Parliament approves €4 billion energy projects


The European Parliament yesterday (6 May) formally endorsed a compromise reached with the Council to spend €3.98 billion to strenghten the bloc’s energy security by upgrading its grids and building clean coal and offshore wind capacity.

The energy projects are part of a €5 billion economic recovery plan, which also allocates further €1.02 billion to broadband Internet connections and rural development. The projects are intended to help Europe to recover from recession by creating jobs and putting it on track for a sustainable and green future.

The bulk of energy funding – €2.37 billion – is allocated to gas and electricity interconnections, including €200 million for the Nabucco gas pipeline. A further €565 million is allocated to offshore wind energy farms and €1 billion to setting up carbon capture and storage (CCS) demonstration plants. 

The first €2 billion of the money will be spent in 2010 and further €1.98 billion in 2010.

The focus on grid inftrastructure followed January’s gas crisis, during which Russia cut off gas supplies to transit country Ukraine, leaving large parts of Eastern Europe without electricity and heating.

After the Parliament vote, European Commission President José Manuel Barroso said the EU could now start the projects immedidiately, which he said would make a real contribution to Europe’s energy security. Building the new infrastructure is expected increase cooperation between the 27 member states during energy crises, while at the same time employing construction workers in the hardest-hit areas.

The European Wind Energy Association (EWEA) welcomed the millions earmarked to offshore wind farms. “By including offshore wind and electricity grids in the plan, EU decision-makers have chosen the right areas to make a real difference long-term,” said EWEA Chief Executive Christian Kjaer.

In contrast, green NGOs criticised the decision to throw €2.5 billion at the oil and gas industries, which they said would neither create jobs nor put Europe on a sustainable energy path. 

On the eve of the Parliament vote, Friends of the Earth Europe published a study showing that billions of EU taxpayers’ money had already been pumped into the fossil-fuel industry over the past five years. The environmentalists called on the EU to spend the money on renewables and energy efficiency improvements instead (EURACTIV 05/05/09).

Energy efficiency projects possible

After much squabbling over the lack of energy efficiency projects in the final list, MEPs managed to sneak a provision into the agreement according to which unspent money “could” be used for energy efficiency and renewable energy projects (EURACTIV 17/04/09). It was agreed that should the Commission judge, in its progress report in March 2010, that the priority projects had not been implemented, it will propose alternative projects for energy-efficiency improvement and renewable energies.

The Greens slammed the compromise package as a flawed, “old-fashioned state aid fund” which failed to invest in sectors where benefits would have included “immediate job creation, energy security and climate mitigation”. 

“Allocating part of the funds to EU cities to invest massively in the renovation of their public buildings or the modernisation of public transport would have had an immediate economic and employment impact. By contrast, the €1 billion given to big energy utilities for carbon capture and storage pilot projects, which will not be ready to go for three years, will have limited benefits on the wider economy,” Green MEP Claude Turmes (Luxembourg) argued.

European Commission President José Manuel Barroso said he was delighted with the formal approval of the Commission's €5 billion initiative. "This allows us to get moving immediately on projects that will provide a welcome boost to the European economy and make a real contribution to giving Europe more energy security in the future," he said.

The Greens/EFA group argued that the Parliament had missed an opportunity to prove the EU's relevance in the context of the economic crisis. "Rather than standing up to the narrow, short-sighted demands of the big member states, the majority in the European Parliament and Commission have simply caved in to their demands. The result is a turgid, old-fashioned state aid fund that will do little to stimulate the economy and, instead, mainly line the pockets of big energy firms that do not need any assistance,"said Green MEP Claude Turmes (Luxembourg).

UK Europe Minister Caronline Flint said the recovery money would benefit British businesses, by financing an an offshore wind project near the Scottish coast, for example. "This is proof of how the EU can complement the work of national governments and play its part to help people through the downturn and to put the European economy back on a path to growth." 

"The fact that this injection of cash is targeted on renewable energy and broadband will ensure that we make the European recovery a green and high tech recovery that will make Europe more competitive in the future," she said.

The European Wind Energy Association (EWEA) hailed the agreement as "the right economic medicine at the right time". It said the money would speed up offshore development and network integration, benefiting consumers by driving down electricity prices. 

It also welcomed the provision to make unspent monies avilabe to renewable energy projects. "This would be an excellent way to ensure any unspent money is put to work to stimulate Europe's economy and reduce greenhouse gas emissions," the organisation said.

In contrast, Friends of the Earth Europe criticised the recovery plan for throwing money at fossil fuel industries instead of developing renewable energies and funding energy efficiency improvements. 

"It is hugely hypocritical for the European Union to claim it is tackling climate change and at the same time be handing over public funds to fossil fuel companies which are causing the problem. In a time of economic downturn, it is ludicrous that one of the richest industrial sectors can receive public money to allow it to go on polluting," said Darek Urbaniak, Friends of the Earth Europe's extrative industries campaigner.

Greenpeace accused the Parliament of only making "cosmetic changes instead of initiating a shift away from dependency on fossil fuels. "The EU talks about creating green jobs and stimulating green recovery, but the truth is it has earmarked twice as much funding for fossil fuel projects than for renewables, and nothing for efficiency. The coal industry will get €1 billion for carbon capture and storage, an expensive and unproven technology," said Frauke Thies, Greenpeace EU renewable energy policy campaigner.

On 28 January, the European Commission tabled a five-billion euro recovery plan targeted mainly at clean energy projects and the deployment of broadband Internet connections in rural areas (EURACTIV 29/01/09).

Under the plans, a total of €3.5 billion (later increased to €3.98 billion) would be devoted to clean coal and offshore windfarms, 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.

EU countries attacked the Commission's plan for a variety of reasons. Some Western countries complained that projects for "smart cities" had been dropped, while Bulgaria, the country worst hit by the recent gas crisis, found its own modest allocation "abnormal" (EURACTIV 04/02/09). An agreement in the Council was finally clinched at the March 2009 EU summit in Brussels (EURACTIV 20/03/09). 

The Parliament, however, called for any money not committed before 1 September 2010 to be "immediately be redirected to projects in the field of energy efficiency and renewable energies". They argued that projects such as carbon capture and storage (CCS) are unlikely to reach a stage of maturity whereby they could absorb all the investment by that time (EURACTIV 02/04/09).

The compromise struck between the institutions on 16 April allows the Commission to propose the use of recovery money that is not committed by the end of 2010 for energy-efficiency and renewables projects. However, the EU executive must prove in a report that priority projects will not be implemented (EURACTIV 17/04/09). The report is due in March 2010.

  • March 2010: Commission to publish progress report.

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