European Union finally decides to scale back on the renewables subsidies, sort of
posted at 8:21 pm on April 10, 2014 by Erika Johnsen
Last year, European bureaucrats finally seemed to be cottoning on to the fact that their self-imposed renewable energy targets were the direct cause of the region’s soaring energy prices, with Europeans’ electricity bills decreasingly made up of actual standalone commodity prices and increasingly made up of subsidies, taxes, and charges especially designed to support renewable energy — often amounting to at least half of bills’ total costs. The European Commission finally got around to releasing some revised rules on Wednesday that effectively take some of those romanticized green mandates down a notch, via the WSJ:
The European Commission watered down some key parts of new rules on government aid aimed at encouraging production of energy from renewable sources, lessening the financial burden on heavy industries and reducing the scale of government subsidies for providers of renewable energy.
The new rules set tougher terms for government subsidies for energy sources such as wind and solar.
The commission, the EU’s executive body, said government subsidies for renewables have led to progress on environmental goals, but have also caused “serious market distortions and increasing costs to consumers”.
Bowing to intense lobbying pressure from industry, the commission also reduced—compared with its earlier proposals—the payments that chemical, glass, steel and other heavy-energy users will be expected to make into public funds to finance renewables. …
The new rules, which will apply from July until the end of 2020, were also the result of pressure from Germany, which is overhauling its own ambitious renewable-energy laws. “Politically, this was the best balance possible,” Mr. Almunia said.
Energy-intensive industries across Europe, like chemical, glass, and steel producers, have been lobbying hard for a break from the costly renewables burden they have been required to shoulder (especially since energy prices in the U.S. have been dropping because of the shale boom). They partially got their wish in the form of a cap of “15 percent of the companies’ gross value added — the value of goods and services that a company produces, minus the cost of all inputs such as personnel and raw materials,” a decrease from the 20 percent cap in the EU’s original draft. As you might imagine, Europe’s environmentalists are not pleased about it, claiming that now the costs of the renewables targets will be shifted even more to consumers. …I don’t quite understand how they failed to realize that consumers have always borne the cost of these renewable targets in one way or another, but oh well.
Germany in particular has been quixotically suffering beneath their own high energy prices and worrying about a loss of business and manufacturing competitiveness, and Chancellor Merkel also announced a drawdown on Germany’s catastrophically misguided Energiewende plan this week:
Chancellor Angela Merkel’s cabinet approved on Tuesday a reform of Germany’s renewable energy law designed to curb a rise in the cost of electricity in Europe’s biggest economy driven by the rapid expansion of green power.
The reform will slow the growth of green energy, which accounts for 25 percent of Germany’s electricity, and force new investors in green power to take some risk. …
It will scale back green subsidies and upper limits will be placed on onshore wind power expansion (at 2.5 gigawatts in capacity per year), photovoltaic (2.5 GW per year) and offshore wind plants (6.5 GW to 2020).
These sound like at least small steps in kinda’ the right direction, but at the end of the day, the region is still largely operating under impractical, costly, top-down energy schemes that are focused on forcibly integrating more renewables while simultaneously shoving out nuclear and discouraging fracking — two of the cleanest, most efficient, and economical options we have at the moment.
Ever since Russian forces took hold of Crimea last month, the British prime minister has been leading a chorus of conservative politicians and energy executives in a refrain they believe will spark a shale gas revolution in Europe: Frack, baby, frack.
The push for a European boom in fracking — shorthand for hydraulic fracturing — has been underway for years, but it has taken on new urgency in recent weeks as fears grow of a revival of the Cold War. With Europe leaning on Russia for a third of its natural gas needs, the continent’s leaders say they need to develop their own energy sources — and fast. …
And yet, Britain is like North Dakota in one important respect: There’s a lot of gas down there, both in the United Kingdom and over vast stretches of continental Europe.
Estimates of shale gas reserves are notoriously imprecise, but the U.S. Energy Information Administration last year placed the amount of recoverable resources in Europe at nearly 470 trillion cubic feet — an amount that could light cities from London to Warsaw for decades.