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Offshore wind project feels economic squeeze

An ambitious wind farm off Belgium's coast is about to launch, but operators say they need more funding to expand the climate friendly project.
Belgium EU Green Summit
A tugboat in Ostend, Belgium, on May 22 tows the concrete pillar foundation for a wind farm about 18 miles offshore. AP
/ Source: The Associated Press

Taller than any of the country's soaring cathedrals, six off-shore windmills rise up from the gray, choppy North Sea waters, ready to start delivering green electricity and reward a e$200 million investment.

Once fully operational this month, the C-Power turbines will produce enough power for 60,000 people. The ultimate plan for the farm is more ambitious: To expand the facility tenfold and create the world's largest far-shore wind farm — enough to light up a city of 600,000.

But project manager Filip Martens needs hundreds of millions of dollars in funding — and with the financial crisis putting a break on bank lending — he's turning to a summit of European Union leaders on Thursday and Friday for help.

"If we want to face our challenges on global warming we have to do something more than only go to see Al Gore's movie," said Martens, referring to the acclaimed documentary about global warming by the former U.S. vice president.

"Of course, this doesn't come for free, but not doing anything will cost us more than investing now that we still have the time for it."

Martens wants EU leaders to come up with support programs that would make it easier to get subsidies or offer loan guarantees to make funding for such projects easier.

Grid connections
And since it depends on fickle wind, he wants EU help to interconnect wind farms into a "trans-European power network" that would improve reliability of power supplies and make wind power more attractive to investors.

Climate change and employment take center stage at the traditional yearend summit in Brussels — held on the last days of an international climate change conference in Poland aimed at drafting a replacement to the Kyoto Protocol on global warming.

Squeezed between green promises and an economy bleeding red, European leaders are in a tough spot: Many feel that expensive climate change goals should be relaxed in favor of the immediate needs of jacking up growth and employment.

Only last year, the EU agreed on an ambitious program to cut greenhouse gas emissions by at least 20 percent from 1990 levels by 2020. Leaders at a March summit also agreed that 20 percent energy used by the 27-nation bloc by 2020 will come from renewable sources like sun and wind.

They became known as the "20-20-20" targets and were music to Martens' ears: The establishment of the European climate commitments came as Martens was locking up investment for the first six C-Power windmills, which tower 600 feet each.

"It came just at the right moment, the pivotal moment," he said. It helped him clinch the first financing, which was led by Dexia bank.

'Risk readiness' has plunged
Now — as he seeks $640 million for 24 new turbines — the European economy is slipping into recession, banks have seen their share prices evaporate and loans have become hard to secure.

"In the market the risk readiness of banks has reduced substantially," said Martens. So negotiating is "more cumbersome, more complex, more time consuming."

The EU has a lot at stake in not letting projects like C-Power falter.

The bloc set the global standard fighting climate change with the "20-20-20" targets and has to prove now it was not bluffing at a time when U.S. President-elect Barack Obama has committed to a major government spend on green projects.

"It is a question of credibility," said European Commission President Jose Manuel Barroso on Tuesday.

But as they enter the Brussels summit, EU nations are divided between those who want to stay the course and those who want softer targets.

Poland is leading a group of nations lobbying to scale down climate change commitments, and together with leaders of eight other coal-dependent eastern European nations, it could turn the summit into an acrimonious cliffhanger.

The problems go beyond the polluting coal belt. Italy, too, is hesitant to stretch its weak economy and wants to dilute the 2007 targets.

That's setting up a major confrontation: "Anything that questions the 20-20-20 targets? No. This, for us, is not negotiable," said Barroso.