UPDATE 1-EU exec wants green energy subsidies aligned, raised

Mon Jan 31, 2011 3:06pm GMT

* Oettinger wants green subsidies aligned, not retroactively

* Wants green investment doubled to 70 bln euros a year

* Industry body reports record investment in 2010

(Adds detail, quotes, background)

By Pete Harrison

BRUSSELS, Jan 31 (Reuters) - The European Union's energy chief called on member states to align their subsidies for green energy and ensure overall investment is doubled to 70 billion euros ($95 billion) a year to meet climate and energy security goals. Leaders meet on Friday aiming to reconcile an EU target of getting 20 percent of their energy from renewable sources by 2020 with a debt crisis that has pushed some countries to the financial brink.

Energy Commissioner Guenther Oettinger told reporters: "We have to consider the financing gap in the energy sector. In 2009, there was 35 billion euros invested in renewable energy. This will have to be doubled in a few years to 70 billion if we are to provide the low-carbon energy we need."

Europe beat all previous records for constructing renewable power last year, adding 22.6 gigawatts of new capacity, the European Wind Energy Association (EWEA) said on Monday. However, new wind power construction slowed by about one tenth, adding 9.3 gigawatts, the industry body added.

"Better access to financing is urgently needed, and the European Union must act without delay to prevent Europe losing its leadership in wind power and other renewable technologies," said EWEA Chief Executive Christian Kjaer.

Subsidies are needed for renewables to compete with fossil fuels which, according to the International Energy Agency, receive more than five times more subsidies worldwide. [ID:nLDE6A81BN]

DECADE OF SUBSIDIES

The Commission's strategy paper estimated that unravelling the tangle of Europe's national subsidies could lead to overall savings of about 10 billion euros a year, but warned against retroactive tinkering with support schemes.

Typically, EU states support renewable projects at a national level via a complex toolbox of quotas, grants, tax exemptions and feed-in tariffs.

"Industry has to be able to plan and to invest," said Oettinger. "In Spain and in the Czech Republic, there have been discussions in parliament about retrospective changes to help the budgets... We will not accept retrospective changes."

Support schemes in Spain and the Czech Republic have been among the most successful in Europe, as have those in Germany and the Netherlands, which are also under review.

Both Spain and the Czech Republic came close last year to hitting their interim targets for green electricity of 29.4 percent and 8 percent respectively, Commission data shows.

Environmentalists had feared the Commission would propose a deeper harmonisation of green support schemes, but welcomed the flexible approach announced on Monday.

"National support schemes for renewable energy have proved overwhelmingly successful in promoting the uptake of renewables," said Claude Turmes, a Green Group member of the European Parliament.

"We welcome that the Commission has acknowledged this and resisted the lobby by big energy utilities to undermine these national schemes," he added.

Hydropower, electricity from waste and photovoltaics in the Mediterranean are starting to compete economically with traditional energy sources, but most other renewable sources will need a decade more of subsidies in Europe, the Commission says.

(Reporting by Pete Harrison; editing by Rex Merrifield and Jason Neely)