EU at odds over priorities for 'green stimulus' 

The Commission originally proposed to spend €3.5 billion of the €5 billion recovery plan on gas and electricity interconnections, offshore wind and carbon capture and storage (CCS) demonstrations. 

EU member-state representatives in the Council of Ministers increased the energy funding to €3.98 bn, but did not touch the project list (EurActiv 20/03/09).

MEPs voting on the proposal on Tuesday (31 March), however, said any money not committed before 1 September 2010 should "immediately be redirected to projects in the field of energy efficiency and renewable energies". They argue that projects such as CCS are unlikely to reach a stage of maturity whereby they could absorb all the investment by that time.

The industry committee wants to see the leftover money support renewables and energy savings, particularly in cities. Governments expect any unspent funds to be returned to their budgets after the implementation period of the recovery plan elapses in 2010.

The early drafts of the recovery plan earmarked €500 million for smart-energy cities, but the plan was scrapped in favour of projects which bring added value at European level, Energy Commissioner Andris Piebalgs explained at the time (EurActiv 11/02/09).

The Czech Presidency and industry committee MEPs will now start informal talks. The Parliament has full powers as a co-legislator on the file, but it is in a hurry to reach an agreement before a vote, scheduled for the beginning of May, to seal the deal before June elections.

Commission stands by CCS and wind energy projects

Peter Vis, an advisor to Commissioner Piebalgs, defended the European package in its current form. "It's not perfect, but I think it's a great step forward," he told a roundtable discussion in Brussels on Tuesday.

Vis said the Commission had chosen to support CCS and offshore wind because they are "technologies down the road that are not competitive yet" but have a lot going for them. 

EU money is justified for CCS due to its global importance as a technology that developing countries will also need to adopt if the fight against climate change is to be effective, he said. Offshore wind, on the other hand, was judged to be the biggest contributor to achieving the EU's renewables targets, he added.

"The case for arguing smart cities as needing to come from European funds is just harder to make, because there isn't that transnational character. In the case of an offshore wind farm off the coast of Denmark, Germany, Belgium or the Netherlands, you can envisage connectors to all of those countries. There's a clearly transnational interest," Vis argued.

In response to the MEPs' call to reallocate money that is not committed on time, he said the Commission would make sure this would not happen. "Commitment needs contractual obligations," he said, adding that invoices could be sent two years later when the pieces of grid are built and operating, for example. "It's in the building phase when the jobs are created and the stimulus happens," he said.

Nick Robins, head of the climate change centre at HSBC Bank, offered a comparison of economic stimuli being adopted in the EU and the US, saying that investment in renewables was conspicuously absent from European recovery plans. But he said there was was no need to "get too concerned". Compared to the US, Europe already has substantive policy frameworks promoting renewables, which explains the lesser need for these to be included in economic recovery plans, he said.

More funds for cities

MEPs also called for €500 million of EU money to be allocated to "innovative financial instruments" to support gas and electricity interconnections and CCS, as well as energy efficiency, renewable energy and smart cities. These would include loans, guarantees, equities and other financial products, they said.

On the same day, the Commission announced it would spend €15 million in 2009 to promote efficiency and renewables investments in buildings and urban transport under the Intelligent Energy Europe (IEE) Programme.

Green MEP Rebecca Harms (Germany) said the listed projects will "fail to use a huge proportion of the allocated funds," arguing that smart cities should have been "Plan A" for the recovery plan. "Today's winners are the giant companies that monopolise the energy market. They will try and make the most of the huge sums that have been secured for the projects for which they have lobbied. Spending billions on carbon capture and storage projects is a mistake, given that this technology will deliver few jobs or technological results in the near future," she said.

Green MEP Claude Turmes (Luxembourg) said at least €2 billion would be left over from gas and CCS projects. "Major urban investment in renovation of buildings, public transport and renewable energy would have made best use of these funds, yielding a double dividend of jobs in the short-term and climate protection for the future," he argued.

European Wind Energy Association (EWEA) was satisfied with the industry committee's confirmation that €565 million of the recovery funds would go to offshore wind projects but questioned the sense of carbon capture and storage investments. "I have doubts whether the vast amounts of money being allocated to coal CCS will contribute to the EU's economic recovery, since the technology will not be commercially viable this side of 2020. EWEA therefore supports the Parliament's proposal to allocate any unspent money to renewable energy technologies, including onshore wind power, which can be employed immediately," said Christian Kjaer, chief executive of EWEA.

Greenpeace praised MEPs for "rightly acknowledging" that carbon capture and storage projects will probably not deliver in time to contribute to economic recovery. "On the other hand, renewables and energy efficiency can create millions of jobs and are the true solution to climate change. It is therefore deplorable that the committee proposes to only redirect funds to energy efficiency and renewables if other projects have not started development by September 2010," said Frauke Thies, Greenpeace EU energy policy campaigner.