EU Council Decision on Renewable Energy

As Lexegese just noted, the EU Transportation, Telecommunication and Energy Council yesterday adopted conclusions on renewable energy policy. These are noteworthy for some points they don’t address, and some they do.

First, things the conclusions don’t mention:

For one, nothing in these conclusions talks about the misguided idea, which is contrary to the case law of the European Court of Justice, that the Commission should attack the German feed-in tariff system as an illegal subsidy I discussed the other day.

Instead, the document makes it very clear that the Commission is supposed to offer “non-binding guidance on support schemes”. Such guidance will be welcomed by the Member States. In contrast, any attempt by the Commission to impose their own misguided ideas on policy against the will of Member States will certainly be most unwelcome.

There is also still no discussion on the question of getting an internal market for renewable electricity. Right now the German feed-in tariff is paid only to generators in Germany, which is at first glance not compatible with basic values of a common market. I recall having written in detail about this question here. To summarize, the Court of Justice said that restricting access to generation inside Germany is a restriction of imports, but it is justified by the environmental goals the feed-in tariff wants to achieve.

That reasoning is of course not valid, because having a free market would, all things equal, lead to even more renewable energy development and therefore even more protection for the environment, so it is impossible to justify the restriction by environmental concerns. Those demand on the contrary that this kind of restriction is lifted.

Another point I could not find addressed in this document is the Desertec project. That would be another important policy that really should be discussed at the Council, but was not this time, though there is a reference to the “Mediterranean Solar Plan” on page 6. There was also still no mention of any support for a large-scale renewable project in the Gobi desert, but it would have been rather surprising if there were at this stage.

Next, some interesting points in the conclusions:

For one, there is this point on financial support at EU level (page 6 of the conclusions):

Where market imperfections are identified and/or producers face limited access to market-based financing, access to more affordable investment capital for RES development should be facilitated. This could include capital through the European Investment Bank, the Structural Funds, mechanisms available under climate policy, long-term liability institutions, institutional investors and innovative financial instruments. It is noted that appropriate financing arrangements will be all the more important, particularly for small renewable producers and regions which suffer from severe and permanent natural or demographic handicaps, when support schemes are being phased out in the Member States;

For Germany, support for solar will be phased out in a couple of years, once the ceiling of 52 GW is reached. Any form of access to cheap finance at EU level will be most welcome once that happens. It will actually be welcome even before any phase-out, and for all forms of generation remaining in the feed-in tariff system after the solar phase-out.

The last point in the conclusions is this on the next steps:

The Council invites the Commission to present in appropriate time and after thorough analysis, discussion and the review by 2014 of certain aspects of the current Renewable Energy Directive as foreseen therein, a solid and effective EU post-2020 RES framework embedded in the broader context of and contributing to the long-term overall EU policy framework. The RES post-2020 framework should take into account, inter alia, the experience gained with the current RES policy framework, including its cost-effectiveness and the interactions between different targets and instruments, and its implementation. Such framework, established within the broader climate-energy context, should also be supportive of security of supply, innovation and competitiveness and thus contribute to promoting long term EU objectives for an energy and resource efficient, safe and sustainable low-carbon European economy. Therefore, this framework should also be developed bearing in mind that substantially higher shares of RES, increased energy efficiency and infrastructure reinforcement will have a key influence in all circumstances, while considering also different national situations, on the achievement of these objectives.

This still does not say much on what direction the EU will follow after 2020, but it gives an idea about the time frame for the discussions on that point. These will start with the 2014 report of the Commission on the existing Directive.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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