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EU considers scrapping 2030 binding renewables targets

European commissioners are considering scrapping a binding target for renewable energy from 2030, a move that would please big utility companies but mark a retreat on one of its signature environmental policies.

The EU's 2030 energy and climate targets, which the commission is due to propose on January 22, are stoking acrimony among countries and between commissioners. Governments, industry and green groups are lobbying the commission intensely over the goals.

(Read more: Solar stocks rise as renewable energy surges)

Adrian Dennis | AFP/Getty Images

A target for how much power European countries should derive from renewables is one of the most bitterly debated parts of next week's package.The UK, which is increasing its use of nuclear power, opposes a binding goal. Germany, which is shutting down its reactors, is the most powerful voice in favor of an obligatory target.

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A proposed compromise, at the heart of discussions over the 2030 package, envisages that a renewables target, of up to 27 per cent, would be non-binding. However, people close to the talks added that the arguments hinge on whether such a non-binding renewables target would need to be given credibility by stronger rules on efficient networks. That would mean binding objectives related to energy infrastructure, smart grids and cross-border interconnectors.

This compromise for 2030, if accepted in the face of German opposition,would represent a significant change from the EU's 2020 targets. Those included binding goals that EU states should cut overall greenhouse gas emissions by 20 per cent from 1990 levels and derive 20 per cent of their power from renewables. Measures to improve energy efficiency by 20 per cent were only aspirational. For 2030, the tougher and quantifiable action would be required on more technical aspects of upgrading infrastructure.

"It's a bottom-up approach that is being considered now," said one person involved.

Discussions have been influenced by concerns that the generous subsidies supporting renewable energy in the EU are driving up energy costs for European industry and undermining its competitiveness, especially compared with the US.

(Read more: US shale revolution leaving Europe in the cold)

Europe has looked on in envy as the US shale gas boom has boosted gas production, driven down gas prices and triggered a manufacturing renaissance.Gas prices for industry fell by 66 per cent in the US between 2005 and 2012, while they rose 35 per cent in Europe over the same period, according to the commission.

Worried by the widening competitiveness gap, European utilities last year called for a complete rethink of European energy policy, demanding big reductions in renewables subsidies. The companies have argued against a 2030 renewables target, arguing it gives governments less flexibility over how they should meet overarching emission reduction targets.

The UK argues that a strong emissions target alone will push countries to create a greener energy mix. Along with France, Italy, Germany, the Netherlands and Spain, it supports a 2030 target of cutting emissions by at least 40 per cent from 1990 levels. Some eastern European nations worry that is too high, as do EU commissioners with more industrial portfolios, who favour a 35 per cent cut.

Utilities such as Eon have campaigned against the renewables target while energy companies such as Alstom and Vestas, which build renewables infrastructure, are seeking a binding target of more than 30 per cent. Greenpeace is advocating a 45 per cent renewables goal.

(Read more: Energy leaders warn of blackouts across Europe)

Critics say that a renewables goal requires subsidies for relatively expensive technologies while a surfeit of carbon allowances is still encouraging power producers to burn coal. Environmental groups admit that the 2020 targets had design flaws but contest that advances in renewable technology would never have happened without a compulsory target.

After the commission makes its proposal on January 22, national leaders will decide in March whether to endorse the 2030 targets.

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