By Günther Hanreich and Gerhard Wächter
European Commission Directorate-General for Energy and Transport, Directorate D
New Energies & Demand Management, Brussels, Belgium

In November last year, the European Commission adopted a Green Paper entitled “Towards a European Strategy for Energy Supply”. It emphasises that the European Union is dependent on its external energy supplies: imports currently account for 50 per cent of total requirements, and this figure is projected to rise to 70 per cent by 2030 if current trends persist.

The Green Paper puts the focus for resisting this trend on demand side measures. However, on the supply side, it highlights the importance of promoting a greater penetration of renewable energy sources in Europe’s economies. The EU has already set itself an ambitious objective of doubling the share of renewable energy from six per cent to 12 per cent of the gross inland energy consumption by 2010. This objective was originally set out in the White Paper on renewable energy sources and was endorsed by the Energy Council in May 1998.

Such a massive expansion of renewables is only achievable if supported by strong promotional policies, including financial incentives. The Green Paper argues that renewable energy sources can only become competitive if financial support is offered in the medium term. The remarkable take-off of wind energy demonstrates the potential of renewable energy sources if they are supported in their initial phases.

The EU and its Member States intend to ratify the Kyoto Protocol in 2002. The reduction target of 7.4 per cent under the new compromise reached in Bonn will then change from being merely a political commitment to becoming part of economic and energy policies.

Climate protection will then have a more dominant position within the objectives of European Community Energy Policy. New business-as-usual projections confirm the continued importance of a rational and co-ordinated implementation of renewable energy and energy efficiency measures if the EU’s CO2 reduction target is to be met.

Moves towards liberalization have a strong influence on the design of renewable energy policies. While liberalization improves the opportunities for renewable energy development, so-called market failures can occur in liberalized markets that could undermine their development. Renewable energy technologies have now to compete against large fossil fuel and nuclear reactors, which do not pay the full cost of their environmental impacts.

The renewable directive

The Directive on electricity produced from renewable energy sources, which was tabled by the Commission in May 2000, is the first piece of European legislation to specifically address renewable energy sources. The European Parliament, during its second reading on 4 July 2001, reached agreement with the Council on the text and the Directive was formally adopted on 27 September 2001.

The strategic objective of the Directive is to create a framework for the medium-term increase of electricity from renewable (or ‘green’) energy sources in the EU and to facilitate its access to the internal electricity market. The Directive aims to create regulatory certainty for stakeholders, while at the same providing a large degree of autonomy to each Member State. This Directive is an important step in making Member States take the additional measures needed to meet the White Paper target of doubling renewable energy use. Its three main pillars are as follows:

National Targets: Member States are obliged to establish national targets for the future consumption of green electricity. If they are all met, around 22 per cent of the EU’s electricity will be provided from renewable sources in 2010, compared to 14 per cent today. The Commission will monitor the compliance of national targets with Community objectives. If the targets are inconsistent with the objectives, the Commission may propose mandatory targets.

Support Schemes: The Directive abstains from proposing a harmonized Community-wide support scheme for green electricity. This is to allow Member States to gain further experience with the application of their national support schemes. The Directive obliges the Commission to compile a report assessing the national support schemes within four years to give a clear picture of the effectiveness of each national support system. If necessary, the report will be accompanied by a proposal for a harmonized European support system to establish a level playing field with electricity produced from conventional energy

Technical issues: The Directive tackles a number of technical issues which are fundamental to the development of green electricity. It obliges Member States to:

  • introduce accurate and reliable certification of green electricity
  • ensure guaranteed access, and priority access if possible, for green electricity to the grid
  • check how administrative procedures for the installation of green power plants could be streamlined and simplified
  • ensure that the calculation of costs for connecting new producers of green electricity to the grid is transparent and non-discriminatory
  • ensure that any transmission and distribution fees do not discriminate against green electricity and that they reflect any cost savings resulting from a renewable plant’s connection to the network.

Although the Directive is on renewable energy, it also encourages energy efficiency by allowing Member States’ targets to be calculated as a ratio of national electricity consumption. Progress on energy efficiency would thus make it easier for a Member State to meet its national target.

The targets that have been set by the Directive are a first step in the right direction. There is now a great and pressing need to rework and rethink ideas, concepts and policies to promote renewable energy sources and rational use of energy so that they can fit more prominently into the energy sector.