EU warned over solo greenhouse gases curb

- A unilateral European approach to curbing greenhouse gas emissions will drive energy-intensive industries to move to other countries, according to a joint policy statement by the region's biggest electricity producers and their largest industrial customers.

The International Federation of European Industrial Energy Consumers (IFIEC) and Union of the Electricity Industry (Eurelectric) said bills would rise as a result of European Union policies designed to encourage greater development of renewable energy schemes, such as wind farms.

An EU directive requires the amount of electricity generated from renewable sources to rise from 14 per cent to about 22 per cent by 2010. The actual increase would be even greater, as the directive excludes large hydroelectric schemes which form the bulk of current renewable energy capacity.

The European Commission is due to decide next year whether to propose making the targets binding. Electricity producers and customers say major competitors such as the US have yet to sign up to the Kyoto agreement principles requiring reduction of greenhouse gas emissions.

"A unilateral approach to curbing greenhouse gas emissions will lead to further market distortions and loss of competitiveness with the non-Kyoto world," they say. Economic reality will unavoidably drive energy-intensive industries to invest outside Europe, or even to close down existing plants within the EU.

"Introducing renewable energy unavoidably leads to higher electricity prices. Not only are production costs substantially higher, but intermittent energy sources like wind energy imply back- up capacity, which adds considerably to the end price."

The joint statement is critical of other energy policies being considered by the EU which it says would "lead to an unstable regulatory framework imposing costly and distortive burdens".

These could include allowing member states to provide "non-market" financial assistance for combined heat and power developments.