Feature article

16 renewable energy focus January/February 200816 renewable energy focus January/February 2008

Directive sets the EU pathwayThe draft Directive governing the EU’s renewable energy target has fi nally

arrived. Is it what the renewable industry had dared to hope for? Dirk

Hendricks, director of the World Future Council’s EU Liaison offi ce thinks it’s a

start, but points to some elements that still need to be addressed. Dirk Hendricks

On 23 January, the European Commission presented its Energy/Climate

package of new EU laws, introducing a number of necessary policy over-

hauls in the fi elds of climate and energy to mitigate the impacts of climate

change, and to decrease the EU’s import dependency for the sake of

Energy Supply Security.

The package includes binding emissions targets, a signifi cant switch to

renewable energy sources, as well as incentives for increased effi ciency

and reduced pollution from European industry.

Given the recent Bali conclusions that industrialised countries should reduce

their emissions by 25%-40% by 2020, the EU’s proposed emission cut of

20% for EU countries and industry – compared to 1990 levels – falls short

of the Bali agreement.

The Commission has also not included additional sectors in an expanded

Emission Trading Scheme, among them ‘transport’.

Renewable Energy Directive

In March 2007 the European Council agreed on a binding target for

2020 – to reach at least a 20% share of renewable energies (RES) in

overall energy consumption, and a minimum share of 10% for biofuels

in each Member State. They agreed to the goal of at least a 20 %

from left to right: Neelie Kroes, Stavros Dimas, José Manuel Barroso and Andris Piebalgs present the Energy package

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renewable energy focus January/February 2008 17

Legislation/EU

renewable energy focus January/February 2008 17

increase in energy efficiency in Europe. The 20% for 2020 targets are

only a medium step. Europe needs to increase renewable energy in

the overall energy mix towards 50%-70% by 2050.

The promotion of renewable energy is addressed in the proposal for a

new Directive on the “promotion of Renewable Energies in Europe until

2020”, which replaces the current Directives 2001/77/EC and 2003/30/

EC, and covers the promotion of RES, and Renewable Heat and

Cooling.

Provisions regarding priority grid access, sharing of costs on grid exten-

sions and reinforcement have been maintained and strengthened,

compared to the Renewable Electricity Directive 2001/77/EC.

Trading, targets and grid access

Generally, the proposal can be welcomed, in particular since existing

national regimes for feed-in tariff s are safeguarded. The Commission

rejected initial proposals from EU Member States like the UK – and

central power utilities – for a mandatory trade scheme for renewable

energy. Such a trade scheme would have severely threatened feed-in

laws that operate in many EU member states; Commissioner Piebalgs

ruled out any EU-wide virtual certifi cate trading mechanism between

companies, which would have interfered with existing and successful

technology-specifi c support schemes (especially feed-in laws). This

continuation guarantees investor confi dence in the renewable energy

industry in these Member States.

The Commission intends to promote a ‘least-cost’ solution to reach the

2020 targets. The ‘Commission staff working document on support for

electricity from renewable energy sources’, published together with the

Directive proposal, concludes that the trade of green certifi cates

between companies turns out to be more expensive – and less eff ective

and less effi cient – than feed-in tariff s. The document recognises explic-

itly that “well-adapted feed-in tariff regimes are generally the most effi -

cient as well as eff ective support schemes for promoting renewable

electricity”.

National Governments are responsible for meeting their own national

targets. The proposed Directive provides fl exibility in meeting these

national targets. EU member states will have the possibility to transfer

Guarantees of Origin (GoO) to other member states, provided they have

reached or exceeded their own intermediate targets. This creates incen-

tives for Governments to quickly increase their production of renewable

energy to fulfi l their targets.

Other suggested important measures include the introduction of binding

priority access to the grid for renewable electricity – one prerequisite for the

promotion of renewable energy production. This element represents clear

progress in comparison with the existing directive on the promotion of

renewable electricity.

The Commission has also made it mandatory to use a certain level of

renewables in all new or refurbished buildings. This measure is supported

by the introduction of several useful provisions designed to reduce

administrative barriers and improve the transparency of procedures.

Another novelty with the current Directive is the insertion of a specific

article about giving information on support measures; costs and bene-

fits; and energy efficiency of renewable energies. The introduction of

accredited training programmes for installers should contribute to

accelerated installation of new renewable energy generation systems.

Despite these positive elements, there are also things to criticise. Despite

a legally binding target in 2020, interim targets are not mandatory. And

the Directive does not foresee penalties for Member states if they do not

reach their own target. The Commission only has the possibility to increase

political pressure on such States.

In addition, there is considerable room for manoeuvres for Member States

– relating particularly to grid access. The implementation of an EU Direc-

tive (as opposed to an EU regulation) implies that many provisions are

subject to National implementation. This might result in variations in poli-

cies between Member States, which could become obstacles to the

completion of a single electricity market.

The transfer of Guarantees of Origin and the appointment of relevant

organisations supervising the trade leave also room for interpretation.

They still need to be clarifi ed or improved to ensure a true promotion of

renewable energy in Europe.

The EU legislative process to come

As it stands now, the EU climate package – including the proposed Directive

– is certainly not enough to pave the way for an urgently needed transition

to a sustainable energy supply in Europe. It is only a step in the right direc-

tion. And a number of improvements and clarifi cations appear necessary.

The proposed Directive still needs to go through the co-decision process

during which European Governments and the European Parliament can

demand amendments before their approval. Therefore, the approval of

the Directive might take all of 2008.

The most urgent topics that need addressing include the integration of

an enforcement mechanism for Member States that do not comply with

their intermediate targets; as well as clearer wording in the section on

guarantees of origin. An improved timing of the required intermediate

targets would ensure that Member States’ eff orts are well-distributed over

the years, and that their eff orts don’t just start shortly before 2020.

Generally, the proposal can

be welcomed, in particular

since existing national

regimes for feed-in tariff s are

safeguarded.

About the Author:Dirk Hendricks is the Head of the Brussels-based EU Liaison Offi ce of the World Future Council. Dirk supports the WFC’s global climate and energy activities with the aim to accelerate the deployment of renewable energy, especially through the promotion of “Feed-In Tariff s”. The WFC has launched a website for decision-makers to develop national feed-in law (Policy Action on Climate Toolkit).

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