Using solar energy has become too expensive for many Greek consumers

Solar energy is abundant, inexhaustible, cheap and doesn’t harm the environment. Yet in the country which enjoys the most hours of sunshine in Europe, and which has to import 70 percent of the energy it uses, not only are no measures taken to subsidize the use of solar energy but whoever does so is «punished» by higher taxes. Hence solar water heaters, which were widely used in the past two decades, are not popular. According the environmental organization Greenpeace, the solar water heaters that have already been installed in Greece save 1.1 billion kilowatts a year, the amount of energy produced by a conventional 200-megawatt electric power station. Yet solar energy is priced higher in Greece than conventionally generated electricity. Value-added tax (VAT) on solar heaters is 18 percent, compared with 8 percent for conventionally produced electricity. Moreover, law 2364/95, which was in force until 2002, has been rescinded. It allowed for 75 percent of the total cost of the purchase and installment of renewable energy systems to be deducted from taxable income. Though many people were not even aware of this provision, the law did provide a minimum incentive to those who chose not to burden the environment. The only support now available applies to some solar heaters for commercial purposes, which attract a subsidy of 33-40 percent of the installation cost. According to Greenpeace, Greece has the second largest area of solar collectors in Europe after Germany, with about 30 percent of houses (1 million households) using solar water heaters. This might seem satisfactory, but the corresponding figure is 80 percent in Cyprus and Israel. The initial cost of installing a solar heater is a deterrent, despite the potential savings on electricity, whereby the system pays for itself in 5-10 years. An average solar heater costs about 700 euros, of which 45 euros represent the VAT. Soon, however, the thoughtless waste of energy produced by fossil fuels will have a direct economic cost. In accordance with the Kyoto Protocol, by 2010 Greece must not have increased its emissions of greenhouses gases by more than 25 percent over those in 1990. Greenhouse gases, chiefly carbon dioxide, nitrogen oxide and methane, are emitted by the use of fossil fuels for transport, heating and energy production. But by 2001, Greece had increased its emissions of those gases by 23.5 percent. If these pollutants continue to increase at the same rate, and there is no sign that any measures will be taken to ensure that at a time when so-called development is being pursued at any cost, greenhouse gas emissions in Greece will have increased by 35.9 percent by 2010 and 56.4 percent by 2020. This means we will have to pay tens of millions of euros in fines in 2010. More widespread use of solar heaters would be of great help here. An average solar heater produces 840-1,080 kilowatts a year, and saves us from emitting 925-1,200 kilos of carbon dioxide. If a solar heater heats about 60 percent of the water a family uses per year, it represents an average saving of about 80 euros a year. As Manos Safos, head of the climate change campaign at Greenpeace’s Greek office, says: «Though solar energy is this country’s comparative advantage and is a solid answer to dependence on fossil fuels, no incentive at all is offered to to promote solar systems for domestic use. When the Economy Ministry abolished the tax exemptions for installing solar systems in homes, it promised there would be other incentives. So far there has been no initiative in that direction.» In order to promote the use of solar heaters, Greenpeace proposes making their installation obligatory in all new buildings, as well as in buildings being radically renovated as in Barcelona, together with subsidies for their purchase and installation. It also argues for a reduction in VAT from 18 to 8 percent or less, so that electricity produced by burning fossil fuels is not cheaper than that produced by solar energy. Incentives in other countries Austria: Tax exemptions. Purchases up to the value of 2,920 euros are exempt from tax. Britain: Low VAT (5 percent). France: Sliding VAT (5.5-19.6 percent). Subsidies for purchase and installation (1,280-2,100 euros per system). Germany: Subsidy of 125 euros (per square meter of installation). Spain: Obligatory installation in new houses (in Barcelona, and soon in Madrid, Pamplona, Seville and Valencia). Subsidy of 210 euros per square meter of installation and cheap loans. Italy: Reduction of VAT from 20 to 10 percent. The Netherlands: Subsidy that covers about 30 percent of the value of the system. Japan: Subsidy of 30-50 percent and low-interest loans for large installations. Low VAT (5 percent). Israel: Obligatory installation in all new houses up to 27 meters high. Subsidy of 30 percent for new technology.