Europe Struggles On Green Push

"This was supposed to be renewable energy's big year in Europe. It isn't going according to plan.

After sanctions on Russia pitched the continent into an energy crisis last year, European leaders moved to bolster energy security and speed up their embrace of alternatives to fossil fuels. But those efforts appear to be falling short, even as a government-fueled boom in the U.S. draws attention and capital.

The Biden administration's Inflation Reduction Act is juicing prospective returns for U.S. low-carbon projects in areas such as renewables and carbon capture and storage, according to investors, bankers and analysts. Some makers of clean-energy equipment are planning to set up shop in the U.S. to take advantage of tax credits.

"People are responding to that and saying 'Let's focus our attention on the U.S., things are going to move quickly,'" said P.J. Deschenes, co-head of Nomura Greentech, a sustainable infrastructure-focused division within Nomura Holdings Inc., the Japanese bank.

Some large companies, such as the Geneva-based energy and commodity company Vitol, are planning to focus on the U.S. Vitol is likely to spend a substantial portion of its budget for energy-transition projects in the U.S., largely because of the act, according to a person familiar with Vitol's plans in this area. A Vitol spokesperson said that projects are evaluated on a case-by-case basis.

Italy's largest utility, Enel Spa, plans to build a colossal U.S. solar-panel factory that could eventually produce as much as 6 gigawatts of panels a year, which would be one of the largest such ventures in the country. It is also working on green-hydrogen projects and building a vast network of electric-vehicle charging points across the U.S.

Soaring costs are also creating particular challenges for offshore wind power. That is being felt in both the U.S.and Europe, but offshore wind makes up a much larger slice of Europe's renewables market.

The developments are a setback for the European Union, which has prided itself on strict environmental regulation. The bloc was an early supporter of clean energy, using subsidies to help spur large wind projects, and pioneering the use of financial tools such as green bonds.

EU states and the bloc have provisionally agreed on a headline target that 45% of all EU energy be renewable by 2030, up from a previous proposal targeting a 40% level. However, a December report from the International Energy Agency, or IEA, said the EU's plans aren't enough to hit the 2030 target, citing insufficient policy support and long delays for project permits.

"It's becoming almost comical: The gap between what European policy makers are saying and what's happening on the ground is absurd," said Morten Dyrholm, a senior vice president at Vestas Wind Systems A/S, Europe's largest turbine maker.

Overall, renewable energy installations in Europe rose last year, with an estimated 38 gigawatts of solar and 20 gigawatts of wind installed, the IEA says. But building projects takes time, and more forward-looking measures are less positive. Renewables investment dropped last year in both Germany and the U.K., Bloomberg New Energy Finance data shows." [1]

1. EXCHANGE --- Europe Struggles On Green Push
Hirtenstein, Anna.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 29 Apr 2023: B.13.