Background

The RES-E Directive of 2009 already set a binding target of 20% final energy consumption from renewable sources by 2020. In their effort to achieve the binding target of 20%, the EU member states have committed to reaching their own national renewable targets. Consequently, all EU member states have adopted national RES-E actions plans, whereby the instruments intended to be implemented to reach their targets were detailed.

On 30 November 2016, the European Commission proposed a set of measures to maintain the competitive stand of the European Union in its transition to clean energy. The European Commission proposals had three (3) pivotal goals: energy efficiency – as main objective, leadership in the RES-E and fair deal for consumers.

On 14 June 2018 the EU co-legislators have reached an agreement on a very ambitious RES-E binding target – 32% for 2030 with an upwards revision clause by 2023. This agreement on the RES-E way forward means that four (4) out of eight (8) legislative proposals made by the European Commission on 30 November 2016 received green light. We refer herein at the agreements on the (i) Energy Performance in Buildings Directive of 14 May 2018 (ii) Energy Efficiency of 19 June 2018 and (iii) governance of the Energy Union of 20 June 2018.

The above four (4) enactments should be considered together with the revisions of the Emissions Trading System, Effort Sharing Regulation, Land Use Change and Forestry Regulation, which were adopted also in 2018.     

Hence, the European Directive on RES-E is part of a bigger effort and measures aimed at ensuring that the European Union becomes more energy independent and, at the same time, takes a leading role in the fight against climate change.

Following the political agreement of 14 June 2018, the text of the RES-E Directive must be formally approved by the European Parliament and the European Council. This is expected to happen in the upcoming months.

Once the formal approval is obtained, the updated RES-E Directive shall be published in the Official Journal of the Union and will enter into force twenty (20) days after. The EU member states will have to implement the RES-E Directive into their national legislation within eighteen (18) months after its entry into force.  

Key changes in the RES-E Directive – European Commission proposal

The RES-E Directive provides a tailored version of the RES-E Directive of 2009 to allow the further development of the RES-E for the 2030 perspective. Moreover, it is aimed at providing certainty and predictability to investors and address the potential of RES-E in different sectors.

1. Deployment of renewables in the electricity sector

The European Commission has recognised the fact that by leaving the choice to the member states to choose the support schemes for the deployments of the RES-E, has led to many situations where the initially adopted support schemes underwent major changes or revoked with retroactive effect. These situations have negatively impacted the confidence of investors.

To avoid such scenarios under the revised RES-E Directive, the European Commission entails the introduction of principles for support schemes that the member states should implement to attract investments to reach the 2030 targets. Since the support schemes are still deemed necessary by the European Commission (although not mandatory and the member states may choose not to implement a support scheme), their design principles must consider protection offered to investors against retroactive changes.

Articles 4, 5 and 6 of the RES-E Directive lay down the principles to be considered when designing a cost-effective support scheme which, at the same time, facilitates a market orientated approach. Furthermore, a gradual and partial opening of the support schemes to cross-border participation is necessary together with protection offered to the investors that the likely changes will not be implemented in a way that negatively impact the supported projects.   

Another major bottleneck against an efficient deployment of renewables has been identified in the bureaucracy encountered for the RES-E project development, execution and operation.

The measures to be implemented by the member states include the establishment of a one-stop-shop and a time limit for the RES-E permit granting process and simple notification procedures to facilitate repowering of existing renewables plants and small-scale projects.

2. Heating and cooling sector

The uptake of renewables in this sector has proved to be slow. 75% heating and cooling still relies on fossil fuels and accounts for 68% of the EU’s gas imports. Therefore, a sustained effort in this sector is necessary to achieve a more energy independent EU.

The revised RES-E Directive aims at increasing the share of RES-E by 1%/year by 2030 in the total heating and cooling supply. Also, it opens access rights to local district heating and cooling systems.

3. Transport sector – sustainable decarbonisation

EU depends on 94% oil supplies to fuel European cars, tracks, ships and planes. To shift this curve, the revised RES-E Directive provides an obligation to European transport fuel suppliers to increase the share of renewable and low carbon fuels.

The level of this obligation is progressively increasing from 1.5% in 2021 – in energy terms, to 6.8% in 2030, to include at least 3.6% advanced biofuels. As a prevention measure against the indirect-use change impacts (ILUC), the revised RES-E Directive introduces a cap on the food-based biofuels towards the EU renewable target, starting at 7% in 2021 to 3.8% in 2030. National databases to ensure traceability and mitigate the risk of fraud must be implemented by the member states.

4. Consumers

The consumers are considered by the revised RES-E Directive as the key to the energy transition, especially when looking at the cost reduction in renewables which now offer the consumers the possibility to actively and conclusively participate in the RES-E market.

Therefore, the revised RES-E Directive offer the consumers stronger rights to (i) self-consume without facing undue restrictions and ensure payment of the RES-E feed into the grid, (ii) participate to the RES-E market as energy communities and (iii) obtain information on the energy performance and sources of the district heating and cooling systems. Furthermore, the revised RES-E Directive consolidates the functioning of the Guarantees of Origin system which shall be extended to renewable gas also.

5. Improved sustainability criteria  

Increased attention is given to the biomass: (i) its use must deliver greenhouse savings compared to fossil fuels, (ii) is produced in a way to avoid deforestation or degradation of habitats or loss of biodiversity and (iii) is converted with high efficiency into energy – to ensure limited use.

The sustainability criteria are extended with the revised RES-E Directive also to the biomass and biogas used for the heat and power. Advanced biofuels should emit 70% fewer greenhouse emissions than the fossil ones. Moreover, the production of forest biomass must be done to ensure sustainability, the latter criterion being also applicable for solid biomass and biogas used in large heat and power plants. Subject to limitative exemptions, large scale biomass electricity plants will need to use high efficient combined heat and power technology – reaching minimum 80% efficiency.   

6. Ensuring the achievement of EU binding target

One major shift from the RES-E Directive of 2009 is that the member states must collectively ensure that the binding target of 32% of EU final consumption coming from RES-E is achieved.

Although specific national RES-E targets are no longer provided/assumed with the revised RES-E Directive, there is the obligation for the member states not to go under the assumed targets of 2020.

Therefore, to build on the progress already achieved by the member states under the RES-E Directive of 2009, the national targets shall be established as baseline starting with 2021 onwards.

It is expected that the collaborative tools included in the RES-E Directive of 2009 and further improved under the revised RES-E Directive are going to be better used by the member states to achieve the EU binding RES-E targets. We refer herein to the statistical transfers between member states, joint projects between member states and joint support schemes.

Conclusions with perspective on Romania

To achieve the development of RES-E under the Directive of 2009, Romania has promoted a green certificates support scheme. Under this support scheme, the RES-E producers receive green certificates which they can trade separately – within a certain mandatory price range, from the RES-E electricity produced.

Since its enactment, Law 220/2008 for the establishment of the RES-E support scheme, has suffered numerous amendments. These amendments were all aimed at stopping the rapid development of the RES-E sector in Romania. Due to the lack of transparency and clear explanation of the reasons behind the changes, the RES-E investors and consumers lost confidence in the sector.

Romania was not the only country to revise negatively its support scheme. Similar measures were also implemented throughout Europe (e.g. Italy, Spain, Belgium, etc.). It is evident that the European Commission is looking to prevent such measures being applied in the future by the member states, which would distort the investors’ and consumers’ confidence. Thus, in case the member states choose to implement support schemes to achieve the 2030 EU targets, then their design must ensure the stability of the support schemes – Article 6 of the revised RES-E support scheme.

Despite the brutal changes implemented by Romania to its support scheme and their negative effects, the RES-E sector developed well. To this end, Romania has managed to achieve its RES-E targets even before the year 2020.

Consequently, the way Romania shall choose to align itself for the revised RES-E Directive – especially in achieving the 32% EU target, is still unclear. It might be that Romania shall make better use of the collaborative tools offered under the revised RES-E Directive or decide to implement support schemes to further promote the production of RES-E.

In consideration of the EU main objective to build an independent energy Europe, it might be that Romania should consider develop as much as possible the RES-E sector but, at the same time, to seek a balance whereby the end consumer is also protected with the implementation of cost-effective measures.

Publishing date: 27.06.2018