Economy Prompts E.U. to Reconsider Climate Goals ; Renewable-Energy Aims and Limits on Hydraulic Fracturing May Be Relaxed

Article excerpt

European officials are having second thoughts about how aggressively to remake the Continent's energy-producing sector.

The European Union, which for years has sought to lead the world in addressing climate change, is tempering its ambitions and considering turning mandatory targets for renewable energy into a Europe-wide goal rather than national mandates.

In a set of proposals to be outlined next week, the union's policy-making body is also likely to resist efforts to restrict exploration for shale gas using the disputed technique known as hydraulic fracturing.

A deep and lasting economic slowdown, persistently high prices for renewable energy sources and years of inconclusive international negotiations are giving European officials second thoughts about how aggressively to remake the Continent's energy-producing sector.

The details are still being negotiated in the corridors of Brussels, but officials said the European Commission's energy and climate proposal will probably include an overarching and binding target of reducing emissions by 35 percent to 40 percent by 2030. Some officials wanted make the new targets for renewable energy nonbinding. But opposition this week appears to have turned the tide in favor of having a binding renewable target -- although it would be applied on a European Union-wide level rather than to individual nations, according to an official briefed on the negotiations.

An intense lobbying effort is underway, with advocates from various groups picking apart aspects of the package.

Jens Tartler, a spokesman for the German renewable Energy Federation, which represents the wind and solar industry, called an absence of binding goals for renewables "totally disappointing" and said it would "contribute to a marked reduction in the pace of expansion of renewables."

But even some in the renewable-energy industry say that the package that is emerging is the best that could be hoped for given the difficult economic environment.

"Of course people say we should be doing more, but we are moving in the right direction," says Tom Murley, who runs funds with 850 million euros, or $1.15 billion, in renewable investments at HG Capital in London.

The proposals, to be outlined next week, are being influenced by fierce debates over the place of nuclear power in Europe and the costs to governments, businesses and consumers of subsidizing the growing share of renewable energy. They also come against the backdrop of a shale gas revolution in the United States and debates over whether Europe should tap into its own potential shale reserves. The extensive new supply of natural gas in the United States has led to sharp reductions in emissions as utilities switch from dirty-burning coal to cleaner-burning gas for electricity generation.

A few months ago, the oil and gas industry worried that the European Union would use the energy paper to kill off shale gas drilling with a slew of new regulations and added costs. Instead, the commission appears to be settling for nonbinding recommendations that governments like Britain and Poland, which are most aggressively pursuing shale gas, might be able to further water down. The exploration of shale already faces headwinds as deposits in Poland are proving difficult to develop and as environmental groups move against the industry's efforts to drill in their communities.

Germany, which has pushed for the energy and climate targets, has been struggling with the realities of shifting its energy mix. Germany's plan, backed by Chancellor Angela Merkel and opposition parties, to close down all of its nuclear power plants and build up renewable energy is running into problems. German consumers are being hit with rising electric bills, and businesses worry that energy costs are putting them at a disadvantage with competitors in countries like the United States. …