Europe Threatens Renewables Subsidies, but Helps Coal

The weekly magazine, Focus, says European Union competition commissioner Mario Monti will launch further action this month against German laws that subsidize green energies.

FRANKFURT, Germany, DE, 2001-09-17 [] The German ‘feed-in’ laws apply to renewable energy and subsidize electricity that is generated at cogeneration plants. The laws require regional suppliers and municipalities to pay above-market prices for power from green sources, then pass additional costs onto consumers. A few months ago, the European Court of Justice ruled that Germany’s subsidy schemes complied with EU law because the inherent environmental goals overruled concerns about producer aid. Last year, Monti had called for state aid to renewables to be cut off after five years, forcing companies to stand on their own feet quickly. The European Union has decided to extend government help for the coal industry until 2010. The existing aid framework expires next year with the Treaty that set up the European Coal & Steel Community. The draft regulation will permit Member States to continue to grant aid to the coal industry for the rest of this decade, as a way of ensuring the EU continues to exploit its own energy resources. Most coal produced within the EU cannot compete with imports, a position that is unlikely to change, the Commission believes. “It is essential to maintain a minimum level of primary energy production in Europe to guard against the uncertainties of too great a dependence on the outside world for energy supplies,” says commissioner Loyola de Palacio. Providing state aid should also help to maintain access to coal reserves which, in turn, means that indigenous coal production would be available to cover any contingencies affecting energy supplies. At the same time, continuing subsidies for the coal industry should not mean an end to the process of restructuring and cut-backs in the least economic pits of recent decades, the Commission stresses. All these moves follow a recent study funded by the EU itself, which showed that the cost of producing electricity from coal or oil would double if external costs of environmental damage and health concerns were taken into account. The study estimates that these costs amount to 1 to 2 percent of the EU’s GDP, not including the cost of global warming. The EXTERNE project, which was undertaken by researchers from all EU countries and the United States, is the first research project to put plausible financial figures against damages resulting from generation from fossil fuels, nuclear and renewable for the entire EU.
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