EU to propose "generous" aid for renewable energy

EU: November 23, 2000

BRUSSELS - European Union Competition Commissioner Mario Monti said on Tuesday he would put forward proposals to allow generous state aid and tax incentives to promote renewable energy schemes.

"Renewable energy is a priority for the (European) Community," Monti told the European Parliament's Economic and Monetary Affairs Commission.

Under his proposals, he said, investors would have a guarantee that their full investment would be recovered.

The proposals, which still have to be approved by the EU's executive Commission, would take effect from January 1 for a seven-year period.

Monti generally backs strict limits on the aid that EU governments can give to industry. But EU Energy Commissioner Loyola de Palacio has said she considers financial support to renewable energies of the utmost importance.

The recent surge in oil prices has also highlighted the advantages of diversifying energy sources.

Monti said his proposals would permit EU governments to grant aid to investment in renewable energy schemes at a rate of 40 percent of admissible cost, with a further 10 percent permissible for small and medium businesses.

Member states would also be able to grant aid to cover the difference between the cost of producing renewable energy and the market price for electricity, he said.

"This aid will be allowed until the whole investment is amortized," he said.

Member states could also grant aid to running costs of renewable energy projects for five years, decreasing every year.

"These are very generous terms in terms of state aid but the objective is justified because we wish to promote renewable energies," he said.

Monti also held out the possibility that EU governments could offer temporary tax cuts or exemptions to foster renewable energy schemes.