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European Commission: renewables growth under threat

Growth in the renewables market will slump unless the EU takes measures now to reduce costs and stimulate investment, the European Commission has warned.

In a new document outlining how Europe can sustain growth in the renewables sector, the Commission, the executive arm of the European Union, also urged the swift development of a post-2020 approach to renewables.

According to the report, the combination of economic recession in Europe and policy uncertainty is threatening investment, the lifeblood of renewables growth.

“Industry is cautious about investing more in renewable energy,” the Commission said. “They are uncertain about future EU policy, and costs are not falling fast enough. As a result, if the price of renewable energy remains much higher than the cost of fossil fuels, growth in the market is expected to decline after 2020.”

This decline in growth could slump from 6% to 1%, the report suggests, if current policy objectives are not updated to ensure Europe reaches its long term policy aims.

The report looks at ways to bring costs down through a more coordinated EU approach. According to the Commission, costs can be driven down by stimulating more competition in the EU energy market. Subsidies for fossil fuels should be phased out and energy taxes revised to boost investment in low-carbon technologies. At the same time, support for renewables should be gradually reduced or eliminated, to incentivise this sector to become competitive in the long term with other energy sources.

National support programmes should also be reformed to promote cost reductions, the Commission said. They should be made more consistent across the EU and simplified, reducing administrative costs for the industry.

Meanwhile, the EU should also encourage the production of wind and solar power where it is cheaper, as companies do for other products and services. EU countries can then buy wind or solar energy more cheaply than by developing their own renewable sources.

The Commission aims to begin the process of developing EU policy beyond 2020, with the launch of an impact assessment of three post 2020 policy options. At present the renewables-specific legislation, the Renewable Energy Directive, expires in 2020, with nothing yet prepared to replace it.

The post 2020 options explored in the impact assessment are: a decarbonisation without renewable energy targets, relying solely on the carbon market and a revised ETS; the continuation of the current regime, with binding targets for renewable energy, emissions reductions and energy efficiency; and what the Commission calls “an enhanced, more harmonised management” of the whole energy sector with an EU renewable energy target.

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