Documents considered by the Committee on 25 April 2017 Contents

5EU Renewable Energy Directive

Committee’s assessment

Legally and politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

Proposal for a Directive on the promotion of the use of energy from renewable sources (recast)

Legal base

Article 194(2) TFEU

Department

Business, Energy and Industrial Strategy

Document Number

(38345), 15120/16 + ADDs 1–9, COM(16) 767

Summary and Committee’s conclusions

5.1The Commission’s proposal forms part of the “Clean Energy for all Europeans” package proposed by the Commission at the end of November 2016. It aims to boost the proportion of EU energy generated by renewable energy sources.

5.2The Commission set out a range of measures, including: an EU-wide target of 27% renewable energy by 2030; a requirement that any Member State falling below its 2020 target levels should pay into a fund to finance renewable projects; new provisions on financial support for renewable electricity schemes; new measures to boost the share of renewable energy in the heating, cooling and transport sectors; and an extension of the biofuels sustainability criteria.

5.3The Committee first considered the proposal at its meeting of 25 January. We pressed the Minister for greater clarity on the Government’s concerns regarding subsidiarity, the legal base and its view that a number of the measures may equate to de facto binding targets. Noting that the proposal is set to enter into force on 1 January 2021, by which time it is expected that the UK will have left the EU, we also asked the Government on what basis it was negotiating—i.e. from the perspective of possible third country or in a business as usual manner.

5.4The details of the response from the Minister for Industry and Energy (Jesse Norman) are set out below. In summary:

5.5Detailed discussion is not expected to begin until the second half of 2017.

5.6In its original Explanatory Memorandum, the Government indicated that it would consider whether some of the details of the proposal may be inconsistent with the principle of subsidiarity. We asked the Minister (Baroness Neville-Rolfe) to articulate her concerns more precisely, ensuring that a distinction was drawn between concerns surrounding subsidiarity and proportionality. We note that this matter was not addressed. While this may be because the Government has not yet reached a conclusion, we re-iterate our request for that analysis.

5.7We welcome the Minister’s indication of the specific aspects of the proposal which equate, in the view of the Government, to de facto binding targets. We note too that no other Member States have raised similar issues, although it is clearly early in the process.

5.8On matters pertaining to the UK’s withdrawal from the EU, the Minister provides a helpful explanation for the basis on which the UK is approaching the negotiations. He does not, however, recognise that it may be advisable to consider the negotiations from the perspective of a third country. We would expect the Government to do so and to update us on any issues which may arise specific to third countries.

5.9As the negotiations are not expected to begin in earnest until the second half of the year, we do not require an urgent update. We will expect to receive an update once some progress has been made and that update should include a response to our query about subsidiarity.

5.10We are grateful to the Minister for sending the Government’s emerging analysis of the impact of the proposal, including a separate paper on the changes proposed in the area of bioenergy. We look forward to further information on the UK-specific impact of the proposal as the Government’s understanding develops.

5.11We retain the proposal under scrutiny and draw it to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents

Proposal for a Directive on the promotion of the use of energy from renewable sources (recast): (38345), 15120/16 + ADDs 1–9, COM(16) 767.

Background

5.12The current Renewable Energy Directive, agreed in 2009, set a target for 20% of energy to be renewable across the EU by 2020. Member States were set individual binding targets for consumption of energy from renewable sources and a sector specific target to achieve 10% renewable energy in transport.

5.13The Commission’s recent proposal set an EU-wide binding target for 27% of energy to be renewable across the EU by 2030. In line with the European Council agreement of 2014, there will be no targets for each Member State although the existing 2020 targets will remain and will be considered as the “baseline”. The proposal covers: support schemes, heating and cooling; biofuels, bioliquids and biomass for transport and biomass for heat and electricity. Full details on the background and content of the proposal were set out in our Report of 25 January.9

5.14In that Report, we noted that the Minister agreed on the one hand that EU-level action was required in order to implement agreed EU-level objectives but, on the other, that the Government would consider whether some of the details of the proposal—notably on support schemes—were compatible with the principle of subsidiarity. We asked that the Minister articulate any concerns more precisely, distinguishing between concerns surrounding subsidiarity and proportionality.

5.15On the legal base, the Government had indicated that it was considering whether the proposals in respect of achieving targets were such that Article 192 TFEU ought to apply. We observed that Article 192 is an environmental policy legal base, providing that the Council should normally operate by qualified majority but that certain decisions should be taken unanimously, while only consulting the European Parliament. These include (Article 192(2)(c)) measures “significantly affecting a Member State’s choice between different energy sources and the general structure of its energy supply”. We asked the Minister to clarify whether the Government was considering the specific application of Article 192(2)(c).

5.16On Brexit, we observed that the proposal was set to enter into force on 1 January 2021 and we asked for information regarding the basis on which the UK was approaching the negotiations.

5.17Finally, we asked the Minister to explain her concerns that a number of the measures may equate to de facto binding targets and to set out any early indication as to whether the Government’s concerns might be shared by others.

Minister’s letter of 27 March 2017

5.18As regards the UK’s approach to the negotiations in the light of the UK’s withdrawal from the EU, the Minister explains:

“it is the Government’s view that until exit negotiations are concluded the UK remains a full member of the EU with all the rights and obligations that entails. We continue to play an active role in supporting the interests of the people of the UK in existing EU business and, in particular, we want the EU to prosper politically and economically. We also continue to support the EU in meeting its decarbonisation objectives under the Paris Agreement. With this in mind, we will continue to seek to shape the EU energy agenda.”

5.19On the legal base, the Minister notes that Article 192(2)(c) TFEU (which requires unanimity for measures “significantly affecting a member state’s choice between different energy sources and the general structure of its energy supply”) was not part of the legal base for the original 2009 Renewable Energy Directive, which was agreed under Qualified Majority Voting. He adds:

“The Government’s analysis is that the measures in this package are not as intrusive on Member States’ competence as the 2009 Directive, which included binding national targets. I have therefore concluded that there is little prospect of obtaining agreement on changing the legal base of this proposal, even if we were minded to seek to persuade other Member States.”

5.20On the Government’s concerns that a number of the measures in the proposed Renewable Energy Directive may equate to de facto binding targets, the Minister says:

“The Government regards the proposal to set the baseline at each Member State’s 2020 target level and the supplier obligation on the transport sector as de facto binding national targets. We also consider that the European Commission’s proposal for a heating and cooling endeavour to increase the share of renewable energy supplied for heating and cooling by 1 percentage point per year could constitute a binding target, depending on the monitoring provisions in the Governance Regulation.”

5.21The Minister says that, so far, the UK’s concerns have not been raised by any other Member States. However, previous intelligence suggests—he says—that Spain, Slovakia, Bulgaria, Latvia, and Estonia broadly oppose binding measures to address gaps. Those Member States likely to miss the EU 2020 renewables target (Ireland, Luxembourg, Hungary and the Netherlands according to the Commission’s Renewable Energy Progress report) might also oppose the baseline measures.

5.22Looking forward, the Minister indicates that detailed discussion is not expected until the latter half of 2017. He reports that, at the 27 February Energy Council, a “significant number” of Member States expressed support for standing by the European Council conclusions of 2014 and for ensuring that while the governance rules must ensure the EU reaches its 2030 climate and energy goals, Member States are given the necessary flexibility to ensure those goals can be achieved in a cost-effective manner.

5.23As regards the impact on the UK, the Minister notes that the Government’s understanding of UK-specific impacts will be informed by the preparatory analysis undertaken for the forthcoming UK Emissions Reduction Plan. An initial analysis of the proposal, based on the Commission’s impact assessment, has been undertaken and is attached to the Minister’s letter. This notes that there are significant changes in the area of bioenergy which could impact on the UK and, in some areas, impose costs.

Previous Committee Reports

Twenty-ninth Report HC 71-xxvii (2016–17), chapter 3 (25 January 2017).


9 Twenty-ninth Report HC 71-xxvii (2016–17), chapter 3 (25 January 2017).




27 April 2017