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RED III - Raised EU Ambitions on Renewables
The new Directive RED III requires at least 42.5% of final energy consumption to come from renewable sources. How to cover the gap between today's 21% and the 42.5% target in six years. How will pay higher bills?
Timidly, the governments of the 27 have held back the ultra-green push from the European Commission and some European Parliament members, who were calling for increasing the contribution of renewable energy from the current 21% of final energy consumption to 45% in 6 years. Ministers managed to secure a reduction to 42.5% by 2030. Since renewables are undeniably more expensive than nuclear and fossil fuels used so far, citizens and companies are now destined to pay hefty bills in the future as well. Even without wars on their doorstep and without sanctions on Russia. Some prospective studies suggest that even to charge electric vehicles, energy costs will be quite high.
Certainly, it's not easy to navigate through the numbers and percentages provided annually by the EU institutions regarding future energy use: total energy consumption, the percentage of energy from renewables, energy savings, energy efficiency, the share of biomass, solar and wind power, fossil fuel imports, prohibitions on the production and import of CO2-producing fuels, and so on.
At least three events have generated this appetite: the pandemic, which caused a collapse in energy consumption, the war in Ukraine, which saw a decrease in energy imports from Russia, and the climate alarm.
These three factors have triggered anxiety within the EU institutions, and the European Commission has responded by offering increasingly ambitious energy solutions. However, the scent of an economic recession has emerged recently, putting European governments on alert and leading them to slow down the race towards the Green Europe.
In fact, while the European Commission and the European Parliament aimed for very high renewable energy targets by 2030, governments have curbed ambitions to 42.5%. As for Euro7, the Council has secured a 2-year delay in the Regulation's entry into force, as opposed to the 4 years initially requested by a number of countries. Read our article on Euro7 here.
At least three events have generated this appetite: the pandemic, which caused a collapse in energy consumption, the war in Ukraine, which saw a decrease in energy imports from Russia, and the climate alarm.
These three factors have triggered anxiety within the EU institutions, and the European Commission has responded by offering increasingly ambitious energy solutions. However, the scent of an economic recession has emerged recently, putting European governments on alert and leading them to slow down the race towards the Green Europe.
In fact, while the European Commission and the European Parliament aimed for very high renewable energy targets by 2030, governments have curbed ambitions to 42.5%. As for Euro7, the Council has secured a 2-year delay in the Regulation's entry into force, as opposed to the 4 years initially requested by a number of countries. Read our article on Euro7 here.
Are these two slowdowns a sign of a European climate commitment weakening? Two fundamental elements come into play here.
The ability of producers and consumers to withstand the stress of EU environmental competitions and the outcome of the 2024 European elections.
Regarding the first, it can be said that consumers are the decision-makers, especially if they cannot afford more expensive vehicles, if they have to wait too long to purchase them, if fueling electric cars becomes difficult and costly, if they lack the financial means to make their homes more energy-efficient, or if their bills increase significantly. In such cases, the political body cannot simply observe the loss of trust.
As for the second, it will be the new European political landscape, both within the EU and in Brussels, that will tell us whether the plans laid out by Ursula von der Leyen and former EU Commissioner Franz Timmermans will change.
Finally, citizens are becoming increasingly skeptical about the convenience of European restrictive choices, as more and more politicians from some European countries emphasize how Europe's use of non-polluting renewable sources is inconsequential for the climate.
The ability of producers and consumers to withstand the stress of EU environmental competitions and the outcome of the 2024 European elections.
Regarding the first, it can be said that consumers are the decision-makers, especially if they cannot afford more expensive vehicles, if they have to wait too long to purchase them, if fueling electric cars becomes difficult and costly, if they lack the financial means to make their homes more energy-efficient, or if their bills increase significantly. In such cases, the political body cannot simply observe the loss of trust.
As for the second, it will be the new European political landscape, both within the EU and in Brussels, that will tell us whether the plans laid out by Ursula von der Leyen and former EU Commissioner Franz Timmermans will change.
Finally, citizens are becoming increasingly skeptical about the convenience of European restrictive choices, as more and more politicians from some European countries emphasize how Europe's use of non-polluting renewable sources is inconsequential for the climate.
World primary energy consumption
RED III: The new EU Directive sets a target of 42.5% for renewables
In 2018, the Directive (EU) 2018/2001 committed the 27 member states to achieve a binding target of at least 32% of energy from renewable sources as a share of total energy consumption by 2030.
In 2020, the European Commission proposed a more ambitious approach to address climate challenges swiftly and reduce greenhouse gas emissions. They aimed to double the share of energy from renewable sources compared to 2020 levels, targeting at least 40% renewable energy in the energy mix by 2030. This move was enshrined in Regulation (EU) 2021/1119, which also set the goal of climate neutrality by 2050 and a net reduction of 55% in greenhouse gas emissions compared to 1990 levels by 2030. Achieving these objectives necessitates a substantial energy transition, enhanced energy efficiency, and a significant increase in renewable energy.
The Directive approved in September 2023 presented a challenge as it brought into conflict the ambitions of European Parliament members advocating for even more ambitious goals with the governments of the 27 member states, who deemed the existing targets already too demanding. The compromise ultimately resulted in an increase in the share of renewable energies to 42.5%, while urging governments to aim for up to 45.0%.
In the International Energy Agency's primary forecast, it is expected that global renewable capacity will surge by nearly 2,400 GW, signifying remarkable growth of almost 75% between 2022 and 2027. This expansion is equivalent to the entire installed power capacity of the People's Republic of China.
This acceleration of 85% compared to the expansion rate observed in the previous five years can be primarily attributed to two key factors. First, the sharp increase in fossil fuel and electricity prices due to the global energy crisis has made renewable power technologies significantly more economically attractive. Second, the conflict in Ukraine has led to a heightened recognition of the energy security benefits offered by renewable energy, especially in Europe and among nations heavily reliant on fossil fuel imports.
RED III Directive: A brief analysis
The new Directive reinforces the EU's commitment to achieving energy independence through the rapid expansion of domestic renewable energy sources, aiming to meet the 55% greenhouse gas emissions reduction target for 2030. This involves a substantial scaling-up and acceleration of renewable energy adoption across various sectors, such as power generation, industry, buildings, and transport, with the ultimate goal of reducing energy costs over time and reducing reliance on imported fossil fuels.
To facilitate this transition, the Directive streamlines permitting procedures, recognizing renewable energy as a top public interest while maintaining strong environmental protection. Member States are encouraged to establish dedicated areas for accelerating renewable projects in locations with high potential and low environmental risks. Cross-border collaboration on renewables is also enhanced.
The agreement includes specific targets and measures to promote renewables in different sectors, including heating, cooling, district heating, and buildings. It introduces a renewable energy benchmark of 49% for building energy consumption by 2030, aligning with EU buildings legislation and guiding Member States.
For the first time, the industry is included in the Renewable Energy Directive, with indicative targets for annual increases in renewable energy use and a binding target of 42% renewable hydrogen in total hydrogen consumption in industry by 2030. The agreement strengthens the regulatory framework for renewable energy in transport, aiming for a 14.5% reduction in greenhouse gas intensity or a 29% share of renewable energy in final energy consumption. It also includes sub-targets for advanced biofuels and renewable non-biological fuels, with a minimum level for the latter.
The agreement emphasizes support for energy system integration through electrification and waste heat utilization and improves the system of guarantees of origin for consumers' information.
Furthermore, the agreement enhances the sustainability criteria for bioenergy, applying to smaller installations and addressing biodiversity and carbon stock concerns. It restricts the use of forest biomass from certain areas and promotes the highest economic and environmental value of woody biomass. Financial support for energy derived from specific sources is prohibited.
The next steps involve the formal adoption of the provisional agreement by the European Parliament and the Council. Once this process is completed, the new legislation will be published and come into force.
The European Green Deal, a long-term strategy aiming for climate neutrality by 2050, serves as the backdrop for this Directive revision. It's part of the broader 'Fit for 55' initiative, designed to align EU policies with a minimum 55% reduction in greenhouse gas emissions by 2030 compared to 1990 levels. Accelerating renewable energy deployment by the end of the decade is a crucial step toward making Europe the world's first climate-neutral continent by 2050, a key component of the European Green Deal.
Additionally, increasing the production and use of renewable energy plays a vital role in the REPowerEU Plan, designed to reduce Europe's dependence on Russian fossil fuel imports. In May 2022, the Commission proposed further measures to accelerate renewable adoption, including an increase in the binding Renewables Target under the 'Fit for 55' package of European Green Deal legislation.
A Comprehensive Analysis here...
To facilitate this transition, the Directive streamlines permitting procedures, recognizing renewable energy as a top public interest while maintaining strong environmental protection. Member States are encouraged to establish dedicated areas for accelerating renewable projects in locations with high potential and low environmental risks. Cross-border collaboration on renewables is also enhanced.
The agreement includes specific targets and measures to promote renewables in different sectors, including heating, cooling, district heating, and buildings. It introduces a renewable energy benchmark of 49% for building energy consumption by 2030, aligning with EU buildings legislation and guiding Member States.
For the first time, the industry is included in the Renewable Energy Directive, with indicative targets for annual increases in renewable energy use and a binding target of 42% renewable hydrogen in total hydrogen consumption in industry by 2030. The agreement strengthens the regulatory framework for renewable energy in transport, aiming for a 14.5% reduction in greenhouse gas intensity or a 29% share of renewable energy in final energy consumption. It also includes sub-targets for advanced biofuels and renewable non-biological fuels, with a minimum level for the latter.
The agreement emphasizes support for energy system integration through electrification and waste heat utilization and improves the system of guarantees of origin for consumers' information.
Furthermore, the agreement enhances the sustainability criteria for bioenergy, applying to smaller installations and addressing biodiversity and carbon stock concerns. It restricts the use of forest biomass from certain areas and promotes the highest economic and environmental value of woody biomass. Financial support for energy derived from specific sources is prohibited.
The next steps involve the formal adoption of the provisional agreement by the European Parliament and the Council. Once this process is completed, the new legislation will be published and come into force.
The European Green Deal, a long-term strategy aiming for climate neutrality by 2050, serves as the backdrop for this Directive revision. It's part of the broader 'Fit for 55' initiative, designed to align EU policies with a minimum 55% reduction in greenhouse gas emissions by 2030 compared to 1990 levels. Accelerating renewable energy deployment by the end of the decade is a crucial step toward making Europe the world's first climate-neutral continent by 2050, a key component of the European Green Deal.
Additionally, increasing the production and use of renewable energy plays a vital role in the REPowerEU Plan, designed to reduce Europe's dependence on Russian fossil fuel imports. In May 2022, the Commission proposed further measures to accelerate renewable adoption, including an increase in the binding Renewables Target under the 'Fit for 55' package of European Green Deal legislation.
A Comprehensive Analysis here...
Can EU succeed?
It is difficult to predict how things will go in practice because even if energy costs are so high, due to the war in Ukraine and the sanctions imposed, that renewable sources are competitive , the European economy is at risk of recession and global demand for energy may shrink.
With an ambitious target of 42.5% for renewables, it signals the EU's determination to accelerate the transition towards a greener future. However, the real test lies in whether consumers can withstand the economic impact and if political leaders can maintain these lofty ambitions.
Equally significant is how other continents align with the Paris climate goals, which could determine whether Europe stands alone in its climate endeavors. This comprehensive analysis delves into the implications and challenges surrounding the RED III Directive and its role in shaping the future of sustainable energy in Europe.
At the same time, the EU decision to reduce fossil fuel imports from Russia supports its energy transition policy: with fewer fossil sources consumed, renewable sources automatically become a larger percentage.
One thing, however, is certain: since energy produced from renewable sources will always cost more compared to other sources, energy bills are destined to continuously rise, potentially tripling in the biennium 2023-2024. Although we are facing an environmental benefit, the European economy will suffer from it. As previously mentioned, it will be necessary to see if consumers can bear the economic impact and if the political classes can confirm the ambitious objectives. Last but not least, the attitude of other continents towards the climate goals of Paris or whether Europe will stand alone will also be of great importance.
With an ambitious target of 42.5% for renewables, it signals the EU's determination to accelerate the transition towards a greener future. However, the real test lies in whether consumers can withstand the economic impact and if political leaders can maintain these lofty ambitions.
Equally significant is how other continents align with the Paris climate goals, which could determine whether Europe stands alone in its climate endeavors. This comprehensive analysis delves into the implications and challenges surrounding the RED III Directive and its role in shaping the future of sustainable energy in Europe.
At the same time, the EU decision to reduce fossil fuel imports from Russia supports its energy transition policy: with fewer fossil sources consumed, renewable sources automatically become a larger percentage.
One thing, however, is certain: since energy produced from renewable sources will always cost more compared to other sources, energy bills are destined to continuously rise, potentially tripling in the biennium 2023-2024. Although we are facing an environmental benefit, the European economy will suffer from it. As previously mentioned, it will be necessary to see if consumers can bear the economic impact and if the political classes can confirm the ambitious objectives. Last but not least, the attitude of other continents towards the climate goals of Paris or whether Europe will stand alone will also be of great importance.
© Copyright eEuropa Belgium 2020-2024
Sources: © European Union, 1995-2024, ©IEA, Eurostat, ©EIA
Sources: © European Union, 1995-2024, ©IEA, Eurostat, ©EIA
