A troubling first sign that Europe’s fiscal crisis will hit the renewable energy sector emerged in Italy this week when the country’s austerity budget halted a practice whereby the government acted as a buyer of last resort for “green certificates” issued to support development of clean energy projects.
The Wall Street Journal reported that the anticipated suspension of state-run energy management agency GSE’s participation in the scheme—which provides collateral for efforts to finance new wind and solar parks—has already sent prices plummeting in the country’s $9.2 billion green-certificates market. The scheme costs the Italian government around $610 million a year.
The news comes on the heels of a report by HSBC that says that Europe’s much-vaunted renewable energy sector will come under pressure from efforts to curb government spending and redress budget deficits. According the WSJ, the report claims that Spain, Italy, Slovakia and the Czech Republic may well be forced to withdraw support for renewable energy. In Britain, Green campaigners responded angrily to the new government’s emergency budget, released on Tuesday. The Guardian Newspaper reported that”Hopes that the emergency budget would shed light on plans for a green investment bank, renewable energy and financial incentives for individuals to make their homes more energy efficient were dashed.”
Hard times may call for hard measures, but European green campaigners will be frustrated that sustainability projects are under threat as a result of years of unsustainable spending by Europe’s governments.