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Making the European Union the global leader in Renewable Energy: Time to make good on promises!

Now that the Trilogue negotiations between the European Commission, European Parliament and the Council have begun, the legislative process for the adoption of the climate and energy package is at a crossroads. It needs to be recalled that the package is not only about an energy system transformation. It is as well an instrument for the envisaged sustainable transition of Europe in terms of social, ecological and economic development.

Renewables are the cheapest source of energy right now, the best option to reach Europe’s climate and energy goals and the sector is still very promising in terms of economic growth. However, to counteract decreasing investments, long-term market visibility and political commitment will be key. To remain the leader in renewables that Europe has always been, further efforts are needed.

Comparing the positions of the three European institutions, the European Parliament is the most ambitious one on the promotion of renewables followed by the European Commission which became lately more ambitious as well. Though supportive of the goals of the Paris Agreement, the Council is still reluctant to fully endorse an EU energy system transformation towards renewable energy and energy efficiency.

Governments of EU Member States should be conscious about the necessity to create momentum for the energy transition towards a sustainable future for Europe by moving towards Europe’s obligation to meet the Paris Agreement. The targets and regulations agreed to take effect by 2030 will shape Europe’s energy system for the next decade – one of the last critical chances to take sufficient action to avoid catastrophic climate change.

Though the climate and energy package sets out roughly the right direction for the path towards renewables, it fails to ensure the speed and depth of the transformation. The proposed renewable energy and energy efficiency targets are far too modest, particularly given the falling technology costs and availability of new renewables technologies, thus jeopardising the progress achieved in previous years. The EU energy framework needs to be better aligned with its long-term climate commitments. To maintain at least the current path of transition and to provide a stable investment climate, a share of minimum 35% renewable energy is needed by 2030.

The latest report of the International Renewable Energy Agency (IRENA) on renewable energy prospects in the European Union identifies cost-effective renewable energy options across all EU countries, sectors, and technologies. It concludes that the EU could double the renewable share in its energy mix, cost effectively, from 17% in 2015 to 34% in 2030.

The European Parliament provided a strong Governance proposal which somehow compensates for the loss of national binding renewable energy targets for 2030. Yet, this positive developments are not yet guaranteed as the European Council can still water it down during the trilogue negotiations. Furthermore, foreseen measures can be undermined by legislation for the new market design.    

For example, priority access and dispatch for renewables needs to be guaranteed as long as there is no fundamental change in the power market and its fossil and nuclear-based structure. Without priority access and priority dispatch obligation, there will be a roll-back and a perverted merit order, where the old capacities or must run capacities from coal, nuclear and heavy oil will be dispatched first and renewables in the end, despite lower costs for many of the RES technologies.

Another important element within the discussion on priority dispatch and access is the threshold for exemptions for small-scale electricity producers. EREF regards the discussed 500kW (and 250kW from 2026 onwards) as too low. It would be in contradiction to the goal of the climate and energy package which foresees big parts of renewable energy development done by citizens, local energy cooperatives and cities. Naturally, these are mostly small-scale projects. Proposing these small producers to cooperate with each other and to group themselves under aggregators to be able to compete with large utilities would only pose another challenge to market entry.

In Denmark and Germany, Europe’s renewable energy leaders, the majority of renewable energy has been installed by citizens and energy cooperatives. Communities, cooperatives and cities turn the drops of thousands of small initiatives into a river of renewable and safe energy solutions. According to a recent study of CE Delft, half of all Europeans could be producing their own electricity by 2050.

The promotion of small producers must go hand in hand with a more rigorous CO2-criterion and explicitly guarantee the eligibility of flexible renewable sources for capacity mechanisms to ensure that capacity markets do not maintain the fossil dominance of the power market. To allow renewable energy projects to enter the markets, old(er) coal, lignite and gas power plants must be phased out. Stopping subsidies disguised as capacity payments would be a first step in the right direction.  

So far, renewable technologies have not penetrated the heating and cooling system as much as they have the electricity system. Though there is consensus about the necessity to decarbonise the heating and cooling sector, European decision-makers must be become much more ambitious. The climate and energy package must include more visibility to renewable heating and cooling and define ambitious targets and policies for this crucial sector for the effective decarbonisation of the EU by 2050.

The advantages of renewable energy are clear: cleaner air, warmer homes, industrial benefits. Furthermore, money stays local, more jobs are created, energy poverty is reduced, and most importantly, renewable energy contributes to saving the planet. It is now up to the European institutions and especially national Governments to create the necessary momentum for the energy transition towards a sustainable future in Europe.

Dr. Dörte Fouquet

Director