Permitting bottlenecks may prevent EU from reaching its 2030 climate goals: trade group
The EU may not be able to reach its 2030 climate goal despite record investment in new offshore and onshore wind capacity across the continent in 2020, according to a WindEurope report.
Released 13 April, the report said complex permitting procedures, not capital, remain the biggest hurdle to building onshore wind capacity in Europe.
If the problem with permitting remains unaddressed, the advocacy group warned wind energy may not be able to its part on delivering on the EU's 2030 target of reducing GHG emissions by 55%.
Wind energy, especially the onshore kind, remains a viable and attractive decarbonization option in Europe. Investment increased sharply in 2020, despite the pandemic-induced economic crisis, said Guy Brindley, WindEurope's senior wind energy finance analyst and one of the report's coauthors.
Some project delays were encountered, but "clearly they were not substantial," Brindley added during a 14 April webinar on the report.
Compared with the €24.5 billion ($29.33 billion) raised in 2019, new wind farms investments in 2020 rose 75% to €42.8 billion ($51.18 billion).
Financing of newbuild capacity represented more than half of the estimated €80 billion ($95.79 billion) spent on wind energy projects, which included €6.5 billion on refinancing, and €9.9 billion in company acquisition deals.
Record year for offshore projects
In 2020, WindEurope said the main driver for new growth was "the record year for offshore financing." The group also said the 2020 total marked the second-highest level since 2016, when developers sought to pre-empt the phasing out of "feed-in tariffs," or fixed electricity prices paid to renewable energy producers for each unit of energy produced and fed into the grid.
"As one of the most mature, proven renewable technologies that can be delivered at scale, wind projects present an extremely attractive opportunity for investors," Edward Northam, Head of Green Investment Group (GIG) Europe, said in a statement accompanying WindEurope's report.
Northam said the challenge currently facing the sector therefore lies not in access to capital, "but in accessing a pipeline of investable projects".
As the report makes it clear, even a strong investment performance in 2020 doesn't guarantee that the EU's aggressive GHG emissions reductions target of 55% by 2030 will be met. The EU's 2030 goal requires 27 GW a year of new wind energy between 2021 and 2030, but the region added just 10.5 GW of new wind energy capacity in 2020.
"As things stand, we expect [Europe] to install only 15 GW a year over each of the next five years," said the report, which summarized financing activity across the European wind sector in 2020.
Apart from complicated permitting procedures, the report said there is dearth of staff to handle applications for existing volumes, "let alone the higher volumes needed for our climate and energy goals."
In some countries, permits are extremely hard to obtain, WindEurope Chief Policy Officer Pierre Tardieu said during the webinar, pointing to Italy, where 100% of onshore wind projects in the past several years have been rejected by superintendents, or local officials charged with preserving cultural artifacts.
Italy at this rate, he said, will find it "very, very difficult" to meet its share of the EU's climate goal, which is a 30% cut in GHG levels below 2030.
Tardieu said the existing EU framework is not working. He said the European Commission's existing framework will not deliver the huge volumes of wind power needed to meet the 2030 climate goals.
The "Fit for 55" legislative package currently under review before the EC should include steps to overcome the permitting bottlenecks, Tardieu added.
The report covered wind energy financing and installation data from the 27 EU countries as well as Belarus, Georgia, Kosovo, Montenegro, Norway, Russia, Serbia, Switzerland, Turkey, the UK, and Ukraine.
According to WindEurope, offshore wind garnered record financial backing in 2020 among European countries, while onshore installations slipped to their lowest investment level since 2016. Investment in offshore wind exceeded onshore wind for the first time in 2020.
Investments in offshore wind farms totaled a record €26.3 billion ($31.44 billion), which financed 7.1 GW of capacity. In contrast, investments totaling €16.5 billion ($19.73 billion) financed 12.5 GW of new onshore capacity.
While the industry anticipated a low onshore wind investment figure in the wake of the COVID-19 pandemic, the report said "it is vital that European onshore wind recovers quickly to meet the targets needed to deliver on the 2030 climate and energy goals, an outcome which will require significant further investment."
It is evident, "it's not the money, it's the number of projects that are needed," Brindley said.
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