Friday, 18 October 2013

Electric Shock: Oettinger finds out that Green energy doesn't attract the most subsidies

Energy Commissioner Guenther Oettinger seems to have gotten quite a shock over energy subsidies. The German commissioner, who also proposed a list of Common Interest infrastructure projects this week, has long maintained that Green energy receives more in subsidies than other non-nuclear power sources and asked for a report from his Directorate-General. But the Sueddeutsche Zeitung has reported that the results weren't quite what the Commissioner expected, and claims that he has had the more embarrassing figures removed.

The SZ uncovered that the figures for the energy industry for the 27 Member State bloc (i.e. before Croatia joined) were: €30 billion on renewable energy, €35 billion for nuclear, and for fossil fuels €26 billion in direct subsidies, with a further €40 billion in subsidies delivered indirectly. The embarrassing numbers didn't make it into the final report (the SZ provides the draft and the final report in the article).

As the paper notes, it is strangely reminiscent of the behaviour of the CDU-FDP German government in editing the report on inequality in Germany. This report initially reported that the inequality gap in Germany has grown in recent years but the final report had key sections altered to suppress this finding, allegedly at the behest of the market liberal FDP.

In any case, the numbers indicate that subsidies and state intervention are a pretty key part of the energy sector in Europe. The politics of slamming renewables for being "expensive" to support need to give way to a broader debate about the energy industry. What does it say about this market that it requires such a high level of state support - and what do we get in return? And are our priorities right in what energy sources we are supporting (coal being part of this mix)? Are these subsidies cost effective?

Cost effectiveness will be a key point, particularly for renewables that are supposed to be the growing market sector. Are we getting the growth in this sector that we should be?

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