European Countries Cut Solar Subsidies; Why Not Cut Fossil Subsidies First?

Posted By Lowell F. on March 19th, 2012

An article in the Sunday Washington Post discusses serious cuts being proposed for the booming solar industry in Germany and elsewhere in Europe. Here’s an excerpt:

German policymakers indicated last week that they planned to cut once-generous subsidies as much as 29 percent by the end of the month, on top of a 15 percent cut in January, although some details were still being negotiated after protests from the solar industry. Britain and Italy have made similar moves, and in January, Spain abandoned its subsidies altogether, prompting outrage from the solar industry.

Just months ago, a solar firm planting a field of solar panels atop one of Hanover’s many sprawling warehouses would have been sure to turn a profit. Now, one solar developer who plans to do that says he’ll be lucky to break even now that the subsidies are drying up.

Advocates say that in sunny regions, solar energy is within several years of becoming cost-competitive with fossil-fuel power — if solar companies can stay in business in the meantime. Several companies have already declared bankruptcy. Others say they’ll give up on Europe and focus on developing countries, where poor infrastructure makes solar panels that work off the grid a cost-effective competitor to diesel generators.

While many concede that the subsidies have become overly generous at a time when solar panels have dropped dramatically in price, they insist that governments are reneging on their pledges to go green and argue that the rollbacks are happening too abruptly. Some question whether countries will still be able to boost renewable energy’s share of the power supply in 2020 to their goals of 20 percent in Britain and 35 percent in Germany.

In sum, countries like Germany are seriously considering cuts to solar power just as it’s taking off.  More broadly, these cuts raise questions about how seriously European governments are committed to their renewable energy goals.  Finally, it’s worth pointing out that these governments still provide billions of dollars a year in financial assistance to fossil fuel industries like hard coal and lignite. Perhaps, before even considering cuts to support for solar power, European governments like Germany’s should be cutting subsidies for dirty energy first?

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