Introduction

The package of measures adopted by the Council on 6 April includes a directive on the promotion of the use of energy from renewable sources (the Renewable Energy Directive). The Renewable Energy Directive promotes the use of renewable sources for electricity generation and sets a target for energy from renewables of 20% of total energy consumption across the EU by 2020, including a further target of 10% for energy from renewable sources for each Member State's transport energy consumption.

In order to achieve the overall targets, the directive sets a mandatory national target for each Member State stating the overall share of gross energy consumption that must come from renewables, taking the differing levels of progress achieved by Member States to date into account. The mandatory national targets will provide certainty for investors and should encourage technological development. To ensure that the mandatory national targets are achieved, Member States are required to follow an indicative trajectory towards the achievement of their target and each will produce a National Action Plan. The plan will set national targets for the share of energy from renewable sources to be used to meet demands for transport, electricity, heating and cooling in 2020. The plans must be submitted to the Commission by June 2010.

To reach the mandatory targets, Member States can apply financial support schemes although it will not be mandatory to link these with schemes in other Member States. The directive also lays down rules relating to statistical transfers between Member States, joint projects between Member States and with non-EU countries, Guarantees of Origin, administrative procedures, information and training, and access to the electricity grid for energy from renewable sources. The directive also establishes sustainability criteria for biofuels and bioliquids.

Member States are required to transpose the directive into national law within 18 months.

Progress against targets must be reported

Member States are free to decide their preferred mix of renewable sources, but must present National Action Plans (NAPs), based on an "indicative trajectory", to the Commission by 30 June 2010. Progress reports must then be submitted every two years. The plans will need to be split so that three sectors are identified separately, namely: electricity, heating and cooling, and transport.

The Commission has proposed a series of interim targets for all Member States, in order to ensure steady progress towards the 2020 targets:

  • 25% of the overall 2020 target to be achieved between 2011 and 2012;
  • 35% of the overall 2020 target to be achieved between 2013 and 2014;  
  • 45% of the overall 2020 target to be achieved between 2015 and 2016; and  
  • 65% of the overall 2020 target to be achieved between 2017 and 2018.  

There are no financial penalties for failing to achieve these interim targets. The Commission does however reserve the right to issue infringement proceedings if Member States do not take "appropriate measures" to try to meet their targets.

Renewable energy produced outside of the Member State may be counted

Two or more Member States can cooperate on joint projects relating to the production of energy from renewable sources. Member States can also join forces with one or more non-EU countries on renewable electricity generation projects. Member States will be permitted to link their national support schemes to those of other Member States, and will be allowed under certain circumstances to count the import of "physical" renewable energy from third-country sources towards their targets. It will not be possible to count "virtual" imports, based on investments in non-EU countries towards a Member State national target.

A system requiring open trading in renewable energy certificates between participants across Member States was rejected in favour of a system only permitting Member States themselves to transfer excess renewables credits. These "statistical transfers" can only take place if the Member State has reached its interim renewables targets.

Guarantees of Origin will only be used for fuel mix reporting purposes

The final version of the directive has simplified many of the provisions originally proposed by the Commission relating to Guarantees of Origin. The requirements now state that Guarantees of Origin are only to be used to prove the quantity of energy from renewable sources in a supplier's energy mix to final consumers. Member States must ensure that a Guarantee of Origin is issued in response to a request from a generator of renewable electricity and that the guarantee will be a standard size of 1MWh.

Biofuels and Bioliquids must be environmentally sustainable

The directive establishes binding criteria to ensure that biofuel production is environmentally sustainable. For the purposes of meeting national targets, energy from these sources must fulfil the requisite criteria. The criteria relate to biodiversity, the protection of rare, threatened or endangered species and ecosystems, and greenhouse gas emissions savings.

From 2017 onwards, the greenhouse gas emissions savings resulting from the use of biofuels produced in existing biofuel production plants must be at least 50% compared with the emissions from using fossil fuels. The greenhouse gas emissions from the use of biofuels produced in new installations must be at least 60% lower than those from fossil fuels.

Unlike traditional, "first-generation" biofuels, second-generation biofuels do not present the same risks to the security of food supplies as these biofuels are, for example, produced from wastes, residues, or biomass such as algae, wood residues, or paper waste. To promote those new, more sustainable alternatives, "second-generation" biofuels will receive double credits for the purposes of the overall 10% transport target.

Improving grid access for generators

In the past many smaller producers of renewable electricity have argued that a lack of transparency and restricted access to electricity grids has prevented them from competing in the market. The directive requires Member States to ensure that transmission and distribution system operators provide either priority access or guaranteed access to the grid for electricity produced from renewable energy sources. System operators will be required to provide any new generator wishing to be connected to their network with a timetable and a comprehensive estimate of costs associated with the connection.

The directive also requires Member States to develop transmission and distribution grid infrastructure, intelligent networks, storage facilities and systems that can be operated safely while accommodating renewable generation.

District infrastructure for heating and cooling must be considered

In their National Action Plans Member States are required to assess whether there is a need to build new district infrastructure for heating and cooling using energy produced from renewable sources (including large biomass, solar and geothermal facilities) in order to achieve their mandatory 2020 national target. Local and regional administrative bodies should be advised to "ensure equipment and systems are installed 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". In particular, they should be encouraged to include heating and cooling systems when planning city infrastructures.

An emphasis on the need for energy efficiency

The directive recognises that one of the most effective ways for Member States to reach their renewable energy targets is by taking energy efficiency measures and thereby reducing the actual quantity of renewable energy that needs to be sourced to meet their relative targets.