Clean energy: the Eu’s laggards need to catch up

Despite promises made after Washington withdrew from the Paris Treaty, according to a new report, the Eu is not providing effective leadership on climate change, and it’s not particularly united either

When Donald Trump withdrew from the Paris climate accord last June, reactions in the Eu were stinging. Donald Tusk said the Us leader’s decision was a “big mistake” but vowed to continue the fight against climate change. Jean-Claude Juncker went even further, saying Trump’s decision amounted to an “abdication” but would only make the world more united, with Europe’s “natural leadership” filling the void.

Yet recent news suggests the Eu is not providing particularly effective leadership on climate change, and it’s not particularly united either. According to a damning new report from Climate Action Network (Can) Europe, a two-speed union is emerging, one in which Western European member states are making middling progress on clean energy targets, while Central and Eastern Europe (Cee) states are lagging far behind. If the Eu really wants to be a “leader” on climate change, it’s clear that it must do more to set a better example – and to encourage its lagging members to clean up their act.

In its latest report, Can ranked the Eu’s member states for their efforts to meet climate and energy targets, rating each country from ‘very good’ to ‘very poor’ – but the ‘very good’ box has been left entirely blank. In fact, only one country, Sweden, has been deemed ‘good’ by the Can researchers. At the other end of the scale, six countries are ranked as ‘very poor’, the worst being Poland, which received a percentage score of just 16%. Poland was just one of several poorly performing countries among the Ee’s 11 Cee member states, with eight ranked in the bottom half of the table.

Much of the disparity stems from the fact that each of the Eu’s member-states has its own specific emissions target based on 2005 levels. The bloc has also offered a range of incentives to less-wealthy Cee member states, allowing them to subsidise polluting producers as long as those companies commit to long-term diversification. But it is becoming clear that such leniency, though justified at the time, is growing unsustainable.

Indeed, even with such expansive parameters, some states have been going so far as to lead active campaigns against the Eu to try and protect polluting energy installations. Last year, for instance, Poland – Europe’s second-highest coal consumer and Can’s worst offender – launched a legal challenge against new Eu pollution standards on toxic coal emissions, a challenge that was backed by Bulgaria.

Granted, seven countries in the Cee region – Bulgaria, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, and Romania – have already met individual 2020 Eu targets for their share of energy consumption from renewables. But the flip side of that story is that they are now under little pressure to continue investing in the renewables market in the future – which has resulted in a backlash that has hit investors especially hard.

Following rapid growth in the solar industry in the Czech Republic, for instance, the government put new restrictions on feed-in tariffs and instituted a new windfall tax that slammed investors that had just entered the market. The tariffs system and the resulting “solar boom” in the country had been subject to criticism, partly because increased reliance on renewables had translated into higher electricity prices for consumers. As a result of the government’s sudden withdrawal of support, “Renewables were completely discredited,” as Jan Mladek, former minister of industry and trade, put it. Since then, no major new renewables projects, other than a wind farm built by Czech firm Jrd, have broken ground in recent years.

Unfortunately, comparable tales can be found across the region, with the outcome that foreign firms in particular have grown increasingly wary of entering these markets. Likewise, governments have had a tendency of altering their policies at the expense of energy investors, which require a degree of certainty in order to justify their presence overseas.

In Bulgaria, for instance, the government’s renewable energy regulatory regime has undergone a series of shifts over the past several years, resulting in growing instability for foreign investors, which make up the bulk of the country’s energy projects. Us-based Aes operates St. Nikola, the biggest wind farm in Bulgaria, and Saudi Arabia’s Acwpa Power is the main investor in the Karadzhalovo Solar Park, one of the biggest in the region.

In 2012, as Bulgaria’s renewable sector was taking off, Sofia imposed a “temporary access fee” for renewable energy generators, forcing the majority of such projects to pay as much as 39% of their income to grid companies. Most recently, in March, the Parliament scrapped feed-in tariffs for renewables, replacing them with a riskier compensation system that passes the risk onto producers – not quite the type of policy a country trying to meet climate change objectives should pursue. In the midst of such uncertainty, certain investors decided to cut their losses. In 2014, Us-based Continental Wind terminated its operations in the country, citing “a series of restrictive legislative changes.”

US renewables group Invenergy is also feeling the chills in Poland. In October, the firm accused Warsaw of illegally undermining its investments by slashing renewable energy prices and ending power-supply contracts. The accusations came soon after the government adopted a new law to cut fees that utilities are forced to pay if they do not buy “green certificates” from renewable energy producers, a move that pushed down clean energy prices substantially.

If Cee member states continue to antagonize investors and drag their feet on implementing clean energy reforms, however, Can’s next report is sure to be all the more damning. Instead of indulging the region and allowing complacency to fester, the Eu must get tough and force the Eastern states to raise their game. Can has urged the Eu to ensure national targets are automatically renewed when the bloc’s overall commitment increases, to keep lazier members in line.

For the sake of Europe’s future, this argument must win the day. A year after Donald Trump walked away, drawing fire from EU leaders, those same bureaucrats must prove their own climate change strategy is more than just window-dressing.