European Union’s Renewable Energy Policy

ABEST1 European Unions Renewable Energy Policy

Article by Andrew Angier

A “non-existent” energy policy

Until recently it was impossible to talk about a European energy policy. Only after the coming into force of the Treaty of Lisbon in December 2009 did the European Union gain formal competences in the area of energy. Finally there was a separate Title devoted specifically to energy. The Title includes only one Article, which stresses that “Union policy on energy shall aim, in a spirit of solidarity between Member States, to: (…)(c) promote energy efficiency and energy saving and the development of new and renewable forms of energy;” (Art. 194). Decisions in this regard are to be taken according to ordinary legislative procedure, with the exception of measures, which “affect a Member State’s right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply.” Such measures are to be accepted by unanimity.

Still, even before the Lisbon Treaty came into force, decisions of great importance for the development of renewable energy sources in Europe have been taken. The legal bases for these decisions were – among others – EU competences in the area of environment. Former Article 174 TEC mentioned among the EU objectives “promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.” But it was even earlier that the, at that time known as European Community, issued a Communication to the Council titled “The Greenhouse Effect and the Community”. In the 1990s it was followed by Green and White Papers. But the major breakthrough in the renewable energy sector in Europe came with the Directive 2001/77/EC.The first breakhrough: Directive 2001/77/ECpicture Directive 2001/77/EC for the first time specified certain targets for the EU-member states regarding the share of the electricity from renewable energy sources in the total electricity consumption for the year 2010. It is important to stress: these targets were not obligatory and no negative consequences were foreseen against countries which didn’t fulfil their “indicative targets”. As the year 2010 draws to an end it’s becoming clear that very few member states will be able to fulfill these targets. In 2008 only Germany exceeded its target. Some countries, notably Greece and the United Kingdom didn’t even come close. picture

Even more important repercussion of the Directive was the obligation of the member states to introduce “support schemes” that would lead to the increase of share of renewable energy sources in the electricity consumption. There are two major kinds of schemes that have been introduced by the member countries: feed-in tariffs (FITs) and green certificates. While the FITs, that guarantee a fixed price for each unit of renewable energy produced, seem less market-oriented, it turned out to be a much more effective system than green certificates in supporting different kinds of energy. Its effectiveness is clearly visible in the development of the wind and solar energy in Germany. But it also brings some threats if the level of a certain tariff is set at a wrong level. This is what happened with the PV market in Spain in 2008. Slowly, however, FITs are getting more and more support in Europe: In April 2010 this system has been introduced in the United Kingdom and in July 2010 the EU Energy Commissar, G√ľnther Oettinger, spoke of a need to adopt something similar to German feed-in tariff system at the European level. The second breakthrough: Directive 2009/28/EC

Despite the introduction of the Directive 2001/77/EC, the development of the RES lagged behind expectations. Especially in the East and Central European countries, that were concentrating more on catching up economically with the rest of Europe, than on changing their structure of energy production, the production of new capacity was blocked by financial and bureaucratic barriers.pictureIn some cases, i.e. Poland, the limited financial resources are spent to develop nuclear program instead of supporting renewable and decentralised energy markets.

In this situation it has become clear, that new measures needs to be taken. In 2006 Council asked the Commission to suggest further measures to increase the share of renewable energy in the total energy consumption. In the same year the European Parliament called for a binding target of 25% of renewable energy in the energy consumption by 2020 in the European Union as a whole In reaction to that European Commission published in January 2007 “Renewable Energy Roadmap” which proposed a legally binding target of 20% energy from renewable sources in total energy consumption in the European Union. It is necessary to stress: this target concerns not only electricity sector (like the Directive 2001/77/EC) but all kinds of energy. Since in some areas the increase in the share of energy from renewable sources is easier than in others it was left for the countries themselves to decide about the share of renewable energy in each sector. But there was one exception: in the transport sector the target for the share of energy coming from renewable sources should reach in all member states the same level: at least 10%. This target should be achieved through the utilization of biofuels but also the introduction of electric cars.

After two years of negotiations in May 2009 Directive 2009/28/EC came into force. It also included a non-binding target of 20% increase of energy efficiency and 20% reduction of CO2 emissions in comparison to year 1990. The latter target should be achieved by the improvement of the European Emissions Trading Scheme that has been revised by the Directive 2009/29/EC. Painful implementation?

The Directive 2009/28/EC should be fully implemented by the member states until December 2010. In addition to that until the end of June each member states were supposed provide the Commission with a detailed explanation concerning the way in which targets of this Directibve will be achieved.

So called National Renewable Energy Action Plans were to be be prepared according to a template prepared by the Commission one year earlier.pictureAll NREAPs can be found on the Commission’s Transparency Platform. It is obvious, that for some countries the targets are less challenging than for others. Whereas the United Kingdom has to increase its share of renewables five-fold, the targets for Sweden and Austria seem to be less challenging. Some countries are already taking approprate steps to face the challenge and perceive it as a chance to develop new sustainable industry, while others are going in a completely different direction. It remains to be seen which strategy pays off.

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