Bioenergy, Energy Efficiency, Geothermal, Hydropower, Solar, Wind Power

European & US Renewable Energy Targets

Issue 1 and Volume 14.

Latest figures on the progress of renewable energy in the European Union have been revealed by the European Commission (EC). They show that the 2020 renewable energy policy goals are likely to be met and exceeded if EU member states fully implement their national renewable energy action plans and if financing instruments are improved.

However, the EC has also stressed the need for further co-operation between member states, reinforcing the convergence of support schemes and better integration of renewable energy into the single European market to ensure that renewable technologies become economically competitive as soon as possible.

According to the Commission statement, three mechanisms favour such cooperation:

  • ‘Statistical transfers’ where one member state with a surplus of renewable energy can transfer it statistically to another state, whose renewable energy sources may be more expensive;
  • ‘Joint projects’ in which a new renewable energy project in one member state can be co-financed by another and energy production shared statistically between the two;
  • ‘Joint support schemes’ in which two or more member states agree to harmonise all or part of their support schemes.

And, according to their National Renewable Energy Action Plans plans, Italy and Luxembourg already both expect to use these mechanisms to help develop renewable energy in another member state and count it towards their own domestic targets.

Nine countries (Czech Republic, Germany, Spain, Lithuania, Hungary, Austria, Poland, Slovenia, and Sweden) currently expect to exceed their 2020 targets and could therefore have a surplus available.

In 2014 the Commission says it plans to assess the effective functioning of the co-operation mechanisms. Nonetheless, preliminary estimates indicate that across the economic bloc such measures could lead to €10 billion of annual savings. Looking to the medium or long term, a convergence of financing, such as feed-in tariffs, will be necessary, when a truly European market is created, the Commission believes. This can include greater co-operation in setting tariffs, technology bands, tariff lifetimes and so on. It could also include completely joining the support schemes, as currently planned by Norway and Sweden, for example.

Commenting on the figures, European Energy Commissioner Günther Oettinger said: ‘We have to invest much more in renewable energy and we need smart, cost-effective financing. If member states work together and produce renewable energy where it costs less, companies and consumers and the tax payer will benefit from this.’

The EU says it is committed to reaching its objective of a 20% share of renewable energy by 2020 and in order to achieve these targets, the Commission calls on member states to implement their national action plans.

Latest data show, however, that in 2010, the indicative targets the member states set themselves for the electricity and transport sector were missed by most member states and the EU overall.

The Commission also calls on EU members to ensure a doubling of annual capital investments in renewable energy from €35 billion/year to €70 billion/year. This investment should mainly come from the private sector, the Commission says, suggesting this could come from big energy companies investing in wind or solar farms or households investing in solar systems or other forms of renewable energy. Within the new EU legislative framework, member states will have to commit the necessary efforts to further invest and cooperate on developing renewable energy, says the EC.

Further investment in renewables will require a substantial use of national support schemes. These support schemes, and other instruments used to finance renewable energy at EU or national level, ought to be as cost-effective as possible,’ the Commission says in a statement.

The Communication shows that, while many different financial instruments are used in all member states to develop renewable energy – grants, loans, feed in tariffs, certificate regimes and so on – their management needs to be improved. Investors need greater coherence, clarity and certainty, the Commission believes.

Responding, the European Renewable Energy Council (EREC) said it too believes that new, innovative financing measures are crucial for Europe’s future prosperity.

‘The Communication provides a clear picture of both the promising progress of renewables and the economic challenges, but is disappointing when it comes to new, innovative ideas regarding financing of renewables,’ said EREC president Arthouros Zervos.

Figures from the industry show that during 2010 more renewable energy power capacity was installed than ever before – a total of 22.6 GW, an increase of 31% compared with 2009 installations. ‘It is the fifth consecutive year that renewables have accounted for more than 40% of new electricity generating installations,’ said Zervos.

‘Given at the same time the continuous slow growth of renewable heat at EU and national level, more support is needed in the heat sector, for example to district heating or cogeneration,’ he added.

Agreeing with the Commissions` conclusion that sudden and retroactive changes to national support schemes seriously undermine investor confidence, Zervos continued: ‘For investment in renewable energy to double investors need stable European and national frameworks.’

However, refering to the Commission’s repeated call for greater convergence of national support schemes and to move to a pan-European trade in renewable energy, Zervos observed: ‘Instead of continuous debates about national support mechanisms, which risks freezing vital investments to achieve binding renewables targets, the focus should be on renewing and enhancing Europe’s outdated and poorly interconnected infrastructure and making new, innovative proposals on how to leverage more private investment for renewables in times of limited public resources.’

The Renewable Energy Directive adopted in 2009 sets binding targets for a 20% share of renewable energy in the EU overall energy mix by 2020 and the EU as a whole reached just over 18% for the share of renewable energy in the electricity in 2010 rather than the indicative target of 21%. For transport, the EU reached 5.1% instead of a provisional target of 5.75%.

Nonetheless, while member states failed to reach their indicative 2010 targets for the share of renewable energy in the electricity and transport sectors, the new renewable energy Directive is designed to ensure that remedial action is taken: member states’ national action plans are required to contain all the measures to achieve the trajectory contained in the Directive.

In a related development, US President Barack Obama has highlighted the growing role of renewables in his latest State of Union Address saying: ‘With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015.’

Concluding his comments on energy development, Obama set a new target for electricity from low-carbon sources including renewables, saying: ‘Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: By 2035, 80% of America’s electricity will come from clean energy sources’.