Politics, red tape 'turning EU clean energy into zombie industry'

The EU's dysfunctional political system is turning clean energy companies into a "zombie industry" of the living dead, the head of one of the bloc's biggest green power groups has warned.

Manuel Sanchez Ortega, chief executive of Spain's Abengoa, said EU politicians are taking so long to decide what sort of energy mix they want, especially in the biofuels sector, that companies do not know if they should keep struggling on or shut down completely. "It's ridiculous."

"It is better to be alive or to be dead, but the other state no one likes," he said. "The EU is creating a zombie industry for clean energy" thanks to bureaucratic delays.

"There's a dysfunction in politics in Europe. People ask me 'How is the bureaucracy in Latin America? How is the bureaucracy in Africa?' I say it's much better than Europe."

The EU launched a range of subsidies and other measures mandating the use of biofuels more than a decade ago, prompting a wave of investment in an industry that was generating revenues of €15bn by 2011.

But concerns that making fuel from crops would drive up food prices and boost demand for farm land, increasing the problem of deforestation, led politicians to rethink their policies three years ago.

A vote to limit crop-based biofuels is due in the European Parliament this week but Mr Sanchez said the long delays meant Abengoa had been forced to put plants on hold in Germany, France and the UK.

A similar lack of clarity was damaging other sectors such as solar power, he said, affecting renewable energy investment across Europe. Abengoa has biofuel, solar power and water treatment operations in more than 85 countries. It derives around 20 per cent of its revenues from Europe, down from more than 50 per cent a decade ago.

"It takes so long to approve and to agree anything and to send clear messages to industry, that people are investing elsewhere instead of investing in Europe," he said.

"It's a pity because from a technological point of view European companies are leading the race for clean energy," he added.

Mr Sanchez said the company was aiming to expand in Africa, home to many of the 1.2bn people who lack access to electricity. Until now, it has focused heavily on the US and Latin America, which account for about two-thirds of its revenues.

Renewables investment is already surging in countries such as South Africa, which launched an ambitious drive to build more green power plants nearly three years ago.

In the first quarter of this year, the country posted the strongest growth in renewables globally, with investment totalling $3.1bn from almost nothing in the same period a year earlier, according to the Bloomberg New Energy Finance research group.

Clean energy companies hope the falling costs of solar power in particular will enable poorer African countries to "leapfrog" expensive traditional power grids and build smaller renewable power networks, much as some countries skipped fixed-line telecoms networks and moved straight to mobile phones.

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