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European Union  |  October 09, 2023 12:10:00, updated

Questions and Answers - Making our energy system fit for our climate targets

Making our energy system fit for our climate targets

What targets are set by the revised Renewable Energy Directive?

The Renewable Energy Directive (RED), as revised under the Fit for 55 package and the REPowerEU Plan, raises the EU's binding renewable energy target for 2030 to a minimum of 42.5%, up from the previous 32% target, with the aspiration to reach 45%. This means almost doubling the existing share of renewable energy in the EU.

More specifically, the reinforced directive supports the uptake of renewables across various sectors of the economy with a set of dedicated targets and measures. Industry, which is a key energy-consuming sector of the economy, is covered for the first time in the Renewable Energy Directive. The new measures include an indicative annual increase of renewable energy use in industry of at least 1.6 percentage points by 2030 as well as a new binding target of 42% of renewable hydrogen in total hydrogen consumption in industry by 2030. As regards transport, the aim is to either reduce by 14.5% the greenhouse gas intensity of transport fuels or achieve an overall rate of 29% of renewable energy in final energy consumption across all transport sectors. This represents an increase from the previous binding target of 14%. There is also a combined sub-target of 5.5% of advanced biofuels and renewable fuels of non-biological original (RFNBOs), with a minimum level of 1% of renewable fuels of non-biological origin. There is also a first-ever indicative target of 1.2% of renewables in the maritime transport fuels sector.

The revised directive also sets a pathway for a gradual increase of renewables in heating and cooling, by at least 0.8 percentage points as an annual average until 2025, and by at least 1.1 percentage points between 2026 and 2030. This is a binding target for all Member States. Moreover, to complement EU buildings legislation and guide Member States' efforts, there is a new indicative national benchmark of 49% of renewable energy in the buildings sector.

How will the revised directive accelerate and support deployment of renewables?

Renewable energy projects will benefit from an overriding public interest presumption, which means that, where necessary, they can get a simplified assessment for specific derogations under the relevant Union environmental legislation. The revised directive also enhances cross-border cooperation on renewables by introducing a mandatory cross-border cooperation framework between Member States.

Crucially, the revised directive takes a significant step to address the main obstacles impeding a faster rollout of renewable energy across the EU, notably the permitting bottleneck. The issue is tackled in a comprehensive manner through spatial planning, simplification and shortening of procedures.

Specifically on permitting, the Member States are required to identify areas with strong potential for the deployment of renewable energy, and within these – the renewable acceleration areas (‘RAAs'), where the impacts of the deployment of renewables on the environment are expected to be low. These dedicated acceleration areas for renewables will enjoy simpler and shorter permitting procedures, with full environmental assessments replaced by a shorter screening for the majority of cases. Deadlines will be one year for permits for new projects, and six months for repowering initiatives. For offshore projects, the permitting deadlines will be two years and one year, respectively. Under the revised directive, the acceleration of permitting procedures will happen across the board. New projects in the majority of zones beyond RAAs should also see their permits granted within two years, and repowering projects' procedures should be concluded within one year, with the exception of offshore wind projects, which are subject to one-year longer deadlines.

How does the revised Renewable Energy Directive address the sustainability of bioenergy?

The revised directive strengthens the sustainability framework for bioenergy in line with the increased climate and biodiversity ambition of the European Green Deal. In particular, the scope of application of the sustainability and greenhouse gas emissions savings criteria for solid biomass fuels is extended to cover installations producing electricity, heating and cooling with a total rated thermal input equal to or exceeding 7,5 MW (compared to 20 MW in the previous Directive). As regards biomass fuels, all existing installations will be subject to the greenhouse gas emissions savings criteria with phasing-in periods based on the type, size and age of the installation.

As for agricultural biomass, the revision includes provisions to ensure that forest biomass is not sourced from certain areas with a particular importance from a biodiversity and carbon stock perspective. Additional so-called “no-go” areas are introduced for old growth forests and heathland. It also clarifies the principles of sustainable harvesting for bioenergy production. For example, harvesting must be carried out in compliance with locally and ecologically appropriate retention thresholds for deadwood extraction.

In addition, the use of bioenergy from forest biomass must be consistent with Member States' commitments and targets as defined in the recently revised Land Use, Land Use Change and Forestry (LULUCF) Regulation. Member States must assess the compatibility of their projected energy use of forest biomass with those targets and include measures and policies ensuring compatibility in their revised national energy and climate plans.

Also, the principle of cascading use of biomass is enshrined in the Directive and is operationalised through a ban on direct financial support for the energy use of veneer logs, saw logs, industrial grade roundwood, stumps and roots. The revised Directive also phases out subsidies for the production of electricity from forest biomass in electricity-only installations.

What are the new targets and measures in the Energy Efficiency Directive?

The recast Energy Efficiency directive introduces higher targets and enshrines the energy efficiency first principle in EU law. It raises the EU energy efficiency target, making it binding for EU countries to collectively ensure an 11.7% reduction in final energy consumption by 2030, compared to the 2020 reference scenario projections. As a result, overall EU energy consumption by 2030 should not exceed 992.5 million tonnes of oil equivalent (Mtoe) for primary energy and 763 Mtoe for final energy. Compared to the previous targets (1128 Mtoe for primary energy and 846 Mtoe for final energy) the increased targets aim to reduce Europe's 2030 energy use by roughly the equivalent of Spain's current annual energy consumption.

To deliver on the ambitious targets EU Member States will have to meet an annual energy savings obligation at an increasing rate, from 0.8% (at present) to 1.3% annually (2024-2025), then 1.5% (2026-2027) and 1.9% from 2028 onwards. This represents an average of 1.49% of new annual savings for the period from 2024-2030.

EU countries will contribute to achieving the EU target by setting indicative national contributions using a combination of objective criteria which reflect national circumstances (energy intensity, GDP per capita, energy savings potential and fixed energy consumption reduction). The revised directive also includes a mechanism that will be triggered if there is a gap between the combined national contributions of Member States and the overall EU target. In that case, the Commission would calculate, based on specific criteria, new targets for the less ambitious Member States in order to close this gap.

The recast directive further strengthens the leadership role to be played by the public sector in enhancing energy efficiency practices. First, the public sector will be subject to a new annual energy consumption reduction target of 1.9%. Second, the Member States' obligation to renovate each year at least 3% of total floor area of buildings owned by the public administration is extended from the central government to all levels of public administration, notably regional and local authorities. Third, the revised law ensures energy efficiency considerations in public procurement. In particular, public bodies will have to systematically take into account energy efficiency requirements when making decisions regarding the purchase of products, buildings, and services, thereby fostering systematic improvements. The public sector will also be driving the development of the energy services market. Energy Performance Contracts will be prioritised in the implementation of energy efficiency projects, especially for large building renovation in the public sector, whenever possible.

The private sector is likewise encouraged to be more energy efficient under the revised directive. When it comes to companies, the directive introduces a different approach based on energy consumption which involves either an energy management system or the carrying out of energy audits. More precisely, businesses operating in the EU will be able to benefit from assessments of their energy use practices, with energy management systems becoming a default requirement for large energy consumers exceeding 85 TJ of annual energy consumption. Smaller companies with an annual energy consumption above 10 TJ will have to perform an energy audit and prepare an action plan to address the different recommendations. The revised EED also introduces, for the first time, a reporting scheme for the energy performance of large data centres, promoting transparency and optimisation of energy efficiency potential.

To pave the way for a fully decarbonised district heating and cooling supply by 2050, the definition of efficient district heating and cooling is also revised, and minimum requirements will be gradually changed to allow for a progressive integration of renewable energy and waste heat and cold in the system. Support to new high-efficiency cogeneration units using natural gas and connected to district heating in efficient district heating and cooling systems will only be possible until 2030, whereas any other fossil fuel use will be banned for new heat generation capacities in such systems. Under the revised law, EU countries will also have to promote local heating and cooling plans in large municipalities having populations above 45,000.

How will the revised directive benefit consumers and alleviate energy poverty?

The recast directive puts a stronger focus on alleviating energy poverty, with the first-ever EU legal definition of energy poverty. In particular, the Directive requires EU countries to prioritise energy efficiency improvements for vulnerable customers, individuals affected by energy poverty and those living in social housing. Under the energy savings obligation, each EU country is responsible for achieving a share of its energy savings among vulnerable customers and those affected by energy poverty. This will help fostering energy-efficiency improvements and therefore lower the energy bills for those most in need. The criteria for determining these targets will be defined by each country, allowing flexibility for tailored solutions based on country-specific circumstances.

The revised directive will also empower consumers through stronger requirements on EU countries to raise awareness and provide information on energy efficiency. It allows for the creation of one-stop shops for technical and financial assistance and consumer protection via out-of-court mechanisms for the settlement of disputes between customers and energy suppliers.

How will the recast directive help tackle the energy efficiency investment gap?

The recast directive further strengthens provisions on energy efficiency financing to facilitate the mobilisation of investments, including from the private sector, which is expected to make a significant contribution to the clean energy transition. Under the new provisions, EU countries will be required to promote innovative financing schemes and green lending products for energy efficiency, by ensuring their wide and non-discriminatory offer by financial institutions. EU countries will also have to report on the volume of energy efficiency investments to improve accountability and transparency.

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