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26th Jan 2020

Alarm over EU proposal to cut loose renewable energy firms

  • The commission says its time to phase out state aid to renewable energy producers (Photo: David Huang)

European Commission proposals on Wednesday (9 April) to phase out subsidies for renewable energy producers have met with accusations of a "corporate capture" of EU policymaking.

Speaking to reporters in Brussels, competition commissioner Joaquin Almunia said the subsidies, partly paid through levies on big energy intensive industries, are distorting the internal energy market and increasing consumer costs.

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“Our objective now is to ensure renewable support is sustainable by gradually integrating the electricity generated through renewables into the market,” he said.

Almunia described the larger solar and wind energy sectors as mature enough to enter the open market.

“It is time that these technologies respond to market signals and that public support is allocated through a competitive process,” he said.

The six-year plan or the so-called energy and environmental state guidelines kicks off in July, replacing existing 2008 rules.

The guidelines were adopted a day after Germany’s government passed legislation to scale back its renewable energy ambitions in an effort to stem rising electricity prices.

Almunia’s plan drops to a fraction, if member states want to, the surcharges on energy intensive industries. The money is used to help prop up renewables.

Burdened by the contributions, Almunia says some of the companies face stiff international competition and risk moving their activities outside Europe.

For his part, Luxembourg Green MEP Claude Turmes says such companies account for 15 to 20 percent of all electricity consumed in Europe but will only have to pay 1.5 percent of the total bill of the transition towards cleaner energy targets.

“This is going away from the polluters pay principle and introducing, the more you pollute, the bigger the gifts you get from government,” he noted.

Turmes said the guidelines had been “hijacked” by Business Europe, a trade association representing the largest corporations in Europe and by the pan-Euro association of electricity producers, Eurelectric.

He accused the EU commissioners for energy, transport, budget, and commission President Jose Manuel Barroso for siding with Business Europe to drop the subsidy levies on big business.

“What is happening with Barroso II is corporate capture as I have never seen it in the last 15 years I have been Brussels,” he said.

He said Almunia should be focussing, as competition commissioner, on the unfair market advantages given to the EU’s coal, gas and nuclear industries instead of undermining the growing green energy sector.

Almunia’s guidelines also call for other changes.

They mean that from 2016 onwards, renewable energy companies will have to shift from a fixed-tariff rate to feed-in premiums.

A year later, they will be required to enter a competitive bidding process in order to receive any aid.

Both are said to create risks and uncertainties that are likely to off put investors and slow down the overall production of green energy in favour of coal and nuclear industries.

The guidelines exempt small installations or technologies at an early stage of development.

Turmes is not alone in voicing criticism.

Brussels-based Climate Action Network Europe, a coalition working on climate and energy issues, said the new EU rules “favour large scale, incumbent, traditional fossil-fuel based energy producers.”

In a rare move, Almunia’s proposal was also voted on by the roundtable of European commissioners on Wednesday.

Almunia said three commissioners abstained. One commissioner voted against.

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