five years have receded; the draft text that commissioners will consider tomorrow offers four formulas for approving aid - two of which are not time-limited.

But Luxembourg MEP and energy specialist Claude Turmes is not satisfied. "While possibly seeking to enable supports to renewables, [the guidelines] may...prevent their development due to the complexity of the rules," which may scare off investors, he said in a letter to top Commission officials last week. The Commission should exempt renewable energy from the guidelines for ten years, he said.

The guidelines also fail to make any commitment to tackling subsidies granted to more polluting forms of energy such as coal or nuclear, he complained, and should also reflect a recent opinion on renewable supports from an advisor to the European Court of Justice (ENDS Daily 27 October). This concluded that "feed-in" aid systems such as those in Germany and Spain are not state subsidies and thus not subject to the guidelines at all.

Environmental group WWF was more forthright today. "Commissioner Monti will tie the hands of an emerging industry that has enormous growth and employment potential....Renewable energy should retain complete exemption from state aid rules," said climate policy officer Stephan Singer.

Meanwhile, Europe's biggest "new" renewable industry, the wind sector, has taken a more pragmatic approach to the introduction of the guidelines. "The text has improved a lot over previous drafts," Vicky Pollard of the European Wind Energy Association (Ewea) told ENDS Daily today.

Ms Pollard said one very important addition was a clause allowing subsidies at a level which not only paid for the initial plant investment costs but also provided a "fair" return on capital to lure potential investors. But she said the industry still had some concerns, particularly over how the costs of replacing large components later in a plant's lifetime could be dealt with.

Follow Up:
European Commission, tel: +32 2 299 1111; see also the latest draft of the guidelines, European Parliament Green party and its analysis of previous drafts of the guidelines, WWF European Policy Office, tel: +32 2 743 8800, and a press release; Ewea, tel: +32 2 546 1941.

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