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WIND AT THE HEART OF EUROPEAN BUDGET SCANDAL

An investigation is underway into allegations that European Commission (EC) officials have falsified documents and hijacked some 20% of Europe's renewable energy budget. Wind energy and solar power are the two renewables technologies hardest hit by the scandal, with reports of dozens of proposals for vital research projects peremptorily thrown out by officials against the recommendations of their own technical experts.

The uproar concerns the procedure for selection of projects for funding under the EC's Joule research programme, a major part of Europe's Non Nuclear Energy programme for 1994-1998. Examination of an internal EC document reveals that the missing 20% -- over 18 million European Currency Units ($22.5 million) -- has been funnelled into the fossil fuel industry as well as into research on "rational use of energy," or energy conservation. Fossil fuel now gets over ECU 10 million more for its research than the sum recommended by the European Parliament as the "indicative" budget for this current round of Joule subsidies.The scandal has been steadily gathering momentum these past weeks, with allegations bordering on the hysterical being made by press and politicians alike. With renewable energy enjoying broad public support across the whole of Europe, any hint of a conspiracy to undermine its research budget was bound to end as political dynamite.

Allegations of misuse of power are directed at Commission officials who, in selecting renewables projects for participation in Joule (Joint Opportunities for Unconventional or Long Term Energy) appear to have ignored a commitment with national governments and the European Parliament to devote 58.6% of the programme's spending to renewables. As it is, just 42% of funding is going to clean power technologies.

Officials in the EC's Directorate General for Science, Research and Development, DGXII, stand accused of secretly altering key paragraphs in expert reports to justify EC claims that there were "an insufficient number of quality projects covering renewable energy." As a result only ECU 81.6 million of renewable energy's indicative budget of ECU 100 million in this first call for Joule proposals has gone where it was intended.

"It's a surgical operation to cut out the key areas of renewable energies currently at the forefront of the technologies," says a furious Hermann Scheer of lobby group Eurosolar. "Projects involving large wind turbines have been removed, even though they promised cost reductions of up to one third." Scheer vehemently denies the EC claims that many projects were of too poor a quality to fund. The expert technical evaluation reports indicated an abundance of good proposals, he says. "There is no plausibility in the Commission's actions."

Commission denial

Director of Energy at DGXII, Ezio Andreta, categorically denies that expert reports were altered. Decisions on funding and project selection were "taken in full respect of the rules and the opinion of the experts," he says. "I can assure you that the Commission has not changed, of course, the original evaluation comments of the technical experts." He also hints at the possibility of extra money on the way to renewable energies, "through an action plan under preparation."

This plan will apparently be discussed at a meeting of the Joule management committee -- made up of delegates from the 15 member countries of the EU -- in early October. A number of projects on a "reserve list" will also be discussed, though whether there is sufficient cash to redress any imbalance in the selections made so far seems doubtful. There is, however, talk of issuing a second call for proposals for renewables projects as early as January, the aim being to increase renewables' percentage of Joule funds.

The current investigation, a "fact finding mission," is being carried out by eight members of the European Union Parliament who all sit on the Parliament's energy committee. The group was founded on September 5 to "look into very serious allegations that the Commission is flouting the wishes of Parliament and the Council by refusing to fund renewable energy projects," according to the minutes of a meeting of the energy committee on that day.

The specific aim, says Eryl McNally, a British member of the group, is to find out why there is a 20% difference between the indicative amount for renewables set by the European Parliament and the amount recommended by DGXII for acceptance. Research Commissioner Edith Cresson's statement that there were insufficient renewables projects worth funding "strikes us as odd," says McNally. Nonetheless she hopes "this little fact finding group" will be enough to solve the problem. "We could call an official Commission of Inquiry, but I hope we will not reach that stage," adds McNally.

"I'm very, very angry. Renewables are the energy source of the future and we have fought for every ECU. For decades subsidies have gone to nuclear and nobody has tried to cut funds," says Hiltrud Breyer, a German member of parliament (MEP) who has spearheaded the drive for an investigation. She suspects the French nuclear utility, EdF, of joining forces with German utilities to "stop the market breakthrough of renewables." In Germany the utilities are fighting a bitter rearguard action against the increasing penetration of wind.

A bombshell for wind

Rumblings of misuse of power in the bowels of the European Commission have been heard since June, but it was only last month that the scandal exploded on the wind community. Ironically, the bombshell was dropped by an American. Chris Flavin of Worldwatch Institute in Washington DC was a guest of the European Wind Energy Association (EWEA) at its seminar in Finland during the first week of September. In an after dinner speech he told a hair raising tale from Brussels of falsified documents, expert opinions ignored, policies flouted and a show down between a Member of the European Parliament and a DGXII official which culminated in a virtual tug of war when the official refused to let go of a file of papers. Flavin had learned of the row while visiting Brussels a few days before his arrival in Finland.

"My comment to EWEA delegates was to point out that wind and renewables have now reached the point where they are a serious threat to the conventional utility sector. Its members are applying pressure to European Commission officials to cut support of renewables," he says.

Flavin's story was backed a week later by a German television documentary (see box). It told of a number of renewables projects which were downgraded by Commission officials to prevent them being funded. To justify the downgrading, expert technical reports were "secretly" altered -- a charge emphatically denied by the official named in the documentary, Ezio Andreta.

The documentary went on to report a meeting between Hiltrud Breyer and Andreta. In a filmed reconstruction of the meeting, a person playing the part of Andreta places his hands and arms firmly over a file of papers which he refuses to give to Breyer. The file was purported to contain the original project evaluations, before they were changed by the Commission. These he finally releases to Breyer and the TV documentary showed excerpts of paragraphs from what it explains were two original evaluation reports and then the same paragraphs, now changed to more negative evaluations, from reports it alleged were doctored by Andreta.

Breyer confirms these events and adds she was accompanied to the meeting with Andreta by Irish MEP, Nuala Ahern. Their aim was to confront Andreta in order to accuse him and his staff of not obeying the rules and acting contrary to EU policy on renewables. The EU Parliament has stated that 62% of the non nuclear budget must go to renewables -- and devoting just 42% of Joule to renewables amounts to ignoring Parliament's wishes, they say.

In search of the truth

Exactly what Commission staff did and did not do is hard to discover; when it comes to details, lips are tightly sealed at DGXII. However, tales from a number of well placed sources suggest the following chain of events.

Panels of technical experts in the various renewables technologies were employed by the EC to assist in evaluating 938 applications for Joule III funding. These experts -- sworn to absolute secrecy -- were incarcerated in Brussels for up to two weeks in the spring, in much the same way as the jury trying the OJ Simpson case. Not only were panel members instructed not to breathe a word of their work and not to remove as much as a pencil from the evaluation room, they were not even allowed to tell anybody what they were employed on.

In the case of wind, the experts waded through proposals for 143 projects, more than for any other category except for solar. Their job was to give points to projects based on the EC's eligibility criteria, weeding out unsatisfactory applications along the way. Once the technical experts had completed their work a strategic panel, again of outside experts, checked the evaluations from an overview position. From these evaluations the chair of the relevant panels, in the case of wind reportedly the head of the renewables unit, Wolfgang Palz, accompanied by his staff, awarded gradings. These could be A1 for excellent projects, A for good projects, B+ for adequate projects and C for those that would not be funded.

At this point events become a little hazy. It seems fairly certain the wind panel put forward 64 projects as suitable for funding and most of these, to start with, received grades of A1, A, or B+. The project papers then passed through more Commission procedure, including "rating harmonisation," before finally making it into the hands of members of the Joule management, or advisory, committee of national delegates. The role of this committee is partly as a watchdog and partly to assist the Commission.

The Joule committee met in July to review the project selections, in the case of wind now reduced from 64 to 31. Committee delegates accepted the list put forward by DGXII without discussion and it was approved. That is according to the Commission's own minutes of the meeting, minutes now subject to considerable dispute, with charges that they represent a distorted record of the truth.

Nearing the truth

The version of the meeting told by people present reveals a different story. Immediately prior to the meeting's start, the list of Joule selections was replaced with a new one, explains Claus Mandrup, delegate from Denmark. It was immediately clear that far fewer renewables projects were now included. "Masses of projects had been downgraded from A to C and masses of country delegates became quite electric," he adds.

This sequence of events is confirmed by Jaap de Jong, delegate for Holland "We observed, indeed, that because of the intervention of the EC, the list showed a certain unbalance in the sense that there weren't many projects on renewables left," he says.

So, far from calmly accepting the Commission's list, national delegates from several countries made strong objections. By this time, in July, they were receiving complaints from project proposers. News was already leaking out of Brussels of a downgrading of dozens of proposals and there were many distraught applicants, several of whom were asking their national delegates for help.

The fact that the objections of delegates to the new list were not recorded in the minutes subsequently provoked a flurry of communication to the Commission, with strongly worded letters from the UK, Irish and Greek delegates. UK delegate, David Irving, wrote: "UK was unable to support the Commission's proposed list, not because of misgivings over the 181 projects per se, but over the manner by which the list had been derived and our feeling that some kind of re-examination of the downgraded projects was needed to reassure the research community about the fairness of procedures. The absence of any reference to the morning tour de table, other than to record comments favourable to the Commission, seems to me to give a distorted picture of the proceedings and will not serve as a document of record."

Irving's views are backed by Irish delegate Pat Bell, who adds in his letter that he is concerned that, "the process of revision of ratings, or the so-called downgrading, was carried out without adequate transparency and adherence to the original call for tender. We would like to see these reservations recorded in the minutes."

Contrary to the official record of the meeting, it would seem that the committee debated the revised list for some time. It is known that reservations were lodged by Germany, Greece, and the Netherlands as well as the UK and Ireland. The committee, however, makes decisions by majority vote and the doubters were clearly outnumbered by delegates who felt the Commission was acting in good faith.

The role of some delegates in this matter is perhaps surprising. Mandrup from Denmark, a country whose Prime Minister, Poul Nyrup, champions the cause of openness in the EC, comments. "We don't feel we have been cheated, though we have demanded transparency in the selection procedure." Another member of the Danish delegation, Flemming Øster, comments: "We were convinced that what they had done was sensible; the Danish projects had done very well."

At the July meeting, though, enough doubt was expressed to require an explanation of the Commission's actions from Director of Energy Ezio Andreta, the same person accused by German television of falsifying the reports of technical experts.

What Andreta did and did not say has been hard to ascertain. The best supported version goes like this: if the committee did not approve the Joule list, a large number of good projects would be delayed for the sake of a smaller number that might and might not have made the grade; this could jeopardise funding for the whole lot; the projects on the list were all above discussion; furthermore, projects on the borderline remained on a reserve list for discussion at a later date when any budgetary adjustments could still be made.

Andreta was not asked to further explain the logic of this statement, even though it was clear that the Joule budget as a whole was now more than fully committed and any reserve list projects would only take the place of proposals which dropped out of the contract process. Instead the committee agreed the selections -- and letters were sent out informing successful applicants that a contract would be coming their way.

Terriers at work

At that point the storm could well have blown over were it not for the European Parliament's energy committee. Like terriers with their teeth into a rat, they have been pursuing the truth with determined vigour, both before and after the August recess.

Tipped off about possible irregularities, the Joule selections, finally made on July 24, were heatedly debated at a meeting of the energy MEPs on July 19 -- a debate which prompted a letter to Cresson from vice chairman Gordan Adam drawing the research commissioner's attention to suspected wrongdoing.

At the same meeting, seemingly in an attempt to pour oil on troubled waters, Ezio Andreta, together with his superior in the research directorate, Hendrik Tent, made an unscheduled address to MEPs. "Absolute assurances that nothing at all was wrong," were given to the committee, according to a two page letter of July 27, written to Cresson by MEPs Breyer and Ahern. "These assurances now unfortunately ring hollow," the letter continues. "The procedures of the Commission itself were circumvented in that the consensus opinions of the experts were reduced to a crude point analysis."

In the letter, too, Breyer first touches on an aspect of the scandal which has since grown in significance -- eligibility criteria. Between the evaluation by technical experts and the re-grading by Commission staff, new criteria seem to have been introduced, criteria which were probably not made clear to project proposers, nor to the experts called in to evaluate proposals. Proposals submitted by groups which did not include an industrial partner, for example, seem to have been thrown out. But nowhere in the official documentation is this criteria, or several others, made clear. In fact, the only mention of industrial criteria in the information package for proposers is on the folder. Here a flow diagram indicates that only if a project cannot be classed as fundamental research will lack of an industrial partner count against it.

The matter of criteria was pursued by Eryl McNally and other members of the fact finding group on September 18, the first day of its investigation. Tent, reports Breyer, presented the MEPs with a copy of the official evaluation guidelines, explaining that projects had been initially allowed through that did not meet the criteria. This the Commission had to correct. But these guidelines were not the same as those issued to technical experts, says Breyer. "I felt insulted. Do they think we are so stupid we wouldn't notice?" she asks.

Finding a way out

Although Hiltrud Breyer's emotive allegations received broad backing from the energy committee, some of her colleagues are clearly irritated by what can be construed as her attention seeking gimmicks. Gordon Adam believes Breyer was "out of order" when she put the matter to German television before the facts were known. Much of the factual data screened by Monitor has since been revealed as incorrect.

"I am concerned. I believe that the co-operation between the European Parliament and the Commission has been one of the success stories of the EU. So I am concerned about anything that might cause this excellent relationship to break down," he says "I find it difficult to believe the sort of allegations being made are true, but we will have to wait and see." His views are in part shared by McNally. "I am very reluctant to accept conspiracy theories, but allegations have been made," she says.

If the fact finding group exposes blatant wrongdoing and incorrect allocation of EU money, a Commission of Inquiry seems inevitable. This would put the whole of Joule on hold and no contracts would be issued. If, though, it is a matter of rectifying mistakes, this can still be done, according to Rolf Linkohr, MEP and rapporteur for the Non Nuclear Programme. "We have to find a political solution. This is the quickest and best way out of it," he says. It seems that what the Commission might have done wrong, it has the power to put right again.

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