Monday, September 28, 2020
Home Climate The EU to establish a new financing mechanism to support renewables

The EU to establish a new financing mechanism to support renewables

The European Commission has opened a four-week public consultation for feedback on draft rules to establish a new EU financing mechanism to support renewable energy projects.

The main goal of this mechanism is to enable Member States to work more closely together in order to achieve their individual and collective renewable energy targets.

“We must use every tool we have to encourage investment in renewable energy,” commented Commissioner for Energy, Kadri Simson. “This new mechanism will provide another option for Member States to contribute to our energy and climate targets, investing in locations where renewable resources are abundant and developing them makes the most sense.”

As a result, the mechanism will also facilitate a more cost-effective deployment of renewables across the EU, in areas that are better suited for it in terms of geography and natural resources and ultimately, it will feed into the European Green Deal ambition of achieving EU carbon-neutrality by 2050.

“It is especially relevant in the context of the post-crisis recovery, where the mechanism could help stimulate the economy in hard-hit Member States, both by getting large-scale projects off the ground and by supporting local SMEs and creating jobs,” underlined Mrs Simson.

Member States are already committed to meeting national binding targets for the share of their energy coming from renewables by 2020. Currently, they primarily meet this figure based on the amount of renewables deployed on their territory through national measures. However, there is also an option for using cooperation mechanisms with other Member States such as statistical transfers or joint projects. The new financing mechanism opens a third possibility: Member States can collectively benefit from renewables projects funded through tenders using this EU-wide financing mechanism.

This new mechanism would enable contributing Member States to pay voluntary financial contributions into the scheme, which will be used to tender support for new renewable energy projects in all Member States willing to host such projects. This has the advantage that contributing countries that are struggling to meet their targets can finance renewables projects elsewhere, which count towards their targets and are potentially more cost-effective than renewables produced on their own territory. For the hosting Member State, the advantage is that it receives additional local investment in renewables projects – and can, therefore, enjoy the benefits in terms of local employment, lower greenhouse gases emissions, improved air quality, modernisation of the energy system and reduced dependency on imports.

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