National governments must create stable investment environments for renewables, WWF

» By | Published 31 Oct 2012

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Recently some national governments in Europe have made changes to their support mechanisms for renewable energies that have created an environment of insecurity for the wind energy sector. However, a new report by the WWF says that such policies create needed certainty for renewable energy investors, backing up a view held by EWEA.

Uncertainty about future policy support for renewable energy in key markets such as the UK, Italy and France has contributed to a notable drop in investment levels across the EU. However, On Picking Winners, a report written by Dr Rob Gross of Imperial College London, argues that given the numerous benefits of renewable energy, it is vital that the EU and its member state governments provide the support needed to ensure it plays its full part in decarbonising the EU’s energy system.

“Without targeted and proportionate policies supporting our renewables industry, we will miss out on the opportunity rapidly to reduce the costs of emerging renewable technologies, and will fail to capitalise on the promising economic growth opportunities that the sector has to offer in the EU,” says Imke Lübbeke, Senior Renewable Energy Policy Officer at WWF European Policy Office.

The report notes that several commentators have argued that a single, economy-wide carbon price is the most effective way of addressing the climate change challenge. However, although carbon pricing has an important role to play, it is far from sufficient on its own to bring forward investment and accelerate cost reductions in emerging renewable technologies, states the WWF.

“Our report exposes deep flaws in the argument that carbon pricing can do it all,” says Lübbeke. “While the simplicity of this argument may sound appealing, in practice relying on carbon pricing alone is likely to lead to carbon-intensive gas plants continuing to dominate our energy mix – thereby preventing newer and cleaner technologies from realising their potential and locking us in to a risky reliance on largely imported fossil fuels”.

Earlier this month, international firms and energy companies including Mitsubishi Power Systems and Siemens threatened to slash planned investments in the UK unless George Osborne, the UK Chancellor, showed real commitment to developing a low carbon economy and delivering green growth. In France, indecision has reigned since France’s highest administrative court decided to ask the European Court of Justice (ECJ) whether the country’s premium purchase price for onshore wind constituted state aid.

Meanwhile, Italy is in the process of going from a tradable green certificate mechanism to a combination of Dutch auction for installations over 5 MW and a feed-in tariff under 5 MW. As Pierre Tardieu, Co-Chair of the Policies and Markets track at EWEA 2013, said recently, this represents a major challenge for the sector which will have to adapt to the new scheme in a matter of months (the new scheme will be effective as of 2013).

“Such political about turns increase the level of risk for a potential financer since future support levels are unpredictable…[and] makes lending more expensive for wind farm developers,” said Tardieu.

The EU and member states must now decide what they want: a renewable energy revolution that would lead to significantly reduced carbon emissions, lower long-term energy costs and a vibrant workforce or a “dash for gas” which will lead to more power stations, higher carbon emissions and the societal and environmental problems to which this will ultimately lead.