Brussels, Belgium – Targeted financial support policies at EU and Member State level, such as feed-in tariffs, create needed certainty for renewable energy investors, in a way that carbon pricing alone would fail to do, according to a WWF UK report – ‘On Picking Winners’ – launched today.The report comes at a turbulent time. Uncertainty about future policy support for renewable energy in key markets such as the UK and Italy has contributed to a notable drop in investment levels across the EU . However, this money is going further than ever before as key technologies such as wind and solar power cost significantly less year on year. WWF's report is, therefore, particularly relevant to ongoing EU discussions on the need for post 2020 renewable energy targets.
‘On Picking Winners: The need for targeted support for renewable energy’, written by Dr Rob Gross of Imperial College London, argues that given the numerous benefits of renewable energy, it is vital that the EU and its Member State governments provide the support needed to ensure it plays its full part in decarbonising the EU’s energy system.
“Without targeted and proportionate policies supporting our renewables industry, we will miss out on the opportunity rapidly to reduce the costs of emerging renewable technologies, and will fail to capitalise on the promising economic growth opportunities that the sector has to offer in the EU”, said Imke Lübbeke, Senior Renewable Energy Policy Officer at WWF European Policy Office.
Several commentators, the report notes, have argued that a single, economy-wide carbon price is the most effective way of addressing the climate change challenge. However, although carbon pricing has an important role to play, it is far from sufficient on its own to bring forward investment and accelerate cost reductions in emerging renewable technologies, or to avoid lock-in to high carbon infrastructure .
Imke Lübbeke concluded: “Our report exposes deep flaws in the argument that carbon pricing can do it all. Whilst the simplicity of this argument may sound appealing, in practice relying on carbon pricing alone is likely to lead to carbon-intensive gas plants continuing to dominate our energy mix – thereby preventing newer and cleaner technologies from realising their potential and locking us in to a risky reliance on largely imported fossil fuels”.
Note to the editors:
1. Bloomberg New Energy Finance: World clean energy investment heading for a drop in 2012, after mediocre Q3, October 2012
2. The report highlights a number of limitations which could arise if carbon pricing was the only policy driver to support investment in renewables:
- A carbon price will rarely be set at the level necessary to attract investment in newer clean technologies like renewables. Instead, it is more likely to drive investment from coal to gas.
- A carbon price set high enough to drive investment in emerging technologies which cannot yet compete with established fossil fuel generation would risk a windfall for operators of existing low carbon plant and higher prices for consumers. Targeted financial support policies combined with a lower carbon price provides an effective way of providing certainty to renewable energy developers whilst driving investment away from high carbon technologies across all sectors.
- At the global level, fossil fuels are more often subsidised than taxed, which also undermines carbon pricing. The effect of fossil fuel subsidies is therefore to create, in effect a ‘negative carbon price’.
- Carbon pricing does not do enough to overcome the non-financial barriers that hinder the deployment of emerging technologies such as compatibility with existing infrastructure, incumbent lobby interests and skill shortages.
Senior Policy Officer Renewable Energy
WWF European Policy Officer
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Communication and Media Officer
WWF European Policy Office
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