Wind loses out to carbon capture in EU funding decision

EUROPE: Renewables industry criticises European Commission's selection procedure for EU Emissions Trading Scheme.

Old and new: a wind farm in front of a coal power station in North Rhine-Westphalia, Germany
Old and new: a wind farm in front of a coal power station in North Rhine-Westphalia, Germany

Wind and its fellow renewables look likely to be second in the queue behind carbon capture and storage (CCS) technology for a handout from the EU Emissions Trading Scheme (EU ETS).

The European Commission has sent its draft decision to EU member states exploring the possibility of using the 300 million emission allowances set aside under Phase III of the ETS, which begins in 2013, to subsidise the construction of 12 CCS plants and support innovative renewable energy technologies.

The EU executive body estimates that at a carbon price of EUR20 a tonne, the total revenue of the so-called New Entrants Reserve (NER) will amount to around EUR6 billion.

The European Renewable Energy Council (EREC) notes that the commission suggests that innovative renewable energy projects should be the focus of the second call for funding, which is due to be decided at the end of 2013, rather than the first 2011 call, so as to enable the maximum number of technologies to come to maturity.

The EREC says that some innovative renewable energy projects are already quite advanced and actively searching for finance. Hence, the council says it intends "to submit high-quality, shovel-ready projects for the first call and ... our expectation is to receive funding for them".

Selection process criticised

The council has also criticised the commission's complicated selection procedure under which developers must evaluate and coordinate a multitude of factors, such as the member state's financial arrangements, the country's geographical balance and the project's degree of innovation. "We think that more can be done to create a fair selection process that makes reasonable demands of project developers while being transparent and comprehensible," says the EREC.

The renewables industry also argues that geographic balance should focus less on the territory of installation but rather on ensuring that as many EU countries as possible benefit from the capital expenditure on the project.

Germany has been advocating opening up all renewables categories to proposals instead of limiting the projects to a closed list of technologies. But EREC says it welcomes the commission's decision to tightly define the technologies qualifying as innovative, as this will reduce the likelihood of an excessive number of technologies coming forward.

Remi Gruet, regulatory affairs advisor at the European Wind Energy Association (EWEA), says: "The NER financing offers exciting prospects for the deployment of innovative wind turbines, particularly offshore, which the industry should certainly make use of."

Member states are scheduled to vote on the draft text this month.

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