New EU Rules To Phase Out Subsidies For Renewables

  • Date: 09/04/14
  • Reuters

Funding green energy will become harder under EU rules published on Wednesday designed to replace subsidies with market-based schemes, just when the Ukraine crisis has heightened the need for alternatives to imported fossil fuel.

The executive European Commission said the guidelines, which will be gradually phased in, strike a necessary balance after fierce political debate about the cost of green subsidies.

“Politically, it’s the best balance possible. We were obliged to establish a lot of trade-offs,” the Commission’s competition chief, Joaquin Almunia, told reporters.

But green energy campaigners, who protested outside the Commission headquarters in Brussels, said the rules were a victory for industry and a blow to the renewables sector as well as ordinary consumers.

The rules take effect from July 1 this year and from 2017 all member states will have to hold tenders to support new green power facilities following a pilot phase from 2015-16.

The idea is to replace feed-in tariffs, which have little or no relation to market reality but have spurred renewable development, with auctions or bidding processes open to all green energy generators competing equally for government funds.

Following extensive lobbying from companies, the new rules allow for exemptions in special circumstances, including sparing energy-intensive industries such as chemicals, metals, paper and ceramics from helping to pay for renewable power. That leaves ordinary household consumers to pick up the bill.

The European Union’s leading economy, Germany, has the biggest interest in the new rules as it seeks to enact its Energiewende, or shift from nuclear to green fuel.

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