Various Documents considered by the Committee - European Scrutiny Committee Contents

11 Renewable energy: progress towards the 2020 target

(32480) 5965/11

+ ADDs 1-3

COM(11) 31

Commission Communication: Renewable Energy — Progressing towards the 2020 target

Legal base
Document originated31 January 2011
Deposited in Parliament3 February 2011
Basis of considerationEM of 17 February 2011
Previous Committee ReportNone, but see footnotes
To be discussed in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionCleared


11.1 The Commission says that renewable energy is crucial to any move towards a low carbon economy, and a key component of the EU energy strategy, which was effectively launched with the adoption of a White Paper in 1997, and which has been driven by the need, not only to decarbonise the sector, but also to address the growing dependency on fossil fuel imports from politically unstable regions. It also points out that the focus over that period has shifted from the use of indicative to legally binding targets under the new Renewable Energy Directive (2009/28/EC). The Commission goes on to highlight the way in which its Energy 2020 Strategy[57] identifies how EU infrastructure and innovation policies are supporting the sector's development, and it says that the purpose of this Communication is to present an overview of the renewable energy industry in Europe, its prospects to 2020, and the outstanding challenges it faces.

11.2 The Communication is also accompanied by three Commission Staff Working Documents—SEC(2011) 129 reporting on the operation of the mass balance verification method for the biofuels sustainability scheme, SEC(2011) 130 reporting on progress in developing renewable energy sources and technical evaluation of the use of biofuels and other renewable fuels in transport, and SEC(2011) 131 reviewing European and national financing of renewable energy—the four documents together forming the Commission's response to the reporting requirements set out in the relevant EU legislation.

The current document


11.3 The Commission points out that, until 2008, the Renewable Electricity Directive (2001/77/EC) and the Biofuels Directive (2003/30/EC) set respectively national indicative targets for the EU under which renewable energy would account for 21% of electricity generation by 2010, and for 5.75% of the energy used in transport. It says that only a few Member States were expected to achieve either of these aims, and that this led to the adoption of the Renewable Energy Directive, which covers energy consumption as a whole and sets legally binding national targets[58] such that the EU achieves a 20% share of renewable energy by 2020. In addition, it requires Member States to prepare National Renewable Energy Action Plans, reform planning regimes and develop electricity grids.

11.4 The Commission says that a review of Member States' plans shows that the new approach is starting to pay off, with renewable energy constituting 62% of investment in energy generation in 2009, and Member State projections showing that it will grow at a faster pace in the years to 2020 than in the past, and that some will exceed their targets (and will thus be able to provide surpluses for other Member States). It says that, if these predictions are fulfilled, the share of renewable energy in the EU as a whole in 2020 will exceed the 20% target, and that overall Member States expect to more than double their total renewable energy consumption by that date. Electricity is expected to account for 45% of the increase, heating 37% and transport 18%, with biomass the largest source, followed by wind power (of which two-thirds will be inshore and one-third offshore), and solar energy.

11.5 As regards individual sectors, the Commission comments that renewable energy should constitute 37% of Europe's electricity mix by 2020, a development which it says highlights the need to accelerate the modernisation of the grid (facilitating grid balancing, flexibility and distributed generation, and in particular the connection of offshore wind generation) and of the electricity market as a whole. As regards heating and cooling, it says that there was only a modest market development due to the lack of an adequate support framework in most Member States, but that this will clearly change with the sector's inclusion in the new EU framework, and that biomass is expected to remain the dominant technology, accounting for 50% of the expected growth up to 2020. In the case of transport, the Commission says that first generation biofuels will be the predominant energy source to 2020, with Europe having the strictest sustainability criteria in the world, and that second generation biofuels and electric vehicles are expected to make only a small contribution.

11.6 The Commission observes that, in order to achieve the 2020 targets in an economical and resource efficient manner, the EU needs to continue to invest in research for advanced renewable energy technologies, and to continue to bring down the costs of offshore wind, photovoltaic power, electric cars, and second generation biofuels, with projects bringing wider environmental benefits being promoted through research programmes such as the Strategic Energy Technology Plan.[59] It notes that this will require significant investment, making it essential to have a stable and predictable financing environment, and that it will be necessary for Member States to strengthen skills, knowledge and capacities.


11.7 The Commission recalls that its Communication on infrastructure priorities[60] identified the need for European investment of more than €1 trillion by 2020, with about half of this being required for replacing or investing in new electricity generation capacity, and priority being given to investment in renewable energy. It adds that this would require annual capital investment in renewable energy to increase from its present level of €35 billion to €70 billion, and that this must continue to be funded mainly through private sector investment, financed eventually by energy consumers. It suggests that the economic benefits of encouraging the renewables industry was widely acknowledged as the global financial crisis took hold in 2009, and that the challenge facing Europe is to stay at the forefront of this industry, where it regards the EU Emissions Trading Scheme as an important driver, and where it believes much can be done by streamlining authorisation and planning procedures and by removing non-cost barriers to the growth of renewable energy.

11.8 In particular, the Commission says that, at a time of major fiscal constraint, more can be done to ensure that money spent in this area is used cost effectively, and that effective selection and coordination of financing tools at both national and EU level is important. It adds that the choice of financial instrument depends upon the state of the technology and project development, and that all the available instruments (which include grants, loans and loan guarantees, equity funds, feed-in tariffs, premiums, quota/certification schemes, fiscal incentives and tenders) have role to play in relation to different forms of project risk and the maturity of the project in question. It notes that grants towards capital costs are used most often in the initial stages, and that support then tends to shift towards operating support, more commonly financed by energy consumers than from taxation, but it stresses the need for financial support to be phased out only when renewable energy costs have declined further.

11.9 The Commission goes on to comment that, whilst some EU funding is applied, the bulk of support for renewable energy is delivered at Member State level, and that a range of different instruments are used. It also says that there has been significant adaptation of instruments as circumstances have changed, with tariffs having been reduced as production costs have declined, and producers being exposed to greater market price risk: and it notes that private financing mechanisms have been developed successfully in some Member States both to attract capital and increase local acceptance of projects, provided these are undertaken in accordance with a clear government strategy.

11.10 At the same time, the Commission says that, although the efficiency of the various instruments has been improved, more needs to be done, in that Member States have tended to operate on a purely national basis, whereas up to €10 billion could be saved annually if they treated renewable energy as a commodity in a single European market. It therefore reiterates the call in the EU Energy Strategy for a greater convergence of national support schemes and the development of a pan-European approach to the development of renewable energy sources of the kind now emerging in relation to offshore wind: and it draws attention to the "cooperation mechanisms" established by the Renewable Energy Directive to enable Member States to develop such sources jointly. In particular, these can involve statistical transfers where a quantity of renewable energy produced in one Member State is transferred to another for target compliance purposes, allow Member States to embark on joint projects to build or co-finance infrastructure, and to agree joint support schemes (such as a common feed-in tariff).

11.11 As regards funding at EU level, the Commission points out that, despite strong political support, the financial support given is relatively low, amounting on average to €3.26 billion a year for the period 2007-09 (mainly in the form of loans from the European Investment Bank). It comments that the instruments used directly by the Commission for financing renewable energy projects, those jointly managed with Member States, and those managed with other institutions will be the subject of review in the light of the next European Financial Framework from 2014, and that it will in particular examine using funds to leverage private capital into energy projects at local, regional, national and European levels, combined with a greater uptake of the cooperation mechanisms under the Renewable Energy Directive. In the meantime, it points out that a major new source of financial support is the programme established under the Emissions Trading Scheme to support the demonstration of carbon capture and storage and innovative renewables at commercial scale, with around €4.5 billion of co-funding available for appropriate projects.

11.12 The Commission concludes by inviting Member States to implement their National Renewable Energy Plans; streamline infrastructure planning regimes, develop the electricity grid; develop cooperation mechanisms and integrate renewable energy into the European market; and ensure that reforms to national support schemes guarantee stability for investors and avoid retroactive changes.

The Government's view

11.13 In his Explanatory Memorandum of 17 February 2011, the Parliamentary Under-Secretary of State at the Department for Transport (Mr Norman Baker) points out that there are no policy implications as this Communication is not a proposal for legislation, and that the Government is already using approaches to increase the use of renewable energy in line with many of those recommended in it, notably through implementation of the UK National Renewable Energy Action Plan; implementation of a fast track process for major infrastructure planning applications for development consent; the publication of a white paper, in summer 2011, on the reform of the electricity market, which will set out a strategy on electricity system balancing; considering how to develop the cooperation mechanisms within the Directive; a grandfathering policy that support, granted under the Renewables Obligation to a generator, remains at the same level as at the point of accreditation (subject to certain exceptions). He also says that the UK is not pushing for harmonisation of national support schemes at this stage.


11.14 This Communication is one of a number of documents produced recently by the Commission on EU energy policy, and deals specifically with the progress made towards achieving the legally binding targets introduced in 2009 for the uptake of renewable energy by 2020. In many ways, it covers familiar ground, and contains no major surprises. In view of this, we see no need for its further consideration, particularly as the Commission's more general Communication on energy strategy was debated in European Committee A on 2 February 2011. We are therefore content to clear the current document.

57   (32170) 16096/10: see HC 428-xi (2010-11), chapter 2 (15 December 2010). Back

58   The UK is required to source 15% of its overall energy, and 10% of energy used in transport, from renewable sources by 2020. Back

59   (29194) 15458/07: see HC 16-vii (2007-08), chapter 12 (9 January 2008). Back

60   (32215) 16302/10: see HC 428-xi (2010-11), chapter 15 (15 December 2010). Back

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