EU pushes increased investment in wind energy

European politicians and wind turbines industry leaders on Monday called for clearer regulations and larger investments in green energy as the sector wrestles with the consequences of the region’s long-running sovereign debt crisis.

Danish Prime Minister Helle Thorning-Schmidt, whose country currently holds the rotating European Union presidency, told the opening session of the European Wind Energy Association’s annual event that the wind power sector is a crucial source for growth in Europe and that political leaders should stay on the green-energy path despite the euro zone’s sovereign-debt crisis and tough austerity measures.

”In times of crisis, political priorities tend to shift. There is a danger that long-term objectives give way to short–term goals. There is a danger that green ambitions are lowered. I know this is a concern throughout the green industry,” Thorning-Schmidt said.

Spain, for example, in January halted all government support for new renewable-energy projects in its effort to cut its deficit.

But the short-term relief provided by cutting investment could prove more expensive over the long run, Thorning-Schmidt said.

”We will save money when we use less energy. And we will save money when we are less vulnerable to rising oil, coal and natural gas prices. The cost of inaction today will only increase in the future,” the Danish prime minister said.

A ”Green Growth” report launched at the conference estimated that the wind-energy sector contributed 32 billion euros ($41.7 billion) to the EU’s €12.3 trillion gross domestic product in 2010. The contribution is likely to increase almost threefold by 2020, the report said.

If the wind farm industry was an EU member state, such an increase would rank it at number 19 in 2020 in terms of contribution to the union’s over all GDP.

However, the future growth in European wind energy depends on clarity from national governments regarding subsidy schemes in order to attract investor money for new wind farm projects, industry officials said.

“Uncertainty is what’s holding a lot of investments back. The regulatory certainty is very important,” said Ditlev Engel, chief executive of Vestas Wind Systems XE:VWS +14.31% , the world’s largest wind-turbine maker.

Siemens Wind Power Chief Executive Felix Ferlemann also called for European politicians to establish a regulatory framework to encourage further investments in the industry. The European Commission already expects wind power to meet up to 50% of the electricity demand in Europe by 2050. Siemens Wind Power is a subsidiary of Siemens AG DE:SIE -1.12%

“Is this realistic? Absolutely. But it can happen only if the right policy signals are being set,” Ferlemann said.

EU Energy Commissioner Günther Oettinger said there is a need for a firmer pan-European energy policy to avoid abrupt changes in member states’ support to the wind turbines industry. He said the commission is working on a proposal for better coordination of state aid and for a binding target beyond 2020.

“If we have a priority and clarity we can get long-term trust of investors,” Oettinger said. “It means we must be active against climate change and become less dependent on fossil fuel and imports from certain states.”

By prioritizing growth in the renewable energy sector, the European Commission estimates that its proposal for a new energy-efficiency directive can create about two million jobs.

According to the Green Growth report, the wind energy sector alone created 33% more jobs from 2007 to 2010, while unemployment in Europe surged in the same period. Going forward, 795,000 Europeans could be employed in the sector by 2030, up from nearly 240,000 in 2010, the report projected.

”Some might still be hesitant but we remain convinced that this is the only path forward for Europe. This is also the case in the ongoing negotiations on the next EU budget. Denmark is working to ensure that EU funding is better targeted to growth and greening of the economy,” Denmark’s Thorning-Schmidt said.

Sara Sjolin is a MarketWatch reporter, based in London.