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Commission report on support for renewable energy in the liberalized electricity market

The European Commission has published a report on the harmonization of the European electricity market, which focuses on environmental issues, and, in particular, considers questions arising from the support of renewable energy sources in this market.

The report is the first ...
The European Commission has published a report on the harmonization of the European electricity market, which focuses on environmental issues, and, in particular, considers questions arising from the support of renewable energy sources in this market.

The report is the first step in the preparation of a proposal for Community legislation on this issue, and indicates that there is a need for common rules on renewable energy sources. The Commission would favour a competition-based system, which would present clear advantages in terms of cost-effectiveness, trade, and rapid development of renewables, therefore strengthening the EU's technological leadership in the field and meeting the Kyoto deadlines.

Common rules will be needed, at least in the medium term, since renewables will continue to need support to offset their higher costs in comparison to other fuels. Given the current small share of renewables in the energy market, support measures in operation or planned in Member States such as tax exemptions, levies, green certificates and guaranteed prices have a limited distortionary effect on the electricity market. However, as the market share of renewables increases greater distortion will be manifested. The Commission aims to ensure that such schemes are compatible with Community law while ensuring that support for increased use of renewables is encouraged.

Commissioner Christos Papoutsis, responsible for energy policy, stressed that "It is important to make rapid progress in this area. Renewable energy is a cornerstone in the Union's strategy for reaching the Kyoto target." He went on to state that the Commission would put forward concrete proposals on common rules for the support of renewable energy during 1998.

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