Renewables

EU risks missing renewables target unless decisive action is taken

1 June 2004 – The European Commission has recommended support mechanisms to enhance the development of renewable energy but has failed to set more ambitious targets for 2020.

In September 2001, the EU adopted the Directive on the Promotion of Electricity produced from Renewable Energy Sources (‘Renewables Directive’). This directive provides an EU-wide legal framework with the aim of promoting and further exploiting the potential of renewable energy sources (RES).

The directive states “a need to promote renewable energy sources as a priority measure”, which goes hand in hand with EU efforts to diversify energy sources in order to enhance the security of supply, to protect the environment and to promote social and economic cohesion. The full implementation of the directive has a potential to save up to 200 million tons of CO2 emissions, representing 6 per cent of the EU’s emissions in 1990.

The 1997 White Paper on renewable energy stipulated the target of 12 per cent of total energy consumption to be produced by renewable energy sources by 2010. This translates into the directive’s objective to produce 22.1 per cent of the EU’s total electricity from renewables by that date. Member States were set individual targets in order to collectively meet this objective.

By 2001, the share of renewables had reached 6 per cent overall, compared to 40 per cent for oil, 23 per cent for natural gas, 15 per cent for solid fuels and 16 per cent for nuclear power.

The deadline for the implementation of the directive was 27 October 2003, when Member States were required to publish an analysis of how far they had succeeded in meeting the national targets.

Issues:

A Commission Communication on the share of renewable energy in the EU was published on 26 May 2004 as a first report on the implementation of the directive by the Member States.

The report shows that Member States are not on track for meeting their national indicative targets, which are set to reach a share of 22.1 per cent of the EU’s electricity from renewable energy sources by 2010. The Communication estimates that under current circumstances, only 18 or 19 per cent will be achieved, which would correspond to 10 per cent of the EU’s total energy demand to be produced by renewables, as opposed to the 12 per cent set out in the White Paper.

“While some efforts have been undertaken by the Member States, the overall result is not satisfactory. If we don’t give a decisive push, we shall not achieve the target of 22 per cent, but a mere 18 or 19 per cent,” said Energy Commissioner, Loyola de Palacio, at a press conference.

Only four Member States are set to meet their national targets: Germany, Denmark, Finland and Spain. Other countries have recently introduced new legislation which could enable them to reach their national objectives by 2010. The worst performing states are Greece and Portugal, which have fallen far behind meeting their targets.

Wind energy is the most successful renewable source in the EU, and especially in Germany, Spain and Denmark, with capacity expected to beat the target by 100 per cent and the European industry controlling 90 per cent of the global market. However, wind energy still only accounts for 2.4 per cent of EU electricity consumption.

Overall, the Commission estimates that additional investments of 10 to 15 billion euro are required to achieve the 12 per cent target the EU has set itself, coming from the public and private sectors alike. The Commission therefore recommends to roll out the successful support mechanisms of Germany, Denmark and Spain to the other countries. This would include feed-in-tariffs, green certificates, market-based mechanisms, tax exemptions etc.

Despite widespread calls for the introduction of a more ambitious target for the share of renewables in the EU’s energy mix by 2020, the Commission has decided not to do so. The Communication proposes a “thorough assessment” of calls for a 20 per cent target, but only expects to set a new target for the time after 2010 in 2007.

“I don’t like to take on commitments without saying how to fulfil them. We could have said 20 per cent, but this would not have been honest,” Commissioner de Palacio said to justify the decision.

Positions:

Environmental groups have reacted with dismay to the Commission report. They had called on the Commission to introduce a more ambitious long-term target for boosting the share of renewable energy to 25 per cent by 2020. In a joint letter to the Commission, WWF, Greenpeace and Friends of the Earth argue that a long-term target is needed to strengthen investor confidence. “The failure to come up with a new renewable energy consumption target for 2020 will send a weak political message at a time when the EU should show leadership in the sector ahead of a global renewable energy conference next week in Bonn,” said WWF’s Giulio Volpi. “Mrs Palacio’s irresponsible actions during the preparation of this document undermine Europe’s leading role in tackling climate change, damage investor confidence and will slow construction programmes. Targets are the foundation on which other renewables policies are built. The current target expires in 2010, so a new longer-term 2020 target remains an urgent need,” added Mark Johnston of Friends of the Earth.

The European Parliament has urged Commission and Council to set a 20 per cent target for the contribution of renewable energy to total domestic energy consumption in the EU by 2020. The EP’s resolution of 1 April 2004 underlines the importance of a regulatory framework for accelerating growth in the renewables market and creating a level playing field as well as tackling administrative and trade barriers.

The European Renewable Energy Council (EREC) has been calling for an increase in the overall renewable energy target for the EU to 20 per cent by 2020. A study carried out by EREC has shown that both the overall 12 per cent target and the 22.1 per cent target for electricity production from RES by 2010 can be achieved if specific support actions are taken soon. Moreover, it estimates that a contribution from renewables to total energy consumption of 20 per cent by 2020 is possible.

EURELECTRIC, the Union of the Electricity Industry, has criticised governments for providing “substantial and unlimited” subsidies for renewable energy sources (RES). The association believes that sustainable growth in this area can only be achieved through a regulatory framework which complies with the rules of a competitive market. Maintaining that support schemes for RES therefore have to be market based, capital efficient and designed to avoid market distortions, EURELECTRIC calls for more harmonisation of RES support schemes than foreseen in the directive.

EUROCHAMBRES has welcomed the fact that the Commission has abandoned setting quantitative targets beyond 2010. “In the long run this would impede effective competition in the field of renewable energies and prevent the search for the most suitable and cost efficient technologies in the Single Market,” said Deputy Secretary General Paul Skehan. Furthermore, organisation is in favour of encouraging Member States to streamline project planning and permission procedures and set up a “one stop shop” for projects.

At the European Conference for Renewable Energy ‘Intelligent Policy Options’ in January 2004 in Berlin, participants concluded that the EU should proceed without delay in setting the ambitious target of 20 per cent for 2020. These conclusions will be a major part of the EU input to the Renewables 2004 Conference in Bonn in June 2004.

Next Steps:


* The core aim of the International Conference for Renewable Energies, which is being hosted by the German government in Bonn on 1-4 June 2004, is to lend further impetus to the global development of renewable energy.
* The Commission will present a report on support schemes for renewables in 2005, potentially including a proposal for an EU-wide framework for RES support schemes.
* Member States are to achieve their national targets by 2010.
* A new target for the period after 2010 will be discussed as of 2005, to be adopted in 2007.