Legally and politically important
Not cleared from scrutiny; scrutiny waiver granted; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee
Proposal for a Directive on the promotion of the use of energy from renewable sources (recast)
Article 194(2) TFEU; Ordinary Legislative Procedure; QMV
Business, Energy and Industrial Strategy
(38345), 15120/16 + ADDs 1–9, COM(16) 767
3.1The 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.
3.2The 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.
3.3The previous Committee first considered the proposal at its meeting of 25 January 2017. It pressed the Government for greater clarity on its 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 was set to enter into force on 1 January 2021, by which time it was expected that the UK would have left the EU, the Committee 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.
3.4The Government indicated in response that, while the UK remained a member of the EU, it would continue to engage in existing EU business on behalf of UK citizens and with a view to supporting the EU in meeting its decarbonisation objectives. On the matter of targets, the then Minister clarified the Government view that both the proposal on the supplier obligation in the transport sector and the proposal setting the baseline at each Member State’s 2020 target levels to be de facto binding targets. The Government no longer had concerns about the legal base, but was silent on the matter of subsidiarity.
3.5Considering the Government’s response at its meeting of 25 April, the previous Committee re-iterated its request for a subsidiarity analysis and urged the Government to approach the negotiations from the perspective of a third country and not only as an EU Member State.
3.6The Minister for Energy and Industry (Richard Harrington) has written to update the Committee and to request a scrutiny waiver in advance of agreement to a possible General Approach at the 18 December Energy Council. He explains that the text of the agreement is still open to change, but that some improvements have already been made in relation to heating and cooling, biomass sustainability and permit-granting. The Government will continue to seek maximum flexibility for Member States to be able to develop their most cost-effective pathway for delivering their ambitious emissions reductions commitments. including deciding what contribution renewable energy should make to meet that commitment, whilst recognising the need for mechanisms to give the EU assurance over the delivery of its objectives on renewables. Any nationally-binding targets or endeavours should not impose significant costs on the UK.
3.7In negotiations, the Government will also seek to minimise any administrative burden or implementation costs as far as possible, and to seek flexibility for Member States to set additional biomass sustainability standards to those in the proposal, or the ability for Member States to continue applying their existing domestic standards.
3.8On Brexit, the Minister notes that it is still too early to assess whether and how the EU exit negotiations will affect the Clean Energy Package. While the Government expects the legislation to have been agreed before Brexit, the transposition deadline of at least some of the legislation, including the Renewable Energy Directive, might fall during any implementation period.
3.9On subsidiarity and proportionality, the Minister sets out the Government’s concerns in greater detail. While the Government agrees that some action at the EU level is necessary to attain the EU’s energy policy objectives, it is also important to maintain Member States’ responsibility for their energy mix. The Government is concerned that some of the specific policy suggestions, such as the transport sector target, do not respect that balance.
3.10We note that the final shape of any agreement is far from clear, but we are grateful that the Minister has set out the direction of travel and the principles that the Government will be following. We support the focus on flexibility, minimisation of administrative burden and respect for the balance of powers between the EU and its Member States.
3.11On the implications of the UK’s exit from the European Union, we take note of the Minister’s view that it is still too early to assess whether and how the EU exit negotiations will affect the Clean Energy Package. We also note the possibility that the transposition deadline for this legislation may fall within any implementation period. While we accept that there can be no certainty as yet over the future relationship in the energy sector, we signal our continued interest in the matter and our expectation that the Government continues to negotiate with EU exit in mind.
3.12The proposal remains under scrutiny, but we waive the scrutiny reserve in order that the Government might support a General Approach at the 18 December Energy Council. based on the principles set out in the Minister’s letter. We look forward to an update from the Minister on the outcome of the Council meeting and an assessment of the prospects for agreement with the European Parliament. We draw this chapter to the attention of the Business, Energy and Industrial Strategy Committee.
3.13The 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.
3.14The Commission’s proposal late last year 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 predecessors’ Report of 25 January.
3.15The Government highlighted a number of concerns in its original position relating to:
3.16In further correspondence, the then Minister indicated that:
3.17Responding in its Report of 25 April, the previous Committee re-iterated its request for the subsidiarity analysis. The Committee also expected the Government to approach the negotiations from the perspective of a third country—as well as that of an EU Member State—and asked to be updated on any issues which may arise specific to third countries.
3.18The Minister writes to update the Committee on negotiations and to request a scrutiny waiver in order for the UK to be able to support a potential General Approach at the 18 December Energy Council,
3.19On the UK’s exit from the EU, the Minister says that it is too early to assess whether and how the EU exit negotiations will have an impact on the various dossiers included within the Clean Energy Package. He notes that the transposition deadline for the Renewable Energy Directive might fall during any implementation period and confirms that the UK’s negotiating position is taking account of these factors.
3.20Addressing the outstanding query from the previous Committee’s earlier scrutiny seeking clarity over the Government’s concerns surrounding subsidiarity and proportionality, the Minister writes:
“On subsidiarity—the Government agrees that some action at EU level is necessary to attain the EU energy objectives. At the same time, however, it is important to maintain Member States’ responsibility for their energy mix. In this context, for example, we have specific concerns around the proposals:
“The Government’s views on subsidiarity are in line with the October 2014 European Council conclusions, which stated that ‘[EU energy efficiency and renewable energy] targets will be achieved while fully respecting the Member States’ freedom to determine their energy mix. Targets will not be translated into nationally binding targets.’
“On proportionality—the Government has some concern about whether all the proposed actions in the Renewable Energy Directive are necessary to achieve the binding 27% EU renewable energy target. The Commission’s reference scenario shows that—without any additional measures—the EU will reach 24.3% renewable energy by 2030 on the basis of current policies; so there is a legitimate question about whether the combination of the measures in this Directive and the linked Governance Regulation might be disproportionate to bridge a 2.7% gap. No additional specific UK analysis has been conducted on this. I understand, however, that the Commission’s Regulatory Scrutiny Board questioned the proportionality of some measures in the proposal, and argued that only relatively limited additional efforts would be necessary to reach the EU-level target of 27%. In particular, the Board argued that issues with proportionality were particularly relevant for the options in the H&C [heating and cooling] sector set out in the Commission’s Impact Assessment. The Commission took account of the Board’s reservation, and replaced the H&C obligation with an endeavour. However, the Board did not require the Commission to submit a revised Impact Assessment.
“Our position is to seek maximum flexibility for each Member State to be able to develop the most cost-effective pathway for them to deliver their emissions reductions commitments, including deciding what contribution renewable energy should make to meeting that commitment, whilst recognising the need for mechanisms to give the EU assurance that its objectives on renewables will be met.”
3.21On the progress of negotiations, the Minister indicates that progress has been significant, but that some issues and division remain, in particular around the transport target and sub-target.
3.22Regarding the EU-level renewable energy target, the target remains at 27% and there has been no push from Member States to raise or lower the target.
3.23Reporting progress on heating and cooling (H&C), the Minister says that there continues to be a binding obligation for Member States to try to increase the level of renewables in the H&C sector. According to the latest text, however, Member States may aim for a yearly increase at any level above zero depending on their national circumstances. The Minister considers this an improvement compared with the original Commission proposal, where Member States had a binding obligation to try to increase the amount of renewables in the H&C sector by at least one percentage point per year. He believes it is important for Member States to have flexibility to decide how to decarbonise the sector based on their national circumstances in order to incentivise investment in low-carbon options and to avoid significant impacts on energy bills.
3.24On district H&C, the Minister says that the obligation for Member States to introduce measures to allow customers to disconnect from their district H&C systems remains, alongside new measures to increase heat from renewable and recoverable heat sources. However, the UK district H&C market meets a number of exemptions from implementation of these requirements, because of the small size of the market and lack of large networks.
3.25The Estonian Presidency has presented several compromise proposals on transport, which are “significantly different” from the Commission’s original fuel supplier obligation, says the Minister. The latest compromise is a 12% nationally-binding transport sector target which includes a 3% advanced biofuels sub-target. The cap on crop-based biofuels would no longer decline to 3.8% in 2030 (as in the original Commission’s proposal), but would instead remain at 7%, which would allow Member States to use more crop-based biofuels to meet the 2030 target. At the same time, the double rewards for waste-based biofuels that exist under the current Directive to encourage those fuels with higher greenhouse gas savings would no longer apply. Given the UK has agreed to move from crop-based biofuels to waste-based biofuels in the next decade, the Minister considers that the proposed accounting rules would make the 12% target and the associated sub-targets more difficult to meet.
3.26On biomass sustainability, the Minister considers that the proposed criteria are more in line with UK standards than was the case with the Commission’s proposal. Nonetheless, says the Minister, Member States would not be allowed to set additional sustainability or greenhouse gas criteria for publicly-funded projects and would be limited by those set out in the proposal. The UK will continue to argue that it should be possible for Member States to set additional sustainability and greenhouse gas criteria if they wish to do so, or at least be able to maintain their existing domestic standards, to protect sustainability.
3.27Concerning permit-granting, the Commission had proposed that Member States should provide one or more contact points to coordinate the entire renewable energy project permit-granting process. Instead, the contact points will “guide” developers through the process. The Minister welcomes this improvement as it would not require the UK to change its processes unnecessarily.
3.28On the opening of support schemes to cross-border participation, the Minister notes that this would now be voluntary. He considers this an improvement, given that it is complex and costly for Member States to be required to open up their support schemes. The Minister notes, however, that the requirement for Member States to publish a three-year forward-look schedule covering their expected allocation of support remains in the proposal. He believes the schedule should be indicative and should apply to a given Parliamentary cycle so as not to cross over Parliaments.
3.29The Minister explains that the Presidency will be seeking to reach a General Approach on various elements of the Clean Energy Package at the 18 December Council. He judges this to be an ambitious objective. The Renewable Energy Directive in particular remains subject to change and so he is requesting a scrutiny waiver on the basis of a clear indication of priorities, and thus providing the Minister with the flexibility to engage effectively. The Minister apologises for having to request a waiver under urgent circumstances, noting that progress has been unexpectedly rapid.
3.30He sets out the approach to both the Renewable Energy Directive and Governance Regulation in the following terms:
“The approach to be followed at the December Council will be to continue focussing on seeking maximum flexibility for Member States to be able to develop their most cost-effective pathway for delivering their ambitious emissions reductions commitments, including deciding what contribution renewable energy should make to meet that commitment, whilst recognising the need for mechanisms to give the EU assurance over the delivery of its objectives on renewables. I will also seek to ensure that any nationally-binding targets or endeavours do not impose significant costs on the UK.
“Our position is to seek to be part of the qualified majority that supports the Presidency’s General Approach on these dossiers, so long as the outcome reached is satisfactory to the UK.”
3.31In addition, the Government will seek to minimise any administrative burden or implementation costs as far as possible, as well as the degree to which the Commission can issue recommendations or intervene in domestic policy. The Government will also seek flexibility for Member States to set additional biomass sustainability standards to those in the proposal, or the ability for Member States to continue applying their existing domestic standards. Finally, the Government will seek to align EU and UK policy where possible to minimise policy changes or costs; as well as focus the Governance framework to achieve the aims of the Paris Agreement and set timescales in line with those in the UNFCCC framework.
17 Twenty-ninth Report HC 71–xxvii (2016–17), (25 January 2017).
18 Rather than having an individual boiler and pipe network inside one home or building, district energy schemes have a large centralised energy centre. which can provide heat, hot water and power to multiple buildings via a district heating and cooling pipe network.
15 December 2017