EU’s power plan lacks boldness

The European Commission this week published its draft Renewable Energy Directive, a 1,000-page programme of reforms designed to help EU member states cut carbon emissions by 40% from 1990 levels by 2030.

It is a good idea, but the execution looks like a missed opportunity.

The draft law, which has to be approved by the EU’s 28 member states and the European Parliament, aims to cut energy use by 30% from 2005 levels by 2030 and encourage greater cross-border trade, to help grids in Europe cope with growing amounts of wind and solar power. To do so, the European Commission plans to allocate €254bn of investments in the sector.

The commission’s plan has also confirmed a target that renewables should account for 27% of the bloc’s power mix by 2030. To achieve that, it wants the energy market to become more flexible and include an increasing share of renewables. Renewables would be traded as close to real time as possible and producers would be able to earn revenues from balancing market. This should result in a more efficient market, where wind power producers are able to optimise the use of the produced power and therefore get more earnings from their assets.

Other proposed reforms include a grandfathering clause to protect existing investments from regulatory changes, and the requirement for governments to clarify an indicative timeline, volumes and budget for renewables support at least three years in advance. That latter rule will be particularly challenging given the often short-term thinking of politicians.

However, some aspects of the reform package have been criticised, by organisations including WindEurope, for not showing enough boldness. For example, the 27% target in renewable energy production by 2030 adds little compared to its previous target of reaching 20% of energy from renewables by 2020.

The commission is also seeking to limit wind and solar energy producers’ right to be the first to sell their electricity into the grid for new projects in nations where renewables already account for a large share of the overall energy mix. This means uncertainty for owners and investors, though current provisions should be maintained for existing and small scale installations.

And its success is set to rely on national governments responding to the targets and actively committing to support renewable energy sources including wind. At present, just seven out of 28 members have policies for renewables which go beyond 2020, so wide support is by no means guaranteed.

The result is a package of reforms that makes some important progress but, given the scale of the challenges facing the world, could have delivered much more.