COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast) - Hoofdinhoud

Council of the European Union

Brussels, 2 December 2016 (OR. en)

15120/16

Interinstitutional File: ADD 5

2016/0382 (COD) i

ENER 417 CLIMA 168 CONSOM 298 TRANS 479 AGRI 650 IND 261 ENV 757 IA 130 CODEC 1802

COVER NOTE

From: Secretary-General of the European Commission, signed by Mr Jordi AYET PUIGARNAU, Director

date of receipt: 1 December 2016

To: Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Council of the European Union

No. Cion doc.: SWD(2016) 418 final - PART 2/4

Subject: COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European

Parliament and of the Council on the promotion of the use of energy from renewable sources (recast)

Delegations will find attached document SWD(2016) 418 final - PART 2/4.

Encl.: SWD(2016) 418 final - PART 2/4

EUROPEAN COMMISSION

Brussels, 30.11.2016 SWD(2016) 418 final

PART 2/4

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast)

{COM(2016) 767 final i} {SWD(2016) 419 final} Contents

• 6. 

  MONITORING AND EVALUATION ................................................................... 179

6.1. Reporting by the Member States ................................................................... 179

6.2. Reporting by the Commission ....................................................................... 180

6.3. Evaluation of the Directive ............................................................................ 180

ANNEX 1 - PROCEDURAL INFO ................................................................................ 182

ANNEX 2 - STAKEHOLDER CONSULTATION ........................................................ 208

ANNEX 3 - PROBLEM DRIVERS MATRIX ............................................................... 214 6. M ONITORING AND EVALUATION

The Commission will monitor the transposition of the Revised RES Directive and its implementation in the Member States under the Energy Union Governance process. For this purpose, the Commission will be supported by yearly Member States reporting as described below.

6.1. Reporting by the Member States

Every two years starting from 2021 onwards, Member States will report under the Energy Union Governance process on key monitoring indicators and dimensions, among which:

• progress on the implementation of national trajectories

o for renewables as a whole o in the electricity, heating and cooling, and transport sector; o by renewable energy technology o if applicable, share of renewable energy in district heating, renewable

energy use in buildings, renewable energy produced by cities, energy communities and self-consumers).

• progress on the implementation of policies and measures

o implementation of heating and cooling and transport measures o Specific measures for regional cooperation; o Specific measures on financial support for renewable o Specific measures on admninistrative procedures, information and

training, and grid access

o Specific measures on the promotion of the use of energy from biomass

• and the following further information:

o the functioning of the system of guarantees of origin o aggregated information on biofuels, renewable transport fuels of nonbiological

origin, waste-based fossil fuels and electricity placed on the market by fuel suppliers

o developments in the availability, origin and use of biomass resources for

energy purposes;

o changes in commodity prices and land use within the Member State

associated with its increased use of biomass and other forms of energy from renewable sources;

o the estimated excess production of energy from renewable sources which

could be transferred to other Member States

o the estimated demand for energy from renewable sources to be satisfied

by means other than domestic production until 2030;

o the development and share of biofuels made from feedstocks listed in

Annex IX

o the estimated impact of the production of biofuels and bioliquids on

biodiversity, water resources, water quality and soil quality within the Member State;

o risks or observed cases of fraud in the chain of custody of biofuels or

bioliquids;

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o information on how the share of biodegradable waste in waste used for

producing energy has been estimated, and what steps have been taken to improve and verify such estimates;

o the energy produced in buildings, as well as the share of self-consumed

energy for electricity and heating and cooling.

o the share of renewable energy in locally generated energy, as well as the

renewable capacity and annual generation by energy communities as defined in Article 2 of Directive 2009/28/EC i.

6.2. Reporting by the Commission

The Commission will proceed to a compilation of, among others, the elements above to be integrated in the yearly State of the Energy Union Report. It will also asses progress in terms of renewables shares in the EU as a whole against projected trajectory, as well as individual Member States achievements against contributions. On the basis of the elements above, the European Commission will also assess Member States progress in creating renewable enabling framework in all sectors.

A particular focus of the commision report will be cast on the cost-effective deployment of renewable energy, in particular the impact on end consumers and industry. This evaluation shall also assess to what extent the Revised RES Directive has contributed to the achievement of the pledge to make the EU "world number one in renewables", through an analysis of the five key dimensions, i.e.:

• citizen empowerement • energy security • technology leadership • overall deployment in each sector • jobs and added value

For the purpose of the above analyses , the Commission will also promote independent studies and reports, including in collaboration with the industry and the academics, to survey sector-specific aspects of the directive, including the impact on employment, growth, technology imports/export and effect on SMEs.

6.3. Evaluation of the Directive

The Commission will proceed to a fully-fledged evaluation of the impact of the Revised RES Directive in 2025, based on 2023 data. The evaluation report will include, inter alia, an assessment of whether the operational objectives of the Revised RES Directive have been reached, in terms of trajectory towards the 2030 EU-target, as well as in each of the following sectors:

• Electricity • Heating and cooling • Transport • Consumers empowerement

The evaluation report will be developed by the Commission with the assistance of external experts, on the basis of terms of reference developed by the Commission services. Stakeholders will be informed of and consulted on the evaluation report, and

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they will also be regularly informed of the progress of the evaluation and its findings. The evaluation report will be made public.

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A NNEX 1 - P ROCEDURAL INFO

Identification

(1) Lead DG: DG ENER

(2) Agenda planning/WP references: AP 2016/ENER/025

Organisation and timing

The Inception Impact Assessment was published in November 2015.

An online public consultation was launched on 18 November 2015 and remained open until 10 February 2016. The main results of this consultation are provided in a separate annex.

Inter-service group:

An Inter-service group meeting was used comprising the Legal Service, the Secretariatgeneral, DG Budget, DG Agriculture and Rural development, DG Climate action, DG Communications Networks, Content and Technology, DG Competition, DG Economic and Financial Affairs, DG Employment, Social affairs and Inclusion, DG Energy, DG Environment, DG Financial stability, Financial services and Capital markets, DG Internal market, Industry, Entrepreneurship and SMEs, the Joint Research Centre, DG Justice and Consumers, DG Mobility and Transport, DG Regional and urban development, DG Research and innovation, DG Taxation and Customs Union.

Not all Directorate-generals did participate in each ISG.

Meetings of this ISG were held on: 25 April 2016 and 14 July 2016.

Consultation of the RSB:

The draft IA was submitted to the Regulatory Scrutiny Board (RSB) on 25 July and was discussed at the RSB hearing on 14 September 2016, following which the RSB asked for a revised submission.

The issues raised by the RSB, with the relevant actions undertaken on the text of the Impact Assessment, are summarised in the following table.

Revised Impact Assessment of the revision of directive 2009/28/EC i on the promotion of the use of energy from renewable sources

Issues Raised Changes introduced in the revised version

Support Schemes for RES

Issue cross cutting to other impact This issue has been addressed in the assessments abstract of this Impact Assessment under

"The findings of the RES and MDI Impact

The two IAs on electricity market design Assessments" as well as in section 2.2.1. and renewable energy present different (driver 1). In addition the document, 'The assessments about the investment that vision for the EU electricity market in 2030

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the market will provide to support and beyond', presented together with the renewable electricity. It is not clear MDI IA include the same assessment. whether a funding gap arises because expected investment is too low, or whether a "safety net" is needed to mitigate the risk that the market might not provide enough investment to reach the EU target on renewables.

In addition, the state of This issue has been addressed in the commercialisation and maturity of the abstract of this Impact Assessment under different renewable energy technologies "The findings of the RES and MDI Impact and their differing need (if any) for Assessments", as well as in section 2.2.1. public support is not addressed. (driver 1), 2.2.2. (driver 2) and sections

5.1.1.2 and 5.1.3.2. An analysis for the 2020-2030 period of the required investments and investment gaps for the different technologies is also available in section 5.1.1.2 as well as in Annex 5 (section 1.1.).

It is also unclear how tendering This topic is covered in section 2.2.2 procedures to procure renewable (driver 2). electricity cost-efficiently (and based on

the principle of technology neutrality) Under option 2 of section 5.1.1, the can address the needs of immature common framework on support schemes renewable energy technologies and avoid with the 'EU toolkit' aims to address these overgenerous support schemes in a issues ensuring that the use of tenders

rapidly changing environment. keeps support costs to their minimum and by considering the possibility to have

technology-specific tenders in certain circumstances (e.g. for technology with long term potential).

The IA report also does not explain why This issue is covered in section 2.2.1. new legislative provisions are needed (driver 2) and in section 5.1.1.2. new beyond the Commission's current legislative provisions are needed in guidelines on energy and environment complementarity with State Aid Guidelines state aids and their future review in to ensure investor certainty. relation to the period after 2020.

Sustainability of Biofuels

Issue cross cutting to other impact The sustainability of biofuels, particularly assessments GHG emissions, in addressed in section

This IA addresses biofuels while 2.2.4 and the implications for the existing bioenergy as a whole is the subject of sustainability criteria, particularly the cap another impact assessment. Given that but also the GHG emission saving target,

the issues for biofuels are not different are addressed in section 5.3. The link to the Impact Assessment on bioenergy

from the issues for other sources of

bioenergy, the reference to the impact sustainability is explained in section 1.3.1.

assessment on renewables should

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demonstrate the coherence or the possible differences in policy approach.

In particular, consistency should apply to sustainability criteria, expectations as to the role of bioenergy/biofuels in relation to the overall target for renewables, assumptions on the role of subsidies, and the cost-benefits of any feasible policy at this stage.

Address the sustainability of biofuels The variable climate performance of (and the need to revise the existing conventional biofuels due to ILUC is sustainability criteria in the RES addressed as part of the problem definition Directive) in a manner coherent with the in section 2.2.4 and the options for the approach taken in the IA on bioenergy. future treatment of food-based biofuels,

particularly the cap, are assessed in section 5.3. The link to the Impact Assessment on bioenergy sustainability is explained in section 1.3.1.

Explain why the IA report does not The difference in GHG performance distinguish between food-based between food-based bioethanol and bioethanol and biodiesel given their biodiesel is explained in section 2.2.4. different greenhouse gas emissions Furthermore it is also discussed in section performance 5.3.

Explain why options which require As explained in section 2.2.4 several frontloading advanced biofuels which production pathways for advanced biofuels are unlikely going to be mature over the are ready for large scale commercialization 2020-30 period are not discarded. provided the right policy framework is in

place. Section 5.3 discards Option 0 (baseline) and Option 1 (obligation covering only advanced renewable fuels) for not contributing effectively to the gradual replacement of food based biofuels by advanced biofuels and by not addressing ILUC.

The IA report should look at whether The IA analyses whether national measures national measures would be more would be appropriate to increase renewable appropriate in respect of subsidiarity, in transport in section 5.3. In particular, it effectiveness and efficiency. finds that Option 0 (baseline), which

includes a continuation of national mandates and taxation policies, is projected not to sufficiently develop advanced biofuels which are required to decarbonise transport. It also highlights that both energy based obligations and GHG reduction obligations are widely applied by the Member States and EU measures could thus built on existing administrative

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capacities. Furthermore, section 2.2.2 explains in a footnote the difficulties in making progress on energy taxation at EU- level.

Baseline Scenario

The content and assumptions of the Under section 1.3.2. further clarifications baseline scenario should be clarified, are provided regarding the modelling including the differences between the scenarios considered for assessment of the PRIMES 2016 reference scenario and various policy options and their link with the scenario extending the “current other initiatives. renewable arrangements”. The IA

should also explain the implications of In all policy sections the baseline scenario the scenarios for the cost of the policies has been clarified.

and for the energy mix, in particular on

bioenergy, which affects negatively the In the electricity section, a table has been

CO 2 target. introduced in 5.1, which provides an overview of the scenarios considered for

assessing the various policy options.

A dedicated section has also been added in Annex 4 to explain in more details the choice of the baseline scenario, and the interactions with the EU Reference Scenario. Additional details have been provided when interpreting the results of the scenario, in particular the impacts on the use of bioenergy in the baseline (CRA) scenario (Section 5.1. – introductory part).

Report Length

An IA report should not generally An abstract/executive summary has been exceed 40 pages in length, otherwise its included at the beginning of the revised usefulness in the decision making Impact Assessment. It summarizes its key process is impaired. The current report elements, providing the context of revision substantially exceeds this limit. A short of the renewables directive, identifying the abstract of the IA report should be problems requiring action, the policy presented at the beginning of the revised options put forward and the main results of report. This abstract should cover the their assessment. main elements of the IA (problems,

objectives, options, impacts and trade Furthermore, the Impact Assessment has

offs, how options compare) focussing in also been revised with a view to improve its readability and provide further clarity

on the critical points for political on problem drivers and their link with

decision-making. It should be

approximately 10-15 pages in length. policy options. To this end, the following

changes are highlighted:

• - 

  In chapter 2, a problem tree is included providing a link between the problem, its drivers and possible consequences

• - 

  In chapter 5, under each section, a table

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has been included providing the link between challenges, drivers and policy options

• - 

  The sections on energy communities and administrative barriers have been included under the electricity sector, as they mostly focus on this sector.

Preferred options

Many different options are discussed but In all policy sections, a number of options no preferences are expressed. It is to be discarded have been identified, difficult, therefore, to gauge the overall reducing the number of potentially balance and proportionality of the preferred options. intended approach towards attainment of the EU-level target and to assess coherence with other initiatives and

Union policies. While it is not mandatory to express a policy preference, the usefulness of the IA report would be enhanced if preferences were stated or if options that compare less well in the analysis could be discarded.

Subsidiarity and proportionality

The discontinuation of national targets To provide further clarity on the need for introduces more uncertainty regarding EU intervention a section on subsidiarity the collective attainment of the EU-level has been included in the abstract and target and the individual contributions Chapter 3 has been revised. of the Member States. However, the

With regard to the transport section, as principles of subsidiarity and

proportionality remain relevant. The mentioned above, the Impact Assessment current impact assessment has only analyses whether national measures would investigated options for action at the EU be appropriate to increase renewables in

transport in section 5.3. In particular, it level notwithstanding that national

measures may be less costly, more finds that Option 0 (baseline), which effective or simply more appropriate includes a continuation of national from a subsidiarity perspective. The IA mandates and taxation policies, is projected should look at a wider range of options not to sufficiently develop advanced including action at Member State level biofuels which are required to decarbonise particularly in the transport and heating transport. It also highlights that energy

based obligations are widely applied by the and cooling sectors. Moreover, the

extension of the scope of the directive to Member States and EU measures could cover administrative issue for permits thus built on existing administrative

and the legal definition of energy capacities. Furthermore, section 2.2.2 refers in a footnote to the difficulties in

communities is questionable on

subsidiarity grounds. making progress on energy taxation at EU-

level.

With regard to heating and cooling, as explained in section 5.2.1.1, the heating and cooling obligation scheme is designed

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to reflect a cost-effective set of measures at national level in order to reach a 27% renewables target. In the absence of further EU incentives, it is likely that Member States would fall below this cost-effective share. In section 5.2.1, a range of mitigation measures have been introduced to leave sufficient flexibility for Member States when designing the obligation i.e. to limit the burden on small-scale suppliers and ensure proportionality and subsidiarity of the option. On the top of it, the most farreaching option (option 1) has been disregarded.

The option to include a definition of energy communities has been introduced as a necessary step to ensure that a certain category of actors, that bring added value in terms of cost-efficient renewable deployment, are able to play a role and compete on equal footing with other market players. Such definition would be based on existing entities (such as SMEs) and will ensure, to the extent possible, that all energy communities across Europe are encompassed. Member States would still have freedom to have their own definition of energy communities, as long as entities falling under the RED definition are granted the right to operate on equal footing within the energy system. This topic is addressed in section 5.1.1.

With respect to administrative procedures, the relation between the existing measures (current article 13 of the RES Directive), the TEN-E Regulation and the proposed options was made clearer (please see section 5.1.4).

Furthermore, clarifications on subsidiarity were added in section 5.1.4, explaining why EU action is required and that the options proposed leave enough freedom for Member States to define the solutions that are best suited for local circumstances. It should be noted that elements of options that are not in line with subsidiarity are pointed out in order to be discarded.

Governance and mid-term review

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Issue cross cutting to other impact

assessment Further explanation is provided in the section concerning links with other

The IA report should explain why it is initiatives (section 1.3.1).

necessary now to anticipate the potential

failure of the envisaged governance The problem definition and assessment of the options for correcting gaps have been

system without any evidence or

understanding as to why the Union may edited to make clearer the roles of the not be on track to attain the EU’s target respective initiatives (please see sections of 27% renewables in 2030. 2.2.1, 2.2.3, 5.5.3 and 5.5.4).

The option of having a mid-term review The IA report contains options for a review should be considered, which would be process to address any potential gaps in based an evaluation of the RES Directive achieving the target. The options related to using the information generated by the review clauses have been revised so that governance process to assess the causes these options are made clearer (please see for any non-attainment and the need for sections 5.5.3 and 5.5.4). additional measures. Such an evaluation would in any event be required under the Commission's better regulation policy.

The report should justify why all sectors Section 2.2.2., driver 1, clarifies the

(electricity, heating and cooling, expected cost-effective contribution of the transport) should contribute more or various sectors to the overall increase in less equally to reaching the overall RES the RES share by 2030. The Impact target, and it should explain how this Assessment does not conclude that all would be the most efficient approach. sectors should contribute more or less

equally, but rather according to their potential, which depends on various factors, including evolution of energy demand in the various sectors. Addition details on the model specifications leading to these results can be found in Annex 4.

Consideration of the 2 nd Regulatory Scrutiny Board Opinion issued on 4 November

How the Proposal of a recast of the RSB comments Renewables Directive addresses the RSB

comments

• B) 

  Overall opinion: NEGATIVE

The Board acknowledges the improvements The assistance of the Board and the in the resubmitted impact assessment guidance offered during the process report. It provides a useful abstract, an contributed to an improved problem improved problem definition, a better definition, a better quantified baseline, as quantified baseline, more details on the well as more details on the options. In options. In particular it establishes the particular, the confirmation that the IA investment gap in renewables for power clearly establishes the investment gap in generation and makes the case for the renewables for power generation and continuation of market based support convincingly makes the case for the

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schemes. continuation of market based support schemes is acknowledged.

However, the Board maintains its negative The Proposal has been significantly opinion because the revised report still reviewed in order to take into account the contains significant shortcomings as listed concerns expressed by the Board in its below: opinions, in particular regarding (i) the

proportionality of the measures initially foreseen in relation to RES support schemes; and (ii) the proportionality of the measures initially foreseen in the heating and cooling sector..

Detailed responses are provided below.

The report fails to assess sufficiently the There is a fundamental shift in the policy principles of subsidiarity and framework for 2030: while the 2020 proportionality. The case for EU-level legal framework was based on legally binding obligations in several areas is not clear. national targets, allowing Member States Options for action at Member State level large discretion on their national have not been considered. A different mix of measures, the 2030 framework is based on EU and national measures might arguably a legally binding target placed at the level be more efficient and effective, notably in of the European Union. The Union's target light of the following: can be best achieved through a partnership – the political decision of the European with Member States combining their Council to move away from national legally national actions supported by a framework binding targets for renewable energy; of EU measures. Such a mix of national – the extent to which national measures are and EU measures will ensure the already in place; achievement of the binding nature of the – the relatively limited additional efforts 2030 Union-level target in a cost efficient required to reach the EU target as way. compared to the baseline, as well as the generally underestimated trend of Relying solely on national measures would renewables growth; lead to a non-cost efficient and unevenly – the need to ensure coherence with the spread efforts across the EU, leading to an various climate and energy policy insufficient deployment of renewables in instruments (such as the proposal on effort the EU internal energy market falling sharing in sectors not covered by the short of the agreed target. EU level action emissions trading system, energy efficiency is necessary to create a robust and stable and energy performance of buildings and framework that enables the collective and the initiative on electricity market design). cost-efficient achievement of the Union's

binding objective of at least 27% renewable energy in 2030, with a fair distribution of efforts by Member States.

This is a minimum target. While the EU is today well on track to achieve its 2020 renewables target, modelling shows that the EU is not on track to meeting the 2030 target. The IA (Reference scenario), which assumptions have been built in close

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cooperation with Member States, points to a likely achievement of 24.3% RES in 2030 on the basis of a continuation of current measures at Member State level. This would not fulfil the legally binding objective of at least 27%.

Moving from 24.3% to the minimum target of 27% requires very substantial additional investments. For RES-E generation only, moving from 24.3% to 27% would require an additional investment of 254 bn EUR over 2021-2030. This figure is the difference between the RES-E investment needs in the Reference scenario (assuming continuation of Member States measures, leading to 24.3%) and the Current Renewables Arrangement (CRA) scenario (assuming by design that the 27% target is met through unspecified additional measures at Member States level, but no additional measures in the recast Directive) – see Annex 5 of the IA.

Against this background, it is important to note that investments in renewables have dropped by more than half since 2011 to $48.8 billion last year. The EU now

accounts for only 18% 1 of global total

investment in renewables, down from close to 50% only 6 years ago. Uncertainty over the EU and, consequently, national frameworks that will be in place after 2020 is affecting the the project pipeline for after 2020. This calls for the prompt establishment of a clear and stable policy framework to make it possible for the EU to achieve its 2030 targets and its ambition to lead the world on renewables.

The Proposal aims at ensuring that a sufficient mix of measures is in place at EU and national levels to meet the at least 27% target. It also aims at reducing the overall cost of meeting the target through the use of EU-level measures, as illustrated by the reduction in RES-E investment needs

1 Frankfurter School-UNEP Centre/BNEF, 2016. Global Trends in Renewable Energy Investments

2016, http://www.fs-unep-centre.org

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between the CRA and the EUCO scenarios - see Annex 4 of the IA.

The additional investments need to be triggered through a consistent development of EU renewable energy policy across the EU, leading to a more cost-efficient deployment and a smooth and efficient operation of the internal energy market whilst fully considering the differing resource capacities of the Member States to produce different forms of renewable energy. Where EU measures are proposed, Member States retain a wide flexibility and discretion to further develop renewables in any sector of their economies that suits best their national circumstances and preferences.

The Commission's Proposal is an integral part of the 2030 Energy and Climate Framework. A single basis for modelling and analysis has been used for all legislative proposals (the Board has already given positive opinions on the Impact Assessments for these), which takes into account cross legislative interactions and builds on the confirmed input of Member States (including their national actions). This has ensured coherence, complementarity and consistency for all proposals. In developing the 'package' there is full consistency across all legislative proposals. Thus, for example, aspects of governance including dialogue, preparation and finalisation of national plans, biannual review and evaluation, recommendations to Member States, and ultimately any legislation revisions are all within the Governance Regulation. Hence there is no accumulation or contradiction in the draft proposals.

More specifically: Detailed explanations are provided below

Proportionality is particularly relevant for The legislative proposal has been adjusted the options in the heating and cooling sector. following the opinion of the Board. The Impacts and costs of the different mandatory nature of the provision has obligations have not been assessed against been abandoned; instead, Member States their small contribution to the overall are provided orientations on how to target. address the untapped potential in the

heating and cooling sector.

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On the substance of the Board comment regarding the proportionality of the obligations assessed in the Impact Assessment, it shall be noted that heating and cooling represents 50% of final energy consumption, is essential to the ultimate achievement of the Union's decarbonisation goals, and in fact contributes close to half of the at 27% share RES in 2030.

Modelling shows that, for the heating and cooling sector to cost-effectively contribute to the 27% target, the RES-HC share would reach 27% in 2030 (EUCO27). Continuation of national measures (reference scenario) would lead to a RES- HC share of only 24.7%. In the absence of further incentive post-2020, the current national policies would not be sufficient to reach the long-term decarbonisation goals.

The gap in terms of RES consumption in the H&C sector between 2020 and 2030 is moderate when looked at in net terms (+4 Mtoe according to modelling undertaking in this assessment, under EUCO27 scenario). However, such unit of measure does not take into account the fact that energy efficiency improvements are likely to proportionally affect existing RES sources in the sector – for instance, reducing the heat consumption in a house will proportionally reduce the energy consumption attributed to the biomass boiler of this house. This means that, in the absence of new investments, RES consumption in the H&C sector can be estimated to decrease by around 20 Mtoe due to energy efficiency improvements only. The effort required to meet the costefficient contribution of RES in H&C is thus around 24 Mtoe (4 + 20 Mtoe), even before taking into account the need to replace existing units reaching the end of their life. This compares to an overall effort required in the electricity sector of c 39 Mtoe (EUCO27), where overall demand will increase over the period.

Cost-efficiently reaching the target will also require a significant change in the energy mix for the heating and cooling

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sector. Between 2020 and 2030, the H&C will need to see: a high uptake of heat pumps (x2 in final consumption); a high deployment of solar thermal (+50% in consumption at residential level); a reduction in overall biomass consumption in the residential sector (-25%); and an uptake in biogas production (up to +2/3 ).

Currently most Member States have heating and cooling policies in place, mainly focussed on efficiency. However, the instability of the schemes, the technology lock-in due to the absence of specific RES-targeted support along with the uncertainty of continuation of such policies post-2020 means that the EU will not reap the full potential of heating and cooling in meeting the overall RES target cost effectively.

Regardingproportionality and subsidiarity, the Proposal now foresees that Member States shall endeavour to achieve an annual increase of 1% in the share of renewable energy in heating and cooling supply. Member States will decide how to implement this measure. This provision will contribute to reaching costeffective contribution of the H&C sector (c. 27% RES-H&C share in 2030) towards meeting the overall RES target. Additionally, full flexibility is left to Member States as to the manner by which they will seek to meet this objective.

It can be noted that, where Member States decide to introduce supplier obligations, related costs can be expected to be limited. The IA addresses the administrative burden associated with obligations - for national administrations the implication is very moderate, particularly when combined with e.g. administration of the Article 7 EED measures. In light of additional information from recent studies, the annual additional costs on fossil fuel sales could be around 0.32 €/MWh, which represents around 0.5% of the price of

natural gas for households in 2030 2 .

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Furthermore, the provisions on heating and cooling have been carefully aligned across all the legislative texts. The proposed EED and EPBD focus on new and renovated buildings and individual consumer choice, while RED addresses the large thermal suppliers where consumers are unable to make individual choice. The risk of unintended consequences, such as a worsening of air quality due to the use of biomass has been fully assessed through the policy scenario (EUCO27) on the Environmental impacts section of chapter 5.2.1. of the IA and found, focusing on the residential sector, that biomass use remains constant (and even decreases in absolute terms) between 2020 and 2030, thanks mostly to energy efficiency and electrification.

Proportionality is also a consideration The Proposal establishes EU-wide regarding the cumulative requirements measures that are complementary to the under the new RES Directive, the Effort new Effort Sharing Regulation (ESR) Sharing Decision and the revised Energy proposed in July 2016. While the ESR Union Governance (especially with regard establishes binding GHG emission targets to national trajectories and corrective for each Member State without defining measures). Together these might be a how to get there, the Proposal establishes disproportionate way to deliver the Union's EU-wide measures only in certain sectors target for renewable energy. covered by the ESD (heating and cooling

and transport) where the added value of EU action is demonstrated and where subsidiarity and proportionality principles are respected. This approach is similar to other EU-wide measures impacting sectors covered by the ESD, such as CO2 emission standards for new cars and vans, or restrictions on fluorinated industrial gases. This approach has also been accepted and successful with respect to 2020 targets

where despite an effort sharing decision 3

with binding national targets, it was decided to have dedicated legislation for renewables.

As part of the investment requirements for the period 2020 – 2030, a number of trajectories have been examined. The assessment confirms that a clear profile of demand, across all technologies, would

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result in a consistent stream of investments, allow for industrialisation of the supply chain, continued cost reduction, whilst supporting jobs and growth in the renewables sector. Combined this also has a positive impact on greenhouse gas emission reductions.

Should corrective measures be needed to make sure the EU as whole achieves the target this would be done through the Energy Union Governance.

The existing state aid guidelines already The legislative proposal has been adjusted address most of the issues that the IA report following the opinion of the Board, in close examines and already acknowledge the 2030 cooperation with DG COMP and the Legal climate and energy targets. It is not clear, Service, in order to ensure that provisions therefore, why the IA addresses the design contained in the Proposal are fully of public support schemes for renewable compatible with and complementary to electricity. State aid rules and do not impinge on EC

competencies in the field of State aid.

The proposed principles are general principles requiring the use (where needed) of market-based and cost-effective schemes. This is fully consistent with the new market design and helps to minimise costs for tax payers and electricity consumers. The provisions further support the investor certainty over the 2021-2030 period created by the regulatory framework of the Directive.

Industry, regulators and several Member States have stressed the need for a stable regulatory framework to ensure the costeffective achievement of the renewable at least 27% target. Some stakeholders stressed the need for a strenghtened ETS price signal, full integration of renewables in the market and, if needed, market based renewables support, encouraging common rules to be developed in the Directive. These rules should also allow Member States to develop the renewable technologies needed for instance for diversification reasons, and ensure that Member States retain the capacity to determine their energy mix, as per the Treaty. The same Member States finally stress that the basic requirements of support schemes for Europe need to be agreed in the Council and the European Parliament, which will build legitimacy

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and public acceptance for the market integration agenda. The Proposal builds on national support schemes and does not introduce an EU support scheme for renewables, leaving Member States discretion on how to incentivise renewables. On the other hand, the Proposal does provide clarity that support schemes can be used if needed and sets out general principles in line with the objective of the market design initiative to integrate renewables in the electricity market and in line with the overall objective to achieve decarbonisation at least costs to consumers.

The principles also respect subsidiarity as they do not interfere with Member States' right to determine their energy mix.

If follows directly from the Treaty that the Commission must ensure that State aid does not distort the internal market to an extent contrary to the common interest. It also follow directly from the Treaty that Member States shall promote the development of renewable forms of energy and have the right to determine their energy mix.

The Commission provides a clear and predictable framework on how it assesses State aid schemes in its State aid guidelines. The Commission in its assessment is bound by its guidelines and reviews them regularly after consultation of Member States and stakeholders in order to adapt them to market developments.

Additionally and crucially, the state aid guidelines and existing legislation have not been designed to prevent retroactive changes impacting the economics of existing projects, and harming investor's confidence in the soundness of the European framework in support of renewables. The Proposal introduces a specific provision aimed at preventing the use of such retroactive changes.

Finally, the Proposal introduces a requirement on Member States to open support to cross-border participation

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which will ensure that renewables are increasingly deployed where their potential and other conditions are most favourable – again leading to most cost-effective support (see Section 5.1.1 of the IA).

Moreover, the sustainability of biofuels and Building on the analysis developed in the their potential contribution to the Union IA to the ILUC Directive, this Impact level target is unclear. The issues have not Assessment assesses a number of options been assessed in the same way as for other for strenghtening the existing forms of bioenergy in the related impact sustainability framework for biofuels, assessment on bioenergy sustainability. including by extending and further Possible changes to the sustainability reducing the existing cap on food-based criteria of biofuels might be appropriate, biofuels to the period after 2020 in order to but this has not been assessed. minimise ILUC emissions.

At the same time, the IA on bioenergy assessed options for strengthening the overall sustainability criteria for bioenergy, including a new sustainabilty criteron for forest biomass (used also for biofuel production) and an extension of the sustainability criteria to biomass used for heat and power.

Finally the report does not provide The impact of each option has been sufficient clarity concerning the preferred analysed in the Impact Assessment, set(s) of options and associated policy tradeproviding a basis for a comparison of the offs to facilitate decision-making by the impacts of the different options analysed. College of Commissioners. The Impact Assessment did not present a

set of preferred options, as allowed under the current practice.

(C) Main requirements for adjustment

(1) In relation to renewable electricity, the See above.

IA should explain why new legal provisions are needed on how to design state aid schemes beyond what exists already in the

Commission's state aid guidelines on energy and the environment (e.g. tendering obligations and opening of tenders to EEA).

(2) The text should better explain how a The Board has confirmed that the IA single uniform (technology-neutral) establishes the investment gap in approach to auctions/tenders for supporting renewables for power generation and renewable electricity will be able to makes the case for the continuation of accommodate the different situations of the market based support schemes. various RES technologies. Conversely, if

technology-specific tenders are permitted, It should be noted in this context that the how would these avoid over-generous Proposal, in view of the Board's opinion

subsidies (particularly given the intention to relating to a possible duplication between the Proposal and State aid rules, does not

prevent retroactive action by Member

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States). include any provisions related to the use of tenders.

• 3) 

  The approach presented in the IA is The IA builds on the assumption that primarily to deliver the 27% EU renewables current EU and Member States policies target with EU-level instruments. While the and measures will only lead to 24.3% in revised report raises subsidiarity-related 2030. The IA has considered a number of issues in the context of providing options across the different sectors "flexibility" for implementing the EU (heating and cooling, transport, instruments, options for Member State electricity). Member States have full action should also be considered. flexibility to select and implement actions

  in sectors most appropriate to their situation. EU instruments are proposed only for actions in which operators can trade between themselves, across borders, and across sectors in order to meet the EU- level binding target collectively and costefficiently in view also of long term technological development for decarbonisation of the economy. The approach retained in the proposal creates a European framework which supports Member States, particularly in heating and cooling, and in transport. This can subsequently be complemented by further action at Member State level.

(4) The report should better justify the The legislative proposal has been adjusted proportionality of the obligations in the following the opinion of the Board. The heating and cooling sector: mandatory nature of the provision has – The report should analyse likely costs and been abandoned; instead, Member States benefits to justify the level of the particular are provided orientations on how to renewable fuel obligation imposed on fuel address the untapped potential in the suppliers. heating and cooling sector.

– The report should assess the

On the substance of the Board comment administrative burden associated with

certification regarding district heating and regarding the proportionality of the fuel obligations in particular for SMEs. . obligations assessed in the Impact – The risk of unintended consequences Assessment, it shall be noted that heating should be analysed, such as a worsening of and cooling represents 50% of final energy air quality due to the use of biomass instead consumption, is essential to the ultimate

of clean fuels such as natural gas. achievement of the Union's decarbonisation goals, and in fact

– The report should better consider

consistency with other legislation on energy contributes close to half of the at 27% share RES in 2030.

efficiency, non-ETS GHG emissions

reduction and new proposals on the energy Modelling shows that, for the heating and efficiency of buildings (EPBD). Article 13 of cooling sector to cost-effectively contribute the existing RES Directive already obliges to the 27% target, the RES-HC share Member States to ensure that their national would reach 27% in 2030 (EUCO27). buildings codes promote a minimum level of Continuation of national measures renewables for near-zero energy buildings (reference scenario) would lead to a RES- and buildings undergoing a major HC share of only 24.7%. In the absence of

further incentive post-2020, the current

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renovation. In addition, the envisaged national policies would not be sufficient to revision of the EPBD aims to promote "own reach the long-term decarbonisation goals. production" of renewable energy as a way

to meet near-zero energy standards for The gap in terms of RES consumption in buildings. In addition, each Member State the H&C sector between 2020 and 2030 is also has a different target for greenhouse moderate when looked at in net terms (+4 gas emission reduction in the non-ETS Mtoe according to modelling undertaking

sector, which might imply less stringent in this assessment, under EUCO27 scenario). However, such unit of measure

obligations to reduce greenhouse gas

emissions. does not take into account the fact that energy efficiency improvements are likely

to proportionally affect existing RES sources in the sector – for instance, reducing the heat consumption in a house will proportionally reduce the energy consumption attributed to the biomass boiler of this house. This means that, in the absence of new investments, RES consumption in the H&C sector can be estimated to decrease by around 20 Mtoe due to energy efficiency improvements only. The effort required to meet the costefficient contribution of RES in H&C is thus around 24 Mtoe (4 + 20 Mtoe), even before taking into account the need to replace existing units reaching the end of their life. This compares to an overall effort required in the electricity sector of c 39 Mtoe (EUCO27), where overall demand will increase over the period.

Cost-efficiently reaching the target will also require a significant change in the energy mix for the heating and cooling sector. Between 2020 and 2030, the H&C will need to see: a high uptake of heat pumps (x2 in final consumption); a high deployment of solar thermal (+50% in consumption at residential level); a reduction in overall biomass consumption in the residential sector (-25%); and an uptake in biogas production (up to +2/3 ).

Currently most Member States have heating and cooling policies in place, mainly focussed on efficiency. However, the instability of the schemes, the technology lock-in due to the absence of specific RES-targeted support along with the uncertainty of continuation of such policies post-2020 means that the EU will not reap the full potential of heating and cooling in meeting the overall RES target

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cost effectively.

Regarding proportionality and subsidiarity, the Proposal now foresees that Member States shall endeavour to achieve an annual increase of [1]% in the share of renewable energy in heating and cooling supply. Member States will decide how to implement this measure.

This provision will contribute to reaching cost-effective contribution of the H&C sector (c. 27% RES-H&C share in 2030) towards meeting the overall RES target. Additionally, full flexibility is left to Member States as to the manner by which they will seek to meet this objective.

It can be noted that, where Member States decide to introduce supplier obligations, related costs can be expected to be limited. The IA addresses the administrative burden associated with obligations - for national administrations the implication is very moderate, particularly when combined with e.g. administration of the Article 7 EED measures. In light of additional information from recent studies, the annual additional costs on fossil fuel sales could be around 0.32 €/MWh, which represents around 0.5% of the price of

natural gas for households in 2030 4 .

Furthermore, the provisions on heating and cooling have been carefully aligned across all the legislative texts. The proposed EED and EPBD focus on new and renovated buildings and individual consumer choice, while RED addresses the large thermal suppliers where consumers are unable to make individual choice. The risk of unintended consequences, such as a worsening of air quality due to the use of biomass has been fully assessed through the policy scenario (EUCO27) on the Environmental impacts section of chapter 5.2.1. of the IA and found, focusing on the residential sector, that biomass use remains constant (and even decreases in absolute terms) between 2020 and 2030, thanks mostly to energy efficiency and

4 EU average. Draft interim results from Fraunhofer.

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electrification.

-

(5) This impact assessment takes a different Building on the analysis carried out in the approach to that which assessed directly the IA to the ILUC Directive, this IA analysed sustainability of other forms of bioenergy in further options for mitigating the ILUC relation to their possible contribution to the impacts of food-based biofuels in the

Union's 27% target. The revised IA remains period post-2020. The analysis shows that primarily focused on how to deliver a such impacts can be effectively mitigated particular volume of renewable energy in by introducing a progressive reduction in the transport sector but does not address the the share of food-based biofuels that can sustainability of biofuels directly including count against the 2030 RES target on top the important issue of indirect land use of existing sustainability criteria for change (and associated greenhouse gas biofuels. In this way, the Proposal clarifies emissions). It is not clear whether foodthe role of food-based biofuels in the postbased biofuels should contribute to the 2020 period. Furthermore, the IA analyses Union's 2030 target. Consideration should options for increasing the GHG savings be given to an additional policy option that requirement to ensure optimal climate addresses the deficiencies in the current performance of advanced biofuels. sustainability criteria (i.e. absence of

Indirect Land Use Change) and which would apply equally to all biofuels

(advanced and food-based).

(6) The coherence and proportionality of the The Proposal establishes EU-wide measures intended under the present measures that are complementary to the initiative and under the energy governance proposed Effort Sharing Regulation and RES options related to the delivery of (ESR). While the ESR establishes binding the EU's 27% target should be better GHG emission targets for each Member explained. Assuming the new legal State without defining how to get there, the obligations are adopted, and taking into Proposal establishes EU-wide measures account the commitments under the Effort only in certain sectors covered by the ESR Sharing Decision, the report needs to (heating and cooling and transport) where demonstrate the need for the linear the added value of EU action is increasing trajectory for the period 2020- demonstrated and where subsidiarity and 2030 as well as the possible corrective proportionality principles are respected. measures under the governance framework This approach is similar to other EU-wide

measures impacting sectors covered by the ESR, such as CO2 emission standards for new cars and vans, or restrictions on fluorinated industrial gases.

As part of the investment requirements for the period 2020-2030, a number of trajectories have been examined. The assessment confirms that a clear profile of demand, across all technologies, would result in a consistent stream of investments, allow for industrialisation of the supply chain, continued cost reduction, whilst supporting jobs and growth in the renewables sector. Combined this also has

201

a positive impact on greenhouse gas emission reductions.

As regards trajectories, the Proposal does not establish any binding trajectories on Member States. The Governance Proposal establishes a need to define indicative Member States ambition levels including indicative trajectories that correspond to their national circumstances and preferences. Without being binding on Member States a linear EU-wide trajectory will help track progress towards the achievement of the EU-wide target.

Should corrective measures be needed to make sure the EU as whole achieves the target this would be done through the Energy Union Governance. Instead, the Proposal defines a set of balanced measures across the different sectors to allow Member States to deliver the target collectively and cost efficiently on the EU level target.

(D) Procedure and presentation

While the report is still very long, adding Acknowledged the abstract has improved the presentation of relevant information.

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A NNEX 2 - S TAKEHOLDER CONSULTATION

This public consultation was launched on 18 November 2015 and remained open until 10 February 2016. The Commission received in total 614 replies. 340 replies were sent by national and EU-wide associations, accounting for 58% of the replies. Out of these, 110 came from industry associations (18% of total replies) and 90 were submitted by the renewable energy industry (15%). Moreover, there were 186 replies directly from undertakings (30%). A total of 19 national governments and 22 regional or local authorities also participated in this consultation. To note the significant participation by individual citizens, energy cooperatives and NGOs.

The detailed assessment of the replies confirms broad consensus amongst respondents on a number of the elements put forward in the public consultation, including inter alia the need for a stable and predictable EU legal framework for renewables, the importance of defining complementary measures in the new directive to ensure the achievement of the at least 27 % binding target and the relevance of developing a market fit for renewables.

However, stakeholders are divided on other issues, such as on the geographical scope of support schemes and the exposure of renewables to market conditions (e.g. priority dispatch and balancing responsibilities).

• 1. 

  General framework for renewable energy policies

Ensuring stability, transparency and predictability for investors

Respondents from all stakeholder categories stress the need for a robust legal framework that can replace key features of the RES Directive, such as national binding targets which were considered crucial to achieve the 2020 objectives. Likewise, 73% of respondents consider that the current directive has been successful in helping to achieve the EU

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energy and climate objectives. Nevertheless, more than 90% 5 of respondents believe that

the renewable energy potential at local level is still underexploited.

When defining the future legislative framework for the period after 2020, several topics stand out as important for stakeholders, most notably:

• Strategic planning of renewable energy at national level required by the EU, which 95% of respondents from across all stakeholder categories consider as important/very important to improve investor confidence.

• Member States consulting on, and adopting, renewable energy strategies that serve as the agreed reference for national renewable energy policies and projects (93% of respondents consider it as important/very important).

• Yet, this measure should be completed by strong guidance from the EC (78% of respondents qualify it as important or very important) and rely on the best practices identified within the RES Directive (for 87% of respondents).

Stakeholders stress that retroactive changes to support schemes should be prevented. Other elements are identified as important to improve the stability of investments; these include the removal of administrative barriers, further market integration and a reinforced investment protection regime going beyond the Energy Charter Treaty. Several respondents also insist on the necessity to ensure a quick implementation of the 2030

Renewables Directive, well ahead of 2021, in order to give timely policy signals and an outlook to investors.

Regarding national energy and climate plans, more than 80 % of respondents support the different tentative elements suggested to be included in the plans. This includes inter alia renewable energy trajectories and policies up to 2050, specific technology relevant trajectories for renewable energy up to 2030 and measures to be taken for increasing flexibility of the energy system and for achieving market coupling and integration.

Complementary measures to achieve the at least 27 % binding EU renewable target

Having a robust legal framework enshrined in the Renewables Directive is considered key to achieving the at least 27% EU renewable energy target by 2030. The majority of respondents favour preventive measures to avoid a gap in target achievement, but also see a need for implementing corrective actions if this happens to be the case. Some stakeholders, such as Energy Regulators, highlight the need to ensure consistency of any complementary measures with national support schemes.

There is wide consensus amongst stakeholders around measures such as EU-level support to research, innovation and industrialisation of innovative renewable energy technologies

(for 91 % of respondents 6 ) and for EU-level financial support to renewable energy, such

as, for instance, a guarantee fund to support renewable projects (80 % of respondents are in favour).

Enhanced EU level regulatory measures are also supported by 72 % of respondents. Member States' respondents further believe that sharing best practices, information and updated guidelines would be useful to improve chances of target achievement.

5 Amongst those who have an opinion on the question itself

6 Amongst those who have an opinion on the question itself

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Respondents' support for other complementary measures is also high, reaching 67 % for EU-level requirements on market players to include a certain share of renewable energy, and 49 % for EU-level incentives such as an EU-wide or regional auction of renewable energy capacities.

Furthermore, all stakeholders touch on the need for enhanced infrastructure investments and highlight the importance of smart grids and storage systems.

Support schemes

Regarding the geographical scope of support schemes, there is a wide variety of opinions across the stakeholder community. While the preferred option by stakeholders (34 %) is a gradual alignment of national support schemes through common EU rules, there is some willingness (17 %) to move further and consider a progressive opening of national support schemes to energy producers in other Member States under some conditions such as, for instance, obligation of physical delivery of the electricity, or having a bilateral cooperation agreement in place. The reasons given to sustain this position generally lie on the fact that the natural conditions of the location in terms of abundancy of the resource (wind or sun) are only one element to be looked at to minimize the cost of deployment of renewable energy (e.g. grid issues, market development). As for Member

States, those generally believe that cross-border participation to support schemes should be on a voluntarily basis. Overall, the development of a concrete framework for cross border participation is generally welcomed.

Moving towards even further integration by introducing a EU-wide level support scheme, or a regional support scheme, is supported by 24 % and 12 % of the respondents respectively, while keeping national level support schemes that are only open to national renewable energy producers is the preferred option for 13 % of the respondents. Several respondents highlight some possible risks and political sensitivities associated with schemes entailing further integration, as those could imply citizens in one Member State having to contribute to renewables' development in another Member State.

Respondents largely consider that support mechanisms should encourage greater market responsiveness, resulting in gradually decreasing support levels as technologies become mature. Several respondents regard regional cooperation and consultation as a useful method to reduce differences and facilitate convergence amongst national support schemes.

• 2. 

  Empowering consumers

Self-consumption

There is a strong support for additional EU action for empowering energy consumers and local authorities. The vast majority of replies (84%) support stronger EU rules guaranteeing that consumers have the possibility to produce and store their own renewable heat and electricity and participate in all relevant energy markets in a nondiscriminatory and simple way, including through aggregators. Many respondents support increasing short-term market exposure for self-consumption systems, by valuing surplus electricity injected into the grid at the wholesale market price. However, a number of renewables' generators highlight that market-based support schemes are still needed for small-scale self-consumption systems during the transition towards a

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reformed market design. Several respondents support facilitated access to finance for local initiatives on renewable energy.

Moreover, the majority supports the introduction of clearer principles for ensuring that network tariffs support the transition to a more prosumer-centric system. While TSOs,

DSOs and some Member States support a strong capacity-related element in tariffs as it is considered more cost-reflective, cooperatives believe that volumetric tariffs are, instead, needed.

Information disclosure to consumers

An easily understandable Guarantees of Origin (GO) system is considered an important factor to drive market demand for renewable energy by enabling consumer choice. A large consensus between respondents exists on the fact that the GO system is a key tool of disclosure of energy sources to consumers and, with few exceptions, that it should be strengthened. In addition, there is support for the extension of GOs to all energy generation types (including information on carbon intensity) and its full operation acrossborders. Some opposing views between stakeholders exist as regards whether full disclosure should be mandatory or voluntary, and several stakeholders raise the problem of excessive administrative burden.

• 3. 

  Decarbonising the heating and cooling sector

There is an overwhelming consensus about the need to remove barriers hampering the deployment of renewable heating and cooling. A high number of respondents, including

Member States and renewable energy industry regard the absence of a functioning heat market as an important barrier. The vast majority of respondents see the lack of energy strategies and planning at the national and local levels (for 84% of stakeholders), the lack of targeted financial resources and financing instruments (for 80% of stakeholders) and the lack of electricity market design supporting demand response as very important, or important, barriers. Moreover, measures to enhance decentralised energy and selfconsumption and thermal storage in buildings and district systems is perceived as an appropriate (78% of respondents consider it important/very important). The majority of respondents is in favour of a mandatory minimum use of energy in nearly zero-energy buildings (67% of respondents consider this important/very important) and a renewable heating and cooling obligation (for 61% of respondents this is important/very important).

Various stakeholders mention the need for a strong alignment of the relevant European directives (i.e. the Energy Efficiency Directive, the Energy Performance of Buildings

Directive and the RES Directive).

• 4. 

  Adapting market design and removing barriers

Building a market fit for renewables

There is general consensus about the need to evolve towards a market fit for renewables along the lines outlined in the new Energy Market Design Consultative Communication.

Most stakeholders support the cross-border integration of short-term markets as a key tool to facilitate renewable energy generators to trade their imbalances. A high number of

respondents 7 consider either important or very important to have a fully harmonised gate

7 Amongst those who have an opinion on the question itself

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closure time for intraday markets across the EU (82%), lower thresholds for bid sizes (80 %), shorter trading intervals (77%) or regulatory measures to enable thermal and electrical storage (77%).

In addition, stakeholders identify as crucial to ensure the liquidity in these markets and guarantee the absence of price caps/exposure to market prices. Several stakeholders also highlight the necessity of equally addressing storage markets and demand side response.

Finally, the ETS improvement is a major priority for most of the stakeholders to further drive investments in renewable energy.

Balancing responsibilities, grid connexion and priority dispatch

Stakeholder views diverge with respect to the degree of exposure of renewable energy generation to market conditions.

As regards balancing responsibilities of generators, stakeholders reveal different positions: while 59 % of respondents consider that, in principle, everyone should have full balancing responsibilities, the remaining 41 % state that exemptions are still needed.

In the view of the latter, exemptions should remain in place until the maturity of shortterm markets can guarantee that renewable energy producers are not being discriminated.

An important number of stakeholders also emphasize that small-scale renewable energy installations and early demonstration projects should not be subject to balancing responsibilities.

Stronger EU rules to remove grid regulation and infrastructure barriers are considered

instrumental for renewable energy deployment. A high number of respondents 8 consider

it either important or very important to have stronger EU rules regarding the treatment of curtailment, including compensation rules (77%), transparent and foreseeable grid development (87%) and predictable and transparent connection procedures (89%), which are identified as even more important than strengthening rules on obligation/priority of connection for renewables.

As regards priority dispatch, 54 % of respondents consider that merit order dispatch is sufficient, while 46 % consider that some exemptions for renewables are still necessary given that markets are not mature. Key stakeholders such as Energy Regulators stress the need to keep priority access for renewables especially in case of network congestions while agreeing that dispatching on the basis of merit order is sufficient.

Administrative barriers

Simplifying administrative permitting procedures are perceived as an untapped potential for reducing costs of renewable energy technology roll-out. Stakeholders identified the creation of a one stop shop (i.e. a national single permitting authority) at national level as a centrepiece of simplified administrative procedures (for 79% of stakeholders).

Harmonising permitting procedures appears to be less of a priority for stakeholders even if still important. Amongst stakeholders, there is strong consensus that permitting procedures should be managed at national level.

8 Amongst those who have an opinion on the question itself

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As regards EU action on renewable energy training and certification, mutual recognition of certifications between Member States has been identified as the key priority by a majority of stakeholders (83%).

Public acceptance of renewables

The necessity of tabling measures to improve public acceptance of renewables was addressed by key stakeholders. Half of the respondents mention the importance of involving citizens and local communities in the development of renewable energy projects, also through awareness campaigns and public dialogue emphasising the contribution of renewables to achieving climate goals, energy security, and local growth.

Involving the general public through investments and co-ownership (e.g. cooperatives) is also widely mentioned as a driver to increase public acceptance alongside decreasing costs of renewable energy technology.

• 5. 

  Increase the renewable energy use in the transport sector

According to many respondents, the main barrier to increasing renewable energy in transport is the lack of a stable policy framework for after 2020, the long debate about biofuels, and the high price of electric vehicles. In order to promote the consumption of sustainable renewable fuels in the EU transport sector and increasing the uptake of electric vehicles, 80% of respondents consider increased incorporation obligations to be effective or very effective.

Further, a large majority regards a higher degree of harmonisation of the support mechanisms, or an obligation at EU level to be effective or very effective (81% and 75% of respondents, respectively). Targeted financial support for the deployment of innovative low-carbon technologies was considered to be effective, or very effective, for

77% of respondents.

Finally, the great majority of stakeholders (87%) show strong support to facilitating access to alternative fuel infrastructure, such as electric-vehicle charging points.

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A NNEX 3 - P ROBLEM D RIVERS M ATRIX

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• - 

  Uncertainty as to when new market design + ETS will provide sufficient investment signals

• - 

  Uncertainty over the post-2020 policy

framework for support schemes RES deployment not

Investor - Uncertainty around individual Member in line with 2050

uncertainty States' contributions to the EU level renewables target and future decarbonisation

governance needs

• - 

  Uncertainty regarding the sustainability rules applying to biofuels, including the role of food-based biofuels post-2020

• - 

  Uncertainty regarding the heating and

  cooling sector strategy RES target for 2030

  is not met

  • - 

    Projected contribution of heating and cooling and transport sector not in line with cost-effective decarbonisation path

• - 

  RES-E support not fully responsive to

Need to improve different technology potential and

cost-effectiveness maturity - RES-E support not fully responsive to

of renewables different potentials across Member

deployment States/regions Risk that heating and

• - 

  Differences in cost of capital, national cooling sector does

approaches to grid connection fees and not contribute to cost

administrative procedures undermine effective overall path

optimal RES-E allocation across EU

administrative procedures undermine & target achievement optimal E-RES allocation across EU Risk of fossil fuel lock

in - External costs of competing

technologies not properly internalised - Transition towards renewables can in

many occasions only be done at

Absence of sector/system level

functioning - No incentives for district heating RES deployment

markets systems to become more efficient and more costly than no access rights to the infrastructure for

necessary

new entrants (including RES) - Difficulty in deploying renewable fuels in

aviation and maritime

• - 

  Current RES Directive built on national targets and not optimised to ensure

collective RES target attainment

Need to update the - Lack of specific RES-transport target

policy framework post-2020 and uncertainty regarding EU could lose global future demand for alternative and RES leadership

renewable fuels - Variable climate performance of

conventional biofuels (due to ILUC)

• - 

  Risk that small scale investors are

Risk of loss of disadvantaged in market-based renewables support (tendering) and citizen-buy in Lack of public thus result in lower public acceptance during transition - Lack of consumer empowerment in the acceptance puts at

energy transition risk RES deployment

• - 

  Not all EU citizens allowed to selfgenerate and consume electricity

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