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Published 29 January 2009

Tags

broadband, carbon capture and storage, Wind power

The European Commission yesterday (28 January) proposed to reallocate five billion euro of unspent EU money, mostly to support clean coal projects, offshore wind farms and the deployment of broadband Internet connections in rural areas.

Presenting the plans on Wednesday (28 January), European Commission President José Manuel Barroso said the projects would represent a "smart investment" for the EU as it battles a deepening economic downturn.

Under the plans, a total of €3.5 billion will be devoted to clean energy projects, while €1 billion will support broadband Internet. A further €500 million is earmarked for tackling new agricultural challenges such as climate change, renewable energy, water management and restructuring the dairy sector.

"Energy and broadband networks are both crucial to the future of the EU economy," the Commission explained in a statement.

The proposal will now be submitted to EU member states for approval, with the Czech Presidency planning to discuss it at the General Affairs Council, the Commission indicated. The next such meeting is scheduled for 23-24 February in Brussels.

Explaining the Commission's choice of projects, a spokesman said priority had been given to the Union's strategic goals. The stage of maturity of the projects was the second criterion, with priority given to those which are expected to develop quickly and can act as a signal for markets to follow.

Carbon storage and offshore wind

Projects to store carbon dioxide emissions from power plants deep underground (carbon capture and storage, or CCS; see EurActiv LinksDossier) receive the lion's share of the funding under the EU executive's proposal, with a €1.25bn financial envelope.

Germany, the Netherlands, Poland, Spain (with Portugal) and the UK will each receive €250m to apply the nascent technology to heavy-polluting coal-fired power plants.

Offshore wind will also receive backing, with €150m going to projects in three groups of countries: Denmark, Sweden, Germany and Poland – the UK, the Netherlands, Germany, Ireland and Denmark – and Germany and Poland.

Bringing broadband to rural areas

€1bn is earmarked for projects to bring broadband to rural areas (see EurActiv 27/11/08). In total, 30% of the EU rural population has no access to the Internet, but the situation differs from one country to another, the Commission said. A chart, published with the communication, shows that rural coverage in Bulgaria and Romania is equal to zero.

EU member countries will have the responsibility of applying for the money, and amounts will be allocated on the basis of the current distribution key for the European Agricultural Fund for Rural Development. Poorer regions will benefit from higher financing.

Disappointment for Nabucco and gas 'interconnectors'

In spite of the recent gas crisis, sums for "gas interconnectors" designed to improve the EU's resilience in a crisis situation appear relatively modest, totalling just over €1 billion.

Bulgaria and Slovakia, the countries worst hit by the crisis, receive only modest sums: Bulgaria is allocated €20m for the Haskovo-Commotini interconnection with Greece, and Slovakia €25m for the Velky Krtis-Ballasaqyarmat interconnector with Hungary.

€250m has been earmarked for the EU's flagship Nabucco gas pipeline project. However, this amount in fact represents a risk-sharing facility, intended to help secure loans from banks at better conditions than those offered on the market, Commission spokesperson Johannes Laitenberger told EurActiv.

Member states 'puzzled'

But it remains unclear whether member states will approve the reallocation of funds.

An Italian diplomat said he was "puzzled" by the Commission's proposal, saying it "does not reflect the decisions taken at the European Council in December".

Italy is concerned that agriculture budgets are now being shifted to other sectors, with only marginal benefit for Italy, except for the €100m earmarked for a gas interconnector with Greece.

A French diplomat questioned the use of selecting long-term projects at a time when short-term decisions are needed to restart the EU economy. "This is more a fund for energy security than a recovery plan," the diplomat said. "This is long term".

Other member states have already said they would prefer the money to be used for transport infrastructure projects.

Positions:

Hungarian Energy Minister Csaba Molnár welcomed the Commission's decision to grant funding to the Nabucco pipeline. "It is a very important decision which can push forward the Nabucco project. I would like to add that this is not just a success of the partner countries in Nabucco, but also a success for Hungary. Hungary was the first country to propose that the partners should not just look at the execution of this pipeline as a business, but also as a common European security programme."

He further welcomed the fact that the Commission proposed nearly 1.5 billion euro for other energy projects, like interconnecting European electricity and energy networks. He announced that a pipeline project between Hungary and Romania, work on which has already been started, received financial assistance worth 30 million euro, while the future pipeline between Hungary and Slovakia will receive a 25 million euro subsidy.

Molnár underlined that the next steps for the Nabucco project – agreements between countries – will be established by July at the latest.

EWEA, the European Wind Energy Association, applauded the Commission's initiative. "The wind industry is pleased that the Commission recognises offshore wind power as a strategic energy source that the EU needs to develop," said Christian Kjaer, EWEA chief executive. "Offshore wind energy was always going to be an exciting, productive and dependable power source, but this new money should now help the industry meet its ambitious potential sooner."

Luxembourg Green MEP and energy spokesman Claude Turmes described the proposed financing for energy projects as "inadequate and unbalanced". "The €3.5 billion package is split between a bloated €3 billion for coal and gas and a meagre €500 million for wind energy. This represents a golden handshake from Barroso for technologies that should be on their way out, instead of a much-needed commitment to clean energy and energy saving."

In a statement, environmental group Greenpeace said the plan represented "another missed opportunity". "Investments in carbon capture technologies would perpetuate Europe’s outdated energy system and its dependence on fossil fuels. 'Clean coal' is an empty promise and is far from being a viable technology. By contrast, renewable energy and energy efficiency technologies are available and working today, ready to create employment for millions of people," said Frauke Thies, EU renewables policy campaigner at Greenpeace.

Hans Van der Loo, head of Shell's EU liaison office in Brussels, welcomed the plan as "good news" and "a positive sign that our leaders are making good use of the current crisis" to invest in long term projects. "It is not a cost but an investment for future generations," Van der Loo told EurActiv. Van der Loo criticised those who say carbon capture and storage (CCS) technology should have been taken off the Commission’s plan and invested in renewable energies or energy efficiency instead. "It is not either or," Van der Loo said. "A sustainable future without CCS is simply not possible."

Next steps:

23-24 Feb.: General Affairs and External Relations Council.

External Links

Background:

In December, EU heads of state and government agreed a fiscal stimulus package representing around 1.5% of EU GDP, or €200 billion. The package was adopted on the basis of a European Commission proposal presented in November (EurActiv 27/11/08).

To complement the recovery plan, the Commission also proposed to reallocate unspent EU funds away from agriculture to support energy and broadband Internet infrastructure projects (EurActiv 11/12/08).

Under the proposal, sums would be shifted from 'heading two' of the EU budget (preservation and management of natural resources, including direct payments to support the farming sector) to 'heading 1A' (competitiveness, growth and employment).