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Icy Breezes Slow Europe’s Hunt For Alternative-Energy Source

Yvette Soete, 79 years old, has lived in the seaside town of Knokke-Heist, Belgium, for 28 years. Eleven years ago, she moved into a fourth-floor apartment with a breathtaking view of the North Sea.

By VICTORIA KNIGHT
DOW JONES NEWSWIRES Wall St. Journal

(Thanks to Craig Erickson for sending along this article and commenting: "Take time to read this article if you are interested in alternative engery." Russ)

But a project to build 50 windmills off the coast threatened to replace her view with a scene of 80-meter-long blades swishing through the air. Ms. Soete went to court and got the project stopped.

The European Union has set a target to generate 22% of its electricity from renewable sources, such as wind, biomass and hydropower, by 2010. Wind energy is clean and more cost-efficient than alternatives such as solar energy. But as windmills sprout across Europe, opposition to them is mounting, and wind generators are finding it hard to get planning permission for so-called wind farms, even offshore. Businesses fear that requirements to buy more expensive "green energy" could hurt their competitiveness and profit. Conservationists say windmills can harm birds and marine life. Local opponents have blocked projects, as residents complain they are noisy and ugly.

That’s why Ms. Soete is battling Belgian electricity company Electrabel SA. The company wants to build a wind farm off the coast of Knokke-Heist that could generate 100 megawatts, enough power for about 85,000 households. The 50 windmills would be spread across an area of eight square kilometers about 12.5 kilometers offshore. The Belgian environment ministry approved the project in June 2002, but construction remains on hold owing to the injunction obtained by Ms. Soete from Belgium’s Supreme Court of Justice. Electrabel says it intends to submit a new application to the Belgian authorities, but the company concedes faces an uphill struggle obtaining the necessary permits.

Unhappy Businesses

Businesses aren’t happy with the EU rules either. Guy Dolle, chief executive of Luxembourg’s Arcelor SA, the world’s largest steel producer, sent a letter to Belgian authorities expressing concern about rising electricity prices, which he blames on the government’s policy requiring companies to buy a fixed portion of electricity generated from renewable sources. Arcelor, which is planning to build a stainless-steel plant at Charleroi in southern Belgium, requires large amounts of energy to produce steel. Mr. Dolle says that until the company reaches a deal with Belgian authorities on prices, the project is on hold.

Manufacturers are particularly critical of so-called feed-in tariffs, which require power companies to buy all the electricity that wind generators produce and to pay a premium for it. Thanks to subsidies, Germany, Spain and Denmark account for 70% of the world’s 31,000-megawatt market for wind-produced energy, according to the European Wind Energy Association, an industry group in Brussels.

Businesses dislike the extra expense. "New ideas and technologies must be explored, but the political will to see these introduced must not override cost considerations and the effects of these on industrial sectors facing global competition," said Peter Claes, president of the International Federation of Industrial Energy Consumers, a Brussels industry lobbying group. If they can’t compete effectively, European firms may be forced to move their operations — and jobs — elsewhere, something the European economy could ill afford given its recent sluggish growth, Mr. Claes says.

Because many of the products they make are for export, German manufacturers are the most vulnerable to energy-price increases, says VIK, a lobbying group that represents large industrial energy consumers in Germany. The cost of making aluminum in Germany, for example, at $1,164 (€974) a metric ton, is already higher than the global average of $1,112 a ton, with energy costs accounting for most of the disparity, the group says. According to Annette Loske, adviser to VIK, firms could face a 26% increase in their electricity bills during the next decade to pay for renewable projects. Rather than a surcharge per megawatt hour, Ms. Loske favors the system used in the Netherlands, which encourages factories to reduce emissions and caps industrial users’ fees on energy produced by renewable sources.

But green energy has become big business, and European turbine makers are in the forefront. Vestas Wind Systems AS, the world’s largest maker of wind turbines, has been boosted by eco-friendly legislation in Denmark. The Danish company controls one-fifth of the $6.5 billion global market. But Vestas’s 2002 net profit slid 87% to €45 million, partly because of slow U.S. sales. Although the company predicts that sales will rise this year, uncertainties surrounding tax credits for renewable energy in the U.S. could squeeze growth. Moreover, generous EU support for renewable-energy projects is luring U.S. operators into Vestas’s traditional market.

General Electric Co., the U.S. company that bought the wind-generation business of Enron Corp. last year, is leading the charge. Steve Zwolinski, president of GE Wind Energy, says he expects the company’s sales in Europe to reach $1 billion this year and to show double-digit percentage revenue growth for 2004, driven by stronger demand in Spain, France, Scandinavia and the United Kingdom.

In October, the British government approved Gunfleet Sands, a 108-megawatt wind farm that GE is to develop off the east coast of England starting in 2005. Eighteen wind projects have been proposed for off the U.K. coast, and 12 have been granted permission to begin construction of machinery that would produce a total of more than 1,200 megawatts.

"With time, education and familiarity, wind parks will become woven into the fabric of society in a positive way," Mr. Zwolinski says.

For now, though, the projects aren’t popular with everyone. "No meaningful assessment of the direct and indirect impact on commercial fisheries has been undertaken," said Doug Beveridge, assistant chief executive at the National Federation of Fishermen’s Organizations in the U.K.

Local opposition isn’t the only problem wind generators face. In some European countries, projects may require as many as six different permits and approvals. Europe’s largest markets have the biggest barriers, according to a recent study by the World Wildlife Fund in Brussels. In Italy, more than 3,000 megawatts of renewable-sourced generation capacity is on hold because of labyrinthine local regulations, the WWF says, a process that the government is attempting to streamline following a countrywide blackout during the summer. A French law enacted last year imposes restrictions on the way renewable-energy projects are planned and developed. Since then the number of permits granted has been reduced to a trickle, the WWF says.

Electrabel faces more challenges than many operators, because each of Belgium’s three administrative regions — Brussels, Flanders and Wallonia — has its own policy on renewable energy, and different rules apply to onshore and offshore projects. "The procedures are extremely complex," says Lut Vande Velde, a spokeswoman for Electrabel, which has also signed an agreement with Spanish turbine maker Gamesa Corporacion Tecnologica SA to develop wind-power projects in Italy and on the Iberian peninsula.

The Alternatives

But what are the alternatives to wind? Burning more fossil fuels means higher emissions of so-called greenhouse gases, such as carbon dioxide, which Europe vowed to curb when it ratified the Kyoto protocol on climate change. Oil could one day run out, coal will become harder to mine and natural gas will have to be imported from other regions, increasing the EU’s heavy reliance on imports.

The French are in favor of nuclear energy, and Finland is building a new reactor, but other European countries such as Italy and Germany are phasing it out, seeing threats from Chernobyl-style accidents, terrorist attacks, and leaks from long-term waste disposal. Almost 70% of the 16,000 people polled in a European Commission study published in April said they were "very concerned" about the way nuclear waste is managed. No underground waste-disposal site exists in the EU.

Against this backdrop, wind and other renewable energy sources such as biomass — energy derived from burning wood, garbage and agricultural waste — hydro and solar power are far more palatable, environmentalists say.

"Wind energy is about as green as it gets. It doesn’t pollute the air, and it doesn’t depend on a scarce fuel source," says Stephan Singer, head of climate change at WWF. Mr. Singer acknowledges that developers have made mistakes in the past, by building noisy sites too close to residential areas or in the paths of bird migrations. He says operators have learned their lesson, and advancements in turbine technology have reduced noise levels. But he concedes that windmills are ugly and says they should be spread more evenly across the landscape to reduce their visual impact.

Energy experts agree that wind has a part to play in reducing greenhouse-gas emissions and improving the security of the EU’s energy supply, but they caution against expecting too much from windmills. When there’s no wind, there’s no power, a phenomenon that occurs when atmospheric pressure is high, usually during cold snaps and heat waves. This means wind isn’t the solution to Europe’s inability to meet sudden surges in electricity demand, which are triggered, for example, when consumers switch on heating or air conditioning.

"Wind is an important energy source but we shouldn’t expect miracles from renewables," says Claude Mandil, executive director of the International Energy Agency, the energy-watchdog organization based in Paris.

Write to Victoria Knight at [email protected]

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