Panel urges EU to scrap funds for ‘dirty energy’

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A high-level group advising the Commission on energy issues has recommended phasing out environmentally harmful subsidies, as EU leaders prepare to endorse proposals for a common energy policy at a summit in Brussels on 8-9 March.

The report’s main conclusion is that public funds in support of environmentally harmful technologies should eventually be scrapped.

“Subsidies must serve the common interest while addressing market failures or otherwise they should be phased out,” the report states. “This is particularly the case for environmentally harmful subsidies.”

The report recommends that member states ensure that “the application of any subsidy is supported by a strategic plan with milestones and clearly articulated sunset clauses”.

But the report stops short of naming specific industrial sectors in which the group believes that subsidies should eventually be phased out.

Jim Leape, director-general of WWF and a member of the group, told EURACTIV: "There clearly are paths for meeting energy-security needs that are incompatible with saving the climate, no question. For some countries an obvious path for energy security is increased coal combustion and that's the worst possible thing for the climate." 

But he said that detailed issues such as Germany's support for coal were not specifically addressed by the group.

"There are many in this group who see that the future of energy security and action required to address climate change are largely converging," Leape added, citing energy efficiency and renewable energies as consensual in this context.

The report may, however, prove uncomfortable reading for the Commission, as it has so far not given the document any official publicity.

During recent months, it has struggled to agree on finding the right balance between environmental policy objectives and preserving the competitiveness of European industry.

Environment Commissioner Stavros Dimas and his enterprise and industry counterpart, Günter Verheugen  - both members of the high-level group - have frequently been at odds over the issue, the last time over binding legislation to reduce CO2 emissions from the car industry.

The High-Level Group on Energy, Competitiveness and the Environment submitted a report on 27 February 2007, giving the Commission and member states practical advice on how best to respond to the climate change and energy challenge.

The group, set up by the Commission in December 2005, comprises several commissioners and members of national governments as well as representatives of industry, civil society and regulators at national and EU level.

It focused its report on incentives to promote low-carbon technologies, with specific reference to energy-intensive sectors such as steel, chemicals, paper and cement, which have been particularly hit by rising energy prices.

The report was published one week ahead of an EU summit dedicated to energy policy to take place in Brussels on 8-9 March.

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