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European Lessons on Renewable Energy Subsidies — What NOT to do!

Todd Wynn and John Eick — American Legislator — May 30, 2013

Considering how important and ubiquitous energy is for virtually all of life’s activities, it should come as no surprise that energy policy often dominates the agendas in legislative chambers in each of the fifty states and on Capitol Hill.  Historically, most of the energy debate in many of these legislative bodies has centered almost exclusively on ensuring that citizens have ready access to affordable and reliable energy.

Unfortunately, over the past several years, the energy debate has shifted.  Instead of worrying about the cost and dependability of energy, many legislators are now focusing on ways in which certain politically preferred energy sources—most commonly wind and solar—can be deployed in favor of more conventional sources.  These policymakers and other environmental advocates will often point to Europe as models for how governments can best encourage the use of “green” energy sources.

It turns out, however, that these models are now proving to be powerful examples of what not to do.

As increased government debt continues to wreak havoc in Europe and elsewhere, the world is starting to cut back on taxpayer support for green energy sources that tend to be less efficient, less reliable, and more expensive.  In fact, during the first three months of 2013, green energy investment declined by 22 percent to its lowest level in four years.

Here is a quick snapshot of recent government action in Europe:

Bulgaria: Protests against high electricity bills and overloads on the electric grid from unreliable energy sources have led the Bulgarian Energy Minister to consider suspending as much as 40 percent of wind and solar power capacity to stem oversupply and stabilize electricity generation.

Czech Republic: In 2010, the Czech government cut subsidies to solar in half and provided limits or caps on other renewable energy subsidy schemes. This action was pushed because of the fear of a steep rise in electricity prices and future power grid instability.

Germany: In early 2013, the German government started a conversation about reducing subsidies to renewables in order to limit rising electricity costs for consumers. Philipp Rösler, Germany’s Minister of Economics and Technology, has called the country’s solar subsidies a “threat to the economy.”

Greece: Due to the ongoing debt crisis, the Greek Ministry of Environment, Energy and Climate Change announced that feed-in tariff rates would be reduced by 40 percent for solar projects across the country.

Italy: The Italian government has moved to reduce renewable energy subsidies. Industry Minister Corrado Passsera recently said “Italy has important goals to meet and even surpass…we need to do so without over-reliance on taxpayer resources.”  Continue reading, here…..

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