The EU Debt Crisis and its Impact on Energy Investment

So long as the economic future of the EU is threatened by the fallout from its debt troubles, the future for renewable energy in Europe will be at risk.  The crisis in Greece, despite extraordinary interventions by the European Union, is far from over, and may in fact be just beginning, leading to concerns about widely-felt contagion throughout Europe. The crisis as a whole has been broadly covered, but a less examined aspect of this crisis is the impact on the renewable sector.  In the near term, the crisis means that EU governments will need to embrace new methods to foster the growth of its renewable energy industry.  Several European governments are now rapidly working to unwind the subsidies and direct incentives that have been the hallmark of European renewable energy policy; to continue to promote growth in alternatives, governments will increasingly have to turn to regulations and taxes to make low-carbon energy more attractive.  If leaders like Spain and Germany cease to prop up the market for alternatives, the expanding debt crisis would have significant long-term implications for the energy mix.

Background on the Debt Crisis: The PIIGS Crisis

Since the financial crisis of 2007 and 2008, attention has focused on the so-called PIIGS – Portugal, Italy, Ireland, Greece, and Spain – which are all eurozone countries that have been harder hit by the recession than the rest of Europe.

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