Czech-mate for renewables
In a brief news release of July 25th, the Czech Government announced its plans to stop providing financial support to all new renewable energy investments, effective January 2014. According to Prime Minister Jiří Rusnok, the reason for this “legal amendment is the increasing financial burden placed on electricity consumers, due to the cost of support to renewable energy in electricity prices, which directly threatens the competitiveness of the industry and gives the consumer uncertainty regarding prices of electricity for next year.”
Since January 2012, WWF’s CrisisWatch has reported on the steadily eroding renewable support policies in many crisis-stricken EU member states: in March 2012, Spain imposed a halt on subsidies for all new investments until 2017; Greece and Portugal drastically slashed their subsidy policies in 2012 and continue to do so in response to their financial support programmers; Italy moves along the same track; the UK recently introduced cuts for onshore wind energy; Germany is also seeking ways to replace the current subsidy system.
Given that fossil fuel prices do not reflect the environmental cost of their production and use, subsidies for renewables has been an effective incentive for their development and for countering the need to curb global CO2 emissions. At the same time, a growing number of reports are turning the spotlights on fossil fuel subsidies and state support measures. An overview of 24 OECD countries has found that €12 billion have been allocated to the production and consumption of fossil fuels (figures for 2010) as government support, while a National Geographic initiative estimated tax breaks and other government measures for the oil industry in developed countries to be in the range of $45-$75 billion p.a. In January 2013, the International Monetary Fund (IMF) drew global attention to the hidden and overt subsidies provided to fossil fuels by governments around the globe, which distort the energy market and undermine the prospects for investments in renewables. Adding to this, the IMF suggests that the $480 billion pre-tax subsidies for petroleum products, electricity, natural gas and coal (2011), do not even protect consumers as they are captured mostly by high income households, encourage excessive energy consumption and promote capital intensive industries.
On World Environment Day 2013, WWF launched the “Seize Your Power” campaign in more than 20 countries. WWF’s aim is to establish a business case for moving new money into renewable energy, while pursuing public commitments from governments and international financial institutions to divest from fossil fuel projects.
Sources: Government of the Czech Republic (in Czech), Bloomberg, WWF’s “Seize your power” campaign.