EU revises renewable energy strategy

EU leaders have shown that they are willing to admit when they've made mistakes with regard to their strategy for deploying renewable energy technologies to combat climate change. Earlier this month they reconsidered their commitment to biofuels based on an assessment of the environmental and socioeconomic impacts that would result if current targets were achieved.

One thing that has not change is the EU's overall commitment to reducing greenhouse gas emissions. When it became apparent that they would fall short of the goal to meet 20% of their energy needs from renewables, EU officials re-calibrated and challenged each member state to try harder. (GW)

EU states handed ambitious renewable energy targets

EurActiv
24 January 2008

The European Commission put forward ambitious targets yesterday (23 January) to boost the EU's overall consumption of renewable energies to 20% by 2020. But while the plans to promote technologies such as solar and wind were largely welcomed, Brussels faces widespread criticism over controversial biofuels targets.

Background:

In March 2007, EU leaders committed to increasing the share of renewable energies in the EU's final energy consumption to 20% by 2020, and promised to up the use of biofuels in transport to 10% by the same date.

Since then, the Commission has been charged with formulating policy proposals to reach the targets, triggering a flurry of stakeholder activity.

In the weeks leading up to the publication of the proposals, controversy surrounded the Commission's plans to promote renewables through the trading of guarantees of origin (GOs - EurActiv 16/01/08), and the sustainability of the biofuels target was questioned by the Commission's own scientists (EurActiv 18/01/08).

Issues:

Differentiated targets for EU member states

A proposal for a new EU directive , published on 23 January, mandates each member state to increase its share of renewable energies - such as solar, wind or hydro - in an effort to boost the EU's share from 8.5% today to 20% by 2020.

A separate target to increase biofuels use to 10% of transport fuel consumption is to be achieved by every country as part of the overall EU objective.

To achieve these objectives, every nation in the 27-member bloc is required to increase its share of renewables by 5.5% from 2005 levels, with the remaining increase calculated on the basis of per capita gross domestic product (GDP). EU countries are free to decide their preferred 'mix' of renewables in order to take account of their different potentials, but must present national action plans (NAPs) outlining their strategies to the Commission by 31 March 2010. The plans will need to be defined along three sectors: electricity, heating and cooling and transport.

Member State	Share of renewables in 2005	Share required by 2020
Austria	23.3%	34%
Belgium	2.2%	13%
Bulgaria	9.4%	16%
Cyprus	2.9%	13%
Czech Republic	6.1%	13%
Denmark	17%	30%
Estonia	18%	25%
Finland	28.5%	38%
France	10.3%	23%
Germany	5.8%	18%
Greece	6.9%	18%
Hungary	4.3%	13%
Ireland	3.1%	16%
Italy	5.2%	17%
Latvia	34.9%	42%
Lithuania	15%	23%
Luxembourg	0.9%	11%
Malta	0%	10%
The Netherlands	2.4%	14%
Poland	7.2%	15%
Portugal	20.5%	31%
Romania	17.8%	24%
Slovak Republic	6.7%	14%
Slovenia	16%	25%
Spain	8.7%	20%
Sweden	39.8%	49%
United Kingdom	1.3%	15%

The Commission has also set a series of interim targets, in order to ensure steady progress towards the 2020 targets:

• 25% average between 2011 and 2012;
• 35% average between 2013 and 2014;
• 45% average between 2015 and 2016, and;
• 65% average between 2017 and 2018.

While only the 2020 target is legally binding, a senior Commission official on 22 January said that the Commission could pursue earlier legal action in cases where a member state's progress is so limited that it is clear the final target cannot be reached.

Virtual power flows

The Commission's proposal allows for the virtual trade in renewable energies involving Guarantees of Origin (GOs), which certify the renewable orgin of electricity produced. This provision already features in existing EU renewables legislation (see EurActiv's LinksDossier), but has hardly been utilised, according to the Commission.

Under the system, member states may invest in renewable energy production in another member state in exchange for GOs, which can be counted towards the renewables target. But the Commisson has attached the condition that a member state must have already reached its own interim target before being allowed to receive investments and transfer GOs to another member state.

Physical trade in renewable energies is permitted and encouraged in the EU's internal market, but currently accounts for less than 6% of the electricity traded between EU member states, according to the European Renewable Energy Council (EREC).

Buildings and district heating

While the focus of the directive is on the promotion of large scale renewable energy installations, member states are nevertheless requested to use "minimum levels of energy from renewable sources in all new or refurbished buildings", and the text makes provisions for the mutual recognition of certifications for technicians who install renewable technologies in buildings (see also our LinksDossier on EU buildings legislation).

Architects and planners are also to benefit from member state 'guidance' when planning new constructions, while local and regional administrative bodies should be required "to consider the installation of equipment and systems for the use of heating, cooling and electricity from renewable sources and for district heating and cooling when planning, designing, building and refurbishing industrial or residential areas".

Grid access

Many smaller producers of renewable energy argue that a lack of transparency and blocked access to energy grids are preventing them from competing on the market (EurActiv 06/07/07).

The text seeks to address the problem by requesting member states to ensure that the transmission and distribution system operators provide "priority access to the grid system of electricity produced from renewable energy sources."

Biofuels and sustainability

Brussels has come under acute pressure from green politicians, NGOs and the scientific community to provide robust sustainability criteria to ensure that the 10% biofuels target does not lead to ecosystem loss, deforestation, population displacement, food price increases and even higher CO2 output.

The Commission's text includes the following criteria:

• Land use - old forest with no or limited human intervention cannot be used for biofuels cultivation, nor can 'highly biodiverse grasslands', or lands with a 'high carbon stock' like wetlands or 'pristine peatlands';
• CO2 impact - the overall greenhouse gas (GHG) savings from biofuels production must be at least 35% in order for cultivation to be considered sustainable.

The Commission will put forward sustainability criteria for energy use of biomass by the end of 2010.

Paying the bill

Revised state aid guidelines were published along with the renewables proposal, paving the way for an increase in state funds to the renewable energy sector, including for biofuels producers, whereby the Commission's sustainability criteria will be tied in with state aid eligibility.

In order to qualify for state aid, projects must in general have excessively high investment costs, with companies that want to go beyond community environmental requirements being particularly eligible for subsidies.

Much of the state support envisioned by the Commission can be handed out in the form of tax breaks. The new guidelines do not, however, propose a revision of value added tax (VAT) schemes, despite previous calls for new 'green' VAT rules by France and the UK (EurActiv 23/07/07).

The Commission predicts that the energy and climate package as a whole (see also EurActiv's related coverage) will cost less than 0.5% of the EU's GDP. The Commission has also repeatedly cited the 'cost of inaction' made in the Stern report (EurActiv 31/10/06), and argues that rising oil and gas prices mean that gains from promoting renewables will be 'much higher' than current Commission calculations.

Positions:

Oliver Schäfer, Policy Director of the European Renewable Energy Council (EREC), told EurActiv that the renewables proposal "looks pretty good now", following in particular changes made to the renewables trading structure and conditions. EREC, along with Spain, Germany and other member states, had raised serious objections to an earlier draft of the directive (EurActiv 16/01/08).

Senior members of the Commission told journalists in Brussels on 22 January that the changes to the renewables trading regime were made as a result of internal discussions within the EU executive, and not in direct response to industry and member state pressure.

The European Solar Thermal Industry Federation (ESTIF) welcomed the proposal enthusiastically. "For the first time, an EU legislative proposal has the explicit purpose of supporting all renewables, including solar heating and cooling", said ESTIF President Gerhard Rabensteiner in a statement.

Makers of wind power turbines also appeared satisfied, with the European Wind Energy Association (EWEA) saying the Commission had "provided a powerful response to the imminent energy and climate crisis". The organisation predicts that wind energy will be "the biggest contributor" to the targets.

Reactions to the biofuels target and to the sustianability criteria were much less favourable, however, with a number of green groups slamming the plans. The Greens in the Parliament have promised to "get rid" of the 10% target in the upcoming negotiations. Green MEP Claude Turmes called the targets "nonsense".

During his presentation of the proposals on 23 January, EU Commission President José Manuel Barroso said that the criteria put forward by the Commission will foster the promotion of international sustainability standards in biofuels trade where previously none have existed. The safeguards are "simple enough to be workable, robust enough to be credible", he said.

Latest & next steps:

• The proposal is now forwarded to the EU Council and Parliament for approval.
• 1st half 2009: Target date for the adoption of the legislation.
• 31 March 2010: Deadline for EU states to present National Action Plans (NAPs) on renewables.