Renewables receive Euro 5.3 billion of energy subsidies in Europe

COPENHAGEN, Denmark, 2004-11-24 Refocus Weekly

European nations provided subsidies of Euro 29.2 billion to energy sources in 2001, of which Euro 5.3 billion went to renewables according to a report by the European Environment Agency.

“Despite significant emissions of carbon dioxide and residual air pollutants emanating from the burning of fossil fuels, the amount of fossil fuel subsidies remains high, particularly for coal,” the report notes. “Support for renewable energy, which is on balance considered environmentally beneficial, is increasing steadily through the introduction of regulatory support mechanisms.”

“With the exception of large hydro-electric power, renewable energy represents a much less mature industry with arguably greater need for technological and market support to enable full commercial development,” it says. “It can be expected that subsidies for renewable industry will fall as costs decline and the technologies mature.”

“There is some evidence to suggest that, in historical terms, renewable energy subsidies in the EU 15 are relatively low in comparison with other forms of energy during periods of fuel transition and technology development,” adding that mature fuels such as natural gas continue to benefit from the technological and industrial infrastructure built up during previous decades.

“At current levels of political and financial support, the EU 15 renewable energy targets for 2010 will not be met,” it warns. “Renewable technologies offer the benefits of both increased energy security and reduced environmental impacts. The policy rationale for their economic support will most likely be strengthened as their contribution to reducing price volatility and overall emissions is better understood and quantified.”

“Unlike governments, individual companies carry little or no obligation to address long-term energy security or environmental challenges,” it adds. “It is the responsibility of governments to ensure, through market pricing and legislative frameworks, that the market responds to these concerns. Governments would be prudent to value the environmental and security of supply benefits of renewable energies and to set long-term price signals for industry development that reflect these benefits.”

The European Environment Agency was formed in 1994 to provide independent information on the environment to policy-makers and the public.


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