Germans advocate subsidy approach

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Minimum payments for renewable energy and guaranteed access to the electricity grid should form the backbone of European Union policy on renewables in the future liberalised energy market, says Germany's wind energy association, Bundesverband Windenergie (BWE). It does not support the European Commission's preference for competitive market mechanisms to stimulate faster development of renewable energy sources.

The BWE's comments are contained in a review of last year's EU White Paper, which sets out a policy for doubling the use of renewables by 2010. Legislation to carry out the policy is now being devised by the Commission. Of Germany's system of subsidised tariffs for wind energy, the BWE warns that "successful measures to support renewable energies in member countries should not be undermined by a mistaken interpretation of liberalisation."

Instead of relying on market forces to promote development, the BWE advocates minimum levels of payment for electricity from renewables so that "at least all the running costs of the power generators are covered." Furthermore, renewables should have "must run" priority in the liberalised electricity market, to start next year. To achieve this, BWE suggests changing the Public Service Obligation (PSO) in the EU's 1996 Directive for an internal market from a voluntary to a mandatory obligation. The PSO allows countries to support renewables as a "public service obligation," without being accused of unfair competition.

The BWE also calls for an internal task force on renewables, an international renewables agency, and a special office to create guidelines for how support of renewables can become a part of the EU's broad regional and international funding programs. Renewables should get priority treatment under foreign trade agreements and priority access to export credits and guarantees, continues BWE. Lines of credit for renewables development overseas should be available from major European investment institutions. On the European market, fiscal breaks for renewables are favoured by BWE, such as exemption from sales tax (VAT), or tax concessions in the financing of renewable energy projects.

The external costs of generating electricity using polluting technologies should be taken account of, too, either as a bonus for renewable energies or by introducing an energy or CO2 tax, adds the BWE. The higher costs of using renewable energies must by paid by all energy consumers -- but the Commission must make it clear to consumers that paying extra for renewables is not a form of aid.

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