(The author is a Reuters market analyst. The views expressed are his own.)
By Gerard Wynn
LONDON Feb 10 The argument that renewable energy should be favoured because it will create "green jobs" - a view held by environmental groups, policymakers and companies in the renewables sector - is trumping economic logic and leaving consumers out of pocket.
Developed countries are overhauling their ageing fossil fuel energy and at the same time responding to new challenges including energy security and climate change.
Europe's wind lobby, the European Wind Energy Association, estimates that nearly a half of all new power generation capacity installed in the European Union since 2000 was from renewable sources. What is the objective of this shift?
Is it simply to meet binding renewable energy targets agreed by the bloc three years ago, or is it to help cut carbon emissions, create green jobs, promote a diverse fuel mix, or cheap energy? Or a combination of these?
One clue comes from an EU programme meant to help countries share the effort and cut the cost of reaching renewable energy targets: its failure so far shows how the sector, and "green jobs", are treated as a special case compared with other energy sources.
The EU's Renewable Energy Directive sets stretching national targets with the collective aim for the bloc to get a fifth of all energy from renewable sources by 2020.
Given that different regions have different energy resources, the law allows countries to meet their targets by developing renewable energy beyond their own borders elsewhere in Europe.
That works like carbon offsetting, where countries, companies or members of the public pay someone to cut carbon emissions on their behalf, but for renewable energy instead.
No country has yet used the option, and only two of the 27 member states are even considering it (Italy and Luxembourg). That's despite the fact almost half of the countries expect to generate renewable energy to spare, and so for sale.
The result has produced some odd decisions: last year cloudy, northern Britain installed more solar power (700 megawatts) than sunny Greece (350 MW) or Spain (400 MW), using a price premium called a feed-in tariff which was a third or more above that of leading solar power countries, Italy and Germany.
The European Commission 12 months ago tried to coax member states out of such illogical choices, reminding them of the Directive's "cooperation mechanisms" which it said could save up to 10 billion euros ($13.30 billion) a year.
The Commission said that money was tight, that annual renewables investment was half that needed to meet the 2020 target, and so it made sense to use funds more efficiently.
"Billions of euro could be saved if member states treated renewable energy as a commodity in a single European market rather than in national markets," it said in January 2011.
"Given the fiscal constraints member states currently face, with combined government deficits of 868 billion euros, every effort should be made to minimise costs. The first step to such a change is the use of the new cooperation mechanisms created by the Renewable Energy Directive."
A year on, nothing has changed: still no country has made use of the mechanism, a European Commission spokeswoman confirmed on Thursday.
What does that tell about national motives?
Do countries dislike meeting their environmental targets in this way?
No they don't. Many EU countries including Spain, Italy, Denmark and the Netherlands have actively bought carbon offsets to meet Kyoto targets for cutting greenhouse gases, where they've funded emissions cuts in developing countries because it's cheaper than at home.
Are countries protective about their energy resources, perhaps preferring to develop these at home instead of in other countries?
Possibly, although the logic of the trading scheme is to free up resources to develop local, non-renewable energy resources where a country has a natural advantage in these.
Do countries, instead, view green energy as a strategic sector for the future, where they want to establish a foothold?
This is more likely: policymakers are pinning growth hopes on the green economy and the seductiveness of green jobs is a part of that: it seems countries don't want to develop such jobs for their neighbours.
The implication is they've been persuaded that green energy jobs are better than other energy jobs, since they could use the scheme instead to explore local shale gas, ramp up nuclear power or exploit abundant liquefied natural gas.
An interesting first major test case might be a "Project Helios", at present just an idea favoured by Athens to develop its solar resources and to help towards Germany's target.
German ministers and Chancellor Angela Merkel last year tentatively supported the idea, as a cheaper alternative to developing more solar power at home: Germany has nearly 40 percent of global capacity.
German environment minister Norbert Roettgen is concerned, however, for the 100,000 domestic jobs which he says depend on the sector.
Meanwhile, British solar power companies and the environmental group Friends of the Earth have taken the UK to court to slow the rate at which it pares solar support.
"Premature cuts could threaten 29,000 jobs," says the website of one of the companies, Solar Century. ($1 = 0.7517 euros) ($1 = 0.6312 British pounds) (Reporting by Gerard Wynn)