EU needs binding national targets to 2030


February 14, 2014

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Forget Valentine’s Day cards. The European Commission is far more likely to spend today reading letters that criticise its 2030 climate and energy plan.

Last month, the commission set out its goal that 27% of energy used in the European Union should come from renewable sources, including wind farms. Clean technology companies criticised the commission for lacking ambition, and the EU Parliament made it clear that it wants it raised to 30%.

But the lacklustre response to this policy isn’t the plan’s biggest problem. On Wednesday, six senior executives from leading European wind power companies gathered together in Brussels to discuss the proposed EU targets.

The debate, hosted by the European Wind Energy Association, focused on the need for legally-binding targets for European countries. And, more specifically, on the precise proportion of energy in each that comes from renewable sources.

There are currently targets that bind countries in the EU. By 2020, countries are legally obliged to gain 20% of their energy from renewable sources.

But the European Commission plans to ditch such targets in its 2030 climate and energy plan.

The speakers said that failing to extend legally-binding national targets to 2030 would send a message to investors that the EU is not serious about renewable energy. They argued that this suggests the EU is weakening its stance, and that this would cause confusion, reduce investment, and harm job growth.

Those are all strong arguments. Without such a commitment, there’s a growing danger that individual countries will lack sufficient drive to see the plan through.

For its part, the UK government has welcomed what it sees as an EU climbdown, and it is easy to imagine countries using this as an opportunity to re-nationalise their energy policies and take a more independent view.

There’s also a growing danger that once again the “bureaucrats in Brussels” get portrayed as isolated from the realities of the commercial agenda.

But the truth of it is that investors need long-term market confidence if they plan to invest in wind energy over the medium to long-term. Binding targets bring with them that assurance.

Indeed, we need only look at Spain to see the negative impact of policy uncertainty on future investment.

In Spain, 27% of power came from renewable sources in 2012. The sector was performing well, aided by strong financial incentives for renewal energy firms. But, last summer, the Spanish government started to weaken those financial incentives and, by attempting to overhaul its energy market, has only created significant industry confusion and stagnation.

Hardly the desired result for a troubled Mediterranean economy that was in need of a financial catalyst and boost.

As the European Commission sets a course for EU energy investment from now until 2030, its success should be measured not by its ideology and vision but by the means through which it will guarantee that these ambitions will be met.

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