Europeans backing away slowly from green-energy commitments

The eurozone might finally be technically out of the woods of their latest economic recession, but Europe is still very much riddled with deep-seated debt and employment problems that aren’t going away anytime soon and there’s still plenty of budget-cutting that needs to be done. That means that some countries are partially doing away with some of their expensive luxury items — and yes, I’m talking about Europe’s many overly-optimistic ‘green’ energy quotas and subsidies.

It’s no coincidence that the European Union’s electricity prices have been conspicuously rising as countries struggle to meet their renewables targets, and Spain has already taken stock of their budget-deficit reality by moving to cut back on some of their renewables subsidies by 10 to 20 percent. They might be poised to retract some of their subsidies even further, and Gerard Wynn writing for Reuters thinks that other countries could shortly be following suit:

Those most likely to take action are countries with more expensive schemes, programmes nearing their environmental targets or nations with higher political risk.

Energy consumers are paying more for expanding, subsidised renewable power, causing tensions over such programmes amid wider austerity measures.

As a result, almost all EU countries have reduced support to keep pace with falls in technology costs, with some having made more drastic cuts, or taken retroactive action which has jolted investors and undermined confidence. …

Even Spain appears vulnerable to further cuts, after repeated attempts to remove the state’s liability for energy sector subsidies, called the tariff deficit, as Fitch Ratings agency has reported. …

German plans to further limit renewable support are on hold pending a forthcoming election; in January, environment minister Peter Altmaier proposed to cap the renewable power charge on retail consumer bills this year and next. …

Besides Spain and Greece, there are at least three other countries which have imposed retroactive changes in renewable support – the Czech Republic, Bulgaria and Romania, usually through new taxes or grid fees for existing projects.

They key words there being “jolted investors” and “undermined confidence,” because that’s what subsidies and special government treatment do: Artificially influence supply and demand that doesn’t reflect real-world value, often to such a degree that these magnanimously-selected “green” technologies live and die by the support they’re afforded. It’s not a method that encourages price efficiency, and it’s not a good long-term plan for spurring alternative technologies that actually could compete on their own merits while wasting time and diverting resources to less worthy projects that bureaucrats rather than consumers have deemed worthwhile. Europe’s current curtailment is a far cry from a full denunciation of those damaging and market-distorting policies, but at least it’s something.

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