Wind the big winner in funds race -- Payout for CO2 reductions

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Forty-eight new wind energy projects with a total installed capacity of 440 MW have been awarded subsidies under the latest and biggest round of a Dutch CO2 reduction plan. With a total of 93 projects, wind took EUR 19.2 million of the EUR 68 million subsidies with which the Dutch hope to cut CO2 emissions by a further three megatonnes a year. In the previous round, 11 wind projects attracted over half the EUR 50.5 million for 216 MW of projects, four of which are now complete with the remainder due to be operating by the end of the year.

The CO2 reduction fund -- now in its fifth year -- provides up to 30% investment subsidy on projects which would otherwise not be commercially attractive and which can book minimum CO2 reductions of one tonne of CO2 or CO2 equivalent per year. The additional installed wind capacity funded under this round of the plan is roughly equal to existing wind power in the Netherlands and amounts to 30% of the targeted 1500 MW onshore by 2010.

While there is no guarantee successful projects will be built, subsidies are only granted to those likely to gain construction and environmental permits, says Belinda Katt of the Projectbureau CO2 Reductieplan. Along with government agencies Novem and Senter, Projectbureau administers the funds. Projects which are not built within a year of the award lose their subsidy. Within the entire program the bureau expects a success rate of 80%.

Falling costs

The EUR 68 million subsidy can leverage EUR 1.172 billion private investment, says Katt, who attributes increased private sector interest to the growing demand for green electricity among Dutch consumers. The cost to the government of avoided emissions is also dropping. Awards are made on an auction basis with applicants asked to name the subsidy they require, though a cap of 30% of total project cost applies. Those asking for the lowest subsidies have the greatest chance of success. As a result, the government is paying less than half the price per ton of avoided CO2 than in the last round where EUR 50.4 million subsidies were awarded to gain just one megatonne of CO2 reduction.

In total, 148 project proposals were submitted between September and mid-February. Of these, nine were withdrawn and 46 rejected. Many were considered too profitable to be eligible or were unlikely to be realised within a year. At present it is uncertain whether there will be a fifth auction, although with some EUR 80 million left in the kitty, this is a strong possibility says Katt.

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