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ENERGY: BONN CONFERENCE SETS NO TARGETS FOR RENEWABLES.

German Chancellor Gerhard Schroder had suggested at the Johannesburg Summit the convening of this conference on renewables, a pledge of support to his outgoing coalition with the German Greens, just three weeks before the legislative elections in Germany. The choice of the conference host country was eloquent: Germany is the world leader in wind energy and number two in solar power. As oil prices skyrocket, the timing of the conference could not have been better.

Commitments.

The governments represented in Bonn signed a political declaration reiterating their commitment to increase substantially and on an urgent basis the overall share of renewable energy in total energy production. A coherent regulatory and political framework will be needed to abolish obstacles, stimulate competition and internalise external costs. There is also a need to develop R&D and invest in human capital. Delegates recognised the important role of the private sector. They also drew up recommendations for increasing the use of renewable energy, which fall into three categories: measures, funding and capacity development. The Declaration speaks modestly ("takes note") of the targets certain countries have set or are about to set. Nothing more was officially said on the subject in Bonn, though.

Targets.

The European controversy over the adoption of targets for the period after 2010 was not dropped in Bonn, however (see Europe Information 2872 for details on the EU report). On the contrary, some took malicious pleasure in reminding Energy and Transport Commissioner Loyola de Palacio that supporting renewables means setting long-term objectives. In a highly-praised speech, the Executive Director of the European Environment Agency Jacqueline McGlade explained that renewable energy targets are needed for 2020 to give markets investment security. Targets have worked well so far and there is no reason to stop using them.

Environment Commissioner Margot Wallstrom also responded to the arguments of her fellow Commissioner responsible for the latest report on renewables in the Union. Without naming Miss de Palacio, she mentioned the "sceptics" who complain about the disadvantages of renewables, but said solutions would be found: "We know the future will prove these sceptics wrong." As for targets, while Mrs Wallstrom acknowledged begrudgingly that it was too soon to set targets for after 2010, she pointed out that these would be set in 2007 and that the figure of 20% would be taken into account (i.e. renewables share of overall energy consumption in the Union in 2020). That figure has recently been put forward by many advocates, including the European Parliament.

Actions.

The conference also published an international Action Plan setting out all the initiatives of participating countries. The European Union contributed two major initiatives to the plan. The first makes provision for the creation of a fund known as the "Patient Capital Initiative", which will act as a catalyst for private investment in the sector by offering attractive funding conditions for investors. It will start up with Euro 75 million, hoping to attract 200 to 400 million Euros in private funding. The first funding operations could probably start up in 2006-2007.

The second European initiative is a global data base on renewables (statistics and best practice) that will give interested governments access to the most relevant information for putting together coherent policies to promote renewables. A test internet site is already in operation on the JREC site, i.e. the Johannesburg Renewable Energy Coalition (http://jrec.iea.org).

Subsidies.

The International Energy Agency (IEA) put out a study on renewables at the conference (entitled "Renewable Energy Market and Policy Trends in IEA Countries"). After progressing to 6% in 1992 from only 4.6% in 1970, renewables share in global energy consumption slipped to 5.5% in 2001. The IEA attributes this decline to the drop in public research and subsidies from 1982. For the IEA, this is in sharp contrast with enthusiastic political statements. And where subsidies are granted, they are mainly concentrated on "new renewables" (wind, solar and ocean) at the expense of traditional ones (biomass and hydro power).

The European Environment Agency has also published the findings of a study on aid for renewables (available on: http://reports.eea.eu.int/technical_report_2004_1/en), which confirms that fossil sources get four times the subsidies granted to renewables: Euro 5.3 billion a year for renewables (or 1/6) out of a total of 29.2 billion for the energy sector, equivalent to 0.4% of GDP. In contrast, support for renewables per unit of energy produced is by far the highest. The European Agency nevertheless calls on European authorities to provide a precise definition of aid to the energy sector to make European data consistent.

The European Investment Bank also presented an action plan for renewables. EIB lending for renewable energy totalled over Euro 1.6 billion in the last five years. Loans for renewable energy will increase to up to 50% of funding for electricity generation by 2010, i.e. up to Euro 700 million a year in 2010 at todays rate. The EIB, through its Climate Change Financing Facility, will allocate some Euro 500 million between 2004 and 2007 for projects to reduce CO2 emissions. It will provide 10 million for a Climate Change Technical Assistance Facility to subsidise emissions trading. Finally, the EIB will explore with other institutions the possibility of creating a new Carbon Credit Fund.

Documents adopted at the conference (action plan, recommendations and declaration) are available on the EISnet site: www.eis.be > Advanced search > Reference= EURE,2875,499
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Publication:European Report
Geographic Code:4E
Date:Jun 9, 2004
Words:914
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