Electricity supply

Electricity supply

2010

Climate policy has traditionally focused on this sector and long-term experiences with policies exist. A few countries have long-standing policies. The maximum rating is a ‘C’, however most countries are well below halfway to achieving the goal, with an average rating of ‘E’.

Germany and Denmark have stable support systems for electricity generation from renewable energy. Both have operated feed-in tariffs for over a decade. Policies to support combined heat and power are relatively advanced in Ireland, Germany and Spain. Performance in overarching issues for electricity supply is generally low due to the un-ambitious cap of the electricity sector in the emission trading system; no emission performance standards for new power plants leading to newly built coal fired power plants and widespread subsidies, in addition to tax exemptions for fossil fuels.

2011

Reduced support for renewable electricity, mainly for solar photovoltaic (PV), partly justified
Some countries reduced support for renewable electricity, mainly the support levels for solar photovoltaic (Slovak Republic, Czech Republic, Italy, France, Spain, UK, Estonia, Germany and Belgium). The reduction of support levels for solar PV is justifiable given the decrease in production cost and very strong market growth. Still, the support reductions were often implemented as a step change and have reduced future investment certainty. This is especially the case in Spain and the Czech Republic, where the support for solar PV was cut retroactively, either by cutting the tariff or by introducing a tax for existing installations.

Energy

Countrysort icon Details per country
AUSTRIA

Renewable Energy
Austria traditionally has a large share of renewable electricity, mainly from hydropower. Since 2002, renewables are supported mainly through the Austrian Green Electricity Act (Ökostromgesetz).
The feed-in tariff has undergone various changes, including limited budgets, which has led to a decline in new installations. The support scheme has recently been adjusted with prolonged guarantee periods and a higher budget. Small hydro and photovoltaics (PV) are now covered through an investment scheme and not by the feed-in tariff. These agreed changes are promising and could re-stimulate capacity increases especially in the fields of wind, hydro and biomass. In July 2011, an amendment of the Ökostromgesetz was published which still needs to be notified by the EU Commission. The amended law will run until 2020.
There is no preferential grid access and the cost for grid extensions is often paid for by the renewables project. This could be improved by adjusting legislation accordingly. The preferential dispatch rules are exemplary. However, no overall strategy for a fully renewable grid structure exists.
The government plans to increase the budget available for renewable electricity (RES-E) support with a one-off €110m fund which will help to reduce waiting lists that have been building-up. In addition, the annual amount of support increases from €21m to €50m, which is split between renewable energy (RE) technologies according to their potential.

BELGIUM

Renewable Energy
In Belgium, renewable electricity is promoted through quota obligations, green certificates and by giving it priority on the grid for both connection and congestion. However, there is not yet a strategy designed to create a grid that can accommodate a large share of renewable electricity.
In the Flemish region, the minimum prices for solar PV were lowered in January and July 2011. They will be lowered again in October 2011 and after that at longer intervals.

BULGARIA

Renewable Energy
Bulgaria passed ambitious renewable energy legislation in 2008 and attracted a lot of potential investors applying for support (PV: 1.6 GWp).
Unfortunately, the strategy for reaching the EU renewable energy targets has not been well structured. This resulted in a (temporary) suspension of the policy until the implications for the public budget are brought to light.
Additionally, the national grid operator continued to control (and thus to limit) grid access of renewable electricity projects.
In April 2011 a new renewable energy act came into force. It fixes the feed-in-tariffs for green electricity producers for a number of years – 20 years for PV, biomass and geothermal and 12 for wind, hydro and other sources.

CZECH REPUBLIC

Renewable Energy
A national action plan for renewable energy was published in July 2010 and approved by the Decision of 25/08/2010, presenting targets for 2020; following this action plan, a review of the renewable energy installations validation process is currently on-going.
A feed-in tariff and green bonuses are in place in the Czech Republic to support the use of renewable energy in electricity generation. The tariff level depends on the technology used. The instrument provides a good legal framework, but long-term reliability has been affected by political decisions. Recently, PV support was lowered as it was decided that the national renewable energy target could be reached with less effort. At the end of 2010, the feed-in tariff (FIT) for PV was lowered substantially for 2011, now only being roughly half of what the 2010 tariffs were. In addition, a tax of 26% on the electricity generated from PV plants installed in 2009 / 2010 was introduced. This increases the instability of the support framework.
Additional constraints relating to renewable energy are currently being discussed by the government, in the form of an obligation to equip all installations of 100 kW or more with an automatic dispatch control which would mean renewable energy production could be automatically curtailed.
In theory, renewable installations are preferably connected to the grid while the congestion management is non-discriminatory. However, currently, applications for grid connection are being denied as new renewable capacity is exceeding the available grid capacity.
The transmission system situation will continue to present a large barrier as planned investments into the infrastructure are insufficient.
In March 2010, the Czech Ministry of Environment issued guidance on the development of PV, wind, biomass and biogas projects, as well as a whole new online information resource describing technical aspects of renewable energy technologies (biomass, wind, biofuels, PV, solar thermal, small hydro, geothermal, biogas).

DENMARK

Renewable Energy
Denmark has high levels of renewable electricity generation installed, especially wind. Support is in place through price premiums and tenders for offshore wind power. Support levels are subject to regular review, but for each individual installation the conditions at the moment of grid connection apply and stay constant over time.
Support is given to different types of installations, except large hydro (>10MW), very small home photovoltaics (PV) systems (<6kW) and geothermal power production.
Especially for biogas, the Danish guaranteed price of 0.76 DKK/kWh is considered too low to secure investment. Furthermore, a lack of clarity regarding the potential for future sales of biogas through the natural gas network hampers growth in this area. The Energy Strategy 2050 plans to increase the use of biogas by subsidising biogas production and ending the use of coal. The transmission grid operator Energinet.dk provides some additional subsidies to small installations and loan guarantees to research opportunities for local wind power generation.
Denmark has an objective to double the share of renewable energy, so that it accounts for at least 30% of energy consumption by 2020 (extended final energy consumption) and 20% by 2011 (gross energy consumption) compared to 15% in 2007. These targets are derived from the EU Renewable Electricity Supply target of 20% renewable electricity supply by 2020. Denmark has agreed to a 30% renewable energy objective as part of the ‘burden sharing’ arrangement agreed under this target. The 20% renewable energy target by 2011 was established by the Parliament as a result of an energy agreement between both government and opposition parties for the period 2008-2011. The long-term vision for Denmark is to be 100% independent from fossil fuels.
Denmark promotes renewable electricity through price regulation. Producers receive a variable premium on top of the market price. The sum of the premium and the market price shall not exceed a certain statutory maximum, which depends on the date of grid connection and the source of energy used. For wind energy, a fixed premium is given on top of the market price for a certain period. In some cases, plant operators are granted a guaranteed bonus and are thus not subject to a statutory maximum. Transmission grid operator Energinet.dk pays an additional subsidy to small systems for the generation of electricity, even small pilot projects are eligible.
In recent years, Denmark has experienced difficulties in finding locations for onshore wind turbines, in part due to political hesitation originating from scepticism toward wind turbines. In 2008, a compensation scheme for wind turbine neighbours was introduced, which makes the deployment of onshore wind turbines more difficult and expensive.
Denmark is introducing sustainability criteria for biomass used for the production of biofuels and bioliquids as set out in the Renewable Energy Directive; its voluntary sustainability criteria for biomass and biofuels is in development.
biomass and biofuels is in development.

 

ESTONIA

Renewable Energy
The February 2010 amendment of the Electricity Market Act reduced the level of support for renewable electricity. Now only a premium of €53.7/MWh is available for renewable electricity. The support is not differentiated by technology and is paid for a maximum of 12 years. However, since 2010, producers can apply for higher tariffs to cover all costs.
Under the GIS, around €22.4m were allocated for the construction of new wind farms.
Wood and wood waste are by far the main renewable energy sources (accounting for about 97%).
Barriers exist, mainly in the integration of wind power into the electricity system.

FINLAND

Renewable Energy
In the beginning of 2011, Finland introduced a feed-in premium scheme to promote use of renewable energy. The premium is equivalent to the difference between the target price and the market price of renewable electricity. An exception is made for electricity production using wood chips, where the premium price depends on the emission permit price. The higher the permit price, the lower the premium. Renewable energy technologies that are eligible for this scheme are: Power by wood chips (> 100 kW), Wind power (>500 kW), Biogas power plants (>100 kW and efficiency > 50%) and Wood fuel combined heat and power (> 100 kW, >8 MW). The tariff prices (i.e. the target prices) are €83.50/MWhe for wind power (with the exception of €105.30/MWhe for the first three years of a wind power plant until 2015), €83.50/MWhe for biogas and wood fuel combined heat and power. For biogas and wood fuel combined heat and power the additional premium for heat production is €50 for biogas and €20 for wood fuels for each produced unit of electricity. Small hydropower (<10 MW) receives energy production subsidy of €4.20/MWhe and investment grant of up to 40% of the investment costs.

FRANCE

Renewable Energy
A feed-in tariff is the main support instrument in place for renewable electricity. The tariff is differentiated according to the technology used. PV, geothermal and offshore wind power receive the highest tariffs. The support is granted for 15 to 20 years and is not generally capped. There is a cap for PV regarding the number of hours that can benefit from the tariffs.
As the current PV projects widely exceed the country’s objectives, France has decided to reduce its feed-in tariff (FIT) for this technology and increase regulation. Since July 2011, PV installations below 100 kWp receive significantly lower tariffs which will be reviewed on a quarterly basis. For larger installations and ground-mounted ones, only those selected via tenders will receive support: a European call for tender was published in July 2011 for roof installations above 250 kWp and ground-mounted installations, and a national call for tender was published in August 2011 for roof installations between 100 and 250 kWp. A new quality label was launched in July 2011: AQPV. This label is meant to promote high-quality and French-manufactured PV panels.
Small biomass installations also benefit from the feed-in tariff since the end of 2009 and the lastest amendments made in January 2011, support large installations through a call for tenders for biomass projects.
On 5 July 2011, a European tender was published for French offshore wind projects. The aim of this tender is to develop 5 wind farms, each in a specific region; the size of each wind farm will vary (from a minimum of 420 MW to a maximum of 750 MW), and the sites are planned to be operational by 2017.
With regard to access and use of the grid, renewable energy plant operators are not given preferential treatment. Both are handled without discrimination against any technology or operator. Only the existing electricity suppliers are obliged to purchase renewable electricity and benefit from national compensation. This creates, de facto, a competitive distortion in the access to renewable electricity between existing suppliers and newcomers. The French grid (except for some French islands where the limit of renewables in the grid has been reached) is quite well developed and can, at least currently, support renewables without additional investment. Thus there is no strategy targeting renewable energy oriented grid structures. However, there is funding for studies in the field of smart grids which in the future will be able to support an increased share of renewable energy.

GERMANY

Renewable Energy
Germany has a differentiated support system for various renewable energy technologies, leading to several types being used. The high feed-in tariff guaranteed for a period of 20 years led to a strong increase in the production of renewable energy. It has grown from 3% in 1990 to 17% in 2010 and 20% by the first half of 2011.
Even though the government has introduced cuts to the tariff for PV, the overall level of support is still sufficiently high to trigger further investment. As of July 2010, feed-in tariffs for solar photovoltaics (PV) have been lowered substantially and future decreases have been accelerated. The rate of decrease is related to the level of PV market development. The reduction of tariffs was further tightened in April 2011. Solar PV is no longer supported on agricultural sites. PV development has slowed down substantially in the first half of 2011.
Biomass: The feed-in tariff is apportioned to and thus paid for by end consumers, and it is planned that households will not have to pay more than an additional €3.5 ct/kWh. Therefore, the government plans to cut the feed-in tariff for biomass.
Electricity producers that generate at least 50% of their electricity from renewables and at least 20% from wind or sun were exempt from additional costs that other electricity producers had to pay if their renewable electricity was not supported through the feed-in tariff. This exemption is abolished as of January 2012. However, apportionment is limited to €2 ct/kWh for these producers, while it was around €3.5 ct/kWh in the past year for other producers.
Improvements are needed in the field of congestion management and improvement of the transmission system. Currently grid operators do not need to accept new renewable energy under specific conditions in case of congestion. This could potentially see the latest and thus most efficient wind plants being turned off.
In June 2011, the government amended the legislation by enacting the Grid Expansion Acceleration Act (NABEG) and the Energy Industry Act (EnWG), which improved the conditions for grid expansion. The EnWG requires transmission system operators to present annually a grid development plan to the regulator, from 2012 on. These three year plans are to contain measures that are necessary to secure grid operation, including a timeline, and information on how previous measures were implemented.

GREECE

Renewable Energy
The primary support instrument for renewable electricity is a feed-in tariff that was introduced in 2006. It covers all renewable technologies and the tariff depends on the technology used. Still, the administrative and technical environment is not very favourable as there are significant project delays – these are mainly due to legal appeals, delays in the construction of power plants because of transaction of licenses among the investors and the lack of access to a proper electricity grid. Major barriers, especially for wind development, include the lack of integrated and binding national land use planning, access to information and stakeholder involvement.
 
To deal with these problems a law was introduced in 2010 to accelerate the licensing of renewable energy projects. This initiative has been criticised for oversimplifying procedures which could endanger environmental protection. The law allowed the regulator to issue a higher number of permits for renewable energy projects in 2010 than in all previous years cumulatively. Additionally, a new biodiversity law adopted early in 2011 limits the potential for renewable energy development in some categories of protected areas.
 
The framework for PV development supports fast growth in the residential sector. However the initially defined capacity cap for residential installations and the framework for agricultural PV installations were criticised. The cap on residential installations was finally removed. Investigations into geothermal energy potential started in 2011.
 
In the connection to and use of the grid, renewable energy projects are preferred to conventionally fuelled sources. Concerning the electricity network development, in 2010 a study was published on the interconnection of Crete and the continental system in line with scenarios of high renewable energy penetration levels.

HUNGARY

Renewable Energy
The main support instruments at national level are the feed-in tariffs for electricity and the investment grants from EU structural funds.
The available budget for renewable electricity is limited. Most of the feed-in tariffs were used to support pure gas and also biomass co-fired combined heat and power plants, which received around two thirds of feed-in funding. In 2009, only 4% of electricity consumed was generated using renewable energy sources. From the funding going into renewables, most is provided to coal plants using 10%-20% biomass for co-firing. This makes the power companies running the coal plants more profitable and slows down the move to renewables. This system is being abolished in the course of 2011, so that feed-in tariffs for electricity will be paid only to power plants fired purely with renewable energy. A new form of support for gas or biomass-fired heat production in combined heat and power plants is expected by January 2012. A tender for a 410 MW wind power project was cancelled; capacity remains at 330 MW.
The concession fee for coal mining was increased significantly, but is still below the fee for gas drilling when comparing the energy content.
The Hungarian government stimulates the agricultural sector to intensively participate in the development of the bio-energy segment through supporting second generation biofuel production (NREAP).
There is support for three categories of bio-energy, among which is solid biomass for electricity production.

IRELAND

Renewable Energy
Ireland has excellent wind power conditions, yet its share of renewable energy has only increased by 7% over the last 20 years. In 2006 a feed-in tariff was implemented (ReFIT), with the aim of 40% of renewables in gross electricity consumption by 2020. The scheme covers large and small-scale wind energy, hydro, biomass landfill gas, and other biomass.
In 2009, this was extended to cover biomass/anaerobic digestion combined heat and power, ocean energy (wave and tidal) and offshore wind, although so far the extended scope has not received EU approval and cannot be implemented. The country has started to investigate how to integrate larger amounts of wind electricity into its all-island grid. Planning is now at an advanced stage.

ITALY

Renewable Energy
Support for renewable electricity is high but important barriers need to be removed to meet future targets, such as administrative bottlenecks.
There is grid priority for renewable energy producers, and they are granted priority in transmission, as long as grid security can be maintained. In this sense current grid capacity is not sufficient. The national grid operator (Terna) has an ambitious investment plan which will hopefully solve the current congestion problems, especially in Southern Italy, where most of the wind capacity is present.
The support is guaranteed for 15-20 years (differentiated by technology). However, the stability of support is not completely predictable in the absence of a medium to long-term strategy and because of frequent changes.
In 2009, a 15 year feed-in tariff for RES-E schemes under 1 MW was introduced. This tariff is expected to have a significant impact on the market.
Photovoltaics (PV) are supported with a premium (Conto Energia) initially introduced in 2005 and then modified again in 2007. This premium for PV production is constant for 20 years and differentiated by size and level of architectural integration.
In August 2010 the third Conto Energia introduced important changes such as new rules and tariffs for plants becoming operational as of January 2011, incentives also for concentrated PV plants, a national target of 8,000 MW by 2020.  But this version will not last long: in March 2011 it was decided by Decree Law 28/2011  that Conto Energia III will only be valid for plants becoming operational before 31/08/2011. For PV plants that becoming operational after 31/08/2011 a new Conto Energia IV was published by Ministerial Decree in May 2011.
The Decree Law 28/2011 also introduces some important news for other RES: a new incentive system will be established for electricity producers with renewable sources beginning their activities after 01/01/2013; the green certificate mechanism will end in 2015 with a transition period between 2011 and 2015; and administrative simplifications will be introduced. A new complete set of measures for renewable energy and energy efficiency starting in 2013 is expected to be published in autumn 2011.

LATVIA

Renewable Energy
Latvia has a high share of renewables in electricity production, which is mainly due to a history of large-scale hydropower, although this has decreased over the last years. The support policy is based on a feed-in tariff which is differentiated by technology and sufficiently high, but capped to a limited share of consumption per technology.
Since April 2010, a new feed-in tariff has been implemented. The tariff is granted to biomass, biogas, solar and wind power stations on the basis of a tender. Hydropower plants receive feed-in tariff by submitting an application and necessary documents to the Ministry of Economy and they do not participate in a tender. The new regulation is more transparent and clearer for all. All renewable energy technologies receive support for 20 years. Hydropower receives support if the installed electric capacity is less than 5 MW. For renewable electricity produced in large power plants a reduced feed-in tariff is applied. After 10 years of operation, the level of support will be reduced.
Additionally, some taxes are favourable for renewables, financial support is available from EU structural funds, and climate change financial instruments are used.
However, high uncertainty due to frequent policy changes and changes in the permitting and planning procedures hamper investment. The Law on renewable energy was due to come into force on 1 July 2011, however by the end of August it had yet to do so. On 9 June 2011 the first reading of Law took place, the second one could be submitted until 15 September 2011.

LITHUANIA

Renewable Energy
The current support instrument is a feed-in tariff differentiated by technology and guaranteed for 10 years. However, several barriers exist, like long lead-times for authorisation, environmental impact assessment procedures, and changes in the legal status of land. The adoption of the new law on renewable energy could have positive impacts for the renewable energy sector development in Lithuania.

LUXEMBOURG

Renewable Energy
A feed-in tariff for wind, solar, hydro, sewage and biogas, solid biomass and waste wood was introduced in 1993 and amended in February 2008. It can be combined with investment subsidies. The mechanism has sufficiently high tariffs for different types of technologies, fixed tariffs for 15 or 20 years and a policy without end date and no cap. However, it has not managed to trigger substantial investments in line with the potential of the country.

MALTA

Renewable Energy
In the policy mix for land owners there is support for small grid-connected photovoltaic (PV) and wind installations, net metering for small PV with a fixed electricity price that is lower than the market price, and soft loans. There is no investment security with the existing system, as support can be terminated at any time.
Malta has increased the feed-in tariffs for solar electricity to €25 ct/kWh on the island of Malta and €28 ct/kWh on the island of Gozo. Prices are guaranteed for eight years. The feed-in premium of non-domestic solar energy is €20 ct/kWh and is guaranteed for seven years.
Malta is considering building an offshore wind park in the Mediterranean Sea. Feasibility testing is ongoing. It is unknown when the final investment decision will be made.

NETHERLANDS

Renewable Energy
A new key financial support instrument for renewable energy, called the SDE+ to replace the feed-in premium scheme, SDE. A budget capped at €1.5bn for new installations will be available as from 1 July 2011. It is equivalent to approximately €100m per year. The main difference is that the SDE+ optimises short-term implementation, with a strong focus on cost-effective technologies. Also small-scale PV (<15 kWp) are no longer eligible. The scheme has four sequential subsidy rounds, increasing per round from €9 ct/kWh to €15 ct/kWh. The previous scheme to support innovative but currently more expensive technologies (e.g. geothermal energy, solar PV, off-shore wind) was put on hold. Changes to the system for 2012 onwards have yet to be determined – a requirement for co-firing of biomass and subsidies for renewable heat is under consideration.
Administrative bottlenecks with regards to renewable energy exist, especially for onshore wind power. Policy on renewable energy has been unstable over the last decade. Although the current subsidy scheme gives 12-15 years support once a subsidy is granted, the former scheme stopped unexpectedly in 2006. It took two years for this gap to be filled by the current scheme. Preferential treatment of renewable electricity is not yet established, but introduction of a new policy is underway. Noting the current share of renewable energy in the Netherlands this is not (yet) a barrier for growth of renewable energy.
The Netherlands is considered a frontrunner in sustainable biomass criteria. The Cramer Criteria of 2006 are described in the standard NTA 8080, which is more stringent than EU legislation. Subsidies for biomass within the SDE scheme are not yet subject to sustainability criteria, but some ‘high risk’ biofuels (palm oil) are excluded.

POLAND

Renewable Energy
Support for renewable energies in the electricity sector is granted through a quota in combination with certificates of origin. The certification is the same for all technologies, so expensive technologies, like photovoltaics (PV), are not especially supported. The quota will increase from 10.4% in 2010 to 12.9% in 2017, which is only a third of the required increase. Experts see the current system as expensive and not very efficient. From 1990-2008, the share of renewable electricity increased by just 3%. The approval phase for renewables projects is rather long.
Renewable electricity producers are granted access to the grid ‘without discrimination’, i.e. not preferentially. Regarding congestion management, renewable electricity is treated preferentially. The Polish grid infrastructure in general will be reinforced, and renewables are one of the reasons for that. However, no strategy taking into account the special needs of renewables exists.
The National Action Plan for Energy from Renewable Energy Sources targets a 15.5% share of renewable energy sources in energy production by 2020. Meanwhile, in accordance with EU energy and climate package, Poland should by then be producing up to 15% of green electricity and heat.

PORTUGAL

Renewable Energy
Feed-in tariffs are available for almost all renewable electricity producers and have, in combination with tendering schemes for wind and biomass, proved to be very effective. They have led to very steep growth of both installed capacity and produced electricity over the last five to six years. Both the scheme and the tariffs are continuously monitored against results and level of maturity of the market. The scheme is used in combination with periodic tenders to assign grid connection lots.
Specific micro-production (up to 5.78 kW) and a new mini-production (up to 250 kW) subsidy schemes are available for households and SMEs.

ROMANIA

Renewable Energy
The 2010 targets for renewable electricity were already met in 2007. Romania has renewable energy policies, but they are not effective yet. Most were planned to become effective between 2008 and 2010. Because of economic recession, these laws are still postponed.
Green Certificates became operational in 2005. The annual quota for renewable energy that benefits from this promotion system is increasing every year. The strategy is to give renewable electricity priority access on the electricity grid, but implementing measures are not in place.
Romania developed a biomass master plan in July 2010, but has yet to implement it. Specific measures for the promotion of the use of energy from biomass are included in the National Renewable Energy Action Plan.
Law 220/2008 for the production of electricity from renewable energy sources has been modified and completed by several legislative acts. The application norms for Law 220 are in place and approved by the Romanian Government. The European Commission approved the Romanian Green Certificates renewable energy support scheme.

SLOVAKIA

Renewable Energy
The key support instrument for renewable electricity is a feed-in premium, where a fixed price is paid in addition to the current electricity price. Additionally, renewable energies are exempt from the consumption tax and voluntary green certificates for renewable-based electricity can be used. In 2010, legislative amendments reduced support by lifting the maximum tariff decrease limitation.

SLOVENIA

Renewable Energy
The relatively well functioning renewable electricity support scheme is differentiated by technology and valid for 15 years. Producers of smaller plants may choose between a feed-in tariff (guaranteed purchase) and a feed-in premium (on top of power price) for renewable energy plants up to 5 MW and combined heat and power (CHP) plants up to 1 MW. Larger plants are only eligible for the feed-in premium. The Spatial Development Strategy defines the use of renewable energy sources as a priority for new or modernised public infrastructure. An amendment to the Regulation on Support of Electricity Produced from renewable energy introduces a 10% annual decrease of support for PV installations until 2014.
Slovenia objects to an EU standard for sustainable biomass criteria especially for energy use, warning that such standards would have to be applied globally.

SPAIN

Renewable Energy
Spain supports the use of renewables for electricity generation by a feed-in premium or a feed-in tariff. The level of support for renewables has been rather high. The support is differentiated according to technology. Biomass has never succeeded in Spain because tariffs are too low.
Tariff cuts in 2011 (especially for PV and wind) and new regulations introduced by Royal Decrees 1614/2010, 1565/2010 and 14/2010 severely slowed the deployment rate for both technologies and has also negatively affected other renewable energy sources, such as solar thermal electricity.
The administrative environment for renewable projects could be improved. The policy framework is unstable because in the past, the target for PV and biomass was surpassed and a cap was introduced in 2009. In addition, attempts were made to change the framework retroactively, causing protests by investors. Spain is very decentralised and at the moment, permitting procedures differ from region to region. On the positive side, grid access and congestion management give preference to renewables by law in the whole of Spain. Nevertheless, a non-transparent framework and high administrative burdens can cause difficulties in accessing the grid. An expansion of the Spanish power grid is envisaged, but without a special focus on the needs of renewables.
With the implementation of the new Sustainable Economy Law 8% of investment in renewables can be deducted from income tax.

SWEDEN

Renewable Energy
Sweden has had a tradable green certificate system in place to support renewable electricity, which has remained relatively unchanged since 2003. The system provides a relatively low level of support and is not specified by technology. Legislative amendments which entered into force on 1 July 2010 extend the quota obligation until the end of 2035. The new renewable electricity target determines that renewable electricity production should increase by 25 TWh in 2020 compared to 2002 levels. Currently, the electricity certificates system applies only to electricity produced in Sweden. However, Norway and Sweden have agreed to introduce a joint green certificates market as from 1 January 2012. From 1 January 2011 bio-liquids used to generate electricity must demonstrate that they are sustainable in line with the Renewable Energy Directive. Peat is not yet defined as non-renewable. Investment support was given to certain technologies, including offshore wind and wind in remote areas until 2009. Solar heating has been supported but will not be supported as from 2012. Stopping support for solar electricity by 2013 is currently under discussion. Lead times for the implementation of projects are relatively long compared to other EU member states. This lack of support instruments for many renewable energy technologies results in a relatively low ranking for Sweden in this area, despite its high current share of renewable electricity production.
In 2009, biomass overtook oil to become the number one energy source in Sweden. Sweden’s target under the EU Renewable Energy Directive is 49% renewables by 2020. The government has adopted a 50% target.

UNITED KINGDOM

Renewable Energy
A Renewables Obligation has been in place since 2002, which places an obligation on electricity suppliers to supply an increasing percentage of renewable electricity. It is a stable policy, which will be in place until at least 2037. The UK achieves around 6% renewable electricity currently. The obligation targets 15% renewable electricity by 2015. It offers sufficient support, particularly since technology banding was introduced. However, non-economic barriers have persisted, especially in the areas of grid access and planning. A feed-in tariff has been in place for small-scale renewables since April 2010.
The solar feed-in tariff for installations has been cut from 32.9p/kwh to 19p in 2011.
Scotland set a renewable electricity target of 100% for 2020.

Countrysort icon Details per country
AUSTRIA

Energy Efficiency
The feed-in tariff for biomass and biogas is directly connected to the use of combined heat and power (CHP) for these fuels, as a minimum conversion efficiency of 60% is required. This very effectively promotes the use of highly efficient CHP technology. This resulted in a total growth of CHP production of 83% between 1996 and 2007.

BELGIUM

Energy Efficiency
Regional targets for CHP exist. Flanders aims for a 5.25% share of CHP in electricity production by 2012 and stimulates this through a regional CHP certificate system. Wallonia aims at a 14% CHP share, being part of the existing support system for RES. This has the effect that electricity generated from high quality CHP is exchangeable by RES-E, i.e. higher CHP deployment might be at the expense of RES-E deployment and vice versa.

BULGARIA

Energy Efficiency
There are few policy mechanisms in place that allow a small cogeneration plant based on renewable energy to sell into district heating where available. Even though some support exists, it is unlikely that it will lead to a 5% share. Through the Energy Act independent producers of heat energy could sell to district heating networks. There is only one such producer connected so far – the rendering of Alexandrovska Hospital, Sofia, Bulgaria.

CZECH REPUBLIC

Energy Efficiency
Combined heat and power production (CHP) is supported through a feed-in tariff. Biomass and biogas CHP units are additionally supported by financial aid from a state fund.

DENMARK

Energy Efficiency
The energy efficiency of Danish power plants is relatively high with just over 37% in 2007. Implementation of combined heat and power reached a historically high level in Denmark in the late nineties and since then, approximately 80% of district heating and 50-60% of thermal electricity production originates from combined heat and power (CHP).
However, the specific situation of Denmark with high and fluctuating imports of electricity from its Nordic neighbours makes it difficult to evaluate the share of CHP in total production. From year-to-year total CHP production does not vary greatly, while total electricity production can vary significantly due to market conditions in the Nordic electricity market, thus influencing the share of CHP. In addition, the increase in wind generated electricity leads to a decrease in the share of CHP. In 2008, 55% of thermal electricity production (i.e. the total production, excluding wind energy and hydropower) was generated in combination with heat, but the share is declining. In 1990, the share was 36.8%, while the figure was 17.6% in 1980. CHP is part of the municipal heat planning policy. Municipal governments assess heat demand and supply options and then introduce restrictions on electric heating and power production without heat recovery.

ESTONIA

Energy Efficiency
A feed-in premium (€33.3/MWh) is applied if electricity is produced in an efficient cogeneration regime using waste, peat or oil-shale processing retort gas as a source of energy, with a capacity not exceeding 10 MW. Currently there is no direct support scheme for heat from renewable energy sources in Estonia.

FINLAND

Energy Efficiency
Finland makes extensive use of combined heat and power and district heating and thus the efficiency of energy production is quite high. Biogas and wood fuel combined heat and power is promoted by a heat premium in the feed-in tariff scheme.

FRANCE

Energy Efficiency
Support for combined heat and power (CHP) is currently only provided to small scale applications. Support for large CHP was phased out. The current situation will probably not lead to a big increase in CHP.
In January 2011, the second phase of France’s white certificate scheme started and will run until the end of 2013 as part of Grenelle II. Sellers of energy (electricity, gas, heat etc.) are obliged to increase energy efficiency of their customers. Energy savings have reached close to 205 TWh cumac (cumac means actualised savings over lifetime of action) by end of June 2011, including 65.2 TWh cumac of energy saving in the first period (June 2006 to June 2009).
During the spring of 2011, the government launched a ‘cash for scrap’ scheme for old gas boilers (prime à la casse des chaudières): when a boiler more than 15 years old is changed for a low temperature one, a €100 incentive is received; €250 is given if a condensation boiler is bought.
In June 2011, France sent its second National Plan on Energy Efficiency to the European Commission, and launched a round table discussion on energy efficiency for households, companies and the state. First results are expected in the third quarter of 2011, including the fiscal measures and the action plan should be validated by the end of the year.

GERMANY

Energy Efficiency
The Act on the modernisation of combined heat and power production (CHP) aims to promote CHP by paying a premium and granting preferential grid access. There is special support for mini CHP plants to be used in households. The total for all premiums is limited to €750m per calendar year, but this budget is currently not fully used. Changes to the CHP law from June 2011 mean that support is not limited by time (formerly 4-6 years) but rather by use (30,000 full operating hours).
Germany has set a goal of increasing the share of CHP to 25% by 2020; currently this goal still seems distant, as the share was 13% in 2009 and growth rates are at around 0.5% per year.

GREECE

Energy Efficiency
Combined heat and power production (CHP) is also supported through the feed-in tariff for renewables and more specified tariffs for different CHP technologies which have been proposed but not yet implemented. The national target of increasing CHP electricity by 12% will probably be missed.
There is an absence of white certificates or other similar schemes for the promotion of energy efficiency in the electricity supply.

HUNGARY

Energy Efficiency
Gas and coal / biomass co-fired combined heat and power was supported until mid-2011 through the feed-in tariff system and received the largest share of funding. Most of the combined heat and power support goes to large, inefficient and already existing combined heat and power. The system is not designed to promote investment in new, efficient combined heat and power installations. The system was abolished as of mid-2011.

IRELAND

Energy Efficiency
The combined heat and power Deployment Programme was closed in 2010 due to lack of funds, and the renewable feed-in tariff (ReFIT) is inactive while EU approval for State Aid is pending. However, once approved this scheme will operate with an extended scope, and will facilitate wave and tidal projects as well as wind, hydro and biomass projects. Through the combined heat and power Deployment Programme and the feed-in tariff, which apply to different forms of combined heat and power production, the country has stimulated energy generation from (small and large-scale) combined heat and power, with a target of 800MW installed capacity by 2020 – around 10% of electricity generation.

ITALY

Energy Efficiency
Combined heat and power (CHP) trends are positive. However, to achieve further increases, stronger policies, less barriers, clarity and stability of existing incentives are needed.
In 2007, specific incentives for (high-efficiency) CHP plants were introduced, such as a feed-in tariff for cogeneration. At the beginning of August 2011, a decree aligning definitions of high efficiency cogeneration was signed, filling an important gap in the legislative framework. A decree on renewed CHP incentives is expected in autumn 2011.

LATVIA

Energy Efficiency
The regulation that handles mandatory procurement of cogenerated electricity has been changed. Now combined heat and power (CHP) plants participating within this framework might receive support in a form of a feed-in tariff. CHPs (less than 4 MW) producing electricity using renewable energy and peat might receive an enlarged feed-in compared to other CHPs (of less than 4 MW). All CHP plants participating within the framework of mandatory procurement with an installed capacity of more than 4 MW, might receive both, feed-in and a capacity payment.
Additional support can be received via direct grants from an EU regional aid scheme.

LITHUANIA

Energy Efficiency
The national energy strategy sets an ambitious goal for CHP plants; they are to reach 35% of total electricity generation by 2025. However, there is no direct support for CHP, although it is possible to apply for subsidies and soft loans.
Due to the shutdown of the Ignalina Nuclear Power Plant at the end of 2009, CHP plants are now economically attractive, even without additional support. According to the amendment of the Law on Heat adopted in June 2010, heat suppliers must purchase from independent heat producers which satisfy quality, supply security and environmental requirements.

LUXEMBOURG

Energy Efficiency
There is some support for micro-CHP, and some investment subsidies and feed-in tariffs for cogeneration up to 1.5 MW. However, grid-connected CHP deployment is currently blocked at the municipal level through legislation by the Ministry of Internal Affairs.

MALTA

Energy Efficiency
Malta has no specific targets to increase the share of combined heat and power (CHP) despite having plans to support CHP. However, the latest power plant addition to Malta’s energy park is not going to use CHP and retrofitting of the two existing plants is not foreseen. Furthermore, no new concrete policies are being discussed and the support scheme for Small and Medium-sized Enterprises (SMEs) appears to be limited.

NETHERLANDS

Energy Efficiency
There is no support for Combined Heat and Power (CHP) at present.

POLAND

Energy Efficiency
Combined Heat and Power (CHP) is supported through a quota system. However the current support is insufficient for strong growth of CHP use.
In April 2011 a white certificate system became law. It makes it possible to trade certificates of energy efficiency. Companies that sell electricity, natural gas or heat to final consumers will be obliged to obtain a certain number of certificates (if they have reduced energy consumption by investing in new technologies). The scheme is not yet operational, but is expected to become so in early 2012.

PORTUGAL

Energy Efficiency
Co-generation is supported by means of the inclusion of co-generated electricity in the Special Regime Production that also support renewable micro-production. Forestry biomass has been granted a higher coefficient since January 2011 (9.6 from 8.2), resulting in an increase of some 10% of the indicative average feed-in tariff (now €109/MWh) which should also result in a higher usage of co-generation from biomass. The potential development of this technology is high both for industrial and tertiary usage.

ROMANIA

Energy Efficiency
Romania is implementing the EU Directive that requires an increase of 10% in electricity production from Combined Heat and Power (CHP) by 2020.
New laws from 2011 provide the methodology for determining and adjusting prices for electrical and thermal energy produced in cogeneration power plants that benefit from the existing scheme support and the bonus for high-efficiency cogeneration. The new legislation also details the methodology for determining and monitoring the contribution of high-efficiency cogeneration.

SLOVAKIA

Energy Efficiency
Slovakia supports electricity produced in highly efficiency Combined Heat and Power (CHP) plants depending on capacity, type of fuel, technology used and the date in which the power plant was put into operation. The share of CHP in electricity production increased by 8% between 2002 and 2007.
 

SLOVENIA

Energy Efficiency
Slovenia supports electricity produced at highly efficient combined heat and power (CHP) plants. Support is dependent upon capacity, fuel used (fossil fuel and biomass) and number of operating hours a year (up to 4,000 or more than 4,000).
Producers above 1 MW can apply for the feed-in premium. The Spatial Development Strategy defines the use of CHP as priority for new or existing thermal power plants and district heating power plants.

SPAIN

Energy Efficiency
Combined Heat and Power (CHP) is also supported through a feed-in premium. The premium differs according to technology. Biomass renewable CHP gets a higher tariff than fossil CHP. The support is not sufficient to increase the use of CHP to required levels.

SWEDEN

Energy Efficiency
Sweden has a strong history in combined heat and power (CHP).
Biomass CHP is also eligible for support under the green certificate system.

UNITED KINGDOM

Energy Efficiency
Combined Heat and Power (CHP) support is not at a sufficient level to boost its uptake. The level of district heating networks is low. The target to achieve 10GW CHP in 2010 was not achieved.

Countrysort icon Details per country
AUSTRIA

Overarching
There is a general exemption on energy taxes for energy suppliers.
Power plants pay no tax for hard coal and 3% for fuel oil. There are no plans to reduce these tax exemptions and subsidies.
While the main business association, the IV (“Industriellenvereinigung”) demanded support for R&D as well as infrastructure investment and legal frameworks for carbon capture and storage (CCS), it is likely that there will be no major support in the medium term for biomass- or coal-based CCS.

BELGIUM

Overarching
The Belgian Federal Government stopped tax exemptions on the use of coal, coke, lignite and fuel oil for electricity generation.
Additionally, a new tax of € 8.65/ton was introduced for using the above-mentioned fossil fuels for electricity production.
Green certificates are highly rewarded, making co-firing biomass in coal fired power plants very attractive. Because of the higher CO2 content of coal compared to natural gas, this does not have a positive impact on CO2-emission reductions.
Nuclear energy remains a much debated topic. After the Fukushima accident, the Belgian authorities agreed to take some time to reflect on the subject, and there remains uncertainty about the nuclear phase-out law which is in place since 2003. The lack of progress on this issue does not contribute to a favourable investment environment for alternative energy sources.

BULGARIA

Overarching
No additional measures, such as a carbon tax or CCS projects are being considered. In August 2011, the Bulgarian government introduced a draft carbon and capture (CCS) law to transpose the European Directive on CCS.
Biomass could receive a boost with the new renewable energy act.

CZECH REPUBLIC

Overarching
The level of energy tax for power production fuels is relatively low and there is no CO2 tax in place. The subsidy for coal mining has significantly decreased since 1990 and currently, no such subsidy for mines in operation exists. However, state aid is provided for environmental liabilities related to mines that are no longer in operation, which constitutes an indirect subsidy.
R&D about carbon capture and storage (CCS) for fossil fuel plants is supported financially in one research project while there is no explicit support for biomass CHP.
There is significant political support for new nuclear power stations and currently, an environmental impact assessment is being carried out for two additional blocks of the Temelin nuclear plant. The preparation of nuclear waste disposal sites is also actively supported by the state.

DENMARK

Overarching
Denmark has an advanced and highly decentralised electricity system, where 20% of all electricity generated comes from wind turbines. All renewable electricity has priority access to the grid and utilities are obliged to receive and pay for the electricity.
In 2008 the government abolished the “coal stop”, which was introduced in 1997 to put a cap on the quantity of coal being used and to ensure that new plants did not use coal.
In November 2008, the Danish parliament approved an agreement on guidelines for the future expansion of the main electricity transmission grid in Denmark. According to the agreement, new and existing (overhead) 132-150 kV power lines will be installed underground. Furthermore, the political parties formally agreed to promote the intelligent management of the future electricity grid, i.e. extended use of smart meters, smart grids etc.
A parliamentary decision not to produce nuclear energy in Denmark was made in 1985.

ESTONIA

Overarching
The ecological tax reform tries to gradually take external costs into account until full implementation in 2012. A pollution charge on fuel combustion has been implemented, but is too low to have a large impact due to lack of alternative options.

FINLAND

Overarching
Finland’s former CO2 tax used to be higher than the price effect of the EU ETS. When the EU ETS became mandatory, CO2 emissions went up due to the diminished cost.
Finland supports nuclear power. The new government did not overturn the plans to build two nuclear power plants made by the last government. However, the government has stated that no additional nuclear power plants will be built.

FRANCE

Overarching
In France, CCS is supported without any restrictions on technology. Thus, it could be used for coal, gas or biomass. Currently, R&D in this field is financially supported for demonstration-scale projects.
Traditionally, France has relied on nuclear power and there is no strong political ambition to change that. A new reactor is currently being built in Flamanville and a second ‘third generation’ EPR was announced in 2008 by President Sarkozy. France still is very favourable towards nuclear energy and in May 2011 spoke out against introducing EU-wide criteria for nuclear stress tests.
At the beginning of July 2011, the French Government announced that it would invest €28m into six innovative smart grid projects (the overall investment including partners’ shares will be €115m).

GERMANY

Overarching
Subsidies on hard coal are still substantial, but have decreased and are to be phased out by 2018. Lignite mining receives exemptions for payments for water and mineral resources extraction. All energy production plants are exempted from mineral oil tax.
There are no emission performance standards for new fossil fuel power plants. Funding is provided for research and pilot projects on carbon capture and storage (CCS). A law on CCS process emissions passed the parliament in July, but was rejected by the Federal Council (Bundesrat) in September 2011.
Following the accident in Fukushima, Germany's government announced that it would phase out all nuclear power plants by 2022; the respective law was approved in June 2011. This has not lead to an increased target for renewables, but the government has announced plans to support new coal and gas power plans with up to 5% of the energy and climate fund’s budget for 2013-2016.

GREECE

Overarching
In Greece, heavy subsidies for the Public Power Corporation (PPC) are in place. The lignite deposits are provided tax-free and the PPC has a monopoly in the Greek market. Under the conditions set by the economic recovery programme, the lignite market should be opened by providing 40% of the lignite resources to other parties. Due to objections from the PPC, the use of new lignite fields was being considered. This would enforce the lignite presence in the system. This idea was since been dropped by the ministry and alternatives are currently under examination.
CCS technology is not supported in Greece, neither for coal or gas, nor for biomass.

HUNGARY

Overarching
No other specific policies could be found that target emissions in the electricity supply sector.

IRELAND

Overarching
The government is targeting a 40% penetration of renewables into electricity demand. Renewable energy feed-in tariffs for measures such as wind, hydro and biomass continue to await EU state aid approval.

ITALY

Overarching
The Italian government is implementing the EU Directive on Carbon Capture and Storage (CCS, Directive 2009/31/CE). Up till now only private pilot carbon capture and storage (CCS) projects exist. The Environmental Ministry has published a notice regarding financing CCS and energy production projects with renewable sources which defines access criteria and participation terms.
Concerning the nuclear strategy, a law decreeing a two year suspension of nuclear power development was adopted. In the June 2011 referendum, which had almost 55% participation, 94% voted in favour of a complete stop to nuclear development plans.

LATVIA

Overarching
Latvia has implemented a tax on natural resources, which taxes users of imports that release pollutants, as well as a tax on CO2 emissions stemming from energy/electricity consumption. Reductions on the tax can apply if environmental protection measures are carried out. Water use in waterworks, including hydropower plants and reservoirs, is exempted from the natural resources tax. Electricity supplied to the end user is taxable. However if electricity is produced by renewables, in hydropower plants or CHP power plants complying with the efficiency criteria, it is exempt from this tax.
In January 2010, EC approved aid for the construction and operation of a 400 MW thermal power plant between 2015 and 2025 in Latvia. Seeking to diversify Latvia's energy mix, the plant should feed on either Liquefied Natural Gas (LNG) that is regasified in Latvia or on solid fuel such as coal, lignite or peat mixed with at least 10% biomass.
In 2010, emissions from the trade sector increased by around 30% in Latvia.

LITHUANIA

Overarching
Some additional measures are included in different national strategies e.g. pollution standards for fuel combustion.

LUXEMBOURG

Overarching
There were no further incentives to decrease the carbon intensity of electricity production, which is also reflected in the upward trend in carbon intensity between 2002 and 2007.

MALTA

Overarching
Some efficiency measures for existing power plants are in place. However, an additional combined-cycle diesel engine power plant is planned which could optionally also be implemented as a natural gas plant. 

NETHERLANDS

Overarching
The Netherlands is active in Carbon Capture and Storage (CCS), but activities do not focus on biomass CCS. Initiatives to store carbon have been put on hold due to public resistance in late 2010.
Energy companies are exempted from the Regulatory Energy Tax.
There is no intention to have more stringent performance standards than those prescribed at the EU level. In 2011 three coal-fired power plants are being built in the Netherlands, and four more are planned. The electricity produced will mainly be exported. An earlier negotiated limit of 350 gCO2/kwh was dropped.

POLAND

Overarching
The tax on conventional fuels for power plants is rather low. For coal and coke, Poland makes use of an exemption and has yet to set the tax at the minimum EU level, which will have to be done by 2012. Subsidies for coal mining have been substantially reduced since the 1990’s, but some still exist and there are no plans to phase these out.
The government has made proposals for possible locations of a new nuclear power plant.
The development of CCS in combination with biomass or natural gas is not supported in Poland. Two pilot projects in combination with coal power plants were planned with the financial support of the EU. Due to the high costs and high investment risk, one of the investors recently resigned from applying for funding worth 5.5 billion polish zloty (€1.26bn) from the EU's NER300 programme. The other investor requires more support, like certificates for clean coal technologies for example, to be able to participate in the project.

PORTUGAL

Overarching
There has been a decrease of carbon intensity in fossil-based electricity production of 20% between 1990 and 2007. The taxation system is still not correctly designed to favour sustainable energy. For instance, there is an energy tax on electricity produced from fossil fuels which is lower than the energy tax for the use of biomass. There is support for CCS, although this is not specifically for coal.
There are indications of a move towards favourable taxation of sustainable energy. Until now, no real environmental fiscal regime was in place, although there is a reduced rate of VAT (13% instead of 23%) for renewable energy products.
New development programmes for both smart grids and the enhancement of a potential ‘buffer’ effect of large hydro and electric vehicles were introduced.

ROMANIA

Overarching
There are no strong policies to encourage renewable electricity. There are some taxes, for instance on CO2, but these are low and not sufficient.
Via the European Structural Funds, the Romanian Government offers incentives for the use of renewable sources.
Romania will continue to subsidise the use of fossil fuels and the modernisation of coal power plants.

SLOVAKIA

Overarching
No significant overarching policies found. The carbon intensity of fossil fuel-based electricity production actually increased by 6% between 1990 and 2007

SLOVENIA

Overarching
A CO2 tax is in force. The ECO-Fund provides soft loans for investment in environmental protection at interest rates lower than market rates and is also relevant for the building and industry sectors.

SPAIN

Overarching
In September 2010, the European Commission approved the Spanish government’s plan to double subsidies for domestic coal in the coming four years (up to €800m) and give it preferential access to the wholesale electricity market. Together with Germany, Spain was one of the major opponents to the phasing-out of coal subsidies in the EU prior to 2014.
Energy taxes for electricity producers are amongst the lowest in the EU and there is no CO2 tax in place. The Energy Efficiency and Renewable Energies Law which is being drafted during 2011 may create a new CO2 emissions tax to finance renewable energies and energy efficiency.
The plan to limit the lifespan of nuclear plants was dropped in the final version of the Sustainable Economy Law adopted in March 2011. Instead nuclear plants have an unlimited lifespan and some security criteria were introduced.
Spain currently (2011) has a significant power generation overcapacity, and the government intends to subsidise electricity generators (imported coal and gas) to maintain the overcapacity. 

SWEDEN

Overarching
The main electricity generation technologies in Sweden are nuclear and hydro.
There is no coal in the Swedish energy mix. As such, the country has made no investments in CCS, either for coal or biomass.
EU ETS installations are exempt from paying the CO2 tax, which applies to other sectors in Sweden.

UNITED KINGDOM

Overarching
Phase 3 of the ETS has no free allocation for electricity production. Any new power plant over 300MW needs to be CCS-ready, including biomass CCS. The UK has pledged £1 bn (€1.1 bn) to fund the country’s first carbon capture and storage (CCS) demonstration project, although progress towards this has been slow. Funding for three additional demonstration projects is planned.
The Climate Change Levy varies as a percentage, from roughly 7% for electricity to 24% for coal. Electricity producers also face the cost of the white certificate scheme for energy efficiency. There is political and planning support for new nuclear capacity. Although there is no specific subsidy for nuclear – there are concerns that there are in fact several hidden subsidies, along with a streamlined planning process. This could distract important resources from promising current and future energy policies.
A carbon floor price of £16 (€18) a tonne will be introduced in 2013, in order to provide a clear price signal to investors, as well as to boost revenues. Fossil fuels used in the production of electricity will be liable to a tax rate equivalent to the difference between the floor price and the EU carbon price. This rate will start at £4.94/tCO2 in 2013. It appears that revenues from the carbon floor price and EU ETS will not be recycled for climate protection, and there are concerns from business and consumer groups about the potential impact on energy bills. The measure will also create a windfall profit for existing nuclear power plants.