Shaping clean power policy in Europe, Europe is in the throes of creating a long term strategy for renewable energy. But, as became clear at a top level congress last month, there is still no broad ag

Europe is in the throes of creating a long term strategy for renewable energy. But, as became clear at a top level conference last month in Greece, there is still no broad agreement on how best to shape a market. While some advocate a contentious route of subsidised rates of pay, others favour an obligation on utilities to include fixed percentages of clean power in their supply mix, obtainable through trade in renewable energy credits.

A clearer sense of direction for the future of renewable energy in Europe has emerged from a three day European Commission conference in Greece. More than 370 participants from all corners of the European Union (EU) converged on the exclusive Astir Palace Hotel at Vouliagmeni near Athens for three days of discussion and debate on the obstacles to renewable energy's penetration of Europe's energy mix.

The European Congress on Renewable Energy Implementation, held May 5-7, drew European Commission (EC) officials, Members of the European Parliament (MEPs), national energy ministers, and a host of representatives from the plethora of European organisations involved in renewables. The host country accounted for half of all those present, with Germany providing the second strongest contingent. The remaining delegates were mainly from within the EU, although a few hailed from other European countries and from as far away as Japan and the USA. The conference, accompanied by exhibitions of technical posters which closely reflected the programme taking place in the conference hall, was hosted by Christos Papoutsis, European Commissioner for Energy, Euratom, Small and Medium Enterprises and Tourism. It was organised by Greece's Centre for Renewable Energy Sources (CRES).

Legislation in the making

The central theme running through all three days was the European Commission's policy paper for a community strategy for renewable energy sources, on which future legislation will be based. The paper, which first saw the light of day in November at an Altener programme conference in Spain (Windpower Monthly, January 1997), set the framework for the congress, with various European groups and organisations lobbying hard for their particular concerns to be taken into account. Many demands were taken up by one speaker after another, prompting several delegates to bemoan the degree of repetition. Nonetheless, it demonstrated the common ground over many issues among the different sectors of the European renewable energy community.

The determined and businesslike tone of the congress was set by Papoutsis. His evident commitment to renewables was welcomed by all present. But he pointed out that in spite of their benefits, renewables' degree of penetration in Europe remains disappointingly low, hardly reaching 6%, while according to estimates it could be as high as 25-30%. "We need an overall strategy, both at European and at national levels, in order to overcome the technical and non-technical barriers," he claimed, concluding the conference with a list of priorities for action (story page 20).

The marginalisation of renewables in Europe could well be drawing to an end, though. Armand Colling, the head of renewables within the EC's Directorate General for energy, DG XVII, told the congress that the Commission had agreed to the inclusion of an energy chapter in the revised European Treaty. This energy chapter would mention explicitly renewable energy sources, he promised.

There were three issues of central importance which must be decided before drafting an action plan, he said:

¥ whether EU member states should define national targets rather than setting a community target to be reached by joint effort

¥ the establishment of a long term financial and fiscal framework

¥ creation within the developing internal market for electricity of a legal and regulatory framework for greater access for renewable electricity and for tradable credits.

"I believe that such a framework has to be the core of a European strategy and action plan in favour of renewable energies," he said.

Opening the congress, Papoutsis said its principal objective was to indicate solutions that will overcome present obstacles to implementing green energy sources. Serious obstacles include the lack of information on both the technological potential for a variety of applications and the potential for connecting renewable sources into electricity networks. Appropriate specifications and European standards for renewable energy equipment and installation are needed, said Papoutsis. He also highlighted financing difficulties. "Today we have the technology and we have the means for promoting renewables. What is missing is information and the confidence," he said.

Willy Leonhardt from the European Solar Council -- and minister for environment, energy and transport in the German state of Saarland, urged the congress to look further ahead and consider what is going to be the energy technology for the next century. "We are going to have to change from the attitudes of the 1970s and 80s when protection of the environment began with measures like introducing catalytic converters," he said, adding that in the next millennium renewable sources will be securing the energy future. The importance of renewable energy to future energy security was often repeated. "We may get a single currency, but without energy security we will not have economic independence," said Jose Gafo Fernandez from the Economic and Social Committee in Brussels.

Some squabbling

Support for the green paper's general aims was universal. But while a consensus emerged of a need to increase renewable energy's share in Europe's energy mix, opinions varied wildly as to how ambitious the target should be. As a starting point the green paper proposed that renewables should aim for a 12% share of gross inland energy consumption by 2010, doubling the current 6%. Rapporteur of the green paper for the Committee of Regions, Jo Leinen, maintained that 15% would be feasible, but he warned against a concrete European target. Instead he preferred individual targets for every country. Leonhardt pressed for a goal of up to 20%. Martha Simantoni from CRES in Greece disagreed: "Twenty per cent sounds too optimistic to me." She stressed the need to act quickly to set a target. "Once we have defined this percentage we can decide what steps need to be taken by the EU and each member state to reach this goal. We must accelerate the implementation of renewable energy sources. If we lose time, we lose markets."

Greenpeace's Jeremy Leggett took issue with the green paper's "ambitious but realistic" target. "Realistic" is often a code word for "low," he claimed. "Meanwhile, climate advisers are warning that we are cooking our planet." Twelve per cent was clearly inadequate, he said, pointing out that Greenpeace's preferred target internationally is 20% by 2005.

On costs and finance

Several speakers emphasised the need to bring down the costs of renewable energy sources. Greece's minister for development, Vasso Papandreou, pointed out that no energy is cheap, but added that if renewables are to play an important role they must be as competitive at the economic level as they are at the environmental level.

MEP Mechtild Rothe pleaded for actions rather than just words. Implementation is the key, she said, and warned that politicians are going to have to play an important role in readjusting energy policy. Legislative adjustments and a legislative framework are needed to give renewables room to develop in Europe's new internal energy market. She criticised the sometimes short sighted attitude in the EU towards support for renewables which receive crumbs compared with the funds thrown at conventional energy sources. Yet she was optimistic that the European parliament would take the steps required to secure any necessary funding. To applause she reported that the European Parliament had asked the Council of Ministers to free as much money for renewable energy as it currently spends on nuclear fusion; this would amount to ECU 225 million.

Martin Jakubowski from the European Small Hydropower Association identified a missing element when he pointed out that the banks were almost entirely lacking from the conference. The commercial banking sector is a very important player, stated Jakubowski. "There must be some combined effort to give them instruments to evaluate projects and standardise methods of evaluation. We also have to consider how to present projects to commercial banks. This is an important point that is missing from the green paper," he said.

Although at times the special pleading from various groups begged the question: from where was the money to come, many ideas for funding were put forward. A session was devoted to the subject of the market and financing mechanisms. Stan Dessens from the Netherlands economics ministry claimed that taxation could be an important element in a renewable energy strategy and advocated a lower rate of sales tax for renewables.

The call for making conventional energies bear their environmental and social costs was echoed time and again throughout the three days. Internalising costs would take some time to achieve politically, believed Ian Mays from the European Wind Energy Association. Nevertheless it is a goal that should be sought, he said. Meantime, leaving renewables to the mercy of the free market was not the route to achieving the targets.

Instead, he favoured the green paper's suggestion of renewable energy credits. This would set an obligation on utilities to buy a percentage of their power from renewable sources. To be effective they would need to be legally binding and should be realistic; many utilities will not have renewable resources so the environmental credits would need to be tradable -- either within member states or throughout the EU. Mays warned that the obligations would not be popular with utilities or with conventional energies who would fiercely oppose their introduction.

Credits versus tariffs

Michael Grubb from the Royal Institute of International Affairs in London also cautioned delegates against pinning all their hopes on internalising external costs. Like Mays, he supported renewable energy credits. "The more I looked at this option, the more attractive it seems to become," he said. He listed a number of points in its favour: it separates the obligation on suppliers and investments in plant, it is complementary to a range of other policy tools such as taxation, it encourages not only least cost technologies but also highest value applications, and it stimulates innovations in applications. Looking ahead to around 30 years from now, Grubb speculated that renewables could contribute between a quarter to a half of Europe's electricity supplies. Exactly where they fall within the range will depend on the policies adopted.

Renewable energy feed-in tariffs -- or REFITs -- are the model for renewables support that EUROSOLAR would like to see adopted throughout the EU, explained Andreas Wagner from the organisation. "We are calling for a European Directive for minimum REFITs which would then have to be implemented in all member states," he said. Their advantage is that they are market oriented, non bureaucratic and do not pose costs for public budgets. The REFITs should be based on average electricity tariffs for households, as is the case in Denmark, Germany and Greece, he said. Special renewable tariffs should be granted at least for as long as it takes to write off the cost of the renewable energy plant. Hermann Scheer from EUROSOLAR added that the Electricity Feed Law which was introduced in Germany six years ago had led to 1600 MW of wind power plants, 97% of which were developed by independent suppliers. Moreover, based on the German experience, an EU wide REFIT directive five years ago would have resulted in 9000 MW of wind energy today, he claimed.

A note of caution was sounded, however, by Godfrey Bevan from the International Energy Agency. He argued that any premium price market of this sort must contain a mechanism which encourages renewables to become competitive. "We cannot continue to subsidise renewables in the long term," he said. "Every mechanism must have in-built its exit strategy. I do not believe that governments are going to continue to provide subsidies for the next 20 or 30 years. We are going to have to become competitive as an industry."

Boris Berkovski from UNESCO was impatient with the idea that governments should not be involved with funding renewables. He asked: "Does renewable energy have a military importance?" and invited the audience to look at where funding came from in the early days of the electronics and computer industries. He also asked: "Are renewable energies already market driven? The answer is no." Renewables should have political support and there should be a structural mechanism to provide incentives, he said. But at the same time the private sector should be involved. "We have to use both mechanisms."

Conventional energy had received subsidies over many decades, pointed out MEP Dietrich Elchlepp. "Why should renewable energy not get the same support to make them competitive in the long term?" Jeremy Leggett from Greenpeace agreed: "Given the scale of the threat of climate change we have to do some radical things. We have to think about subsidies. There is no excuse for not thinking about them."

Hermann Scheer robustly attacked the current political fixation with competitiveness. "Instead of political decisions for higher energy prices via an ecotax, more and more political decisions are coming for lower energy prices; this leads to an economy of death," he thundered. "The main economic advantage of solar energy is its main disadvantage within the existing energy economy: the impossibility of privatising the sun or to earn money by supplying wind or solar radiation."

Several speakers made the point that renewables mean industrial innovation and jobs -- and that regional and local authorities have an important role to play in promoting renewables. Dimitris Ristori from the EC's Directorate General for energy, DG XVII, believed renewables should become a priority within regional policies and strategies. Josep Puig I Boix from Energie Cites maintained that linking local initiatives to national and European community policies is the way forward. He called for Europe's proposed action plan to take account of the role of local authorities to improve renewable energy use.

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