European Union countries should consider dropping their national support schemes for renewable energies in favour of a harmonised EU approach that would send a clearer signal to investors, French President François Hollande said at the conclusion of an EU summit yesterday (22 May).
“There must be coordination, cooperation, and harmonisation for renewable energy,” Hollande said when asked to react to statements by Gérard Mestrallet, the CEO of GDF Suez who has complained about overcapacity in the renewable energy sector.
The European Union, Hollande explained, needs to “encourage the best renewable energies and refrain from changing the rules along the way, like was unfortunately the case in France in recent years”.
In an interview with the Le Monde newspaper ahead of yesterday’s summit, Mestrallet blamed government subsidies for contributing to excess capacity in the renewable energy market. Oversupply has led to fierce competition in the solar PV sector, leading to European plant closures and a trade dispute with China.
"We are not asking for subsidies, but for visibility, stable and homogenous rules in Europe, and quantified objectives up to 2030 in terms of the fight against climate warming," Mestrallet said in the interview.
Hollande said he broadly agreed with Mestrallet’s views, saying Europe had to “send a clear message to investors” and tackle the “windfall” some companies were making from state aid to renewables.
This called for a European response "and in this strategy, there must be coordination, cooperation, and harmonisation for renewable energy,” Hollande said. “And for that, you'd better have European rules, a European framework.”
German Chancellor Angela Merkel also seems open to some degree of harmonisation on renewable subsidies across the EU, saying it could happen “at a later stage”.
"Germany as you know is a champion as regards producing more and more renewables in the overall use of energy,” she said after yesterday’s summit. “This is something we want to promote to the Union as a whole,” she said, adding: “One also has to address at a later stage the harmonisation of eco-taxes for renewables."
EU considering harmonisation
The renewables industry has long been opposed to harmonisation, arguing European markets are too fragmented to allow it.
The European Commission has followed the same line although it noted in a January 2011 communication that harmonisation could be envisaged in the longer term.
"A convergence of financing, such as feed-in tariffs, will be necessary in the medium or long term, when a truly European market is created," the Commission said in the communication. "This can include greater cooperation in setting tariffs, technology bands, tariff lifetimes, etc." Convergence, it continued, could also include completely joining the support schemes, as planned by Norway and Sweden.
An EU official with knowledge of the matter remarked that EU countries were “almost constantly revising their support schemes for renewable energy, sometimes well, sometimes badly,” suggesting some degree of harmonisation would be desirable.
The EU summit conclusions do mention that the Commission will present "guidance on efficient and cost-effective support schemes for renewable energies" (page 3) but did not provide more details as to the substance or timing.
The EU official indicated that the guidance document would encourage a “a more European approach” to developing renewable energy, “not least through using cooperation mechanisms to encourage trade and more cost-effective joint exploitation of renewables across border.”
But the official underlined that such guidance will only be voluntary since support schemes are created at the initiative of the member states. Separately, the Commission is also working on a revision of its state aid rules “to allow for targeted interventions to facilitate energy and environmental investment.”
For Hollande, government support should rest on two principles: First, "the European character of the support for renewable energies and [second] the stability of these incentives."