The end of state aid for renewables?
The European Commissioner for Competition, Mario Monti has called for state aid to the renewable energy industry to be cut off in five years' time to compel companies to stand on their own feet more quickly. In a draft paper outlining plans for this sector, the Commission says it is 'generally speaking not in favour of aid towards the operation of a firm', but that for companies in the environmental field, 'such aid may be authorised in specific cases'. However, it says this should be limited to compensating companies for extra costs incurred by choosing to use renewable energy sources and that even these subsidies should eventually be phased out. Environmental campaigners are upset by the plans, fearing that renewable energy producers will be able to compete with more traditional methods of generating energy and reduce companies' incentive to reduce carbon dioxide emissions. But although Mr Monti has acknowledged that environmental aid accounts for a relatively small proportion of state aid, the Commission stresses that it wants to see an overall reduction in subsidies paid to firms in the Member States.