European businesses fear ‘lost decade’ for renewables ahead of EU proposals

As the European Commission (EC) prepares to present its energy package for 2030 on Wednesday (30 November), a coalition of multinational businesses including BT, Philips Lighting and Kingfisher has called for more ambitious energy legislation to replace the current renewables directive.

In the build up to Wednesday’s proposal, the Prince of Wales’s Corporate Leaders Group (CLG) –members of which are collectively worth more than £115bn in revenue generating capabilities – has interviewed nine businesses about how the Renewable Energy Directive has impacted corporate policy.

Many of the businesses felt that the EC’s current proposals were insufficiently ambitious to deliver policy clarity. They spoke of frustration over a lack of policy enforcement, an incoherent framework and low levels of member state ambition, which has led to “inertia” from companies and consumers.

CLG Director Jill Duggan said: “Companies from a variety of sectors are calling on the EC for higher ambition on renewable energy, delivered through a robust framework with strong, visible ownership of the process by member states. The current proposals do not provide investors with sufficient clarity about renewable energy policies in their markets.”

‘Lost decade’

Wednesday’s strategy is the first step towards translating targets agreed in October 2014, when the European Union (EU) Council agreed a framework which included a proposed target of 27% of energy consumption drawn from renewable energy sources by 2030.

Until 2020, renewable energy targets are binding on member states. The 2030 renewables target is binding at EU-wide level, but after opposition from countries such as the UK, it will not be binding at national level.

The CLG, which recently outlined the importance of “business friendly” national government long-term policy planning to accelerate a low-carbon transition, has highlighted concerns over the disparity between member states’ engagement with the targets.

European business leaders view the absence of a common framework as likely to discourage investment in the transition to renewable energy, with fears that the focus for investment opportunities in clean technologies will shift to the US and China.

Duggan continued: “Member states must take early and ambitious action if they want to secure investor confidence. For many of those businesses we interviewed, the move from member state targets under the 2020 package to an EU-only target feels like a big backwards step. Without strong, determined coherent leadership on renewables policy by the EC, we risk a lost decade for renewables in Europe setting back our long-term plans.

“There is clearly a high level of ambition in these companies for robust renewable energy policy and it is encouraging that this is not only coming from energy and energy intensive companies but also those with less direct interest. The Commission now has a clear mandate to realise these ambitions.”

According to IKEA’s solar global business leader Alejandro Castro Pérez, member state lack of ambition leads to corporate lack of ambition. He said: “It’s too unambitious and not coherent enough – corporate planning suffers from this lack of ambition and too much uncertainty. If the EU were to get ahead of the game, IKEA could solve issues and implement policies at a much faster rate. We are failing to get the advantage from having a central EU body.”

Lowest common denominator

After leaked documents revealing renewable energy will no longer be a top priority in the proposals, major corporations including Google, Unilever and IKEA last week backed a call for improvements to the forthcoming package.

And now CLG members are echoing this call, suggesting that an EU-only target will fail to have the desired effect. Kingfisher’s head of carbon and renewables Jeremy Parsons said: “Setting an EU-wide target is always hampered by the lowest common denominator if you cannot set different objectives.

“For example, Spain has done its 27% – it is, in fact, at 40%, so what incentive do they have to do more? Then again, Poland isn’t even going to try…They have 1.2m people employed in the coal industry, providing 80% of their power generation –changing to renewables is not top of their list.”

Interface’s sustainability director Ramon Arratia is also sceptical about the proposed lack of member state targets: “An overall EU target is a bit irrelevant on its own – member states will make their own decisions –or not–on how to contribute to that target.”

George Ogleby

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