COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the Proposal for a Directive of the European Parliament and the Council amending Directive (EU) 2018/2001 of the European Parliament and of the Council, Regulation (EU) 2018/1999 of the European Parliament and of the Council and Directive 98/70/EC of the European Parliament and of the Council as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652

EN EN
EUROPEAN
COMMISSION
Brussels, 14.7.2021
SWD(2021) 621 final
PART 2/2
COMMISSION STAFF WORKING DOCUMENT
IMPACT ASSESSMENT REPORT
ANNEXES
Accompanying the
Proposal for a Directive of the European Parliament and of the Council
Directive (EU) 2018/2001 of the European Parliament and of the Council, Regulation
(EU) 2018/1999 of the European Parliament and of the Council and Directive 98/70/EC
of the European Parliament and of the Council as regards the promotion of energy from
renewable sources, and repealing Council Directive (EU) 2015/652
{COM(2021) 557 final} - {SEC(2021) 657 final} - {SWD(2021) 620 final} -
{SWD(2021) 622 final}
Europaudvalget 2021
KOM (2021) 0557 - SWD-dokument
Offentligt
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TABLE OF CONTENTS
ANNEX 1: PROCEDURAL INFORMATION.............................................................................................. 2
ANNEX 2: STAKEHOLDER CONSULTATION........................................................................................12
ANNEX 3: WHO IS AFFECTED AND HOW? ...........................................................................................81
ANNEX 4: ANALYTICAL METHODS ......................................................................................................87
ANNEX 5: 2030 CLIMATE TARGET PLAN POLICY CONCLUSIONS ...............................................123
ANNEX 6: DISCARDED OPTIONS..........................................................................................................126
ANNEX 7: DETAILED ASSESSMENT FOR HEATING AND COOLING ............................................131
ANNEX 8: OVERVIEW BIOMASS PLANS FROM NATIONAL ENERGY AND CLIMATE
PLANS...............................................................................................................................................168
ANNEX 9: BIOMASS AND BIOENERGY: ADDITIONAL INFORMATION .......................................172
ANNEX 10: CHANGES TO DIRECTIVE 98/70/EC................................................................................176
LIST OF TABLES.......................................................................................................................................187
LIST OF FIGURES.....................................................................................................................................187
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ANNEX 1: PROCEDURAL INFORMATION
Lead DG, DEcide Planning/CWP references
DG ENER, PLAN/2020/7536, 2021 Commission Work programme (under the
“European Green Deal” headline ambition and as part of the “Fit for 55” package).
Organisation and timing
The review of RED II was announced in the European Green Deal Communication in
December 2019.
An Inter Service Steering Group was established which involved the following DGs:
JUST, RTD, ENV, ECFIN, AGRI, SG, CNECT, TRADE, COMP, BUDG, LS, CLIMA,
DEFIS, DEVCO, EMPL, EEAS, ESTAT, IDEA, FISMA, GROW, JRC, MARE, MOVE,
REFORM, REGIO, SANTE and TAXUD. A total of 3 meetings were held, on 19
October 2020, 7 December 2020 and 2 March 2021.
Consultation of the RSB
Two “upstream” meetings were also held with the RSB. The first one, on 24 November,
was with DGs CLIMA, ENER and MOVE on the ‘Fit for 55’ package, to ensure
coherence. The second, on 12 January 2021, was specifically on the RED II and EED
revisions.
A draft Impact Assessment was submitted to the Regulatory Scrutiny Board (RSB) on 10
March 2021. Following the Board meeting on 14 April 2021, it issued a negative opinion
on 19 April 2021. After careful consideration and integration of the Board’s
recommendations in the first opinion, a second improved Impact Assessment has been
prepared and submitted on 28 April. After consideration of the resubmitted Impact
Assessment the Board issued a positive opinion with reservations on 28 May 2021.
The two Board’s recommendations of 19 April 2021 and 28 May 2021 have been
addressed as presented below in the final Impact Assessment.
RSB 1st Opinion of 19 April 2021
Recommended improvements and how they were addressed.
(1) The report should clearly define the scope of the initiative. It should specify how it
aligns with the greenhouse gas reduction targets of the Climate Law, and how it
follows or differs from the CTP modelling scenarios. On this basis, the report should
make clear what are the open policy choices that this impact assessment aims to
inform. The report should explain how the other ‘Fit for 55’ initiatives may affect the
scope, choices or impacts of this initiative.
 The Board’s recommendation is very relevant and allowed to clarify the scope of
this initiative and how it aligns and builds on CTP. To this effect, changes have
been included in Chapter 5.2. to improve the text. The key findings of CTP and
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how they were fine-tuned in the “Fit for 55” core scenarios are now explained in
Annex 4A. Chapters 1 to 6 where reviewed, clarifying and adding references to
how the proposed measures will contribute to the Climate Law objectives that
now enshrine the increased climate target for 2030.
 The general objective has been reviewed and now makes reference to CTP but
does no longer mention the explicit range for overall RES share as other ranges
are discussed too in Chapter 5.
 References to interrelations with other Fit for 55 initiatives were added in the
section on overall ambition (interlinkage with ESR, EED and ETS revision), in
the transport section (regarding ETS, ReFuel Aviation and Maritime) and in the
bioenergy sustainability section (interaction with LULUCF). A more thorough
assessment of interactions is presented in Annex 4.
 Changes have been included in both Chapter 6 and 7 (efficiency assessment) to
explain how core scenarios illustrate the possibility of relying more or less
strongly on regulatory instruments (notably supporting renewables uptake as
assessed in this IA).
(2) The report should present a much more thorough justification for proposing some
of the measures. In the absence of an evaluation, the report should provide evidence
supporting the identified problems, in particular as regards the insufficient energy
system integration and bioenergy sustainability criteria. The report should better
explain which problem drivers cannot be addressed by market based instruments (the
extension of the emissions trading system to transport and buildings and the Energy
Taxation Directive) and require further regulatory intervention at EU level.
 In order to address this important comment made by the Board, more clarity and
distinction were provided between (1) the areas of action that are considered as
essential and directly linked with the specific objectives (overall target, transport,
H&C, system integration, bioenergy) and (2) those that are “flanking and
enabling measures” (cross-border cooperation, offshore wind, industry – see
Section 5.3.4), through an overall restructuring of options. For further
improvement, a table explaining the new structure of policy options has been
included in Chapter 5;
 Furthermore, the structure of options proposed was clarified and simplified, by
deleting certain areas of action altogether (PPAs) and by streamlining the number
of options within areas of action while reflecting better the intervention logic by
checking the options against the problem definition and objectives;
 The key aspects of the Renewable Energy Directive today (Section 1.1) were also
included and highlighted, the general objective of the IA was clarified and the
interlinkages and the complementarity of the measures assessed with other
instruments, notably carbon pricing, were discussed in more detailed (Chapters 5
and 6).
(3) The report should clarify which measures are crucial to achieve the policy
objectives and which are only ‘nice to have’. Given that parallel initiatives also contain
measures regulating industry, transport and buildings, the report should better
substantiate the rationale for proposing additional measures and demonstrate that they
are needed to reach the objectives.
 The main options which are crucial to achieve the necessary contribution of RED
to the CTP ambitions are in the field of heating and cooling, district heating and
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transport, as well as to implement the key actions of the Energy System
Integration Strategy as well as the Biodiversity Strategy. They were separated
from “flanking and enabling measures” as explained in answer to point (2). While
keeping the same level of ambition, the new structure aims at facilitating the
reading by separating between crucial options and flanking and enabling
measures. As also mentioned under the replies under point (2) the structure of
options proposed was clarified and simplified by reducing the number of options
within areas of action and better clarifying the rationale for the remaining ones,
without sacrificing the comprehensive exposition of the options.
(4) The value added of some of the measures, specifically from the EU perspective,
needs to be better justified in the report. In particular, for measures relating to heating
and cooling that are by their nature deployed at a local level, subsidiarity
considerations need to be clarified. The report should also justify the need for
proposing menus of measures that are to be implemented by Member States.
 The above recommendation made by the Board led to re-work Chapters 3 and 7
in order to better describe the EU added value. Specifically in Section 3.3 it is
explained that by acting at EU-level in combination with action at Member State
level, barriers to public and private investments can be tackled more effectively.
Notably, addressing the lack of coordination between various bodies at national
level as well as improving administrative and technical capacity can incentivise
cost-optimal deployment of renewables at city and community level, where issues
such as heating, cooling and hot water use remain key and are not decarbonising
rapidly enough.
 The section 3.3 was also improved by better explaining that simply setting targets
at EU levels and leaving Member States complete freedom as to how to achieve
them would not be an effective way to achieve the agreed targets, as has been
recognised by the co-legislators when they agreed the specific measures in the
current REDII and the Governance Regulation. It also risks causing distortions to
the internal market, and would lead to a less effective preservation and
improvement of the environment, one of the specific aims of Article 194 TFEU.
All these measures, do not, however, impinge upon the important national
prerogatives such as the Member State's right to determine the conditions for
exploiting their energy resources, their choice between different energy
technologies and the general structure of their energy supply.
 Section 7.5 on subsidiarity and proportionality was completely reworked to
address the Board’s recommendation, by including the arguments in relation to
subsidiarity and EU added-value, across options. For H&C, the argumentation
was added about the paramount need to act in this sector as it will carry the
largest effort in terms of renewables deployment while keeping flexibility to
Member States. The link with Chapter 3 was also re-enforced.
 Section 7.5 concludes that the balance between obligations and the flexibility left
to the Member States on how to achieve the objectives is considered appropriate
in the light of what is needed for the increased climate ambition.
(5) The impact analysis for measures regulating bioenergy seems too narrow. The
report should analyse the effects on the bioenergy sector resulting from the increasing
demand for renewable energy sources and clarify assumptions, uncertainties and
potential risks. In particular, this relates to sectors that are difficult to electrify (e.g.
aviation and maritime transport). It should analyse to what extent the increased
5
demand for renewable energy could be satisfied from within the EU. The report should
clarify whether the proposed sustainability criteria for biomass and the increased use
of bioenergy (especially after 2030) are aligned to the Green Deal’s ‘do no harm’
principle, in particular for air pollution. It could be clearer on potential trade-offs with
the revised LULUCF, the EU’s biodiversity strategy and the bioenergy sector, and how
different interests are balanced.
 To address this critical recommendation, a number of important changes and
clarifications were introduced. The problem definition has been extended with
additional reference to the recent findings of the JRC report on woody biomass
for energy. As requested by the Board, the issue of air pollution is raised in
section 2.3 and in 6.7.2.
 The policy options have been clarified and linked to the political commitments
under the European Green Deal and the Biodiversity Strategy (and the associated
JRC report on woody biomass for energy). The section on future biomass demand
and supply has been significantly developed in particular in section 6.7.1 with
additional information on structure and development of demand (figure 32), and
highlighted the situation in Member States in the NECPs. More detailed
information on the administrative impact has been added in section 6.7.3.
 The section on the problem definition and key drivers has been further elaborated
to address air emissions associated to biomass combustion. In the section on the
assessment of the policy options, the discussion of potential trade-offs and
synergies with the revised LULUCF and EU Biodiversity strategy have been
further developed in the coherence section in 6.7.4 (specific box on interrelation
with LULUCF).
(6) The report should complete the analysis of impacts. Modelling results should be
complemented by a more thorough (qualitative or quantitative) assessment of the
considered individual measures, drawing on other available evidence. The report
should clarify who is affected and how. In particular, it should show how effects are
distributed across Member State. It should revise the presentation of the comparison of
options. It should always compare options against the baseline and adjust the scoring
accordingly. Options should be systematically compared to all assessment criteria,
based on the impact analysis.
Further quantitative assessment was included under assessment of the measures
wherever possible. Specifically, for heating and cooling (Sections 6.2.1.3) and
district heating and cooling (Section 6.2.2.3) more studies available from
literature were highlighted. In these sections, it was stressed that a coordinated
infrastructure planning with more involvement of local and regional authorities
could result in important economic savings and avoid issues of mis-planning and
resulting inefficiencies. This policy option provides an enabling tool for higher
ambition in renewable heating and cooling, and increases the effectiveness of
other measures – also the carbon pricing. It also enables coordination with the
Long-term Building Renovation Strategies (Article 2a of the revised EPBD) and
the Comprehensive Heating and Cooling Assessments (Article 14 of the EED and
Article 15(7) of REDII). For the MS, the operating cost would be limited to the
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administrative costs to develop such global framework and the cost of
pilot/demonstration projects1
 The analysis “who is affected and how” was included in Annex III.
 In revised Section 7.1, the effectiveness of the options was summarized for the
specific areas of intervention, including the scoring adjustments as requested by
the Board. In addition, dedicated sections were developed on Coherence (Section
7.3) and administrative and monitoring impacts (section 7.4) while discussing the
latter across Chapter 6 with more details specifically for H&C( Sections 6.2.1.4)
and DH&C(6.2.2.4) and in Annex 5.
 Impacts of certain options highlighted by the RSB, in particular bioenergy and
certification were strengthened. In Annex 8, a specific example on impact on
smaller installations producing electricity from woody biomass has been added.
 In some instances modelling results were used better, e.g. in Section 6.1.2.3
(distributional impacts) and in Section 6.6.1 as MIX-H2 scenario was fine-tuned
and thus more useful for discussion of policy options.
(7) Views of stakeholders, in particular the dissenting and minority views should be
better reflected throughout the report, including on the problem definition,
construction of options and the choice of the preferred option(s).
 Additional references to stakeholder views (stakeholder boxes) were added to
chapter 6 to reflect the Board’s recommendation, and the views of different
stakeholder groups were described in more detail, differentiating between
business / industry, NGOs, public authorities or other groups. In some cases
including in the section 5.6 on discarded options, a justification was added
justifying why stakeholder views supporting an option that was eventually
discarded were not considered.
(8) The report should improve the presentation of the estimated costs and benefits of
the preferred option(s) and include a more comprehensive overview in Annex 3. As far
as possible, the report should quantify the expected increase in administrative burden.
 Further quantitative analysis has been added, including on administrative costs in
Chapter 6. Annex 3 has been updated and the analysis from the REFIT table
moved under it.
(9) The methodological section (in the annex), including methods, key assumptions,
and baseline, should be harmonised as much as possible across all ‘Fit for 55’
initiatives. Key methodological elements and assumptions should be included concisely
in the main report under the baseline section and the introduction to the options. The
report should refer explicitly to uncertainties linked to the modelling. Where relevant,
the methodological presentation should be adapted to this specific initiative. In
particular, the report should clarify that the modelling results show the impact of the
assumed overall ambition level of measures, instead of the effect of the specifically
proposed measures.
1
Heat as a service project in Bristol example: ttps://es.catapult.org.uk/news/bristol-energy-is-first-uk-
supplier-to-trial-heat-as-a-service/
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 The methodological section (Annex 6) was harmonized with the methodology
document accompanying Fit-for-55 initiatives of DG CLIMA as already for
previous submission both texts had several items in common. The Annex is now
clearer in explaining the common methodological approach in modelling.
 The use of modelling results are explained better in Section 5.2.: policy options
on the level of targets are aligned with core scenario findings and core scenarios
show the impact of all “Fit for 55” initiatives combined. With respect to the latter,
the MIX-LD variant offers a possibility to isolate the impacts of revision of RED
only. The variant is discussed in Chapter 6.1.2 and well as in Chapter 7.2.
 Finally, Section 5.5 shows how variants are used for assessment of certain options
(notably MIX-H2 on RFNBOs promotion and MIX-GAP on Member States top
ups for RES H&C shares) and explains that some policy options analysed in this
impact assessment revolve around the type or way of implementation, and not the
level of ambition of regulatory measures. Implications on Member States RES
shares for the overall and H&C sector were also included in Table 12.
RSB 2nd
Opinion of 28 May 2021
1) The report should present a more thorough justification for proposing some of the
measures. It should better explain which problem drivers cannot be addressed by
market based instruments (e.g. the possible extension of the emissions trading system
to transport and buildings and the energy taxation Directive) and require specific
regulatory measures on renewable energy at EU level. It is not clear what problems the
‘flanking and enabling measures’ address. The problem description should be
completed to cover the issues that these measures aim to tackle.
 In order to address this relevant comment made by the Board, further
improvements under the problem drivers were made to highlight the need to
tackle non-market barriers in end use sectors complementing the action of carbon
pricing. The rationale for ‘flanking and enabling measures’ to support the cost-
effective achievement the overall renewable energy target in 2030 is also further
explained.
(2) The report should better justify why it is necessary to introduce lists of measures on
heating and cooling and on district heating and cooling, which are inherently national
or even local responsibilities. It should justify why it proposes to make it compulsory
for each Member State to introduce two of the measures for heating and cooling. The
report should clarify the status of the list of measures for district heating and cooling.
 This important consideration raised by the Board has been fully taken into
account. The text has been updated to reflect the possibility for Member States to
choose between an extended list of measures without any compulsory measures.
This would provide a tool box of measures and guidance in implementing the
heat transition with full flexibility at national level. The latest design fully
respects national and local diversities in conditions and starting points, and
provide a clear framework for actors at all levels (national, regional, local) and of
all types (from utilities and companies to municipalities to citizen
consumers/prosumers). In addition, the district heating elements were
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substantially improved not just on the current aspects of REDII in Chapter 1 but
in all sections across the document, specifically Chapters 5 and 6.
(3) The report does not sufficiently justify the addition of new options on electric
vehicle charging infrastructure. It should specify the problem these options aim to
address and explain why they cannot be tackled under parallel Fit for 55 initiatives,
notably the revisions of the alternative fuel infrastructure Directive and the energy
performance of buildings Directive. The assessment on this point needs to be
reinforced to better support the choice of preferred option.
 As recommended by the Board, the narrative and options on electric vehicle
charging have been improved throughout the impact assessment to highlight
better the problems and issues and how this revision, the AFID (Alternative fuel
infrastructure directive) and the energy performance of buildings directive fit
together in order to facilitate the electrification of the transport sector in the
context of a integrated energy system. The assessment of the options was also re-
enforced in all sections of the impact assessment to support the preferred option
in Chapter 8.
(4) The report does not sufficiently substantiate the lack of sustainability of bioenergy.
It should better use available evidence to demonstrate why the current sustainability
criteria are insufficient and possibly incoherent with the Biodiversity Strategy and the
Land Use, Land-Use Change and Forestry Regulation (LULUCF). The current
argument that the National Energy and Climate Plans (NECPs) do not sufficiently
assess the impacts on LULUCF sinks and biodiversity is not convincing, as the
modelling results show a substantial increase in demand for bioenergy only after 2030
(period not covered by the NECPs).
 The problem definition was revised to highlight the links with the Biodiversity
Strategy and LULUCF and in particular the requirement of the Biodiversity
Strategy to minimise the use of whole trees. The problem description was
extended to respond to the need to minimise the use of quality stemwood for
energy production. Additional arguments were added why a targeted
strengthening of the criteria, based on the improvements made by RED II in
2018, are necessary.
(5) The report should strengthen the analysis of impacts of the proposed measures on
air pollution, in particular those regarding the renewables target for transport and the
use of bioenergy. When analysing the environmental impact of the increased use of
bioenergy, the report should not only make the comparison with the current situation,
but also with other possible renewable energy sources. While the initiative focusses on
2030 targets, the report needs to discuss the coherence of the various measures with
the decarbonisation goal for 2050 and other long-term policies (e.g. zero pollution
action plan).
 Further references to the problem of air pollution were added in the section on
problem definition, including on drivers and on the evolution of the problem, and
in the chapter discussing the bioenergy options.
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(6) The report should present how measures have different impacts across Member
States.
 In order to address this important comment made by the Board, we disaggregated
further the impacts on Member States and included fuel expenditure and
electricity prices per (group of countries of) Member States. Furthermore key
Member States results of core scenarios such as RES-E and RES H&C were
included and will be further complemented in the form of technical report.
(7) While the comparison of options from the effectiveness angle has improved in the
revised report, the comparative assessment of efficiency, coherence and proportionality
is not presented in a straightforward way. The report should present all criteria in a
synthetic, tabular form that would allow a better comparison of the options against the
baseline. The comparison should be more specific and go beyond the aggregated
modelling results and beyond general statements on coherence or the level of
administrative burden.
 As suggested by the Board, in order to clarify further the options presented, the
comparison of effectiveness was expanded to include, efficiency, coherence and
proportionality in a consolidated manner. Furthermore, more clarifications were
included beyond modelling results and table was re-worked to include MIX-H2
and highlight further MIX-LD results. The coherence and level of administrative
burden sections in Section 6 were highlighted even further and cross-referenced
with Section 7 which summarizes the assessment in the previous Section.
(8) The report should transparently report on all stakeholder groups’ views (including
diverging ones) on critical issues (for example on sustainability criteria). It should
clearly explain how concerns have been taken into account.
 In particular in areas highlighted by the Board such as Heating & Cooling and the
biomass sustainability criteria, the analysis of the stakeholder views was further
fine tuned. In specific cases, references to stakeholder opinions were added in the
summarising chapters 7 and 9, including when the preferred option did not follow
the majority opinion by stakeholders. In the case of biomass, it should be
highlighted that the opinions brought forward in the OPC and expressed during
stakeholder consultations were very diverse.
(9) The narrative on subsidiarity is not sufficiently nuanced in the report. The
subsidiarity principle indicates that the EU may only intervene if it is able to act more
effectively than EU countries at their respective national or local levels. Therefore,
measures should be assessed from the point of view of being in conformity with the
principle rather than whether the subsidiarity is impacted or not.
 As the Board pointed out, the conformity with the subsidiarity principle has been
highlighted further in the relevant sections, such as (district) heating and cooling
when assessing the options especially on the measures at national or local levels
and also in section 7.5. As mentioned in point 2 above, the specific sections on
(district) heating and cooling were further improved throughout the whole text.
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(10) The report is far too long and should be shortened in a manner that ensures
effective information for policy makers.
 Further efforts were made to reduce the length of the document to keep the core
elements of the assessment in the main document text, with additional
information either shifted to the Annex or deleted if it did not provide clear added
value.
Evidence, sources and quality
A study was commissioned from external contractors Trinomics to provide technical
support for renewables policy development and implementation.
The impact assessment carried out for the CTP was also part of the analysis.
The Member States’ National Energy and Climate Plans and the Commission’s
assessment and the 2020 Renewable Energy Progress Report also formed part of the
evidence base.
In addition the following studies also fed into the impact assessment:
 Technical support for renewables policy development and implementation:
enhanced efficiency through sector integration
 Renewable Cooling under the Revised Renewable Energy Directive
 Renewable Space Heating under the Revised Renewable Energy Directive
 Policy support for heating and cooling decarbonisation
 Regulatory and market conditions of District Heating and Cooling
 Potentials and levels for the electrification of space heating in buildings
 Renewable Heating and Cooling Pathways, Measures and Milestones for the
implementation of the recast Renewable Energy Directive and full
decarbonisation by 2050
 Technical assistance to assess the potential of renewable liquid and gaseous
transport fuels of non-biological origin (RFNBOs) as well as recycled carbon
fuels (RCFs), to establish a methodology to determine the share of renewable
energy from RFNBOs as well as to develop a framework on additionality in the
transport sector
 Simplification of Permission and Administrative Procedures for RES Installations
 Establishing technical requirements & facilitating the standardisation process for
guarantees of origin on basis of Dir (EU) 2018/2001
 Technical assistance for assessing options to establish an EU-wide green label
with a view to promote the use of renewable energy coming from new
installations
 Assessment of the potential for new feedstocks for the production of advanced
biofuels (ENER C1 2019-412)
 Support for the implementation of the provisions on ILUC set out in the
Renewable Energy Directive N° ENER/C2/2018-462
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 The use of woody biomass for energy production in the EU (JRC report,
published in January 2021)
 Scoping study setting technical requirements and options for a Union Database
for tracing liquid and gaseous transport fuels
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ANNEX 2: STAKEHOLDER CONSULTATION
The Inception Impact Assessment (Roadmap) was published for feedback from 3 August
to 21 September 2020 and 374 replies were received. There were responses from
stakeholders from 21 Member States and 7 non-EU countries. Most responses came from
companies or business associations, followed by NGOs, anonymous and citizens. Most
responses came from Belgium (with a high share of European business associations
located in Brussels), followed by Germany and France. A vast majority of the
contributions reflected a positive attitude towards some type of revision of the Directive.
For transport, heating and cooling, and building sectors, respondents called for the
increase of shares of renewable energy sources with the development of specific targets
in each of those sectors. On bioenergy, a majority of respondents were opposed or called
for the limitation of the use of forest biomass as an energy source. Respondents insisted
also on the necessity of focusing on the development of renewable hydrogen technology.
The industrial sector called for the use of guarantees of origins to certify renewable
energy and low-carbon fuels. A more detailed report is set out below.
In addition, the Commission launched an online public consultation on 17 November
2020 for 12 weeks until 9 February, in line with the Commission Better Regulation rules.
It contains multiple choice and open questions covering a wide range of issues on the
revision of REDII. 39046 replies were received in total, although the vast majority of
replies consisted of a standard reply to a single question (section 3.7.3) on the types of
biomass permitted for bioenergy production, criticising the use of forest biomass. In
terms of the other replies, an analysis is presented below…
Stakeholder views were also gathered in two workshops, the first held on 11 December
with sessions on the role of renewables in 2030 on the way to a carbon-neutral economy,
heating and cooling, transport, industry, electricity, bioenergy and certification. The
workshop was attended by around 500 participants from various industries, trade
associations, lobby groups, as well as government institutions.
On Monday 22 March, DG ENER (Units C1 and C2) organised a second stakeholder
workshop in the context of the revision of the Renewable Energy Directive (2018/2011)
which gathered close to 1000 registered participants. Stakeholders were also consulted in
more specific fora such as the Gas Regulatory Forum (14-15 October 2020), expert
workshops on the decarbonisation of heating and cooling (26 November 2020 and 5
February 2021) and the Florence Electricity Forum (7 December 2020).
Consultations with the relevant sectoral social partners were held in a specific hearing on
the “Fit for 55” package held by EVP Timmermans and Commissioner Schmit on 1st
July 2021.
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Synthesis report: replies to the roadmap of the inception impact assessment on
EU renewable energy rules
The Commission consulted stakeholders on the inception impact assessment (Roadmap)
on the revision of Directive (EU) 2018/2001 on the promotion of the use of energy from
renewable sources via the have-your-say website from 03 August to 21 September 2020.
This consultation was open to the public.
The Roadmap had 374 replies, of which of which 220 came from companies or business
associations, 43 from NGOs, 39 were anonymous, 29 from citizens (25 from the EU, 4
non-EU), 12 from environmental organisations, 12 from public authorities (mainly
regional and local, only NL replied at ministerial level), 5 from academic & research
institutions, 1from a consumer organisation, 1 from a Trade Union, and 11 “other”. In
terms of where the replies were from, 102 came from Belgium, mainly due to the
presence of representation offices to the EU institutions in Brussels. Many replies also
came from Germany (49), France (30), The Netherlands (20), Italy (19) and Sweden (16).
A smaller proportion of replies came from other Member States such as Finland (10),
Spain (10), Poland (9), Denmark (6), Ireland (5), Croatia (3), Hungary (3), Portugal (3),
Slovakia (3), Czechia (2), Slovenia (2), Greece (1), Luxembourg (1) and Romania (1).
This consultation also gathered replies from non-EU countries such as the United
Kingdom (8), the United States (7), Norway (4), Canada (3), Brazil (2), Armenia (1) and
Indonesia (1).
Figure 46 - Overview stakeholder replies per sector
General
A vast majority of the contributions reflected a positive attitude towards the increase of
the climate ambition set in the European Green Deal and towards some type of revision
of the Directive. A small number of stakeholders pointed out the negative impact such an
early revision of the Directive could have for the stability of the regulatory framework
220
43
39
29
12
12
5 1
1 11
Companies or Business associations
NGOs
Anonymous
Citizens
Environemental organisations
Public authorities
Academic and research institutions
Consumer organisation
Trade Union
Other
14
and investor certainty. A few were concerned about the cost of raising the targets for
industry and consumers.
Almost a third of replies explicitly indicated that the revision should raise the EU
overall RES target. Fewer stakeholders had a position on whether national targets
should be binding or indicative, a majority of them supporting that they are binding. The
sectors most frequently mentioned as appropriate for revision were transport, bioenergy,
heating and cooling, buildings, certification of renewable and low carbon fuels, and
permitting procedures.
Many respondents mentioned other EU legislative initiatives, which showed an
awareness of the inter-connectedness of RES with other policies, such as the Energy
Efficiency Directive, the EU Emissions Trading System, the Fuel Quality Directive, the
Energy Taxation Directive, the Energy Performance of Building Directive, the
Renovation Wave and the circular economy strategy.
Transport sector
Biofuels, biogas, biomethane
NGOs & academia (15 contributions) tended to call for a stronger limitation of food and
feed crops used for biofuels, an increase of the GHG threshold to at least 70%, the
abolishing of all multipliers, the revision of Annex IX to exclude problematic
feedstock such as crude tall oil, pre-commercial thinnings, round wood, pulp wood and
tree stumps) and want only domestic Used Cooking Oil to be used for biofuels in the EU.
Businesses & associations in the biofuels sector (64 contributions) called for the
following list of measures: the increase of 14% transport target, the removal of the cap
on 1G biofuels, the revision of Annex IX only to add new feedstocks, the removal of
caps for all Annex IX feedstock, abolishing of double counting (although some voices
want double counting to be maintained), and articles 29 – 31 should not be changed.
Several companies (19 contributions) called for stronger support for biogas / bioLPG /
Dimethyl ether / biomethane in transport. Furthermore, some propose changes to Annex
VI to account for recent developments in the Anaerobic Digestion sector and the
introduction of a minimum target for renewable gas.
A few businesses and business associations called for the current set of rules to be
continued. The EV industry (5 contributions) called for electrification to be favoured
over biofuels (e.g. a minimum target for electrification of 3.5%) and an increase of the
transport target. The City of Stockholm supported the use of biofuels as a successful
strategy to reduce CO2
emissions from the transport sector.
Hydrogen, RFNBOs (synthetic (e-) fuels), low-carbon fuels & gas, recycled carbon
fuels, gas
NGOs & academia (9 contributions) called for the use of green hydrogen only where
electrification is not possible (e.g. maritime, aviation) due to the low energy efficiency of
the process compared to electrification. They insisted that hydrogen must only be
sourced from RES electricity and not from Steam Methane Reforming (blue hydrogen).
Furthermore, some called for recycled carbon fuels (RCF) to be excluded from the
transport target.
15
Businesses & associations (23 contributions) called for the following list of measures: the
removal of criteria in recital 902
as they are too restrictive, the establishment of
minimum quota for green hydrogen /e-fuels in transport (e.g. 3.5%), the same
treatment of synthetic fuels as electrification (same multipliers), the establishment of
sub-targets for synthetic fuels in different sectors (e.g. chemicals, steel), the
development of rules that support RCFs and counting of RCFs towards renewable
transport target (other voices are against this).
The Ministry of Transport of the State of Baden-Württemberg called for an increased
transport target and sectoral sub-targets for hydrogen and e-fuels. One recycling
company is concerned that RCFs might undermine EU recycling policy.
Maritime and aviation
Businesses and business associations (8 contributions) insisted that investments in R&D
are needed in the maritime and aviation sectors for successful decarbonisation.
Furthermore, they called for biofuels to be redirected to sectors that are difficult to
electrify such as maritime and aviation, for example through minimum shares or
multipliers for SAF / shipping fuels.
Bioenergy
Forest biomass
Several NGOs, academics and citizens (20 NGOs, 15 citizens, and 2 academic
institutions) are opposed to the use of forest biomass for energy, or called for its
limitation by arguing that it leads to the destruction of forests, release of CO2 and air
pollution. The measures they called for are: the restriction of the term “forest biomass”
eligible under the directive to residues and wastes, no use of round wood for energy
purposes, the exclusion of forest-derived biomass from REDII, correct, science-based
accounting of emissions from energy from forest biomass, and the reduction of
financial incentives and subsidies such as renewable support schemes, zero accounting
in ETS for forest biomass.
In contrast to NGOs and academic institutions, the IEA Bioenergy Technology
Collaboration Programme and its scientists had a more favourable view towards the use
of forest biomass for energy. They argued that energy from woody biomass can
contribute to climate change mitigation, as long as carbon stocks are maintained or
enhanced. Furthermore, they pointed to the importance of bioenergy with carbon
capture and storage (BECCS) negative emissions technology.
Businesses and business associations (22 contributions) representing forest owners, the
panel industry, the pellet industry and the power generation industry among others did
not want a revision of Articles 29 - 31 to ensure the predictability of legislation.
Furthermore, some called to implement the cascading use of wood principle.
2
Recital 90 outlines requirements such as temporal and geographical correlation between the electricity
production unit with which the producer has a bilateral renewables power purchase agreement and the fuel
production. It further explains that renewable fuels of non-biological origin cannot be counted as fully
renewable if they are produced when the contracted renewable generation unit is not generating electricity.
Finally, it explain the conditions when there is an electricity grid congestion and what should be
understood under additionality.
16
On the topic of forest biomass certification, one certification scheme (FSC) called for
bringing the certification of forest biomass for energy under RED II in line with its
work on certification.
Heating and cooling sector
A large number of stakeholders supported the review of RED II, also highlighting the
need to review the H&C articles, especially the RES H&C targets. Business
organisations pointed out the importance of implementation and the use of non-
legislative instruments.
Most stakeholders asked for a stronger H&C target of at least 50% share of RES by
2030 and called for a higher annual RES-H&C target of 3,1%. Stakeholders also called
for making the H&C target in Article 23 binding. Several gas industry stakeholders
called for quotas for green gas and renewable hydrogen and the inclusion of these new
renewable fuels in the accounting for the RES H&C sub-target.
Several stakeholder mentioned the importance of updating the target accounting for RES
H&C to include various renewable sources and fuels and waste heat, including for heat
pumps. They also pointed out the need to extend Article 4 on support schemes to H&C
overall or to specific technologies and fuels.
Several stakeholders called for prioritising district heating networks (DHC), together
with buildings, to increase the uptake of renewables in HC. Better accounting for the
DHC target and financial instruments are also called for. Stakeholders also called for
encouraging the development of heating networks for sector integration benefits and
flexibility.
Dedicated financial instruments are called for to support energy infrastructures carrying
renewable electricity and renewable heat to buildings and industry as well as regulatory
and financial support for sector integration.
Many stakeholders highlighted the importance of integrating waste heat better into the
REDII framework, and to enable the use of local waste heat, but did not call for a specific
waste heat target. Some of them argued that under Article 2(9) waste heat from any
sources should be included and equated with renewables. Stakeholders also called for
better supporting heat recovery from wastewater and sanitary hot water.
Several stakeholders highlighted the central role of thermal storage in facilitating the
expansion of renewable heating and cooling, sector integration, flexibility and
aggregation and called for financial and regulatory support for its integration into the
renewable framework.
Several stakeholder asked for a clarification of the definition of renewable energy in
Article 2 of REDII (inclusion of the heat content of waste water/sewage water, various
green gases, geothermal, lithium).
Many stakeholder demanded a stronger and more predictable framework for financial
support and instruments for renewable heating and cooling projects.
Many stakeholder mentioned the importance of sector integration, which to promote the
combination of RES power, RES gas and RES heat, using also thermal energy storage, a
solution well present, with low costs and with an enormous potential as an aggregator of
different solutions.
17
Several stakeholder call for the ban on fossil fuels and stress that the future role of
natural gas for heating must be clarified and general plan for climate friendly alternatives
established.
Several gas industry stakeholders argued for a stronger focus on renewable gases such
as biomethane, green hydrogen and synthetic gases.
Some stakeholders argued that it is important to use general market instruments, either
instead of tighter regulation or complementing this.
Industry stakeholders of bioenergy sector highlighted the importance of sustainable
biomass and biomass fuels in heating.
Hydrogen
A majority of stakeholders underlined the necessity of focusing on the development of
renewable hydrogen technologies. However, some stakeholders claimed that hydrogen
made from nuclear energy should be considered as clean hydrogen. A minority of
stakeholders mentioned that the revision should encourage equally all different types of
low-carbon gases, including blue hydrogen.
A majority of stakeholders asked for the appropriate policies to accelerate and scale-up
the deployment of hydrogen technologies. They pointed out the need to enhance cost
reductions for electrolysers and scale-up electrolyser production. They argued this can be
supported through public procurement policies, long term contracts and investment
support in the early phase. Some stakeholders specified the importance of energy system
integration in the framework of the development of RES with hydrogen.
Some stakeholders called for a dedicated support scheme that should incentivise
additional renewable electricity generation capacities to feed electrolysers that cover the
essential needs for RE hydrogen.
A majority of stakeholders favoured REDII and other relevant EU legislation having a
clear, consistent, and transparent European definition of renewable hydrogen across all
European policies and laws. One stakeholder called for strengthening this definition to
include only surplus renewable electricity, which would, in turn, require increased
investments in renewable electricity installations.
Some stakeholders pointed out that specific targets for renewable hydrogen should be
introduced in the transport and heating and cooling sectors. Among this group of
responses, a few stakeholders called for a minimum quota of 5% green hydrogen and E-
Fuels in the revision of the REDII use for industry. On the other side, a minority of
stakeholders specified that technology specific targets should be avoided.
Certification/ Guarantees of Origins
Many respondents from the industrial sector called for the use of guarantees of origins
(GOs) as the only tool to certify renewable energy and low carbon fuels that meet
appropriate sustainability requirements.
The majority of the views expressed can be classified into three main categories:
extending the GOs to other gases such as ammonia; extending GOs to all energy sources;
and abandoning GOs as a certification system.
18
When it comes to hydrogen, a large number of stakeholders were in favour of a dedicated
certification scheme that guarantees that all hydrogen used to contribute to the EU’s
renewable energy targets comes from surplus renewable electricity.
Buildings, Permitting procedures, Renewables self-consumers and
Renewable energy communities
There was a strong call to increase the share of RES in buildings, and some stakeholders
suggested specific targets (50% of RES share in buildings, ensuring that 40% of heating
is provided by heat pumps in 2030 and 70% in 2050).
A number of respondents called for a clarification of the definitions of renewable
energy communities (RECs) and citizen energy communities in the Internal Energy
Market Directive (IEMD) and more consistency among Member States.
Stakeholders were in favour of not reviewing the related legislation while supporting a
smooth and prompt transposition by Member States. In that sense, stakeholders were in
favour of a transposition into the primary legislation to make it more effective. It was
also recommended that Member States should properly assess barriers to self-
consumption and RECs. A business association proposed the introduction of targets for
the development of SCs and RECs.
Report of the Open Public Consultation
Executive Summary
The review of the Renewable Energy Directive 2018/2001/EU (RED II) is part of a wider review
process to align various directives to the ambition of the European Green Deal, where the
Commission proposed to increase the greenhouse gas reduction target of the EU from 40% to at
least 50%-55% by 2030, and to achieve climate-neutrality by 2050. The review of RED II
considers the interactions that it will have with other EU strategies, such as the Energy System
Integration and the Hydrogen Strategies, the Renovation Wave Strategy, the Offshore Renewable
Energy Strategy, and the EU Biodiversity Strategy for 2030.
As part of the open public consultation (OPC) process the European Commission launched a
questionnaire to collect views and suggestions from stakeholders and citizens concerning the
revision of the Directive 2018/2001 on the promotion of the use of energy from renewable
sources (REDII). The questionnaire, which consists of 54 closed questions and 42 open
questions, was uploaded on the EU Survey Platform at https://ec.europa.eu/info/law/better-
regulation/have-your-say/initiatives/12553-Revision-of-the-Renewable-Energy-Directive-EU-
2018-2001/public-consultation). The questionnaire was open for 12 weeks, from 17 November
2020 to 9 February 2021.
Key results
Participants
 The consultation attracted a total of 39,074 participants3
, the vast majority of which
responded in a personal capacity (38,404) while the remaining 670 represented an
3
The consultation initially received 39,046 submissions to the questionnaire. 6 responses were excluded
from the analysis because these organisations provided double submissions (one response is kept for each
19
organisation4
. Only four individuals stated they were not an EU citizen, while 54
organisations are not based in the EU;
 Among the organisations that participated in the questionnaire, the majority reported being
business associations and companies (a total of 71%) while NGOs and environmental
organisations represented 16% of the respondents;
 Concerning the participation of EU citizens, four countries (Spain, the Netherlands,
Germany, and Sweden) submitted over 40% of the responses received, while the UK and
the United States were the most represented non-EU countries;
 Central government or central agencies from 13 Member States participated in the survey:
Belgium, Czechia, Estonia, France, Germany, Italy, Latvia, Lithuania, Luxembourg,
Netherlands, Slovakia, Spain, and Sweden. Public Authorities at lower levels (regional and
municipal) from France, Germany, Netherlands, Spain and Sweden also replied, and a
further response arrived from the Norwegian Ministry of Petroleum and Energy;
 A large number of responses (38,313, 98%) came from a coordinated campaign that only
answered questions 9.3 and 9.3.1 (concerning whether limits to the feedstock for biomass
should be introduced, where participants from the campaign used an identical
reply). During the analysis additional smaller coordinated responses groups were identified.
Two further campaigns involved a total of 25 and 18 participants categorised as NGO and
environmental organisations. The analysis of open-ended questions also identified 141
businesses participating in 28 separate coordinated campaigns involving 3 participants or
more;
 Excluding the questions on biomass feedstock targeted by the large coordinated campaign,
the first four questions of the survey are the most answered closed questions, while the
open-ended questions with most answered is Q1.3.2, where participants were asked to
explain why they think certain parts of RED II should be amended.
First overview of results
 98% of participants state that renewable energy is either important or very important. The
result is consistent across all stakeholders groups.
 RED needs to be modified to be more ambitious and prescriptive. There is a clear support
for changes also among business organisations.
 Concerning what should change, the overall target and the target for transport are the two
answers with the most votes. Other popular answers are provisions concerning low-GHGs
fuels (sustainable low carbon fuels such as low-carbon hydrogen and synthetic fuels with
significantly reduced full life-cycle greenhouse gas emissions compared to existing
production), provisions to simplify procedures for developers and Guarantee
of Origin requirements,. The associated open questions (what else should change) received
many and broad answers. Emerging themes include the do-no-harm principle, the role of
bioenergy, and mixed messages concerning the role of low-carbon options.
 All groups indicated a preference for an increased RES target, with 80 % supporting a level
of the target of at least the level of the CTP (43% stating it should be in line with the CTP
while 37% saying it should be higher). All groups expressed a very strong preference (64%
or higher) for the target being binding at both EU and national level.
 Transport and H&C are the two sectors where additional efforts should be required, with
most stakeholders groups selecting either one or the other as their most popular choice.
 The majority of participants (86%) are in favour of an increase in the target for renewables
in transport, with 43% suggesting this should be more ambitious than the 2030 CTP, 34%
that it should be as ambitious as the CTP, and 9% that it should be less ambitious.
organisation). 9 questionnaire responses were added subsequently after they were submitted via email.
There were 34 additional contributions (without questionnaire) via email, 9 of which from participants that
had already submitted a questionnaire.
4
645 responded to the questionnaire and 25 provided additional contributions
20
 On H&C, the majority of participants indicate that the current indicative target of 1,3%
yearly increase of renewables in heating and cooling installations should increase
(67%) and that renewable electricity should be counted towards the target (79%). Overall,
participants slightly prefer a non-binding H&C target at MS level (51% to 49%), with wide
variation among categories.
 Overwhelming support for stricter biomass sustainability criteria is found with NGOs,
environmental organisations and individuals. T Coordinated by NGOs, 38.313 EU citizens,
with a similar reply to one question, highlighted the fact that a serious reform should occur
in EU bioenergy policies in order to not undermine climate, air quality, and biodiversity
objectives and the commitment to the Sustainable Development Goals.
 Not considering the contributions from the above campaign, participants think
sustainability criteria for the production of bioenergy from forest biomass should not be
modified by a small margin (56% no to 44% yes), with clear splits among different
categories.
Summary of results from Section I – General questions on the review
and possible revision of RED II
 EU citizens and all stakeholder groups are in favour of amending RED to be more
ambitious, prescriptive and biding, targeting better some sectors that are currently lagging
behind.
 The importance of renewable energy is clearly recognised (98% of participants state that
renewable energy is either important or very important). The result is consistent across
all stakeholders groups;
 RED needs to be modified to be more ambitious and prescriptive. There is a clear support
for changes also among business organisations. Regarding what to change, and not taking
into account the specific case of bioenergy, the overall target and the target for transport are
the two answers with the most votes on this specific question. Changes to the overall
target is the most popular answer across all groups except consumer organisations (which
expressed more often a preference for the transport target). Other popular answers to what
should be amended are: GO requirements, provisions concerning low-carbon fuels,
and provisions to simplify procedures for developers. The associated open questions (what
else should change) received many and broad answers. Emerging themes include
the exclusion or restriction of bioenergy, the do-no-harm principle, and mixed messages
concerning the role of low-carbon options;
 Transport and H&C are the two sectors where additional efforts are requested, with
most stakeholder groups selecting either one or the other as their most popular choice;
 All stakeholder groups indicated a preference for an increased overall RES target,
with 43% stating it should be in line with the CTP while 37% saying it should be
higher than the CTP. All groups expressed a very strong preference (64% or higher)
for the target being binding at both EU and national level.
Summary of results from Section II – Technical questions on
Transversal Energy System Integration Enablers
 Stakeholders opinion concerning energy system integration is less clear, with opposite
views arriving from different stakeholders groups and with the lack of neat preferences for
most of the various measures proposed to support better integration:
 Participants were asked to rate the importance of different measures to build a more
integrated energy system. Overall, all options proposed are considered
either important or very important, with RE in buildings scoring the highest (93%
combined) and biogas/biomethane the lowest (70% of participants rated it important or very
important). The energy efficiency principle should be reflected in RED by promoting the
use of waste heat and minimising energy transformation;
21
 Electrification of energy consumption would be better supported by investing in
transmission and distribution networks and by developing further interconnectors and
fostering digitalisation;
 Both individual and professional participants expressed the view that non-renewable low-
carbon fuels should not be promoted or should be promoted less. There is a mixed support
for encouraging the use of hydrogen and e-fuels produced from hydrogen. The more
popular single answer was that they should not be encouraged, but the majority
of participants are favourable to these with some limitations;
 Concerning the type of support measures for RES and low-carbon fuels, participants
expressed a preference for market based support schemes. Supply-side quotas (the least
popular answer) are still supported by the majority (57%) of respondents. Further answers
(with fairly neat majorities) indicate that Monitoring and certification systems should
ensure that GHG emissions are fully taken into considerations, GOs should be extended to
renewable fuels and low-carbon fuels and renewable hydrogen should be added to the
cooperation mechanisms;
 CCS should play a prominent role for industry and to generate negative emissions,
but participants are split 50/50 concerning whether RED should be revised to
encourage the uptake of CCS and CCU.
Summary of results from Section III - Technical questions on specific
sectors
Electricity
 Concerning measures to tackle the remaining barriers for the uptake of renewable
electricity, participants rated streamlining permitting procedures as the most appropriate
and urgent, with fostering regional cooperation as the second. Additional comments
suggested increased support for renewable energy communities and self-consumption and
demand-side management measures. The promotion of regional cooperation could instead
be promoted by strengthening connection infrastructure and removing barriers to
cooperation;
 In order to promote the use of private renewable power purchase agreements, removing
administrative/legal barriers is considered the more appropriate measure, followed by
financial solutions/instruments. Additional measures suggested include the use of existing
certification systems and the digitalisation of grid infrastructure;
 A clear majority of citizens and organisations (60%) think that all public authorities
should be obliged to buy green energy outright, and a further 24% think they should
be obliged but subject to some limitations.
Heating and cooling
 Participants indicate that the more appropriate option to increase the uptake or RES H&C
is the use of district heating integrating waste and renewable heat (94% indicated it is
either appropriate or very appropriate) and increase in energy efficiency (93%). Renewable
gas is the least chosen answer, but still attracted 71% of positive views. Other options
proposed included System-wide integration and harmonisation across energy carriers, and
promoting a broad portfolio of technological options;
 Overall, participants slightly prefer a non-binding H&C target at MS level (51% to 49%),
with wide variation among categories. However, the majority of participants indicate that
the target should increase (67%) and that renewable electricity should be counted towards
the target (79%);
 Environmental organisations and NGOs are the two groups clearly against making the
target mandatory, increasing it, or counting hydrogen and synthetic fuels towards the H&C
target (majority of 70% in each of the three questions). Although no explanation is
provided, from other answers is possible to assume that NGOs and environmental
organisations fear that higher and mandatory targets would incentivise further use of
biomass and synthetic fuels in heating and cooling;
22
 Participants expressed a mild preference for expanding the list of measures included in the
directive (54% yes to 46% no) and similarly (53% yes to 47% no) on making all or some
measures binding. The list of measures provided in the Directive should be expanded to
give priority to solar and geothermal energy, expand details on waste heat and encourage
climate-neutral and decentralised solutions;
 Participants are also divided concerning whether measures to increase the share of
renewables in heating and cooling should binding: no 47%, yes 28%, yes but only some
measures 26%;
 The measures more appropriate for increasing the share of renewable H&C are pricing
instruments, guidance and mandatory heat planning;
 Public authorities should be encouraged to identify renewable H&C potential by
strengthening the obligation in Art. 14 and Art 15 and by requiring mandatory long-
term strategies.
District heating and cooling
 Participants expressed a mild preference for a binding target for renewable energy in
district heating and cooling (53% yes to 47% no) and for increasing the current target (51%
yes to 49% no). Environmental organisations and NGOs are distinctly against both
propositions (only group of stakeholders expressing this preference), a similar view
expressed for the heating and cooling target, because of the effect such a target may have
on demand for biomass;
 A clear majority of respondents to the associated open question (level of increase to the
current district heating target) suggest an increase of 2 to 3 percentage points;
 The more appropriate measure to encourage the use of waste heat and cold by district
heating and cooling networks are the requirement to encourage cooperation between
industrial and service sector companies, and the requirement for authorities to prepare the
necessary plans. Further suggestions from stakeholders at this regard concern requiring
economic and technical feasibility, and no obligation to use waste heat;
 Participants expressed a clear preference for strengthening third party access (68%),
consistent across all groups. This is so to reduce the power of monopolies, increase
competition and efficiency;
 Participants also think that consumers rights would be strengthened by improved
information on energy performance and renewable share and increased price
transparency, while all measures proposed to support system integration are similarly
rated (between 92% and 94% of participants rated them as either appropriate or very
appropriate).
Buildings
 Participants think that Member States should require minimum RES share in new and
renovated buildings (78% overall in favour), and 37% suggest a RES share of 50% or
higher. Participants clarify in the associated open question that RED should introduce a
gradual approach with additional limitations;
 Participants ranked simplifying permitting and administrative procedures as the measure
that would be most appropriate to facilitate the phasing out of fossil fuels, followed
by strengthening consumer information and accessibility of measures;
 All measures proposed to improve the replacement of heating systems were rated
either appropriate or very appropriate, with combined approval ranging from 95% to
81%. Information campaigns is considered the most appropriate option.
Industry
 The majority of participants are in favour of a RES obligation for industry, either on
industry in general (55%) or to specific industries (12%). A substantial share (30% to 40%
of those who answered the associated open questions think that sectors already subject to
the EU-ETS should be excluded from the target and that obligations should be accompanied
by financial support;
23
 Measures more appropriate to encourage RES take up in industry are the simplification of
the permitting and administrative procedures, and minimum shares in the national building
stock, but all measures proposed are considered appropriate by at least 79% of participants.

Transport
 The majority of participants (86%) are in favour of an increase in the target for transport,
with 43% suggesting this should be more ambitious than the 2030 CTP, 34% that it should
be as ambitious as the CTP, and 9% that it should be less ambitious. NGOs and
environmental organisations are the only category where the most popular answer is no
increase to the transport target (with 33% of answers), mostly due to concerns with increase
in biofuel use that may be incentivised by a higher target. Common observations from
stakeholders concern the removal of multipliers and the focus on some modes of transport
such as road and aviation (both mentioned by around 25% of responses to the open
question);
 Participants think Member States should not count other low carbon fuels (such as low
carbon hydrogen) towards the target (45% yes to 55% no), but also think that these fuels
should be encouraged (79%). Among the types of low carbon fuels, the most chosen are
advanced biofuels and other fuels produced from biological waste and residues (293
responses) and renewable hydrogen and renewable synthetic fuels (292 responses).
Participants further elaborated on the types of renewables and low carbon fuels that should
be specifically promoted by referring also to electrification/batteries and suggesting the
exclusion of low-carbon fossil fuels as these would compromise RED;
 An obligation on fuel suppliers should promote liquid renewable fuels, renewable
electricity and gaseous renewable fuels, with relative disagreement between stakeholders
groups. In the associated open question (which types of renewable and low carbon fuels can
be best promoted by an obligation on fuel suppliers), renewable electricity is the option
with most mentions and the fuel obligation should be based on GHG emissions targets.
 An additional target would be the most appropriate to encourage the use of hydrogen and
hydrogen-derived synthetic fuels in transport, while renewables in general would be
encouraged by ensuring the availability and interoperability of public charging
infrastructure and the support to the installation of domestic chargers.
Bioenergy sustainability
 Bioenergy sustainability attracted strong views throughout the questionnaire in related
questions, and Q9.3 and Q9.3.1, on limits to the type of feedstock allowed, received 38,786
answers, of which 38,313 thorough a coordinated campaign5. The campaign chose not to
answer the other questions concerning bioenergy sustainability, but the sentiment towards
bioenergy is unambiguous;
 Participants think sustainability criteria for the production of bioenergy from forest biomass
should not be modified by a small margin (56% no to 44% yes), with clear splits among
different categories.6 Overwhelming support for stricter criteria is found
in NGOs/environmental organisations and individuals;
 A 50-50 split is instead found concerning the extension of criteria to installation below
20MW for solid biomass and 2 MW for biogas;
 The question whether there should be limits to the type of feedstock used for bioenergy
production under RED II was answered by 38,786 participants, with 99% stating that RED
should be changed to remove biomass from the list of renewable resources, limiting the use
for bioenergy to locally-available waste and residues, and that this should be accompanied
5
www.stopfakegreen.eu, a network of ca 130 environmental and other organisations, also active in the
public debate on taxonomy
6
It should be noted that this split does not take into account the coordinated replies mentioned above as the
campaign participants did not reply to this question.
24
by a moratorium or a cap on the total amount of solid biomass in electricity and heating, by
an accelerated phase-out of high ILUC risk fuels, and by the removal of incentives for
bioenergy;
 Excluding the responses provided through the coordinated campaign, most responses
provided on behalf of organisations still indicate that the criteria should be amended in
some other way. Businesses and others are the only categories with small majority for no
change (53% and 50%);
 The most popular answer to the question concerning the extension of GHG criteria was NO
(232 answers). A lower number of responses indicate that the threshold should be increased
(81), that the criteria should be extended to existing installations (72) or that other
limitations should be introduced. These additional limitations are suggested in the
associated open question, where participants predominantly suggested stricter GHG criteria.
However, often the message is about the appropriateness of the use of bioenergy in general,
and considering biogenic emissions rather than supply chain only.;
 Concerning whether the energy efficiency requirements should be made more stringent, the
majority of answers (186) are in favour of an amendment (indicating that it should be
extended to plants lower than 50MW (103 answers) or that the requirement should be
higher (83 answers)). The remaining 167 participants are contrary to a change to the
requirement.
Report of the 1st Stakeholder workshop 11 December 2020
Executive Summary
On 11 December 2020, the European Commission, DG Energy, held an online workshop
in the context of the work to revise Directive 2018/2001 on the promotion of the use of
energy from renewable sources. The revision aims to ensure that RES cost-effectively
and sustainably contribute to at least 55% GHG emissions reduction in 2030, in line with
the Climate Target Plan (CTP). This means reaching a 38% to 40% share of RES in
2030. The workshop was part of the wider consultation process on the revision of the
Directive, launched on 17 November 2020. The main consultation documents are
available online (at https://ec.europa.eu/info/law/better-regulation/have-your-
say/initiatives/12553-Revision-of-the-Renewable-Energy-Directive-EU-2018-
2001/public-consultation) and the consultation remains open until 9 February 2021.
The workshop agenda included 32 external speakers in seven sessions. Each session was
coordinated by an official from DG Energy, following a loose script previously agreed
with the contractor’s project team. The workshop also included an opening session from
Ditte Juul Jørgensen, Director-General, DG Energy and closing remarks from Paula
Abreu Marques, Head of Unit, Renewables and CCS Policy, DG Energy.
The event was organised with the support of Trinomics which provided technical and
content support to DG Energy. Over 699 people from over 250 different organisations
registered for the workshop. During the day of the workshop, 443 people connected via
the Zoom platform for an average of 4 hours and 10 minutes.
Overview of the event
The stakeholder meeting for the revision of Directive 2018/2001 on the promotion of the
use of energy from renewable sources (REDII) was held on the 11 December 2020 as
part of a wider consultation process. The process includes a questionnaire open to any
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individual and organisation (available online at https://ec.europa.eu/info/law/better-
regulation/have-your-say/initiatives/12553-Revision-of-the-Renewable-Energy-
Directive-EU-2018-2001/public-consultation) and a second stakeholder workshop, to be
held in spring 2021 (probably March tbc).
The workshop was organised by Trinomics as part of the contract ENER/ C1/2020-440
for Technical support for RES policy development and implementation: delivering on an
increased ambition through energy system integration.
Agenda
The workshop was organised in seven sessions, split between morning and afternoon. As
part of the agenda, Ditte Juul Jørgensen, Director-General at DG Energy, and Paula
Abreu Marques, Head of Unit for Renewables and CCS Policy, also from DG Energy,
provided introductory and concluding remarks, respectively.
The seven sessions covered the main areas of REDII, with session 1 providing the wider
context for the need of renewable energy to achieve EU climate objectives. Each session
was moderated by a DG Energy official responsible for the topic and gave ample space to
the contributions from the panellists. The format of the event was agreed so that it would
give maximum exposure to stakeholders’ opinions and foster a debate among them. The
event ran from 10.00 to 18.00, with a 1.15-hour lunch break.
Figure 47 - Agenda stakeholder workshop (morning)
Agenda item Moderator Panellists
10:00 Opening and
introduction
Ditte Juul Jørgensen, Director-General, DG Energy, European Commission
10:15 –
11:15
Session 1
The role of
renewables in 2030
on the way to a
carbon-neutral
economy
Paula Abreu
Marques, Head of
Unit for Renewables
and CCS Policy,
DG Energy,
European
Commission
 Dolf Gielen, Director, IRENA Innovation and Technology Centre
 Günter Hörmandinger, Deputy Executive Director, Agora Verkehrswende
 Philipp Offenberg, Program Manager, Europe at Breakthrough Energy
 Simone Mori, Head of Europe, Executive Vice President, Enel
11:15 –
12:15
Session 2
Renewable energy
in Heating and
Cooling, Buildings
and District Heating
Eva Hoos, Policy
officer, Renewables
and CCS policy, DG
Energy, European
Commission
 Brian Vad Mathiesen, Coordinator of Heat Roadmap Europe, Aalborg
University
 Andrej Jentsch, Operating Agent, IEA Technology Collaboration
Programme on District Heating and Cooling, including Combined Heat and
Power
 Patrik Pizinger, Mayor, City of Chodov, Czech Republic
 JP Prendergast, Chairman, Claremorris and Western District Energy Co-
Operative
 Philippe Dumas, Secretary General, EGEC
12:15 –
13:15
Session 3
Renewable energy
in transport
Bernd Kuepker,
Policy officer,
Renewables and
CCS policy, DG
Energy, European
Commission
 Paul Durrant, Head of End-use Sectors & Bioenergy, IRENA
 Geert Decock, Manager, Electricity and Energy, Transport & Environment
 Gloria Gaupmann, Chair of the Advanced Biofuels Coalition, & Head of
Public Affairs, Technology & Innovation, Clariant
 Simon Bergulf, Director of regulatory affairs, Maersk
 Maarten Van Haute, Alternative Fuels Officer, Q8
BREAK (1hr 15min)
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Figure 48 - Agenda stakeholder workshop (afternoon)
Agenda item Moderator Panellists
14:30 –
15:15
Session 4
Renewables in
industry
Ruud Kempener,
Policy officer,
Renewables and
CCS policy, DG
Energy, European
Commission
 Martin Porter, Executive Chair, CISL Brussels
 Peter Botschek, Director of Climate Change and Energy, CEFIC
 Aurelie Beauvais, Deputy CEO and Policy Director, SolarPower Europe
 Mikael Nordlander, Head of R&D portfolio Industry Decarbonisation,
Vattenfall AB
15:15 –
16:00
Session 5
Measures for a
further uptake of
renewables in
electricity
Antonio Lopez-
Nicolas, Deputy
Head of Unit,
Renewables and
CCS policy, DG
Energy, European
Commission
 Bruno De Wachter, Convenor, Working Group Market Design and RES of
ENTSO-E Market Committee
 Giles Dickson, Chief Executive Officer, WindEurope
 Dirk Vansintjan, President of the European federation of citizen energy
cooperatives, REScoop
 Hélène Lavray, Senior Advisor - Renewables & Environment, Energy
Policy, Climate & Sustainability - 2030 Framework Lead, Eurelectric
16:00 –
16:45
Session 6
Bioenergy
sustainability
Giulio Volpi,
Policy officer,
Renewables and
CCS policy, DG
Energy, European
Commission
 Uwe Fritsche, Task Leader of IEA Bioenergy Task: Deployment of
biobased value chains, IINAS
 Robert Matthews, Programme Group Manager, Forest Research
 Linde Zuidema, Forest and Climate Campaigner, Fern
 Jean-Marc Jossart, Secretary General, Bioenergy Europe
 Lotta Heikkonen, Forest Policy Advisor, Confederation of European Forest
Owners
16:45 –
17.30
Session 7
A European system
for certification of
renewable and low-
carbon fuels,
including hydrogen
Galin Gentchev,
Policy officer,
Renewables and
CCS policy, DG
Energy, European
Commission
 Jorgo Chatzimarkakis, Secretary General, Hydrogen Europe
 Peter Styles, Executive Vice Chair, EFET Board
 Sascha Wüstenhöfer, System Manager, ISCC International Sustainability
and Carbon Certification
 Javier Castro, Business Development Carbon Management Service, TÜV
SÜD Industrie Service
 Sacha Alberici, Managing Consultant, Guidehouse
17:30 Concluding
remarks
Paula Abreu Marques, Head of Unit, Renewables and CCS Policy, DG Energy, European
Commission
Attendance
A total of 699 people registered for the event via the link provided and by sending a request via
email. Of these, the total number of attendees was 495, of which 52 were moderators, panellists,
and project team members. The remaining 443 participants were public audience. The attendance
rate (share of registered people that connected to the workshop on the day compared to the total
number of registrations) is 74%. On average, each attendee stayed logged in for 4 hours and 10
minutes, with several participants logging in and out multiple times.
The figure below shows the number of active connections throughout the day of the workshop.
The dip in the graph between 13:25 to 14:45 is the break period. Generally, attendance was
higher in the morning session than in the afternoon session and peaked at just under 350
participants.
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Figure 49 - Number of active connections
Most of the workshop participants were from within the EU, with the majority connecting from
Belgium, followed by Germany, France, and The Netherlands. The high number of connections
from Belgium reflects the number of lobby groups based in Brussels (bearing in mind this
analysis excludes attendees registered with a @ec.europe.eu domain). Non-EU countries, such as
the United Kingdom, United States of America and Others are highlighted in yellow and orange
in the figure below
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Figure 50 - Location of participants (excluding participants from European Commission)
Member States Third countries Remaining locations with less than 4
attendees
About half of the participants of the workshop came from various industries, trade associations,
lobby groups (26%), as well as government institutions (22%), which includes officers from the
European Commission. A large group of stakeholders came from private companies (14%),
which was followed by Transmission and Distribution System Operators (10%), science, research
and consulting companies (9%) and NGOs (1%). Furthermore, 18% of stakeholders fell under the
category of “other”, this category encompasses stakeholders such us publicly-owned companies,
utilities, private individuals and other stakeholders which did not clearly fall under any of the
other categories.
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Figure 51 - Affiliation of participants (including participants from European Commission)
Among the 100 attendees classified as belonging to governmental organisations (central
government and other governmental bodies, excluding EU institutions but including the
permanent representation in Brussels), the countries with the most representatives were France
and the Netherlands. No representatives attended from the governments of Bulgaria, Italy,
Lithuania, Cyprus, Denmark, Malta, Romania, and Sweden.
Figure 52 - Government representatives by country (excluding participants from European Commission)
30
Polls
A total of 12 polls were launched during the workshop, one or more per session except for
Session 3 (based on the deliberate design of the session). The participants were given about 1
minute for each question to submit their responses. The results of the polls are presented below.
Session 1 The role of renewables in 2030 on the way to a carbon-
neutral economy
Figure 53 - In which sectors do you think additional efforts to increase the use of renewable energy are most needed
for a potentially higher renewables target for 2030? (n=215, multiple answers possible)
As shown in the figure above, the top three sectors where additional efforts are required to meet a
potentially higher renewables target for 2030 are:
 Transport sector (123 votes)
 Heating and cooling (116 votes)
 Buildings (86 votes)
These are followed by: industry (82 votes), electricity (77 votes) and district heating and cooling
(56 votes). The sector with the lowest number of votes was services including ITC (with 19
votes).
Figure 54 - Should the overall renewable target be binding at EU level or at national level? (n=195)
31
The figure shows that most of the respondents think that the overall renewable target should be
binding at both the national levels, as well as the EU level (128 votes, 66% out of 195 votes).
The answer with the second highest number of votes was “only at EU level”. Only 3% of
respondents think that the renewable targets should not be binding.
Session 2 Renewable energy in Heating and Cooling, Buildings and
District Heating
Figure 55 - Should the current indicative target of 1.3 pp (or 1.1 pp, if waste heat and cold is not used), annual
average increase of renewable energy in heating and cooling set for the period of 2021-2030 in Article 23 become a
binding target for Member State
Most of the respondents (85 votes, 75% out of 114 votes) think that the current indicative target
of achieving a 1.3 ppt annual average increase in renewable energy in heating and cooling set for
the period of 2021-2030 in Article 23 should become a binding target for Member States.
Session 4 Renewables in industry
Figure 56 - Do you think there should be an obligation on certain industrial sectors to use a minimum amount of
renewable energy? (n=93)
32
Most respondents (43 votes, 47% of 93 votes) think that there should be an obligation on the
industry sector in general to use a minimum amount of renewable energy. This answer was
followed by 28% of respondents that specific industry sectors should have that obligation.
Whereas 13% of respondents thought that such obligations should be voluntary, 12% thought
there such be no such obligations.
Figure 57 - Which of the following additional measures to encourage the use of renewable energy in industry do you
find appropriate? (n=78, multiple selection possible)
The three most voted additional measures to encourage the use of renewable energy in industry
are:
 Simplified permitting and administrative (39 votes)
 Support for corporate sourcing of renewables, including for on-site and near
site generation as well as corporate renewable power purchase agreements
(37 votes)
 Contracts for difference for zero-carbon products and services (32 votes)
Session 5 Measures for a further uptake of renewables in electricity
Figure 58 - Which of the following measures do you consider the most appropriate in tackling the remaining barriers
for the uptake of renewable electricity that matches the expected growth in demand for end-use sectors? (n=81)
33
The measures voted as the most appropriate approach to tackle the remaining barriers for the
uptake of renewable electricity that matches the expected growth in demand for end-use sectors
are:
 Further streamline permitting procedures (29 votes)
 Further support the uptake of energy communities and self-consumption (16
votes)
 Further support the uptake of private renewable PPAs (13 votes)
Session 6 Bioenergy sustainability
Figure 59 - Do you think the REDII sustainability criteria for bioenergy should be modified? (n=96)
The majority of respondents (54 votes—57% of 96 votes) think that the REDII sustainability
criteria for bioenergy should not be modified. 22% of the respondents think that they should be
modified, and that the existing land criteria for agriculture biomass should also apply to forest
biomass. 20 respondents think that they should be modified, and that the risk-based approach
should be replaced by mandatory Sustainable Forest Management (SFM) certification.
34
Figure 60 - Do you think the REDII sustainability criteria for forest biomass should be modified? (n=100)
Most respondents (53 votes—53% out of 100 votes) think that the REDII sustainable criteria for
forest biomass should not be modified. On the contrary, 33 respondents think that they should
be made stricter, while 14 respondents think that the criteria should apply to heat and power
installations below 20MW.
Figure 61 - Do you think that the use of certain bioenergy feedstock should be limited under REDII? (n=97)
The majority of the respondents (64 votes—66% of 97 votes) think that the use of certain
bioenergy feedstock should not be limited, as long as the REDII sustainability criteria are
followed.
35
Figure 62 - Do you think that REDII criteria on GHG emission savings and bioelectricity efficiency should be
modified? (n=83)
Most respondents (52 votes—62% of 83 votes) think that the REDII criteria on GHG emission
savings and bioelectricity efficiency should not be modified. 38% of the respondents (31 votes)
think that the criteria should be made stricter.
Session 7 A European system for certification of renewable and low-
carbon fuels, including hydrogen
Figure 63 - Is the RED II certification scheme appropriate to address sustainability issues, ensuring traceability, and
accounting for the different targets (global renewable and sector targets, as in transport under Article 25)? (n=85)
38% of the respondents (32 votes) think that the REDII certification scheme should be properly
extended to all emerging fuels (RFNBOs, low-carbon fuels). 23% of the respondents (20
votes) think that GOs should become the only verification of a compliance system, and 21% (18
votes) think that the scope should be extended to all sectors, beyond transport. 18% of the
respondents (15 votes) think that the current certification fits its purpose.
36
Figure 64 - For which renewable and low-carbon fuels would the Union Database be the appropriate tool? (n=68)
44% of the respondents (30 votes) think that the Union Database would be the appropriate tool
for electricity, gases, and liquids, followed by liquids and gases (19 votes—28% of 68 votes). A
quarter of the respondents (17 votes) think that GOs would be a more suitable tool instead.
Summary of the sessions
The workshop was started by the opening address of DG Ditte Juul Jørgensen, DG Energy,
European Commission. In her remarks, DG Juul Jørgensen referred to the positive outcome that
the European Council achieved in the evening of 10 December 2020, by reaching the agreement
on the 2030 climate target of 55%, on the multi-annual financial framework and on the EU
Recovery and Resilience Facility.
With an ambitious target set for 2030, and a clear policy objective established, the EU has now
set a strong foundation for the ongoing work on the revision of the Renewables Directive, so that
it can help the EU achieve its climate goals. The EU has been able to decouple economic growth
and GHG emissions, as a result of the efforts across the different levels of society, from local
communities to businesses and various organisations. About 20% of energy comes from
renewable sources today, and renewable sources deliver one third of EU electricity. This shows
that the EU power systems can cope with high levels of variability that comes with a higher share
of renewables.
The current RED was adopted in 2018, to be implemented by Member States no later than June
2021, and set a binding target of 32% across the EU. It sets out measures for different sectors,
and sets indicative targets in the transport, heating, and cooling sector. Collective commitments
are likely to achieve 33.1%-33.7% of renewable share as part of the overall energy consumption
in 2030. However, this will not be enough to mitigate climate change, and to reach the increased
ambition of at least 55% reduction of GHG by 2030.DG Energy is working with other DGs in the
European Commission to implement the Green Deal by reviewing a long list of directives. Shares
of renewables in final energy consumption should amount to 38% to 40% in 2030 in order to
reach the revised climate targets. Decarbonising the transport sector is a key challenge and there
is no single solution. Nonetheless, the Sustainable Mobility Strategy was approved earlier the
37
week, and the Renewable Energy Directive will provide a strengthened framework. Heating and
cooling accounts for 50% of our energy consumption, and three quarters of the energy used
comes from carbon sources. An increase of the renewable share in Heating and Cooling would be
important to help the EU meet its climate targets. Hydrogen and system integration strategies are
also important to help decarbonise the hard-to-abate sectors which are currently carbon intensive.
The Renewable Energy Directive is expected to bring positive value to the EU, providing quality
green energy jobs, reducing energy imports, reducing costs for household and business
consumers, and improving the health and benefits of EU residents.
Session 1 The role of renewables in 2030 on the way to a carbon-neutral
economy
Table 28 - Details of Session 1
Time Moderator Panel
10:15 –11:15 Paula Abreu Marques,
Head of Unit for Renewables
and CCS Policy, DG
Energy, European
Commission
 Dolf Gielen, Director, IRENA Innovation
and Technology Centre
 Günter Hörmandinger, Deputy Executive
Director, Agora Verkehrswende
 Philipp Offenberg, Program Manager,
Europe at Breakthrough Energy
 Simone Mori, Head of Europe, Executive
Vice President, Enel
Position of each panellist
Dolf Gielen, Director, IRENA Innovation and Technology Centre
o The increased ambition level in the GHG reduction target is important and gives
a global signal. The existing RES and EE targets are still quite recent. According
to IRENA’s calculation these targets would yield 45 to 46% emissions reduction.
It is an increase now from that level to 55%, which means that there is a revision
of targets needed for RES and particularly for EE. The NECPs show the
countries ambitions and the aggregated commitment is higher than the EU’s RES
target. However, on EE there is a shortfall. There is a bit of interaction between
RES and the EE target. So, it is important to also work more on EE.
o There has been positive development on renewable power, e.g., around Offshore
Wind. But it is also important to work not only on generation but also on the
flexibility (enabling grids, smart grids, more demand side flexibility). A mix of
technology, marketing & regulation measures, operating practices will be
needed.
o Regarding the electrification of end-use sectors: electromobility is moving faster
in transport than previously estimated. There is a lot of attention for cars but
electrifying commercial vehicles also deserves (more) attention.
o Investments in EE of buildings need to increase. It is important to work on the
efficiency so as to not install RES in buildings that are not energy efficient.
o Hydrogen and green commodities in general also need more attention. Need
dedicated policies for renewables to put the energy transition on track.
Günter Hörmandinger, Deputy Executive Director, Agora Verkehrswende
o Usually, someone interested in transport, only paid attention to the transport-side
view of the RED. Recently electrification is coming along more quickly than
expected. Instead of looking at transport-specific energy carriers, now we also
look at electricity, which is a commodity for the whole economy.
o Before combustion was the “thing”, now we see a transition starting to happen.
o If transport becomes a really large consumer of electricity, would it be more
useful to focus on electricity as such?
38
o What will happen to the combustion engine? We get clear signals from the car
industry that they cannot pursue two technologies in the future (production
lines). Until 2030 the majority of cars on the road will still be combustion
engines. In perspective – the newest cars drive the most. The transition in the
consumption of the fleet will change faster than the actual fleet will indicate.
o With regard to the increased level of ambition: this is not a pathway to lose
economically but the contrary. This is a way to stay at the forefront of the
technology development. Will Europe be the buyer? Or the developer of the
technology?
Philip Offenberg, Program Manager, Europe at Breakthrough Energy
o Breakthrough Energy mission is to speed up the energy transition, focused on
energy technology and innovation. 3 main challenges on the road to 2030:
1. Quick rollout of existing technologies. An important discussion we
should have is that land is a limiting factor. We need innovation to create
more efficient technologies (both for more generation, but also for less
space needed).
2. Innovation, we need to deploy more innovative technologies quickly. EU
has programmes to push innovation, e.g., Horizon framework,
Innovation Fund. The RED could create a demand pull for EU major
energy technologies. Why don’t we propose that a portion of this
percentage should be reserved for innovative technologies? Or think of
creating a fund that targets innovative technologies.
3. Global cleantech race – “race to the top” – between China, the new US
administration and Europe.
Simone Mori, Head of Europe, Executive Vice President, Enel
o We strongly support this new more ambitious target. Because we are convinced
that there is a room for investment, for decarbonising, especially with electrical
renewables. We have the evidence that there is a way to decarbonise electricity
in a very cost-efficient way. What should we do in Europe in order to achieve the
target?
o The new target implies more than doubling the number of electrical renewables
installed in Europe in the next 10 years. This means increasing the rate of
investment in RES by 50% versus the last year. We have the technology, the
finance, and the big players, however investments are not delivering at the level
that would be expected. There are not enough projects to fulfil the demand in the
planned tenders, there is a clear bottleneck in the tender procedure. Current
Article 16 of RED is not enough. It is important to increase the enforcement of
the Governance, we need more coherence, a more top-down European model.
We understand that there is a problem of battle of power (EU, MS, local
decisions). But this is clearly the number 1 constraint to achieve a fast and cost-
effective decarbonisation.
o We need to reinforce harmonisation and integration of the European Market. We
support the creation of Pan-European or macro-regional tenders. Putting together
the different markets to create a real Pan-European market ground would be very
important to improve the investibility of the sector.
o The market: The European power market is based on the rules that were created
20 years ago, and in a market that was completely different: a short-term market
based on the marginal costs of plants. Now, according to the new targets there
will be the majority of power generation based on zero marginal cost production.
We need a new thinking injected in this segment, to update the market to these
new technologies.
o It is also important to bring decarbonised cheap electricity to the customers and
sectors which are not utilising it today, especially in the transport sector. To
39
create a mechanism to quickly decarbonise the sector/kickstart the market in the
earlier years.
o To be avoided: fragmentation of the support schemes. This prevents the market
to work properly.
Session 2 Renewable energy in Heating and Cooling, Buildings and District
Heating
Table 29 - Details of Session 2
Time Moderator Panel
11:15 –12:15 Eva Hoos, Policy officer,
Renewables and CCS
policy, DG Energy,
European Commission
 Brian Vad Mathiesen, Coordinator of Heat
Roadmap Europe, Aalborg University
 Andrej Jentsch, Operating Agent, IEA
Technology Collaboration Programme on District
Heating and Cooling, including Combined Heat
and Power
 Patrik Pizinger, Mayor, City of Chodov, Czech
Republic
 JP Prendergast, Chairman, Claremorris and
Western District Energy Co-Operative
 Philippe Dumas, Secretary General, EGEC
Position of each panellists
Brian Vad Mathiesen, Coordinator of Heat Roadmap Europe, Aalborg University
o EE costs (?)may become very high for building; we may need to decarbonise
another way. Target at a more system-wide level (not suitable at building level),
RES is part of the energy system. Such(building-specific) target could become
very expensive (and miss the level of heat needed);
o Have an integrated planning measure (EU/national/local). Buildings that have a
neighbour can sometimes work together (otherwise individual HP), then DHC.
EU/national planning procedure enabling local municipalities to deploy the
required infra. The local level is key, understand the main problems (factors),
and gather initiatives. Allow using waste heat (including “black energy” -> waste
energy from fossil fuels), and other RES (like geothermal, solar thermal, bio);
o DHS as infrastructure, not as final energy demand, … offers many evolving
opportunities;
o Energy system integration, HP helps electrification, but it would not be efficient
through individual systems. It would be more efficient to decarbonise at DHC
level than at individual. Allow also to store energy (heat).
Dr Andrej Jentsch, Operating Agent, IEA Technology Collaboration Programme on DHC, including
CHP
o Important to have the right metric: carbon neutrality (rather than renewability)
now (rather than in the future, analogy of a cut tree). Need to revise the
methodology to determine the emission, to make it accurate with the most recent
scientific findings. Take scientific knowledge, to define the goal;
o Increasing of RES is possible, large deployment of DHC
o Good playing field for economic and regulatory deployment of DHC
Patrik Pizinger, Mayor, City of Chodov, Czech Republic
o Strong role for DHC, for Chodov the main driver was to phase out from coal
(DHC exists since ’70). DHC only option in such city, with many (3,000) flats;
o Local authority’s role is to deploy and make it more efficient (no other choice
than DHC);
40
o DHC should be an attractive choice for users (alternative is natural gas). But
Chodov wanted to take green choices; Need to find the right source of heat.
o National and EU levels need to be involved, should support to increase the
efficiency of existing infrastructure (currently 20% in losses);
o Increasing carbon footprint (incl. EE) of existing infrastructure is a no-regret
option
o Secure DHC needs support, EU, national and local. EU should provide support
to local authorities with advice for taking right technology choices and
financially for infrastructure upgrade
JP Prendergast, Chairman, Claremorris and Western District Energy Co-Operative
o Answer from the perspective of a community (aim at 100% RES), number
increases exponentially
o Community allows empower other communities, key players have an important
role, especially as it pertains to implementing policies (rural and urban);
o Waste-heat use in cities, Bioeconomy, zero-waste economy, especially relevant
for the rural communities. Integrated with local resources extracting value,
community focus generating energy for DHC;
o Planning, acceptance … streamlined fashion. Not effective at the moment,
should change the communication. Lack of training. We need an enabling
framework. Joined approach to decarbonise H&C
o Communication from top to down, and bottom to up, both channels are essential.
Need for a common message across Europe, common approach to
communication;
o Need legal framework to enable prosumers;
o Combination of technologies, DHC is the infra to facilitate this combination.
Lead by example;
o This is also about job creation;
o Important to involve communities, not only the fairest but the fastest way.
Philippe Dumas, Secretary General, EGEC
o Art 23 is not enough. Electricity with a market design has been successful. We
need heat market design, heat market policy, with fair competition (for all RES).
Technologies are competitive and mature, but the frame is not fair. We do not
allow DHC installation;
o TEN-E should ensure DHC becomes eligible (TEN-H), allow cross-border, but
not local infra, is not fair;
o We need the internalization of external (system) costs;
o We need to exchange best practices, planning, heat forum, ENTSO-H to plan
infra, cities are key actors, urban planning, … a proper institution at EU level;
o Art. 23 is a good first step, but we can do better.
Q&A
o Gas is many things (several types), should be used as backup for power and heat,
“Fit” gases are biogases (from agriculture, biowaste and gasified biomass);
o Avoid use hydrogen in building, increasing the cost;
o HP key for sector integration, but answer remains individual in each MS. No EU
legislation to impose, but we need a push to ensure MS assess opportunities for
DHC;
o Roadmap where we need up to 25 000 grid DHC connections. At least 18000
new grids by 2030. Also, problem with refurbishing existing grids;
o Need for a broader understanding of the value of biomethane value chain.
Coverage of topics in Session 2
o Role of local authorities;
41
o Integrated planning;
o Good communication channels (all directions);
o Enable local communities, and use technologies;
o Increase ambition, actions should be facilitating;
o Renewable fuels, clear on their value chain, to make the best use.
Session 3 Renewable energy in transport
Table 30 - Details of Session 3
Time Moderator Panel
12:15 –
13:15
Bernd Kuepker, Policy
officer, Renewables and
CCS policy, DG
Energy, European
Commission
 Paul Durrant, Head of End-use Sectors & Bioenergy,
IRENA
 Geert Decock, Manager, Electricity and Energy, Transport
& Environment
 Gloria Gaupmann, Chair of the Advanced Biofuels
Coalition, & Head of Public Affairs, Technology &
Innovation, Clariant
 Simon Bergulf, Director of regulatory affairs, Maersk
 Maarten Van Haute, Alternative Fuels Officer, Q8
General Introduction (Bernd Kuepker, DG ENER)
This panel session focuses on the possibilities and challenges of a high integration of renewable energy in the transport
sector.
Progress is required for the transport sector: Following the EC’s impact assessment of the CTP, a significant increase
in the targeted Renewable Energy Share in Transport (RES-T) from currently 14% by 2030 as laid out in RED II to
about 24% by 2030 may be required to meet the 2050 GHG emission target. In addition, the EC’s ‘Sustainable and
Smart Mobility Strategy' published on 9th December 2020 outlines the upcoming challenge. The EC is also re-
evaluating the AFID, CO2 standards for cars, FQD, ETS and new initiatives to promote the uptake of renewable fuels
in the aviation and maritime sectors.
The aim of this particular workshop is to discuss how to improve specific policies and measures in RED II necessary to
meet ambitious 2030 targets without a complete policy change. It should cover the level of ambition, new measures as
well as a stable investment framework.
The position of each panellist
Paul Durrant, Head of End-use Sectors & Bioenergy, IRENA
o In transport, there is a need for a similar tipping point as has been seen in
renewable electricity production. A focus on solutions that are consistent with
reaching net zero is necessary, do not waste resources on solutions that will not
contribute to this end goal..
o One issue is that the ultimate mix in transport is still unclear. In the short term,
focus should lie on electrification, as it has become clear that it will be the
dominant option for transport (cars, LDV, somewhat unclear still for HDVs).
o Whereas hydrogen will have a significant role in 2050 timeframe, it’s
contribution until 2030 will be very limited. Short term focus regarding hydrogen
needs to be on establishing the enabling conditions , including infrastructure,
GOs, standards & certification, and investments in electrolyser to further reduce
costs.
o Aviation and shipping cannot be ignored. While only limited progress is
expected in this decade it is, however, necessary to lay the groundwork for the
30s and 40s (with net zero goal in mind).
o The role of biomass seems very underestimated in the current debate, since it
will be necessary for a significant share of the global energy supply (around 20-
42
30%) according to IRENA calculations, for achieving the decarbonization goal.
It is of crucial importance to make use of sustainable biomass.
o Electrification seems somewhat underrepresented in RED II as it has become
clear that electrification will be dominant.
Geert Decock, Electricity and Energy Manager, Transport & Environment
o To reach the -55% GHG reduction target a significant change is required,
following the EC’s Sustainable and Smart mobility Strategy: “Overall we must
shift the existing paradigm of incremental change to fundamental
transformation.” (SWD(2020) 331 final). The importance and role of different
elements in RED II are outlined in the following five aspects:
o 1) In general, T&E advocates “quality over quantity”. Better a lower target of
sustainable fuels than higher targets fulfilled with unsustainable fuels. In line
with this, besides targets for different fuels T&E is rather in favour of a GHG-
driven approach, where best performing fuels are rewarded.
o 2) Electrification: The new provisions should move beyond a mandate (as
implemented for biofuels). Also need to integrate aviation and shipping sector.
Efforts need to be coordinated across transport sectors. Create synergies instead
of hurdles. Support should rather focus on a credit mechanism, as implemented,
e.g. in NL or FR.
o 3) Biofuels: A phase out of high-ILUC fuels such as fuels from palm or soy oil
should happen soon. Other crop-based biofuels should be phased out over time.
It is important to eliminate “loopholes”, like the low-ILUC category.
o 4) RED II moved away from biofuels to more advanced biofuels. Next revision
needs to mover further. Advanced biofuels are limited and will not be able to
contribute significantly towards the energy supply in 2050 (can only cover
11.4% of expected energy demand of aviation alone). Important to keep
competing uses between sectors in mind. Strong sustainability criteria are
required (e.g. only waste-based).
o 5) The role of RFNBOs should focus on long-distance transport, notably aviation
and shipping. Details will be developed in ReFuel and FuelEU initiatives, which
is why no specific targets should be implemented in RED II.
Gloria Gaupmann, Chair of the Advanced Biofuels Coalition, & Head of Public Affairs, Sustainability
Transformation, Clariant
o The advanced biofuel coalition represents 11 companies from the biofuel sector.
The coalition welcomes the Green Deal, but acknowledges the big challenge it
poses.
o Biofuels will play a significant role, since by 2030 still 90% of existing vehicles
will have an ICE. For a significant emission reduction, both climate neutral fuels
as well as strict car emission standards are required. A coherent policy
framework is required that stimulates the use of climate–neutral alternative fuels
and that also adopts a well-to-use approach on emission standards.
o Production capacities for advanced biofuels are being ramped up. Still, another
revision of RED II, which is still in the progress of national transposition, will
significantly prevent necessary investments and poison the investment
environment.
o Therefore, a revision of RED II should only include minimal revisions for the
transport sector, including e.g. increased targets. However, no fundamental
changes in rules as e.g. the sustainability criteria, or eligible feedstocks should be
performed. GHG reductions should rather be driven by FQD and a technology
neutral well-to-wheel approach in CO2 emission standards should be adopted.
o “We would like to see the Commission to only propose a minimally invasive
revision of RED II. For the transport sector, make it very clear to the external
world and the investors, that the targets of RED II will be increased, that there
will be no back-tracking, and, very importantly, don’t change the fundamental
43
rules of the game, such as sustainability criteria or certain feedstock lists of the
annexes.”
Simon Bergulf, Director of Regulatory Affairs, Maersk
o Shipping faces its third revolution. Maritime transport will not only sail on a
single fuel in the future. As their assets are 25-30 years in lifespan and targets
need to be achieved by 2050, the commercially viable vessels to do so need to be
ready at the end of this decade. There is a very strong sense of urgency.
o Laying the groundwork to accommodate different fuels is absolutely key. Strong
regulatory framework, certification, rewarding first movers are absolutely key to
remain competitive.
o Revision of RED II not needed, rather of Fuel Quality Directive. Although the
current role of the maritime sector in RED II and accordingly its progress in
decarbonisation so far is rather limited, an upcoming revision of RED II could
have significant impact on the maritime sector. An example is the topic of
bunkering, since shipping from Europe to Asia mainly only includes 1
bunkering. Therefore, a strong and renewable shipping hub in Europe would be a
significant global hub. It is expected that a transformation to new fuels will be
connected to significant costs, which is also why there will be no immediate
jump to green fuels. Each application within the maritime sector may use an
individual fuel in the future.
o Certification, e.g. for used cooking oil and other fuels, as well as tradeable credit
systems are important aspects. For the latter, the existing system in the
Netherlands should be considered for other countries. With the right framework
in other countries, they would invest. The maritime industry sees an urgent need
for action and clear regulations – now - due to the long investment cycles and
life spans within the industry.
Maarten Van Haute, Alternative Fuels Officer, Q8
o Fuel suppliers are transforming to mobility suppliers with different kinds of fuels
being supplied to different sectors. Therefore, all kinds of renewable and
sustainable fuels should be covered in RED II.
o For suppliers, the fragmented national legislation is difficult and a stronger
harmonization within Europe would be supported. Lack of harmonization makes
it difficult for a European Player to supply across Europe and comply with
different rules.
o Additionally, the alignment of FQD and RED II is important. Sub-mandates
would not be useful.
o Vehicle GHG emission standards should be sued to foster electrification rather
than RED II.
A summary of the panel discussion
o The discussion covered three aspects: i) EU harmonisation of provisions, ii)
multipliers, iii) promotion of RFNBOs in RED II
o Regarding harmonisation, a stronger alignment is supported by the panellists,
although country-specific potentials and progress should be recognized in
different national renewable targets for the transport sector. It is important to
keep a holistic view considering other revisions happening and context-specific
regulation. It is important not to undermine existing targets and mechanisms by
additional measures. T&E would not want the same target for RES-T across MS,
but it should be made sure that renewable electricity can be counted towards the
transport target in all MS.
o Regarding multipliers, especially the factor of four for renewable electricity in
road (Art.27(1)) is seen ambiguously. For some, it is unclear how they are being
justified. T&E supports it in absence of a better system (although it is a generous
mechanism), since the contribution of renewable electricity in transport will be
44
limited until 2030. Removing the multiplier would penalize energy efficiency. In
contrast to that, biofuel industry sees the risk of an inflation of multipliers. For
the maritime and aviation sector existing multipliers should be increased, since
the model has worked for electricity in road transport, while the progress in
increasing the RES share in maritime and aviation has been limited. In general,
however, for fuel suppliers the rationale behind multipliers is already difficult to
understand (which also is mirrored in several questions and comments by the
audience).
o The panellists agree that RFNBOs – and especially hydrogen for e.g. heavy duty
road transport – will play an important role. Still, the impact within this decade
will be limited, some argue. Today it is important to build a regulatory
framework with sustainability criteria to direct investments into technologies
contributing to the strong decarbonisation targets (“move from reduction mindset
to transition mindset”). Whether an overall sub-target for RFNBOs would be a
suitable measure is seen critical by some panellists, since sector-specific sub-
targets (e.g. 1-2% RFNBOs in aviation, or shipping, with ramp up after 2030)
will already create demand. This is crucial to bring innovative technologies to
the market – in the optimal way.
Q&A
Areas and topics raised in Q&A tool:
Multipliers
o Focus on reducing CO2 instead of mechanism to drive numbers (i.e. multipliers): multipliers do not
multiply the climate impact, but only drive up figures
o Danger of fraud (e.g. multipliers for biofuels in the NL)
o With clear cap for conv. biofuels, no need for multipliers
Biofuels in general
o Development of EU Database (with regard to biomass)
o Importance to reduce carbon intensity of current gaseous and liquid fuels for current vehicle fleet,
necessity and role of biofuels (also crop-based)
o Advanced biofuels: possibilities beside waste-based biofuels
o Solutions for long haul trucking
o Will the revision of the REDII terminate this artificial and unfit limitation to the use of sustainable waste?
(existing RED II 1.7% limitation for contribution of feedstocks in part B Annex IX)
Crop-based biofuels
o Potential of biofuels with significant GHG savings, e.g. European renewable ethanol
o EU globally alone in restricting crop-based biofuels
o No neg. impact of crop-based biofuels on food prices and availability (Renewable Energy Progress report
of the European Commission (Com2020/952) page 18)
o What is the justification for opposition against crop-based biofuels?
RFNBOs
o Delegated acts seem to incentive direct connection between RES and electrolyser  contradicting
Energy System Integration
o Rapid ramp up of RFNBOs is essential and would provide benefits now, still legislative framework is
missing
o Additionality requirement increases RFNBO costs
Regulation
o Set absolute cap for fossil-based fuels (declining until 2050) instead of RES-T shares
o RED II is basis for investment decisions, targets could also be increased in original timeline for RED II
o Only need for higher ambition for RED II targets, but no significant changes (investment)
o Revision before transposition period has ended is not ideal
o RES-T of Art 25 with 14% minimum share only contributes for a very small part to the art. 7 target, it’s
rather to incentivise specific fuels. Additionality criteria is therefore counterproductive
Harmonisation
o Quality/Blending limits in FQD limit higher RES-T  alignment of RED II and FQD
o Move to well-to-wheel approach
o Consider parallel policy initiatives (FQD, CO2 restrictions for vehicles)
Other
o Sustainable and Smart Mobility Strategy : details on upcoming Renewable and Low-Carbon Fuels Value
Chain Alliance?
o How to achieve 25% in CTP with only 30 Mio. EVs and increasing energy consumption
45
Session 4 Renewables in industry
Table 31 - Details of Session 4
Time Moderator Panel
14:30 – 15:15 Ruud Kempener, Policy
officer, Renewables and
CCS policy, DG Energy,
European Commission
 Martin Porter, Executive Chair, CISL Brussels
 Peter Botschek, Director of Climate Change and
Energy, CEFIC
 Aurelie Beauvais, Deputy CEO and Policy
Director, SolarPower Europe
 Mikael Nordlander, Head of R&D portfolio Industry
Decarbonisation, Vattenfall AB
Position of each panellist
Martin Porter, Executive Chair, CISL Brussels
o Role of increased use of RES through 3 sections: competitiveness, RES industry,
industry broadly;
o Competitiveness : more difficult than thought, in the context of sustainable
development in general, paradigm shift... how to measure comp.? An Innovation-
centric approach is key. Domestic and Global market opportunities, EU has
advantages on the world scene. Will we be buying or selling the technologies?
Need to look at opportunities the industry has regarding value chains, the
industrial ecosystem etc.
o European Roundtable of Industry encompasses the following: manufacturing,
energy industry, renewable will benefit, macro-economic benefits, jobs, but not
uniform, some leading, others not. Make the right decision on policy and
regulatory to allow their deployment;
o Industry more broadly (cement, steel, chemical, ), competitive advantages if cost
reduction, with electrification as a key element. How to incentivise our ability to
invest in electrification? Look at other aspects (side-by-side RES) such as
circular economy, material use, demand side is important.
Peter Botschek, Director of Climate Change and Energy, CEFIC
o Chemical EU: biggest energy consumer, 2/3 is gas & electricity consumption
(already now), biggest global exporter, energy cost is very important;
o GHG reduced more than 50%, to 1990, but still to be expected;
o RES will play important role to help decarbonise;
o Developed different pathways, circularity, hydrogen, renewables, recycling,
closing the loop are important aspects to look at;
o To decarbonise, electrification is essential, but it requires more RES electricity
(even if process electrification leads to EE). Regarding renewable energy, the
chemical industry in Europe predicts 140% more energy use than the IEA
predicts to be available by 2050 (in capacity);
o Access to affordable, reliable low-carbon energy is essential. Access RES
renewable, with competition / innovation as main force, and not normative or
obligation;
o Electrification will results in efficiency loss in the end-use process. Something to
be considered under the EED.
Aurelie Beauvais, Deputy CEO and Policy Director, SolarPower Europe
o Important to increase RES, industrial demand is a huge market, growing
exponentially in EU (RE100 forecasted more than 6GW PPA in 2020  PPAs
46
grew by 100% in 2020 compared to 2019, corresponds to 20% installed capacity
from solar & wind in 2019). Other segments, (e.g., commercial and industrial
rooftops) potential would reach 140GW by 2030; (compared to H2 strategy –
120 GW);
o More and more driven by the market, less and less support needed from public
money, makes the green deal more achievable, reduce the burden on public and
citizens;
o PV & wind are the most competitive : potential is huge (good for the need of
industry), cost competitive everywhere (not only in south and/or north  the
more cost competitive the more available it can become everywhere), becomes
enabler of the Green Deal and decarbonisation of industry;
o Competitiveness and innovation : RES makes business sense, next is to scale up.
Innovation remains important, RES and electrification moving frontier (and other
technologies., e.g., H2);
o Big potential for RES H2, ready to harness the challenges. Accelerate the
maturity and cost competitiveness.
Mikael Nordlander, Vattenfall R&D Portfolio Manager Industry Decarbonisation
o Hybrit is a disruptive solution, it cannot be done without cooperating, it is
important;
o Working in value-chain;
o Harvest RES through electrification is essential;
o Majority capex in RES, at Vattenfall;
o Barriers: cost could be considered (but weight in final product remains limited,
as it impacts an intermediate material, cheap. Cost increase to end consumer is
low);
o Firm belief this green characteristic will have a value for the final consumer;
o If early mover (e.g., SSAB, LKAB), de-risking is important;
o Additionality, if high demand in industry, but it depends (e.g., wind Elec deploys
rapidly in Sweden). So, no need to focus on additionality.
Q&A
o How important is demand for green products, has EU advantage > large well fit
domestic market, demand is created by standards, also the materials (with
replication outside EU)
o Not yet a key driver, efforts made by some MS to buy, e.g., electric vehicle, with
limited results. The profit margin for a car is surprisingly low, … it could
become challenging. Elasticity of consumer are different;
o Chains are all different. Leaning the believe in the market is not enough. Need
for policy, support (CfD?);
o How RES could be provided to SME, can be entirely be decarbonised through
electrification (PPAs, ….). Remove barrier: target increase (extra boost to the
market); administrative barriers (regulatory); low hanging fruit (appropriate
framework, like imposing tendering for small installations is not appropriate).
Supply side, green (broadly than carbon) is a competitive advantage, for
branding. But more often cost is key… should decrease and increase
competitiveness.
Coverage of topics in Session 4
o PPA
o Innovation & research, scaling, business modelling
o Administrative barriers (permit)
o CfD (technology neutral, dilute the funds), review state aid guidelines, link with
PPA
o GOs, traceability is key
47
o De-risk instruments
Session 5 Measures for a further uptake of renewables in electricity
Table 32 - Details of Session 5
Time Moderator Panel
15:15-16:00 Antonio Lopez-Nicolas
(Deputy Head of the
Renewable Energy Unit,
DG ENER)
 Dirk Vansintjan, President of the European federation
of citizen energy cooperatives, RESCOOP
 Giles Dickson, CEO, Wind Europe
 Bruno De Wachter, Convenor of the Working Group
Market Design and RES, ENTSO-E
 Hélène Lavray, Senior Advisor - Renewables &
Environment, Energy Policy, Climate & Sustainability,
Eurelectric
Introductory statement by Antonio Lopez-Nicolas
The first sessions focussed on end-use sectors, in line with the CTP IA. Yet it does not make the
power sector less important. RES-E share should increase from 32% to 65% by 2030 (most of it
being variable renewables). On the demand side, it would happen with an electrification of end-
use sectors, and indirect electrification of hard-to-abate sectors. Barriers remain though:
renewables have a 1.5% annual installation rate increase only, which needs to double during the
next decade. How to make the increase happen?
Position of each panellist
What major barriers do you see in the deployment of renewables in the electricity sector by
2030, in order to build an integrated energy system with at least 65% of renewable electricity
share?
Bruno De Wachter, Convenor of the Working Group Market Design and RES, ENTSO-E
o Two issues: need to install renewables, and to operate them in real time
o The electricity networks have to follow as well, along all voltage levels.
Permitting is a major problem for transmission grid as well. Only 10 years
for this exercise, while it takes 10 years for permitting and 3 years for
construction.
o Need to go further and further offshore, including offshore grids. There is a need
for a stable regulatory framework (in particular for hybrid assets).
o RES: national support mechanism: will it be the most appropriate way to support
RES deployment in the future? Today, we do not value enough renewable
electricity. And the Guaranties of Origin system means nothing on RES-
consumption (lack of temporal and spatial consistency). Need to come up with
another system, more transparent: more in real time. Start with a voluntary
system (industries) and then something compulsory. It would incentivise demand
to follow production.
Dirk Vansintjan, President of the European federation of citizen energy cooperatives, RESCOOP
o So far high voltage consumers are exempted from contribution to RES
support costs, as well as conventional power generators. Generates a lack of
trust from citizens.
o Happy with REDII on energy communities; but MS should set a sub-target for
energy communities, tax shift from green to grey energy carriers; provide access
48
for energy communities to district heating (less monopoly from DSOs, more
empowerment for companies and businesses).
Hélène Lavray, Senior Advisor - Renewables & Environment, Energy Policy, Climate & Sustainability,
Eurelectric
o Investment cycles are rather long, there is a need for a consistent 2030
framework as quickly as possible (ETS, Energy Efficiency Directive, other
instruments such as the TEN-E regulation).
o Permitting: a pressing issue - permitting issue for wind and solar but also hydro
and distribution system. REDII goes in the right direction, but more could be
done e.g., speed up for PCIs, DSOs too.
o Disappointed by the electrification rate in CTP's IA. E.g., in the road transport
sector and for indirect electrification. Classification of e-fuels should be clarified.
Giles Dickson, CEO, Wind Europe
o Permitting: rules too complex, processes too slow. Not enough civil servants
on the processes. It acts as a bottleneck. Today 12 GW/y of new wind capacity;
for 2030 need to rise to 21 GW/y (under the 32% RE target), or to 26-28 GW/y
of new wind capacities (under the 40% RE target). Issue: they cannot afford
permitting delays. Commission is to enforce Articles 16 and 17, yet it will not be
enough to deliver the new increase. Need to proactively drive the
simplifications. Not reopening the article but adding to it a system of
benchmark – for instance based on the KPIs determined by the project RES
Simplify in January, as an Annex of the Directive.
o Guarantees of Origin. The demand side is crucial. Art 19 is not delivering that,
there is a need for traceability of each unit of renewable electricity: GOs should
be made mandatory. Do not introduce in the RED measures that would concern
low carbon energies, as the directive should focus exclusively on renewable
energies.
o Need to keep financing cost very low, as today it can represent the largest share
of total costs. Contracts for difference are very good to de-risk investment.
They are good for governments too, as the industry pays back when market
prices are high. It is crucial to have this revenue stabilisation mechanism.
Session 6 Bioenergy sustainability
Table 33 - Details for Session 6
Time Moderator Panel
16:00-
16:45
Giulio Volpi, Policy
officer, Renewables and
CCS policy, DG
Energy, European
Commission
 Uwe Fritsche, Task Leader of IEA Bioenergy Task:
Deployment of biobased value chains, IINAS
 Robert Matthews, Programme Group Manager, Forest
Research
 Linde Zuidema, Forest and Climate Campaigner, Fern
 Jean-Marc Jossart, Secretary General, Bioenergy Europe
 Lotta Heikkonen, Forest Policy Advisor, Confederation of
European Forest Owners
Position of each panellist
Q1: What is the role of bioenergy up to 2030 and towards the 2050 target?
49
Q2: Is the current set of criteria (such as sustainability criteria, minimum plant size, LULUCF
accounting) sufficient to ensure biomass for energy is harvested and used sustainably and is
effectively reducing GHG emissions?
Uwe Fritsche, Task Leader of IEA Bioenergy Task: Deployment of biobased value chains, IINAS
o Up to 2050 and beyond, bioenergy is still necessary in all scenarios on a global
scale; it will be also very relevant for developing countries. The question is thus
what kind of bioenergy we will use rather than if it will be used at all;
o In the context of bioeconomy’s sustainability, it is important to consider
interactions with fossil, mineral, renewable systems as well as bioeconomic
contributions to ecosystem services are important, considering dynamic
interlinkages and substitution effects. The bioeconomy is the only system
providing food, feed, and eco-system services, for which there is no substitute.
o In a sustainable bioeconomy, we should focus on the use of bioenergy in sectors
that are hard to decarbonise (aviation, shipping, hi-temperature industrial heat).
The question is – which feedstock?
o Even bioenergy production could enrich biodiversity, net-positive approaches
exist already but need to be scaled up.
o Bioeconomy can provide further income for rural areas that face economic
decline due to urbanisation. There are now small-scale bio-refineries, which
produce fuel and could be a long-term sustainable solution.
o Bioenergy should not increase competition for land. This means keep looking for
waste reduction, restoring land, and intercropping.
o RED II was important in driving a change towards a bioeconomy. A revision of
RED could improve the governance of these processes and speed up their uptake.
Robert Matthews, Programme Group Manager, Forest Research
o The premise that bioenergy delivers zero emissions when used is true only
sometimes.
o Timing of emissions is an important aspect: initially the GHG emissions of
certain bioenergy are high, only in long-time perspective when the crops or trees
regrow the balance is restored.
o There is now more scientific understanding to distinguish impact of particular
fuels and can be used for differentiated approach, for example for bioenergy
sources. These have to be considered when designing new policies.
o These aspects have to be considered when designing policies towards 2030 and
2050.
Linde Zuidema, Forest and Climate Campaigner, Fern
o Towards 2050, EU will have to reduce emissions and remove CO2 from the
atmosphere to reach its carbon objectives. Land and forest are the best options to
remove CO2, but this depends on how sustainably they are managed.
o Currently, the sustainable management of forests is not done properly, harvesting
for biomass fuels and other short-term uses is occurring. Woody biomass is
currently 35% of renewable use mix.
o The use of biomass has negative impacts in the short timeframe where the
climate action has to be taken; it has also negative impacts caused by other GHG
emissions, air pollution and biodiversity. The investment in biomass is diverting
investment in other cleaner technologies.
o The risk-based approach is flawed: RED does not address risk of increased forest
harvesting, e.g., using whole harvested wood for fuel of wood with high carbon
content.
o Also, LULUCF not accounting for all uses, some emissions are left unaccounted
o EU rules currently do not encourage sustainable use and incentivise short term
biomass use over carbon sinks.
50
o A weak risk-based approach cannot balance a plethora of incentives and funds
destined to support forests harvesting. Data shows that biomass burning has
negative effects, but MSs are not transparent about the impacts. Without
additional restrictions on feedstocks, a phase-out plan for use in heating and
power, and a reduction in regulatory and financial incentives, wood biomass
should not be supported by RED.
Jean-Marc Jossart, Secretary General, Bioenergy Europe
o On the market: MS national plans are focussed on renewable resources at
national level, and they expect an increase in bioenergy use of 49% in bioenergy
by 2030. Afterward it is unclear.
o MS tells us that there is a huge potential, forests grow, and we harvest lass than
the amount gained by the growth in forest mass: we harvest less than 2/3 but
forests grew by 47% in the last 30 years. This use is sustainable, so it will be
there in 2050.
o Market: wind and PV will play a growing role, but bioenergy has added value as
a flexibility source. Because of bioenergy, the EU will need to invest less in grid
management and storage.
o Heating: modelling suggests a reduced use of biomass for heating, but this is not
certain. This is because biomass is an affordable source, both for distributed and
district heating, also for high-temperature industry applications (e.g., steam). Due
to low prices, it is a solution also for fuel poverty.
o Bioenergy a key pillar in any 2050 strategy.
o Sustainability criteria: It should be recognised that bioenergy sector has already
substantial sustainability regulation. Bioenergy is the only sector with strong
sustainability requirements, such as reducing emissions in the supply chain (70%
required); no other sector covers supply chain and emission in third countries.
o Bioeconomy industry is looking at the EU, and continuing changes will
discourage investment. For bioenergy, the EU should not repeat the same
mistakes made for biofuels by providing an approach too complex and that
changes too often.
Lotta Heikkonen, Forest Policy Advisor, Confederation of European Forest Owners
o 16 million forest owners
o EU forests are essential for decarbonising the energy system.
o Guiding principles are Sequestration, storage, substitution – and bioenergy plays
a fundamental role
o Commission analysis shows need for increased bioenergy consumption, in hard-
to-decarbonise sectors and provide flexibility for the electricity grid.
o Are current criteria sufficient? They have not yet been implemented (this will
start next summer), so it is not possible to evaluate their effectiveness yet;
o Reopening the sustainability criteria before it has been implemented, it will be a
burden on forest owners. The instability of regulatory system is harmful to forest
owners (e.g., increasing administrative burdens) and it will not give the good
signal to forest owners.
o Risk-based approach already delivers sustainability benefits, and sustainable
forest management fully accounts for main sustainability principles. The focus of
forest owners is to maintain a healthy forest ecosystem, and this is achieved by
the current approach to sustainable management.
o There is already national-level legislation that works
o Finally, we do not need to reinvent the wheel. There is a need to support forest
owners to adapt their approach to new conditions and requirements.
51
Session 7 A European system for certification of renewable and low-carbon
fuels, including hydrogen
Table 34 - Details of Session 7
Time Moderator Panel
16:45-
17:30
Galin Gentchev,
Policy officer,
Renewables and CCS
policy, DG Energy,
European Commission
 Jorgo Chatzimarkakis, Secretary General, Hydrogen
Europe
 Peter Styles, Executive Vice Chair, EFET Board
 Sascha Wüstenhöfer, System Manager, ISCC
International Sustainability and Carbon Certification
 Javier Castro, Business Development Carbon
Management Service, TÜV SÜD Industrie Service
 Sacha Alberici, Managing Consultant, Guidehouse
Introduction from moderator – main issues addressed
o How to integrate, streamline and widen to other sectors the certification system
in order to have a fully-fledged certification system where all works in a
complementary way
o The traceability across the value chain needs to be ensured; this is different for
various types of fuels
o It is also a question of technical implementation, with the existing system(s),
avoiding also double counting
Position of each panellist
Jorgo Chatzimarkakis, Secretary General, Hydrogen Europe
o Carbon content of fuels is the new currency/metric (to set a price). GO,
certification schemes will be needed in the future H2 markets (in future,
hydrogen will be carrier but also a feedstock).
o It is not possible to just copy other gas regulations. For gases, there are many
certification schemes, not all trustable. Another suggestion might be the
electricity certification schemes, but they require physical infrastructure (to book
and claim).
o Ask for a new hydrogen certification scheme è 5T principles for certification
scheme: traceability (source/origin), trackability (along the supply chain),
tradability, transparency, trust... e.g. CertifHy (very robust). Covering all sectors
(transport, building, industry,...).
o There is a possibility of using distributed ledger technology to deliver the scheme
(e.g. block chains); it is not mature yet but there is a lot of potential and should
be ready by when the H2 market will materialize (> 2025). Should also
encompass storage.
o It is also necessary to introduce certification scheme that addresses hydrogen-
derived fuels using carbon as feedstock.
Peter Styles, Executive Vice Chair of the EFET Board
o The perspective should be cross-sectoral, cross-commodity, technology neutral
approach, as far as possible (let’s be cautious not to disturb the existing
transparent well-functioning markets).
o Another guiding principle: carbon neutral or other concrete renewable sources
are a mean to the end, which is zero-carbon economy, and not a final goal. So,
certification should be covering as much as possible all carriers and sources.
o Gold standard is the ETS: level playing field across EU, not relying on national
regulation, principle of non-interference with energy markets. Links exist already
between RES and verification (monitoring regulation).
52
o Certification should be tradable independently from the physical substance; no to
mass/energy tracking.
o Let’s not partition the energy markets, trying to track electrons, molecules etc.
would be overcomplicated. But EU certification scheme is a Yes.
o Double counting must be avoided.
Sascha Wüstenhöfer, System Manager, ISCC International Sustainability and Carbon Certification
o Yes, the certification system is now fit for purpose, several delegated acts should
come in the coming months.
o The RED has demonstrated that specific sustainability requirements can be
introduced for specific sectors, so dedicated regulation is possible.
o There are not many experiences with RED II effects since it is only being
implemented
o There is also a large room for interpretation, so we need a clear legal framework,
otherwise we may miss the opportunity to establish a level playing field.
Therefore, the RED revision should pay attention to:
o Sustainability requirements for biomass: social sustainability aspects are missing
(e.g. safe working conditions, child labour) – it works in some independent
schemes already, so it is possible to integrate such approach.
o Traceability: Art 30: limited guidance on how it should be addressed, too much
room for different interpretation (e.g. an „appropriate time period“) – should be
clarified or otherwise there will not be level competition across (certification)
schemes.
o Principle of trust: define what to do with economic operators that do not abide
with the regulation.
o Control and monitoring scheme of the certification bodies is needed. Otherwise,
we might face the risk of a race to the bottom to avoid proper oversight
mechanism.
Javier Castro, Business Development Carbon Management Service, TÜV SÜD Industrie Service
o The current system works well, however, the question of what happens when
somebody is not conforming to the rules is not addressed, as well as some other
operating issues;
o Why co-existence of 2 systems makes sense:
 Mass balance system (focus on final consumption) is not feasible for
electricity, e.g., tracing the electrons;
 Book and claim (focus on production) would be too complicated for
biomass e.g. difficult to link with the end use.
o There could be a possibility to transform certificates from GO to mass balance
and vice-versa. This integration has to be integrated on EU level, or else there
will be different national rules and the system will not work efficiently
o New system should be based on integration of existing systems.
Sacha Alberici, Managing Consultant, Guidehouse
o Benefits: providing auditors with timely data; limiting risk of bad transactions;
support MSs and schemes in monitoring activities
o It should be complementary existing schemes
o Successful implementation requires cooperation with national actors
o Schemes would need to ensure that economic operators actually use the database
o Downstream supply chain is already familiar with similar databases, upstream
sector however needs to be supported to learn how to use
In first step focus only on liquid and gaseous fuels in transport, but also hydrogen, biogas,
bioliquids should be included to facilitate cross-border trade; later cover heating biomass, res
electricity used for RFNBO production; but also including RES electricity generation would be
step too far.
53
Coverage of topics in Session 7 / Concluding remarks
o Existing certification system delivered results, the question was about adapting
it, given the emergence of new carriers, etc.
o Discussion on the scope & the content
o Need for a specific H2 certification scheme
o Level playing field, technology neutral
o Certification should tradable, ideally independently of the commodity
o No tracing of electrons
Concluding Remarks by Paula Abreu Marques
Paula Abreu Marques concluded the session, by sharing the key takeaways that were summarised
from the seven sessions held during the workshop. Some of the key points raised concerned:
 In order for the EU to achieve a 55% GHG reduction, increased ambitions in RE and
energy efficiency are necessary. Increasing the share of renewables in the transport and
heating and cooling sectors are key focus areas, although increasing the share of
renewables in buildings and electricity supplies are also important.
 There is a need for stable regulatory framework with specific renewable energy and
regulatory measures, which includes top-down EU governance rules to enable
investments.
 Strong EU objectives are needed, at least doubling current ambition level of Heating &
Cooling. A variety of heat sources, such as solar, geothermal, bio, are needed to replace
fossil fuels.
 District Heating and Cooling are central for decarbonising Heating & Cooling and
Energy System Integration at low-cost. Expansion and modernisation could be supported
at the EU level to ensure a level playing field, fair competitiveness and investments.
 Local communities and cities are important actors to achieve EU and national goals, and
should be enabled to effectively implement the REDII provisions. Clear communication
of EU and national goals and integrated planning is also required to connect all levels of
governance towards achieving the broader climate goals.
 During the workshop, there was a broad consensus on the need to step up efforts for
promoting renewables in the transport sector. Rate of electrification of road transport is
expected to increase, and will deliver important contributions. Harmonisation of policy
instruments in REDII is desirable, but not full harmonisation. Some stakeholders
expressed worries on policy certainty and investments over possible revisions of the
REDII for the sector.
 In the industry sector, there remains a major growth area for RE deployment. Scale-up of
cost-competitive renewable energy is critical to ensure competitiveness of EU industry.
 The polling exercise saw that a majority of the participants supported targets for
renewables in the industry sector. Nonetheless, important barriers were also identified by
panellists. Supporting conditions such as simplifying permitting processes, PPAs, state-
aid guidelines, business model innovations and reduction of financial risks were seen as
critical to ensure low-cost renewables.
 Renewable electricity remains central for cost-effective decarbonisation and unlocking
renewable energy demand and consumer participation and electrification of end-use
sectors is essential.
54
 Barriers to renewable electricity deployment need to be removed. This can be achieved
through the implementation of the existing REDII and building on REDII provisions
such as regional cooperation or guarantees of origins. Also, is important to coordinate
with other works such as the European Taxation Directive review to ensure level playing
field across sectors.
 Sustainable Bioenergy is important to reach carbon-neutrality, especially for hard to
abate sectors. Bioenergy in the EU is a by-product of broader circular bio economy and
has to be seen in this context. Confidence in the sustainability of EU bioenergy is an
important requirement for wide-spread development, which will depend on Sustainable
Forest Management, and the maintenance of forest carbon stocks and sinks. Industry and
forest owners see REDII and LULUCF as important steps forward and call for stable
regulatory framework to support investments. Meanwhile, NGOs are more critical and
call for stricter rules. Achieving a balance would be important in the REDII review.
 Further development of certification system into a full-fledge certification would make a
vital contribution to achieve ambitious energy targets. Adjusting the scope of the
certification to cover all emerging fuels is important. Sector-specific certification could
be necessary, for hydrogen, for example.
 There is a need to ensure that REDII will be fully and timely implemented, so policy
continuity and stability is key. The REDII review should focus on areas where there is a
clear need to enhance the provisions to link to the climate ambitions to the energy system
integration and to other relevant policy documents and decisions that have been taken.
 This workshop is only a part of the stakeholder engagement planned for the REDII
review. Stakeholders are welcome to provide their feedback via the Open Public
Consultation (OPC), which is also opened till 9 February 2021. A second workshop is
also planned to be held in Spring 2021, well before the adoption of the Commission’s
proposal which is scheduled for June 2021.
55
Report of the 2nd Stakeholder workshop 22 March 2021
Executive Summary
On 22 March 2021, the European Commission, DG Energy, held a second online event in the
context of the work to revise Directive 2018/2001 on the promotion of the use of energy from
renewable sources. The revision aims to ensure that Renewable Energy Sources (RES) cost-
effectively and sustainably contribute to at least 55% Greenhouse Gas (GHG) emissions
reduction in 2030, in line with the Climate Target Plan (CTP). This means reaching a 38% to
40% share of RES in 2030. The event was part of the wider consultation process on the revision
of the Directive launched on 17 November 2020. Information on the review of Directive
2018/2001, the public consultation and the two stakeholder workshops is available online (at
https://ec.europa.eu/energy/topics/renewable-energy/renewable-energy-directive/overview_en).
The event agenda included 7 external keynote speakers7
in three sessions. An official from DG
Energy coordinated each session. The event also included an opening session from Kadri Simson,
the Commissioner for Energy at the European Commission, a sharing of the first outcome of the
open public consultation by Paula Pinho, Head of Unit ENER C.1 Renewables and Energy
System Integration Policy, and closing remarks from Ditte Juul Jørgensen, Director-General, DG
Energy.
The event was organised with the support of Trinomics which provided technical and content
support to DG Energy. Over 1048 people from over 600 different organisations registered for the
event. During the day of the event, 873 people connected via the Zoom platform for an average
of 3 hours and 42 minutes.
Overview of the event
This second stakeholder event for the revision of Directive 2018/2001 on the promotion of the
use of energy from renewable sources (RED II) was held on the 22 March 2021 as part of a wider
consultation process. The process includes a questionnaire which was open to any individual and
organisation (available online at https://ec.europa.eu/info/law/better-regulation/have-your-
say/initiatives/12553-Revision-of-the-Renewable-Energy-Directive-EU-2018-2001/public-
consultation) as well as a first stakeholder event, which was held on 11 December 2020.
The event was organised by Trinomics as part of the contract ENER/ C1/2020-440 for Technical
support for RES policy development and implementation: delivering on an increased ambition
through energy system integration.
Agenda
The event was organised in three sessions, split between morning and afternoon. As part of the
agenda (see table below), Kadri Simson, the Commissioner for Energy at the European
Commission, and Ditte Juul Jørgensen, Director-General at DG Energy, provided introductory
and concluding remarks, respectively. Paula Pinho, Head of Unit C1, provided an introductory
presentation of the results of the online Stakeholder Consultation, which closed on 9 February
2021.
The three sessions covered main areas of RED II, namely: renewable energy in transport;
renewable energy in heating and cooling, buildings and district heating; and sustainability of
forest biomass for energy. Each session was moderated by a DG Energy official responsible for
the topic and gave ample time for keynote interventions and contributions from the public. The
format of the event was agreed so that it would give maximum exposure to stakeholders’
7
See Annex I for the profiles of each speaker
56
opinions and foster a debate among them. The event ran from 10h00 to 17h00, CET, with a 1.25-
hour lunch break.
Table 35 - Agenda of stakeholder workshop
Agenda item Moderator Speakers
Morning Session
10h00 Opening and introduction Kadri Simson, Commissioner for Energy, European Commission
10h15 First outcome of
Stakeholder Consultation
Presentation by Paula Pinho, Head of Unit ENER C.1 Renewables and Energy System Integration Policy
10h45 Session 1 Renewable
energy in transport
Bernd Kuepker,
Policy Officer, DG ENER
Decarbonisation and Sustainability of
Energy Sources, European
Commission
Keynote interventions
 Dr. Alexander Landia, Chairman, The Mobility House AG
 Prof. David Chiaramonti, Polytechnic of Turin
Interventions from attendees
12h15 Break
Afternoon Session
13h30 Session 2 Renewable
energy in Heating and
Cooling, Buildings and
District Heating
Eva Hoos,
Policy Officer, DG ENER Renewables
and Energy System Integration Policy,
European Commission
Keynote interventions
 Brian Vad Mathiesen, Coordinator of sEEnergies, Aalborg
University
 Oliver Rapf, Executive Director, Buildings Performance
Institute Europe
Interventions from attendees
15h00 Session 3 Sustainability of
forest biomass for energy
Giulio Volpi,
Policy Officer, DG ENER
Decarbonisation and Sustainability of
Energy Sources, European
Commission
Keynote interventions
 Sarah Mubareka, Joint Research Centre, European
Commission - Presentation of JRC woody biomass study
 Prof. Jean-Pascal van Ypersele, UC Louvain, former vice-
chair of IPCC
 Karoliina Niemi, Forest Director, Finnish Forest Industries
Federation
Interventions from attendees
16h30 Conclusions Ditte Juul Jørgensen, Director General, DG Energy, European Commission
Organisation
Inviting participants and management of registrations
Preparations for the event started just under one month in advance of the event. A first round of
email with a “save the date” reminder was sent to 768 stakeholders on 2 March 2021, which
informed them of the date and time of the second stakeholder engagement event. A second email
to 807 stakeholders was sent the following week, on 12 March 2021, where the tentative agenda
and the registration link to the online event was provided. A third and last e-mail was sent to 831
stakeholders on 19 March 2021, to provide them with an updated agenda, the profiles of the
keynote speakers, and the same registration link for them to register for the event via Zoom.
The platform chosen for the event – Zoom – was selected based on its capability to support the
high number of participants expected to attend the event. Registration was done directly via the
Zoom registration platform.
Agenda preparation and coordination with panellists, moderators and
stakeholders providing interventions
In preparation for the event, DG ENER identified and reached out to the seven keynote speakers,
and confirmed their participation independently. Similar to the first stakeholder engagement
event held on 11 December 2020, the moderator for each session was the responsible officials in
57
DG ENER C.1 and C.2. The project team had also reached out to keynote speakers and
moderators on 16 March 2021, to provide them with their unique link to join the online event, a
technical guide for using Zoom, and the opportunity to participate in any of the three technical
dry run session that was scheduled between 17-18 March 2021, if they would like to. In addition,
a dry run session was also specially organised on 17 March 2021 to orientate the core team from
DG ENERGY to get accustomed to the functions of Zoom and the interface with Sli.do.
In the period between the first workshop and the second stakeholder event, the project team had
received several requests from the public, asking the opportunity to voice their views and
concerns in the second stakeholder event. To ensure these requests were accommodated,
additional slots were planned during the event, while time was also provided for additional
impromptu interventions during the event, ensuring a fair balance of positions.
A final e-mail to the keynote speakers was sent on 19 March 2021 which included an outlook
invitation, together with the updated agenda, a compilation of the profiles of keynote speakers of
the event, and speakers’ unique weblink to join the event, along with other administrative details.
A final e-mail was also sent to stakeholders who would provide short interventions on 19 March
2021, including the updated agenda, compilation of keynote speakers’ profiles, as well as other
administrative details.
Questions from stakeholders via email
Before the event, stakeholders were able to submit questions to the project’s email address. These
were shared with moderators in the document titled: moderators’ guide. The questions received
are included in Annex VII.
On the day – behind the curtain event coordination
Three staff members from Trinomics were managing various tasks to ensure the smooth and
seamless running of the event on the day. Tasks included:
 answering emails from participants having problems to connect;
 registering several new participants that had not previously registered;
 explaining the housekeeping rules to participants of the event;
 following up on the inputs from attendees via the chat functions;
 time keeping;
 management of the slide-pack; and
 technical support for moderators and panellists.
Other members of the project team were also responsible for note-taking and support to
moderators of the respective sessions.
Post-event follow-ups
The attendance report in Zoom, and a compilation of the questions received via Sli.do were
downloaded at the end of the event. The slides that were used during the event were compiled
and tidied up after the event. A thank you e-mail, along with a PDF copy of the slides, as well as
the list of questions received via Sli.do during the three sessions was sent to workshop
participants on 24 March 2021. An updated copy of the slides was sent to workshop participants
on 31 March 2021 A copy of the slides for the event was also made available online
(https://ec.europa.eu/info/events/workshop-revision-renewable-energy-directive-2021-mar-
22_en).
The minutes taken during the event were also consolidated from the task leads of the project team
for each session..
58
Attendance
A total of 1048 people registered for the event either via the link provided or by sending a request
via email. Of these, the total number of attendees was 873, of which 38 were moderators,
panellists, and project team members. The remaining 835 participants were public audience. The
attendance rate (share of registered people that connected to the event on the day compared to the
total number of registrations) is 83%. On average, each attendee stayed logged in for 3 hours and
42 minutes, with several participants logging in and out multiple times.
The figure below shows the number of active connections throughout the day of the event, from
10.00 to 17.00. The dip in the graph between 12:15 to 13:30 is the lunch break. Generally,
attendance was higher in the morning session than in the afternoon session and peaked at just
under 675 participants.
Figure 65 Number of active connections
Most participants were from within the EU, with the majority connecting from Belgium,
followed by Germany, Spain, and France. The high number of connections from Belgium reflects
the number of lobby groups based in Brussels (bearing in mind this analysis excludes attendees
registered with a @ec.europe.eu domain). Non-EU countries, such as the United Kingdom,
United States of America and Others are highlighted in yellow and orange in the figure below.
59
Figure 66 Location of attendees (excluding attendees from European Commission)
Member States Non-EU countries Remaining locations with less than 5 attendees (EU
and Non-EU)
Over half of the attendees of the event came from business organisations (53%). 20% of the
attendees represented public authorities, which includes officers from the European Commission.
8% came from environmental organisations and NGOs, 3% came from academic and research
institutions, and 16% of the stakeholders fell under the other category.
60
Figure 67 Affiliation of attendees (including attendees from European Commission)
Among the 142 attendees who represented governmental organisations (central government and
other governmental bodies, excluding EU institutions but including the permanent
representations in Brussels), the countries with the most representatives were Portugal, the
Netherlands and Belgium. No representatives attended from the governments of Bulgaria,
Croatia, Cyprus or Denmark.
Figure 68 Public authorities by country (excluding attendees from European Commission)
EU Member States Non-EU countries
61
Opening and introduction by Kadri Simson, Commissioner for Energy
The event started with the opening address of Kadri Simson, Commissioner for Energy, European
Commission. In her remarks, Kadri Simson referred to the large amount of interest in the revision
of the Renewable Energy Directive by stakeholders, with almost 39,000 responses to the Open
Public Consultation (OPC). These responses came from all sectors: citizens, business
associations, companies, public authorities, environmental organisations and NGOs.
From the conclusions drawn from the OPC, the European Commission started identifying a way
forward towards a legislative proposal that will come in June in the Fit for 55 package. The
context of this work is well known: Europe wants to be the first climate neutral continent by
2050, making renewables the main pillar of the EU energy system. In order to reach the EU
targets, the renewable energy sector needs to grow by 15-20% annually. Electricity produced by
renewable sources exceeded that produced by fossil sources for the first time in 2020. However,
the supply today will not be able to match the future demand. Expanding the renewable energy
sector is an opportunity for European industries and companies cleaners and more competitive.
Further, climate ambitions will require investments in renewable energy of 350 billion euros per
year.
Supporting the green transition and investing in renewable energy is at the core of many EU
initiatives, including the Next Generation EU Plan and the Recover and Resilience Plans. Europe
is showing global leadership by contributing fuly to the aims of the Paris agreement, The Fit for
55 package will include changes to the Emissions Trading System, Energy Taxation Directive
and Energy Efficiency Directive.
While Member States do make use of the current EU policy framework to increase the use of
renewables, it will not be enough to raise the share of renewable energy to 38—40%, which is
needed to meet the increased climate ambitions under the Green Deal and the Climate Target
Plan (goal of reducing EU’s greenhouse gas emissions by 55% by 2030). The Commissioner
therefore underlined the need for important additional investments on renewables and the fact
that REDII revision will focus on sectors that need more attention, such as transport and heating
& cooling, to bring the Directive in line with the ambition of the Climate Target Plan.
Particularly, this includes the transport and heating and cooling sectors. As of 2019, only 8.9% of
the energy used in the transport sector is produced from renewable sources. The impact
assessment shows that the share of renewables in that sector will need to increase to 24% by
2030. This will require a transformation of the transport sector. Charging infrastructure and
secure access to batteries will be critical to the roll out electric vehicles. Clean hydrogen will be
crucial to decarbonise aviation and maritime. Further, advanced biofuels will need to be
promoted more. The 2018 Renewable Energy Directive set the first targets, but these will need to
be revisited in light of the higher 2030 ambitions.
The decarbonisation of the buildings sector is vital to meet the 2030 targets. According to the
impact assessment, Member States should reduce GHG emissions from buildings by 60%
compared to 2015 levels. The European Commission will also look into measures to increase the
use of renewable energy in the industry sector, which accounts for 26% of EU’s energy
consumption, in particular the chemical, iron and steel sectors.
One of the main concerns raised by stakeholders regarding the use of bioenergy is that it could
lead to unsustainable forest management practices with a negative impact on biodiversity.
Sustainability criteria were introduced in the last revision of the Renewable Energy Directive,
which will start to apply in 2021. The draft implementing act will be published soon (est. June
2021), and it will be subject to a four-week open public consultation period.
However, this may still not be enough. Therefore, the European Commission is looking at
targeted changes to the sustainability framework in the context of the revision of RED II. The EU
62
objective is clear: EU and national legislation should support only sustainable practices and avoid
those with negative impacts on biodiversity.
In the concluding remarks of Kadri Simson, the Commissioner for Energy, European
Commission, she thanked stakeholders for their contributions and interest. She remarked on how
there is a clear and unambiguous support to raise the EU’s ambitions and increase the share of
renewables in the EU. She looks forward to an ambitious proposal to be announced in June this
year in 2021.
Outcome of the Open Public Consultation by Paula Pinho, Head of Unit,
DG ENER.
Paula Pinho, Head of Unit ENER C.1 Renewables and system integration, European
Commission, presented the first outcome of the Open Public Consultation (OPC). As part of the
OPC process, the European Commission launched a questionnaire to collect the views and
suggestions from stakeholders and citizens concerning the RED II. The questionnaire, which
consists of 54 closed questions and 42 open questions, was uploaded on the EU Survey Platform
at https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12553-Revision-of-
the-Renewable-Energy-Directive-EU-2018-2001/public-consultation). The OPC was open for 12
weeks, from 17 November 2020 to 9 February 2021. In conclusion, the European Commission is
grateful for the contributions that stakeholders have provided. The OPC will help the European
Commission in their preparatory work on the revision of RED, particularly in identifying what
the main issues and concerns are.
63
Session 1 Renewable energy in Transport
Table 36 - Details of Session 1
Time Moderator Panel
10h45 –12h15 Bernd Kuepker, Policy
officer, Decarbonisation
and Sustainability of
Energy Sources, DG
Energy, European
Commission
Keynote interventions
 Dr. Alexander Landia, Chairman, The Mobility
House AG
 Prof. David Chiaramonti, Polytechnic of Turin
Interventions from attendees
 Antonella Rossetti, Senior Advisor, Farm Europe
 Claude Mangin, Market Development Manager,
ENTSOG
 Eric Sievers, Director of Investments, Ethanol
Europe
 Harmen Dekker, Director, European Biogas
Association
 Ilkka Räsänen, Vice President, Public Affairs,
Neste
 Marko Janhunen, Director, Public Affairs, UPM
 Xavier Noyon, Secretary-General, European
Biodiesel Board
 Emmanuel Desplechin, Secretary General, E-
pure
 Felicia Mester, Senior Policy Advisor, Hydrogen
Europe
 Laura Buffet, Energy Director, Transport and
Environment
Summary
The share of renewables in the transport sector should be increased and efforts should be
intensified in this field. Energy system integration as a whole is important, and would require a
more consistent implementation by Member States (MS). Biofuels, hydrogen and electrification
are all important to meet the decarbonization goal, since some sectors (for example aviation and
maritime) will not be covered by electrification in the short and medium term. The importance of
high volume biofuels was also highlighted in the keynote intervention of Prof. Chiaramonti.
However, the views of stakeholders on the role of the available options for transport
decarbonisation and in particular the role of conventional biofuels differed. The need for new
technologies and boost in research and development (R&D) were also underlined, where the
revision of Annex 9 part A of RED II was highlighted by a number of stakeholders. Others
underlined that regulatory stability was important.
Position of keynote speaker Dr. Alexander Landia, Chairman, The
Mobility House AG
 National implementation is a main obstacle today (it is a patchy picture).
 We need to think broader - beyond mobility and consider energy integration as a
whole.
 The question is how to charge a large amount of electric vehicles (EVs)? We need to
turn this into a solution: How to provide flexibility for energy system.
 Vehicle-to-Grid (V2G) integration is a key factor for successful and sustainable
transport and energy transition.
 The daily flexibility needs of RES compared to contribution that EV batteries can
make to this. Based on conservative assumption: EV batteries can contribute 1/3 of
daily flexibility needs by 2030, more than 100% by 2050.
 Suggests three ways to do so:
1) Smart-charging (you select when you want to charge your battery, e.g. 2 hour
window while parked for 10 hours);
2) V2G, the car is giving back power when needed;
64
3) Second life batteries after they reach 80% capacity—they can be perfectly
used in stationary storage.
 The volume is very large and the costs are relatively low, because batteries have
been paid for by driving already. This will result in lower costs than pumped
hydropower or gas turbines.
 Put consumers at the heart of transformation of the energy system by allowing them
to earn money on their contribution and reducing emissions. Consumers can earn
about 1300€ per year and reduce emissions by 4t C02/annum/vehicle at the same
time. This is an example from Germany.
 Volkswagen will offer its first bi-directional charging for their vehicles in 2022.
This may increase consumer interest who may ask for updates in regulation in order
for them to tap into this economic incentive.
 Currently, promoting electric mobility is done through the provision of subsidies
which are costly. The car owners, who have received subsidies, are not motivated to
provide the services of their batteries to serve the grid. If these batteries are not used
for grid services, half of the capacity guaranteed by original equipment
manufacturers (OEMs) will be wasted.
 Our proposal is to introduce smart regulation to enable the use of batteries for grid
services, to enable consumers to earn money by driving with green power, and if
they are able to earn revenue (1300€/year), this could be securitized through a green
bond or loan. That would be an upfront potential payment on power with current
share of German states in the purchase subsidies.
 In Germany, the 2,500 batteries that are managed by Mobility House were able to
deliver about 4% of the daily flexibility needed by the European grid system on 8
Jan.
 A massive contribution of EV batteries is possible at very low costs.
 RED II did not specify that you need to calculate the specific contribution of any
source of fuel in a certain way, and is dependent on the interpretation of the national
governments. In our view, the current German methodology underestimates the
contribution of electric cars and e-fuels by 13 times.
 There is a need to measure the real contribution, which is possible.
 There is a need to create a level playing field for aggregators, like Mobility House,
for example.
 There is also a need to avoid car manufacturers working in silos building car
batteries without sharing information. Proposes for open systems, multi-OEMs,
multi-vendor, multi-operator, which are able to operate across the EU.
 It would be great to have reliable data from network operators on CO2 footprint of
power in the system and the share of renewable energy used.
 The moderator asked Dr. Landia if further actions are required to ensure correct
implementation of existing provisions , or if he could go in further detail in this
regard. There is a need for more R&D and rules for car manufacturing. There is a
need for European manufacturers to agree on the standard for manufacturing cars to
facilitate bi-directional charging.
 The moderator sought to clarify with Dr. Landia the question of implementation of
the RED II. Do questions pertain to ensure correct implementation of existing RED
II or is there a need to set out some rules in more detail to ensure proper
implementation. What kind of rules would be required? In response, Mobility House
said that they have produced a set of rules for Germany, as these are country
specific. These include, for example, rules regarding R&D and more guidance for
car manufacturers, for example by agreeing on the Combined Charging System
(CCS) standards, a software standard, for bi-directional charging vehicles. EU car
manufacturers would need to agree on this standard before manufacturing cars.
Another example is the need for calibrated metering /smart metering, which can
reduce the earnings of EV owners. There need to be rules to build a reliable database
65
sharing information between EV batteries and OEMs, in order to avoid the need for
installing this additional smart meters.
Prof. David Chiaramonti, Polytechnic of Turin
 All fuels and feedstocks are needed to achieve targets.
 RED II is one important policy in the portfolio of complementary policies, such as
the European Emissions Trading System (ETS), Effort Sharing Regulation, waste
policies, Carbon Offsetting and Reduction Scheme for International Aviation
(CORSIA) etc.
 Insights from RE-CORD project on biofuel scenarios and market perspectives:
o Massive market uptake of industrial-scale lignocellulosic and electricity-based
fuels expected after 2030/2035.
o RED II Annex IX A-B: RES-T greenhouse gas emissions savings of 24% by
2030 is not sufficient
o Land use: Good soil practices are possible and beneficial.
 2030-2050 scenarios:
o All renewable options need to be deployed in parallel to deliver scale-up to
long-term ambitious goal.
o Ambitious and stable (long-term) supporting policies.
o Curtailment of fossil fuels to further foster renewable uptake?
 Biofuels under pressure from climate-constrained future => water deficits
increasing!
 Biofuels have to become part of a circular economy.
 Biofuels can contribute if well-designed and integrated in a circular sustainable
development models.
Summary of interventions from attendees
Antonella Rossetti, Senior Advisor, Farm Europe
 According to their study, biofuels produced from European crops have not replaced
EU food production. Biofuels contribute to the development of rural areas.
 Renewable energy progress report: no correlation has been observed between food
prices and biofuel demand. At the same time, we see that the Commission persists
with its attempt to limit the contribution of EU biofuels with a negative narrative.
 We need to understand on what basis the Commission is assessing and reviewing the
cap on biofuels.
 Clear policy distinction needed: sourced from EU vs. imported (often from
deforested areas).
Claude Mangin, Market Development Manager, ENTSOG
 Would like to extend RED II scope to low carbon fuels because it can help
decarbonize.
 Understands that some stakeholders are afraid of this but declares good intention.
 Simplify and harmonise accounting based on point of origin. Need clearer sub
targets.
 Not in favour of additionality principle.
Reaction from keynote speakers
Dr. Alexander Landia, Chairman, The Mobility House AG:
 Agree that all technologies are required to reach the targets.
 Internal combustion engine used for conventional biofuels or hydrogen has a very
low energy efficiency.
 Current Fuel Cell technology from green electricity inputs have an energy efficiency
of about 35%.
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 If used directly in a battery electric vehicle (BEV), a 70-90% efficiency can be
achieved.
 In the long term, there will be a clear way on how to this. On the way there you need
all of it, because there are areas where you cannot use batteries, for e.g. in the
aviation sector.
Prof. David Chiaramonti, Polytechnic of Turin:
 It is a multi-discipline consideration. Well-designed biofuels can be carbon negative.
The Paris COP 21 heard a continuous request for carbon negative actions because
carbon neutrality is not sufficient to meet the high climate targets set. This,
combined with the curtailment of fossil fuels, is the single action that will help.
 How much value do you give to fighting desertification and drought versus
greenhouse gases emissions savings? They work together, and there is no need to
prioritize one over the other, but instead, to prioritize those technologies that
addresses both, e.g. multi-year agriculture. There is a big opportunity to address
many positive impacts with multiple instruments in the same value chain.
 In that respect, ETS has been mentioned. ETS is also under revision, there is a
consideration for nature-based solutions. This can be very well integrated with the
sustainable biofuel value chain. There is an opportunity but problem: hard to
harmonize. We should not see this as problems but as a significant opportunity to
boost these impacts.
Eric Sievers, Director of Investments, Ethanol Europe
 RED I was a ‘total failure’ to biorefineries; RED II has improved to this end but not
yet triggered any major investments.
 There is no 8.9% renewable share 2019 in Europe as this figure is after multiple
counting;
 Criticises Dr. Chiaramonti, EC and consultants supporting the EC for lack of
expertise in biofuels;
 Fantasies defy markets (refers to intervention by Antonella Rossetti, Farm Europe);
 Prices are falling;
 Full intervention available as an op-ed on euractiv:
https://www.euractiv.com/section/all/opinion/why-red-iii-will-fail-just-as-three-
renewable-energy-directives-have-already/
Harmen Dekker, Director, European Biogas Association
 Recent reports over the last two years. Biogas potential is very high. We can cater to
30-40% renewable gas supply, besides green hydrogen, produced in a true circular
way.
 It is not about the engines, but about the fuel. The risk of not stimulating biomethane
is not meeting the targets for curbing the methane emissions. There is a need to
make sure that there are enough sustainable fuels also for mobility. It should be
stimulated also on the vehicle side.
 Five points:
o Biomethane in transport should be recognized on an equal basis to BEV in
lifecycle analysis. It should at least be acknowledged as a zero emission fuel.
o RED should not be used for low carbon fuels.
o Agreeing with Landia, sectorial targets should be increased. Removing
multiplier should be seriously considered.
o Biomethane is not only a renewable fuel which is already available and
supplying negative emissions in the transport sector. It can also be available to
cater for the maritime sector, and as a heavy-duty fuel.
o Lastly, a target on renewable gas (11%) is needed to make sure biomethane
and green hydrogen are taken up in the future.
67
Ilkka Räsänen, Vice President, Public Affairs, Neste
 There is a need to reduce emissions, and all measures are needed to be able to
achieve the target.
 By 2030, 90% of heavy-duty vehicles (HDV) and 80% of private vehicles will run on
diesel. The need to address 80% of the fleet should be a priority. Other solutions will
emerge over time.
 Will there be enough feedstock to raise ambition level set by the IEA, for example?
Yes there is enough feedstock. There is availability and potential. The previous RED
revision already sets caps on food and feedstock and started ILUC to mitigate risks.
 Industry is still investing a lot. There is a need for research and investment. There is
also a need to raise ambition level and current feedstock pool.
Marko Janhunen, Director, Public Affairs, UPM
 Taking the point of view of an investor, there is a strong need for enabling
regulation. There is also a need to limit the changes to the current directive to reduce
the risk of regulatory uncertainty for investors.
 Should there be a revision of Annex 9 Part A, it will bring the risk of creating chaos.
 Regulation is key and little details are extremely important. The revision is an
opportunity to put things in the right place.
Reaction from keynote speakers
Dr. Alexander Landia, Chairman, The Mobility House AG:
 Observations: 6% GHG reduction in transport in Germany was impossible to be
fulfilled by biofuels. 1% gap was filled by EVs and other contributions. Biofuels
were unable to deliver 6%.
 On the other hand, the price of biofuels is driven by palm oil prices in Indonesia.
 If we have a chance to increase the share renewable by simply having electric cars
on the street and recognizing their contribution 1:1 without multipliers, we can
compare that to the contribution of biofuels and then make this comparison to the
price.
Prof. David Chiaramonti, Polytechnic of Turin:
 To Erik Sievers: What I tried to show is the biorefinery approach. The point is that
any sustainable model should be promoted. Sustainability goes way beyond
greenhouse gas emission reduction only, and beyond the scope of RED. The view
should be broad and include all the possible benefits following the green deal
approach. Conventional crops in well-designed chains could contribute.
 To Harmen Dekker: Fully agree on your comment. I mentioned earlier about gas for
climate, and the potential there for heavy transport is perfectly fitting into
sustainability concept on agricultural sector that was introduced earlier during my
intervention.
 To Marko Janhunen: Very relevant. In legislation, details are also important , e.g.
measurement of carbon in soil. The solutions must be doable to deploy systems and
not add burdens when it comes to implementation because it hampers investments. It
is possible today. We would not build anything without a sound combination of
measurement and modelling. It is normal practice to combine measuring and
modelling.
Xavier Noyon, Secretary-General, European Biodiesel Board
 The European Biodiesel Board represents a range of biofuels, and has an awareness
of various sectors, including road, heavy-duty vehicles, aviation, maritime.
 Beyond the sustainability issues, it is also very important to take into account public
acceptance. It is a difficult task for the legislator address all the various views of the
population.
68
 A stable framework and recognition are beyond doubt very important. It is very
important for investments and for the development of the industry to have stability
in the regulation.
 We already work with farmers on soil quality. We think that simple bans or
simplistic solutions and categories that do not match existing notions on feed/food
crop, and is not constructive. We are ready to look at issues seriously, but there is a
need a better and more appropriate categorisation.
 Important to continue to develop biodiesel and to consider its role in
decarbonisation. The development of biodiesel is not contradictory to the political
decision to develop electric vehicles.
 In deploying those solutions and other measures, such as the limitation on feedstock,
these can have a negative impact on the aviation sector, which would need to rely on
sustainable biofuels to decarbonise. It can also lead to devastating effects for the
deployment of biofuels for road transport in the near future. This is a complex
debate with no simple solutions.
Emmanuel Desplechin, Secretary General, E-pure
 Supports the European green deal ambition.
 Increased targets and pushing biofuels.
 We must ensure that the targets and sub-targets are met and are not undermined by
future revision.
Felicia Mester, Senior Policy Advisor, Hydrogen Europe
 Significantly revising upwards the 14% renewable fuel obligation (Art. 25) with a
specific dedicated target for renewable fuels of non-biological origin in the transport
sector (similar to the 3.5 % target for advanced biofuels provided by Art. 25.1 (b)) to
level the playing field.
 The application of multipliers (Art. 27.2) (without a corresponding upward revision
of the target, when the Directive was negotiated) has made the 14% a target almost
irrelevant or very easily attainable (statistically) in many EU countries from the
moment the RED II was adopted. Therefore, we advocate for a revision of the
multiplier system.
 Renewable energy sub-targets and multipliers need to be mutually reinforcing as one
provides a push in supply and the other creates a pull effect. This is currently not the
case.
 When developing legislation and proposing targets and incentives, it is important to
avoid duplication of efforts; as such, if specific sectoral targets, for e.g. in industry,
maritime or aviation, are proposed within the context of RED revision, they should
always be coherent with any other more specific and targeted sectoral legislative
initiatives e.g. ReFUEL in the maritime and aviation.
 Specific sub-targets for these energy intensive sectors (e.g. steel production, aviation
and maritime) should be considered in the upcoming revision of the RED to further
incentivize and speed-up deployment and adoption of renewable energy.
 We have repeatedly raised our concern on the principle of additionality as defined
today. It is the single highest regulatory barrier holding back renewable hydrogen
deployment in Europe today. We welcome the work of the Commission on the
Delegated Act.
o The effect of additionality applied only to hydrogen producers is detrimental
to the market uptake and deployment of renewable hydrogen, and with it, the
demand for more renewable energy.
o Holding renewable hydrogen producers responsible for the residual mix of the
electricity system in a particular country is deeply unfair. No other consumer
of renewable energy is subject to such conditions in order to be able to claim
renewable character. Applying additionality criteria only to hydrogen
producers is as such, highly discriminatory.
69
o It ignores the basic economic rules of supply and demand: renewable
hydrogen creates exclusively demand for renewable energy. More demand for
renewable energy leads to more supply of renewable energy. This is a basic
economic principle. Happy to explain in detail why.
o The fears themselves are exaggerated, as most of the production of hydrogen
using non renewable energy delivered by the electricity grid will only happen
in the initial stage of market development, will be scattered across Europe,
and, in relative terms, will be a drop in the ocean compared to the size of the
electricity market. Any possible negative impacts that may occur will be small
and short lasting.
o Even if the effect of connecting electrolysers to the grid would be to
inadvertently generate demand for fossil-based electricity (NB. please
remember that renewable energy producers generate demand exclusively for
renewable electricity), the net effect would actually be positive in a significant
number of countries, and the sector where the hydrogen would be used. Here
again happy to share further info and our data.
 Hydrogen as a distinct energy carrier, separate from electricity and gas. As such,
conversion from one energy carrier to another must be transparent to the consumers.
 Guarantees of Origin (GOs) must include (1) the primary energy sources (full
disclosure of sources) and (2) the greenhouse gas emission footprint.
 GOs need to capture the attributes resulting from different production pathways.
 It is becoming clear that in order to account for transport targets we will need
imported hydrogen. An international GO system is required for import and export of
hydrogen.
 Conversion from H2 GO to Gas GO as the two are not interchangeable.
Laura Buffet, Energy Director, Transport & Environment
 The main point of the revision of the RED is to shift design to not only focus on
liquid fuels but also towards zero-emission technologies such as renewable
electricity.
 Touches on four points:
o Biofuels: All crop-based biofuels should be phased out by 2030 from RED II,
high deforestation with biofuels including palm oil should be phased out
much earlier, e.g. 2021. Advanced biofuels need stronger safeguards within
the RED framework.
o Renewable Electricity: The RED is not really designed to fully accommodate
its potential. We really encourage the Commission to introduce a dedicated
credit mechanism at the EU-level to make sure the potential of renewable
electricity is fully reflected in the revised RED targets.
o There has been some indication from stakeholders, and the Commission to
broaden the scope of RED to include on low carbon fuels. T&E is strongly
against it. Important for RED to focus on renewables. Regarding hydrogen,
they should be made eligible only when produced from renewable electricity
with clear additional requirements.
o Regarding overall transport target, T&E agrees on revising the target.
However, the target of 24% is too high. We advocate for a lower target, but
there is a need to focus on the quality of the fuels and the environment
integrity of the fuels, rather than on the quantity of the fuels. There is also a
need to reflect the environmental impacts on the use of these fuels.
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Main topics covered in Session 1 on renewable energy in Transport
 Adjusting targets
 Potential of EVs and BEVs
 Need for a consistent, simplified and harmonised way to measure greenhouse gas
emission reductions across technologies
 Bioenergy/Biofuels
 Low carbon fuels
Session 2 Renewable energy in Heating & Cooling, Buildings and District
Heating
Table 37 - Details of session 2
Time Moderator Panel
13h30 –15h00 Eva Hoos, Policy officer,
Renewables and Energy
System Integration Policy,
DG Energy, European
Commission
Keynote interventions
 Brian Vad Mathiesen, Coordinator sEEnergies
Europe, Aalborg University
 Oliver Rapf, Executive Director, Buildings
Performance Institute Europe (BPIE)
Interventions from attendees
 Michael Villa, Executive Director, smartEn
 Paolo Basso, Policy Director, EHI
 Paul Voss, Managing Director, EHP
 Jaume Loffredo, Energy Policy Officer, BEUC
 Sanjeev Kumar, Head of Policy, EGEC
 Thomas Nowak, Secretary General, EHPA
 Pedro Dias, Secretary General, SolarHeat Europe
Summary
The high expectations and potentials for decarbonization in the heating & cooling, buildings, and
district heating sectors were discussed, with the Energy Efficiency First principle and the
sustainable supply chains of heat as the core aspects. Among others, efforts should be made to
accelerate district heating, combined with stimulating the uptake of individual heat pumps in
rural areas. Particular attention should be given to thermal storage linked to heating & cooling
(H&C), not only to the storage of electricity. Smart thermal grids are needed besides smart
electricity grids. The study presented by Oliver Rapf (BPIE) shows the potential of renewable
energy in the building sector and its role should be increased with targets—in the range of 53%
RES (heat + electricity) in final energy demand by 2030. Therefore fossil fuels should be
replaced by renewable electricity for heating, cooling and hot water. Reflection points for RED II
include: increasing the annual target for the share of RES in H&C, increasing electric and thermal
storage capacities in buildings, and making use of flexible energy demand management systems
in buildings. A more integrated approach and planning is needed to support the growth of RES in
buildings, therefore long-term renovation strategies should be included in the EPBD revision.
This would require the increase of deep renovation rate, the application of stringent definition,
implementation of national Nearly Zero Energy Building standards, and integrated planning to
combine buildings efficiency strategy with renewable H&C supply strategy. The outcome of the
discussion saw a need for a more ambitious and binding H&C target, and the need to foster
demand-side flexibility, electrification, hybrid solutions, the strengthening of replacement
obligations and more funding for renewable district heating and cooling (DHC).
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Position of each panellists Brian Vad Mathiesen, Coordinator of
sEEnergies Europe, Aalborg University
 sEEnergies projects (see https://www.seenergies.eu/), is a continuation
of Heat Roadmap Europe.
 In individual MS, H&C makes for more than 50% of the final energy demand, and
must therefore be the focus. Heating in all MS is more important than cooling.
 The scenarios in Clean Planet for All (1.5 TECH and 1.5LIFE) do not address a high
ambition on DHC, relying too much on gas and Power-to-X (P-to-X) (which is
counter-intuitive), with unrealistic energy efficiency targets in buildings. Particular
attention should be given to thermal storage linked to H&C, not only to storage of
electricity, which is more expensive. Smart thermal grids are needed in addition to
smart electricity grids.
 Energy efficiency in scenarios from 100 kWh/m2 to 40 kWh/m2 is problematic. The
2030 level is much more realistic.
 Bioenergy is really problematic. Do not replace coal with biomass in combined heat
and power (CHP), and not to replace individual heaters with biomass boilers! Biogas
is another matter, it can be used in CHP.
 Tesla Powerwall should be banned (EUR 300/kWh) if we want to have a cheap
integration of renewable energy. It is cheaper to invest in thermal, and bigger energy
storages!
 Lots of heat is wasted because we do not have a district heating network. Waste
Heat (WH) can cover half demand of DHC (where available).
 Those countries that have natural gas predominantly (UK, NL) have low penetration
of renewable energy in heating but the inverse is also true. Positive
correlation between district heating and renewable uptake.
 Need a lot more DHC, a lot energy savings, and also need to distinguish between
cities and rural areas. For buildings we need to look at building (?) renovations,
saving energy etc
 In the future we need a smart energy system – not only electricity but also smart
thermal grids.
 We need to ramp up the investments in new district heating and cooling in Europe if
we want to decarbonise Europe in a cost-effective manner.
Recommendations:
 Heat pumps in buildings - increase in share from 1% to half of the heat
market mainly in rural areas.
 District heating supply increase from 12% to cover the other half of the heat market
mainly in urban areas.
 Individual fuel boilers and electric heating for heating should be limited as far
as possible
 All natural gas boilers should be phased out.
 Hydrogen is not for heating buildings.
Oliver Rapf, Executive Director, Buildings Performance Institute
Europe (BPIE)
 The building sector must reduce GHG by 60% by 2030. How do we come to the -
60% GHGs? Report is available online at https://www.bpie.eu/publication/on-the-
way-to-a-climate-neutral-europe-contributions-from-the-building-sector-to-a-
strengthened-2030-target/ , where the work presented is based on model developed
under Horizon2020 project.
 RES heat + electricity to 53% and for heat: 32%. These numbers are based on
looking at just heating, cooling and hot water demand.
72
 Need to make sure that within the coming decade we reduce energy demand by
24.8% which is the enabling condition to allow for increasing renewables.
 Modelling shows that the decrease of fossil fuels should be larger than renewables
because energy efficiency is essential (see figure below).
 Policy design is based on modelling target for H&C need to come to 3.7% under
Art. 23 of RED II
 Need significant storage electric capacity and increasingly thermal
storage (including in buildings): better insulated, higher efficient buildings. More
flexible energy demand system. Integrate the respective tech. There are strong link
with the Energy performance of buildings directive (EPBD), a more integrated
approach is needed.
 How can we foster energy positive districts and buildings? Buildings could become
an energy source.
 Sees a current disconnect between renewable energy supply to building sector, and
the decrease of energy consumption of the building sector – this would require
better integrated planning to meet the higher climate targets. The relevant policies
would need to be considered along with the revision of RED II.
73
Summary of interventions from attendees
Michael Villa, Executive Director, smartEn
 Smart renewable electrification in buildings and transport sectors could be
interoperable. This is in line with the energy system integration strategy.
 In order to help integrate more variable RES generation in the system in a cost-
effective way, in addition to reducing energy consumption or energy efficiency
measures, making consumption more flexible could help. This would require an
evolution of the energy system concept from a static to a dynamic one. This would
increase system efficiency. This would not only benefit end-users, but also offers
flexibility for the energy system. Therefore, there is a need to activate greater
flexibility.
 Example of Norway by 2030 -> even if EVs are charged in buildings, energy
demand will increase by 3.5% rather than doubling. -> extremely important that
RED fosters supply and demand flexibility in all user sectors.
Paolo Basso, Policy Director, EHI
 Agrees that addressing heating will go a long way in decarbonising buildings. In
Europe, the vast majority of heating equipment is old and inefficient and has to be
replaced faster than it is today -> part of renovation wave.
 Hybrid technologies have a role to play -> present advantages to realise system
integration, low intensity on budgets and buildings & grids.
 Decarbonised and renewable gases have a role to play -> at this stage there is no
more talk about fossil fuel technologies for heating, the appliances can use
renewables and hydrogen for heating.
 Thermal storage is important. We know thanks to the modelling that there will be a
role for each tech.
 EHI supports a RED II target of 38 to 40%. They would like to see a clearer role
for hybrid heat pumps under the RED II as well as minimum targets for buildings
and large renovation.
 In favour of increasing the 1.3% target and making it binding.
 Renewables gases and renewables electricity should count for the heating and
cooling
Paul Voss, Managing Director, EHP
 Review of RED II should be looked at in conjunction with discussions on the
Energy Performance in Buildings Directive (EPBD) and the Energy Efficiency
Directive (EED). Experience in market for district heating has developed well.
Emergence of sector integration is very helpful. District heating can help to find an
appropriate role in the system for renewable electricity, and also for renewable
decarbonised gases to balance the electricity system, and to be used in CHP.
 Currently, district H&C still uses plenty of fossil fuels, in a more integrated system
we should be able to help but also be helped through integration of more
renewables. District heating can help tie all things together and avoid using more
precious resources like electricity or hydrogen.
 Hydrogen should be kept out of residential heat.
Jaume Loffredo, Energy Policy Officer, BEUC
 Need clear decision of where to go, how to get there, and how to do it efficiently.
Legislation (the “how”): binding H&C targets. Getting there: planning – plan
where to put DHC, heat pumps -> very important for consumers, they do not know
what they should be buying at the moment due to lack of clarity.
 Low carbon hydrogen has no places in residential heating -> more costly and less
efficient.
Sanjeev Kumar, Head of Policy, EGEC
 Fossil fuel subsides going into H&C must be eradicated. It is important that non-
renewable technologies are excluded from RED II.
74
 District heating has a significant role to play because we have to decarbonise fast.
Funding to district heating systems needs to increase. As a reference, list of
Projects of Common Interest (PCI) allocated 29 billion euro to fossil infrastructure.
We would like to have at least the equivalent for district heating under the revision
of the PCI list
 For technologies like geothermal -> risk insurance, need to de-risk large projects
with high Capital Expenditures (CAPEX) (geothermal, ocean etc). Art. 3.5 of RED
II instructs MS to reduce CAPEX, however, it is better option to put a risk scheme
at European level than to put the burden on Member States, as it is at the moment.
 Cooling is very important -> adequate attention is needed.
 Rural communities cannot be left behind. Need dedicated programme to rapidly
decarbonise.
Thomas Nowak, Secretary General, EHPA
 We have enough solutions available, Heat Pumps are an important one. Need to
start soon, heating and cooling sector is quite slow. Start now and push for
solutions that are available now and then see what happens. 60% of existing
buildings can be retrofitted with a Heat Pump without need for renovation.
 3.7% target -> needs to be supported from the policy side to avoid ambiguity on
which solutions to take.
Pedro Dias, Secretary General, SolarHeat Europe
 Having an opportunity to make a change. 2030 is a milestone, and whatever is
installed by 2030 will be there in 2050 (assets with long life time). This is the
decade of transition to decarbonise heat.
 Promote measures that will help consumers in the transition. High upfront costs
but lower operational ones and pull and push measures. Need to work on planned
replacement. Currently consumers are dealing with urgent replacement. Need to
work with consumers to have planned replacements: provide answers to questions
such as what are the options? what are the financing mechanisms? etc.
 Industry need to push for transition and RED needs to include an obligation on
companies to incorporate at least a small percentage of energy from RES.
Session 3 Sustainability of forest biomass
Table 38 - Details of session 3
Time Moderator Panel
15h00 –
16h30
Giulio Volpi, Policy
officer,
Decarbonisation and
Sustainability of Energy
Sources, DG Energy,
European Commission
Keynote interventions
 Sarah Mubareka, Joint Research Centre, European
Commission
 Prof. Jean-Pascal van Ypersele, former vice-chair of IPCC,
UC Louvain
 Karoliina Niemi, Forest Director, Finnish Forest Industries
Federation
Interventions from attendees
 Kenneth Richter, Consultant, Birdlife Europe
 Alex Mason, Senior Policy Officer, Climate and Energy,
WWF European Policy Office
 Simon Armstrong, Chief Technical Officer, Sustainable
Biomass Program
 Ulrich Leberle, Raw Materials Director, Confederation of
European Paper Industries
 Jean-Marc Jossart, Secretary General, Bioenergy Europe
75
Summary
The panel started with a presentation by the Joint Research Centre of the European Commission
(JRC), on their recent report on woody biomass. According to JRC, the need for a swift and
robust implementation of sustainability criteria on forest biomass to minimize biodiversity risks
was underlined, along with the reminder that effectiveness will depend on national legislations.
The report also identifies risky and positive pathways for producing bioenergy, particularly forest
bioenergy, depending on how the raw material is harvested. The two keynote speakers presented
on the one hand industry views advocating that current RED II sustainability criteria should not
be changed, whereas Prof. Jean-Pascal van Ypersele from UC Louvain reminded that forests
were essential for carbon sink and that bioenergy was not carbon neutral as such. A lively debate
on the sustainability of bioenergy and carbon neutrality of forest biomass followed, with
panellists and attendants sharing different points of view on the role of bioenergy for the 2030
and 2050 targets. Some were against bioenergy being treated as carbon neutral and there was a
discussion with regards to the counting (or not) of emissions under LULUCF criteria in
REDII. NGOs called for a cap on bioenergy, industry warned against creating regulatory
instability which would undermine the achievement of the 2030 targets
Position of each panellist
Sarah Mubareka, Joint Research Centre, European Commission
 JRC presented on the recent report on woody biomass, available online at
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-
reports/use-woody-biomass-energy-production-eu
 Key messages:
o High dependency on forest-based industries to produce by-products;
o Overall higher rate for energy demand (increased reported uses of woody
biomass for energy & material);
o Gap in data is a major obstacle
1. Sustainability criteria covering smaller plants would lead to improved
monitoring;
2. Swiftly implementation for RED II sustainability criteria to avoid
negative impacts.
 Extend no go areas (additional safeguard in highly diverse ecosystems).
 Effectiveness of EU measures will depend on national legislation fitness &
implementation.
Prof. Jean-Pascal van Ypersele, former vice-chair of IPCC, UC
Louvain
 Trees are worth more to humanity alive than dead.
 Causal link between CO2 concentration and temperature spirals - urgency to go to
net zero emissions of CO2.
o Limited effect of COVID19 on CO2 emissions
 Provisions from RED II would allow MS to cut and burn trees for energy to the
detriment of forests and climate change.
o Need to stop treating biomass power generation as CO2 neutral,
fundamentally revise current consideration of wood burning/wood imports in
the EU;
o Reference to IPCC report and misinterpretation leading to carbon neutrality
approach
o It takes a long time to reabsorb the CO2.
 Significant increase of wood harvesting after 2015 (also shown in paper by
Ceccherini et al.)  expansion of wood markets (supported by provisions in RED
II).
76
 Increase in wood pellets due to subsidies.
 EASAC conclusions:
o CO2 emissions per unit of electricity generated from forest biomass are higher
than from coal;
o Initial impact of replacing coal with forest biomass is increased CO2 levels in
the short and medium term;
o EU (and MS) legislation should ensure only positive contributions to climate
change are regarded as RES.
 Payback:
o The concept of all bioenergy being carbon-neutral is too simplistic. Carbon
neutrality involves a payback' period (the time taken for forests to reabsorb
the carbon dioxide emitted during biomass combustion), which ranges from
decades to hundreds of years.
o In calculating payback periods, it is essential to properly include the timing of
harvesting on carbon stocks as well as supply chain and biogenic emissions.
Switching from fossil fuels to forest biomass is the equivalent of taking out a
carbon loan.
o However, although monetary loans require paying back in a specified period,
carbon loans currently are free of any such conditions; yet until payback is
achieved, the effects on climate are negative.
o The proximity of current levels of warming to the 1.5C Paris targets requires
that only projects whose payback periods are of the order of a decade or less
Should be regarded as 'renewable energy'. The distorting effects of the
current separation of combustion and Land use and Land- Use and Forestry
(LULUCF) emission rules on Climate must be considered.
o From a mitigation perspective, it is important that forest carbon stocks are
maintained — or preferably increased over time.
 Conclusion:
o Urgency to protect biodiversity/climate;
o RED wrongly treats wood burning as carbon neutral;
o This led to increased harvesting of forests and decreased biodiversity;
o Carbon debt created by burning wood will have to be paid in the future;
o Separate targets for LULUCF and other sectors without trading between them
would be safer (natural sinks are difficult to account for).
Karoliina Niemi, Forest Director, Finnish Forest Industries Federation
 Finish Forest Industries Federation (FIFF) – 80 forest companies operating in
Finland with global markets;
 Federation lobbies at Finnish, EU, global level;
 Forest resources increasing but unstable. Resources used in products 
substitution effect
 Fossils are a one way process  fossil resources are decreasing and are stable;
 Transition from fossil to biobased economy
o 200bn EUR increase to 2030 for forest industry products;
o Contribute to green deal & energy solutions.
 Key: Sustainable, active and timely forest management  Keep forests healthy.
 Forestry
o Produce high quality wood (different by products, resource efficient use of
single tree);
o Manage forest, taking care of biodiversity;
o Loop system;
o Different criteria from different EU policy sectors - how to ensure stable
operating environment?
 Biomass sustainability
77
o Focus on eliminating fossil resources and fostering green sustainable solutions
o Sustainability criteria cover all essential parts of biomass sustainability.
Reasons against revising them are:
1. Wood diameter cap does not solve challenge (if any); large diameter
trees are burnt if of low quality, due to various issues (diseases, shape,
disasters).
2. Criteria have not been tested yet, as RED II just being implemented.
3. Risk-based approach is a modern way to assess sustainability of actions,
respecting national forestry policy. If legislation is not good enough, then
operator can go at sourcing level with certification to proof sustainability.
4. Industry needs a stable operating environment, and opening criteria
would generate years of uncertainty and be a risk for industrial renewal.
Summary of interventions from attendees
Kenneth Richter, Consultant, Birdlife Europe
 NECPs of most MS provide little detail on future biomass sources (and often
wrong);
 Danger of steep increase on wood burning for power;
 Burning trees increases net emissions and contributes to forest degradation;
 Feedstock issue, needs feedstock solution (will not be solved with sustainability
criteria);
 Only fine forest residue is acceptable, but nobody collects this for power
generation;
 Easiest solution is to end support for burning biomass under RED
o No subsidy for wood harvested from forest, should go to clean energy
solutions instead;
o Can still use waste/residues from forestry activities.
Alex Mason, Senior Policy Officer, Climate and Energy, WWF European Policy Office
 NGOs are concerned about biodiversity, but main issue with bioenergy rules are
the climate issues. If these are fixed, then biodiversity issue will be fixed as well;
 EU policy is encouraging energy that increases emissions compared to fossil
energy;
 Key issue is what you are burning (not how it was produced, how the forest was
managed);
 Rules are also encouraging dedicated energy crops, food and feed based biogas.
Any dedicated use of land will end in more carbon emissions than if the land was
left alone;
 There needs to be a feedstock-based approach, and we can expect another U-turn
from the EU similarly to what happened with biofuels.
Simon Armstrong, Chief Technical Officer, Sustainable Biomass Program
 2/3 of biomass supplied to CHP is supplied via SBP;
 SBP verifies sustainability criteria;
 Effective solution being implemented already through SBP covering large scale of
EU biomass energy generation;
 Changing regulation at this stage creates uncertainty, while a consistent approach
is necessary;
 Difficult to implement restrictions (such as cm cap), discussed in detail before;
 Practical experience – limitation of stem wood will not be effective:
o How to differentiate stem wood from branches/leaves;
o Disproportionate administrative burden;
o Perverse/unintended outcomes.
Ulrich Leberle, Raw Materials Director, Confederation of European Paper Industries
 The key concerns related to biomass are:
o Does it harm forest ecosystem/biodiversity?
78
o Does it lower CO2 emissions?
o Does it harm the efficient working in the wood sector and forest based
economy?
 Last revision struck a balance between env/climate/socio-economic concerns
o Paper industry thinks that subsidies have distorted markets and shifted the use
towards bioenergy.
 LULUCF framework reflects the use of biomass from forest. Other reductions
would be needed, so it is not ‘neutral’.
 More focus on efficiency, local supply chains, so RED II is showing results
already (more sustainable);
 Possibility for MS to exclude technologies based on concerns (following cascading
use of materials).
Jean-Marc Jossart, Secretary General, Bioenergy Europe
 56% of participants in OPC think RES criteria should not be modified;
 Some participants want to limit feedstock based on an emotional response, but this
is a misunderstanding and not an effective way of doing policy
o Forest owners will never grow a forest for bioenergy, fuelwood is made of
discarded wood (colour/shape)
 Strict implementation of RED II is needed;
 LULUCF framework works. We should not count emissions of bioenergy, as this
would be a double counting (in line with IPCC/IEA);
 The more wood demand, the more forests will be grown.
Main topics covered in Session 3
 Biodiversity protection
 Legislative stability and implementation
 Separate LULUCF targets
 Data gaps for sustainability criteria
 Forest management
Concluding Remarks by Ditte Juul Jørgensen, Director General, DG
ENERGY
Ditte Juul Jørgensen, Director General DG Energy, concluded the session, by sharing the key
takeaways as a summary of the three sessions held during the event. Key points raised concerned:
 The European Commission (EC) needs to accelerate the development of renewable
energy in order to achieve the 2050 climate neutrality objective and in order to
meet the 2030 targets. This already seen in the Climate Target Plan and the Impact
Assessment (in collaboration with DG CLIMA) on how to reach 55% by 2030,
which has been agreed upon by all 27 MS. These ambitions translate to a new
target of 38-40% renewable energy by 2030, which is significantly higher than the
current 32% target.
 Transport
o The EU needs a much higher level of electrification as well the integration of
biofuels and hydrogen. To achieve the level of electrification that the EU
needs, system integration is crucial.
o Electrification is the main option to decarbonise road transport, but there are
different needs and possibilities for different modes of transport.
o EC needs to set the right enabling framework for electrification, which
requires significant investments, regulatory measures across a range of policy
fields.
o For renewable and low carbon fuels, EC needs to maintain a stable
framework, but needs to modify the current framework in order to meet the
79
objectives. Particularly, hydrogen and hydrogen based synthetic fuels need to
be considered for the maritime sector or aviation.
o The views of stakeholders on the role of biofuels is mixed. EC believes there
is a place for the use of advanced biofuels, but the main focus should be
electrification.
 Heating and Cooling
o In H&C the level of ambition needs to be stepped up, accompanied with a set
of measures to make sure this key sector contributes to the overall ambition.
However, there are different aspects that need to be taken account of when
setting targets, particularly local specificities/conditions and the criteria
around of cost and effectiveness.
o Price signals are key, including the need to make a level playing field across
energy carriers and consistency with carbon pricing.
o When replacing existing heating systems and looking at what heating systems
will be installed, it needs to be ensured that there are no longer investments in
fossil based systems.
o It is important to help make sure there is consumer guidance. Generally, there
needs to be a clear framework for consumers to make choices.
o Buildings need to be reviewed as it is the largest sector for energy use in
heating and cooling and largest greenhouse gases emitter. In buildings, there
needs to be a level playing field for the different technologies.
o RED must be coherent and coordinated with the review of the EED and later
the EPBD.
o RED should incentivise investments and remove bureaucratic burdens.
o District heating and cooling is a feasible and cost effective way to decarbonise
heating and cooling in cities and therefore local authorities will play a key
role in the DHC systems. The review of RED should support the development
of administrative and financial capacity in local authorities and actors, such as
communities and local authorities, to implement European and national
objectives and increase coordination among the different actors.
o Waste heat could play a crucial role in integrated energy system and help
lower overall consumption and overall GHG emissions. Data centres are a
good example of the use of waste heat as a cheap and sustainable heat source.
o There is a need for a ambitious and higher target for H&C, as compared to
current targets, and to increase the rate of renewables in H&C in buildings.
 Bioenergy and Sustainability
o EC needs to make sure that bioenergy policy aligns with biodiversity
objectives and the need to establish carbon sinks to help the EU to become
climate neutral.
o Biomass is the main renewable energy source in the EU, it currently
contributes to about 10% of the EU’s overall energy consumption and 60% of
renewable energy consumption. Bioenergy is playing, and will continue to
play an important role in decarbonising the energy system. We need to make
sure that if bioenergy continues to play this central role in decarbonising the
EU economy in the future, it should be done in a sustainable manner to
maximise positive impacts of bioenergy, with no negative impacts, that is
aligned with biodiversity, afforestation and carbon sinks strategies.
o In the 2018 RED revisions, the sustainability criteria on bioenergy were
strengthened, but they have not yet been implemented
o Some of possible negative impacts of forest biomass on biodiversity can be
avoided with the implementation of the current RED, which will be
transposed and implemented in the summer.
o The JRC report of the use of woody biomass for energy use is part of the
overall basis for the review of RED.
80
o From the JRC report, it is clear that there is a need to include additional no-go
areas for forest biomass to minimise the risk that biomass sourcing will have a
negative impact on biodiversity
o EC will now look at different options to strengthen sustainability criteria and
find a balance between using biomass to decarbonise the EU economy, protect
biodiversity and enhancing carbon sinks in order to meet the EU climate
ambitions.
 Current status of the revision of the RED
o The European Commission is currently working on the impact assessment of
the full Fit for 55 package, which is scheduled for the summer.
o Since there are close links with RED with the Emission Trading System, the
Energy Efficiency Directive and LULUCF regulation, these components are
being constructed in a harmonized manner to ensure a consistent and
coordinated proposal this summer.
81
ANNEX 3: WHO IS AFFECTED AND HOW?
Member States could be affected by the procedure to deliver pledges within their
national renewables development path, as well as by the provisions for gap-filling
instruments in case of difficulties in reaching a higher RES target. The update of
National Energy and Climate Plans could require increased consultation and preparation
with stakeholders to reach the higher ambition, including for the new subtargets. They
would benefit from increased guidance through an enlarged certification scheme and
better terminology.
Local communities and municipalities will also be affected in the effort to coordinate
national level and local level renewables planning. This might imply some additional
administrative costs for coordination between governmental levels, but also ensure that
local authorities are involved from the start so that public resistance issues can be better
addressed.
The Revised RES Directive will also impact non-renewables producers and suppliers
with regard to their market share as a consequence of the deployment of more renewables
across the EU energy market.
As per renewables technology producers and renewables installers, the post 2020
renewables and Energy Union Governance policy framework could foster investment
security and increase cross border business opportunities.
The investors and the financial sector will factor in an increased investment security in
the post-2020 renewables provisions especically in reducing cost of capital for riskier
renewable energy technologies, in particular innovative fuels (RFNBOs, H2).
Businesses in general could benefit from the renewables cost reductions expected from
new requirements for support to renewables and administrative procedures. Additional
certification costs could emerge but would be limited and would be compensated by
additional market opportunities.
Transmissions service operators and distribution service operators could be affected
by provisions to enhance energy system integration between DHC systems and other
energy networks and eliminate exceptions to make access to networks for renewables and
waste heat including from prosumers in large DHC networks. This would enable energy
consumers to become active market participants.
Citizens should be impacted in terms of higher local acceptance of renewables projects
and increased utilisation of renewable energy in their energy mix, therefore reaping the
ultimate benefit of a lower-carbonisation of the economy at large and related lower
degrees of pollution.
SUMMARY OF COSTS AND BENEFITS – based on modelling
Benefits Costs
Scenarios
MIX vs
MIX-LD Interpretation
MIX vs
MIX-CP Interpretation
82
2030 EU27
results unless
otherwise
stated metric MIX
MIX-
CP
MIX-
LD
Difference
MIX vs
MIX-LD
illustrates
impact of
drivers
representing
revision of
RED
working
together
with other
"Fit for 55"
proposals
RED revision
brings:
Difference
MIX vs
MIX-CP
illustrates
impact of
achieving
necessary
2030 RES
ambition by
drivers
representing
revision of
RED rather
than very
high carbon
pricing
RED revision
compared to
very high carbon
price brings:
GHG reductions
(incl intra EU
aviation and
maritime, excl
LULUCF) wrt
1990
%
change
from
1990 53,1% 53,0% 52,1% 1,0
1 p.p. of
necessary GHG
reduction
compared to
1990 0,1
difference is
negligible all core
scenarios were
designed to
achieve GHG
55% target
Overall RES
share % 38,0% 37,6% 36,3% 1,7
1.7 p.p. bigger
share of total
RES in final
energy
consumption in
2030 0,3
Small difference
showing that high
level of carbon
pricing can be as
effective as
renewables
policies in
achieving
necessary RES
shares
RES-E share % 62,6% 63,0% 60,2% 2,4
2.4 p.p. bigger
share of RES in
electricity in
2030 -0,4
Small difference
showing that high
level of carbon
pricing can be as
effective as
renewables
policies in
achieving
necessary RES
shares in
electricity
RES-H&C share % 38,9% 37,8% 36,9% 2,0
2 p.p. bigger
share of RES in
H&C in 2030 1,1
Small difference
showing that
ambitious
regulatory
measures are
more effective in
achieving
necessary RES
shares in H&C
than even very
high level of
carbon price
(€65/t)
83
RES-T share % 26,4% 26,1% 25,9% 0,6
0.6 p.p. bigger
share of RES in
transport in
2030 0,4
Small difference
stemming from
the fact that level
of RES-T
ambition is
established by
ambitious NECPs
and initiatives on
aviation and
maritime fuels
PEC energy
savings
%
change
from
2007
Baseline 38,5% 38,0% 37,9% 0,6
0.6 p.p. bigger
primary energy
savings in 2030 0,5
Small difference
illustrating that
higher RES-E
shares have
positive impact
on PEC
FEC energy
savings
%
change
from
2007
Baseline 35,8% 34,9% 35,3% 0,5
0.5 p.p. bigger
final energy
savings in 2030 0,8
Small difference
illustrating that
higher RES-H&C
shares have
positive impact
on FEC
Investment
expenditures
(excl transport)
av annual (2021-
30)
bn
€'15/year 410 393 396 13
Average annual
investment
needs higher by
€ 13bn 17
Average annual
investment needs
higher by € 17 bn
compared to case
with high carbon
price as main
driver
Energy system
costs excl
carbon pricing
and disutilities
av annual (2021-
30)
bn
€'15/year 1543 1535 1539 4
Average annual
system costs
higher by € 4bn 8
Average annual
system costs
higher by € 4bn
compared to case
with high carbon
price as main
driver
ETS price in
current sectors
(and maritime) €/tCO2 46 51 46 0
no significant
change - level of
carbon price
was frozen
between MIX
and MIX-LD -5
Carbon price can
by lower by 5€/t
in the current
ETS sectors
ETS price in
new sectors
(buildings and
road transport) €/tCO3 46 68 46 0
no significant
change - level of
carbon price
was frozen
between MIX
and MIX-LD -23
Carbon price can
by lower by 23€/t
in the new ETS
sectors
Average Price of
Electricity €/MWh 166 167 165 1
no significant
change -1
no significant
change
Import
dependency % 53% 53% 53% 0
no significant
change 0
no significant
change
Fossil fuels
imports bill
savings
compared to
BSL for the
period 2021-30) bn €'15 91 79 75 16
Savings on
fossil fuels
import bill are
higher by 16 bn 12
Savings on fossil
fuels import bill
are higher by 12
bn
84
Energy-related
expenditures
(excl transport)
of households as
% of households
income % 7,8% 7,7% 7,7% 0,1
no significant
change 0,1
no significant
change
SUMMARY OF BENEFITS
As observed in the CTP impact assessment, an increased climate target for 2030, and the
subsequent actions undertaken as regards renewable energy, will require considerable
additional investments. At the same time the main benefit of the options is that they are
an effective way for the Member States to collectively increase the use of renewable
energy, thus contributing to the aim to reduce GHG emissions by 55% by 2030.
A more secure EU energy system, less dependent on imports, would be achieved by the
increase in renewable energy, in particular from offshore. Air quality in cities will be
improved by among others renewable heating, especially district heating in cities, and
increased use of RES in transport, as well as electrification of transport. Many of the
policy options are projected to create jobs, in line with the envisaged green digital
recovery. Fuel suppliers will be positively impacted by the expansion of the EU system
for certification of renewable and low carbon fuels as it will make it easier for them to
sell to consumers who need to show sourcing of renewable energy. Positive biodiversity
impacts will follow from stronger sustainability criteria for bioenergy. It may reduce
import from outside the EU of biomass fuels, as third countries choose not to comply
with them and redirect their export away from the EU. This would have a positive effect
on the internal supply, allowing EU producers (farmers and forest owners) to obtain
higher prices.
Overall the policy options have positive economic, environmental and societal benefits.
SUMMARY OF ADMINISTRATIVE AND COMPLIANCE COSTS:
For Member States:
 Regarding revised renewable energy target, the administrative costs can be
estimated to be low or even close to zero as these targets can be monitored
through official statistics (renewable energy shares including sectoral and
absolute amounts per technology) which are already readily available at national
level and from Eurostat;
 Regarding the target for H&C no additional administrative burden or increased
compliance costs are expected as no new obligations or additional reporting
would be required from the Member States compared to the current Article 23 of
RED II or the Governance framework;
 Regarding the measures for H&C this depends on the member States choice of
the measures to be implemented;
 Regarding the revised transport target, the preferred option would reduce the
administrative burden for public authorities compared to the baseline as all
options would eliminate the current overlaps between the FQD and REDII;
85
 Regarding the indicative target benchmark for renewables in buildings, this
option could lead to is unlikely to lead to an increase in administrative burden
depending on the measures a Member State choses to use to reach the target. On
the other hand as Member States are already obliged to design such measures as
part of their long-term renovation strategies, required under Article 2a of the
EPBD, and which formed part of the NECPs submitted in 2019, so such measures
should already be known and in place. Increased compliance costs are therefore
not foreseen;
 Regarding the target for renewables in industry, considering that general statistics
on energy consumption in industrial sectors already take place as part of the EU
energy balances, the impact on any administrative burden will be limited;
 Regarding the strengthened sustainability criteria for biomass, National
authorities are likely to face moderately increased administrative burden
associated with the monitoring of the new no-go areas.
For Industry:
 Compliance costs for industry to get these have renewable and low carbon fuels
certified can occur but it can be expected that they will be largely compensated by
the market opportunities, which the certification and respective labelling would
provide to them;
 Regarding the strengthened sustainability criteria for biomass, the preferred
option is likely to moderately increase the administrative burden and compliance
costs for economic operators. Costs for bioenergy operators may increase because
of additional administrative costs to demonstrate compliance with new land
criteria. Fuel cost for biomass plants owners may also increase, due to producers
passing the additional costs and, to some extent, reduced supply (introduction of
no-go areas is likely to impact mainly biomass imports).
For households:
 Equipment costs, Renovation costs, Disutility costs, Energy expenses related to
buildings as share of households total consumption,
A summary of the administrative and compliance related costs of the revision are
presented below:
Description Expected
additional
administrative
and compliance
related costs
Comments
Higher overall EU renewable energy target Low/zero These targets already exist so no new
administrative costs and they can be
monitored through official statistics
(renewable energy shares including sectoral
and absolute amounts per technology)
which are already readily available at
86
national level and from Eurostat albeit legal
basis for MS work on this reporting is
missing. This should be addressed in
revision but as all MS already deliver the
necessary reporting in the current
framework, no additional reporting
framework needs to be added. On the other
hand, the reporting will have to be deepened
(RFNBOs, e-fuels);
Renewable energy target for heating and cooling Low/zero Target already exists so no new
administrative/monitoring costs.
The policy measures depends on the choice
by Member States
Renewable energy target for transport Low Overlaps between FQD and REDII should
be eliminated, leading to greater efficiency
and lower costs for administrations.
Benchmark for renewable energy in buildings Low Member States are already obliged to
monitor and report on RES in H&C of
buildings but not at such level of detail as
new benchmark would require.
Target for renewable energy for industry Low Member States are already obliged to
monitor and report on RES in H&C of
industry but not at such level of detail as
new target would require.
Including RES in energy audits may
increase the costs of audits, but would be
compensated by the savings potentials
identified.
Accounting and certification of e-fuels/RFNBOs Medium Some increase in costs to have all renewable
and low carbon fuels accounted for and
certified.
Strengthened sustainability criteria for biomass, Medium Moderately increased administrative and
compliance costs for economic operators
associated with monitoring. Possible rise in
fuel costs for biomass plants owners
87
ANNEX 4: ANALYTICAL METHODS
4.1 Common analytical framework for the Impact Assessments of the revision of
ESR, ETS, CO2 standards, LULUCF, RED and EED
4.1.1 Introduction
Aiming at covering the entire GHG emissions from the EU economy, and combining
horizontal and sectoral instruments, the various pieces of legislation under the “Fit for
55” package strongly interlink, either because they cover common economic sectors (e.g.
buildings sector is currently addressed by energy efficiency and renewable polices but
would be also falling in the scope of extended ETS) or by the direct and indirect
interactions between these sectors (e.g. electricity supply sector and final demand sectors
using electricity).
As a consequence, it is crucial to ensure consistency of the analysis across all initiatives.
For this purpose, the impact assessments underpinning the “Fit for 55” policy package
are using a collection of integrated modelling tools covering the entire GHG emissions of
the EU economy.
These tools are used to produce a common Baseline and a set of core scenarios reflecting
internally coherent policy packages aligned with the revised 2030 climate target, key
policy findings of the CTP and building on the Reference Scenario 2020, a projection of
the evolution of EU and national energy systems and GHG emissions under the current
policy framework8
. These core scenarios serve as a common analytical basis for use
across different “Fit for 55” policy initiatives, and are complemented by specific variants
as well as additional tools and analyses relevant for the different initiatives.
This Annex describes the tools used to produce the common baseline (the Reference
Scenario 2020) and the core policy scenarios, the key assumptions underpinning the
analysis, and the policy packages reflected in the core policy scenarios.
4.1.2 Modelling tools for assessments of policies
Main modelling suite
The main model suite used to produce the scenarios presented in this impact assessment
has a successful record of use in the Commission's energy, transport and climate policy
assessments. In particular, it has been used for the Commission’s proposals for the
Climate Target Plan9
to analyse the increased 2030 mitigation target, the Sustainable and
Smart Mobility Strategy10
, the Long Term Strategy11
as well as for the 2020 and 2030
EU’s climate and energy policy framework.
The PRIMES and PRIMES-TREMOVE models are the core elements of the modelling
framework for energy, transport and CO2 emission projections. The GAINS model is
used for non-CO2 greenhouse gas emission projections, the GLOBIOM-G4M models for
8
The “current policy framework” includes EU initiatives adopted as of end of 2019 and the national
objectives and policies and measures as set out in the final National Energy and Climate Plans – see the EU
Reference Scenario 2020 publication.
9
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020SC0176
10
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020SC0331
11
https://ec.europa.eu/clima/sites/clima/files/docs/pages/com_2018_733_analysis_in_support_en_0.pdf
88
projections of LULUCF emissions and removals and the CAPRI model is used for
agricultural activity projections.
The model suite thus covers:
 The entire energy system (energy demand, supply, prices and investments to
the future) and all GHG emissions and removals from the EU economy.
 Time horizon: 1990 to 2070 (5-year time steps).
 Geography: individually all EU Member States, EU candidate countries and,
where relevant the United Kingdom, Norway, Switzerland and Bosnia and
Herzegovina.
 Impacts: energy system (PRIMES and its satellite model on biomass),
transport (PRIMES-TREMOVE), agriculture, waste and other non-CO2
emissions (GAINS), forestry and land use (GLOBIOM-G4M), atmospheric
dispersion, health and ecosystems (acidification, eutrophication) (GAINS).
The modelling suite has been continuously updated over the past decade. Updates
include the addition of a new buildings module in PRIMES, improved representation of
the electricity sector, more granular representation of hydrogen (including cross-border
trade12
) and other innovative fuels, improved representation of the maritime transport
sector, as well updated interlinkages of the models to improve land use and non-CO2
modelling. Most recently a major update was done of the policy assumptions, technology
costs and macro-economic assumptions in the context of the Reference scenario 2020
update.
The models are linked with each other in such a way to ensure consistency in the
building of scenarios (see figure below). These inter-linkages are necessary to provide
the core of the analysis, which are interdependent energy, transport and GHG emissions
trends.
Figure 69 - Interlinkages between models
12
While cross-border trade is possible, the assumption is that there are no imports from outside EU as the
opposite would require global modelling of hydrogen trade.
89
Energy: the PRIMES model
The PRIMES model (Price-Induced Market Equilibrium System)13
is a large scale
applied energy system model that provides detailed projections of energy demand,
supply, prices and investment to the future, covering the entire energy system including
emissions. The distinctive feature of PRIMES is the combination of behavioural
modelling (following a micro-economic foundation) with engineering aspects, covering
all energy sectors and markets.
The model has a detailed representation of policy instruments related to energy markets
and climate, including market drivers, standards, and targets by sector or overall. It
simulates the EU Emissions Trading System. It handles multiple policy objectives, such
as GHG emissions reductions, energy efficiency, and renewable energy targets, and
provides pan-European simulation of internal markets for electricity and gas.
The model covers the horizon up to 2070 in 5-year interval periods and includes all
Member States of the EU individually, as well as neighbouring and candidate countries.
PRIMES offer the possibility of handling market distortions, barriers to rational
decisions, behaviours and market coordination issues and it has full accounting of costs
(CAPEX and OPEX) and investment on infrastructure needs.
PRIMES is designed to analyse complex interactions within the energy system in a
multiple agent – multiple markets framework. Decisions by agents are formulated based
on microeconomic foundation (utility maximization, cost minimization and market
equilibrium) embedding engineering constraints and explicit representation of
technologies and vintages, thus allowing for foresight for the modelling of investment in
all sectors.
PRIMES allows simulating long-term transformations/transitions and includes non-linear
formulation of potentials by type (resources, sites, acceptability etc.) and technology
learning. The figure below shows a schematic representation of the PRIMES model.
13
More information and model documentation: https://e3modelling.com/modelling-tools/primes/
90
Figure 70: Schematic representation of the PRIMES model
It includes a detailed numerical model on biomass supply, namely PRIMES-Biomass,
which simulates the economics of current and future supply of biomass and waste for
energy purposes. The model calculates the inputs in terms of primary feedstock of
biomass and waste to satisfy a given demand for bio-energy and provides quantification
of the required capacity to transform feedstock into bioenergy commodities. The
resulting production costs and prices are quantified. The PRIMES-Biomass model is a
key link of communication between the energy system projections obtained by the core
PRIMES energy system model and the projections on agriculture, forestry and non-CO2
emissions provided by other modelling tools participating in the scenario modelling suite
(CAPRI, GLOBIOM/G4M, GAINS).
It also includes a simple module which projects industrial process GHG emissions.
PRIMES is a private model maintained by E3Modelling14
, originally developed in the
context of a series of research programmes co-financed by the European Commission.
The model has been successfully peer-reviewed, last in 201115
; team members regularly
participate in international conferences and publish in scientific peer-reviewed journals.
14
E3Modelling (https://e3modelling.com/) is a private consulting, established as a spin-off inheriting staff,
knowledge and software-modelling innovation of the laboratory E3MLab from the National Technical
University of Athens (NTUA).
15
SEC(2011)1569 : https://ec.europa.eu/energy/sites/ener/files/documents/sec_2011_1569_2.pdf
91
Sources for data inputs
A summary of database sources, in the current version of PRIMES, is provided below:
• Eurostat and EEA: Energy Balance sheets, Energy prices (complemented by
other sources, such IEA), macroeconomic and sectoral activity data (PRIMES
sectors correspond to NACE 3-digit classification), population data and
projections, physical activity data (complemented by other sources), CHP
surveys, CO2 emission factors (sectoral and reference approaches) and EU
ETS registry for allocating emissions between ETS and non ETS
• Technology databases: ODYSSEE-MURE16
, ICARUS, Eco-design, VGB
(power technology costs), TECHPOL – supply sector technologies, NEMS
model database17
, IPPC BAT Technologies18
• Power Plant Inventory: ESAP SA and PLATTS
• RES capacities, potential and availability: JRC ENSPRESO19
, JRC
EMHIRES20
, RES ninja21
, ECN, DLR and Observer, IRENA
• Network infrastructure: ENTSOE, GIE, other operators
• Other databases: EU GHG inventories, district heating surveys (e.g. from
COGEN), buildings and houses statistics and surveys (various sources,
including ENTRANZE project22
, INSPIRE archive, BPIE23
), JRC-IDEES24
,
update to the EU Building stock Observatory25
Transport: the PRIMES-TREMOVE model
The PRIMES-TREMOVE transport model projects the evolution of demand for
passengers and freight transport, by transport mode, and transport vehicle/technology,
following a formulation based on microeconomic foundation of decisions of multiple
actors. Operation, investment and emission costs, various policy measures, utility factors
and congestion are among the drivers that influence the projections of the model. The
projections of activity, equipment (fleet), usage of equipment, energy consumption and
emissions (and other externalities) constitute the set of model outputs.
The PRIMES-TREMOVE transport model can therefore provide the quantitative analysis
for the transport sector in the EU, candidate and neighbouring countries covering
activity, equipment, energy and emissions. The model accounts for each country
separately which means that the detailed long-term outlooks are available both for each
country and in aggregate forms (e.g. EU level).
In the transport field, PRIMES-TREMOVE is suitable for modelling soft measures (e.g.
eco-driving, labelling); economic measures (e.g. subsidies and taxes on fuels, vehicles,
emissions; ETS for transport when linked with PRIMES; pricing of congestion and other
externalities such as air pollution, accidents and noise; measures supporting R&D);
regulatory measures (e.g. CO2 emission performance standards for new light duty
16
https://www.odyssee-mure.eu/
17
Source: https://www.eia.gov/outlooks/aeo/info_nems_archive.php
18
Source: https://eippcb.jrc.ec.europa.eu/reference/
19
Source: https://data.jrc.ec.europa.eu/collection/id-00138
20
Source: https://data.jrc.ec.europa.eu/dataset/jrc-emhires-wind-generation-time-series
21
Source: https://www.renewables.ninja/
22
Source: https://www.entranze.eu/
23
Source: http://bpie.eu/
24
Source: https://ec.europa.eu/jrc/en/potencia/jrc-idees
25
Source: https://ec.europa.eu/energy/en/eubuildings
92
vehicles and heavy duty vehicles; EURO standards on road transport vehicles;
technology standards for non-road transport technologies, deployment of Intelligent
Transport Systems) and infrastructure policies for alternative fuels (e.g. deployment of
refuelling/recharging infrastructure for electricity, hydrogen, LNG, CNG). Used as a
module that contributes to the PRIMES model energy system model, PRIMES-
TREMOVE can show how policies and trends in the field of transport contribute to
economy-wide trends in energy use and emissions. Using data disaggregated per Member
State, the model can show differentiated trends across Member States.
The PRIMES-TREMOVE has been developed and is maintained by E3Modelling, based
on, but extending features of, the open source TREMOVE model developed by the
TREMOVE26
modelling community. Part of the model (e.g. the utility nested tree) was
built following the TREMOVE model.27
Other parts, like the component on fuel
consumption and emissions, follow the COPERT model.
Data inputs
The main data sources for inputs to the PRIMES-TREMOVE model, such as for activity
and energy consumption, comes from EUROSTAT database and from the Statistical
Pocketbook "EU transport in figures28
. Excise taxes are derived from DG TAXUD excise
duty tables. Other data comes from different sources such as research projects (e.g.
TRACCS project) and reports.
In the context of this exercise, the PRIMES-TREMOVE transport model is calibrated to
2005, 2010 and 2015 historical data. Available data on 2020 market shares of different
powertrain types have also been taken into account.
Maritime transport: PRIMES-maritime model
The maritime transport model is a specific sub-module of the PRIMES and PRIMES-
TREMOVE models aiming to enhance the representation of the maritime sector within
the energy-economy-environment modelling nexus. The model, which can run in stand-
alone and/or linked mode with PRIMES and PRIMES-TREMOVE, produces long-term
energy and emission projections, until 2070, separately for each EU Member-State.
The coverage of the model includes the European intra-EU maritime sector as well as the
extra-EU maritime shipping. The model covers both freight and passenger international
maritime. PRIMES-maritime focuses only on the EU Member State, therefore trade
activity between non-EU countries is outside the scope of the model. The model
considers the transactions (bilateral trade by product type) of the EU-Member States with
non-EU countries and aggregates these countries in regions. Several types and sizes of
vessels are considered.
26
Source: https://www.tmleuven.be/en/navigation/TREMOVE
27
Several model enhancements were made compared to the standard TREMOVE model, as for example:
for the number of vintages (allowing representation of the choice of second-hand cars); for the technology
categories which include vehicle types using electricity from the grid and fuel cells. The model also
incorporates additional fuel types, such as biofuels (when they differ from standard fossil fuel
technologies), LPG, LNG, hydrogen and e-fuels. In addition, representation of infrastructure for refuelling
and recharging are among the model refinements, influencing fuel choices. A major model enhancement
concerns the inclusion of heterogeneity in the distance of stylised trips; the model considers that the trip
distances follow a distribution function with different distances and frequencies. The inclusion of
heterogeneity was found to be of significant influence in the choice of vehicle-fuels especially for vehicles-
fuels with range limitations.
28
Source: https://ec.europa.eu/transport/facts-fundings/statistics_en
93
PRIMES-maritime features a modular approach based on the demand and the supply
modules. The demand module projects maritime activity for each EU Member State by
type of cargo and by corresponding partner. Econometric functions correlate demand for
maritime transport services with economic indicators considered as demand drivers,
including GDP, trade of energy commodities (oil, coal, LNG), trade of non-energy
commodities, international fuel prices, etc. The supply module simulates a representative
operator controlling the EU fleet, who offers the requested maritime transport services.
The operator of the fleet decides the allocation of the vessels activity to the various
markets (representing the different EU MS) where different regulatory regimes may
apply (e.g. environmental zones). The fleet of vessels disaggregated into several
categories is specific to cargo types. PRIMES maritime utilizes a stock-flow relationship
to simulate the evolution of the fleet of vessels throughout the projection period and the
purchasing of new vessels.
PRIMES-maritime solves a virtual market equilibrium problem, where demand and
supply interact dynamically in each consecutive time period, influenced by a variety of
exogenous policy variables, notably fuel standards, pricing signals (e.g. ETS),
environmental and efficiency/operational regulations and others. The PRIMES maritime
model projects energy consumption by fuel type and purpose as well as CO2, methane
and N2O and other pollutant emissions. The model includes projections of costs, such as
capital, fuel, operation costs, projections of investment expenditures in new vessels and
negative externalities from air pollution.
The model serves to quantify policy scenarios supporting the transition towards carbon
neutrality. It considers the handling of a variety of fuels such as fossil fuels, biofuels
(bioheavy29
, biodiesel, bio-LNG), synthetic fuels (synthetic diesel, fuel oil and gas, e-
ammonia and e-methanol) produced from renewable electricity, hydrogen produced from
renewable electricity (for direct use and for use in fuel cell vessels) and electricity for
electric vessels. Well-to-Wake emissions are calculated thanks to the linkage with the
PRIMES energy systems model which derives ways of producing such fuels. The model
also allows to explore synergies with Onshore Power Supply systems. Environmental
regulation, fuel blending mandates, GHG emission reduction targets, pricing signals and
policies increasing the availability of fuel supply and supporting the alternative fuel
infrastructure are identified as drivers, along fuel costs, for the penetration of new fuels.
As the model is dynamic and handles vessel vintages, capital turnover is explicit in the
model influencing the pace of fuel and vessel substitution.
Data inputs
The main data sources for inputs to the PRIMES-maritime model, such as for activity
and energy consumption, comes from EUROSTAT database and from the Statistical
Pocketbook "EU transport in figures30
. Other data comes from different sources such as
research projects (e.g. TRACCS project) and reports. PRIMES-maritime being part of the
overall PRIMES model is it calibrated to the EUROSTAT energy balances and transport
activity; hence the associated CO2 emissions are assumed to derive from the combustion
of these fuel quantities. The model has been adapted to reflect allocation of CO2
emissions into intra-EU, extra-EU and berth, in line with data from the MRV database.31
For air pollutants, the model draws on the EEA database.
29
Bioheavy refers to bio heavy fuel oil.
30
Source: https://ec.europa.eu/transport/facts-fundings/statistics_en
31
https://mrv.emsa.europa.eu/#public/eumrv
94
In the context of this exercise, the PRIMES-maritime model is calibrated to 2005, 2010
and 2015 historical data.
Non-CO2 GHG emissions and air pollution: GAINS
The GAINS (Greenhouse gas and Air Pollution Information and Simulation) model is an
integrated assessment model of air pollutant and greenhouse gas emissions and their
interactions. GAINS brings together data on economic development, the structure,
control potential and costs of emission sources and the formation and dispersion of
pollutants in the atmosphere.
In addition to the projection and mitigation of non-CO2 greenhouse gas emissions at
detailed sub-sectorial level, GAINS assesses air pollution impacts on human health from
fine particulate matter and ground-level ozone, vegetation damage caused by ground-
level ozone, the acidification of terrestrial and aquatic ecosystems and excess nitrogen
deposition of soils.
Model uses include the projection of non-CO2 GHG emissions and air pollutant
emissions for the EU Reference scenario and policy scenarios, calibrated to UNFCCC
emission data as historical data source. This allows for an assessment, per Member State,
of the (technical) options and emission potential for non-CO2 emissions. Health and
environmental co-benefits of climate and energy policies such as energy efficiency can
also be assessed.
The GAINS model is accessible for expert users through a model interface32
and has
been developed and is maintained by the International Institute of Applied Systems
Analysis33
. The underlying algorithms are described in publicly available literature.
GAINS and its predecessor RAINS have been peer reviewed multiple times, in 2004,
2009 and 2011.
Sources for data inputs
The GAINS model assesses emissions to air for given externally produced activity data
scenarios. For Europe, GAINS uses macroeconomic and energy sector scenarios from the
PRIMES model, for agricultural sector activity data GAINS adopts historical data from
EUROSTAT and aligns these with future projections from the CAPRI model. Projections
for waste generation, organic content of wastewater and consumption of F-gases are
projected in GAINS in consistency with macroeconomic and population scenarios from
PRIMES. For global scenarios, GAINS uses macroeconomic and energy sector
projections from IEA World Energy Outlook scenarios and agricultural sector projections
from FAO. All other input data to GAINS, i.e., sector- and technology- specific emission
factors and cost parameters, are taken from literature and referenced in the
documentation.
Forestry and land-use: GLOBIOM-G4M
The Global Biosphere Management Model (GLOBIOM) is a global recursive dynamic
partial equilibrium model integrating the agricultural, bioenergy and forestry sectors with
the aim to provide policy analysis on global issues concerning land use competition
between the major land-based production sectors. Agricultural and forestry production as
32
Source: http://gains.iiasa.ac.at/models/
33
Source: http://www.iiasa.ac.at/
95
well as bioenergy production are modelled in a detailed way accounting for about 20
globally most important crops, a range of livestock production activities, forestry
commodities as well as different energy transformation pathways.
GLOBIOM covers 50 world regions / countries, including the EU27 Member States.
Model uses include the projection of emissions from land use, land use change and
forestry (LULUCF) for EU Reference scenario and policy scenarios. For the forestry
sector, emissions and removals are projected by the Global Forestry Model (G4M), a
geographically explicit agent-based model that assesses afforestation, deforestation and
forest management decisions. GLOBIOM-G4M is also used in the LULUCF impact
assessment to assess the options (afforestation, deforestation, forest management, and
cropland and grassland management) and costs of enhancing the LULUCF sink for each
Member State.
The GLOBIOM-G4M has been developed and is maintained by the International
Institute of Applied Systems Analysis34
.
Sources for data inputs
The main market data sources for GLOBIOM-EU are EUROSTAT and FAOSTAT,
which provide data at the national level and which are spatially allocated using data from
the SPAM model35
. Crop management systems are parameterised based on simulations
from the biophysical process-based crop model EPIC. The livestock production system
parameterization relies on the dataset by Herrero et al36
. Further datasets are
incorporated, coming from the scientific literature and other research projects.
GLOBIOM is calibrated to FAOSTAT data for the year 2000 (average 1998 - 2002) and
runs recursively dynamic in 10-year time-steps. In the context of this exercise, baseline
trends of agricultural commodities are aligned with FAOSTAT data for 2010/2020 and
broadly with AGLINK-COSIMO trends for main agricultural commodities in the EU
until 2030.
The main data sources for G4M are CORINE, Forest Europe (MCPFE, 2015)37
,
countries’ submissions to UNFCCC and KP, FAO Forest Resource Assessments, and
national forest inventory reports. Afforestation and deforestation trends in G4M are
calibrated to historical data for the period 2000-2013.
Agriculture: CAPRI
CAPRI is a global multi-country agricultural sector model, supporting decision making
related to the Common Agricultural Policy and environmental policy and therefore with
far greater detail for Europe than for other world regions. It is maintained and developed
in a network of public and private agencies including the European Commission (JRC),
Universities (Bonn University, Swedish University of Agricultural Sciences, Universidad
Politécnica de Madrid), research agencies (Thünen Institute), and private agencies
34
Source : http://www.iiasa.ac.at/
35
See You, L., Wood, S. (2006). An Entropy Approach to Spatial Disaggregation of Agricultural
Production, Agricultural Systems 90, 329–47 and http://mapspam.info/ .
36
Herrero, M., Havlík, P., et al. (2013). Biomass Use, Production, Feed Efficiencies, and Greenhouse Gas
Emissions from Global Livestock Systems, Proceedings of the National Academy of Sciences 110, 20888–
93.
37
MCPFE (2015). Forest Europe, 2015: State of Europe's Forests 2015. Madrid, Ministerial Conference on
the Protection of Forests in Europe: 314.
96
(EuroCARE), in charge for use in this modelling cluster). The model takes inputs from
GEM-E3, PRIMES and PRIMES Biomass model, provides outputs to GAINS, and
exchanges information with GLOBIOM on livestock, crops, and forestry as well as
LULUCF effects.
The CAPRI model provides the agricultural outlook for the Reference Scenario, in
particular on livestock and fertilisers use, further it provides the impacts on the
agricultural sector from changed biofuel demand. It takes into account recent data and
builds on the 2020 EU Agricultural Outlook38
. Depending on the need it may also be
used to run climate mitigation scenarios, diet shift scenarios or CAP scenarios.
Cross checks are undertaken ex-ante and ex-post to ensure consistency with GLOBIOM
on overlapping variables, in particular for the crop sector.
Sources for data inputs
The main data source for CAPRI is EUROSTAT. This concerns data on production,
market balances, land use, animal herds, prices, and sectoral income. EUROSTAT data
are complemented with sources for specific topics (like CAP payments or biofuel
production). For Western Balkan regions a database matching with the EUROSTAT
inputs for CAPRI has been compiled based on national data. For non-European regions
the key data source is FAOSTAT, which also serves as a fall back option in case of
missing EUROSTAT data. The database compilation is a modelling exercise on its own
because usually several sources are available for the same or related items and their
reconciliation involves the optimisation to reproduce the hard data as good as possible
while maintaining all technical constraints like adding up conditions.
In the context of this exercise, the CAPRI model uses historical data series at least up to
2017, and the first simulation years (2010 and 2015) are calibrated on historical data.
4.1.3 Assumptions on technology, economics and energy prices
In order to reflect the fundamental socio-economic, technological and policy
developments, the Commission prepares periodically an EU Reference Scenario on
energy, transport and GHG emissions. The scenarios assessment used for the “Fit for 55”
policy package builds on the latest “EU Reference Scenario 2020” (REF2020)39
.
The main assumptions related to economic development, international energy prices and
technologies are described below.
Economic assumptions
The modelling work is based on socio-economic assumptions describing the expected
evolution of the European society. Long-term projections on population dynamics and
economic activity form part of the input to the energy model and are used to estimate
final energy demand.
Population projections from Eurostat40
are used to estimate the evolution of the European
population, which is expected to change little in total number in the coming decades. The
38
EU Agricultural Outlook for markets, income and environment 2020-2030,
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/agricultural-outlook-
2020-report_en.pdf
39
See related publication.
40
EUROPOP2019 population projections
97
GDP growth projections are from the Ageing Report 202141
by the Directorate General
for Economic and Financial Affairs, which are based on the same population growth
assumptions.
Table 39. Projected population and GDP growth per MS
Population GDP growth
2020 2025 2030 2020-‘25 2026-‘30
EU27 447.7 449.3 449.1 0.9% 1.1%
Austria 8.90 9.03 9.15 0.9% 1.2%
Belgium 11.51 11.66 11.76 0.8% 0.8%
Bulgaria 6.95 6.69 6.45 0.7% 1.3%
Croatia 4.06 3.94 3.83 0.2% 0.6%
Cyprus 0.89 0.93 0.96 0.7% 1.7%
Czechia 10.69 10.79 10.76 1.6% 2.0%
Denmark 5.81 5.88 5.96 2.0% 1.7%
Estonia 1.33 1.32 1.31 2.2% 2.6%
Finland 5.53 5.54 5.52 0.6% 1.2%
France 67.20 68.04 68.75 0.7% 1.0%
Germany 83.14 83.48 83.45 0.8% 0.7%
Greece 10.70 10.51 10.30 0.7% 0.6%
Hungary 9.77 9.70 9.62 1.8% 2.6%
Ireland 4.97 5.27 5.50 2.0% 1.7%
Italy 60.29 60.09 59.94 0.3% 0.3%
Latvia 1.91 1.82 1.71 1.4% 1.9%
Lithuania 2.79 2.71 2.58 1.7% 1.5%
Luxembourg 0.63 0.66 0.69 1.7% 2.0%
Malta 0.51 0.56 0.59 2.7% 4.1%
Netherlands 17.40 17.75 17.97 0.7% 0.7%
Poland 37.94 37.57 37.02 2.1% 2.4%
Portugal 10.29 10.22 10.09 0.8% 0.8%
Romania 19.28 18.51 17.81 2.7% 3.0%
Slovakia 5.46 5.47 5.44 1.1% 1.7%
Slovenia 2.10 2.11 2.11 2.1% 2.4%
Spain 47.32 48.31 48.75 0.9% 1.6%
https://ec.europa.eu/eurostat/web/population-demography-migration-projections/population-projections-
data
41
The 2021 Ageing Report : Underlying assumptions and projection methodologies
https://ec.europa.eu/info/publications/2021-ageing-report-underlying-assumptions-and-projection-
methodologies_en
98
Sweden 10.32 10.75 11.10 1.4% 2.2%
Beyond the update of the population and growth assumptions, an update of the
projections on the sectoral composition of GDP was also carried out using the GEM-E3
computable general equilibrium model. These projections take into account the potential
medium- to long-term impacts of the COVID-19 crisis on the structure of the economy,
even though there are inherent uncertainties related to its eventual impacts. Overall,
conservative assumptions were made regarding the medium-term impacts of the
pandemic on the re-localisation of global value chains, teleworking and teleconferencing
and global tourism.
International energy prices assumptions
Alongside socio-economic projections, EU energy modelling requires projections of
international fuel prices. The 2020 values are estimated from information available by
mid-2020. The projections of the POLES-JRC model – elaborated by the Joint Research
Centre and derived from the Global Energy and Climate Outlook (GECO42
) – are used to
obtain long-term estimates of the international fuel prices.
The COVID crisis has had a major impact on international fuel prices43
. The lost demand
cause an oversupply leading to decreasing prices. The effect on prices compared to pre-
COVID estimates is expected to be still felt up to 2030. Actual development will depend
on the recovery of global oil demand as well as supply side policies44
.
The table below shows the international fuel prices assumptions of the REF2020 and of
the different scenarios and variants used in the “Fit for 55” policy package impact
assessments.
Table 40: International fuel prices assumptions
Source: Derived from JRC, POLES-JRC model, Global Energy and Climate Outlook (GECO)
Technology assumptions
Modelling scenarios on the evolution of the energy system is highly dependent on the
assumptions on the development of technologies - both in terms of performance and
costs. For the purpose of the impact assessments related to the “Climate Target Plan” and
42
https://ec.europa.eu/jrc/en/geco
43
IEA, Global Energy Review 2020, June 2020
44
IEA, Oil Market Report, June 2020 and US EIA, July 2020.
in $'15 per boe 2000 ‘05 ‘10 ‘15 ‘20 ‘25 ‘30 ‘35 ‘40 ‘45 ‘50
Oil 38.4 65.4 86.7 52.3 39.8 59.9 80.1 90.4 97.4 105.6 117.9
Gas (NCV) 26.5 35.8 45.8 43.7 20.1 30.5 40.9 44.9 52.6 57.0 57.8
Coal 11.2 16.9 23.2 13.1 9.5 13.6 17.6 19.1 20.3 21.3 22.3
in €'15 per boe 2000 2005 ‘10 ‘15 ‘20 ‘25 ‘30 ‘35 ‘40 ‘45 ‘50
Oil 34.6 58.9 78.2 47.2 35.8 54.0 72.2 81.5 87.8 95.2 106.3
Gas (NCV) 23.4 31.7 40.6 38.7 17.8 27.0 36.2 39.7 46.6 50.5 51.2
Coal 9.9 15.0 20.6 11.6 8.4 12.0 15.6 16.9 18.0 18.9 19.7
99
the “Fit for 55” policy package, these assumptions have been updated based on a
rigorous literature review carried out by external consultants in collaboration with the
JRC45
.
Continuing the approach adopted in the long-term strategy in 2018, the Commission
consulted on the technology assumption with stakeholders in 2019. In particular, the
technology database of the main model suite (PRIMES, PRIMES-TREMOVE, GAINS,
GLOBIOM, and CAPRI) benefited from a dedicated consultation workshop held on 11th
November 2019. EU Member States representatives also had the opportunity to comment
on the costs elements during a workshop held on 25th
November 2019. The updated
technology assumptions are published together with the EU Reference Scenario 2020.
4.1.4 The existing 2030 framework: the EU Reference Scenario 2020
The EU Reference Scenario 2020 as the common baseline
The EU Reference Scenario 2020 (REF2020) provides projections for energy demand
and supply, as well as greenhouse gas emissions in all sectors of the European economy
under the current EU and national policy framework. It embeds in particular the EU
legislation in place to reach the 2030 climate target of at least 40% compared to 1990, as
well as national contributions to reaching the EU 2030 energy targets on Energy
efficiency and Renewables under the Governance of the Energy Union. It thus gives a
detailed picture of where the EU economy and energy system in particular would stand in
terms of GHG emission if the policy framework were not updated to enable reaching the
revised 2030 climate target to at least -55% compared to 1990 proposed under the
Climate Target Plan46
.
The Reference Scenario serves as the common baseline shared by all the initiatives of the
“Fit for 55” policy package to assess options in their impact assessments:
- updating the Effort Sharing Regulation,
- updating the Emission Trading System,
- revision of the Renewables Energy Directive,
- revision of the Energy Efficiency Directive,
- revision of the Regulation setting CO2 emission performance standards for cars
and light commercial vehicles,
- review of the LULUCF EU rules.
Difference with the CTP “BSL” scenario
The REF2020 embeds some differences compared to the baseline used for the CTP
impact assessment. While the technology assumptions (consulted in a workshop held on
11th
November 2019) were not changed, the time between CTP publication and the
publication of the “Fit for 55” package allowed updating some other important
assumptions:
 GDP projections, population projections and fossil fuel prices were updated, in
particular to take into account the impact of the COVID crisis through an
45
JRC118275
46
COM/2020/562 final
100
alignment with the 2021 Ageing Report47
and an update of international fossil
fuel prices notably on the short run.
 While the CTP baseline aimed at reaching the current EU 2030 energy targets (on
energy efficiency and renewable energy), the Reference Scenario 2020, used as
the baseline for the “Fit for 55” package, further improved the representation of
the National Energy Climate Plans (NECP). In particular it aims at reaching the
national contributions to the EU energy targets, and not at respecting these EU
targets themselves.
Reference scenario process
The REF2020 scenario has been prepared by the European Commission services and
consultants from E3Modelling, IIASA and EuroCare, in coordination with Member
States experts through the Reference Scenario Experts Group.
It benefitted from a stakeholders consultation (on technologies) and is aligned with other
outlooks from Commission services, notably DG ECFIN’s Ageing Report 2021, as well
as, to the extent possible, the 2020 edition of the EU Agricultural Outlook 2020-2030
published by DG AGRI in December 202048
.
Policies in the Reference scenario
The REF2020 also takes into account the still-unfolding effects of the COVID-19
pandemic, to the extent possible at the time of the analysis. According to the GDP
assumptions of the Ageing Report 2021, the pandemic is followed by an economic
recovery resulting in moderately lower economic output in 2030 than pre-COVID
estimates.
The scenario is based on existing policies adopted at national and EU level at the
beginning of 2020. In particular, at EU level, the REF2020 takes into account the
legislation adopted in the Clean Energy for All European Package49
. At national level,
the scenario takes into account the policies and specific targets, in particular in relation
with renewable energy and energy efficiency, described in the final National Energy and
Climate Plans (NECPs) submitted by Member States at the end of 2019/beginning of
2020.
The REF2020 models the policies already adopted, but not the target of net-zero
emissions by 2050. As a result, there are no additional policies introduced driving
decarbonisation after 2030. However, climate and energy policies are not rolled back
after 2030 and several of the measures in place today continue to deliver emissions
reduction in the long term. This is the case, for example, for products standards and
building codes and the ETS Directive (progressive reduction of ETS allowances is set to
continue after 2030).
Details on policies and measures represented in the REF2020 can be found in the
dedicated “EU Reference Scenario 2020” publication.
47
The 2021 Ageing Report : Underlying assumptions and projection methodologies
https://ec.europa.eu/info/publications/2021-ageing-report-underlying-assumptions-and-projection-
methodologies_en
48
https://ec.europa.eu/info/news/eu-agricultural-outlook-2020-30-agri-food-sector-shown-resilience-still-
covid-19-recovery-have-long-term-impacts-2020-dec-16_en
49
COM(2016) 860 final.
101
Reference Scenario 2020 key outputs
For 2030, the REF2020 scenario mirrors the main targets and projections submitted by
Member States in their final NECPs. In particular, aggregated at the EU level, the
REF2020 projects a 33.2% share of renewable energy in Gross Final Energy
Consumption. Final energy consumption is 823 Mtoe, which is 29.6% below the 2007
PRIMES Baseline.
In the REF2020, GHG emissions from the EU in 2030 (including all domestic emissions
& intra EU aviation and maritime) are 43.8% below the 1990 level. A carbon price of 30
EUR/tCO2eq. in 2030 drives emissions reduction in the ETS sector. The table below
shows a summary of the projections for 2030. A detailed description of the REF2020 can
be found in a separate report published by the Commission50
.
Table 41: REF2020 summary energy and climate indicators.
EU 2030 REF2020
GHG reductions (incl. Domestic emissions & intra EU aviation and maritime) vs
1990 -43.8%
RES share 33.2%
PEC energy savings -32.7%
FEC energy savings -29.6%
Environmental impacts
GHG emissions reduction in current ETS sectors vs 2005 -48.2%
GHG emissions reduction in current non-ETS sectors vs 2005 -30.7%
Energy system impacts
GIC (Mtoe) 1224.2
- Solid fossil fuels 9.3%
- Oil 31.9%
- Natural gas 22%
- Nuclear 11%
- Renewables 25.8%
Final Energy Demand (Mtoe) 822.6
RES share in heating & cooling 32.8%
RES share in electricity 58.5%
RES share in transport 21.2%
Economic and social impacts
System costs (excl. auction payment) (average 2021-30) as % of GDP 10.9%
Investment expenditures (incl. transport) average annual (2021-30) vs (2011-20)
(bn€)
285
EU ETS carbon price (€/ton, 2030) 30
Energy- expenditures (excl. transport) of households as % of total consumption 7.0%
Source: PRIMES model
50
Link to reference.
102
The system costs (excluding ETS carbon-related payments) reaches close to 11% of the
EU’s GDP on average over 2021-2030. This cost51
is calculated ex-post with a private
sector perspective applying a flat 10% discount rate52
over the simulation period up to
2050 to compute investment-related annualized expenditures.
By 2050, final energy consumption is projected at around 790 Mtoe and approximately
74% of the European electricity is generated by renewable energy sources. GHG
emissions in the EU are projected to be about 60% lower than in 1990: the REF2020 thus
falls short of the European goal of climate neutrality by 2050.
Focusing on the energy system, REF2020 shows that in 2030 fuel mix would still be
dominated by fossil fuels. While the renewables grow and fossil fuels decline by 2050,
the substitution is not sufficient for carbon neutrality. It also has to be noted that there is
no deployment of e-fuels that are crucial for achievement of carbon neutrality as analysed
in the Long Term Strategy53
and in the CTP.
Figure 71: Fuel mix evolution of the Reference Scenario 2020
Source: Eurostat, PRIMES model
51
Energy system costs for the entire energy system include capital costs (for energy installations such as
power plants and energy infrastructure, energy using equipment, appliances and energy related costs of
transport), energy purchase costs (fuels + electricity + steam) and direct efficiency investment costs, the
latter being also expenditures of capital nature. For transport, only the additional capital costs for energy
purposes (additional capital costs for improving energy efficiency or for using alternative fuels, including
alternative fuels infrastructure) are covered, but not other costs including the significant transport related
infrastructure costs e.g. related to railways and roads. Direct efficiency investment costs include additional
costs for house insulation, double/triple glazing, control systems, energy management and for efficiency
enhancing changes in production processes not accounted for under energy capital and fuel/electricity
purchase costs. Energy system costs are calculated ex-post after the model is solved.
52
See the EU Reference Scenario 2020 publication for a further discussion on the roles and levels of
discount rates in the modelling, which also represent risk and opportunity costs associated with
investments.
53
COM(2018) 773
0
200
400
600
800
1000
1200
1400
1600
1800
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Mtoe
Other renewables***
Bioenergy**
Solar
Wind
Nuclear
Natural gas
Oil
Coal*
103
Figure 72: Share of energy carriers in final energy consumption in the Reference Scenario 2020
Note: * includes peat and oil shale; ** includes manufactured gases, *** includes waste
Source: Eurostat, PRIMES model
Coal use in power generation decrease by 62% by 2030 and almost completely disappear
by 2050. Also demand for oil sees a significant decrease of 54% over the entire period –
the most important in absolute terms. Electricity generation grows by 24% by 2050.
Figure 73: Final energy demand by sector in the Reference Scenario 2020
Source: Eurostat, PRIMES model
Despite continued economic growth, final energy demand decreases by 18% between
2015 and 2050 (already by 2030 it decreases by more than 8%).
4.1.5 Scenarios for the “Fit for 55” policy analysis
From the Climate Target Plan scenarios to “Fit for 55” core scenarios
In the Climate Target Plan (CTP) impact assessment, the increase of efforts needed for
the GHG 55% target was illustrated by policy scenarios (developed with the same
modelling suite as the scenarios done for the “Fit for 55” package) showing increased
ambition (or stringency) of climate, energy and transport policies and, consequently,
leading to a significant investment challenge.
The first key lesson from the CTP exercise was that while the tools are numerous and
have a number of interactions (or even sometimes trade-offs) a complete toolbox of
0
100
200
300
400
500
600
700
800
900
1000
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Mtoe
Electricity
Other RES
Bioenergy***
Heat distributed
Hydrogen
Natural gas**
Oil
Coal*
0
100
200
300
400
500
600
700
800
900
1000
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Mtoe
Transport
Residential
Services &
agri
Industry
104
climate, energy and transport policies is needed for the increased climate target as all
sectors would need to contribute effectively towards the GHG 55% target.
The second key lesson was that even though policy tools chosen in the CTP scenarios
were different - illustrating in particular the fundamental interplay between the strength
of the carbon pricing and intensity of regulatory measures - the results achieved were
convergent. All CTP policy scenarios that achieved a 55% GHG target54
showed very
similar levels of ambition for energy efficiency, renewables (overall and on sectoral
level) and GHG reductions across the sectors indicating also the cost-effective pathways.
The third lesson was that carbon pricing working hand in hand with regulatory measures
helps avoid “extreme” scenarios of either:
 a very high carbon price (in absence of regulatory measures) that will translate
into increased energy prices for all consumers,
 very ambitious policies that might be difficult to be implemented (e.g. very high
energy savings or renewables obligations) because they would be costly for
economic operators or represent very significant investment challenge.
The Figure below illustrates the interactions between different policy tools relevant to
reach the EU’s climate objectives.
Figure 74: Interactions between different policy tools
With the 55% GHG target confirmed by EU leaders in the December 2020 EUCO
Conclusions55
and the 2021 Commission Work Programme56
(CWP 2021) that puts
forward the complete toolbox to achieve the increased climate target (so-called “Fit for
55” proposals), the fundamental set-up of the CTP analysis was confirmed. This set-up is
still about the interplay between carbon pricing and regulatory measures as illustrated
above, and the extension of the ETS is the central policy question.
54
A 50% GHG target was also analysed
55
https://www.consilium.europa.eu/media/47328/1011-12-20-euco-conclusions-fr.pdf
56
COM(2020) 690 final
105
As described above, the policy scenarios of the CTP assessment are cost-effective
pathways that capture all policies needed to achieve the increased climate target of 55%
GHG reductions. This fundamental design remains robust and the CTP scenarios were
thus used as the basis to define the “Fit for 55” policy scenarios.
In the context of the agreed increased climate target of a net reduction of 55% GHG
compared to 1990, the 50% GHG scenario (CTP MIX-50) explored in the CTP has been
discarded since no longer relevant. The contribution of extra EU aviation and maritime
emissions in the CTP ALLBNK scenario was assessed in the respective sector specific
impact assessments and was not retained as a core scenario. This leaves the following
CTP scenarios in need of further revisions and updates in the context of preparing input
in a coherent manner for the set of IAs supporting the “Fit for 55” package, ensuring the
achievement of the overall net 55% GHG reduction ambition with similar levels of
renewable energy and energy efficiency deployment as in CTP:
 CTP REG (relying only on intensification of energy and transport policies in
absence of carbon pricing beyond the current ETS sectors);
 CTP MIX (relying on both carbon price signal extension to road transport and
buildings and intensification of energy and transport policies);
 CTP CPRICE (relying chiefly on carbon price signal extension, and more limited
additional sectoral policies).
Scenarios for the “Fit for 55”package
Based on the Climate Target Plan analysis, some updates were needed though for the
purpose of the “Fit for 55” assessment, in terms of:
 Baseline:
o to reflect the most recent statistical data available, notably in terms of
COVID impacts,
o to capture the objectives and policies put forward by Member States in
the NECPs, which were not all available at the time of the CTP analysis,
The baseline used in the Fit for 55 package is thus the “Reference Scenario 2020”, as
described in section above.
 Scenario design in order to align better with policy options as put forward in the
CWP 2021 and respective Inception Impact Assessments57
.
As a consequence, the three following core policy scenarios were defined to serve as
common policy package analysis across the various initiatives of the “Fit for 55” policy
assessments:
57
Importantly, all “Fit for 55” core scenarios reflect the Commission Work Programme (CWP) 2021 in
terms of elements foreseen. This is why assumptions are made about legislative proposals to be made later
on - by Quarter 4 2021. On the energy side, the subsequent proposals are: the revision of the EPBD, the
proposal for Decarbonised Gas Markets and the proposal for reducing methane emissions in the energy
sector. For transport they refer to the revision of the TEN-T Regulation and the revision of the ITS
Directive. In addition, other policies that are planned for 2022 are also represented in a stylised way in
these scenarios, similar to the CTP scenarios. In this way, core scenarios represent all key policies needed
to deliver the increased climate target.
106
 REG: an update of the CTP REG case (relying only on very strong intensification
of energy and transport policies in absence of carbon pricing beyond the current
ETS sectors).
 MIX: reflecting an update of the CTP MIX case (relying on both carbon price
signal extension to road transport and buildings and strong intensification of
energy and transport policies). With its uniform carbon price (as of 2025), it
reflects either an extended and fully integrated EU ETS or an existing EU ETS
and new ETS established for road transport and buildings with emission caps set
in line with cost-effective contributions of the respective sectors.
 MIX-CP: representing a more carbon price driven policy mix, combining thus
the general philosophy of the CTP CPRICE scenario with key drivers of the MIX
scenario albeit at a lower intensity. It illustrates a revision of the EED and RED
but limited to a lower intensification of current policies in addition to the carbon
price signal applied to new sectors.
Unlike MIX, this scenario allows to separate carbon price signals of “current” and
“new” ETS. The relative split of ambition in GHG reductions between “current”
ETS and “new ETS” remains, however, close in MIX-CP to the MIX scenario
leading to differentiated carbon prices between “current” ETS and “new” ETS58
.
These three “Fit for 55” core policy scenarios have been produced starting from the
Reference Scenario 2020 and thus use the same updated assumptions on post-COVID
economics and international fuel prices.
The table below provides an overview of the policy assumptions retained in the three
core policy scenarios. It refers in particular to different scopes of emissions trading
system (“ETS”):
- “current+”: refers to the current ETS extended to cover also national and
international intra-EU maritime emissions59
: this scope applies to all scenarios,
- “new”: refers to the new ETS for buildings and road transport emissions: this
scope applies in MIX and MIX-CP up to 2030,
- “large”: refers to the use of emissions trading systems covering the “current”
scope ETS, intra-EU maritime, buildings and road transport (equivalent to
“current+” + “new”): this scope applies in MIX and MIX-CP after 2030.
The scenarios included focus on emissions within the EU, including intra-EU navigation
and intra-EU aviation emissions. The inclusion or not of extra-EU navigation and extra-
EU maritime emissions is assessed in the relevant sector specific Impact Assessments.
58
This is a feature not implemented in the CTP CPRICE scenario.
59
For modelling purposes “national maritime” is considered as equal to “domestic navigation”, i.e. also
including inland navigation.
107
Table 42: Scenario assumptions description (scenarios produced with the PRIMES-GAINS-GLOBIOM modelling suite)
Scenario REG MIX MIX-CP
Brief
description:
ETS
Extension of “current” ETS to
also cover intra-EU maritime
navigation60
Strengthening of “current+”
ETS in line with -55%
ambition
By 2030: 2 ETS systems:
- one “current+” ETS (current extended to intra-EU maritime)
- one “new” ETS applied to buildings and road transport
After 2030: both systems are integrated into one “large” ETS
Relevant up to 2030: the 2 ETSs are
designed so that they have the same
carbon price, in line with -55%
ambition
Relevant up to 2030: “current+” ETS
reduces emissions comparably to MIX
Lower regulatory intervention resulting in
higher carbon price than in MIX, notably in
the “new” ETS
Brief
description:
sectoral policies
High intensity increase of EE,
RES, transport policies versus
Reference
Medium intensity increase of EE,
RES and transport policies versus
Reference
Lower intensity increase of EE and RES
policies versus Reference.
Transport policies as in MIX (except
related to CO2 standards)
Target scope EU27
60
“Intra-EU navigation” in this table includes both international intra-EU and national maritime. Due to modelling limitations, energy consumption by “national maritime” is assumed
to be the same as “domestic navigation”, although the latter also includes inland navigation.
108
Scenario REG MIX MIX-CP
Aviation Intra-EU aviation included, extra-EU excluded
Maritime
navigation
Intra-EU maritime included, extra-EU excluded
Achieved GHG reduction of the target scope
Including
LULUCF
Around 55% reductions
Excluding
LULUCF
Around 53% reductions
Assumed Policies
Carbon pricing (stylised, for small industry, international aviation and maritime navigation may represent also other instruments than
EU ETS such as taxation or CORSIA for aviation)
Stationary ETS Yes
Aviation-Intra
EU ETS
Yes
Aviation - Extra
EU ETS
Yes: mixture 50/50 carbon pricing (reflecting inclusion in the “current+” / “large” ETS, or taxation, or CORSIA)
and carbon value (reflecting operational and technical measures); total equal to the carbon price of the “current+”
(up to 2030) / “large” ETS
Maritime-Intra
EU ETS
Yes, carbon pricing equal to the price of the “current+” (up to 2030) / “large” EU ETS
109
Scenario REG MIX MIX-CP
Maritime-Extra
EU ETS
As in MIX (but applied to the
“current+” ETS)
Up to 2030: no carbon pricing.
After 2030: 50% of extra-EU MRV61
sees the “large” ETS price, while the
remaining 50% sees a carbon value equal to the “large” ETS carbon price.
Buildings and
road transport
ETS
No Yes (in the “new” ETS up to 2030, and in the “large” ETS after 2030)
CO2 standards
for LDVs and
HDVs
CO2 standards for LDVs and HDVs + Charging and refuelling infrastructure development (review of the Directive
on alternative fuels infrastructure and TEN-T Regulation & funding), including strengthened role of buildings
High ambition increase Medium ambition increase Lower ambition increase
EE policies
overall ambition
High ambition increase Medium ambition increase Lower ambition increase
EE policies in
buildings
High intensity increase (more
than doubling of renovation
rates assumed)
Medium intensity increase (at least
doubling of renovation rates
assumed)
Lower intensity increase, no assumptions
on renovation rates increases
EE policies in
transport
High ambition increase Medium intensity increase As in MIX
RES policies
overall ambition
High ambition increase Medium intensity increase
Lower ambition increase except for
transport (see below)
61
50% of all incoming and all outgoing extra-EU voyages
110
Scenario REG MIX MIX-CP
RES policies in
buildings +
industry
Incentives for uptake of RES in
heating and cooling
Incentives for uptake of RES in
heating and cooling
No increase of intensity of policy
(compared to Reference)
RES policies in
transport and
policies
impacting
transport fuels
Increase of intensity of policies to decarbonise the fuel mix (reflecting ReFuelEU aviation and FuelEU maritime
initiatives).
Origin of electricity for “e-fuels” under the aviation and shipping mandates:
up to 2035 (inclusive) “e-fuels” (e-liquids, e-gas, hydrogen) are produced from renewable electricity, applying
additionality principle.
from 2040 onwards “e-fuels” are produced from “low carbon” electricity (i.e. nuclear and renewable origin). No
application of additionality principle.
CO2 from biogenic sources or air capture.
Taxation
policies
Central option on energy content taxation of the ETD revision
Additional non-
CO2 policies
(represented by
a carbon value)
Medium ambition increase
111
Quantitative elements and key modelling drivers
Policies and measures are captured in the modelling analysis in different manners. Some are
explicitely represented such as for instance improved product energy performance standards,
fuel mandates or carbon pricing in an emission trading system. Others are represented by
modelling drivers (“shadow values”) used to achieve policy objectives.
The overall need for investment in new or retrofitted equipment depends on expected future
demand and expected scrapping of installed equipment. The economic modelling of the
competition among available investment options is based on:
- the investment cost, to which a “private” discount rate is applied to represent risk
adverseness of the economic agents in the various sectors62
,
- fuel prices (including their carbon price component),
- maintenance costs as well as performance of installations over the potential lifetime of
the installation,
- the relevant shadow values representing energy efficiency or renewable energy
policies.
In particular, carbon pricing instruments impact economic decisions related to operation of
existing equipment and to investment, in the different sectors where they apply. The table
below shows the evolution of the ETS prices by 2030 in the Reference and core scenarios.
Table 43: ETS prices by 2030 in the difference scenarios (€2015/tCO2)
Scenarios
Carbon price “current” ETS sectors Carbon price “new” ETS sectors
2025 2030 2025 2030
REF2020 27 30 0 0
REG 31 42 0 0
MIX 35 48 35 48
MIX-CP 35 52 53 80
The investment decisions are also taken considering foresight of the future development of
fuel prices, including future carbon values63
post 2030. Investment decisions take into
account expectations about climate and energy policy developments, and this carbon value
achieves in 2050 levels between €360/tCO2 (in REG, where energy policy drivers play
comparatively a larger role) and €430/tCO2 (MIX-CP)64
.
In complement to carbon pricing drivers, the modelling uses “shadow values” as drivers to
reach energy policy objectives of policies and measures that represent yet to be defined
62
For more information on the roles and levels of discount rates applied per sector, see the EU Reference
Scenario 2020 publication.
63
Post 2030, carbon values should not be seen as a projected carbon price in emissions trading, but as a shadow
value representing a range of policies to achieve climate neutrality that are as yet to be defined.
64
The foresight and the discounting both influence the investment decisions. While in the modelling the
discounting is actually applied to the investment to compute annualised fixed costs for the investment decision,
its effect can be illustrated if applied to the future prices instead: for example, the average discounted carbon
price in 2030 for the period 2030-2050 for renovation of houses and for heating equipment, applying a 12%
discount rate, is €65 in the MIX scenario and €81 in the MIX CP scenario.
112
policies in the respective fields: the so-called “energy efficiency value” and “renewable
energy value”, which impact investment decision-making in the model. These values are thus
introduced to achieve a certain ambition on energy efficiency, for instance related to national
energy efficiency targets and renewable energy targets in the NECPs as represented in the
Reference Scenario 2020, or increased renovation rates in buildings and increased sector
specific renewable energy ambition related to heating and cooling in the policy scenarios.
The table below shows average 2025-2035 values for the different scenarios. The values in
REF2020 reflect the existing policy framework, to meet notably the national energy targets
(both energy efficiency and renewable energy) as per the NECPs. They are typically higher in
policy scenarios that are based on regulatory approaches than in scenarios that are more based
on carbon pricing. The “energy efficiency value” and “renewable energy value” also interact
with each other through incentivising investment in options which are both reducing energy
demand and increasing the contribution of renewables, like heat pumps. This is for instance
the case in the REG scenario, where the comparatively higher “energy efficiency value”
complements the “renewable energy value” in contributing to the renewable energy
performance of the scenario, notably through the highest heat pump penetration of all
scenarios.
Table 44: Energy efficiency value and renewable energy value (averaged 2025-2035)
Scenarios Average renewables
shadow value
Average energy efficiency
shadow value
(€'15/ MWh) (€'15/ toe)
REF2020 62 330
REG 121 1449
MIX 61 1052
MIX-CP 26 350
Specific measures for the transport system
Policies that aim at improving the efficiency of the transport system (corresponding to row
“EE in Transport” in the Table 42, and thus reduce energy consumption and CO2 emissions,
are phased-in in scenarios that are differentiated in terms of level of ambition (low, medium,
high ambition increase). All scenarios assume an intensification of such policies relative to
the baseline. Among these policies, the CO2 emission standards for vehicles are of particular
importance. The existing standards65
, applicable from 2025 and from 2030, set binding
targets for automotive manufacturers to reduce emissions and thus fuel consumption and are
included in the Reference Scenario.
Medium ambition increase
65
The existing legislation sets for newly registered passengers cars, an EU fleet-wide average emission target of
95 gCO2/km from 2021, phased in from 2020. For newly registered vans, the EU fleet-wide average emission
target is 147 gCO2 /km from 2020 onward. Stricter EU fleet-wide CO2 emission targets, start to apply from 2025
and from 2030. In particular emissions will have to reduce by 15% from 2025 for both cars and vans, and by
37.5% and 31% for cars and vans respectively from 2030, as compared to 2021. From 2025 on, also trucks
manufacturers will have to meet CO2 emission targets. In particular, the EU fleet-wide average CO2 emissions
of newly registered trucks will have to reduce by 15% by 2025 and 30% by 2030, compared to the average
emissions in the reference period (1 July 2019–30 June 2020). For cars, vans and trucks, specific incentive
systems are also set to incentivise the uptake of zero and low-emission vehicles.
113
In this case, the following policy measures are considered that drive improvements in
transport system efficiency and support a shift towards more sustainable transport modes, and
lead to energy savings and emissions reductions:
- Initiatives to increase and better manage the capacity of railways, inland waterways and
short sea shipping, supported by the TEN-T infrastructure and CEF funding;
- Gradual internalisation of external costs (“smart” pricing);
- Incentives to improve the performance of air navigation service providers in terms of
efficiency and to improve the utilisation of air traffic management capacity;
- Incentives to improve the functioning of the transport system: support to multimodal
mobility and intermodal freight transport by rail, inland waterways and short sea shipping;
- Deployment of the necessary infrastructure, smart traffic management systems, transport
digitalisation and fostering connected and automated mobility;
- Further actions on clean airports and ports to drive reductions in energy use and emissions;
- Measures to reduce emissions and air pollution in urban areas;
- Pricing measures such as in relation to energy taxation and infrastructure charging;
- Revision of roadworthiness checks;
- Other measures incentivising behavioural change;
- Medium intensification of the CO2 emission standards for cars, vans, trucks and buses (as
of 2030), supported by large scale roll-out of recharging and refuelling infrastructure. This
corresponds to a reduction in 2030 compared to the 2021 target of around 50% for cars
and around 40% for vans.
Low ambition increase
In this case, the same policy measures as in the Medium ambition increase are included.
However, limited increase in ambition for CO2 emission standards for vehicles (passenger
cars, vans, trucks and buses) as of 2030 is assumed, supported by the roll-out of recharging
and refuelling infrastructure. This corresponds to a reduction in 2030 compared to the 2021
target of around 40% for cars and around 35% for vans.
High ambition increase
Beyond measures foreseen in the medium ambition increase case, the high ambition increase
case includes:
- Further measures related to intelligent transport systems, digitalisation, connectivity and
automation of transport - supported by the TEN-T infrastructure;
- Additional measures to improve the efficiency of road freight transport;
- Incentives for low and zero emissions vehicles in vehicle taxation;
- Increasing the accepted load/length for road in case of zero-emission High Capacity
Vehicles;
- Additional measures in urban areas to address climate change and air pollution;
- Higher intensification of the CO2 emission standards for cars, vans, trucks and buses (as of
2030) as compared to the medium ambition increase case, leading to lower CO2 emissions
and fuel consumption and further incentivising the deployment of zero- and low-emission
vehicles, supported by the large scale roll-out of recharging and refuelling infrastructure.
This corresponds to a reduction in 2030 compared to the 2021 target of around 60% for
cars and around 50% for vans.
Drivers of reduction in non-CO2 GHG emissions
Non-CO2 GHG emission reductions are driven by both the changes taking place in the energy
system due to the energy and carbon pricing instruments, and further by the application of a
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carbon value that triggers further cost efficient mitigation potential (based on the GAINS
modelling tool) in specific sectors such as waste, agriculture or industry.
Table 45: Carbon value applied to non-CO2 emissions in the GAINS model (€2015/tCO2)
Scenarios
Non-CO2 carbon values
2025 2030
REF2020 0 0
REG 4 4
MIX 4 4
MIX-CP 5 10
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Key results and comparison with Climate Target Plan scenarios
Table 46: Key results of the “Fit for 55” core scenarios analysis for the EU
2030 unless otherwise stated REF REG MIX
MIX-
CP
Key results
GHG emissions* reductions (incl.
intra EU aviation and maritime,
incl. LULUCF)
% reduction from 1990 45% 55% 55% 55%
GHG emissions* reductions (incl.
intra EU aviation and maritime,
excl. LULUCF)
% reduction from 1990 43.4% 53.0% 52.9% 52.9%
Overall RES share % 33% 40% 38% 38%
RES-E share % 59% 65% 65% 65%
RES-H&C share % 33% 41% 38% 36%
RES-T share % 21% 29% 28% 27%
PEC energy savings
% reduction from 2007
Baseline
33% 39% 39% 38%
FEC energy savings
% reduction from 2007
Baseline
30% 37% 36% 35%
Environmental impacts
CO2 emissions reductions (intra-EU
scope, excl. LULUCF), of which
(% change from 2015) -30% -43% -42% -42%
Supply side (incl. power
generation, energy branch,
refineries and district heating)
(% change from 2015) -49% -62% -63% -64%
Power generation (% change from 2015) -51% -64% -65% -67%
Industry (incl. process emissions) (% change from 2015) -10% -23% -23% -23%
Residential (% change from 2015) -32% -56% -54% -50%
Services (% change from 2015) -36% -53% -52% -48%
Agriculture (energy) (% change from 2015) -23% -36% -36% -35%
Transport (incl. domestic and intra
EU aviation and navigation)
(% change from 2015) -17% -22% -21% -21%
Non-CO2 GHG emissions
reductions (excl. LULUCF)
(% change from 2015) -22% -32% -32% -33%
Reduced air pollution vs. REF (% change) -10%
Reduced health damages and air
pollution control cost vs. REF -
Low estimate
(€ billion/year) 24.8
Reduced health damages and air
pollution control cost vs. REF -
High estimate
(€ billion/year) 42.7
Energy system impacts
Primary Energy Intensity toe/M€'13 83 75 76 76
Gross Available Energy (GAE) Mtoe 1,289 1,194 1,198 1,205
- Solids share % 9% 6% 5% 5%
- Oil share % 34% 33% 33% 33%
- Natural gas share % 21% 20% 20% 21%
- Nuclear share % 10% 11% 11% 11%
- Renewables share % 26% 31% 30% 30%
- Bioenergy share % 13% 13% 12% 12%
- Other Renewables share % 13% 18% 18% 18%
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Gross Electricity Generation TWh 2,996 3,152 3,154 3,151
- Gas share % 14% 12% 13% 14%
- Nuclear share % 17% 16% 16% 16%
- Renewables share % 59% 65% 65% 65%
Economic impacts
Investment expenditures (excl.
transport) (2021-30)
bn €'15/year 297 417 402 379
Investment expenditures (excl.
transport) (2021-30)
% GDP 2.1% 3.0% 2.9% 2.7%
Additional investments to REF bn €'15/year 120 105 83
Investment expenditures (incl.
transport) (2021-30)
bn €'15/year 944 1068 1051 1028
Investment expenditures (incl.
transport) (2021-30)
% GDP 6.8% 7.7% 7.6% 7.4%
Additional investments to REF bn €'15/year 124 107 84
Additional investments to 2011-20 bn €'15/year 285 408 392 368
Energy system costs excl. carbon
pricing and disutility (2021-30)
bn €'15/year 1518 1555 1550 1541
Energy system costs excl. carbon
pricing and disutility (2021-30)
% GDP 10.9% 11.2% 11.15% 11.1%
Energy system costs incl. carbon
pricing and disutility (2021-30)
bn €'15/year 1535 1598 1630 1647
Energy system costs incl. carbon
pricing and disutility (2021-30)
% GDP 11.0% 11.5% 11.7% 11.8%
ETS price in current sectors (and
maritime)
€/tCO2 30 42 48 52
ETS price in new sectors (buildings
and road transport)
€/tCO2 0 0 48 80
Average Price of Electricity €/MWh 158 156 156 157
Import dependency % 54% 52% 53% 53%
Fossil fuels imports bill savings
compared to REF (2021-30)
bn €'15 136 115 99
Energy-related expenditures in
buildings (excl. disutility)
% of private
consumption
6.9% 7.5% 7.5% 7.4%
Energy-related expenditures in
transport (excl. disutility)
% of private
consumption
18.1% 18.1% 18.3% 18.5%
Note: *All scenarios achieve 55% net reductions in 2030 compared to 1990 for domestic EU emissions,
assuming net LULUCF contributions of 255 Mt CO2-eq. in 1990 and 225 Mt CO2-eq. in 2030 and including
national, intra-EU maritime and intra-EU aviation emissions66
.
Source: PRIMES model, GAINS model
Table 47: Comparison with the CTP analysis
Results for 2030 CTP 55% GHG reductions
scenarios range
(REG, MIX, CPRICE,
ALLBNK)
“Fit for 55” core scenarios range
(REG, MIX, MIX-CP)
Overall net GHG reduction (w.r.t. 1990)* 55% 55%
66
Emissions estimates for 1990 are based on EU UNFCCC inventory data 2020, converted to IPCC AR5 Global
Warming Potentials for notably methane and nitrous oxide. However, international intra-EU aviation and
international intra-EU navigation are not separated in the UNFCCC data from the overall international bunker
fuels emissions. Therefore, 1990 estimates for the intra-EU emissions of these sectors are based on (a
combination of) data analysis for PRIMES modelling and 2018-2019 MRV data for the maritime sector.
117
Overall RES share 38-40% 38-40%
RES-E 64-67% 65%
RES-H&C 39-42% 36-41%
RES-T 22-26% 27-29%
FEC EE 36-37% 35-37%
PEC EE 39-41% 38-39%
CO2 reduction on the supply side (w.r.t.
2015)
67-73% 62-64%
CO2 reduction in residential sector (w.r.t.
2015)
61-65% 50-56%
CO2 reduction in services sector (w.r.t.
2015)
54-61% 48-53%
CO2 reduction in industry (w.r.t. 2015) 21-25% 23%
CO2 reduction in intra-EU transport (w.r.t.
2015)
16-18% 21-22%
CO2 reduction in road transport (w.r.t. 2015) 19-21% 24-26%
Non-CO2 GHG reductions (w.r.t. 2015, excl.
LULUCF)
31-35% 32-33%
Investments magnitude, excluding transport
(in bn€/per year)
401-438 bn/year 379-417 bn/per year
Energy system costs (excl. auction payments
and disutility) as share of GDP (%, 2021-
2030)
10.9-11.1% 11.1-11.2%
Note: *All scenarios achieve 55% net reductions in 2030 compared to 1990 for domestic EU emissions,
assuming net LULUCF contributions of 255 Mt CO2-eq. in 1990 and 225 Mt CO2-eq. in 2030 and including
national, intra-EU maritime and intra-EU aviation emissions66
(except the CTP ALLBNK that achieves 55% net
reductions including also emissions from extra-EU maritime and aviation).
Source: PRIMES model, GAINS model
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4.1.6 Results per Member State
This document is completed by detailed modelling results at EU and MS level for the
different core policy scenarios:
- Energy, transport and overall GHG (PRIMES model)
- Details on non-CO2 GHG emissions (GAINS model)
- LULUCF emissions (GLOBIOM model)
- Air pollution (GAINS model)
That can be found in “Technical Note on the Results of the “Fit for 55” core scenarios for the
EU Member States”.
4.2 Specific analytical elements for this impact assessment – modelling of the electricity
system (with METIS model)
METIS is a project67
initiated by DG ENER for the development of a computer program
consisting of modules and datasets titled METIS, with the aim to further support DG ENER’s
evidence-based policy making, especially in the areas of electricity and gas. The software is
developed by Artelys with the support of IAEW (RWTH Aachen University), ConGas and
Frontier Economics as part of Horizons 2020 and is closely followed by DG ENER. METIS
first version was delivered at the DG ENER premises in February 2016.
The METIS project provides DG ENER with an in-house tool that can provide insights and
robust answers to complex economic and energy related questions, focusing on the short-term
operation of the energy system and markets. METIS was used in the impact assessment of the
Market Design Initiative.68
Table 48 - METIS models displayed in the Crystal Super Grid user interface
67
http://ec.europa.eu/dgs/energy/tenders/doc/2014/2014s_152_272370_specifications.pdf
68
https://ec.europa.eu/energy/sites/ener/files/documents/metis_s12_-_assessing_market_design_options.pdf
119
Purpose of this note
This note should be seen as an entry point for anyone interested in the understanding of the
METIS models. One of the main objectives of this note is to present the available
documentation, source code and data used in METIS and explain how to use them to
understand the model operation. With this note and the associated elements, the reader will be
able to fully understand the equations behind the different energy models, apprehend how
energy scenarios are built, and learn which indicators are available to analyse the results of a
simulated energy scenario.
METIS currently relies on the Artelys Crystal Super Grid Platform (ACSG)69
to run the
model and visualise input data and results. The different METIS models and indicators are
run and calculated by the ACSG platform, which also provides a convenient graphical user
interface allowing users to easily modify, launch the computations of, and analyse METIS
energy scenarios.
Figure 75 - METIS open-book approach
Scenarios for policy analysis with model METIS
Baseline: Limited demand-response. In this scenario, 30% of EVs’ and heat-pumps’
demands are assumed to be flexible, their operation being based on the hourly electricity
price (reflecting real-time pricing, RTP). The remaining demand does not feature any flexible
operation, meaning that cars charge immediately when they are connected to the charging
point and heat pumps operate when demand occurs (no heat storage is considered). This share
reflects what is understood as the minimum level of flexibility required to achieve the CTP
69
https://www.artelys.com/fr/applications/artelys-super-grid
120
level of ambition. However, this option is already considered too ambitious given the current
situation where flexibility is practically 0%.
High demand-response (high-DR). This model run features a higher flexibility share, as
70% of EVs and heat pumps feature flexible demand. This strategy is expected to reduce
further the system costs, and help integrating renewables.
High demand-response with vehicle-to-grid (high-DR-V2G). In this model run, in addition
to 70% flexible demand of EVs and heat pumps, it is also considered that EVs can use the
energy stored in their batteries to inject electricity in the grid (vehicle-to-grid). It provides an
additional flexibility potential to the system.
Demand-response to a combined price and vRES signal (DR-vRES-share). This model
run considers that 70% of heat pumps and EVs (no V2G capabilities considered) respond to a
signal combining the retail electricity price and a second price component based on the real-
time share of vRES in electricity generation.
Hourly GO option:
In order to account for consumers’ response to the hourly vRES share in electricity
generation, an indirect representation of hourly GOs and its associated price is integrated into
METIS.
In addition to the hourly electricity price, the consumer is exposed to the hourly GO price,
which is assumed to vary as a piecewise linear function of the hourly vRES share. When the
vRES generation exceeds a given threshold, the GO price falls to 0 due to oversupply
conditions. The threshold is set at a 30% RES share in power generation in this analysis.
However, when renewable generation is lower than the specified threshold, offtakers are
competing for GOs. For this model run, the price is assumed to rise linearly with the decrease
in vRES generation, until reaching a maximum when almost no renewable generation is
available. For this exercise, this maximum is called scarcity price.
Setting this scarcity price defines the overall shape of GOs price curve against renewable
generation. Considering the hourly vRES-share extracted from the high-DR model run, one
can compute the average GO price over the year. This annual GO price is expressed in
comparable terms with respect to current GO prices (which typically range between 0.1 and 2
€/MWh, reaching up to 10 €/MWh in selected cases), which can be cancelled within a year.
In total, three model runs are considered in which the scarcity price varies in order to reach
different average GO prices. The average GO prices equal 2, 4 and 10 €/MWh, in contrast to
the mean wholesale electricity price of 46 to 50 €/MWh under the MIX scenario in 2030.
Table 49 - scarcity and average GO price per demand scenario70
Low demand Medium demand High demand
Scarcity price 13 €/MWh 26 €/MWh 65 €/MWh
Average price 2 €/MWh 4 €/MWh 10 €/MWh
70
The EU27 average electricity price in the MIX scenario is between 46 and 50 €/MWh
121
Figure 76 - vRES share against GO price duration curve - FR - medium demand scenario
Setting a GO-price reflecting the hourly vRES share on top of the retail electricity price
provides a financial incentive for the consumer to operate at hours that benefit the most to the
system in terms of renewables integration. In particular, as displayed on the load duration
curves in the table and figure above, some hours feature the same electricity price,
indistinctively of the actual vRES share, therefore the electricity price alone does not provide
the appropriate signal to a consumer trying to identify hours with higher vRES shares. Setting
a GO price on top of the electricity price provides a complementary signal that favours
renewables consumption.
However, it should be noted that adding a renewable signal on top of the electricity price
could shift the consumer operation to hours featuring higher electricity prices, instead of
relying on cheap electricity generation, e.g., from nuclear energy. This consumption pattern
modification may increase renewables integration at the expense of the overall system costs.
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Figure 77 - vRES share against electricity price duration curve - FR - medium demand scenario
Figure 78 - vRES share against total electricity price (incl. GOs) duration curve - FR - medium demand scenario
123
ANNEX 5: 2030 CLIMATE TARGET PLAN POLICY CONCLUSIONS
The Communication on stepping up Europe’s 2030 climate ambition - the Climate Target
Plan (CTP)71
and its underpinning impact assessment are the starting point for the initiatives
under the Fit for 55 package.
The plan concluded on the feasibility - from a technical, economic and societal point of view
- of increasing the EU climate target to 55% net reductions of greenhouse gases (GHG)
emissions by 2030 compared to 1990. It also concluded that all sectors need to contribute to
this target.
In particular, with energy supply and use responsible for 75% of emissions, the plan put
forward ambition ranges for renewables and energy efficiency, which correspond in a cost-
efficient manner to the increased climate target. The climate target plan also established that
this increase in climate and energy ambition will require a full update of the current climate
and energy policy framework, undertaken in a coherent manner.
As under the current policy framework, the optimal policy mix should combine, at the EU
and national levels, strengthened economic incentives (carbon pricing) with updated
regulatory policies, notably in the field of renewables, energy efficiency and sectoral policies
such as CO2 standards for new light duty vehicles. It should also include the enabling
framework (research and innovation policies, financial support, addressing social concerns).
While sometimes working in the same sectors, the policy tools vary in the way they enable
the achievement of the increased climate target. The economic incentives provided by
strengthened and expanded emissions trading will contribute to the cost-effective delivery of
emissions reductions. The regulatory policies, such as the Renewable Energy Directive
(RED), the Energy Efficiency Directive (EED), the Regulation on CO2 standards for vehicles
supported by the Directive on the alternative fuels infrastructure, and the Re(FuelEU)
aviation and maritime initiatives, aim at addressing market failures and other barriers to
decarbonisation, but also create an enabling framework for investment, which supports cost-
effective achievement of climate target by reducing perceived risks, increasing the efficient
use of public funding and helping to mobilise and leverage private capital. The regulatory
policies also pave the way for the future transition needed to achieve the EU target of the
climate neutrality. Such a sequential approach from the CTP to the Fit for 55 initiatives was
necessary in order to ensure coherence among all initiatives and a collective delivery of the
increased climate target.
With the “MIX” scenario, the impact assessment included a policy scenario that largely
reflects the political orientations of the plan.
The final calibration between the different instruments is to be made depending, inter alia on
the decision on the extension of emissions trading beyond the maritime sector and its terms.
The table below shows the summary of the key CTP findings:
Table 50: Key policy conclusions of the Climate Target Plan
COM (2020) 562 final.
71
POLICY CONCLUSIONS IN THE CTP
GHG emissions
reduction
 At least 55% net reduction (w.r.t. 1990)
 Agreed by the European Council in December 2020
 Politically agreed by the European Council and the European Parliament in
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the Climate Law
ETS  Corresponding targets need to be set in the EU ETS and the Effort Sharing
Regulation to ensure that in total, the economy wide 2030 greenhouse gas
emissions reduction target of at least 55% will be met.
 Increased climate target requires strengthened cap of the existing EU ETS
and revisiting the linear reduction factor.
 Further expansion of scope is a possible policy option, which could include
emissions from road transport and buildings, looking into covering all
emissions of fossil fuel combustion.
 EU should continue to regulate at least intra-EU aviation emissions in the
EU ETS and include at least intra-EU maritime transport in the EU ETS.
 For aviation, the Commission will propose to reduce the free allocation of
allowances, increasing the effectiveness of the carbon price signal in this
sector, while taking into account other policy measures.
ESR  Corresponding targets need to be set in the Effort Sharing Regulation and
under the EU ETS, to ensure that in total, the economy wide 2030
greenhouse gas emissions reduction target of at least 55% will be met.
LULUCF  Sink needs to be enhanced.
 Agriculture forestry and land use together have the potential to become
rapidly climate-neutral by around 2035 and subsequently generate
removals consistent with trajectory to become climate neutral by 2050.
CO2 standards
for cars and
vans
 Transport policies and standards will be revised and, where needed, new
policies will be introduced.
 The Commission will revisit and strengthen the CO2 standards for cars and
vans for 2030.
 The Commission will assess what would be required in practice for this
sector to contribute to achieving climate neutrality by 2050 and at what
point in time internal combustion engines in cars should stop coming to the
market.
Non-CO2 GHG
emissions
 The energy sector has reduction potential by avoiding fugitive methane
emissions. The waste sector is expected to strongly reduce its emissions
already under existing policies. Turning waste into a resource is an
essential part of a circular economy, as is prevention of waste, addressed
by both Circular Economy and the Zero Pollution Action Plans. Under
existing technology and management options, agriculture emissions
cannot be eliminated fully but they can be significantly reduced while
ensuring food security is maintained in the EU. Policy initiatives have
been included in the Methane Strategy.
Renewables  38-40% share needed to achieve increased climate target cost-effectively.
 Renewable energy policies and standards will be revised and, where
needed, new policies will be introduced.
 Relevant legislation will be reinforced and supported by the forthcoming
Commission initiatives on a Renovation Wave, an Offshore Energy
strategy, alternative fuels for aviation and maritime as well as a Sustainable
and Smart Mobility Strategy.
 EU action to focus on cost-effective planning and development of
renewable energy technologies, eliminating market barriers and providing
sufficient incentives for demand for renewable energy, particularly for end-
use sectors such as heating and cooling or transport either through
electrification or via the use of renewable and low-carbon fuels such as
advanced biofuels or other sustainable alternative fuels.
 The Commission to assess the nature and the level of the existing,
indicative heating and cooling target, including the target for district
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72
The Impact Assessment identifies a range of 35.5% - 36.7% depending on the overall design of policy
measures underpinning the new 2030 target. This would correspond to a range of 39.2% - 40.6% in terms of
primary energy consumption.
heating and cooling, as well as the necessary measures and calculation
framework to mainstream further renewable and low carbon based
solutions, including electricity, in buildings and industry.
 An updated methodology to promote, in accordance with their greenhouse
gas performance, the use of renewable and low-carbon fuels in the
transport sector set out in the Renewable Energy Directive.
 A comprehensive terminology for all renewable and low-carbon fuels and a
European system of certification of such fuels, based notably on full life
cycle greenhouse gas emissions savings and sustainability criteria, and
existing provisions for instance in the Renewable Energy Directive.
 Increase the use of sustainably produced biomass and minimise the use of
whole trees and food and feed-based crops to produce energy through inter
alia reviewing and revisiting, as appropriate, the biomass sustainability
criteria in the Renewable Energy Directive,
Energy
Efficiency
 Energy efficiency policies and standards will be revised and, where
needed, new policies will be introduced.
 Energy efficiency improvements will need to be significantly stepped up to
around 36-37% in terms of final energy consumption72
.
 Achievement of a more ambitious energy efficiency target and closure of
the collective ambition gap of the national energy efficiency contributions
in the NECPs will require actions on a variety of fronts.
 Renovation Wave will launch a set of actions to increase the depth and the
rate of renovations at single building and at district level, switch fuels
towards renewable heating solutions, diffuse the most efficient products
and appliances, uptake smart systems and building-related infrastructure
for charging e-vehicles, and improve the building envelope (insulation and
windows).
 Action will be taken not only to better enforce the Energy Performance of
Buildings Directive, but also to identify any need for targeted revisions.
 Establishing mandatory requirements for the worst performing buildings
and gradually tightening the minimum energy performance requirements
will also considered.
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ANNEX 6: DISCARDED OPTIONS
1. Options on target setting
Possible scenarios representing 2030 EU GHG emissions reduction target below 55% or
higher were discarded at an early stage as they do not fulfil the political mandate agreed by
EU leaders. In line with this agreement, policy options assessed look at the impact of
achieving the resulting 38-40% renewable energy shares. Lower or higher shares of
renewables would diverge from the cost-effective pathways established in the CTP.
During the 1st
stakeholder meeting, panellists from the different sessions reflected a positive
attitude towards the increase of the overall target. In addition, polls conducted during the
workshop showed that the top 3 sectors where additional efforts are considered necessary to
meet higher renewables targets for 2030 are the transport sector, heating and cooling, and
buildings. In addition 66% of participant in the workshop think that the overall renewable
target should be binding at both national levels and EU levels.
Some stakeholders have asked for a higher target – beyond 40% renewable energy shares or
renewable electricity share of 100% by 2030 respectively but such scenarios resulting in EU
GHG reductions target of over 55% were not assessed in this IA. No scenarios without
increasing energy efficiency and renewable energy ambition - one of them or both - were
analysed as they would depart from current legislation and miss on synergies that are crucial
for a cost-effective achievement of 2030 GHG target. The experience with policies to date
proves that the targets for GHG emissions reduction, RES and EE ambition reinforce each
other. The objective of this impact assessment is to assess an increase of renewable energy in
line with the 55% GHG reductions in a responsible manner, following the European Green
Deal and as approved by EU leaders, which will require mitigating all negative social and
economic impacts associated with the transition.
Scenarios in this Impact Assessment take into account existing EU and national policies,
including regarding their energy mix, and aim for a future policy mix that is coherent to
implement. This is why no scenarios were developed that would put an exaggerated burden
of the decarbonisation transition on a specific sector or technology or have an asymmetric
distribution of effort or would be inconsistent with the progress achieved so far.
The options of updating and aligning the necessary legislative framework to include an
earlier mandatory resubmission of the updates to the NECPs (including the national
contributions to the RES targets) was also discarded. This resubmission will be required for
the short-term, well before the scheduled 2023 (draft updates) and 2024 (final updates)
submission and would have ensured that Member States reconsider their national
contributions to a potentially increased EU RES target at the earliest opportunity. Although
this option would probably result in earlier action to realise the increased ambition levels but
also in additional administrative burden. Furthermore, this option may require legislative
changes which may be challenging to deliver in such a short timeframe and may therefore
hamper the feasibility of this option.
2. Options on promotion of low carbon and renewable fuels
In this set of options, option 4 (creation of specific targets for low-carbon fuels such as blue
hydrogen) was discarded at an early stage. Low carbon fuels will be needed in a transition
period on the way to a net-zero economy. A specific promotion under the Renewable
127
Directives would however not be in line with the spirit of the Directive and risks setting the
wrong incentives leading to stranded assets and to a more difficult transition to net-zero
emissions in 2050. Option 3 (accounting of low carbon fuels for sectoral transport and
heating & cooling targets) was also discarded as such a measure would likely push out more
expensive renewable fuels in fulfilling these sub-targets.
3. Options on bioenergy sustainability
In the set of policy options on bioenergy sustainability, the following policy options were
discarded at an early stage.
Applying the sustainability criteria only at forest unit level. Under this option, compliance
with the new sustainability criteria for forest biomass would be applied only at the level of
forest sourcing areas or forest units and they would be demonstrated by means of
certification. The option is discarded due to proportionality (high increase of costs for forest
owners) and subsidiarity. First, the requirement to apply the criteria at forest unit level would
impose a heavy burden on private forest owners, in particular for small forest owners. Indeed,
the certification/verification costs would represent an important/excessive share of forest
owners’ incomes, in particular considering the lower value often paid for wood for fuel
versus other uses. This would imply that wood producers would be unwilling to take up
certification/verification in order to demonstrate compliance. This will be particularly true for
small/local operators73
. Thus, this would question the effectiveness of this option. This option
also overlooks the very different characteristics of the forest sector in the EU. For instance,
the recent JRC biomass study acknowledges that about half of the stemwood used for
bioenergy comes from coppice forests. In view of the very limited economic return of this
type of forests (only harvested in long time frames), requesting compliance with the
sustainability criteria would render their management totally uneconomic. Similarly for
biomass coming from forest fire prevention treatments and other phyto-sanitary and
restoration measures, which are necessary for protecting and enhancing the vitality and health
of forests. Moreover, transposition of such requirements will also be very burdensome for
public administrations, especially in those Member States where small-size foresters are
predominant. Secondly, Member States have forest policy frameworks in place to ensure
sustainable forest management practices and compliance with the sustainability criteria. The
specific frameworks vary from country to country, but all include domestic legislation and a
variety of additional requirements that are enshrined in legislation, such as national forest
programmes or equivalent and strategies. Member States also use a common set of FOREST
EUROPE C&I as a tool to establish ‘base-line conditions’ and to monitor progress towards
specific socioeconomic and environmental goals and other aspects of the sustainable
management of forests, including protection and conservation of forests. As these policy
frameworks comply with the specific criteria, it would not be necessary to request that at
forest unit level.
Introducing biogenic carbon emission factors in the REDII GHG emission calculation
methodology. This option would ensure that biogenic CO2 emissions are included in the
lifecycle greenhouse gas performance of forest biomass, in addition to supply-chain
emissions. This would allow for a full picture of climate impacts from these feedstocks. This
is in line with the agreement in the scientific community that accounting of biogenic CO2
emissions needs to be included in order to have a clear picture of the carbon impacts of
73
ReceBIO follow-up study, 2016
128
bioenergy74
. As described in the JRC study on forest bioenergy, biogenic emissions and
removals are often not accounted in standard lifecycle analysis (LCA) because it is implicitly
assumed that the plant regrowth will compensate for them. However, because of the time lag
between emissions and regrowth, it is essential to include biogenic carbon accounting to
understand the overall carbon impacts of bioenergy pathways75
. Nonetheless, Camia et al76
(2021) also make a clear distinction between using LCA for regulatory purposes (e.g. for
benchmarking pathways) and for strategic purposes (e.g. for impact assessment). While the
full accounting of biogenic carbon is clearly necessary for proper strategic studies, this is not
always the case for regulatory purposes. Indeed, an option to include biogenic carbon
accounting within the GHG emission accounting metholodology set out in REDII Annexes V
and VI was already considered and discarded in the 2016 Impact Assessment report on
bioenergy sustainability, mainly because of the crucial importance of value-choices involved
in defining the calculation methodology (i.e., subjectivity in the choice of counterfactuals). In
addition, it would pose difficulties linked to verification. Hence, the inclusion of biogenic
carbon within the REDII GHG emission accounting methodology would be unfeasible and
therefore it is not further analysed in this Impact Assessment.
Requirements for air pollution related to solid biomass. Air pollution is addressed through a
number of legal measures at EU level, including Directive 2004/107/EC aimed at reducing
concentrations of pollutants in ambient air, Directive 2008/50/EC on ambient air quality, the
Large Combustion Plants Directive (2001/80/EC) and Directive (EU) 2016/2284 on National
Emission Ceilings. In addition, the Ecodesign directive has set stricter emission requirements
for new solid fuel boilers and space heaters. In particular, since 1 January 2020, seasonal
space heating emissions of particulate matter shall not be higher than 40 mg/m3 for
automatically stoked boilers and not be higher than 60 mg/m3 for manually stoked boilers.
The Commission will review these standards in 2021, and revise them if appropriate. Air
pollution specifically related to biomass is particularly linked to the stock of old boilers used
in particular in households, as well as by the scale of use in certain populated areas. Given the
fact that air pollution from biomass is specifically addressed through other EU measures and
regulations, it is not considered appropriate to set specific requirements in the context of this
policy initiative.
Application of sustainability requirements to all biomass users (including residential). This
option aims at avoiding that only part of the biomass consumed in the EU is subject to
sustainability rules. However, monitoring compliance for residential heating installation
would be particularly challenging, particularly in those Member States that have significant
auto-consumption of biomass for heating which is not registered in the commercial markets.
Making all bioenergy installations (including residential ones) subject to an EU-wide
sustainability scheme would imply disproportionate administrative burden on Member States
and citizens to verify the compliance of a high number of small scale/private installations.
New reporting requirements on forest bioenergy. The need for new reporting to improve the
monitoring of bioenergy supply and demand was already discussed in the preparation of
74
https://op.europa.eu/en/publication-detail/-/publication/e6c29d5b-2bef-4ec4-93f5-c3f672af0b47
75
Agostini et al. (2020). https://link.springer.com/article/10.1007/s11367-019-01654-2
76
Camia A., Giuntoli, J., Jonsson, R., Robert, N., Cazzaniga, N.E., Jasinevičius, G., Avitabile, V., Grassi, G.,
Barredo, J.I., Mubareka, S., The use of woody biomass for energy purposes in the EU, EUR 30548 EN,
Publications Office of the European Union, Luxembourg, 2021, ISBN 978-92-76-27867-2, doi:10.2760/831621,
JRC122719
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Clean Energy Package. It is for this reason that the Governance Regulation includes new
monitoring requirements for Member States, which need to be transposed at the latest by June
2021. Accordingly, Member States will have to include detailed information on biomass
sustainability in their first integrated energy and climate report, to be submitted by 15 March
2023 (see below). This information will feed into the first COM report on the sustainability of
biomass due by October 2023, according to Article 35(2)(d) of the Regulation (see box
below). In addition, the EU Bioeconomy Monitoring System is strengthening the monitoring
of bioenergy supply and demand (see additional info below). Because of these efforts that are
already underway, this option is not further assessed.
Box: reporting requirements on forest bioenergy under the Governance Regulation
ANNEX IX ADDITIONAL REPORTING OBLIGATIONS
Part 1 Additional reporting obligations in the area of renewable energy
(m) primary supply of solid biomass (in 1 000 m3, except with regard to point (1)(b)(iii),
which will be provided in tonnes)
(1) Forest biomass used for energy production (domestic production and import)
(a) Primary biomass from forest used directly for energy production
(i) Where available, branches and tree tops (reporting is voluntary)
(ii) Where applicable, stumps (reporting is voluntary)
(iii) Round wood (split into industrial stem wood and fuelwood)
(b) Where applicable, forest-based industry co-products used directly for energy
(i) Where applicable, bark
(ii) Chips, sawdust and other wood particles
(iii) Where applicable, black liquor and crude tall
(c) Where available, post-consumer wood used directly for energy production
(d) Processed wood-based fuel, produced from feedstocks not accounted under point (1)(a),
(b) or (c):
(i) Where applicable, wood charcoal
(ii) Wood pellets and wood briquettes
(2) Where available, agricultural biomass used for energy production (domestic production,
import and export)
(a) Energy crops for electricity or heat (including short rotation coppice)
(b) Agricultural crop residues for electricity or heat
(3) Where available, organic waste biomass for energy production (domestic production,
import and export)
(a) Organic fraction of industrial waste
(b) Organic fraction of municipal waste
(c) Waste sludges
Box: JRC EU Bioeconomy Monitoring System
The EU Bioeconomy Monitoring System was developed as the JRC-led action of the
Updated EU Bioeconomy Strategy (COM/2018/673). It addresses the need for a
comprehensive monitoring system to measure the environmental, social and economic
sustainability of the EU bioeconomy. This monitoring system is a part of the EC Knowledge
130
Centre for Bioeconomy. The EU Bioeconomy Monitoring system contains indicators that
cover the five strategic objectives of the Strategy, which are (1) to Ensure Food and Nutrition
Security; (2) to Manage Natural Resources Sustainably; (3) to Reduce dependence on non-
renewable unsustainable resources, whether sourced domestically or from abroad; (4) to
Mitigate and adapt to climate change; and (5) to Strengthen European competitiveness and
create jobs.
Critical indicators include indicators about biomass supply and uses from all primary
production systems, as well as the condition and pressures on the ecosystems that produce the
biomass. Considerable effort is made by the JRC to collect, harmonise, update and maintain
metadata for these indicators. The JRC has a long-term commitment to maintain and
continuously improve this monitoring system. Several indicators that are directly related to
bioenergy are included in the monitoring system, for the full list, see
https://knowledge4policy.ec.europa.eu/visualisation/eu-bioeconomy-monitoring-system-
dashboard_en
4. Permitting
Simplifying permitting and administrative procedures was seen by many replies to OPC as a
very appropriate measure to facilitate the phasing out of fossil fuels. However, REDII
introduced new and substantial requirements on permitting, including clear deadlines for
permitting procedures (generally two years) and a single contact point for applicants with
clear guidance on procedures. These requirements were designed to alleviate problems with
complex and slow national procedures and disproportionate rules, and represent the political
compromise reached in REDII. They have not yet been implemented in the Member States
(transposition deadline 30 June 2021) and it would be premature to amend them before any
evaluation. For these reasons this option has not been pursued.
At the same time, some stakeholders have raised the importance that electrolysers connected
to renewable power generation capacity should be considered, and become eligible under the
existing permitting processes for renewable energy.
5. Promoting RES through enhanced consumer information – revising the system of
Guarantees of Origin (GO) for electricity
The main measure to provide information to consumers on their electricity supply in RED II
are the guaranties of origin in Article 19. In the OPC, several respondents asked to improve
the existing system by reducing administrative barriers for private companies and by avoiding
double counting.
In that context, we looked at revising the current GO measure to further promote RESe in end
use sectors e.g. by requiring suppliers to provide closer to real time shares of renewable
energy supply or by requiring the issuing of GOs to be linked to the commercial flows with
PPAs. These options has been discarded because relevant improvements are already expected
through the implementation of the existing provisions of RED II and the Directive on
131
common rules for the internal market for electricity77
e.g. with the realtime supply contracts
and the requirement to use GO for electricity disclosure. The expected impacts beyond the
current baseline are both relatively limited and uncertain.
In addition, implementation issues related to a revision of the GOs would be technically very
complex and cause delays in the way forward.
ANNEX 7: DETAILED ASSESSMENT FOR HEATING AND COOLING
This Annex covers further technical analysis and measures complimenting Chapters 5 and 6.
For measures described under Option 2 for to the overall heating and cooling sector (mainly
Article 23 of REDII) together with buildings (Article 15) and district heating and cooling
further details are included in this Annex.
Heating and cooling sector
NECP assessment
Under Article 23(1) of REDII, Member States shall endeavour to increase their RES share in
FEC for heating and cooling by an indicative 1.3%-point as annual average counting for the
periods 2021 to 2025 and 2026 to 2030, starting from the share of renewable energy in the
heating and cooling sector in 2020. Article 23(1) also indicates that this increase shall be
limited to 1.1% for Member States in which waste heat and cold is not used. If the share of
RES in H&C in 2020 is above 60%, the Member States may count any such share as
fulfilling the average annual increase (see Art 23 (2b)); if the share is above 50% and up to
60%, the Member States may count any such share as fulfilling half of the average annual
increase (see Art 23 (2c)). Member States shall provide any information as to which
constraints may be responsible for not meeting the requirements reflecting structural barriers
arising from the high share of natural gas or cooling, or from a dispersed settlement structure
with low population density.
According to the NECP assessment78
, the renewable energy share in the heating and cooling
sector amounted to 21% in 2018 in EU27. The final NECPs of EU 27 anticipate a share of
renewable energy in the heating and cooling sector of 23% in 2020 and 33% in 203079
. The
33% RES H&C share in 2030 was facilitated by more than 10% decrease in the final energy
consumption for H&C projected by Member States from 2020 to 2030 in EU2780
.
The share of renewable energy is above 50% by 2020 in 5 MS (Denmark, Estonia, Finland,
Lithuania, and Latvia)81
. In Sweden, this share is above 60%82
. Several countries report a low
77
Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for
the internal market for electricity and amending Directive 2012/27/EU, OJ L 158, 14.6.2019, p. 125–199
78
Assessment of heating and cooling related chapters of the NECPs
79
Spain and Latvia did not provide data and were not included in the 33% in 2030.
80
The final energy consumption (FEC) for heating and cooling represented about 46% of the total final energy
consumption in EU-27 calculated on the based on the Shares Tool (Eurostat Statistics) , which reflects national
data collection and do not fully report all types of consumption.
81
Above 50%, Member States has to achieve half of the renewable increase requirement, i.e. 5.5 or 6.5% point
per year (Article 23(2)(c) of RED II).
132
share of RES in the H&C sector and in 3 Member States the share of renewables is below
10%.
As shown in the table below, 13 countries do not comply with the current H&C target, and
five countries are expected to comply only partially, i.e. in one of the periods (2020-2025 or
2026-2030), but not in both. Only nine 9 Member States plan to meet their targets.83
The table below shows RES share in the H&C sector in 2020, the average annual increase of
RES share in H&C by 2025 and 2030. It also indicates whether the Member State takes waste
heat and cold into account and whether constraints for not meeting the requirements are
provided84
. Considering all criteria from Article 23 mentioned above, we assessed whether
the Member State were screened against these requirements. Member States that are not in
line with the requirements are highlighted red, while those in line with the requirements are
highlighted green.
Table 51 - RES share in the heating and cooling sector regarding RED II Art 23 (Member
States that are not in line with the requirements from Art 23 are highlighted in red, while
those in line with the requirements are highlighted green)
Member
state
RES-H&C
share in
2020 in %85
Average
annual
increase of
RES share in
H&C by
2025
Average
annual
increase of
RES share in
H&C by
2030
Waste heat
is counted or
not
Constraints for
not meeting
the
requirements
(see footnote)
Belgium 8.0 0.28 0.38 No No
Bulgaria 31.3 1.4 0.9 No No
Czech
Republic
20.7 1.04 0.96 No Yes
Denmark 54.0 0.8 0.4 No No
Germany 16.0 0.72 0.92 NA No
Estonia 55.3 0.74 0.8 No No
Ireland 7.8 1.46 1.78 No No
Greece 30.6 1.28 1.2 NA No
Spain 18.0 1.4 1.2 NA No
France 26.0 1.21 1.2 NA No
Croatia 33.3 0.34 0.32 NA No
82
Above 60%, Member States are not subject to the renewable increase requirement (Article 23(2)(b) of RED
II).
83
Estonia, Finland, France, Greece, Ireland, Lithuania, Luxembourg, Spain and Sweden.
84
For example structural barriers arising from the high share of natural gas or cooling, or from a dispersed
settlement structure with low population density.
85
RES share in final energy consumption for heating and cooling
133
Member
state
RES-H&C
share in
2020 in %85
Average
annual
increase of
RES share in
H&C by
2025
Average
annual
increase of
RES share in
H&C by
2030
Waste heat
is counted or
not
Constraints for
not meeting
the
requirements
(see footnote)
Italy 20.9 0.8 1.9 NA No
Cyprus 31.986
0.73 0.78 NA No
Latvia 53.4 0.54 0.30 No Yes
Lithuania 50.9 2.5 0.75 No No
Luxembourg 13.7 1.23 2.12 NA No
Hungary 18.2 0.5 1.6 NA No
Malta 22 0.5 0.24 NA Yes
Netherlands 8 0.587
0.5 NA No
Austria 36.5 0.32 0.5 NA No
Poland 17.4 1.06 1.14 NA No
Portugal 34 0.4 0.4 No Yes
Romania 25.2 0.82 0.74 NA Yes
Slovenia 36.4 0.18 0.82 NA No
Slovakia 12.5 0.72 0.58 NA No
Finland 54.0 0.8 0.56 No No
Sweden 69.2 0.56 0.04 Yes No
The current share of RES in the H&C sector as well as the ambition to increase it over the
period 2020-2030 varies considerably between the Member States, as illustrated by the figure
below.
86
Interpolated value (the original value was given for 2021, and it amounts to 32.6%)
87
Calculated for the period 2021 to 2030 (data for 2025 is not provided)
134
Figure 79 - Share of RES in H&C in all MS in 2020 & in 2030 + share of H&C in Final
Energy Consumption; Source: Trinomics based on JRC’s assessment of NECPs
In the figure above, the blue bars shows the large variations between MS
regarding their share of renewables as expected for 2020. In 2020, 6 MS
were expected to have a share of RES in H&C above 50%, while 3 MS
would have a share below 10%. In 2030, only 9 Member States meet the
target of 1.3%-point annual increase of renewables in the H&C sector
of Article 23(4) of RED II (dark green in Figure above). 4 additional
Member States meet partially the target (light green in Figure
above).Specific measures for the overall heating and cooling sector
Options for sector-specific measures to increase renewable energy in the heating and cooling
sector (RES-H&C)
Option 2: Menu of voluntary measures
Option 2a) Add/clarify measures that Member States can use to implement the
target (menu of measures Member States can choose from/obligation to
implement at least 2 measures)
Option 2a): Add/clarify measures to the list in Article 23(4) that Member States can use to
implement the target (menu of measures Member States can choose from/obligation to
implement at least 2 measures)
This option in part clarifies the current high-level provisions and in part includes
strengthening of the existing measures by also including new aspects.
Possible sector-specific measures
 Option 2a)-A1: Capacity building for national/local authorities to plan/implement
renewable projects and infrastructures for heat planning requirements at local/regional
level;
135
 Option 2a)-A2: Risk mitigation framework to reduce cost of capital for renewable
heat projects;
 Option 2a)-A3: Heat purchase agreements for corporate and collective small
consumers;
 Option 2a)-A4: Planned replacement schemes of fossil heating systems - fossil
phase-out schemes with milestones;
 Option 2a)-A5: Update of the qualification and certification requirements of installers
(article 18 and annex VI), and obligation on technology providers and vendors, that
trained and qualified installers are available in sufficient numbers to service the
required growth in renewable heating and cooling installations in buildings and
industry.
As indicated in Section 6.2 these measures could be combined with the target options.
Analysis of impacts of sector specific measures for the overall HC sector (relevant also for
district heating and cooling and buildings)
Options 2a)-A1: Capacity building for national/local authorities to
plan/implement renewable projects and infrastructures, national and
local heat planning
Effectiveness
Capacity building is considered a cost effective way to support the decarbonisation of the
heating and cooling sector. Capacity building is especially important to Capacity building in
heating and cooling, including heat planning, has been supported by a number of Horizon
2020. However, wide scale replication and diffusion is more effective if the results could be
consistently conveyed via an EU framework across all Member States. Coordinated
infrastructure planning with more involvement of local and regional authorities could result
in important economic savings and avoid issues of mis-planning, mis-communication, mis-
information and lack of understanding of the local particularities, needs and opportunities
resulting in inefficiencies. The costs related to administration, coordination and
communication are not expected to be significant compared to the savings of avoiding
inefficient planning.
Administrative burden
Planning of renewable and waste H&C deployment projects and infrastructure in heating and
cooling should ideally be at the core of the NECP section on the deployment of renewable in
the H&C sector. Given the high dependency of the different energy infrastructures (in the
frame of energy system integration, moving e.g. partially from gas network to electricity
and/or DHC). The LTRS should also have addressed, at least partially, the issue of planning,
as the deployment of renewable heating systems and the increase of energy efficiency in
buildings should go hand in hand. Planning the deployment, reinforcement, extension or
dismantling of existing infrastructure, need to consider the expected evolution of heat
demand (which influences the alternatives), and the existing alternatives that can replace
fossil fuels, including the potential for low carbon liquids and gases (from biological origin or
not). Therefore, the planning process would encompass the whole decarbonisation of the
H&C sector. Most of the MS have already started to plan, or at least to define planning the
136
deployment of renewables in H&C, but their progress depends on their global commitment
and the set of policy measures they foresee in the frame of their NECPs. For some, planning
would be a question of progressively mainstreaming H&C infrastructure considerations in
other policy areas (e.g. urban policy), to ensure full coverage of the H&C concerns. For
others, planning would be required as a kind of overarching framework, and would therefore
encompass the complete process of H&C decarbonisation, including the Comprehensive
Assessment (article 14 EED). Such planning could also be seen as a part of the LTRS, where
a more dedicated focus on supply should be mainstreamed, highlighting the importance to
address the deployment of all heat market and related infrastructure (gas, liquid, electricity,
and heat).
For those MS starting from the beginning, administrative overburden is probably the higher
risk that could jeopardise the whole planning process, due to the lack of human and financial
resources, and the need to take into account local parameters. A balance has to be found
between the details and the efficiency. Therefore, guidance would be useful to support MS
planning in an effective way. A recent study88
for the EC on the competitiveness of the H&C
industry and services finds that easing administrative costs and barriers via better alignment
of procedures and requirements (e.g. technical requirements, certification and licencing)
would make it substantially easier for renewables to enter markets and become more
competitive.
For those MS having a set up a clear vision on the way to decarbonise the H&C, and
especially to deploy renewables, planning would then be a kind of reminder of the important
and integrated issues to address.
Key steps to consider in the planning of deployment of renewable heat and associated
infrastructure include89
:
 Developing strategic H&C plans – this is a first step and needs to consider the
local context, resource availability, existing infrastructure, socio-economic
conditions etc. The three-step approach described in the textbox on Decarb City
Pipes 2050 project could be a suitable template for H&C plan development in
cities.
 Stakeholder engagement – the type of stakeholders and extent of their
engagement will, to an extent, depend on the H&C plans developed.
 Assessing and mapping HC demand and energy resources – this step would
expand on the initial information considered for planning. In the case of the
H&C sector the location of the demand and supply is of critical importance in
order to enable connecting them to one another. The planning should also take
into account other energy sectors in the analyses to maximise synergies and
ensure energy system integration where possible.
 Integrating energy resources in the existing and new infrastructure to
match the demand – future demand can be deduced through measurements of
88
Still to reference
89
Bertelsen, N., Mathiesen, B. V., Djørup, S. R., Schneider, N. C. A., Paardekooper, S., Sánchez García, L.,
Thellufsen, J. Z., Kapetanakis, J., Angelino, L., & Kiruja, J. (2021). Integrating low temperature renewables in
district energy systems: Guidelines for policy makers. International Renewable Energy Agency.
137
actual demand in buildings, bottom-up modelling for building consumption and
top-down modelling of heat demands.
 Assess the required investments, operational and fuel costs, including all
technical challenges – for many heating technologies upfront investments and
high capex costs constitute a barrier for competing with current, fossil-based
technologies. Thus, appropriate instruments to lower this barriers and promote
uptake are crucial. A level-playing field for operational and fuel costs, by,
among others, eliminating subsidies or other fiscal incentives for fossil-based
fuels is important.
 Enabling regulatory conditions, financing, and business models to deploy –
this aspect is closely linked to the point above. Government authorities need to
establish financial and regulatory measures to ensure that the benefits of
renewable heating systems are captured by the established pricing regimes.
As explained above, these steps are already tackled by the MS, to varying extents, meaning
there is no one single approach to assess the administrative costs related to their
implementation.
National authorities will be strongly involved, but local authorities (municipalities, cities, or
regions) will also need to progressively commit and engage in the process of planning
renewable H&C deployment projects and infrastructure. In several MS, major cities have
already started and provide good examples on the best planning approach, such as illustrated
in the textbox on Denmark.
Experience with heat planning90
A report prepared by the Danish Energy Agency (2019) aims at providing inspiration on
municipal heat planning based on Danish experiences and delivers input to a common heat
planning methodology for municipalities in Baden-Württemberg. Such report can provide
useful guidance for other municipalities in their heat planning.
Danish heat planning was kick started in the late 1970’s as a response to the two oil crises in
1973 and 1979, which had huge implications for the Danish economy. The reason for
commencing heat planning in Baden-Württemberg is even more serious, namely the wide
recognition of the global climate crisis. Though the backdrop for planning is different, this
report shows that a lot of the experience from Denmark have high relevance for Baden-
Württemberg. In addressing the Danish experience with heat planning, the region has put
special emphasis on the learnings from the beginning of 1980’s when the framework for
Danish heat planning was created.
In order to meet its climate and energy targets Baden-Württemberg has a strong focus on
energy efficiency improvements in housing and green heating. This entails an expansion of
district heating through municipal heat planning with a particular focus on supply from fuel
free energy sources.
The German region recently required its 103 cities of more than 20 000 inhabitants to develop a vision
for their CO2-neutral heat supply 2050.91
90
Experience with heat planning in Denmark, input for developing a heat planning in Baden Württemberg,
Danish Energy Agency (https://www.ea-energianalyse.dk/en/front-page/), 2019
138
While the total population of the Baden-Württemberg is approx. 11 million people, the 103
largest cities hold a population of approx. 5,5 million people, that is roughly the same number
of inhabitants as in Denmark. Therefore, planning at city level requires guidance and
commitment at regional or national levels.
Despite its long experience in district heating (over 40 years), the Danish heat planning was
implemented over a relatively short time span. The first heat supply act was introduced in
1979 - before that there was no fixed framework for heat planning- and by the mid 1980’s
almost all Danish municipalities (there were about 300 at the time) had developed heat plans.
The main objective of the heat planning was to determine, which areas in the municipality
should be supplied with district heating or natural gas, and which areas were still supposed to
use individual heat sources such as oil boilers, biomass boilers or electric heating. All these
considerations are still valid, although they could be expanded with the new fuels and
technologies. A key selection parameter in the heat planning was the energy density of the
different areas of a municipality. The principal approach was that most densely populated
areas would usually be supplied with district heating, less densely populated areas with
natural gas and the more sparsely areas with individual heating.
The heat planning also provided directions on how district heating should be supplied. This in
turn influenced the location of district heating systems in a way where cities with large
amounts of surplus heat from power generation or industries would typically expand district
heating to less densely populated areas that would otherwise have been supplied with natural
gas.
Since the late 1980’s, heat planning in Denmark has developed on a more ad hoc based
approach. During the 1990’s a lot of mainly smaller cities, which previously had not had
collective heat supply, developed district heating systems based on combined heat and power
plants, mainly gas-fired, and in the last 10 years quite a few areas, which were originally
designated for gas boilers, have been converted to district heating. The conversion
contributed to the increasing share of district heating of total heat supply from around 46% to
around 50% in the past decade. Since 2011, the number of district heating installation in both
new and existing buildings has increased by 9%. Whereas the heat planning that took place in
the early 1980’s aimed at reducing oil dependency, the later steps of heat planning have
focused on reducing the environmental impacts, particularly the CO2 footprint, of heat
supply.
The following figure illustrates the main actors of the energy system that should be involved
in heat planning.
91
https://decarbcitypipes2050.eu/2021/02/10/heat-planning-baden-wurttemberg-takes-the-bull-by-the-horns/
139
Among the main lessons to be used for the Baden-Württenberg:
1) Heat planning needs to be locally anchored
2) Capacity building and knowledge sharing was key to successful heat planning
3) Multilateral municipal coordination groups were key to human capacity building
4) Developing common planning assumptions improved the quality of the planning
process
5) Educational programs linked to the concrete planning contributed to human
capacity building
6) Policies need to ensure that solutions that are desirable from a social perspective are
also advantageous from a consumer viewpoint
7) District heating projects need to prove that they benefit society as a whole
8) Requirements for mandatory connection has been a powerful but debated tool in
Danish heat planning
9) Both normative and financial policies were applied to incentivize green heating
10) Political attendance at the highest level ensures resources and commitment to heat
planning
11) Public involvement was key to get commitment to the plans among citizens
12) New district heating systems and extension of existing systems were driven by
existing district heating companies and cooperatives with strong local support.
Option 2a)-A2: Risk mitigation framework to reduce cost of capital for
renewable heat projects
Risk mitigation for large heat generation and infrastructure projects:
Risk mitigation framework to reduce cost of capital for renewable heat projects
Deploying renewable heating and cooling projects often entails large upfront investments for
small and large investors alike.
In the case of large heating and cooling projects, for example geothermal, solar thermal or
innovative waste based technologies in district heating and cooling systems and for the
development of large generation and network capacities, the upfront investment represents a
high risk for one single investor. This is due to the volume of the investment as uncertainties
in societal, technical, administrative, political, environmental areas and in markets could lead
to a failure of the whole project. Risk mitigation measures and sharing of the volumes at risk
140
(called risk volumes) are key for investors. Therefore, the different types of risk exposure for
renewable heating and cooling projects are outlined and measures suggested that reduce these
risks and the risk volume.
In the case of small investment projects, households and small enterprises do not often have
sufficient expertise and financial resources to make the necessary upfront investment and
tackle the technical complexities, which also represents risks for small investors, but also for
financial institutions, which are reluctant to support small projects with high transaction
costs.
This option aims to address both large project risks and the risks for both consumers and
financial institutions of small, diverse and diffuse investment in new renewable heating
systems.
 Risk mitigation framework for large renewable heat supply projects.
The life cycle of these projects requires a long-term planning security. This means a long-
term strategy ensuring the feed-in or demand for renewable heat, including forward looking
perspectives such as a target for the RES-share in HC, measures to stimulate investment and
demand, identification of cost-effective sites and standards for impact assessments. The
availability of one-contact point could facilitate administrative procedures and provide
information on potential sites (groundwater and geothermal sources) and thus reduce
administrative burdens and related barriers or risks.
Addition risks can characterise specific projects in specific phases, such exploration and
drilling in geothermal or the planning and construction of heat infrastructures and securing
public acceptance is also a risk.
The benefit of a risk mitigation framework directly manifest in reduced cost of capital,
energy costs, technological developments as well as scale effects in production and
installations – as observed in the wind and solar power – and thus could contribute to
declining unit costs and increase profitability of the project. Financial investment support for
innovative and sustainable technologies (R&D support) might have a dampening effect on
costs as well as on the volume risk. Market risks, such as price and sales risks, are addressed
by Art. 4 RED II for renewable electricity while heating is not mentioned.
Besides risk reducing measures, risk sharing through special financing facilities such as a
special programme for geothermal projects in the framework of InvestEU (former EFSI), or
public financing at national levels.
The risk mitigation framework could have different design elements, including one-stop-
shop, institutional project assistance and pre-selection of sites, etc.
Examples from Member States
(1) RES2 in Italy
Italy has outlined the contribution of geothermal energy in its renewable energy targets.92
It
has drafted a provision of support (RES2) for innovative technology, which has significant
potential for innovations and a considerable exploitable potential (energy). This includes
adhoc instruments for new plants based on innovative technologies and for example measures
92
NECP Italy, https://ec.europa.eu/energy/sites/default/files/documents/it_final_necp_main_en.pdf, section
2.1.2
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such as auctions, register mechanisms.93
Italy is in charge of the Strategic Priorities of the
SET Plan regarding the European leadership in the development of RES, in particular of the
geothermal sector.94
However, it does not outline how to address the high risks associated
with high upfront investments.
(2) SAF environment Fund in France and other measures for geothermal energy
The Auxiliary Finance Company (SAF) guarantees funds to covers the risk of geothermal
energy. Two types of guarantees are possible: short-term, for the success of the first wells
drilled and long-term, for the sustainability of the resource and risks of total or partial drying
up and damage to the installations over a period of 20 years of operation.95
Further investment in geothermal energy, geothermal district heating and cooling systems,
and heat storage solutions using geothermal energy, is supported through the Heat Fund. In
addition, to mitigate drilling and exploration risks, France enables the participation by the
Heat Fund in funding regional mapping for Geothermal installations of Minimal Importance
(GMI), and where necessary in funding support for decision-making on the economic
profitability of surface geothermal resources.
Beyond financial support, local coordination structures will be implemented to coordinate the
activities in the region and exchange directly with ADEME. Further, to facilitate drilling and
exploration of geothermal energy from an administrative perspective, the Mining Code will
be modified with respect to explicitly mentioning the generation of heating and cooling
through geothermal energy as activity96
.
(3) Renewable Energies Heat Act in Germany/Market incentive programme
. While at the consumption side, no incentives for using (large) geothermal heat is provided,
investors of geothermal generation facilities are directly addressed through the market
incentive programme. It offers financial support (grant) for drilling and installations as well
as for the related network of large geothermal projects through the KfW programme (state
bank) as part of the market incentive programme, which is anchored in the Renewable Heat
Act.97
 Risk mitigation framework for small renewable heat supply projects.
This option would ensure that projects aggregation and de-risking is extended to small
heating system replacement projects and these are addressed together with other component
of building refurbishment on an equal footing. The model would follow the one established
in the Energy Efficiency Financial Institution Group (EEFIG98
) as the findings of this
projects are equally relevant for small renewable heating and cooling project investments.
93
NECP Italy, p. 114 and 147
94
NECP Italy, p. 231
95
NECP France, https://ec.europa.eu/energy/sites/default/files/documents/fr_final_necp_main_en.pdf
96
Law No 2018-727 of 10 August 2018 has empowered the government to take measures (through the uses of
ordinances) to reform the provisions of the Mining Code in relation to the granting and extension of titles for the
exploration and operation of geothermal energy. The objective of this scheme is to simplify the applicable rules
in order to improve the development of renewable energy activities.
97
NECP Germany, https://ec.europa.eu/energy/sites/default/files/documents/de_final_necp_main_en.pdf
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Although the majority of energy financing was focusing on large electricity related renewable
energy generating assets until the last decade, obtaining adequate financing for small
renewable projects still remains a challenge.99
Therefore, increasing access to long-term debt and renewable installation finance through
adequate instruments is needed, and should be bundled with energy efficiency instruments.
The EEFIG should be explicitly extended to RES H&C.
Such instruments could allow operational renewable energy projects to finance into long-term
debt and increase the financial leverage by “discounting” the future cash flows, possibly from
a heat purchase agreement. These cash flows (from heat purchase agreements) could serve as
collateral, reducing the amount of equity needed and improving financing terms, for
increasing the capacity to invest, addressing more holistically the building renovation. While
such instruments would focus on financing, their goal would be to increase new investments
in one building when all energy efficiency and renewable are not addressed in one shot,
especially when the new investments would have a longer payback time.
According to the EEFIG, evidence from the market strongly suggests that simply providing
capital does not necessarily lead to successful deployment of that capital. It is necessary to
consider the factors that drive demand for financed energy efficiency and put in place
mechanisms to help drive demand such as technical assistance and marketing. The same
applies for small-scale renewable.
All energy efficiency and renewable investments, whatever their size or nature, face various
types of risk such as performance risk, quality or market risks. Addressing appropriately the
categories of risks is key to define the approach to risk mitigation and financing. Databases
for heating and cooling investments (RES and EE) could support de-risking those
investments (cf. textbox to illustrate such DB).
De-risking examples
The De-risking Energy Efficiency Platform (DEEP100
) was developed by the EEFIG
De-risking Project consortium and launched in the end of 2016 in close coordination
with the Commission’s “Clean Energy for All Europeans” package. DEEP is an open-
source database for energy efficiency investments performance monitoring and
benchmarking, based on evidence from implemented projects. The main objective of
the DEEP is to improve the understanding of the real risks (especially performance
risks) and benefits of energy efficiency investments based on market evidence. At
launch the database included more than 7,800 energy efficiency projects in buildings
and industry from 25 data providers. DEEP provides anonymized historical data
structured along major project characteristics, (geography, energy efficiency measures,
verification status, industry / type of building, multiple benefits, etc.). It provides
insight on financial performance indicators such as payback and discounted avoidance
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cost. Financial institutions can use this evidence in market assessment, performance
risks calculation and to benchmark their own individual projects or portfolios against
user-selected sub-sets of the projects in DEEP.
Setting up risk-mitigation and instruments are no-regret measures and should be adopted in a
structured way to frame the decarbonisation of the whole heating and cooling sector, building
on existing tools and initiatives. De-risking instruments is decreasing the cost of capital, and
therefore would reduce the cost of renewable H&C technologies, increasing their
attractiveness to all. These instruments may have a slightly positive impact, allowing more
consumers to use renewable H&C.
Effectiveness
The option would be effective in reducing costs of capital, reduce barriers to financing and
increase access to and the number of renewable heating and cooling projects. It would thus
contribute to the objectives of increased renewable deployment in heating and cooling and to
the overall renewable share increase in line with the CTP.
Administrative burden
The option could partially build on and further develop the already existing framework under
the REDII, which covers mainly renewable electricity. The setting up of risk mitigation
framework would represent some additional burden for Member States. However, such
framework could use synergies with several other initiatives under the Green Deal, which
could be extended to cover large and small renewable heating and cooling projects. One of
these synergies would be with the many instruments available for building renovation and
under the EEFIG. These already cover - although not in a consistent manner - renewable
energy and could be extended to renewable heating and cooling projects, including the
mechanisms available for aggregation of small projects, de-risking, and technical assistance.
Option 2a)-A3: Heat purchase agreements for corporate and collective small
consumers
Effectiveness
A power purchase agreement (PPAs) is a long-term electricity supply agreement between an
installation operator (seller) and an electricity customer (buyer). The agreements are
generally signed for a period of up to 10 years, though shorter-term PPAs are also possible.
Heat purchase agreements, as the name implies, mirror PPAs but focus on the selling and
buying of heat. The generator of the renewable heat receives a fixed price per unit of energy
(e.g. joule), meaning that it can expect fixed returns on its investment and offer the bank the
certainty it requires for the loans. The high-demand customer can therefore ensure that its
renewable energy supply comes either directly from a specific plant, or from a green
portfolio, at a fixed price for the duration of the agreement. The proof of the green quality
and origin of the energy supply is provided by the guarantees of origin (GO) of the
energy/heat-generating plants.
Although supplies of heat (or cooling) are similar in many respects to other utility type
supplies, in heat networks there is a key difference, namely that the customer’s use of the
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energy supplied has a significant effect on the overall operational efficiency of the network.
This is reflected in how heat purchase agreements and their tariffs are structured.101
The
company learning costs and associated administrative burden costs related to contract
drafting, legal implementation etc. are expected to be outweighed by the financial certainty
for suppliers and provision certainty for that such agreements bring. These in turn, are
expected to support the mainstreaming of heat markets.
Administrative burden
The option enables companies and collectives of consumers to have access to renewable
heating and cooling at lower costs. The administrative burden is limited and is compensated
with the benefits in terms of empowerment and lower purchase prices.
Option 2a)-A4: Planned heating system replacement schemes:
This options aims to give certainty and allow preparation and high-quality replacement of
current old and obsolete fossil heating systems by renewable and carbon neutral ones with
pre-defined schedules and gradually. The option would empower Member States to
implement modernisation coupled with fossil phase out and define the design and milestones
according to the specific circumstances (e.g. age, composition) of their heating stocks, while
ensuring coordination with their national building renovation strategies.
Over half of the EU individual oil and gas boiler stock is older or in the second half of its
technical lifetime (lifetime 20 years). These will have to be changed in the period until 2030
and replaced with renewable and carbon-neutral solutions to avoid carbon lock-in. Since
renewable and carbon-neutral heating technologies are already available and their levelised
cost of heat is not significantly higher, or, depending on the specific function and technology,
is lower than that of new fossil systems, the replacement does not lead to additional
investment compared to what will anyway have to be invested. It is rather a prudent spending
for heating systems that anyway need to be replaced, while ensuring that investment is in
future proof technologies and carbon lock-in is avoided.
Planned replacement programmes could be designed in many different ways: such as fossil
phase-out according to certain schedules or by trigger points (new construction, major
renovation, heating system inspection/change, renting, etc.) or for certain building types
(public, commercial, etc.). It can include national scrappage schemes (e.g. for boilers beyond
their lifetime or at boiler replacement trigger points.
Around half of the EU heating stock will need to be changed in the next 5-8 years as
indicated in the figure below. Further disaggregation for a selected number of countries (DE,
FR, SP, PL, RO, FI) is found further below under the buildings section.
Member States will have the freedom to design and implement measures that ensure an
orderly replacement. Fossil phase-out with milestones gives the most freedom for MS as
regards the choice of implementation and requires them to plan and ensure implementation of
gradual replacement of fossil heating systems by 2050 with defined milestones in 2030. It
101
Scottish Futures Trust (2018) Guidance on the development of Heat Supply Agreements for District Heating
schemes. Available at: https://www.districtheatingscotland.com/wp-content/uploads/2018/02/HSA-guidance-
final-Feb-18.pdf
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also leaves them free to put in place boiler replacement/scrappage schemes and set
requirements at national level for technology providers.
Effectiveness
Heating appliances usually last 20 years so it is important to avoid the installation of old,
inefficient and fossil heating systems in buildings by 2030 the latest, as this can lead to a
carbon lock-in and stranded assets. Thus, requiring Member States to plan heating system
replacement would be an effective way to increase the decarbonisation of the heating sector
and to ‘future-proof’ it. In addition, a number of cities/regions have already announced plans
to phase out fossil fuel based heating102
, or certain types such as oil based103
, so this measure
would fit with existing national policies. Decreasing fossil fuels in heating systems will have
beneficial environmental affects, although if this is through increased use of biomass, the
effect on air quality would need to be assessed. The mandatory minimum energy performance
standards proposed in the Renovation Wave Communication as part of the revision of the
Energy Performance of Buildings Directive could also facilitate the gradual phase out
heating systems based on fossil fuels.
The proposed options on targets for heating and cooling (see also options on buildings)
combined with the options proposed for supporting measures (planned heating systems
replacement) would ensure that the upcoming replacement cycle is well-used to trigger a
switch from fossil fuels to renewables and other carbon-neutral solutions, and prevent the
installation of new fossil appliances, which due to the long lifetime of these assets, would
result in carbon lock-in..
The transition from fossil based heating to renewable ones would not entail large costs
additional to what anyway will have to be incurred as planned replacement would be staged
replacing those systems that are beyond or at the end of their lifetime, thus – given that
heating is essential – when investment in new system has to occur anyway. Planned
replacement would by design target those systems that need to be changed in any case and
would follow the natural replacement cycle of heating (and cooling stocks (See Annex XX
showing the age of heating stock in selected countries). In addition, the cost of a new
renewable heating system and the related levelised cost of heat (LCOH) is often at par or
lower than that of competing fossil-based system. LCOH for a selected number of countries
(DE, FR, SP, PL, RO, IT and FI) is shown in previous sections.
The proposed risk mitigation option is considered necessary and effective to give the correct
signals to the market and help small innovative projects to leverage funding104
.
Administrative burden
Planned replacement schemes of heating appliances to facilitate fossil phase-out can be
implemented through several instruments such as support schemes, fiscal incentives, building
requirements for new buildings and deep renovation, or via banning purchase of determined
products (heating appliances). Minimum administrative requirements foreseeable would
include:
102
Vienna
103
Germany
104
Energy Efficiency Financial Institution Group (EEFIG) report: https://www.bpie.eu/wp-
content/uploads/2017/06/EEFIG_Underwriting_Toolkit_June_2017.pdf
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Data collection. In order to understand the extent of the necessary replacements and to
monitor the implementation of any phase-out scheme reliable data is a pre-requisite. Thus,
lack of reliable information is often a barrier as setting up data collecting procedures might
require significant administrative costs. For example, an evaluation of the effects of the
Baden-Württemberg Renewable Heating Act found that data sources were inconsistent. Data
on the number of heating system exchanges reported to the Statistical Office of the State of
Baden-Württemberg including that reported by chimney sweeps was different from the
market statistics of boiler manufacturers. One of the reasons for this was attributed to
authorities not having enough time and resources to ensure rapid data processing.105
Monitoring, reporting and enforcement costs. To ensure that the phase-out programmes
are proceeding accordingly and that the results are consistent with targets set for e.g. 2030 or
2050, monitoring and reporting procedures should be set up periodically. The time-intervals
for monitoring should strive to find a balance between achieving sufficient information for
assessing the programme and excessive administrative burden. For example, in the case of
Baden-Württemberg the number of energy audits has increased significantly since 2015 – the
year in which the Renewable Heating Act was amended introducing the renovation
roadmap106
.
Awareness raising campaigns. Are important to adequately communicate to the citizens the
programme being implemented, the reasons for it, expected outcomes etc. Benefits include
increased awareness of citizens, increased probability for public acceptance and support,
stimulating capacity building, generating conditions for an efficient citizen participation
process and the involvement of stakeholders. As such replacement schemes could be
misunderstood by the concerned parties107
, a very clear communication is of paramount
importance. Campaigning costs could be as high as 400, 000 EUR/yr.108
Costs to consider
include:
 Market research expenses
 Expenses related to the design of communication tools and brand
 Publication expenses
 Website maintenance costs
 Direct communication and meetings
 Training of staff
 Organisation of press conferences and events
Multi-level coordination. As already mentioned, these instruments would require additional
planning efforts, to tackle all local/regional/national influencing factors and constraints, and
therefore increasing development costs, for national involved parties (national authorities and
administrations, but also building professionals, such as architects, planners, designers and
construction workers, and local authorities).
Importance of local actors engagement. When phasing out fossil systems, it is of
paramount to have a clear vision on the long term low-carbon/renewable alternatives (to
105
Pehnt, M. et al. (2019) Evaluating the renewable heating and efficiency obligation for existing buildings –
insights into the mechanisms of mandatory building requirements
106
https://um.baden-wuerttemberg.de/index.php?id=8110
107
As it was the case in Belgium, end of 2017, when the 2050 Energy Pact fixed the objective to stop selling
heating oil appliances after 2035, there was a large confusion and string reaction by the stakeholders, and even
social actors. https://www.chauffagistes-belgique.be/pacte-energetique-implications.htm &
https://heatingexpertise.be/fr/2019/07/10/vers-la-fin-du-chauffage-au-mazout-en-belgique/
108
Niches. Innovative Demand Management Strategies: City-wide Campaigns. Available at:
http://www.rupprecht-consult.eu/uploads/tx_rupprecht/14_City_wide_campaigns.pdf
147
determine by what a fossil-based system should be replaced). The other case of the Aosta
Valley region illustrates how important it is to consider local parameters, when assessing the
demand side (consumption profiles), and mainly the supply side (the most attractive
renewable alternative is wood-based fuel). This requires engaging decision bodies at regional
or even local levels to plan correctly the deployment of renewable. It is hardly recommended
to start at these levels (as was also the case for Baden-Württemberg).
As explained above, depending on the national situation, some of these steps are already
tackled in the implementation of the LTRS, and would only require a marginal additional
effort, while for others it would require to deploy a new vision.
The figure below shows that the number of energy audits in Baden Württemberg has
increased since 2014 and is the highest among several German federal states. The high
number of audits can be linked to the updated made in 2015 to the Renewable Heating Act
Baden-Württemberg. There is a correlation between the success of a replacement-schemes
and associated monitoring and energy audits. The administrative burden could be limited to a
simple scheme driven from the national level, and increased in complexity and involvement
of local actors.
Figure 80 - Evolution of the number of funded energy audits per capita in different German federal states
District heating and cooling
Technical assessment
The GHG reduction impact would be significant as demonstrated by cases, where DHC is the
main Green Deal conform instrument to decarbonise heating in entire cities. The options
would significantly contribute to air quality and particulate emission reduction, improving
health conditions in cities. Case studies109
on efficient, renewable-based and smart DHC
systems show CO2 emissions below 100 gram CO2/kWh110.
Examples are: the Gram solar
thermal DH system in Denmark (30 kg CO2MWh); the Paris Saclay DHC system in France
109
Efficient district heating and cooling systems in the EU, Tilia GmbH, 2016
110
Efficient district heating and cooling systems in the EU. Case studies analysis, replicable success factors and
potential policy implications. Tilia GmbH for the JRC, 2016.
148
(below 100 kg CO2/MWh), which is based above 50% on renewables, the Ecoenergies
Barcelona DHC system in Spain (94,9 kg/MWh for the district heating part and 0 kg
CO2/MWh for the district cooling part based on surplus cold and renewables), the Stockhom
DHC system in Sweden (0,136 kg CO2/MWh for heating and 0 kg CO2/MWh for cooling),
the Tartu DHC system in Estonia (0,102 kg CO2/MWh for heating and 0 kg CO2/MWh for
cooling), and the HafenCity DH system in Germany (75 kg CO2/MWh). One of reasons for
investing in these systems was to improve air quality, in addition to ensure stable low prices
of heat – these are two important reasons for consumer acceptance.
Need to upgrade existing DHC
111
Upgrade DH
The Upgrade DH project aims to improve the performance of district heating networks
in Europe by supporting selected demonstration cases for upgrading, which can be
replicated. The project aims at initiating the DH upgrading process (retrofitting
approaches); increasing the share of waste/residual heat (currently 7 % in the demo
cases) by more than 6 % and the share of renewable heat (currently 28 % in the demo
cases) by more than 20 % in eight demo cases and beyond; replicating the proposed
upgrading solutions across Europe; developing regional / national action plans for the
retrofitting of district heating networks by including the results of the retrofitting
approaches.
The Upgrade DH project supports the upgrading and retrofitting process of DH systems
in different climate regions of Europe, covering various countries: Bosnia-Herzegovina,
Croatia, Denmark, Germany, Italy, Lithuania, Poland, and The Netherlands.112
On these
8 cases, the following 3 cases explicitly include the use of additional renewables:
Bosnia-Herzegovina plans the integration of solar thermal collectors; Denmark intends
to convert the CHP to biomass; the Netherlands intends the installation of a second
16MW biomass boiler.
However, in most cases, the focus of the upgrading was to increase the relative share of
renewables in the heat production as well as to improve the use of the available
resources, and to optimize the management of the network.
In some cases, by reducing the environmental effect, especially emissions of the local
pollutants, the health of the local population increases, which is one of the main social
benefits of such a project, but also the fact that public opinion towards DH would
increase due to such projects promoting efficiency and increasing the share of
renewables in DH production.
111
https://www.upgrade-dh.eu/en/about-upgrade-dh/
112
https://www.upgrade-dh.eu/images/Publications%20and%20Reports/UpgradeDH%20D5.5.pdf
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Cost-effectiveness
A recent analysis of the cost-effectiveness of district heating compared to individual heating
solutions under conditions based on the Danish system including the Danish taxes and tariffs
shows that new district heating is highly competitive vis-à-vis individual heating
technologies. Looking at a heat demand of 13 800 kWh/year corresponding to an energy
renovated building and considering DH produced with a wood chip boiler or electrical
compression heat pump, the results shows that the annual costs of DH are ~ 19% (EUR 430
cheaper) lower compared to an individual natural gas boiler and ~ 30-31% cheaper (EUR
805) than an individual biomass boiler or individual air-to-water heat pump.113
The study
assumed no pre-existing heating systems in the area (neither DH nor individual heating). The
results show that heat demand and district network length are important variables. The
figures below show the assumed costs, efficiency, lifetime and other parameters used to make
the assessment. The results cannot be extrapolated to other member states are they are
dependent on fuel prices, tariffs and taxes which vary from country to country. However, it
can be concluded that densely populated areas should be the starting point for establishing
new DH networks in other countries/cities outside of Denmark.Figure 81 - Parameters for individual
heating technologies and the district heating unit114
Figure
82 - Parameters for district heating technologies115
113
Green Energy Association (2018) The competitiveness of district heating compared to individual heating:
When is district heating the cheapest source of heating?
114
Ibid.
115
Ibid.
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Figure 83 - Comparison of the price of heat for new DH heat (wood chip boiler) and individual heating. Heat demand at
13800 KWh/year, Network Scale of 1 (small pipe grid)
Figure 84 - Comparison of price of heat from new DH (wood chip boiler) and individual heating. Heat demand of 4 900
kWh/year and Network Scale 1 (small pipe gird)
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Figure 85 - Comparison of individual heating systems (systems de chauffage domestique) & of district heating systems
(LCOE de la chaleur collective)116
Summary of case studies upgrading existing DHC117
1. Sisak, Croatia
It has been determined early in the project that the most upgrading measure for the district
heating system in Sisak is the implementation of the thermal storage unit in the form of the
buffer tank. Given the high interest of the relevant stakeholders to significantly improve the
efficiency of the system, the business model has been developed in a close cooperation with
all of them (incl. heat production and heat distribution companies in Sisak (HEP Proizvodnja
and HEP Toplinarstvo)), which enabled achieving a high level of detail and accuracy of the
analysis. The investment cost of the 66.6MWh steel tank (incl. 12 MW heat exchanger,
foundations, measurement equipment and connection pipes), was about 1.6M€, with linear
116
Coûts énergies renouvelables et de recuperation, ADEME, 2020 (data 2019)
117
https://www.upgrade-dh.eu/images/Publications%20and%20Reports/UpgradeDH%20D5.5.pdf
152
depreciation through different time periods (i.e. equipment 10 years, civil works 15 years).
The thermal storage was to be owned by the HEP Proizvodnja, owner and operator of the
existing biomass cogeneration unit (storage was expected to improve the efficiency of the
CHP). Since this project would fall into the category of small projects in the HEP Group
portfolio based on its investment costs, it is most likely that the funds would be provided by
the HEP Group itself, i.e. no loan would be needed. However, both the scenario with 50%
bank loan and the scenario without the loan have been analysed to cover both cases. For
thermal storage integration in Sisak, revenues would consist of reduced peak load boiler use
and the reduced use of steam line during the summer period. These are both reflected in
the lower consumption of natural gas and amount to 312,440 €/a. On the other hand, the costs
of the project are rather lower, since there is no need for additional personnel or additional
software. Therefore, they consist of the operation and maintenance costs and the insurance
costs and amount to 10,539 €/a. By taking into account all these parameters, the lifetime of
the project (20 years) and the discount rate (5%, to discount future cashflows to the present
value), the net present value of the project has been calculated at ~1.5M€, giving the internal
rate of return of 14.9% and the payback period of 6.1 years. The project would have a
relevant socio-environmental impact at the local level, decreasing the emissions CO2
emissions by 2,145 t, NOx emissions by 382 kg, SO2 emissions by 12 kg and CH4 emissions
by 115 kg.
2. Marburg, Germany
The municipal utility - Stadtwerke Marburg (SWMR) – is responsible for the whole district
heating process chain, from generation to distribution and sales. Detailed hydraulic
calculations of the DH grid with different scenarios and multiple upgrade opportunities
identified the UM “optimisation of the pump operation” to be the most relevant topic,
which could be the case for many other DH systems. The cost-effectiveness of replacing the
network pumps often does not appear economic at first glance, as the investment costs only
appear to be offset by small savings. The ownership model and the DH business itself will
not be affected by replacing the pumps. In most cases, pumps prove to be robust components
that, if operated and maintained properly, will still work properly after several decades. For
the example in Marburg the Pumps were built in the 60s and are still running with no major
problems. If only the simple replacement of old pumps by new pumps of the same size is
considered a business case, the investment cost are easy to identify. A typical DH system is
designed for a specific maximum heat demand at a certain temperature level. In the last
decades a lot has changed, new generation plants reach efficient operating conditions at much
lower temperatures, still sufficient for space heating; the energy demand of individual
consumers is decreasing (e.g. due to better insulation materials or warmer outside
temperatures during winter). Hence, the initial planned pumping power is oversized, and the
pumps are operating in inefficient part load situations all over the year.
For the reliable supply of the customers of a district heating system it is important, that the
appropriate amount of heat can be transported through the DH grid. The technical analysis
showed that the DH system could be operated reliably when the installed pumping capacity is
reduced from ≈250 kW to ≈120 kW, for an increase in efficiency of ~25%. Yearly savings
are estimated at ~74k€, with an investment around 95k€.
3. Middelfart, Denmark
The upgrading measures considered in the city of Middelfart are the result of a long
collaboration between the local district heating company Middelfart Fjernvarme Amba, and
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the consultancy company COWI. Since the beginning of the Upgrade DH project, the focus
of the upgrading was to increase the share of renewables in the heat production as well as to
improve the use of the available resources, and to optimize the management of the network.
Before 2018, approximatly 2/3 of the heat supplied to the DH transmission system TVIS was
from a natural gas fired CHP plant. With increased focus on climate changes and the higher
standards required by the Danish governments, the Municipalities (including Middelfart
Municipality) supplied by the TVIS system, agreed to convert the CHP plant to biomass. It
increases the share of CO2 neutral production units from 27% to 94% in 2020 and thereby
decreases CO2 emission by ~83% (reduction of CO2 ~ 10,000 tCO₂ eq/y). The woodchip-
based CHP plant (90 MWel & 230 MWth) supplies heat for the district heating transmission
system TVIS (main heat supplier for the DH network). The initial investment is around 200
M€, which leads to an evaluation of the financing resources, which requires access to a bank
loan. Afterwards, considering the operation and maintenance cost, the revenue of the heat
sales and the savings obtained by using biomass, the expected payback period was calculated
to be around 25 years. The sensitivity analysis showed that the variation of natural gas and
biomass prices have a high impact of the feasibility of the project. The utility Ørsted is
the owner of the plant, which is the main actor involved. However, the conversion costs were
covered with the contribution of the TVIS transmission system, which is a partnership of the
four municipalities that are supplied by the system, where Middelfart Municipality has
around 8% of the shares.
The ownership of the production system and transmission system are going to be the same
after the conversion. Due to the high focus on the sustainability and CO2 reduction targets
established by the Danish government, the project was further evaluated for the
environmental costs/benefits and it was considered as feasible. The refurbishment of old
service pipes was also considered, for network optimization, which was based on employees'
knowledge of the network as well as based on not verified assumptions. By combining a
Termis analysis of the service pipes and measurements allowed to identify the areas where
the service pipes are in poor conditions. Based on that, it will be possible to plan the
replacement of the existing pipes in a more efficient way, giving the priority to the service
pipes that affect the network's performances the most. Middelfart DH company allocates
every year around 1.35M€ of the income from heat sales for the renovation of the DH
network, and more specifically for the service pipes. It guarantees a continued check and
upgrade of the distribution network in the municipality. The evaluation of the investment
considered an upgrade of the Termis system, which is installed in Middelfart of ~13k€,
helping to replace the pipes in bad conditions at first (with a 2 years payback). There is a
close collaboration between the district heating company and the consultancy company to use
the results in the most efficient way and to further develop the tool.
4. Bologna, Italy
Berti-Pichat is a complex system, which features heat/chill/electricityprovision. The 3 CHP
engines do manage to provide for the base load, yet gas boilers are vastly used during the
peaks of heating season.
The investment is about installing heat pumps in the system, allowing for a greater utilization
of the CHP units, while recovering a share of heat not currently utilized (because of its low
temperature) and decreasing the usage of gas-fired boilers. The implementation phase
involves significant investment costs linked to mechanical/hydraulic interventions, as well as
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IT activities for SCADA connection. Cogeneration in Italy is subject to subsidies to the
extent its “high efficiency” can be proven. The other main revenue driver is constituted by the
avoided costs of gas boilers consumption, whose usage should decrease significantly as the
heat pumps are operating in the heating season. The operating costs connected to the
upgrading measure are constituted by the electricity consumption of the heat pumps (in terms
of missed electricity sale) and the maintenance costs for the asset.
The significant capital investment is expected to reach breakeven within 3 years, leveraging
also on regulatory incentives (related to high-efficiency cogeneration). Sensitivity analyses
were carried out, in order to assess the investment parameters in case of a fluctuation of the
main drivers (gas prices, cogeneration incentive structure, electricity market prices), outlining
that the returns were still very promisingeven in the most negative scenario. The concept of
smart substations involves a significant infrastructural effort, requiring to enable the metering
on both the primary and secondary side with fine granularity. The measure aims at achieving
a better customer knowledge and profiling through advanced analytics, while decreasing
pumping costs (better regulation).
5. Salcininkai, Lithuania
“Salcininku silumos tinklai” is the municipality’s district heating company that operates 14
boiler houses in Šalčininkai county in which it produces and distributes heat to residents and
institutions in 10 different locations. The total installed heating capacity is 48 MW. Heat is
supplied via 18.7 km long pipelines which are connected to 2,168 consumers, 96.8% of
whom are residents. The heating systems at user size are usually designed for 80/60°C
temperatures. The design temperature for hot water is 52°C. The supply temperature varies
from 70 to 95°C throughout the year. most significant areas of impacts that the company
seeks to improve is heat distribution. Investments in infrastructure of pipelines in the district
heating network of Salcininkai started more than 30 years ago. Throughout the existence of
this DH system, millions were invested. The seriousness of the issue and necessity of network
optimization was identified by comparing DH system parameters to other DH systems of the
country. Technological heat losses in 2018 were 10.2 GWh, which stands for 26.1% of the
total heat produced. Network insulation is outdated in many places and does not ensure the
thermal conductivity requirements which leads to considerable heat losses. Network
optimization is a long-term step by step strategic approach which will lead to more efficient
DH network.
The boiler used to meet the low summer demand is 6.5 MW to deliver peak demand ~1MW,
hence decreasing the lifetime of the boiler and highly reducing its efficiency. The installation
of a solar collector field with a possible heat storage implementation to the current boiler
house would eliminate the inefficiency of low summer demand supply. It would increase the
annual average efficiency of the current biomass boiler by eliminating the need of boiler for
summer. The heat production would be more flexible, efficient, and diverse. The lifetime of
the current main heating source would be prolonged and primary energy demand would
decrease.
The integration of solar thermal energy into existing DH system is a complex combination of
finding the right balance between size of investment and the right selection of working
modes. In such system, to ensure optimum system performance and maximum usage of solar
energy, it is necessary to install the heat storage and use the existing heat source (biomass
boiler) only if the energy produced and stored by the sun is not enough. The total investment
for solar thermal implementation (combination of 11,600 m2 solar collector field, 2,600 m3
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volume heat storage and other auxiliary equipment) in the main district heating system of
Salcininkai would cost ~ 4M€. The only potential funding sources for the pipe refurbishment
will be funds of the DH company and loans depending on the scale of the project and the
company’s financial situation during the implementation moment. The solar thermal system
combined with thermal storage would lead to elimination gas boiler usage during the short-
term peak demand periods, and to reduce CO2 emissions (~236 tCO₂ eq/a).
Taking into consideration subsidy schemes for solar thermal energy available today, the
project could be financed from the European Structural Funds by up to 50% of the eligible
costs. Due to the fact that the loan will be quite significant for the company and its capital
might not be sufficient enough therefore municipality might give guarantee to the bank in
order to help DH company to implement the project. Private capital of DH company is
usually used as security deposit (mortgage) for the bank.
Finally, the network optimization will most likely be a 30-year refurbishment plan which
means revenue will increase on a year by year basis, leading to increasing primary energy
demand reduction.
From these cases, it seems clear how important technical guidance helps the upgrade (EE &
RES) of existing DHC, even when the business cases are very attractive. In all cases, an
external guidance (via the Upgrade DH project) was necessary to initiate, support the
identification of upgrading measures, and coordinate all works.
Another important aspect to consider, is that for the longer pay back investments, the
economic feasibility would not be sufficient and therefore would need additional policy, like
support from public authorities, or emission reduction targets, to steer and incentivize the
concerned parties (heat producers or network operators).
A key issue to tackle, as illustrated by several cases (Middelfart, Bologna, ), is that the
sensitivity is very high when it comes to variations of natural gas and biomass prices. Hence,
there is a need for an overall regulatory environment, including from the EU level, that levels
the playing field with gas and other fossil fuels, like the ETD and ETS (including ETS
extended to building). This level playing field should work at large scale (such as in the case
of Middelfart) to incentivise the switch to renewable in existing DHC. It also become critical
for the deployment of new DHC systems, where those would compete with individual heating
systems, particularly gas boilers as it would deploy mainly in urban areas, which are more
connected to gas than rural areas.
Last but not least, from these cases (especially the replacement of gas supply by biomass,
solar heat, or heat pumps), additional financial support may be required, to bridge the gap
and, for these renewable investments, to reach the competitiveness level of gas (CHP or
gas).Long term refurbishment and optimization plans of existing DHC (incl. their extension)
are useful approaches to continuously look for efficiency improvements, regarding operation
but also new investments and refurbishments. Such approach would also tackle all changes in
demand pattern, such as lower demand, or decrease in temperature requirements. A good
example of long term planning is given by the utility of the city of Munich, Stadtwerke
München (SWM) with the implementation of its climate targets, replacing coal from
lignite plants by geothermal district heating for 560,000 households by 2040.118
The
Upgrade DH cases also illustrate (e.g. in Lithuania) the interest of diversifying the energy
118
https://www.thinkgeoenergy.com/munich-targeting-geothermal-district-heating-for-560000-households/
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supply side, providing additional flexibility, also linked to market opportunities, to the overall
DHC system.
Options of specific measures on district heating and cooling
Option 2b)-B0: Align the definition of ‘efficient district heating and
cooling with the CTP and EGD.
The current definition is spelled out in Article 2(41) of EED and integrated into REDII by
reference in its Article 2(20). This definition provides the criterion as regards which DHC
systems should allow disconnection, network access or should align with the 1 ppt annual
renewable increase rate under REDII. The current definition makes it possible for 100%
fossil fuel systems to be qualified efficient indefinitely in the future. The review of the
definition is an option under the EED review and therefore is not proposed as an option under
the REDII review. Full consistency of its review under the EED should be ensured with the
REDII review.
Option 2b)-B1: Eliminate exceptions and make access to networks
mandatory for renewables and other carbon-neutral sources
(waste heat), including from prosumers, in large DHC
networks.
 Introduction on access regimes to DHC networks119
DHC systems are natural monopolies. A natural monopoly exists whenever, due to high fixed
costs and low marginal costs, it is cheaper if only one company and not several competing
companies supply the market. Natural monopolies occur primarily in the area of grid-bound
supply systems. In the energy sector, these include, for example, grid operation in the
electricity, gas and district heating markets. In all these markets it would not make sense for
several companies within a city or region to operate supply networks in parallel. Instead,
parallel operation would lead to higher overall costs. Due to lower connection densities (the
connections would then be distributed between the two or more parallel networks), the
network costs per kilowatt hour would also rise.
In order to prevent natural monopolists from abusing their market dominance, the markets
concerned require a minimum level of regulation. In particular, this applies to network
operation. The core of regulation is typically the connection and usage conditions of the
infrastructure.
The liberalization (market entry or exit) of the electricity and gas sectors has introduced
competition in the respective markets on both the supply side (generation) and the demand
side (retail). Different producers can feed in energy at different grid levels, consumers can
choose between different suppliers. In the DH market, a comparable opening of the market is
lacking in most European countries. In many European countries, the DH sector is seen as an
integrated infrastructure in which generation, grid operation and distribution are operated in
an integrated manner by one company in a city or region.
However, while the DHC grid can be regarded as a natural monopoly, this does not
automatically apply to the other elements of the supply chain, e.g. the production side and/ or
retail. A second competitor does not face high sunk costs. While technical restrictions,
119
DHC Trend Study, ENER/C1/2018-496, ongoing.
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especially for smaller grids, might inhibit an economic operation of more than one production
unit, a competitive heat production market is generally possible in larger networks.
The Renewable Energy Directive II (Directive (EU) 2018/2001) calls on the Member States
to increase the share of renewable energies in the grid-based heating and cooling supply. Art.
24 of RED-II opens up two ways of doing this,
 either by the implementation of measures aimed at increasing the share of RES
in heating and cooling networks by 1 % per year,
 or by granting producers of renewable heat/cold or waste heat access to the
grid (Third Party Access TPA).
So far, there is only little scientific literature on third party access to heating and cooling
networks. In particular, cooling networks are almost never explicitly mentioned in this
context. A distinction is made between network access models and single buyer models or
"regulated" and "negotiated" TPA.
 Network Access Model: Producers have access to heat networks provided that
they supply heat to their own end-customers, which could be new customers or
existing customers of the incumbent vertically integrated grid operator
 Single Buyer Model: Producers are entitled to feed heat into a DH grid while
the grid operator (single buyer) is obliged to accept and pay for the heat. Under such
an approach, consumers do not have any choice between different suppliers, they are
all supplied by the single buyer. Regarding grid access different models apply:
o negotiated voluntary network access under which “the DH operator
and supplier” (requesting grid access) “determine, on a voluntary basis, how to
set up the heat dispatch order to the DH network”;
o negotiated mandatory network access with a clear obligation to grid
operators to enable grid access. However, the (technical and economic)
conditions for grid access still need to be negotiated between the parties
involved;
o fully regulated network access, where the regulator determines ex-ante
access provisions for grid access. Here, the network operator is obliged to
provide access to the network if these conditions are met by the heat producer
requesting grid access.
The literature distinguishes between systems called “regulated TPA” and “negotiated
TPA”. Whereas “negotiated TPA implies that the DH network owners are required to
negotiate about access to the network with the producers of heat”, regulated TPA
refers to a regime “where the network owner has a legal obligation to allow access to
the network” while the conditions for access to the network are negotiated between
the network operator and the third party in advance. In both cases, customers have the
right to choose their own supplier. Moreover, describe single buyer models and a
system called “extended producer market”. The latter is a certain form of a single
buyer model, extended by high transparency rules for all market actors. The idea of
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this model is that due to clear unbundling rules and high transparency requirements
regulation efforts can be reduced.
However, there are many more conceptual options to open heating networks for third
parties. This includes the option - over and above the requirements of RED-II - of
opening heating networks to competition at the supply side, referred to as "full TPA"
instead of restricting network opening on the generation side, referred to as "producer
TPA".
Table 52 - Overview of TPA regulations in the Member States, the UK, Iceland, Norway and Ukraine(Source:
ENER/C1/2018-496, ongoing)
If TPA is allowed (at least in principle)
Country
Regulation
on
TPA
Restrictions
for
TPA
Exceptions
for
TPA
Open
retail
market
(full
TPA)
Producer
TPA
Regulation
of
grid
access:
mandatory
vs.
voluntary
Regulation
of
grid
access:
negotiated
vs.
regulated
Austria No - - No Yes voluntary negotiated
Belgium1)
No - - Yes Yes voluntary negotiated
Bulgaria Yes No a,b,d3)
No Yes mandatory regulated
Croatia
Cyprus No DH in Cyprus
Czech Republic Yes I,II2)
a,b,c3)
No Yes mandatory negotiated
Denmark No - - - Yes voluntary negotiated
Estonia Yes I2)
No No Yes mandatory regulated
Finland No - - No Yes voluntary negotiated
France No - - No Yes voluntary negotiated
Germany No - - No Yes voluntary negotiated
Greece No - - - - - -
Hungary No - - No Yes voluntary negotiated
Ireland No - - No Yes voluntary negotiated
Italy No - b3)
No Yes voluntary negotiated
Latvia Yes Yes Yes mandatory negotiated
Lithuania Yes - a,b,c3)
No Yes mandatory regulated
Luxembourg
Malta No DH in Malta
Netherlands Yes - - No Yes voluntary negotiated
Poland Yes - c3)
Yes Yes mandatory negotiated
Portugal
Romania Yes ? ? ? ? ?
Slovenia
Slovakia Yes II2)
a,b,c3)
No Yes mandatory
Spain No - - - - - -
Sweden Yes II2)
c3)
No Yes mandatory negotiated
UK No - - - - - -
Norway Yes No a,b,c3)
Yes Yes mandatory negotiated
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Iceland
Ukraine
1)
Answers are only provided for Flanders as there is no legal framework on DHC in place in
Brussels and Wallonia.
2)
(I) Occasions at which TPA is required (e.g. TPA required when new demand needs to be
covered or existing heat production capacities need to be replaced), (II) TPA for RES-
H/excess heat only, (III TPA restricted to large DHC systems
3)
(a) Grid lacks the necessary capacity, (b) heat does not meet the required technical
parameters, (c) negative impact on costs for customers, (d) other reasons
Source:Own survey with input from national DHC stakeholders
TPA regulation is not yet well developed in most of the countries studied. In about half of the
analysed countries, TPA is regulated in some form. However, there are significant differences
in the regulation depth. In the other half of the countries there is no explicit regulation of
TPA.
Contractual modalities for third party access, Source: ENER/C1/2018-496, ongoing
Option 2b)-B2 Enhanced energy system integration between DHC
systems and other energy networks
o coordination and common market operation of DHC systems with electricity
distribution (DSO) and transmission system operators (TSO) for flexibility
services, demand response and related investment in infrastructure and
generation assets;
o coordination and common market operation of DHC systems with gas
distribution system operators, hydrogen and other energy networks - in
addition to with electricity operators.
It is coherent with the Energy System Integration Strategy (ESI), which states that modern
low temperature district heating systems should be promoted, as they can connect local
demand with renewable and waste energy sources, as well as the wider electric and gas grid –
contributing to the optimisation of supply and demand across energy carriers. ESI requires
accelerated investment in smart, highly-efficient, renewables-based district heating and
cooling networks, if appropriate by proposing stronger obligations through the revision of the
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Renewable Energy Directive and the Energy Efficiency Directive and the financing of
flagship projects.
Improving coordination and market operation of district heating and cooling systems with
electricity distribution (DSO) and transmission system operators (TSOs) will improve energy
system integration generally. This option builds on current provisions (in Article 24(8))
regarding cooperation with DSO. Adding TSO or further adding gas distribution system
operators, hydrogen and other energy networks would allow benefitting from more sector
integration possibilities at limited additional administrative cost.
Option 2b)-B3 Enhance energy system integration for waste heat and
cold use via a coordination framework for key actors
It would overcome the challenge highlighted in the ESI that local energy sources are
insufficiently or not effectively used in our buildings and communities. The option is
coherent with ESI and Circular Economy principles. According to ESDI applying the
principle of circularity in line with the new Circular Economy Action Plan, a big, yet largely
unused potential is the reuse of waste heat from industrial sites, data centres, or other sources
could be realised. An important part of energy reuse is feeding waste heat/cold into district
heating and cooling networks.
Effectiveness
Global planning of DHC (incl. coordination with gas infra)
Several European countries have inefficient district heating systems120
, designed for high
temperatures. These district heating systems face the double issue of establishing new
systems as well as consolidating and expanding existing ones while improving efficiency and
increasing the share of renewable in these systems and building sectors. Many of these
systems will have to move from 1st and 2nd generation district heating to 3rd or 4th
generation systems. This can happen with new production units, access to new renewable
resources, efficient distribution infrastructure, highly efficient buildings that can utilise low
temperature supply and with improved heating controls, heat metering and consumption-
based billing. A starting point should be to move towards demand-driven systems where
customers can actively control their consumption. New systems should be established using
state-of-the-art technologies along the value chain.
Clear district heating regulation and planning can be the determining factor in the
decarbonisation of the H&C and especially in the widespread use of DHC.121
Such regulation
could address several principles involving local authorities, such as bearing the responsibility
to approve new H&C supply and distribution projects, setting up rules to ensure the projects
with the highest socio-economic benefits is selected, using local resources as much as
possible in the most efficient way by combining heat and power, establish rules to ensure the
most competitive end-consumer price (low market price), empowering the end-consumer.
120
https://www.districtenergyinitiative.org/sites/default/files/publications/towardsadecarbonisedhcsectorineufinalre
port-111220191046.pdf
121
The regulatory process, responsibilities and requirements when approving district heating projects in
Denmark, as demonstrated in the District Energy – green heating & cooling for urban areas, State of Green 2020
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A prioritisation of heat synergy regions/areas has been made for 14 Member States in the
HRE4122
, based on spatial information for heat and cold demand and potential resources for
heat production. This kind of mapping should help planning the deployment of DHC
infrastructure, supporting planners, DHC operators and national/regional/local authorities.
The map below shows 4 types of regions/areas in the 14 Member States of the HRE4.
Figure 86 - Heat synergy regions prioritised in 14 MS
Source: Heat Roadmap Europe123
Regarding the conversion to new RES generation, considering the rather long lead time for
planning and licensing new district heating and cooling systems and high upfront investment
costs, medium and long-term planning of new DHC networks should be done by
122
https://heatroadmap.eu/
123
https://vbn.aau.dk/ws/portalfiles/portal/316535596/Towards_a_decarbonised_H_C_sector_in_EU_Final_Report
.pdf
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collaboration between local, and regional authorities and with national authorities overseeing
these plans, but also with other infrastructure operators (such as gas DSO).
Building refurbishment programmes, electricity, telecommunication, water, or gas network
investments and works are rarely implemented considering new DHC systems. Sustainable
energy programmes targeting the decarbonisation and energy efficiency of buildings and the
heating and cooling supply are often overlooked during the urban planning and design phase.
Decisions on investments in infrastructures and buildings at municipal or commercial levels
may take place in an isolated manner without any consideration for the feasibility of long
term sustainable solutions. Usually, no life cycle cost analysis is performed to assess the
long-term cost-competitiveness of various options.
Enhanced coordination of DHC systems with other energy infrastructure would
support cost effective decarbonisation of the H&C, especially in the case of gas networks
that may either supply DHC (renewable gases such as biomethane or renewable hydrogen),
either compete by extending their scope, and hence jeopardising DHC and/or becoming
potential stranded assets. Therefore, any natural gas DSOs should consult energy planners &
DHC operators to determine the most appropriate option for the long term decarbonisation of
the H&C sector.
It is crucial to take an integrated approach towards the energy systems’ planning,
development, and operations across all energy infrastructures. In order to minimise total life
cycle cost, building design & operation with district H&C systems using various renewable
sources and carriers can work together to optimise temperature levels, time of use based on
tariffs and price signals, store energy in the most cost-effective way, record and regulate load
profiles, integrate weather forecasts, and anticipate price formation. Appropriate cross-
sectoral software interfaces need to be established to achieve interoperability124
also with the
gas system (including hydrogen). Energy efficiency and the use of renewable H&C should be
maximised and the synergies between them optimised by tapping into existing local
renewable and associated innovative design and technologies. Planning tools and
methodologies specific to the decarbonisation of DHC are necessary, in order to coherently
model, analyse, and design H&C systems as an integral part of the entire energy system.
Close collaboration between all network and infrastructure operators is required to ensure
appropriate integrated planning.
In order to promote all types of energy utilisation and supply (all renewable sources),
interaction between supply and demand as well as efficient operation, a new generation of
energy systems which treat the district heating network as the centre piece is emerging.
Unlike traditional energy systems, the DH network, electricity and gas networks in the new
generation of energy systems are closely linked through CHP units, HP and other electricity
and/or gas-driven heating systems and influence each other. Therefore, to ensure the safe
operation of the future DH network and gas & electricity networks, the integrated framework
for generation and infrastructure planning need to be carried out. While ensuring to meet all
124
https://www.rhc-platform.org/content/uploads/2019/10/RHC-VISION-2050-WEB.pdf
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operation constraints, a multi-stage planning model for the combined generation,
infrastructure, can minimize investment and operating costs of the combined systems.
Combined generation, DH, electricity and gas networks expansion or adaptation planning is a
large-scale, high-dimensional, nonlinear optimization problem, which is difficult to solve
(sophisticated mathematical optimization method to quickly obtain the optimal solution may
be required). This would first require the different operators to coordinate efficiently.
Option 2b)-B4 Strengthen information provisions for consumers,
such as:
o requirement to include specific RES share and a numerical energy
performance number (PEF) in the information district heating/cooling systems
provide to consumer (e.g. on bills, suppliers/regulators’ websites);
o Energy label (voluntary or mandatory) for DHC systems.
Effectiveness
Usually, in supply-driven systems, billing is often based on lump sums and hence the system
is frequently seen as unfair and outdated. By evolving to more demand-driven system thanks
to disclosure, consumers would adjust their energy consumption to their needs. Therefore, if
consumption-based billing is paired to metering, consumers would also have an incentive to
rationale energy use, which in turn, would pave the way to increase energy efficiency or
through more regulation of energy use. The importance of metering in a demand-driven
system reaches far beyond a proper billing of the energy consumed, since the deeper
knowledge of the consumer patterns and conditions may enable the detection of faults in the
consumer installations or demand-side management.125
All these are mainly driven by
efficiency purposes, but by providing information on the renewable and carbon content of the
heat consumed, consumers would also more deeply follow the logic behind price formation
and the energy sources used to produce heat.
Customer’s role
A more active role of consumers in promoting high shares of renewable energy in district
heating and cooling through the disclosure of district heating and cooling energy performance
certificates, to be compared with building level energy performance certificates, would be
supportive to make the adequate choice. This would incentivise the competition between
most efficient energy performance solutions at the energy system or building level. Such
competition is increasingly relevant as consumers are encouraged to invest in local renewable
heating solutions, such as solar thermal systems, wood-pellet systems or heat pumps, under
the energy performance of buildings directive. These local solutions could be complemented
or replaced with renewables-based district heating and cooling systems to provide additional
flexibility and performance. This variant increases competitiveness, and therefore economic
impacts.
Customers’ rights
125
https://www.districtenergyinitiative.org/sites/default/files/publications/towardsadecarbonisedhcsectorineufinalre
port-111220191046.pdf
164
Regarding potential disconnections, since efficiency standard does not include minimum
energy performance thresholds and since no data is available on how different DHC systems
can be categorised based on efficiency levels, estimating the impact of a better information of
the customers and increased rights to disconnect remains hypothetical.
Higher disconnection risk and impacts could be expected in Member States with
proportionally higher DHC market shares, and globally lower energy efficiency of these
DHC. Where the share of inefficient DH systems is large, stronger disconnection rights could
severely impact the economic viability of these networks. However with other enabling
instruments such as planning or risk mitigation, the risk of disconnection could also incentive
these systems to modernise and offer attractive services to reduce consumers’ willingness to
disconnect.
The efficiency of labelling and disclosure to final customers, to promote the increase of
energy performance of the DHC and the switch to renewable will depend on the ability of the
Member States to raise awareness and effectively influence the willingness and interest of
customers to envisage disconnecting. This could only happen if the renewable alternatives are
effectively available and are competitive. But in any case, disconnection will remain difficult
for a consumer and would be a last resort solution.
This variant extends the existing provision under article 24(1) regarding information to final
consumers, by increasing transparency. Hence, it will be a minor amendment.
Renewable energy in Buildings
The shifting of buildings’ heating and cooling systems away from fossil fuels to more
renewable based systems is key to achieve the higher ambitions of the Green Deal and the
CTP and for the decarbonisation of buildings126
. According to the CTP, in order to achieve
the 55% emission reduction target, by 2030 the EU should reduce buildings’ greenhouse gas
emissions by 60%, their final energy consumption by 14% and energy consumption for
heating and cooling by 18%. It is also crucial to reduce local air pollution, meaning that non-
combustion renewables have to be prioritised. The Renovation Wave made decarbonisation
of heating and cooling a priority area for action and promotes renewables in buildings.
Current provisions in REDII include a general requirement for ensuring a minimum level of
renewables in buildings without specifying it and so far as technically, functionally and
economically feasible. The visibility of renewables in building, although they are the key
drivers for improving energy performance, remains low and allows continued use of fossil
Residential buildings
fuels with limited use of renewables in new and refurbished buildings.
constitute the largest heating consumers (68.5%), followed by the service sector buildings
(24.3%) and industrial buildings (7.2%) as indicated in the figure below. The share of
renewables in district heating supplying buildings is 28.2% composed mainly of biomass and
renewable waste (26.9%), followed remotely by heat pumps (geothermal and ambient
energy) (1.2%) and solar thermal (0.1%).
126
The Energy Performance of Buildings Directive (revised) set the objective to decarbonise the EU building
stock by 2050.
165
Figure 87 - Renewables in buildings
A dedicated study is analysing four core scenarios to decarbonise space heating (including
domestic hot water). The four scenarios zooms on specific technology pathways: direct
renewable heat, direct electrification, indirect electrification and district heating. While the
study is still on-going, preliminary results show large energy consumption and related GHG
reductions across all scenarios compared to baseline.127
The figure below shows final energy
demand for space and water heating by energy carrier. While final energy demand in the
baseline scenario reduces from almost 4000 TWh/yr in 2017 by less than 30% until 2050, the
different decarbonisation scenarios show significantly higher energy savings in the range of
35%. Counting delivered energy only (i.e. subtracting solar, ambient and geothermal energy,
the reduction accounts to more than 60% in the electrification scenario, where heat pumps
dominate the generation mix.
127
The design of the scenarios is being refined and not all costs have yet been included in the modelling
analyses, such as additional electricity generation capacities and dedicated infrastructures for H2.
166
Figure 88 - Final energy demand for space and water heating by energy carriers, EU-27 (+UK, CH, NO), 2017, 2030 and
2050 across scenarios, Source: Renewable space heating under the revised Renewable Energy Directive, ENER/C1/2018-
494 (ongoing, only preliminary re
Space heating and water heating in buildings (households, services, industry) accounts for
30.9% of final energy demand in the EU128
. Households contribute most to heating demand,
68.5%; while services has a share of 24,3% and industry 7.2%. The energy carrier mix for
space and water heating (final energy) is dominated by natural gas (43.1%), followed by
biomass (16.1%) and fuel oil (14.8%). Based on the primary energy factors, the renewable
share in the primary energy mix is 23.5%, while 76.5% is provided by fossil fuels.
Consumption is inefficient with an average building consuming 120.25 kWh/m2/a compared
to 50 kWh as most adopted value for nearly zero-energy buildings in Member States.
The shifting of buildings’ heating and cooling systems away from fossil fuels to more
renewable based systems is key to achieve the higher ambitions of the Green Deal and the
CTP and for the decarbonisation of buildings129. According to the CTP, in order to achieve
the 55% emission reduction target, by 2030 the EU should reduce buildings’ greenhouse gas
emissions by 60%, their final energy consumption by 14% and energy consumption for
heating and cooling by 18%. It is also crucial to reduce local air pollution, meaning that non-
combustion renewables have to be prioritised. The Renovation Wave made decarbonisation
128
Renewable Space Heating under the Revised Renewable Energy Directive, ENER/C1/2018-494, TU-Wien
and alia, on-going. All values are calculated for 2017.
129
The Energy Performance of Buildings Directive (revised) set the objective to decarbonise the EU building
stock by 2050.
167
of heating and cooling a priority area for action and promotes renewables in buildings.
Current provisions in REDII include a general requirement for ensuring a minimum level of
renewables in buildings without specifying it and so far as technically, functionally and
economically feasible. The visibility of renewables in building, although they are the key
drivers for improving energy performance, remains low and allows continued use of fossil
fuels with limited use of renewables in new and refurbished buildings.
Meanwhile, from CTP results, non-electricity fuels used only for heating purposes shows a
decline of fossil fuels with MIX and MIX-CP showing that with the projected carbon pricing
levels there is a strong impact on lowered demand for natural gas. Renewable energy (other
than ambient heat required for heat pumps) increases its share in buildings in the REF in 2030
and in 2050 perspective. Biomass (used in modern stoves) remains stable over the 2020-2030
period. In modelling results, biogas, solar thermal and geothermal also have marginal shares
in energy consumption. Distributed heat increases its shares to 16% in 2030.
Figure 89 - Non-electricity fuel consumption in buildings
0
50
100
150
200
250
300
REF MIX MIX-CP REG REF MIX MIX-CP REG
2000 2015 2030 2050
Mtoe
Other RES
Other bioenergy
Heat distributed
Hydrogen
e-gas
Biogas
Natural gas
Oil
Coal
168
ANNEX 8: OVERVIEW BIOMASS PLANS FROM NATIONAL ENERGY AND CLIMATE PLANS
According to the Commission’s assessment of the National Energy and Climate Plans (NECPs), a
majority of Member States foresee an increase in bioenergy use from 2021-2030. However many of
their national plans lack details on how to supply the required sustainable biomass, by feedstock and
origin and trajectories for forest biomass, and how they are aligned with measures to maintain and
increase the carbon sink. Below is a summary of the main findings by Member State.
AT: Increase of bioenergy, relying on “sustainable forest management” without further definition
and without any consideration on biodiversity. There was a recommendation to analyse the
sustainable supply of biomass and its impacts on LULUCF, not addressed.
BE: No assessment of biomass trajectory nor impacts on LULUCF.
BG: Refers to increase of use of biomass, but mainly coming from waste and residues +
afforestation.
HR: Announced increase bioenergy with plantations of fast-growing species. The NECP announced
a study on bioenergy, and several afforestation measures are announced.
CY: Bioenergy expected to play a major role on the energy mix; the draft NECP did not assessed the
sustainable supply, nor impacts on sinks and biodiversity. In the final version, CY argued that no
intention to use forest biomass (and therefore no impact on sinks), but the sustainable supply of
biomass remained not assessed.
CZ: Expected expansion of bioenergy, relying on afforestation (mainly based on indigenous species,
according to final plan). No trajectories on sustainable supply of biomass.
DK: The Commission recommendations to the draft NECP asked for details to ensure the sustainable
supply of biomass, because bioenergy will play a major role in the mix. The final version announced
a study on the sustainable supply and already provided some data.
EE: The NECP plan for RES increase relies strongly on bioenergy; the country announces a big loss
of sinks in the NECP, harvesting is quite intense, but states that all forests are sustainable.
FI: NECP announces that bioenergy will continue to be predominant in the energy mix, and will
further expand. The Commission asked in its SWD to the draft to assess its sustainable supply and
impacts on biodiversity and sinks. The final report acknowledge that bioenergy is a potential
problem for biodiversity, but ensures that the sustainable management is guaranteed. The plan refers
to an impact assessment that recommends that incentives for biodiversity have to be introduced, but
no mention about the status of such recommendations.
FR: Very prudent in the use of biomass and with an ad-hoc strategy which integrates sustainable
supply and biodiversity.
DE: Another prudent case, where the plan explains that there is a limited availability of sustainable
biomass, which should focus in sectors without alternatives. The maximum amount of bioenergy is
even estimated and the focus in on other technologies (wind and solar) with more potential and lower
costs.
169
EL: Increased use of bioenergy announced, mainly based on energy crops, woody biomass and
coppice plantations + residues to avoid forest fires. No assessment of impacts on biodiversity and
LULUCF sinks.
HU: Increased use of biomass, without assessment of sustainable supply or impacts on sinks and
biodiversity, despite Commission recommendations.
IT: The Commission requested an analysis of trajectory of biomass supply and impacts on LULUCF,
but the final version is according to my notes well nuanced, with safeguards for biodiversity and
other environmental issues. Does not seem problematic.
IE: Bioenergy is planned to increase massively, especially from forestry. The final plan provides
trajectories, but not impacts on sinks and biodiversity.
LIT: Unclear. The NECP refers to the cascading principle.
LU: Expected expansion of biomass for energy, with commitment about cascading use and
sustainability. Intention to extend criteria to plants 10MW<X<20MW. Origin from “Grande
Région”. No actual assessment yet of supply potentials, and no link with biodiversity explained.
MT: Increased bioenergy demand, imported, without any assessment of sustainability, origin, etc.
NL: The Commission asked to analyse biomass supply trajectories, but the wording is very prudent
on the impacts on biodiversity. Does not seem problematic.
PL: Projected increase in biomass use for energy, with a consistent increase in the share of final
energy consumption to about 11 % by 2040. No assessment of impacts on biodiversity or sinks.
Forest-related infringement procedure ongoing.
PT: Despite comments from the Commission, the final report does not seem problematic.
Biodiversity well integrated, with measures to increase sinks in forestry and reduce agricultural
emissions.
RO: Increase of bioenergy use. The final NECP acknowledge uncertainties and data gaps, and does
not assess its sustainable supply. Illegal logging is a big issue. Forest-related infringement procedure
ongoing.
ES: The plan foreseen a massive increase of bioenergy. Even if measures to further exploit waste
and residues are mentioned, the sustainable supply of biomass and its impacts on carbon sinks is not
properly assessed. There are issues with the use of biomass from eucalyptus plantations (and derived
forest fires) in Galicia, and those plantations are extending to Asturias and, to lesser extent, to the
Basque Country.
SE: The Commission requested an assessment of the sustainable supply of biomass. The final report
covers biodiversity in very broad terms. SE argues that its forests are sustainably managed, but this is
challenged in scientific literature and by NGOs.
SI: Projected increase of use of biomass. SI argues that “in modern individual, collective and
industrial heating, heat and power plants is important for Slovenia, as this allows it to improve the
reliability and competitiveness of energy provision, to reduce GHG emissions and to protect the
environment”. No assessment of climate and biodiversity implications, and no mention of concrete
measures.
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SK: Biomass projected to increase, without assessment of trajectories, sustainable supply and
impacts on biodiversity or sinks
171
172
ANNEX 9: BIOMASS AND BIOENERGY: ADDITIONAL INFORMATION
SYNERGIES BETWEEN CLIMATE AND BIODIVERSITY, IMPLICATIONS
FOR REDII SUSTAINABILITY CRITERIA DESIGN
Responding to a need identified in the EU Biodiversity Strategy for 2030 (COM/2020/380) the
Commission committed to publishing a report130
on the use of forest biomass for energy production.
Bioenergy is the main renewable energy source in the EU and in many Member States, accounting
for over 10% of EU final energy consumption and about 60% of renewable energy consumption. An
objective was to ascertain if synergies could be identified to inform the EU climate and energy
policies governing the sustainable use of forest biomass for energy production and the accounting of
associated carbon impacts.
The report notes that EU legislation focuses the definition of environmentally sustainable bioenergy
on biodiversity conservation and climate change mitigation, because bioenergy sits at the nexus of
two of the main environmental crises of the 21st century: the biodiversity and climate emergencies.
Wood-based bioenergy has the potential to provide part of the solution to both crises, but only when
biomass is produced sustainably.
It is clarified in the report that woody bioenergy is not automatically assumed “carbon neutral”
within the EU climate and energy policy framework for the period after 2020 – contrary to the
legislative framework under the Kyoto Protocol. The Land Use, Land Use Change and Forestry
(LULUCF) sector through Regulation 2018/841 now accounts the emissions (or removals) due to
changes in forest carbon stocks and sinks against Member State accounts and targets, and
consequently biomass emissions are not accounted again in the energy sector under Directive
2018/2001 (REDII).
The JRC analysis shows an increasing overall use of woody biomass in the EU in the past two
decades (around 20% since 2000). Similarly, the subset of woody biomass used for the specific
purpose of energy has followed an increasing trend until 2013 (about 87% from 2000-2013), after
which the growth has slowed. According to the JRC analysis, wood-based bioenergy production is,
to a large extent, based on secondary woody biomass (forest-based industry by-products and
recovered post-consumer wood), which makes up almost half of the reported wood use (49%).
Nevertheless, primary woody biomass (stemwood, treetops, branches, etc. harvested from forests)
makes up at least 37% of the EU input mix of wood for energy production (and the remaining 14% is
uncategorised in the reported statistics). Roughly 20% of the total wood used for energy production
is made up of stemwood, while 17% is made up of other wood components (treetops, branches, etc.).
4% of total wood energy demand for energy is supply by industrial stem wood. Wood-pellets imports
from US have a minor role in the EU after Brexit.
Considerable inconsistencies in reported data are identified: it is estimated that in the EU, the amount
of woody biomass used exceeds the total amount of reported as sources by more than 20%, with
large differences among Member States131
. This identified gap also highlights a specific need to
130
Camia A., Giuntoli, J., Jonsson, R., Robert, N., Cazzaniga, N.E., Jasinevičius, G., Avitabile, V., Grassi, G., Barredo,
J.I., Mubareka, S., The use of woody biomass for energy purposes in the EU, EUR 30548 EN, Publications Office of the
European Union, Luxembourg, 2021, ISBN 978-92-76-27867-2, doi:10.2760/831621, JRC122719
173
improve tracking and reporting of a crucial climate policy resource, and the report identifies also
Earth observation (remote sensing, and Copernicus services) as a suitable and potent tool to address
this. The report also suggest to extend the REDII biomass sustainability criteria for heat and power to
smaller scale installations below 20 MW to address this data gap and avoid the risk of leakage of
sustainable biomass from large to small scale uses.
The JRC report provides detailed assessments of a wide variety of pathways for biomass sourcing.
Summarised in the figure below, these show, on the one hand, that it is indeed possible to highlight
pathways that can both reduce greenhouse gas emissions in the short term while not damaging, or
even improving, the condition of forest ecosystems. For example, afforestation on former
agricultural land with mixed species plantations or with naturally regenerating forests would enhance
the terrestrial sink even before producing biomass for energy and thus would contribute to climate
change mitigation, while at the same time improving ecosystems’ conditions.
On the other hand, several pathways are categorized negatively on both biodiversity and climate
counts, and should be discouraged. In this respect, it can be highlighted that the conversion of natural
and old growth forests to plantations aiming to provide wood for bioenergy would be extremely
negative for local biodiversity, and at the same time it would provide no carbon mitigation in the
short-medium term. Similar considerations are valid also for the conversion of naturally regenerating
forests to high-intensity management plantations: the impact on local biodiversity is highly negative
while, even though wood production might increase, the benefits in terms of carbon mitigation are
only accrued in the medium to long term.
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Figure 90 - Qualitative assessment of the archetype pathways based on their climate and biodiversity impacts. Black symbols
represent pathways referring to ‘logging residues removal’ intervention, yellow symbols refer to pathways for ‘afforestation’, and blue
symbols refer to ‘conversion to plantation’ interventions. Uncertainty ranges are placed where payback time for carbon emissions
could not be placed within a single one of the already broadly defined levels. The position of the interventions within each sub-section
is arbitrary. (Source: Camia A., Giuntoli, J., Jonsson, R., Robert, N., Cazzaniga, N.E., Jasinevičius, G., Avitabile, V., Grassi, G.,
Barredo, J.I., Mubareka, S., The use of woody biomass for energy purposes in the EU, EUR 30548 EN, Publications Office of the
European Union, Luxembourg, 2021, ISBN 978-92-76-27867-2, doi:10.2760/831621, JRC122719, Fig. 42)
According to the JRC analysis, wood-based bioenergy production is, to a large extent, based on
secondary woody biomass (forest-based industry by-products and recovered post-consumer wood),
which makes up almost half of the reported wood use (49%). Nevertheless, primary woody biomass
(stemwood, treetops, branches, etc. harvested from forests) makes up at least 37% of the EU input
mix of wood for energy production (and the remaining 14% is uncategorised in the reported
statistics).
Considerable inconsistencies in reported data are identified: it is estimated that in the EU, the amount
of woody biomass used exceeds the total amount of reported as sources by more than 20%, with
175
large differences among Member States132
. This identified gap also highlights a specific need to
improve tracking and reporting of a crucial climate policy resource, and the report identifies also
Earth observation (remote sensing, and Copernicus services) as a suitable and potent tool to address
this. The report also suggest to extend the REDII biomass sustainability criteria for heat and power to
smaller scale installations below 20 MW to address this data gap and avoid the risk of leakage of
sustainable biomass from large to small scale uses.
DETAILS ON ADMINISTRATIVE COSTS – THE CASE OF A 15 MW
BIOMASS CHP PLANT
Administrative costs – the case of a 15 MW biomass CHP plant
A 15 MW (input) CHP biomass plant is able to produce 4 MW of electricity and 9 MW of
heat. Assuming a load of 50% (i.e. the plant runs at full power for 50% of the time) and a
conversion efficiency of 3.5 tonnes of oven-dry biomass per MWh, the plant would need
19,000 tonnes of fuel per year133. At an indicative price for woodchips at €120 per tonne, the
plant would have annual fuel cost of €2.3 million per year.
In order to demonstrate compliance, an installation has to keep records of purchases of
certified woodchips sufficient to cover the fuel needed to produce the MWh output generated
over a certain period. The installation has then to be audited and certified, which means an
independent third party has to verify that this information is available and satisfies the criteria.
Audit cost may vary between €5,000 and €10,000134 per year, while working hours spent on
administrative tasks depend on a number of factors. For example, how many fuel shipments
the plant requires per year, the extent to which software allows the system to be automated
etc. However, these are expected to be limited: in 2017135 these were estimated to be 64 one-
off and 36 hours per year.
Besides direct costs, the plant may have to face increased fuel costs, as it has to ensure the
purchase of certified fuelwood. Some cost of certification would accrue for each step in the
supply chain, but they may vary according to the trader (for example, a trader that already
supplies certified wood or currently supplies plants above 20 MW is likely to have in place
the appropriate process so that its cost increase will be limited to the associated quantities).
133
This is equivalent to 380 truck-trailers (largest available) per year. https://metsateho.fi/wp-content/uploads/L2.2.-
Laitila.pdf
134
Based on various estimates. For example, EC (2016) A Study on Energy Efficiency in Enterprises: Energy Audits and
Energy Management Systems, reports energy audit costs in manufacturing between €9,000 and €30,000, but these will
involve far more complex assessments than those envisaged for compliance with RED criteria.
135
Sustainable and optimal use of biomass for energy in the EU beyond 2020, May 2017
176
ANNEX 10: CHANGES TO DIRECTIVE 98/70/EC
Technical specification for fuels used in road transport are regulated in Directive 98/70/EC, so-called
Fuel Quality Directive (FQD) to protect health and the environment and ensure vehicle compatibility
across the EU. Increasing the biofuel blend above certain levels may affect the functioning of
engines and emissions control systems, or increase maintenance requirements, particularly in older
vehicles.
The FQD therefore requires the placing on the market of a protection grade for petrol with a
maximum oxygen content of 2.7% and ethanol content of 5% (i.e. E5) until 2013, with allowance for
Member States to continue this requirement for a longer period if considered necessary. Based on
available information there is no E5 protection grade enforced in 15 Member States, while there is in
6 Member States with 2 indicating a future date for its removal (in 2022 and 2024 respectively); no
information has become available for the remaining 6 Member States.
No similar requirement for a protection grade is made for diesel. While B7 (7% FAME) is currently
the most commonly available grade, certain Member States have or are considering the marketing of
B+ (higher than 7% v/v blend).
Opportunity to revise legal provisions
The technical limits on oxygenates and ethers blended in gasoline and the technical limits on FAME
blended in diesel fuel as well as standards set of other parameters which can be affected with
increased alternative fuel blend components may limit the range of options available to attain higher
ambition levels with respect to the incorporation of renewables in the road transport fuel mix.
In the context of the revision of the REDII and its increased ambition level with respect to the
incorporation of renewable components in transportation fuels, it is relevant to assess if changes are
necessary for protection grades for petrol and diesel, considering blends which may be taken up
between 2021 and 2030. This includes consideration of the number of vehicles in the EU fleet for
which a protection grade may be needed and what the costs would otherwise be for owners of
incompatible vehicle owners.
Costs to suppliers as a result of multiple grades of fuels being marketed across the EU, and reflecting
on whether a change to the FQD in this respect will have EU added value, in terms of the objective
for promoting a single market are equally relevant. Also, it is worth noting that as fuel suppliers
benefit from marketing the minimum number of grades of fuel, there is risk that the protection grade
is used on a wider scale than just the vehicles that need it (as it is the case currently with E5
particularly in some MS).
Fuels marketed in the EU
Nearly 96% of the petrol sold in the EU in 2018 contained bioethanol: 84.3 % was of the product
type E5 (i.e. up to 5 % ethanol content by volume and in which the ethanol is derived from biofuels
or is of biogenic origin), 11.4% was E10 (i.e. up to 10 % ethanol content by volume) and 4.1 % was
E0 (no ethanol content). Only 0.2 % of petrol was E+ (i.e. > 10 % ethanol content by volume). This
refers mainly to E85, used in engines modified to accept a higher content of ethanol. Such flexi-fuel
vehicles (FFV) are designed to run on any mixture of petrol and ethanol with up to 85 % ethanol by
volume.
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Figure 91 - Petrol sold in the EU in 2018
Source: Eionet report - ETC/CME 9/2019 October 2020 Fuel quality monitoring in the EU in 2018, Fuel
quality monitoring under the Fuel Quality Directive
All diesel sold in the EU contained biodiesel: 99.2 % was of the B7 product type (i.e. containing up
to 7 % fatty acid methyl esters, FAME) and 0.8 % was of the B+ product type (i.e. containing more
than 7 % FAME).
Figure 92 - Diesel sold in the EU in 2018
Source: Eionet report - ETC/CME 9/2019 October 2020 Fuel quality monitoring in the EU in 2018,
Fuel quality monitoring under the Fuel Quality Directive
Since 2015, diesel sold in France has been B8 or B10. Lithuania’s main diesel grade contains 8%
biofuel. In the FQD Evaluation the automobile industry and fuel suppliers argued this constitutes
fragmentation of the single market. They further requested clear labelling of the B8 blend and the
supply of B7 as a protection grade for vehicles that are not compatible. The FQD REFIT evaluation
staff working document has noted that not offering a B7 protection grade goes against the objective
of the FQD to ensure fuel-engine compatibility.
According to PRIMES MIX scenario gasoline and diesel fuel consumption is expected to reduce in
2030 compared to 2020. The respective shares of the bio-based components are nevertheless
expected to increase, passing from 6% in 2020 to 8% in 2030 in gasoline, and from 8% to 10% in
diesel blends.
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Table 53 - EU27 petrol and diesel fuel consumption; Source: PRIMES/ Prepanl / EU27noUK:Green
Deal 55% carbon taxation COVID scenario /transport
EU27 Petrol consumption (ktoes) EU27 Diesel fuel consumption (ktoes)
2020 2030 2020 2030
Petrol 56956 48125 Diesel fuel 158660 146703
of which
biofuel
3255 3766 of which
biofuel
12624 14856
% biofuel 6% 8% % biofuel 8% 10%
Initial considerations
Bio-ethanol
For bio-ethanol blends where the EU legal obligation for the E5 protection grade is no longer in
force since 2013 and the currently allowed maximum E10 blending is far from being reached across
the EU, a revision of the reference fuel for petrol to be able to incorporate higher volumes of bio-
ethanol blend does not seem to be justified in the 2030 perspective.
In support of this, the following evidence is considered as relevant.
- A 2017 report for the European Commission noted that most post-2003 vehicles are E10 tolerant
Invalid source specified..
- Most post-2003 vehicles are E10 tolerant136
. The proportion of pre-2003 vehicles in circulation in
2020 is 1.3 to 6.8% depending on MS. ACEA also publishes a regularly updated comprehensive
list137
of vehicles compatible with E10 fuel with post-2011 vehicles suggested by manufacturers
to be E20 tolerant.
- ACEA reports that the average age of a passenger car in the EU is 10.8 years old138
. Some
Member States have much older vehicle fleets than others: Lithuania (16.9 years), Estonia (16.7
years), Romania (16.3 years) Greece (15.7 years), and so changes to protection grades could
disproportionately impact some Member States. However, Romania and Estonia already market
E10 widely139
. In the case of Estonia, E10 holds 45% of the petrol market share, while E10 is
100% of the petrol sold in Romania.
- Based on vehicle fleet projections of the PRIMES-TREMOVE model to 2030 and due to natural
fleet turnover, by 2030 there will be only a small number of vehicles requiring E5, i.e. vehicles
aged 27 years or older in 2030.
- The cost of retrofitting is between €200140
and €550141
. Small numbers of vehicles of this age
will still be in circulation, particularly in the case of classic car enthusiasts. For vintage cars such
as these, compatible petrol supply may be considered via special interest groups rather than in the
general market.
136
https://op.europa.eu/en/publication-detail/-/publication/ec1f67bd-5499-11e7-a5ca-01aa75ed71a1
137
https://www.acea.be/uploads/publications/ACEA_E10_compatibility.pdf
138
https://www.acea.be/uploads/publications/ACEA_Report_Vehicles_in_use-Europe_2019.pdf
139
https://www.epure.org/about-ethanol/fuel-market/fuel-blends/
140
https://op.europa.eu/en/publication-detail/-/publication/ec1f67bd-5499-11e7-a5ca-01aa75ed71a1
141
https://www.gov.uk/government/consultations/introducing-e10-petrol
179
- The majority of stakeholders142
consulted in 2020 indicated that no problems would be caused by
the removal of the E5 protection grade, particularly in the case of vehicle manufacturers and fuel
producers/suppliers.
Stakeholders were also asked what they believe to be the appropriate protection grade for petrol
by 2030, if any: the majority believe E10 would be an appropriate protection grade in 2030. One
stakeholder group which has a differing view to this are fuel producers or suppliers, for which the
majority believe that no protection grade is needed in 2030.
Diesel fuels and bio-based components
The reasoning differs for diesel fuels and relevant bio-based components. Whereas part of the
biodiesel component is made up by hydrogenated vegetable oils (HVO), which are drop-in fuels not
subject to the same technical limitations as FAME for vehicle compatibility, limiting reference diesel
fuel to B7 could be perceived as a barrier to achieving GHG reduction targets, considering that
practically the entire EU supply of diesel was B7 in 2018.
Sustaining the market uptake of B10 would require a B7 protection grade, which is currently not
provided for in the FQD as noted above, but was already flagged as relevant in the FQD REFIT in
the interest of vehicle compatibility and functioning of the single market functioning.
The FQD allows Member States to market diesel blends that have a FAME content higher than the
7% specified in the FQD. CEN has developed standards for higher diesel blends, including B10.
When comparing technical parameters for diesel fuels regulated by FQD, the only difference with
EN590 for B7 and EN16734 is the content of FAME, which increases from 7% v/v to 10% v/v.
Table 54 - Standards of different diesel blends
Property Units FQD B7 B10
Standard EN590
EN
16734
Density @15°C kg/m3 <845
820-
845
820-
845
Cetane Number >51 >51 >51
PAH %m/m <8.0 <8.0 <8.0
Sulphur Content mg/kg <10.0 <10.0 <10.0
Manganese Content mg/l <2.0 <2.0 <2.0
Distillation
- 95%V/V
Recovered at
°C <360 <360 <360
Fatty Acid Methyl
Ester (FAME)
%V/V <7.0 <7.0 <10
142
The stakeholder consultation was performed through Contract no. 340201 2019 815556 ETU CLIMA.C.4
180
B10 in the stakeholder consultation
Stakeholders143
expressed a largely positive response to expectation by 2030 of FAME blends
moderately beyond current limits, (i.e. 8-10%). There were also a number of responses indicating
positively that blends of higher level will be used, with 29% of respondents indicating blends of 11-
20% will be used (60% of respondents provided an input on this range).
In lower blends of fuels, i.e. up to 10% biofuel, FAME is the most dominant fuel type responded by
stakeholders, followed by a combination of FAME and HVO. In blends of 11-20%, HVO is the type
of fuel most expected to be used in 2030. Next to FAME and HVO, most respondents that did
specify other renewable fuels may be added to diesel blends in 2030, mentioned that synthetic diesel
(i.e. PtX, E-fuels) could be expected to be used in all diesel blends. A fuel producers’ association
also mentioned the possibility of DME in diesel blends of 1-7% renewable content.
Some fuel producers suggest FAME in the 8-30% range could also be used by all vehicles, while
others specify that these vehicles would have to be identified as B10, B20 or B30 compatible; many
respondents argue that the use would likely be limited to captive fleets, heavy-duty vehicles or bus
fleets.
France and one unidentified Member State note that diesel blends in the 8-10% band are likely to be
used in all vehicles by 2030, while one further Member State mentions that this blend could be used
if it was allowed under the FQD. Ireland also noted that it expects diesel blends with 11-20% bio or
renewable content to be used by all vehicles by 2030.
Vehicle compatibility with B10 fuel grade
There was inconsistency in the views of stakeholders on the compatibility of the existing fleet with
B10. Most of the respondents that argued there should be no protection grades argued that setting
protection grades would hinder the development of the biofuel market and would slow the progress
towards meeting the GHG targets. With respect to B10 fuel specifically, it was mentioned that
vehicle manufacturers would need to advise more frequent service intervals to change engine oil, due
to possible dilution of engine oil with FAME
The vehicle producers association ACEA published a list144
of passenger cars compatible with the
B10 diesel fuel in 2018 Invalid source specified.. The list indicates that not all vehicles were
marked as being compatible with B10. For example, all Citroën and Peugeot vehicles introduced
after 2000 and Renault vehicles with type-approval Euro 5 or higher are compatible. For other car
manufacturers, ACEA’s list indicates that only certain vehicles are compatible.
A more recent list of B10 compatible vehicles prepared by biofuel producer associations AGQM and
MVaK was published in 2020 Invalid source specified.. The list highlights that many vehicles that
are marked as compatible to run on B10 do so outside Europe. Next to those approved in the ACEA
list, the AGQM and MVaK list also notes that all BMW, Dacia and Opel vehicles with type-approval
Euro 5 or higher are compatible with B10.
The vehicle manufacturers noted above (ACEA and MVaK lists) comprise one third of the diesel
vehicle market in 2019 and it is likely higher in reality, meaning that the proportion of compatible
143
The stakeholder consultation was performed in the study "Technical assessment of transport fuel quality parameters",
Contract no. 340201 2019 815556 ETU CLIMA.C.4
144
https://www.acea.be/uploads/publications/ACEA_B10_compatibility.pdf
181
vehicles should exceed this, as not every vehicle model marked as B10 compatible could be
identified. One vehicle manufacturer organisation noted that all their vehicles sold after 2000 are
compatible in the stakeholder questionnaire. Another organisation indicated all vehicles with Euro 5
type-approval or higher. Based on this information, it is assumed that potentially 50% of new
vehicles in 2020/2021 may have compatibility issues with B10 fuel.
The expectation by stakeholders of consequences of a removal of B7 from the market is split, as
shown in the table below: exactly half of the stakeholders responding to the survey believed that no
problems would be caused by such a removal, while the other half believed problems would be
caused.
Figure 93 - Stakeholder responses to the question: “would the removal of B7 from the market cause
problems for owners of existing vehicles by 2030?”
When asked what an appropriate protection grade for diesel in 2030 would be, the responses indicate
that half of stakeholders believe a B7 protection grade should be introduced, as shown in the table
below. A quarter of respondents, mostly from the fuel producers and suppliers group, believe that no
protection grade for diesel is required. Some respondents (19%) indicated that B10 would be the
appropriate protection grade. All vehicle manufacturers responding to the question indicated that a
B7 protection grade is appropriate.
Figure 94 - Stakeholder responses to the question: “what would be the appropriate protection grade
in 2030?”
A protection grade for diesel would only be required should adoption of B10 become more
widespread. In response to such an increase to B10, it is assumed that all manufacturers would adapt
their new vehicles to be compatible, resulting in all vehicles registered between 2025 and 2030 being
compatible.
Vehicle age in 2030 Number of vehicles (000s) Proportion of vehicles not
Cars LDVs
182
2030 compatible with B10
Table 55 - European Fleet of B10 non compatible diesel cars and light duty vehicles (LDVs) in 2030
by age according to PRIMES-TREMOVE model and fuel compatibility (000’s of Vehicles)
0-4 years 18721 4581
0% assumed* not to be
compatible
4-9 years 23305 4713
Approximately 10% of vehicles
assumed* not to be compatible
9-14 years 22989 6395
Approximately 50% of vehicles
estimated not to be compatible,
based on information from
literature and stakeholders
14-19 years 9695 3020
Approximately 70% of vehicles
estimated not to be compatible ,
based on information from
literature and stakeholders
*estimated, based on the assumption that new vehicles will be adapted to be compatible with B10 in
response to increased marketing of B10.
Based on the above, 28% of the combined car and LDV fleet is assumed as not compatible with B10
in 2030. Economic impacts are assessed based on this assumption.
Economic impacts
Cost of Vehicle Upgrades or Retrofits
There would be economic impacts for some vehicle owners without B7 protection grades for diesel
(for FAME content). Owners of non-compatible vehicles would need to replace their vehicle with a
newer, compatible model. Costs are calculated on the basis of owners replacing their vehicle earlier
than the end of life, leading to lost residual value of the vehicle and an effective cost associated with
incurring the replacement costs earlier than they otherwise would. This effective cost is due to the
difference in present value of the cost, calculated using a social rate-of-time preference 4% annual
discount rate.
Table 56 - Cost of Vehicle Upgrades in Absence of Protection Grade (Vehicles not compatible with
B10) 2015 Price Year
Vehicle type
Lost residual value
of vehicles
Cost due to earlier
vehicle purchase
Total cost
Cars (Diesel) €62.1bn €110bn €172.4bn
LDVs (Diesel) €22.7bn €43.4bn €66.1bn
183
Total (Diesel) €238.5bn
Source: "Technical assessment of transport fuel quality parameters", Contract no. 340201 2019
815556 ETU CLIMA.C.4
Costs for Fuel Suppliers
The introduction of a B7 protection grade for diesel could lead to some filling stations marketing an
increased number of fuel grades and which may require making associated investments in storage
and refuelling infrastructure. An estimate for the investment cost of around €100,000 for a filling
station to market an additional grade of E85 in 2015 is made in Invalid source specified.. Europe’s
Independent Fuel Suppliers (UPEI) provided a higher cost in the stakeholder survey, indicating that
the introduction of additional marketed grades could cost between €200,000 and €2,000,000 per
filling station. Beyond investment in additional tanks, pumps, hoses, store management systems and
electronic pricing information at the retail location, new grades would also affect the cost of storage
& handling (S&H). A lot of factors, such as the volume of each grade, if it is a blended or straight
product or if it can be blended in a truck will affect the costs. Furthermore, truck usage would also
become less optimised if additional blends were required, which could lead to additional distribution
costs.
Depending on market uptake of higher biodiesel content in diesel, the share of filling stations
required to make such an investment may differ. Here we consider three scenarios: a) 10% of filling
stations, b) 50% of filling stations and c) 100% of filling stations. Based on the cost data gathered
from the literature and stakeholder survey, a cost estimate of €200,000 is used per filling station for
marketing an additional grade of fuel. There were 75,396 active filling stations in the EU in 2018
Invalid source specified.. We assume the same number of active filling stations in 2030. As shown in
the table below. the estimated cost to fuel suppliers is between €1.5 Billion and €15 Billion.
Table 57 - Estimated cost of supplying additional grades for scenarios of different % of petrol
stations marketing additional B7 protection grade 2015 Price Year
Scenario Number of filling stations Estimated cost (million €)
Scenario a) – 10% 7,540 1,508
Scenario b) – 50% 37,698 7,540
Scenario c) – 100% 75,396 15,079
In different Member States, ownership structures of filling stations varies, with some being
dominated by a small number of larger companies (Germany, Greece, Italy), while in others
ownership is largely by smaller independent retailers (Poland) Invalid source specified.. Smaller,
independent retailers are likely to have less available funds for investing in additional infrastructure
and would be disproportionately affected by the need to market an additional grade of fuel. As an
alternative response, these retailers may choose to market only the protection grade, leading to
reduced biofuel uptake (See Environmental Impacts).
184
Impacts on the Single Market
Protection grades can negatively impact the EU single market. If the protection grade is optional,
then some Member States will choose to adopt it and some will not. In countries where it is adopted,
the protection grade may become the dominant or only fuel that is sold. Other Member States may
choose to require E10 instead, due to greenhouse gas targets. This can therefore lead to a situation of
increased market fragmentation. This theoretically can increase costs for producers as there is less
economy of scale and more fragmented grades across Europe.
This fragmentation can also affect owners of vehicles requiring the protection grade, in the event of
driving across borders of different Member States.
Environmental impacts
Greenhouse Gas and air pollutant emissions
A protection grade can reduce uptake of biofuels and prevent greenhouse gas emission reductions.
The costs of marketing multiple grades of fuel means that some filling stations, particularly smaller
stations or those independently owned, may need to market only the protection grade, therefore
reducing biofuel uptake and greenhouse gas emission savings.
In the PRIMES-TREMOVE modelling, a scenario has been modelled145
for the widespread uptake of
B10 without protection grades, with impacts calculated relative to a baseline which includes no
FAME protection grade. The impacts of a possible B7 protection grade is therefore calculated in the
context of reducing the potential benefits. This impact depends on the extent to which protection
grade fuels are marketed. Impacts are estimated for two scenarios: firstly, where protection grade
fuels are only used by vehicles that require them. In the case of diesel and B7 protection grade, it is
estimated that approximately 28% of the car and LDV fleet is not B10 compatible in 2030. Secondly,
where protection grades are utilised by a larger proportion of the fleet: the protection grade take up is
assumed to be 70%.
The table below shows the estimated emissions impacts of a B7 protection grade in the form of
reduced benefits. It reflects the impacts relative to the PRIMES modelling scenario, where in the
absence of a B7 protection grade there is total fleet uptake of a diesel blend with 10% FAME and
10% HVO. As such, these impacts are an upper estimate of the emissions impacts of the protection
grades given the ambitious nature of the PRIMES modelling scenario.
Table 58 - Emissions Impact of Protection Grades
Protection
Grade
(Fuel)
Percentage
Of Fleet
Using
Protection
Grade
NOX Emissions
impact relative to
PRIMES-
TREMOVE
Scenario
SO2 Emissions
impact relative to
PRIMES-
TREMOVE
Scenario
CO2 Emissions
impact relative to
PRIMES-
TREMOVE
Scenario
145
"Technical assessment of transport fuel quality parameters", Contract no. 340201 2019 815556 ETU CLIMA.C.4
185
B7
(Diesel)
28% 4.3 kt 16.4t 9,602 kt
B7
(Diesel)
70% 10.8 kt 41.1t 24,006 kt
Conclusions
In the context of the revision of the REDII and its increased ambition level with respect to the
incorporation of renewable components in transportation fuels, it is relevant to assess if changes are
necessary for protection grades for petrol and diesel, considering blends which may be taken up
towards 2030.
For bio-ethanol blends where the EU legal obligation for the E5 protection grade is no longer in
force since 2013 and the currently allowed maximum E10 blending is far from being reached across
the EU, a revision of the reference fuel for petrol to be able to incorporate higher volumes of bio-
ethanol blend does not seem to be justified in the 2030 perspective.
For bio-based components in diesel fuel, limiting reference diesel fuel to B7 limits available options
to attain higher targets in the revised REDII, considering that practically the entire EU supply of
diesel was B7 in 2018.
Sustaining the market uptake of B10 would require a B7 protection grade, which is currently not
provided for in the FQD as noted above, but was already flagged as relevant in the FQD REFIT in
the interest of vehicle compatibility and functioning of the single market functioning.
The introduction of an EU-wide B7 protection grade for 7% FAME in diesel is recommended due to
the proportion of vehicles (potentially 28%) not compatible with B10 expected to be present in the
fleet by 2030. It is considered necessary by vehicle manufacturers and half of fuel supplier
stakeholders that engaged in the consultation for this study. However, the extent to which the non
compatibility exists is disputed by some stakeholders. Without the protection grade, owners of
incompatible vehicles would incur costs of early vehicle replacement, with relatively higher
incidence in Member States with older average fleet age, which are also among the Member States
with lower than average GDP per capita.
The disadvantage of introduction of a B7 protection grade is that it may lessen the increase in uptake
of biofuels and consequently lead to lower than otherwise environmental benefits. There could also
potentially be additional costs for fuel suppliers resulting from marketing of multiple diesel grades,
depending on whether the protection grade must be available in all filling stations or only a smaller
proportion, for example those above a certain size.
In the case of bio-ethanol in petrol, the E5 protection grade is assessed as irrelevant with E10 as
reference fuel. It is therefore concluded that no legal revision is needed for bio-ethanol content in
traded petrol at this stage.
186
References
ACEA, 2018. B10 Compatibility,European Automobile Manufacturers Association
ACEA, 2019. Vehicles in use Europe 2019. [Online]
Available at: https://www.acea.be/uploads/publications/ACEA_Report_Vehicles_in_use-
Europe_2019.pdf
ACEA, 2019. Vehicles in use Europe 2019
AGQM, 2018. Approval list of commercial vehicle manufacturers for operation with biodiesel (B20 |
B30 | B100)
European Commission, 2015. Impact of higher levels of bio components in transport fuels in the
context of the Directive 98/70/EC of the European Parliament and of the Council of 13 October
1998, relating to the quality of petrol and diesel fuels and amending Council Directive 93/12
European Commission, 2017. COM/2017/0284 final - REPORT FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT AND THE COUNCIL in accordance with Article 9 of Directive
98/70/EC relating to the quality of petrol and diesel fuels
European Commission, 2017. Evaluation of Directive 98/70/EC of 13 October 1998 relating to the
quality of petrol and diesel fuels as amended
European Commission, 2017. Impact of higher levels of bio components in transport fuels in the
context of the Directive 98/70/EC of the European Parliament and of the Council of 13 October
1998, relating to the quality of petrol and diesel fuels and amending Council Directive 93/12
European Commission, 2017. SWD(2017) 179 final Evaluation of Directive 98/70/EC of the
European Parliament and of the Council relating to the quality of petrol and diesel fuels ('Fuel
Quality Directive'
European Commission, 2020. State of the Art on Alternative Fuels Transport Systems in the
European Union
FuelsEurope, 2019. NUMBER OF PETROL STATIONS IN EUROPE END OF 2018
ICCT, 2020. EUROPEAN VEHICLE MARKET STATISTICS Pocketbook 2020/21
MVaK, 2020. Approval List Biodiesel (B10)
UK DfT, 2020. Introducing E10 Petrol: Consultation
187
LIST OF TABLES
Table 28 - Details of Session 1.......................................................................................................................... 37
Table 29 - Details of Session 2.......................................................................................................................... 39
Table 30 - Details of Session 3.......................................................................................................................... 41
Table 31 - Details of Session 4.......................................................................................................................... 45
Table 32 - Details of Session 5.......................................................................................................................... 47
Table 33 - Details for Session 6 ........................................................................................................................ 48
Table 34 - Details of Session 7.......................................................................................................................... 51
Table 35 - Agenda of stakeholder workshop..................................................................................................... 56
Table 36 - Details of Session 1.......................................................................................................................... 63
Table 37 - Details of session 2 .......................................................................................................................... 70
Table 38 - Details of session 3 .......................................................................................................................... 74
Table 39. Projected population and GDP growth per MS................................................................................. 97
Table 40: International fuel prices assumptions................................................................................................ 98
Table 41: REF2020 summary energy and climate indicators.......................................................................... 101
Table 42: Scenario assumptions description (scenarios produced with the PRIMES-GAINS-GLOBIOM
modelling suite)............................................................................................................................................... 107
Table 43: ETS prices by 2030 in the difference scenarios (€2015/tCO2)........................................................ 111
Table 44: Energy efficiency value and renewable energy value (averaged 2025-2035)................................. 112
Table 45: Carbon value applied to non-CO2 emissions in the GAINS model (€2015/tCO2).......................... 114
Table 46: Key results of the “Fit for 55” core scenarios analysis for the EU.................................................. 115
Table 47: Comparison with the CTP analysis ................................................................................................. 116
Table 48 - METIS models displayed in the Crystal Super Grid user interface ............................................... 118
Table 49 - scarcity and average GO price per demand scenario ..................................................................... 120
Table 50: Key policy conclusions of the Climate Target Plan ........................................................................ 123
Table 51 - RES share in the heating and cooling sector regarding RED II Art 23 (Member States that are not in
line with the requirements from Art 23 are highlighted in red, while those in line with the requirements are
highlighted green)............................................................................................................................................ 132
Table 52 - Overview of TPA regulations in the Member States, the UK, Iceland, Norway and Ukraine(Source:
ENER/C1/2018-496, ongoing)........................................................................................................................ 158
Table 53 - EU27 petrol and diesel fuel consumption; Source: PRIMES/ Prepanl / EU27noUK:Green Deal 55%
carbon taxation COVID scenario /transport .................................................................................................... 178
Table 54 - Standards of different diesel blends ............................................................................................... 179
Table 55 - European Fleet of B10 non compatible diesel cars and light duty vehicles (LDVs) in 2030 by age
according to PRIMES-TREMOVE model and fuel compatibility (000’s of Vehicles) .................................. 182
Table 56 - Cost of Vehicle Upgrades in Absence of Protection Grade (Vehicles not compatible with B10)
2015 Price Year............................................................................................................................................... 182
Table 57 - Estimated cost of supplying additional grades for scenarios of different % of petrol stations
marketing additional B7 protection grade 2015 Price Year ............................................................................ 183
Table 58 - Emissions Impact of Protection Grades ......................................................................................... 184
LIST OF FIGURES
Figure 46 - Overview stakeholder replies per sector......................................................................................... 13
Figure 47 - Agenda stakeholder workshop (morning)....................................................................................... 25
Figure 48 - Agenda stakeholder workshop (afternoon)..................................................................................... 26
Figure 49 - Number of active connections ........................................................................................................ 27
Figure 50 - Location of participants (excluding participants from European Commission)............................. 28
Figure 51 - Affiliation of participants (including participants from European Commission) ........................... 29
Figure 52 - Government representatives by country (excluding participants from European Commission) .... 29
Figure 53 - In which sectors do you think additional efforts to increase the use of renewable energy are most
needed for a potentially higher renewables target for 2030? (n=215, multiple answers possible).................... 30
Figure 54 - Should the overall renewable target be binding at EU level or at national level? (n=195) ............ 30
188
Figure 55 - Should the current indicative target of 1.3 ppt (or 1.1 ppt, if waste heat and cold is not used),
annual average increase of renewable energy in heating and cooling set for the period of 2021-2030 in Article
23 become a binding target for Member State .................................................................................................. 31
Figure 56 - Do you think there should be an obligation on certain industrial sectors to use a minimum amount
of renewable energy? (n=93)............................................................................................................................. 31
Figure 57 - Which of the following additional measures to encourage the use of renewable energy in industry
do you find appropriate? (n=78, multiple selection possible) ........................................................................... 32
Figure 58 - Which of the following measures do you consider the most appropriate in tackling the remaining
barriers for the uptake of renewable electricity that matches the expected growth in demand for end-use
sectors? (n=81) .................................................................................................................................................. 32
Figure 59 - Do you think the REDII sustainability criteria for bioenergy should be modified? (n=96) ........... 33
Figure 60 - Do you think the REDII sustainability criteria for forest biomass should be modified? (n=100).. 34
Figure 61 - Do you think that the use of certain bioenergy feedstock should be limited under REDII? (n=97)34
Figure 62 - Do you think that REDII criteria on GHG emission savings and bioelectricity efficiency should be
modified? (n=83)............................................................................................................................................... 35
Figure 63 - Is the RED II certification scheme appropriate to address sustainability issues, ensuring
traceability, and accounting for the different targets (global renewable and sector targets, as in transport under
Article 25)? (n=85)............................................................................................................................................ 35
Figure 64 - For which renewable and low-carbon fuels would the Union Database be the appropriate tool?
(n=68)................................................................................................................................................................ 36
Figure 65 Number of active connections........................................................................................................... 58
Figure 66 Location of attendees (excluding attendees from European Commission)....................................... 59
Figure 67 Affiliation of attendees (including attendees from European Commission)..................................... 60
Figure 68 Public authorities by country (excluding attendees from European Commission)........................... 60
Figure 69 - Interlinkages between models......................................................................................................... 88
Figure 70: Schematic representation of the PRIMES model............................................................................. 90
Figure 71: Fuel mix evolution of the Reference Scenario 2020...................................................................... 102
Figure 72: Share of energy carriers in final energy consumption in the Reference Scenario 2020 ................ 103
Figure 73: Final energy demand by sector in the Reference Scenario 2020 ................................................... 103
Figure 74: Interactions between different policy tools.................................................................................... 104
Figure 75 - METIS open-book approach......................................................................................................... 119
Figure 76 - vRES share against GO price duration curve - FR - medium demand scenario........................... 121
Figure 77 - vRES share against electricity price duration curve - FR - medium demand scenario................. 122
Figure 78 - vRES share against total electricity price (incl. GOs) duration curve - FR - medium demand
scenario............................................................................................................................................................ 122
Figure 79 - Share of RES in H&C in all MS in 2020 & in 2030 + share of H&C in Final Energy Consumption;
Source: Trinomics based on JRC’s assessment of NECPs.............................................................................. 134
Figure 80 - Evolution of the number of funded energy audits per capita in different German federal states . 147
Figure 81 - Parameters for individual heating technologies and the district heating unit ............................... 149
Figure 82 - Parameters for district heating technologies................................................................................. 149
Figure 83 - Comparison of the price of heat for new DH heat (wood chip boiler) and individual heating. Heat
demand at 13800 KWh/year, Network Scale of 1 (small pipe grid) ............................................................... 150
Figure 84 - Comparison of price of heat from new DH (wood chip boiler) and individual heating. Heat
demand of 4 900 kWh/year and Network Scale 1 (small pipe gird) ............................................................... 150
Figure 85 - Comparison of individual heating systems (systems de chauffage domestique) & of district heating
systems (LCOE de la chaleur collective) ........................................................................................................ 151
Figure 86 - Heat synergy regions prioritised in 14 MS ................................................................................... 161
Figure 87 - Renewables in buildings............................................................................................................... 165
Figure 88 - Final energy demand for space and water heating by energy carriers, EU-27 (+UK, CH, NO),
2017, 2030 and 2050 across scenarios, Source: Renewable space heating under the revised Renewable Energy
Directive, ENER/C1/2018-494 (ongoing, only preliminary re ....................................................................... 166
Figure 89 - Non-electricity fuel consumption in buildings ............................................................................. 167
Figure 90 - Qualitative assessment of the archetype pathways based on their climate and biodiversity impacts.
Black symbols represent pathways referring to ‘logging residues removal’ intervention, yellow symbols refer
to pathways for ‘afforestation’, and blue symbols refer to ‘conversion to plantation’ interventions. Uncertainty
189
ranges are placed where payback time for carbon emissions could not be placed within a single one of the
already broadly defined levels. The position of the interventions within each sub-section is arbitrary. (Source:
Camia A., Giuntoli, J., Jonsson, R., Robert, N., Cazzaniga, N.E., Jasinevičius, G., Avitabile, V., Grassi, G.,
Barredo, J.I., Mubareka, S., The use of woody biomass for energy purposes in the EU, EUR 30548 EN,
Publications Office of the European Union, Luxembourg, 2021, ISBN 978-92-76-27867-2,
doi:10.2760/831621, JRC122719, Fig. 42) .................................................................................................... 174
Figure 91 - Petrol sold in the EU in 2018........................................................................................................ 177
Figure 92 - Diesel sold in the EU in 2018....................................................................................................... 177
Figure 93 - Stakeholder responses to the question: “would the removal of B7 from the market cause problems
for owners of existing vehicles by 2030?” ...................................................................................................... 181
Figure 94 - Stakeholder responses to the question: “what would be the appropriate protection grade in 2030?”
......................................................................................................................................................................... 181


EN EN
EUROPEAN
COMMISSION
Brussels, 14.7.2021
SWD(2021) 621 final
PART 1/2
COMMISSION STAFF WORKING DOCUMENT
IMPACT ASSESSMENT REPORT
Accompanying the
Proposal for a Directive of the European Parliament and the Council
amending Directive (EU) 2018/2001 of the European Parliament and of the Council,
Regulation (EU) 2018/1999 of the European Parliament and of the Council and Directive
98/70/EC of the European Parliament and of the Council as regards the promotion of
energy from renewable sources, and repealing Council Directive (EU) 2015/652
{COM(2021) 557 final} - {SEC(2021) 657 final} - {SWD(2021) 620 final} -
{SWD(2021) 622 final}
Europaudvalget 2021
KOM (2021) 0557 - SWD-dokument
Offentligt
1
Table of contents
1. INTRODUCTION: POLITICAL AND LEGAL CONTEXT............................................................... 6
1.1. Key aspects of the 2018 Renewable Energy Directive (REDII)........................7
1.2. The Renewable Energy Directive and interactions with the key ‘Fit for 55’
legislation/initiatives and others ........................................................................9
2. PROBLEM DEFINITION .................................................................................................................. 10
2.1. What are the problems? ...................................................................................10
What are the problem drivers?...................................................................................12
2.2. How will the problem evolve?.........................................................................18
3. WHY SHOULD THE EU ACT? ........................................................................................................ 21
3.1. Legal basis .......................................................................................................21
3.2. Subsidiarity: Necessity of EU action ...............................................................21
3.3. Subsidiarity: Added value of EU action ..........................................................21
4. OBJECTIVES: WHAT IS TO BE ACHIEVED? ............................................................................... 23
4.1. General objectives............................................................................................23
4.2. Specific objectives ...........................................................................................23
4.3. Intervention logic.............................................................................................24
5. WHAT ARE THE AVAILABLE POLICY OPTIONS? .................................................................... 24
5.1. Baseline............................................................................................................24
5.2. Scope of this initiative and alignment with the Climate Target Plan ..............26
5.3. Description of the policy options.....................................................................27
5.4. The overview of policy options .......................................................................47
5.5. The core scenarios, variants and their use in this IA .......................................47
5.6. Options discarded at an early stage..................................................................49
6. WHAT ARE THE IMPACTS OF THE POLICY OPTIONS INCLUDING FOR EFFECTIVENESS,
EFFICIENCY AND COHERENCE? ................................................................................................. 50
6.1. Overall renewable energy target level and achievement .................................51
6.2. Heating and Cooling ........................................................................................69
6.3. Transport........................................................................................................100
6.4. Measures to enhance the contribution of transport and heating and cooling to the
system integration of renewable electricity ...................................................112
6.5. Certification of renewable and low carbon fuels ...........................................126
6.6. Promotion of innovative renewable and low carbon fuels.............................130
6.7. Bioenergy sustainability criteria ....................................................................141
6.8. Flanking and enabling measures....................................................................157
7. HOW DO THE OPTIONS COMPARE AND CONCLUSIONS ..................................................... 174
2
7.1. Effectiveness..................................................................................................179
7.2. Efficiency and impacts...................................................................................185
7.3. Coherence ......................................................................................................190
7.4. Administrative and monitoring impacts.........................................................191
7.5. Subsidiarity and proportionality ....................................................................192
8. PREFERRED OPTION/CONCLUSIONS........................................................................................ 193
8.1. Methodological approach...............................................................................194
8.2. Policy interactions..........................................................................................194
8.3. Preferred policy options.................................................................................195
8.4. Investments underpinning the preferred policy option ..................................197
8.5. Ensuring coherence in the finalisation of the package...................................197
8.6. REFIT (simplification and improved efficiency) ..........................................198
9. HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED?................................ 199
10. LIST OF TABLES AND FIGURES................................................................................................. 200
3
Glossary
Term or acronym Meaning or definition
REDII Directive (EU) 2018/2001of the European Parliament and of the
Council of 11 December 2018 on the promotion of the use of energy
from renewable sources, OJ L 328, 21.12.2018, p. 82–209
CTP 2030 Climate Target Plan
EGD European Green Deal
GHG Greenhouse gas
LULUCF Land use, land-use, change and forestry, Regulation (EU) 2018/841
of the European Parliament and of the Council of 30 May 2018 on
the inclusion of greenhouse gas emissions and removals from land
use, land use change and forestry in the 2030 climate and energy
framework, and amending Regulation (EU) No 525/2013 and
Decision No 529/2013/EU, OJ L 156, 19.6.2018, p. 1–25
ILUC Directive Directive (EU) 2015/1513 of the European Parliament and of the
Council of 9 September 2015 amending Directive 98/70/EC relating
to the quality of petrol and diesel fuels and amending Directive
2009/28/EC on the promotion of the use of energy from renewable
sources, OJ L 239, 15.9.2015, p. 1–29
NECP National energy and climate plan
TFEU Treaty on the Functioning of the European Union
GO Guarantee of origin, based on article 19 of REDII and defined in
Article 2(12), , is an electronic document which has the sole
function of demonstrating to a final customer that a given share or
quantity of energy was produced from renewable sources
BDS Biodiversity Strategy
ESI Energy System Integration
CCS Carbon Capture and Storage
CCU Carbon Capture and Use
RFNBO Renewable fuel of non-biological origin, according to Article 2(63)
of the Renewable Energy Directive. This includes for instance
renewable hydrogen and hydrogen based synthetic fuels.
FQD Directive 2009/30/EC of the European Parliament and of the
Council of 23 April 2009 amending Directive 98/70/EC as regards
the specification of petrol, diesel and gas-oil and introducing a
mechanism to monitor and reduce greenhouse gas emissions and
amending Council Directive 1999/32/EC as regards the
specification of fuel used by inland waterway vessels and repealing
Directive 93/12/EEC, OJ L 140, 5.6.2009, p. 88–113
4
Governance Regulation Regulation (EU) 2018/1999 of the European Parliament and of the
Council of 11 December 2018 on the Governance of the Energy
Union and Climate Action, amending Regulations (EC) No
663/2009 and (EC) No 715/2009 of the European Parliament and of
the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC,
2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the
European Parliament and of the Council, Council Directives
2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No
525/2013 of the European Parliament and of the Council ,OJ L 328,
21.12.2018, p. 1–77
ETS Emissions Trading System
EED Directive 2012/27/EU of the European Parliament and of the
Council of 25 October 2012 on energy efficiency, amending
Directives 2009/125/EC and 2010/30/EU and repealing Directives
2004/8/EC and 2006/32/EC, OJ L 315, 14.11.2012, p. 1–56
EPBD Directive 2010/31/EU of the European Parliament and of the
Council of 19 May 2010 on the energy performance of buildings
OJ L 153, 18.6.2010, p. 13–35
Union database Database to be established under Article 28 of RED II with the aim
to increase cooperation between national systems tracking
renewable fuels in order to improve the data availability on the EU
level and minimise the risk of fraud and double counting of fuels. It
shall be set up for fuels that are:
 Eligible for being counted towards the target
(specifically the numerator referred to in point (b)
of Article 27(1) – the renewable transport target);
 Suitable for measuring compliance with renewable
energy obligations;
 Eligible for financial support for the consumption of
biofuels, bio-liquids and biomass fuels.
AFID Directive 2014/94/EU of the European Parliament and of the
Council of 22 October 2014 on the deployment of alternative fuels
infrastructure, OJ L 307, 28.10.2014, p. 1–20
Part A advanced biofuels Biofuels for transport made from the feedstocks listed in Part A of
Annex IX to REDII
Part B advanced biofuels Biofuels for transport from the feedstocks listed in Part B of Annex
IX to REDII
RLF Renewable and Low Carbon Fuels
H&C Heating and Cooling
DH District Heating
DHC District Heating and Cooling
4GDH 4th Generation District Heating system is a coherent technological
and institutional concept which by means of smart thermal grids
assists the appropriate development of sustainable energy systems.
FTE Full time equivalent (employment)
5
PPA A contract under which a legal or natural person agrees to purchase
renewable electricity directly from an electricity producer.
Mtoe Million tonnes of oil equivalent
6
1. INTRODUCTION: POLITICAL AND LEGAL CONTEXT
The European Green Deal establishes the objective of becoming climate neutral in 2050 in a manner
that contributes to European competitiveness, growth and jobs. This objective, and the objective of a
55% reduction in GHG emissions by 2030 as confirmed by EU Heads of State and Government in
the European Council in December 2020, requires an energy transition and significantly higher
shares of renewable energy sources in an integrated energy system. The increased use of energy
from renewable sources is crucial to combat climate change, protect our environment and health and
reduce our energy dependency, as well as to contribute to the EU’s technological and industrial
leadership and the creation of jobs and growth.
REDII sets a binding EU target to reach at least a 32% share of renewables in the energy mix in
2030. It moves away from the national binding targets which were set within the 2020 framework to
national contributions to the Union target as set by the Member States in their National Energy and
Climate Plans (“NECPs”). On 17 September 2020, the Commission adopted the 2030 Climate Target
Plan1
(“CTP”), which explores options to achieve a new 2030 climate target of at least 55% GHG
emissions reductions. This target was endorsed both by the European Parliament2
and by the
European Council3
. As stated in the CTP, renewable energy plays a fundamental role in
delivering the European Green Deal4
and for achieving climate neutrality by 2050. The energy
sector contributes over 75% of total GHG emissions in the EU and energy efficiency. Renewable are
therefore central to achieving the higher climate ambition for 2030. According to the CTP, achieving
at least 55% GHG emissions reductions would result in an accelerated clean energy transition and a
greener energy mix, with renewable energy seeing its share reaching 38% to 40% of gross final
energy consumption by 2030.
The acceleration of the ongoing energy transition requires a real paradigm shift and profound
changes in the way how we produce and consume energy. This requires significant investments in
new technologies, materials and fuels. Such profound changes do not happen overnight and the
magnitude of investment is a challenge. To further leverage this step change, investors need certainty
on the direction to go and where to invest. Compared to other “Fit for 55” measures, the revision of
RED can deliver best on specific support measures for new renewable solutions and create certainty
for investors to make the accelerated energy transition happen.
This revision of RED II builds on the CTP and the impact assessment5
that underpins it, as do all the
‘Fit for 55’ initiatives.
Implementing the EGD roadmap, the Commission has adopted several strategies that require a
review of different elements of the EU’s renewable energy policy:
1
COM(2020) 562 final
2
European Parliament resolution of 15 January 2020 on the European Green Deal (2019/2956(RSP))
3
European Council conclusions of 11 December 2020, https://www.consilium.europa.eu/media/47296/1011-12-20-euco-
conclusions-en.pdf
4
COM (2019) 640 final
5
SWD (2020) 176 final
7
 The Energy System Integration Strategy6
and the Hydrogen Strategy7
aim to build an
integrated energy system fit for climate neutrality and to turn hydrogen, especially renewable
hydrogen, into a viable solution to contribute to this vision. Both strategies propose a number
of actions to be addressed through the review of REDII, including promoting the principle of
energy efficiency first, moving towards a more “circular” energy system by reusing waste
heat and biomass wastes and residues, promoting renewable-based electrification in sectors
such as transport, buildings, industry and promoting the use of renewable and low carbon
fuels8
, including hydrogen, for hard-to-decarbonise sectors;
 The Renovation Wave initiative9
, which aims to at least double the current low renovation
rates in the EU and highlights the need to speed up the integration of renewables in buildings
as well as the decarbonisation of heating and cooling;
 The Offshore Renewable Energy Strategy10
, which sets out the scaling up of offshore
renewable energy and its use as an EU priority;
 The EU Biodiversity Strategy11
calls for better protection of and increasing the quantity,
quality and resilience of Europe’s forests, including primary forests. It also includes a
mandate to the Joint Research Centre to carry out a study on use of forest biomass for energy
production and related biodiversity risks, in order to inform the review of REDII12
.
Furthermore, in response to the COVID-19 induced economic crisis effects on the European
economy the Commission adopted an Economic Recovery Package13
to facilitate investments to
accelerate the transition towards a climate neutral economy (amongst other matters). The review of
REDII must been seen in this context as a tool to complement the Recovery Package by helping to
create a legal framework that sets the right incentives for a smooth and cost-effective energy
transition that supports Europe’s recovery and resilience efforts, making Europe a healthier
continent.
The review of REDII does not stand alone. It is part of a broader exercise that affects other energy
and climate legislation and policy initiatives, as announced in the EGD roadmap, and in the
Commission work programme for 202114
under the title “Fit for 55 package”. Therefore, close
coordination is undertaken with the other proposals that are part of the June 2021 ‘Fit for 55’
package (see section 1.2).
1.1. Key aspects of the 2018 Renewable Energy Directive (REDII)
REDII is the main EU instrument dealing with the promotion of energy from renewable sources. It
was adopted in 2018 and has to be fully implemented by Member States on 1 July 2021. A full
review of the Directive is therefore not yet possible, and the Impact Assessment will focus on a
6
COM (2020) 299 final, 10 July 2020
7
COM(2020) 301 final, 10 July 2020
8
RLF include sustainable biofuels and biogas, renewable hydrogen and hydrogen based fuels as well as non-renewable
fuels with low GHG emission intensity
9
COM (2020)662 final
10
COM (2020)741 final
11
COM (2020) 80 final
12
https://publications.jrc.ec.europa.eu/repository/bitstream/JRC122719/jrc-forest-bioenergy-study-2021-final_online.pdf
13
https://ec.europa.eu/info/strategy/recovery-plan-europe_en
14
COM(2020) 690 final
8
targeted review to ensure the implementation of the Climate Target plan and other key Commission
initiatives such as the Energy System Integration Strategy and the Biodiversity Strategy, while
ensuring coherence with the other initiatives under the “Fit for 55” package.
It establishes an EU-level binding renewable energy target for 2030 of at least 32 % to be
collectively delivered by Member States on the basis of voluntary national contributions, calculated
according to an indicative formula included in the Governance Regulation. The national (binding)
2020 targets set in REDI also act as a minimum share of renewables (“baseline”) that Member States
are obliged to maintain after 2020.
REDII also sets an indicative target to increase renewables in the heating and cooling sector by 1.3
percentage point yearly15
. The targets are accompanied by a list of optional measures that Member
States may choose to take and an obligation to, assess the potential of the use of renewables and
waste heat and cold in the heating and cooling sector including District heating and cooling16
.
Member States must introduce appropriate measures in their building codes to increase the level of
renewables in the building sector, in particular requiring minimum levels of renewable energy in new
buildings and those undergoing major renovation. General requirements on basic information
provisions and disconnection rights for consumers in district heating and cooling are also included.
REDII includes a sectorial binding target for transport of 14%, to be met by an obligation on fuel
suppliers. It includes a cap of 7% of food based biofuels and a specific sub-target for advanced
biofuels of 3.5%. Electrification of transport is only incentivised in a residual manner. The use of
renewable energy in certain sectors (road transport, rail transport, maritime and aviation) is only
incentivised through “multipliers”, allowing to account more than the actual energy content
consumed. The consumption of renewable electricity is also incentivised through such multiplier, as
well as that of advanced biofuels. 17
REDII strengthens the EU sustainability framework for bioenergy. It includes enhanced
sustainability criteria covering also biomass/biogas in heat and power, in addition to biofuels/biogas
for transport (as under REDI). REDII includes new biodiversity and climate safeguards for forest
biomass. Also, REDII lays down minimum GHG emission saving thresholds, requiring biomass in
heat and power to emit 70% fewer GHG emissions (on lifecycle basis) compared to fossil fuels
(increasing to -80% in 2026). Minimum energy efficiency requirements for biomass electricity
15
The 1.3 percentage point can be fulfilled by up to 40% with waste heat and cold from district heating and cooling, if a
Member State chooses so. The “pure” renewable heating and cooling target is an indicative 1.1 percentage point annual
average increase, when a Member State chooses not to use waste heat and cold from district heating and cooling.
Member States can justify not meeting the indicative target when due to structural barriers, such as high share of gas,
cooling or disperse settlement structure, this would be too expensive.
16
For District Heating and Cooling, Member States must promote renewables by fulfilling a 1 percentage point annual
average increase in the period of 2021-2030 (which can be up to 100% met with waste heat and cold) or as an alternative,
may implement third party access to district heating networks for renewables, high-efficiency cogeneration and waste
heat/cold suppliers. Third party access is subject to several exceptions, which can be granted for example for systems
meeting the efficient district heating and cooling definition, or systems below 20 MW threshold. Member States with low
district heating penetration below 2% are exempted from these provisions.
17
Including a multiplier of 4 for road transport, a multiplier of 1.5 for rail transport, a multiplier of 1.2 for maritime and
aviation transport, and a multiplier of 2 for biogas and advanced biofuels produced from feedstocks listed in Annex IX
(parts A and B)
9
production have also been introduced. REDII promotes the shift from conventional to advanced
biofuels. Finally, article 3 of the Directive requires that, amongst other, Member States design their
support schemes with due regard with the waste hierarchy, to aim to avoid undue distortions of the
biomass raw material market. These criteria have not yet taken effect, as the deadline for
transposition by Member States is June 2021.
REDII also includes a number of enabling measures aiming to increase the renewable energy
shares in the EU. These measures were calibrated in the Clean Energy for All Package with other
energy, climate, environmental but also consumer legislation. They include the right for renewable
self-consumers and renewable energy communities to generate, store and sell electricity without
being subject to disproportionate procedures and to be fairly remunerated for the electricity they feed
into the grid.
Furthermore, measures to simplify and speed up administrative and permitting procedures to ease the
administrative burden for renewable projects developers. The Directive also includes general
principles for the design of support schemes, in order to provide visibility to both Member States and
investors on their possible design. Schemes are also subject to a voluntary opening to neighbouring
Member States, with a review clause to reassess the possibility of a mandatory opening.
1.2.The Renewable Energy Directive and interactions with the key ‘Fit for 55’
legislation/initiatives and others
In conjunction with the REDII, the current EU climate and energy policy framework already presents
several elements of synergies as shown in the figure below. Specific interlinkages between
legislative instruments are explained in detail and where relevant in Chapters 5 and 6.
Figure 1 - RED II Interactions with other key legislation affecting Renewable Energy
10
The interactions are the strongest with the ETS – especially if extended to sectors of road transport
and buildings. The analysis supporting the CTP shows that carbon pricing works best hand in hand
with regulatory measures, and that this helps avoid “extreme” scenarios of either:
 very high carbon prices that can translate, in the absence of regulatory measures addressing
market failures and barriers, into high energy prices for consumers (representing the highest
burden for vulnerable individual consumers energy intensive industry etc.);
 very stringent energy policy requirements (e.g. very high energy savings or renewables
obligations) that may be rejected by Member States because it would not give them much
flexibility and would be too costly for economic operators struggling to mobilise the
necessary investments and ultimately passing it through to consumers.
The proposed approach is to adjust and review the various complementary policy instruments to
address various and distinct challenges in the pursuit of climate neutrality and European Green Deal
objectives.
The IA is fully aligned with the GHG targets proposed in the Climate Law18
for 2030 and 2050, as
the IA is based on the Climate Target Plans scenarios achieving those two targets. The IA focuses
on how to deliver the necessary level of ambition, mindful of interaction with other instruments, the
governance process and subsidiarity principles. It looks at ways to formulate the sectoral RES
targets, what fuels are eligible to fulfil them, which tools are proposed for Member State choice and
which elements are binding. In addition to delivering the RES levels of ambition as defined in the
CTP, the revision of REDII also assesses certain tools to achieve better energy system integration
(ESI) and ensure that biomass sustainability criteria are fit for purpose.
In order to address the key interactions with legislative instruments mentioned above, scenarios (so-
called “Fit for 55” core scenarios) were modelled to show how all instruments together can deliver
the increased climate target of 55% net GHG reductions. REDII revision is reflected in those
scenarios – please see methodology explained in Chapter 5.
2. PROBLEM DEFINITION
2.1.What are the problems?
REDII was designed and adopted to achieve a share of at least 32% renewable energy in gross final
energy consumption in a cost-effective and sustainable way by 2030, as part of a broader 2030
climate and energy framework, which set a 40% GHG reduction target. However, the EGD and its
follow-up initiatives have increased the ambition of the Union climate and energy policies. This new
ambition can only be achieved with considerably increased volumes of renewable energy in the
system in addition to a strong improvement in energy efficiency. The common economic analysis
underpinning the 2030 Climate Target Plan shows that, in the pathway/scenario focusing on a
combination of carbon pricing and medium intensification of regulatory measures in all sectors of the
economy, the current REDII fails to contribute sufficiently to the increased ambition and new
policies adopted under the EGD in three ways.
18
Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving
climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law)
11
First, the targets and measures set in the Directive are not sufficiently ambitious to achieve the
general and sectoral shares in heating and cooling and transport sectors of renewables the CTP
indicates as cost-effective to achieve an at least 55% of GHG emissions reduction in 2030 and
climate neutrality by 2050.
While in the electricity sector the penetration of renewables has been the fastest, it will need to be
scaled up substantially compared to historic rates of deployment. The key drivers remain the ETS
price, energy taxation and taxonomy as well as further reducing technology costs through further
enabling measures in renewables legislation in the electricity and industry sectors.
Second, the Directive does not properly reflect the measures proposed in the Energy System
Integration and Hydrogen strategies to advance towards a more integrated energy system
where there is, inter alia, a more energy efficient and circular energy system, further renewables-
based electrification and further use of renewable and low-carbon fuels in those sectors where
electrification is not yet a viable option.
These three goals are essential to reach the 2030 ambition in a cost-effective way. This is in
particular valid for sectors that are difficult to de-carbonise such as transport, heating & cooling and
industry.
Furthermore, the current certification system has already shown good results but its scope and
content does not cover new fuels such as innovative renewables of non-biological origin (RFNBOs).
All renewable and low-carbon fuels need robust certification across the life cycle to help achieve of
both energy and climate targets.
Finally, the current REDII sustainability criteria for bioenergy need to be reinforced in a
targeted way in light of the increased climate and biodiversity ambition of the EU Green
Deal19
.
The clean energy transition will result in an overall increasing demand for biomass (particularly after
2030), be it for bioenergy or alternative uses in products, while at the same time the EU land use sink
needs to be maintained and enhanced and EU biodiversity safeguarded. According to the National
Energy and Climate Plans, a majority of Member States plan to increase their use of bioenergy, but in
most cases without assessing the impacts on LULUCF sinks and biodiversity (see Annex 8).
Energy policy is only one among several factors influencing forest management. Nevertheless if an
increased uptake of renewable energy is met through unsustainable forest biomass sourcing, this
19
The Climate Target Plan points to the need to increase the use of sustainably produced biomass to achieve the 2030
and 2050 targets, while minimising the use of whole trees and food and feed-based crops for energy .The Biodiversity
strategy sets the following objectives, amongst others: ‘strictly protecting at least 10% of the EU land area, including all
remaining EU primary and old-growth forests’, and ‘planting at least 3 billion additional trees in the EU by 2030, in full
respect of ecological principles’. Concerning energy, the Strategy states that: The EU will prioritise solutions such as
ocean energy, offshore wind, which also allows for fish stock regeneration, solar-panel farms that provide biodiversity-
friendly soil cover, and sustainable bioenergy’. In this respects it recalls that: ‘The revised Renewable Energy Directive
includes strengthened sustainability criteria and promotes the shift to advanced biofuels based on residues and non-
reusable and non-recyclable waste. This approach should continue for all forms of bioenergy. The use of whole trees and
food and feed crops for energy production – whether produced in the EU or imported – should be minimised’. The
Strategy mandates the JRC to conduct a study on the use of forest bioenergy, including potential risks of unintended
biodiversity and climate impacts, with the view to inform the review of REDII and the LULUCF Regulation.
12
could put further pressure on the forest sink and the biodiversity in forests. A. In addition, the
combustion of biomass in inefficient energy installations can affect air quality objectives. At the
same time, the Climate Target Plan pointed out to the need for increased use of sustainable bioenergy
in order to achieve the 55% target by 2030 and climate neutrality by 2050. It is therefore essential to
ensure that RED II in combination with the LULUCF Regulation and other climate and environment
legislation) further minimises trade-offs and maximises synergies between biomass production and
biodiversity and climate protection.
Stakeholder views
The vast majority of the contributions to the Inception Impact Assessment reflected a positive
attitude towards the increase of the climate ambition set in the European Green Deal and
towards a revision of the Directive. A small number of stakeholders pointed out the negative
impact such an early revision of the Directive could have for the stability of the regulatory
framework and investor certainty. Regarding the question in the OPC ‘Does REDII need to
be modified?’, across all stakeholder groups, the majority agreed that RED II needs to be
modified, and that it needs to be more ambitious as a result of the higher climate ambition in
the European Green Deal and Climate Target Plan. Top of the list for change was targets,
followed by transport, and the number of replies on forest biomass shows the public interest
on the issue of bioenergy sustainability.
2.2.What are the problem drivers?
2.2.1. Insufficiently ambitious targets and measures for renewables deployment in EU
and Member State legislation both in 2030 and 2050 perspective
2.2.1.1. Insufficient ambition to achieve the overall renewable energy target in 2030
As indicated in the latest Renewable Energy Progress Report20
, if Member States meet the national
contributions for renewable energy they have set in their NECPs, the Union is expected to reach a
share of renewables between 33.1% and 33.7% by 203021
that would contribute to -41% GHG
emission reduction thereby overachieving the current 32% RES target set in REDII while being
significantly lower than the necessary 38% to 40% share set out in the CTP to be consistent with the
overall EU target of at least 55% GHG reduction by 2030.
Apart from these identified shortcomings regarding the EU overall renewable energy target, an
assessment per sector also reveals that REDII’s ambition and measures are not sufficient to deliver
the EGD and CTP ambition. Market barriers and lack of incentives, particularly in end-use sectors
such as heating and cooling or transport, hinder further penetration of renewables, either through
electrification, or via the penetration of renewable and low-carbon fuels such as advanced biofuels
and renewable and other sustainable alternative fuels and gases. Further cross –border cooperation
and integrated approach to develop and deploy further renewable technologies like offshore
renewable energy and in industry is still missing. Enhanced and expanded measures, including
20
COM(2020) 952 final
21
COM(2020) 564 final
13
flanking and enabling measures, under RED II could deliver a larger uptake of renewable energy in
the EU.
2.2.1.2. Insufficient ambition for renewables deployment in the heating and cooling
sector
Heating and cooling currently accounts for half of the EU energy consumption. 60% of heating is
consumed in buildings and around 40% in industrial process heating. More than three quarters of
heating is supplied from fossils fuels. 80% of energy demand in residential buildings is driven by
heating and cooling needs, and around 60% in service sector buildings. Many heating systems are
old and inefficient and half are beyond their service lifetime. The replacement of half of the current
heating stock and even more in district heating networks will have to occur in the next 5-8 years. A
clear and ambitious policy framework is essential to ensure that investments for building renovation
are cost-efficient and facilitate replacing fossil fuel boilers with more sustainable alternatives.
The share of renewables in this sector in the EU in 2019 was 22.1%, with only a 5.3 percentage point
increase over the last 10 years22
. In district heating the share of renewables is slightly higher around
28.9% but is mainly attributable to the use of biomass (26.9%), while other renewable heat
technologies (heat pumps, solar and geothermal) amounting to only 2% are used only in a few
innovative networks. In industry, only 9% of the heating requirements are supplied by renewable
energy. In their NECPs, around half of the Member States did not present sufficient trajectories and
measures to fulfil the current indicative heating and cooling target of an 1.1 percentage point (ppt)
average annual increase (or 1.3 ppt if waste heat is used) over the 2021-2030 period, while the other
half indicated the achievement of this target in their plans 23
. Likewise the gradual modernisation and
building of renewable based district heating and cooling systems remained unaddressed by but a
handful of Member States, even where this type of heating has a significant share. Overall the
insufficiency of ambition in planned measures and trajectories signals a significant risk of long-term
carbon lock-in, which will be difficult and expensive to correct if steps are not taken in the period
until 2030. According to the aggregated projected trend in the NECPs, is only enough to reach a 33%
RES share in H&C in 2030, in contrast with the 38-41% estimated necessary in the CTP.
Without a clear policy framework to roll-out renewable heating technologies in buildings and district
heating as the main pillar of decarbonisation, replacement of heating systems will be sporadic and in
many cases be based on uninformed decisions taken under duress in winter break-downs leading to
replacing current fossil systems with the same and leading to fossil lock-in for the next 20-30 years.
The synergies with energy efficiency and especially with building renovations are important to
harness, as well insulated buildings are a pre-condition to replace old heating systems in buildings
with efficient renewable heating or make connection with low-temperature modern district heating
networks possible. As almost 75% of the existing buildings in the EU inefficient, they become a key
barriers for deploying renewables to cover building’s heating needs. Addressing this barrier, requires
a framework amenable to increase the annual heating system replacement rate to at least 4% per
annum as indicated in the Climate Target Plan as an integral part of building renovation. The EU
Renovation Wave therefore sets heating and cooling decarbonisation as one of its key areas for
22
EU 27 RES share in heating and cooling was at 16.79 % in 2009.
23
Assessment of the heating and cooling related chapters of the National Energy and Climate Plans (NECPs), Toleikyte,
A., Carlsson, J., JRC Technical Report, 2020.
14
actions and calls for strengthened heating and cooling targets and minimum levels of renewables to
be part of the REDII review. The accelerated deployment of renewable heating and district heating
via strengthened measures to facilitate heat planning and planned replacement schemes, ensure risk
mitigation and capacity building for consumers and public authorities is critical to scale up projects
and investment and ensure level playing field for an orderly and cost-effective decarbonisation of
heating.
Effective market and regulatory frameworks to guide the transition to the 2030 critical milestones
and towards carbon-neutrality in 2050 are missing in all but a few Member States. With the possible
extension of carbon pricing instruments, non-market barriers such as lack of sufficient capacity for
heat and project planning, lack of information and coordination, lack of skills to enable the switching
to renewables that still exist would need to be overcome for carbon price signals to fully exercise
their impacts while allowing for a fair, effective and cost-efficient achievement of the climate goals,
consistent with the energy and climate policy architecture as a whole. In this regard, multi-level
coordination across the many actors (local, national and EU) is needed and the key building blocks
for success (clear targets and horizontal measures supporting their delivery) are developed but not
sufficiently understood, diffused and applied across the EU. The lack of clear and effective EU
framework jeopardises progress due to the large size of the sector and the high correlation it has with
the overall RES shares.
2.2.1.3. Insufficient ambition for renewables deployment in transport sector
Transport is the only energy sector that has seen an increase in GHG emissions in the past decades,
increasing mobility needs as well has a high reliance on fossil fuels24
being the main drivers. This is
happening despite the technological developments in the sector, where transport means (cars, planes)
are much more energy efficient than some years ago. Furthermore, transport is the end-use sector
where renewable energy is being developed at the slowest pace, with an EU 8.9% share of
renewables in 2019.
REDII replaced the 10% target set in REDI for 2020 by an obligation on fuel suppliers, which must
be designed in a way that allows the Member States to achieve their target of 14% renewables and a
sub-target of 3.5% advanced biofuels by 203025
. The achievement of the target is facilitated by
several multipliers on energy content both for transport sectors and for specific fuels26
. In addition to
technical standards of fuels traded on the EU market, the FQD sets out a 6% target for the reduction
of the greenhouse gas intensity of transport fuels by 2020, but does not set out a dedicated target for
the promotion of innovative fuels. Following the recast of the RED, the sustainability framework in
the FQD is now outdated. For these reasons it is relevant to assess whether elements of the FQD are
still appropriate to avoid them acting as a barrier to the achievement of the revised ambition level of
the RED.
There are two main technology options to reduce this dependency on fossil fuels and decrease the
sector’s GHG emissions: Firstly, penetration of transport electrification and its deep, smart
24
The transport sector depends to 94 % on fossil fuels
25
Including multipliers
26
While renewable fuels consumed in the aviation and maritime sector are counted towards the numerator of the formula
(with a weighting of 1.2) that is applied to determine the share of renewable energy in transport, the consumption of
kerosene and heavy fuel oil is not considered in the denominator, which reduces the ambition level of the target.
15
integration with the energy system for enhanced system flexibility and increased use of renewable
electricity; secondly, in sectors that are more difficult to electrify such as aviation and maritime,
increased use of renewable and low carbon fuels.
As to electricity in transport, in addition to missing price signals, barriers for electrification and its
integration in the energy system are mainly the narrow range of electric vehicle models across all
budgets, and insufficient recharging infrastructure, especially with intelligent or bidirectional
functionality. The conditions for innovative mobility services such as aggregators are not yet in
place, including access to data of vehicles, electricity grid and charging. Different charging
infrastructure types and payment models also complicate the access for consumers to the
infrastructure. Neither consumers, charge point operators, aggregators nor mobility service providers
have access to information on the RES share or carbon intensity of the system in an interoperable
manner. Further, REDII, apart from counting the contribution of renewable electricity towards the
renewable energy target in transport, does not set out any mechanism ensuring that operators of
recharging infrastructure are rewarded for supplying renewable electricity to electric vehicles under
the obligation on fuel suppliers. This fails incentivising investments into recharging infrastructure
and limits the contribution of renewable electricity contribution to the target.
The main market barrier for the use of renewable and low carbon fuels are the higher costs of such
fuels compared to fossil fuels. Higher costs and low technological and commercial maturity limit the
supply potential of innovative renewable fuels such as advanced biofuels and renewable fuels of non-
biological origin (RNFBOs), mainly renewable hydrogen and renewable hydrogen-based synthetic
fuels, which have decarbonisation potential despite their intrinsic energy inefficiency. REDII already
limits the amount of biofuels produced from food and feed crops that can be counted towards the
renewables targets due to their impact on indirect land use change and limited decarbonisation
contribution.
The 2030 CTP Impact Assessment27
shows that with existing policies the transport sector would fall
short in delivering the contribution needed to achieve the economy-wide target of at least 55% GHG
emissions reduction by 2030 and climate neutrality by 2050. The results also show that after 2030 a
further significant scale up of the production of renewable and low carbon fuels is required on the
pathway to achieve climate neutrality. With respect to the level of ambition, the CTP indicates that
for 2030 the share of RES in transport should reach 27-29%28
including a substantial contribution of
advanced biofuels, which is significantly higher than the current 14% target set in REDII for
transport. That assessment further demonstrated the importance of RNFBOs for the achievement
climate neutrality in order to provide a decarbonisation pathway for hard to abate sectors. While
REDII covers these fuels and sets out a framework ensuring that they achieve emission savings, it
does not include specific incentives for their use. Given their early stage of technological
development and high costs, a lack of dedicated incentives may slow down their commercial
deployment, which would endanger the rapid uptake of renewable and low carbon fuels that is
required after 2030. A possible extension of carbon pricing instruments alone would not be sufficient
to drive the development of such fuels, and would create the risk to sustain less sustainable low
27
Impact Assessment accompanying the Communication from the Commission to the European Parliament, the Council,
the European Economic and Social Committee and the Committee of the Regions ‘Stepping up Europe’s 2030 climate
ambition -Investing in a climate-neutral future for the benefit of our people’, SWD(2020) 176 final.
28
Including multipliers as per current methodology
16
carbon and biofuels. Other instruments that are relevant for the promotion of low carbon
technologies such as the ETS are more suitable to promoting the switch to mature low carbon
technologies but cannot provide by themselves the strong investment signal needed to develop new
innovative technologies. Such investment signals could also keep increasing costs for consumers by
carbon taxes and ETS in check.
2.2.2. Insufficient promotion of ESI in REDII29
The current model, where energy supply and consumption for supply for electricity, heating and
cooling, transport, industry, gas and buildings takes place in ‘silos', each with separate value chains,
rules, infrastructure, planning and operations - cannot deliver the increased climate targets in 2030
and climate neutrality by 2050 in a cost-efficient way. The lack of integration of the energy system
results in greater costs, inefficiencies, lost opportunities and a disproportionate burden on the power
sector, which cannot alone deliver the overall decarbonisation effort required at EU level. In the end,
it would lead to higher costs to households and businesses.
Several barriers, not appropriately addressed in REDII, still prevent the emergence of a truly
integrated energy system, in particular (i) the slow rate of electrification of certain end-use sectors,
(ii) the slow uptake of renewable sources in heating and low penetration of renewable and low-
carbon fuels, such as biofuels, biogas, hydrogen and synthetic fuels, in particular in certain transport
applications and in industry, as well as (iii) a still limited contribution to new distributed loads
(electric vehicles, heat pumps) to the system integration of variable renewable electricity.
Smart and renewable use of power is crucial for heating and cooling systems, as well as electric
vehicles, to live up to the European Green Deal objectives aiming to a reduction of 90% of the
transport sector’s GHG emissions by 2050. The fast uptake of electric vehicles (EVs) is expected to
follow exponential tendencies, with an estimate of more than 30 million electric cars by 203030
. The
potential of EVs to absorb further renewable electricity and decrease system GHG emissions has to
be well appreciated and fully utilised through appropriate measures, as stipulated in the Energy
System Integration Strategy.
REDII provides only limited incentives for the electrification of end-use sectors. There are no
specific provisions encouraging the electrification of heating and cooling, apart from the general,
indicative heating and cooling target and the equally indicative and optional district heating and
cooling target (the denominator of which can be reduced through electrification). The transport
obligation is also rather designed to incentivise the uptake of specific fuels, in particular advanced
biofuels, with electricity only incentivised through the use of a “multiplier”.
REDII does not yet include specific provisions aimed at ensuring that distributed assets such as home
batteries and electric vehicles contribute to the system integration of variable renewable electricity.
The Clean Energy package has brought about a significant redesign of electricity markets to ensure
29
The increase of RES in the EU has greatly contributed to increased security of supply by replacing imported fossil
fuels from third countries. This process will continue including with the electrification of transport. However, it will
present its own challenges in terms of resilience of critical infrastructure, hybrid threats and cybersecurity, and the
resilience of RES supply chains. This aspect has not been addressed in detail in this Impact Assessment. DG ENER has
launched a study on “Resilience of the critical supply chains for energy security and clean energy transition during and
after the COVID-19 crisis” which is ongoing
30
COM (2020) 789 Sustainable and Smart Mobility Strategy – putting European transport on track for the future
17
that all forms of flexibility are in principle able to participate in electricity markets, however
regulatory gaps still exist on the specific conditions necessary to ensure a level playing field in the
participation of such small or mobile distributed assets in practice, both individually as well as
through aggregation. The AFID and EPBD also regulate the deployment of EV charging points,
however through fragmented scopes of application. Provisions are missing to ensure coverage at all
types of locations (publicly accessible, private for own use, and private with broad access), as well as
to ensure that the deployed charging points are indeed fit for system integration purposes by offering
smart charging or even vehicle-to-grid functionalities. Specific measures are also necessary to ensure
that integration can be supported by a competitive and innovative services market through a level
playing and enhanced consumer choice.
Regarding certification systems, REDII does enable the tracing of renewable transport fuels and
some low carbon transport fuels. However, this system does not allow a sufficiently clear distinction
between renewable and low-carbon fuels (including hydrogen) on the one hand and more polluting
energy sources on the other hand, and does not allow tracing in the transport/transmission system
from production facilities to consumption centres. Moreover, the two parallel systems for tracking
the consumption of renewable energy under REDII (‘book & claim’ system based on guarantees of
origin and a certification system based on mass balance) do not sufficiently promote further the
integration of the energy system.
2.2.3. Insufficient sustainability criteria safeguards for bioenergy
Today bioenergy represents the largest single source of renewable energy in the EU, making up about
60% of final renewable energy consumption, of which 60% comes from forestry31
.
In order to further inform the review of REDII, the Biodiversity Strategy has mandated the JRC to
conduct a study on the use of woody biomass for energy and its potential climate and environmental
impacts32
. While bioenergy production can have positive climate and biodiversity impacts33
, JRC has
identified a number of potential bioenergy pathways that should be avoided for biodiversity and
climate protection. For example, an excessive removal of harvest residues, or the removal of stumps,
for bioenergy use can harm soil productivity, biodiversity, and water flows. In addition, the
conversion of primary and highly biodiverse forests to plantations, aiming to provide wood for
material and energy use, can be extremely negative for local biodiversity and climate mitigation in
the short-medium term and lead to irreversible damage.
The JRC study has found that a robust and effective implementation of the REDII sustainability
criteria for forest biomass could effectively minimise/avoid several of the identified risks. However,
the study has concluded that additional safeguards are needed to address the existing policy gaps in
the context of future biomass demand increases. More specifically, JRC has recommended the
following two key measures: a) applying the existing no-go areas for agricultural biomass also to
31
Navigant 2020, ‘Technical assistance in realisation of the 5th report on progress of EI renewable energy’.
32
The use of woody biomass for energy production in the EU, EUR 30548 EN, Publications Office of the European
Union, Luxembourg, 2020
33
Impact assessment to the Climate Target Plan (SWD/2020/176 final)
18
forest biomass, in order to avoid the risk of biomass sourcing from primary and highly biodiverse
forests: b) applying the EU sustainability criteria to smaller installations (below the current threshold
of 20 MW) in order to regulate a larger share of biomass use, thus avoiding possible ‘environmental
leakage’ risks.
According to JRC data, the majority of woody biomass for energy use comes from timber residues
and waste produced either from the forest-based industries and post-consumer wood (49%), or from
timber logging (17%). At the same time, 20% of total woody biomass supply comes from stemwood,
of which at least half is from coppice forests. About 4% of total woody biomass use for energy
comes from industrial quality stemwood. This finding highlights the need for Member States to
further promote the cascading use of woody biomass when designing their support schemes for
bioenergy. In this respect, the Biodiversity Strategy has also called for the use of whole tree
harvesting for energy production – whether produced in the EU or imported – to be minimised34
.
Inefficient biomass combustion is also a source of air pollution35
. According to the World Health
Organisation, residential heating with solid fuels (coal or wood) is an important source of particulate
matters and carcinogenic compounds, especially in Central Europe. In particular, biomass
combustion in old and inefficient households and other small installations could compromise local
and regional air quality objectives. While REDII does not include specific air quality criteria for
biomass combustion, it should be noted that air pollution of fuels is effectively addressed through EU
environmental legislation including a number of different measures36
. Under the energy legislation,
the Eco-design Directive has been identified as the most appropriate tool to set stricter emission
requirements for new solid fuel boilers and space heaters, which are applicable since 1 January 2020.
2.3. How will the problem evolve?
REDII is the main Union instrument for the promotion of renewable energy37
. To meet the share of
38% to 40% renewable energy in 2030 set out in the CTP, an increase in renewable energy is needed
as a consequence of the proposal by the Commission endorsed by the European council and
confirmed by co-legislators in the Climate Law, to step up the ambition of the climate target 2030 to
at least -55%. According to the 2020 Renewable Energy Progress Report38
, based on the existing
framework of REDII and analysis of the NECPs submitted by the Member States, projects that the
EU’s renewable energy share will reach between 33.1% and 33.7% in 2030. Leaving the ambition
34
The term “whole-tree harvesting” is used to indicate the practice of cutting the entire above ground portion of a tree
and removing it from the forest, including the main trunk tops and limbs, branches and needles, and sometimes even
stumps and roots.
35
According to an analysis by the European Environment Agency, the increase of use of renewable energy led to a
decrease of SO2 and NOx emissions by 6% and 1% respectively in 2017 compared to a 2005 baseline. In contrast, it led
to an increase of PM2.5 and NMVOC emissions of 13% and 4% respectively, which is estimated to have occurred in all
Member States except one, where the use of biomass has decreased. The EEA explains this relative increase by growing
bioenergy use over the period in the EU. Since, in most cases, biomass is used for domestic heating, the EEA concludes
that this is likely to have led to increases in PM2.5 concentrations.
36
Directive 2004/107/EC aimed at reducing concentrations of pollutants in ambient air, Directive 2008/50/EC on
ambient air quality, Directive 2001/80/EC on Large Combustion Plants and Directive (EU) 2016/2284 on National
Emission Ceilings.
37
CPRICE scenario achieved GHG55 but at very high carbon price imposed on end consumers. This scenario was
largely dismissed.
19
level of the Renewable energy directive unchanged would put additional burden for increased
decarbonisation on other instruments such as the Energy Efficiency Directive as well as other
instruments such as the Emissions Trading System, and the LULUCF and Effort Sharing
Regulations. This could increase economic costs and distributional impacts especially in sectors
included in the ETS. It would also fail to incentivise the market to invest more in renewables and
innovate sufficiently.
In heating and cooling, the low ambition shown by many of the Member States in their NECPs in
relation to the indicative renewable heating and cooling target and the indicative renewable district
heating and cooling target set in REDII would continue. The current target ambition, coupled with no
additional measures to tackle long-entrenched barriers across the whole heating and cooling sector
means there would be slow progress, technology lock-in and lack of engagement from citizens,
consumers and investors to contribute to the decarbonisation of this sector.
In transport, it is clear that several Member States have high ambition for greening road transport,
in particular by looking into policies strongly discouraging the use of cars and vans with internal
combustion engine. Direct electrification with renewable electricity, in conjunction with deep
integration of electric vehicles in the electricity system, are considered to be the main options to
reduce GHG emissions of cars and light duty vehicles. However, there are other transport modes,
such as aviation and maritime but also long-haul transport, which cannot today be easily electrified
and where renewable and low-carbon fuels including renewable hydrogen will be needed to replace
fossil fuels, complementing energy efficiency improvements, modal shift and electrification efforts.
Such innovative fuels will not be sufficiently promoted by other means such as ETS.
Renewables are developing strongly in the power generation sector through lower technology costs
and stable ETS prices, but this is not enough to decarbonise the electricity sector at the pace required
to cut emissions in the EU by 55% by 2030. New market avenues to develop additional renewable
power generation, e.g. through merchant projects or corporate PPAs, are emerging, but still at a
limited scale and in only a few Member States. The use of measures for cross-border cooperation has
been limited in the past. With a view to 2030, very few Member States included concrete plans in
their NECPs to implemented cross-border cooperation projects in the future, and this leads to lost
opportunities. With regard to offshore renewable energy, the sector has shown great progress over
the past years. However, to complement the provisions on grid related planning and cooperation
addressed in the proposal for the revised TEN-E Guidelines, more ambition and increased efforts on
deployment plans, joint projects and regional cooperation on renewable offshore generation are
essential in order to tap the huge potential offered by offshore energy needed by 2030 and beyond
and to do so in a cost-effective way.
As there are no specific requirements on industry to increase the level of renewable energy use
under REDII, it is to be expected that the uptake of renewable energy will continue to stagnate as it
has done over the past decade, and GHG emissions from industry will not decrease.
Regarding buildings, on average, the percentage use of renewables in buildings is 23.5%. Without
new measures to increase the use of renewable energy in buildings generally and to encourage the
move away from oil and coal- boilers, emissions from the buildings sector will be very slow to
decrease.
20
In terms of energy system integration, the further penetration of electricity and other decarbonised
energy carriers such as renewable and low carbon fuels is expected to be moderate and uneven.
Without further action to improve integration of the energy system, the burden of decarbonisation
would continue to fall predominately on the power sector, and the substantial potential for
decarbonisation and increased renewable energy use in end-use sectors, such as buildings, heating
and cooling, transport and industry, would be partly foregone. Regarding the system integration of
variable renewable electricity, the Clean Energy Package has introduced a number of provisions
ensuring that electricity markets are fit for renewables. However, such provisions could be
complemented by more sector-specific measures aimed at reaping the full benefit of distributed
assets, such as heat pumps or electric vehicles and stationary batteries, for the integration of variable
renewables.
In hard-to-decarbonise sectors such as maritime, aviation and industry, the current framework will
offer limited incentives to promote innovative fuels such as RFNBOs and low-carbon fuels by
2030. While REDII sets a target of 3.5% for advanced biofuels in transport, high upfront capital
investment needs and higher costs for RFNBOs and low carbon fuels will not allow them to
penetrate these sectors before 2030 and thus provide the basis for a more significant uptake after
2030. Renewable and low-carbon fuels (including hydrogen) can be promoted most effectively if
they can be easily distinguished from more polluting energy sources. Without a certification system
and the provision of information to the market and policy makers about the environmental and
energy efficiency performance of energy carriers, the promotion of promising energy solutions
would be jeopardised.
REDII extended the EU bioenergy sustainability framework to cover also large-scale use of
biomass and biogas in heat and power and it included new risk-based criteria for forest biomass and
for agriculture biomass. It also includes minimum GHG saving criteria for biofuels for transport and
biomass/biogas in heat and power and minimum efficiency criteria for biomass based electricity
production. In addition, it requires Member States to design their support schemes with due regard
to the waste hierarchy to avoid undue distortions of the raw material market, and not to support waste
to energy in case they have not met the separate sorting obligations under the Waste Framework
Directive. However, these criteria will be effective only from the transposition deadline in June 2021
and there is no information on their effectiveness.
The use of bioenergy is projected to increase moderately between 2020 and 2030 (in some scenarios
biomass consumption is even projected to decrease, mitigating possible conflicts with biodiversity
objectives). Post-2030 sustainable bioenergy is set to gain increasing importance, particulary in the
electricity, transport and industry sectors, with the view to contribute to carbon neutrality goal by
205039
. While the EU sustainability criteria have been reinforced under REDII, they do not fully
address the risks of sourcing forest biomass from primary and highly biodiverse forests (unless they
are protected by national or international competent authorities). In addition, the exemption of
installations equal or above 20MW still leaves a large share of biomass unregulated (25% of
commercial woody biomass plus households use for space heating). Furthermore, thanks to the
Renovation Wave, the replacement rate of inefficient biomass boilers is projected to increase, with
related reduced emissions. Finally, Member States provide important financial support to bioenergy
production. In 2018 the total EU27 biomass support amounted to 10.3 billion EUR, and biogas
21
received 3 billion EUR, and when subsidies could not directly assigned to any of the two (biomass-
biogas), the support amounted to 1.5 billion EUR. Without a reinforced application of the cascading
principle, this national financial flows could lead to undue distortions of the raw material market, and
even divert high quality wood to energy market, with associated negative impacts on resource
efficiency, biodiversity and carbon sinks. The projected reduction of biomass use by households for
local space heating, due to more efficient housing and higher electrification, will result in a reduction
of related air emissions.
3. WHY SHOULD THE EU ACT?
3.1. Legal basis
The proposal is based on Article 194(2) of the Treaty on the Functioning of the European Union
(TFEU), which provides the legal basis for proposing measures to develop new and renewable forms
of energy, one of the goals of the Union’s energy policy, set out in Article 194(1) (c) TFEU. REDII,
which will be amended by this proposal, was also adopted under Article 194(2) TFEU in 2018.
It is an initiative in an area of energy, which is a shared competence between the EU and the Member
States.
3.2. Subsidiarity: Necessity of EU action
A cost-efficient accelerated development of sustainable renewable energy within a more integrated
energy system cannot be sufficiently achieved by Member States alone. An EU approach is needed
to provide the right incentives to Member States with different levels of ambition to accelerate, in a
coordinated way, the energy transition from the traditional fossil fuel based energy system towards a
more integrated and more energy-efficient energy system, based on renewables-based generation.
The CTP establishes that renewables have a key role to play to decarbonise the Union’s economy
and must be substantially increased to respond to the Union’s new climate ambition. Taking into
account the different energy policies and priorities among Member States, action at EU level is more
likely to achieve the required increased deployment of renewables than national or local action alone.
This collective effort is also more likely to succeed in reaching Union climate targets, as can be seen
by the 2020 renewable energy target, with some Member States likely to deliver below their national
contribution but others above, so that in total the contributions exceed the Union target.
The EU common framework and targets leave discretion for Member States to set concrete policies
and actions that contribute to the national contributions and EU targets while respecting their right to
decide their energy mix.
3.3. Subsidiarity: Added value of EU action
EU action on renewable energy brings added value because it is more efficient and effective than
individual Member States’ actions, avoiding a fragmented approach by addressing the transition of
the European energy system in a coordinated way, ensuring net reduction of greenhouse gas
emissions and pollution, protecting biodiversity, harnessing the benefits of the internal market, fully
exploiting the advantages of economies of scale and technological cooperation in Europe, and giving
investors certainty in an EU-wide regulatory framework.
22
In its Conclusions of 10 and 11 December 2020, the European Council endorsed a binding EU target
of a net domestic reduction of at least 55% in greenhouse gas emissions by 2030 compared to 1990.
The analysis in the CTP indicated that the least cost pathway to achieve greenhouse gas reduction
targets in 2030 is for the renewable energy share to increase. A revised EU-wide energy and climate
framework for renewable energy in 2030 will also help to steer Member States energy policies to
achieve a sustainable, secure and integrated energy system for European citizens. The increase of
renewable energy across the EU benefits from coordination at the EU level given the EU’s single
market. An increase in the 2030 target for the EU’s Renewable energy share will impact all sectors
and has a much greater chance of leading to the necessary transformation, acting as a strong driver
for a cost-efficient change and resilient to external shocks.
This impact assessment looks at how to increase the share of renewable energy in different sectors by
2030 to contribute effectively to the goal of GHG emissions. The analysis of the Member States’
NECPs is fully taken into account. Where targets are considered, this is because having ambitious
Union targets will also drive ambitious contributions from the Member States. Collective
achievement of the Union target will be facilitated by the measures set out in this assessment, which
will give Member States the tools and the flexibility necessary to increase the share of renewable
energy in their overall consumption. By acting at EU-level in combination with action at Member
State level, several barriers to public and private investments can be tackled and this will effectively
supplement and reinforce national and local action. Addressing the lack of coordination between
various bodies at national level as well as improving administrative and technical capacity will
incentivise cost-optimal deployment of renewables at city and community level, where issues such as
heating, cooling and hot water use remain key and are not decarbonising rapidly enough with more
details under the assessment of the measures (Section 6.2.1.3).
The role of Member States is crucial to achieve the increased overall EU GHG ambition and putting
in place measures at Union level aims to focus action at nation level where it can be most effective,
taking into account the very varied situations on in Member States. This is fully in line with Article
194(2) of the Treaty on the Functioning of the European Union, which states that the Union policy
on energy shall aim, in a spirit of solidarity between Member States, to promote the development of
new and renewable forms of energy. Simply setting targets at EU levels and leaving Member States
complete freedom as to how to achieve them would however not be an effective way to achieve the
agreed targets, as has been recognised by the co-legislators when they agreed the specific measures
in the current REDII and the reporting and governance structure set out in Regulation 2018/1999. It
also risks causing distortions to the internal market, and would lead to a less effective preservation
and improvement of the environment, one of the specific aims of Article 194 TFEU.
Important national prerogatives such as the Member State's right to determine the conditions for
exploiting their energy resources, their choice between different energy technologies and the general
structure of their energy supply, remain fully untouched. The balance between obligations and the
flexibility left to the Member States on how to achieve the objectives is considered appropriate given
the imperative of achieving, ultimately, climate neutrality.
In terms of consistency with the Charter for fundamental rights, the overarching aim of this review is
to increase the use of renewable energy and reduce GHG emissions, and this is entirely in line with
Article 37 of the Charter under which a high level of environmental protection and the improvement
of the quality of the environment must be integrated into the policies of the Union and ensured in
accordance with the principle of sustainable development.
23
4. OBJECTIVES: WHAT IS TO BE ACHIEVED?
4.1. General objectives
The general objective of this initiative is to ensure that the revised REDII is fit to contribute to the
achievement of at least 55% of GHG emissions reduction in 2030 and to do so in a cost-effective and
sustainable way. This needs to be done in complementarity with the other initiatives of the “Fit for
55” package and consistently with other EGD objectives and initiatives.
4.2. Specific objectives
The initiative will contribute to the achievement of the general objective by pursuing the following
specific three objectives:
 To increase sufficiently the renewables share in final energy consumption. This will
ensure that the overall and sectoral deployment of renewable energy in 2030 is in line with
the CTP findings, thus contributing cost-effectively to the increased 2030 climate target of at
least 55% as well as climate neutrality objective in 2050 (which requires the large scale
rollout of innovative technologies including RFNBOs and advanced biofuels after 2030).
For this objective, regulatory and non-regulatory options will be explored on the following
topics: overall target, heating and cooling, including buildings, transport, accompanied by
flanking and enabling measures in electricity and industry.
 To increase energy system integration by promoting electrification based on renewable
electricity, to create a level playing field for all innovative renewable and low carbon
fuels and to specifically promote innovative renewable fuels (such as hydrogen and its
derivatives produced from renewable electricity). This will ensure that the increase in the
RES share in final energy consumption is cost-effective by promoting ESI in line with the
CTP and the ESI strategy and that innovative fuels are promoted strongly considering that
they are indispensable for carbon neutrality.
For this objective, regulatory and non-regulatory options will be explored on the following
topics: promotion of renewables-based electrification, measures to improve the system
integration of renewables, and definition, certification of all innovative renewable and low
carbon fuels and promotion of innovative renewable fuels.
 To ensure that renewables, in particular produced from forest biomass, are sustainable.
This will ensure that forest biomass consumed in the EU is produced sustainably, including
by minimising the risk of significant negative environmental and climate impacts, in line with
the ambition set in the EGD and the BDS.
24
4.3. Intervention logic
The figure below visualizes the intervention logic, linking the problem, problem drivers, specific
objectives and general objectives. The policy options described in section 5 are defined to address
these objectives.
Figure 2: Intervention logic
5. WHAT ARE THE AVAILABLE POLICY OPTIONS?
5.1.Baseline
The baseline for this initiative is the recast of REDII as described in Section 1.1
The EU Reference Scenario 2020 (REF) and its Member States specific results reflect
implementation of REDII recast. REF is the baseline in the impact assessments for all the
initiatives of the “Fit for 55” Package40
, including in this one. Complete information about
40
Regardless of timing of specific initiatives – please see also Annex 4 explaining how “Fit for 55” initiatives are
captured in the core scenarios.
25
preparation process, assumptions and results are included in the Reference scenario publication41
.
The most relevant information for this assessment is also presented in Annex 4.
REF reflects the agreed 2030 EU climate and energy targets: at least 40% GHG reduction, at least
32% renewables share and at least 32.5% energy efficiency (energy efficiency target is, however, not
achieved – see below). REF also reflects main policy tools at EU level to implement these targets
and, to the extent possible, the complete range of foreseen of bottom up national policies and
measures of the final NECPs that Member States submitted in 2019/2020 according to the
Governance Regulation42
. The REF also takes into account the energy system impacts of the
COVID-19 crisis that already heavily impacted the EU and Member States’ economies in
2020/202143
.
For 2030, REF projects for the EU a 33.2% share of renewable energy in gross final energy
consumption44
. It also projects that final energy consumption is 883 Mtoe, which is 29.6% below the
2007 Baseline and thus an ambition gap to the agreed 2030 energy efficiency target of at least
32.5%. For the ESR, an overall reduction of emissions of 30.7% by 2030 as compared to 2005 is
projected. These projections are in line45
with the Commission’s assessment of final NECPs46
.
Taking into account the national contributions and policies put forward in the final NECPs, the REF
scenario achieves 33.2% renewable energy share in 2030, and thus overachieves the current EU 32%
renewable energy target. All sectoral shares show growth in renewable energy deployment compared
to historical levels, which reflects the ambitious policies of the Member States. Those policies and
the resulting renewables deployment are, however, not sufficient for achieving the level of ambition
commensurate with the increased climate target (38-40% according to CTP). Naturally, also all
sectoral shares are below the levels projected in the CTP scenarios - as illustrated in the table below.
Table 1 - Overview projected sector shares; Source ESTAT, PRIMES
Total RES share RES-E RES-H&C RES-T
2005 10% 16% 12% 2%
2015 18% 30% 20% 7%
2030 REF 33% 59% 33% 21%
2030 CTP : ranges for 55% GHG scenarios 38-40% 64-67% 39-42% 22-26%
41
REF reference COM/2021/X
42
Regulation (EU) 2018/1999
43
The REF incorporates in much more detail (than the CTP Baseline) Member States’ policies and objectives as put
forward in their NECPs and makes assumptions on the impact of the COVID crisis linked to most recent macro-
economic forecasts. Concerning renewables deployment, the most salient feature is the increased Member States’
ambition in terms of renewables deployment in transport. Increased consumption in the buildings sector in 2020 (due to
COVID-19) should also to be noticed as it has an impact on RES H&C shares (i.e. lowering them).
44
The gross final energy consumption is the energy used by end-consumers (final energy consumption) plus grid losses
and self-consumption of power plants. This indicator is calculated on the basis of Directive 2009/28/EC on the promotion
of the use of energy from renewable sources.
45
Primary energy consumption reduction projections in REF (32.7%) are, however, close to the agreed target for 2030.
This is not in line with the Commission’s assessment that indicates that the gap in final energy consumption is mirrored
by the gap in primary energy consumption. The REF projections, however, capture the latest evolutions in the power
generation, notably coal phase-out (not fully reflected in the NECPs) and the latest technology outlook for renewables in
power generation (notably smaller role of biomass).
46
COM/2020/564 final
26
2030 RED IA: core scenarios ranges for 55% GHG scenarios 38-40% 65-66% 36-41% 27-29%
While not all trends can be captured in energy system modelling, the REF shows the impacts of
several trends described in section 2.3 above.
According to REF, GHG emissions from the European Union in 2030 (incl. intra EU aviation and
maritime and incl. LULUCF) would be 45% below the 1990 level. An EU allowance price of 30
EUR/tCO2eq. in 203047
, national policies and lowering costs of renewable technologies would drive
the emissions reduction in the ETS sector.
REF models the impacts of targets and policies already adopted, but not the target of net-zero
emissions by 2050. As a result, there are no additional policies driving decarbonisation after 2030.
However, climate and energy policies will likely not be rolled back after 2030 and several of the
measures in place today will continue to deliver emissions reduction in the long term. By 2050, some
60% GHG reductions (with regards to 1990) are projected to be achieved.
5.2. Scope of this initiative and alignment with the Climate Target Plan
All “Fit for 55” initiatives, including this one build on the CTP and its underpinning impact
assessment, but they also expands CTP analysis looking more in detail of actions in different sectors
and creation of necessary enabling conditions. The CTP showed, on the basis of scenarios, that
achievement of increased climate target of at least 55% net GHG emissions reduction in 2030 is
feasible and enables a smoother trajectory to climate neutrality in 2050 but it requires that all sectors
contribute to the increased effort.
With the energy sector contributing currently to just over 75% of GHG emissions, the clean energy
transition in the current decade plays a central role. This transition has to accelerate significantly
compared to scenarios leading to the previously agreed climate target (of at least 40% GHG
reduction in 2030). They key finding from CTP modelling was that achieving in the cost-efficient
manner the 55% GHG target in 2030 would mean a share of renewables in final energy
consumption of 38%-40% in 2030. A significant additional uptake of energy efficiency will also be
necessary. CTP assessment indicated that achieving 55% GHG reductions in 2030 requires savings
of 36-37% of the final energy and savings of 39-40% of the primary energy. Likewise, the CTP
established the desired reductions in the GHG emissions in the current ETS and ESR sectors.more
details are included in Annex 5.
Consequently, the scope of this initiative is to deliver, together with other “Fit for 55” proposals, the
necessary and cost-effective deployment of renewables (via increasing the targets and addressing the
market failures/non-market barriers) to contribute achievement of increased climate target.
The updated core scenarios confirmed that the range for renewables deployment in order to reach
55% GHG target cost-effectively is 38-40%. Several other “Fit for 55” proposals affect the scope of
this initiative, notably extension of carbon pricing. This fundamental interaction is portrayed by core
scenario set-up discussion on the core scenario results interpretation in section 5.5. Other interactions
and key findings of the CTP and how these findings were fine-tuned based on the “Fit for 55” IA
work are discussed in Annex 4.
47
In June 2021, the ETS price is around 50 EUR/tCO2eq.
27
The updated core scenarios have an important role in this assessment as the policy options on the
level of targets (overall, sectoral) are aligned with core scenario findings (while considering also
options proposed by stakeholders). In addition, a number of policy options concerns how these
options can be delivered - i.e. the ways to establish targets or enabling conditions for their
achievement.
Policy options such as the ones revolving around advanced biofuels and RFNBOs are based on a
dedicated variant (MIX-H2) coherent with other “Fit for 55” policy options, still lead to 55% GHG
target but are in line with the goals of the Hydrogen Strategy in order to provide a stronger push to
mainstream such fuels (see section 5.3).
5.3.Description of the policy options
Based on existing studies, on the inputs from stakeholders and on internal analysis, a range of policy
options and measures for each policy area were screened to respond to the problems identified in the
problem definition.
A set of policy options and measures under each policy area including non-legislative and legislative
alternatives are considered below in order to address the drivers of the problems identified above.
The concrete figures supporting the policy options are assessed in detail in Chapter 6. A ‘snapshot’
of stakeholders’ views is included for each set of options48
, with further details in the text and a
comprehensive overview in Annex 2.
How policy options are structured
Policy options are structured into four main areas. The three first areas are directly linked with the
specific objectives of the initiative and thus are deemed crucial to achieve those. The fourth area
contains flanking and enabling measures that are supportive of those objectives.
Core policy options
1. Options linked to the insufficient ambition of existing legislation to reach climate
neutrality. This includes options about the overall target, heating and cooling, including
buildings, and transport.
2. Options linked to the need to increase energy system integration. This includes options to
promote electrification and the certification and promotion of innovative fuels.
3. Options linked to ensure the bioenergy sustainability.
Flanking and enabling measures
4. In addition, to the specific objectives of the revision of this Directive, a limited number of
additional flanking or enabling measures could contribute to the cost-efficient deployment
of renewables. This includes measures to foster regional cooperation, offshore renewables
deployment and the uptake of renewable energy in industry that would complement also
carbon price instruments while further reducing technology costs.
48
Where results of the Open Public Consultation are given as percentages, this refers to the replies given to individual
questions and not to percentage of the total number of replies.
28
5.3.1. Area I: Insufficient ambition in EU and MS legislation both in 2030 and 2050
perspective
5.3.1.1. Options to increase and ensure the achievement of the overall renewable
energy target in 2030
As shown in the REF scenario both the current EU renewable energy target (at least 32% by 2030)
and the aggregated ambition of the Member States (between 33.1% and 33.7% by 203049
) are not
ambitious enough compared to the level of renewable energy shares needed to reach the -55%
reduction of GHG emissions included in the CTP50 51
and agreed by EU leaders. This is problematic
as without sufficiently high ambition levels, it is less likely that the share of renewable energy will
increase at the rate required for reaching the GHG reduction target in a cost-effective manner.
Options considered are:
Level of the target
 Option 0: No change to the target i.e. keep at least 32 % (baseline scenario).
 Option 1: A minimum target in the range of 38-40%
 Option 2: A higher target than 40%
Nature of the target
 Option 0: No change to the nature of the target and EU target which is fulfilled by national
contributions, i.e. EU binding target and national voluntary contributions
 Option 1: National binding targets in addition to the EU binding target
Stakeholders’ opinions
In the OPC, a majority of respondents favoured a target of at least 38-40% (43% of respondents) or
higher (37% of respondents). All respondents expressed a very strong preference (71% or higher) for
the target being binding at both EU and national level. 22% of respondents believe that the target
should be binding only at EU level. All 11 Member States responding to the consultation52
were in
favour of at least increasing the target in line with the CTP (if not beyond 40%). Regarding the
binding nature of the target, most MS opted for the target to be binding at least at EU level -if not at
both EU and national levels, while only two MS responding to the OPC opted against the target
being binding at either level.
49
Based on the assessment of the National Energy and Climate Plans: COM (2020) 564 final.
50
RES Shares need to reach 38-40% in 2030: https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52020DC0562&from=EN.
51
EU Leaders Council conclusions: https://www.consilium.europa.eu/en/meetings/european-council/2020/12/10-11/.
52
Plus one Member State responding separately
29
5.3.1.2. Options to increase renewable energy in the heating and cooling sector
(RES-H&C)
For the H&C sector to contribute effectively to the overall RES Share levels indicated the CTP ,
Member States’ efforts in this sector should be increased53
. Heating and cooling are local and diverse
across Member States. leading to highly fragmented industry and stakeholder structure, which
constitutes a barrier for sharing knowledge and have access to a common framework of measures
and tools (regulatory, financial, etc.), which could facilitate actions at national and local levels. EU
framework in this sector is recent and incipient leading to limited EU value added and capacity to
harness synergies from shared knowledge and capacity building, common regulatory framework and
investment risk mitigation instruments. Clearer overarching EU objectives and more comprehensive
list of measures and instruments are needed to support and guide national efforts in Member States
by public authorities, citizens and businesses and scale-up the capacity of the heating and cooling
industry to supply technologies and solutions. An expanded and comprehensive list of measures
would diffuse best practices and would provide a list of policy instruments to guide national efforts
while aiming to address non-market barriers, complementary with carbon pricing instruments, while
ensuring effectiveness, cost efficiency in a balanced manner.
The options aim to ensure that renewable energy supply (sources, technologies and infrastructures) is
sufficiently available and deployed, including via district heating and cooling, and that buildings
becomes fit for the integration of renewables to gradually replace fossil based heating and cooling
systems in line with the CTP and the Renovation Wave. When it comes to Industry, the pace of RES
uptake is clearly insufficient to contribute adequately to an increased 2030 climate target in line with
the CTP. Furthermore, early investments are needed to adapt production processes, e.g. through
electrification, to the availability of different renewable energy carriers. Introducing more specific
provisions covering the use of renewables in industry could help accelerate the cost-efficient uptake
of RES in industry.
To overcome non market barriers from the fragmented nature and the limited capacity to tap on
common instruments of the heating and cooling sector, the proposed options revolve around two core
issues:
(1) Measures to address non market barriers in the area of heating and cooling for further fuel
switching to renewables, coherent with carbon price mechanisms and energy efficiency measures
that would complement the current list of measures in Article 23(4) which also, for example, cover
buildings.
(2) Assessing the level and nature of RES H&C targets, including renewable energy in buildings and
industry,54
that lead to the necessary deployment of renewables in the H&C sector, contributing to
overall 2030 national RES contributions and thus fulfilment of overall RES target.
Options considered are:
53
NECPs showed only a modest 0.9% point increase
54
Article 23 of REDII includes an indicative average increase for the 2020-2030 period for all MS specifically for the
whole H&C sector. There is no inclusion of an EU level RES H&C target or targets for buildings or industry
30
Option 0: No changes, maintain current indicative 1.1%-point average increase in
renewables at Member State level under REDII and the list of measures (baseline)
 Option 1: Non-regulatory measures - Guidance and Best Practice Exchange
This option involves the use of non-regulatory measures alone to support the full implementation
of REDII provisions. These activities would take the form of Guidance and Best Practice
Exchange without using legally binding measures. These could help to address those weaknesses
that were identified during the assessment of the NECPs and in discussions with Member States,
mainly using the forum of the Concerted Action to prepare the implementation of RED II55
.
These could cover the following areas: RES heating and cooling share accounting; interpretation
of relevant definitions and provisions (e.g. in relation to waste heat, ambient energy); guidance
on possible measures, renewable cooling following the adoption of the delegated act on
calculation methodology foreseen for 31 of December 2021 and also specific guidance on the
current measures in Article 23(4)In terms of H&C shares, the existing indicative increase target
in REDII would continue to apply unchanged.
 Option 2: Regulatory Measures - Extend the current list of measures of Article 23(4) in
REDII
Clarify and complement the current list of measures to ensure the availability of a core set of
generally applicable instruments at EU level, as common buildings blocks of common relevance,
applicability and replicability for heating and cooling decarbonisation. The extended list of
measures will provide the missing common EU framework to ensure level playing field and
enhance regulatory certainty. The list of measures an extended list of measures to cover capacity
building, risk mitigation, heat purchase agreements, planned replacement schemes, renewable
heat planning and updated training and qualification requirements for installers that Member
States can use to implement the overall heating and cooling RES target. (See Annex 7 for detail
of measures);
This option aims to overcome non-market barriers and complement carbon price signals by
ensuring better coordination and planning, increasing capacity for heat system replacement and
project development, ensuring accurate and sufficient information for informed decision making,
reducing risks of investment and ensuring engagement of local authorities and consumers. Lack
of such measures would necessitate much higher carbon prices signals, would delay the
translation of carbon pricing into concrete consumer investment decision and increase cost
burden for consumers, in particular low-income households and vulnerable consumers.
 Option 3: Level and nature of the targets
o Option 3a) make the current 1.1%-point average increase at Member State level as a
minimum baseline complemented by an indicative Member State-specific top-up
based on the EU’s RES H&C share as carried out in dedicated modelling work for
this impact assessment in agreement with CTP analysis.
o Option 3b) make an annual average increase binding at Member State level translated
based on the EU’s RES H&C share as carried out in dedicated modelling work for
55
Concerted Actions of the Renewable Energy Directive: CA-RES. The CA-RES usually holds two sessions per year.
31
this impact assessment in agreement with CTP analysis to reach the overall RES 38-
40% shares..
o Option 3c) a binding EU target for RES heating and cooling only
o Option 3d) (Indicative) EU RES benchmarks of 49% for the EU building stock (a
general numerical level of minimum RES use in national building stocks as a
percentage of the overall energy use) and for renewable energy consumption of 1.1%
yearly average over the 2020-2030 period in industry to monitor progress and efforts.
This set of options involves possibilities to strengthen the current target. Option 3a) makes
the current target mandatory, while also adjusting its design to higher ambition in a way that
reflects national circumstances in a proportionate way (indicative top-ups). Options 3b)
increases the current target in a uniform way and makes it binding for all Member States.
Option 3c) introduces a new design in the form of an overall EU target. Options 3a), 3b) and
3c) present different mutually exclusive design options. Options 3d) is complementary with
3a), 3b) and 3c) and can be applied to reinforce these other options.
Stakeholders’ opinions
Overall RES heating and cooling targets:
In the replies to the Roadmap, most stakeholders asked for a stronger H&C target of at least 50%
share of RES by 2030 and called for a higher annual RES-H&C target of 3,1%. Stakeholders also
called for making the H&C target in Article 23 binding. Several gas industry stakeholders called for
quotas for renewable gas and renewable hydrogen and the inclusion of these new innovative
renewable fuels in the accounting for the RES H&C sub-target.
Heating and cooling was the second most popular sector (after transport) for additional efforts to
increase the share of the renewable energy according to the replies to the OPC.
When it comes to the MS’ answers to the OPC, most of them opted against both increasing the target
and making it binding.
RES in buildings:
In the replies to the Roadmap there was a strong call to increase the share of RES in buildings, and
some stakeholders suggested specific targets (e.g. 50% of RES share in buildings, ensuring that 40%
of heating is provided by heat pumps in 2030 and 70% in 2050).
78% of those replying to the OPC, in particular environmental organisations (87%) and NGOs
(82%), expressed the view that there should be a minimum percentage of renewables in new and
renovated buildings.
5.3.1.3. Options to increase renewable energy in the district heating and cooling
sector (RES-DH&C)
Examples of modern renewable-based efficient district heating and cooling (DHC) demonstrated
cost-effective solutions for high renewable energy integration, increased energy efficiency and
32
energy system integration56
. However, while the potentials have been demonstrated in scientific
studies57
and by numerous examples, such examples remain few and far between. The current
provisions under REDII require Member States to endeavour to increase the share of renewables by
an annual average 1%-point
(100% of this target can be fulfilled by waste heat and cold), or implement network access for
renewables, waste heat and cogeneration. These provisions, weak as they are, include several
exemptions allowing Member States to do nothing even where their systems are old, mostly based on
fossil fuels (for example coal still has a significant share) and subject to consumer dissatisfaction in
several Member States, where DHC has significant market share (14%-50% in Northern, Central and
Eastern Europe, and above 50-80% in certain cities)58
.
The NECPs analysis has shown a general lack of measures and trajectories to address DHC in line
with the REDII. For example only three MS provided targets and trajectories for renewables in
DHC59
, while the role of these networks is significant or increasing in all but a few countries60
.
The current provisions make it possible for ‘de-facto’ 100% fossil systems to continue indefinitely in
the future, while other segments of the heating sector (e.g. individual heating technologies and fuels)
are becoming subject to increasingly stricter requirements to decarbonise, even when their potentials
are weaker, more expensive and remote in the future. The lack of EU action in this sector would
allow business-as-usual to continue with ensuing lock-in-effects, wasted cost-effective possibilities
to harness (especially local) renewable sources (ambient, geothermal energy via heat pumps or
bespoken technologies, solar thermal, cheap waste based bioenergy or waste heat, etc.). Similarly the
demonstrated energy system integration potential of DHC61
would not materialise by lack of a clear
EU framework guiding local actors and encouraging their efforts to link district heating networks
with renewable electricity, waste heat and renewable gases deployment. Consumer information as
regards the climate performance of these systems should in parallel be improved to ensure level
playing field, greater transparency and fair competition with alternatives. The proposed measures are
necessary to ensure that the next inevitable and imminent investment cycle in district heating is not
wasted and directed towards future proof solutions when replace the current old and obsolete heat
generation units (around two thirds of the generation assets).
56
Integrating renewable and waste heat and cold sources into district heating and cooling systems. Case studies analysis,
replicable key success factors and potential policy implications. Study performed by Tilia for JRC, 2021., see also
Enabling Positive Energy Districts across Europe: energy efficiency couples renewable energy, JRC, Shnapp, S., Paci,
D., Bertoldi, P., 2020.
57
See for example: Towards a decarbonised heating and cooling sector in Europe. Unlocking the potential of energy
efficiency and district energy, Aalborg University, Denmark, November 2019. See also the results of EU supported
projects, e.g. Hotmaps (Aalborg and alia), RELaTED, WEDISTRICT, CELSIUS projects, etc.
58
Overview of District Heating and Cooling markets and Regulatory Frameworks under the Revised Renewable Energy
Directive, ENER/C1/2018-496, ongoing.
59
Assessment of Heating and Cooling Related Chapters of the National Energy and Climate Plans, JRC, Toleikyte, A.,
Carlsson, J, 2020.
60
District heating is already significant in Northern, Central- and Eastern Europe and the Baltic States; it is being
increasingly deployed in Western Europe. District heating has also important potentials in the Northern part of Southern
MS, while district cooling have the potential to relieve pressure stemming from increasing cooling needs in Southern
Europe and the warmer regions of other European countries, including the Nordics. Only Malta and Cyprus does not
have any DHC in their territories.
61
Interaction of District Heating with the Electricity System, Provision of Balancing Services, JRC, Jiménez-Navarro,
J.P., Boldrini, A., Kavvadias, K., Carlsson, J, 2021. Heat Roadmap Europe
33
The current measures should be aligned with the higher ambition and decarbonisation policies laid
down in the European Green Deal, the ESI and the Hydrogen Strategies and the Renovation Wave.
In particular, the ESI Strategy calls to accelerate investment in smart, highly-efficient, renewables-
based district heating and cooling networks, if appropriate by proposing stronger obligations through
the revision of REDII and the Energy Efficiency Directive. The Renovation Wave highlighted the
role of district approaches to building renovation creating new business opportunities and reducing
overall costs. District approaches where the simultaneous deployment of modern district heating and
cooling systems offer cost-saving synergies with building renovation by allowing the scaling and
aggregating projects making zero-energy or even positive energy districts possible through modern
district heating and cooling systems with large potential for renewables and waste-heat recovery.
The EED review complements the REDII review by revising the definition for efficient district
heating and cooling. This definition should be updated to CTP and EGD goals to make exemptions
from the annual average target, network access and disconnection justifiable. The ambition level
should be raised to give clear signals for investment decisions even if the target remains indicative to
allow sufficient flexibility to cater to specific national conditions. The coordinated review of the
EED and REDII aims to increase complementarities and synergies between renewables and energy
efficiency in developing modern renewable DHC by enhancing the EED focus on primary energy
savings and REDII focus on renewables in DHC; renewables thus can contribute to energy savings,
while higher requirements for efficiency enable renewables and make them cheaper to implement.
Thus the same renewables in DHC help achieving the renewable heating and cooling, district heating
and cooling and overall renewable targets, while also contributing to the energy efficiency targets.
Options, in conjunction with the revision of the EED and the EPBD, are:
 Option 0: No changes, maintain current policies under REDII (baseline scenario);
The baseline scenario assumes continued implementation of the existing framework without changes
to the REDII. Enforcement takes place through established methods - the annual monitoring of
Member States' performance under the Governance Regulation, continuous dialogue with Member
States under the Concerted Action, if needed supported by further Commission recommendations to
Member States, and infringement proceedings where relevant.
 Option 1: Non-Regulatory Measures - Guidance and Best Practice Exchange covering
provisions that are either new or high-level making room for diverging interpretation and
implementation by Member States. Such Guidance and Best Practice Exchange could cover
clarification of the following provisions: ‘efficient district heating and cooling’; DHC target
accounting; information provisions for consumers; network access and exemptions; sector
integration between district heating systems and the electricity grid. Option 1 could in addition
cover best practice exchange on areas identified by Member States, such as support schemes and
financing, waste heat and renewables connection, links with buildings, flexibility and sector
integration or any other element of the current framework.
This option would help address the weaknesses identified during the assessment of NECPs and the
discussions with Member States preparing the implementation of RED II62
. It would cover the
62
In the context of the Concerted Actions of the Renewable Energy Directive.
34
following areas: RES DHC share accounting; interpretation of relevant definitions and provisions
(e.g. in relation to waste heat and ‘efficient district heating and cooling’); guidance on the role of
district heating in energy system integration; renewable district cooling following the adoption of the
delegated act on calculation methodology.
 Option 2: Strengthening existing measures on improved information for consumers,
strengthened rights of renewable heat suppliers to access networks, improved and extended
ESI with other energy carriers and networks.
As exemption from access rights and other measures (disconnection, target) are based on the
definition of efficient district heating and cooling, this definition also needs to be revised to
align it with the European Green Deal. The review of the definition is undertaken jointly by
the EED and REDII reviews, as both directives use the same definition. The shared definition
and its joint review ensure coherence and synergy between the two directives.
This option aims to improve the REDII current framework for the development of modern DHC
systems and ensure their greater contribution to heating and cooling decarbonisation in alignment
with EGD/CTP and the options on H&C. It complements the EED and ensures better synergies
between EED and REDII.
 Option 3: Level and nature of the target
o Option 3a) No changes; maintain current indicative 1% point average increase at
Member State level
o Option 3b) add indicative EU renewable target for renewables’ share in DHC;
o Option 3c) increase the indicative 1%-point increase target;
o Option 3d) increase the 1%-point increase target and make it binding;
This option involves possibilities to strengthen the current target. Option 3a) keeps the status-quo.
Option 3b) introduces a new design in the form of an overall EU target. Option 3c) increases the
current target but leaves it indicative. Option 3d) increases the current target and makes it binding.
Options 3a)-3d) are mutually exclusive.
Stakeholders’ opinions
Most respondents in the Open Public Consultation indicated that the use of waste and renewable heat
(94% of the respondents of who 50% rated it as very appropriate and 44% as appropriate) and
increased energy efficiency (93% of the respondents of who 64% rated it as very appropriate and
29% as appropriate) is believed to be (very) appropriate for increasing the uptake of renewable
energy in district heating and cooling networks. Participants expressed a mild preference for a
binding target for renewable energy in district heating and cooling (53% yes to 47% no) and for
increasing the current target (51% yes to 49% no). Environmental organisations and NGOs are
distinctly against both propositions (only group of stakeholders expressing this preference), a similar
view expressed for the heating and cooling target, because of the effect such a target may have on
demand for biomass.
35
5.3.1.4. Options to increase renewable energy in the transport sector (RES-T)
RED II requires Member States to set an obligation on fuel suppliers to ensure that the share of
renewable energy in the transport sector achieves a 14% target - and a 3.5 % sub-target for advanced
biofuels. The focus of the measure is to set out a policy framework that promotes renewables in
transport. Decisions on the concrete design of obligation are largely left to the Member States.
Contribution of conventional biofuels is capped based on their share in 2020. The Fuel Quality
Directive (FQD) includes in addition to fuel quality standards a 6% target to reduce GHG emissions
of transport fuels and an outdated set of sustainability criteria.
The options under this section aim to deliver to achieve the ambition level of the Climate Target Plan
55% GHG reduction across the economy while applying different implementation options.
The measures to limit the contribution of conventional biofuels and the flexible limit on Annex IX
Part B biofuels are maintained under all options to minimise indirect land use change-risks and to
take into account the limited feedstock supply, respectively.
The use of multipliers in the calculation of the share of renewable energy in the transport sector is
maintained in view of the Decision of the co-legislator in 2018 on this matter63
. However, the
multipliers are adjusted to better reflect the maturity of different types of fuels and the energy
efficiency of electric vehicles. Where necessary the nominal level of the target is adjusted to
maintain the level of ambition. Options in this section are assessed based on their capacity to achieve
the ambition level of the Climate Target Plan 55% GHG reduction across the economy as carried out
in dedicated modelling work for this impact assessment in agreement with CTP analysis.
Options are:
Baseline
 Option 0: No change in the current legislation (baseline scenario);
Level and nature of the targets
 Option 1: The ambition level for renewables in transport is increased and new fuel blends are
introduced to facilitate the achievement of the higher targets64
. The 6% emission reduction
target set out in the FQD65
is removed.
 Option 1A: The target for renewables in the transport sector is increased and the sub-target for
advanced biofuels is increased.
 Option 1B: In addition to the increase of the target and the sub-target for advanced biofuels a
dedicated sub-target for RFNBOs is introduced.
Measures
 Option 2: The Member States are required to set out an obligation on fuel suppliers that
ensures the achievement of the target. The Directive would set out design features of the
obligation to harmonise the way the contribution of renewable electricity supplied to electric
63
The Commission had proposed to abolish all multipliers.
64
The way to calculate the target e.g. the use of multipliers may be streamlined in a way that sets the right incentives and
reflects political priorities but leaves the overall ambition unchanged.
65
Article 7a of the Directive 2009/30/EC
36
vehicles is taken into account and to avoid overlaps with measures implemented under the
ReFuel EU Aviation initiative. Further, the following sub-options are considered:
 Option 2A: The obligation on fuel suppliers is expressed in terms of energy i.e. fuel suppliers
are required to incorporate a minimum share of renewable energy in the fuels they supply to
the market including minimum shares for advanced biofuels and RFNBOs. All fuels need to
achieve minimum emission savings requirements;
 Option 2B: The obligation on fuel suppliers is expressed in terms of emission savings i.e. fuel
suppliers are required to reduce the emission intensity of fuels placed on the market. There
would be no sub targets for advanced biofuels and RFNBOs;
 Option 2C: The choice between the approaches described under A and B is left to the Member
States (as currently);
 Option 2D: The obligation on fuel suppliers is expressed in terms of emission savings but
operators are required to achieve minimum shares for advanced biofuels and RFNBOs;
Apart from raising the level of ambition for the share of renewables in transport including for
renewable fuels of non-biological origin (RFNBOs), renewable electricity in transport and advanced
biofuels66
, the options concern the design of the obligation on fuel suppliers including the question
whether it should be expressed in terms of emission savings or supplied renewable energy and how it
can better promote the use of renewable electricity in electric vehicles.
The options are aligned, and complementary to the ReFuel EU Aviation and Fuel EU Maritime
initiatives. The role of RED II in this context is to set the overarching framework and targets for the
promotion of renewables in the transport sector, including for innovative renewable fuels, while
ReFuel EU Aviation and Fuel EU Maritime initiatives aim to address sector specific sectorial
challenges with dedicated measures. ReFuel Aviation for example proposes sector-specific blending
mandates by imposing a minimum share of SAF (Sustainable Aviation Fuels) to be supplied to
airlines, and an uplift obligation on airlines to take such fuels at EU airports. The overall availability
as well as the terminology and the certification scheme of renewable fuels will be ensured through
the RED II framework.
Both measures contribute towards the achievement of the targets set out in RED II.
Stakeholders’ opinions
Transport was the most popular sector for additional efforts to increase the share of the renewable
energy according to the replies to the OPC. The majority of replies were in favour of an increase in
the renewables target for transport, with 43% suggesting this should be more ambitious than the 2030
CTP, 34% that it should be as ambitious as the CTP, and 9% that it should be less ambitious. A very
large majority of respondents (86%) think that the renewables target in transport should be increased
in some way.
66
The level of ambition for advanced biofuels has been reduced and level of RFNBOs has been increased in options 1A
and 1B compared to the Climate Target Plan based on the commitments set out for advanced biofuels in the NECPs and
taking the objectives of the H2 strategy for RFNBOs into account.
37
5.3.2. Area II: Insufficient promotion of energy system integration in REDII
5.3.2.1. Measures to enhance the contribution of transport and heating and cooling
to the system integration of renewable electricity
With the extended use of heat pumps in heating and cooling, the deployment of stationary batteries,
and especially with the proliferation of electric vehicles (EVs around 30 million vehicles expected in
the EU by 2030 based on conservative estimates), it is necessary to ensure that these assets can fully
contribute to the system integration of renewable electricity, and thus facilitate reaching higher
shares of renewable electricity in a cost-optimal manner, while ensuring a secure and reliable supply
of electricity.
The Clean Energy package introduced a number of general provisions aiming at ensuring that
various storage assets can gain access to balancing markets without discrimination. Such provisions
can be complemented by targeted measures aiming at ensuring that small and mobile distributed
assets are sufficiently integrated within the electricity system in a manner that maximizes their
potential contribution to the system integration of renewable electricity.
For EVs specifically, their contribution to system integration largely depends on the access to smart
charging infrastructure with the ability to vary charging intensity according to certain signals, the
availability of bidirectional flow between charger and vehicle (Vehicle to Grid, V2G) and the
availability of near-real time information on pricing and share of renewable electricity. In order for
integration to take place efficiently and competitively, market players such as electricity suppliers
and electromobility service providers also need to have access to basic battery information and be
able to offer their services via sufficient and non-discriminatory access to charging infrastructure.
The EPBD and the Alternative Fuel Infrastructure Directive focus on the deployment and planning of
charging infrastructure in thermally enclosed buildings and publicly accessible areas, respectively. A
gap therefore exists for structures and areas not within the above categories, such as multi-storey
parking structures and off-street parking areas with controlled access. In addition, AFID’s scope is
specific for ensuring infrastructure adequacy to support EV fleets for mobility, instead for system
integration. A gap in regulatory scope is therefore clearly present, both in terms of geographical
application and in terms of purpose, which does not enable legislating for the desired location, type
and number of charging infrastructure fit for EV integration. It is important to complement these two
legislations and their upcoming revisions, by creating transversal requirements for charging points to
be deployed and operated in a manner that optimizes their contribution to the system integration of
renewable electricity.
The following options are considered:
1. Availability of RES relevant system information:
 Option 1.0: No changes, availability of near-real-time information on the share of RES in the
system is optional (baseline scenario);
 Option 1.1: In addition to price signals, mandate TSO/DSOs to make available information
on the RES-share of the electricity in the system (for instance in the relevant bidding zone),
as well as forecasting information where possible, in a near-real-time and interoperable
38
manner, which can be used by all players, including managers of Building Energy Systems
and EV users and those acting on their behalf, as well as network connected devices.
 Option 1.2: In addition to option 1.1, also mandate electricity suppliers to provide
information in bills on the actual RES-share of the electricity consumed, based on the real
RES-share in the system at hours of consumption, which would complement the information
provided through guarantees of origin for customers of green offers (and the “residual mix”
for other customers).
2. Set minimum requirements for the availability of intelligent infrastructure (intelligent
charging and/or V2G) for the integration of electric vehicles in the electricity system
 Option 2.0: No change in the current legislation (baseline scenario);
 Option 2.1A: mandate Member States to ensure that all recharging points installed in their
territory are able to support smart charging functionality
 Option 2.1B: same as Option 2.1A, but allow Member States to exclude certain locations
where smart charging would typically not present added value to system flexibility
 Option 2.1C: mandate Member States to assess the extent to which the deployment of
additional smart charging points in their territory can further contribute to system flexibility
and penetration of renewable electricity, going beyond the minimum requirements of their
deployment for mobility purposes for example as required under AFID or EPBD).
 Option 2.2A: mandate Member States to ensure that all recharging points installed in their
territory are able to support V2G functionality
 Option 2.2B: same as Option 2.2A, but allow Member States to evaluate the level of
deployment of bidirectional charging (V2G) according to the specific needs of their system
3. Ensure a level playing field in the market of electricity supply and electric mobility services,
specifically for aggregation of distributed assets
 Option 3.0: No change in the current legislation (baseline scenario);
 Option 3.1 ensure that electricity storage systems or devices are treated by network and
market operators in ways that are not discriminatory or disproportionate irrespective of their
size (small-scale vs large-scale) and whether they are stationary or mobile, so that they are
able to competitively offer flexibility and balancing services
 Option 3.2: give electricity market participants and mobility service providers access to basic
battery information, such as State-of-Health and State-of-Charge
 Option 3.3: ensure open access to charging infrastructure that is not for own use
Stakeholders’ opinions
The open public consultation gave a clear message that consumers (EV-users) should receive
information on the renewable content of the electricity mix when charging. In general, many
stakeholders stress that e-mobility should only be encouraged if it is powered by renewable
energy. Some stakeholders suggest a fuel-neutral credit trading mechanism to stimulate e-
mobility.
During the stakeholder consultation, independent electricity suppliers and electromobility
service providers of intelligent charging services to EV-users through aggregation have
39
explicitly referred to the need for the deployment of intelligent charging infrastructure with
open access to the necessary battery data and also raised concerns with regard to the level
playing field in the electromobility market and the practices related to network charges, taxes
and tariffs. Participants (in particular aggregators) have also stressed the need for free and
open access to battery data (currently controlled by manufacturers), as well as ensuring that
charging infrastructure is open to all mobility service providers and electricity market
participants without under equal treatments.
5.3.2.2. Terminology covering all renewable and low-carbon fuels
The Energy System Integration strategy announced as one of its key actions the establishment of a
comprehensive terminology for all renewable and low-carbon fuels and a European system of
certification of such fuels, based notably on full life cycle GHG emission savings and sustainability
criteria, building on existing provisions included in REDII as well as in other interconnected policy
areas. Moreover, the TEN-E Regulation proposal introduced infrastructure categories facilitating the
integration of renewable and low-carbon gases into the grids, smart gas grids and hydrogen networks
which require a sustainability assessment.
 Option 0: Continue with existing definitions of RFNBOs and RCFs as categories.
 Option 1: extend the definition of RNFBOs only
 Option 2: include in Article 2 a new definition of low carbon fuels as being: recycled carbon
fuels, low-carbon hydrogen, and synthetic fuels the energy content of which is derived from
low-carbon hydrogen - without any GHG threshold associated
 Option 3: same as option 2, but associate a specific GHG threshold that such low-carbon
fuels have to meet in order to be considered low-carbon; empower the Commission to come
up with a common methodology to demonstrate achievement of such GHG threshold by way
of delegated act.
Option 3A: define a GHG threshold that is specific to low-carbon fuels
Option 3B: define a GHG threshold that is the same as for RFNBOs and Recycled
Carbon Fuels (RCFs).
Such thresholds could either be expressed in absolute value of GHG emissions per unit of energy,
or in terms of GHG savings to be achieved relative to a comparator – similarly to what is
currently done for RNFBOs and RCFs
5.3.2.3. European system of certification of renewable and low carbon fuels
The terminology for renewable and low-carbon fuels should be underpinned by a strong certification
and traceability system It is important to ensure that any claims that a fuel is renewable or low-
carbon be underpinned by a proper certification, verification and traceability system. Such system
should inform customers and the Member States about the sustainability characteristics of renewable
and low carbon fuels, ensure that only sustainable fuels are supported and facilitate cross-border
trade. Taking into account that supply chains are global, the further development of the EU
certification system would also take into account the international implications of such development
as well as exploring options for international regulatory cooperation.
40
The current certification system for renewable and low carbon fuels is based mainly on voluntary
schemes, recognised by the European Commission67
. National certification schemes are also a
possible tool under REDII but are used by Member States only to a limited extend. The current
system of guarantees of origin (GOs) is used only for consumer information and due to its limitations
(GOs only cover renewables, can be sold separately from the electricity supply, and do not contain
sustainability nor GHG emissions data), they cannot be used for proper certification of energy,
consumed and reported by the Member States. REDII therefore tasks the European Commission to
develop a Union database to register and trace along the supply chain all liquid and gaseous fuels in
the transport sector.
There is currently no harmonised certification system for hydrogen, although it may be expected that
some of the voluntary schemes may enlarge their scope to cover also this type of certification. The
same is valid for new fuels that have the potential to increase their market share as a result of the
implementation of the REDII (e.g. RFNBOs such as hydrogen-based synthetic fuels) for which a
certification system will have to be put in place.
Options, grouped by category, are:
A. Scope and content of the certification system:
 Option 0A: No changes, maintain current policies under REDII (baseline);
 Option 1A: Adjustment of the scope and content of the current certification system
(based on voluntary and national certification schemes) to include all fuels, covered by
REDII (including recycled carbon fuels) as well as improvement of the certification process
to take into account additional requirements and methodologies developed under REDII;
 Option 2A: Further development and harmonisation of the existing system of Guarantees of
Origin as an alternative certification system for renewable and low carbon gases and
renewable electricity.
B. Traceability:
 Option 0B: Baseline: remain with the current scope of the Union database to cover only
liquid and gaseous transport fuels
 Option 1B: A single information system (e.g. Union database) is developed to improve the
traceability of energy carriers and support to the mainstreaming of the mass balance system
by applying one covering all energy end-use sectors and the respective supply chains in a life
cycle approach (from production to place of consumption of the fuels). The enforcement of
the information system to cover parts of the value chain outside of the EU will be ensured
through the existing framework for voluntary schemes currently also operating outside the
EU. Support for the deployment of the information system would be also ensured through
strengthening of international cooperation.
Stakeholder’s opinions
During the 1st
stakeholder workshop, panellists acknowledged the necessity to have a fully-
fledged certification system for all renewable fuels and low-carbon fuels across the life cycle.
67
Article 30(4) REDII
41
In addition, adjusting the scope of this system is important to cover all emerging fuels
including RFNBOs as well as renewable and low-carbon fuels.
92% of participants to the OPC found that the certification and verification system should
ensure that the GHG impact of energy conversions along the value chain are fully taken into
consideration, while avoiding double counting.
5.3.2.4. Promotion of innovative renewable and low carbon fuels
Whilst REDII sets a target of 3.5% for advanced biofuels in transport, the current framework offers
limited incentives to promote the uptake of RFNBOs ahead of 2030. Yet, for hard-to-decarbonise
sectors such as transport and industry, early investments in RFNBOs are needed to prepare a rapid
upscaling of these solutions after 203068
. Similarly, the conversion of renewable electricity into
renewable fuels and gases to provide long-term storage and buffering options is not cost-efficient
yet, although this solution might be needed with the rapid rise of variable renewable electricity
production.
This is also recognised in the action points in the Energy System Strategy and the Hydrogen Strategy
which refer to additional measures to support renewable and low-carbon fuels, possibly through
minimum shares or quotas for RFNBOs in specific end-use sectors. Based on their current
framework that allows for the accounting for RFNBOs in the transport sector, there are a number of
options to further promote their uptake. Based on this, the chapter will focus on innovative
renewable and low-carbon fuels (both gases and liquids) produced from hydrogen and not look in
detail at other renewable fuels such as biofuels.
Options are:
 Option 0: No changes, maintain current policies under REDII (baseline); promotion of
RNFBOs with non-regulatory measures such as guidance and best-practice sharing, funding
of R&D as well as raising consumer awareness.
A. Extension of the scope of accounting:
 Option 1: Extend RFNBOs accounting beyond transport, including heating & cooling and
industry, improve the consistency of accounting and the way RFNBOs are counted to the
overall target69
 Option 2: Allow Member States to count low-carbon fuels towards the sectoral RFNBO
targets (in transport and industry), but not allowing low carbon fuels to count towards the
overall RES target.
B. Creation of specific sub-targets for RFNBOs:
68
Chiaramonti, D., Talluri, G., Scarlat, N. and Prussi, M., The challenge of forecasting the role of biofuel in EU transport
decarbonization at 2050: a meta-analysis review of published scenarios, RENEWABLE and SUSTAINABLE ENERGY
REVIEWS, ISSN 1364-0321 (online), 139, 2021, p. 110715, JRC121788.
69
According to REDII, not the RFNBOs but the renewable electricity used to produce the RFNBOs is counted towards
the overall target for renewable energy, which disincentives cross border trade.
42
 Option 3: Dedicated RFNBOs targets in hard-to-decarbonise sectors such as transport
(including aviation, maritime) and industry - targets should be established based on additional
modelling reflecting ESI and Hydrogen strategies.
 Option 4: Combined target for RFNBOs in transport and industry - targets should be
established based on additional modelling reflecting ESI and Hydrogen strategies.
C. Creation of specific sub-targets for all innovative low-carbon fuels:
 Option 5: Dedicated low-carbon fuels targets in hard-to-decarbonise sectors such as transport
(including aviation, maritime) and industry - targets should be established based on additional
modelling reflecting ESI and Hydrogen strategies.
 Option 6: Combined low-carbon fuel target in transport and industry - targets should be
established based on additional modelling reflecting ESI and Hydrogen strategies.
Stakeholder’s opinions
A majority of participants in the OPC think that the use of hydrogen and e-fuels produced
from hydrogen should be encouraged, provided they emit less GHG or are produced only
from renewables. The latter is in particular supported by NGOs. 64% consider a supply side
quota as appropriate or very appropriate, 79% favour market based support mechanisms.
5.3.3. Area III: Options to ensure bioenergy sustainability
According to the modelling for the CTP, projected increases in bioenergy use by 2030 will be limited
compared to today. However, post-2030 bioenergy is set to gain increasing importance with the view
to contributing to the carbon neutrality goal by 2050. Increased demand for bioenergy from forest
biomass may have a negative effect on forest carbon and biodiversity protection if the raw material is
sourced in an unsustainable way (e.g. through conversion of primary or old-grown forests, or through
unsustainable forest management practices such as whole tree harvesting for energy). A number of
options have been discarded at an early stage (see Annex 6). Options assessed are:
 Option 0: Full application of the enhanced REDII sustainability criteria
This option would include the following measures/initiatives: Implementing Act on forest biomass
(article 29(8)); Implementing Act on standards for voluntary schemes (article 30); new reporting
requirements on bioenergy supply and demand under the Governance regulation; application of the
new eco-design standards for new solid fuel boilers, including biomass.
 Option 1: Non-regulatory measures
This option would involve the development of a series of non-regulatory measures to
complement/support the efficient implementation of the enhanced REDII bioenergy sustainability
criteria, including: new guidance on harmonised implementation of the new sustainability criteria
(e.g. article 29(2) on soil management for agriculture biomass); new guidance on implementation of
article 3(3) on support schemes for bioenergy; new guidance on cascading use of forest biomass;
new guidance on better monitoring of forest biomass supply and demand; new guidance on efficient
biomass use in the household sector;
43
 Option 2: Targeted strengthening of the EU bioenergy sustainability criteria
This option would consist in the further strengthening of the REDII enhanced sustainability criteria
for biofuels, bioliquids and biomass fuels. This would involve the following additional requirements:
1. application of the existing no-go areas for agriculture biomass to forest biomass, including
primary and highly biodiverse forests, in line with the Biodiversity Strategy;
2. application of the GHG saving criteria (article 29(10)) also to existing heat and power
installations, in line with the higher climate ambition; and
3. stricter energy efficiency criteria for large-scale electricity installations, in line with resource
efficiency goals;
 Option 3: Application of the EU sustainability criteria to small-scale installations
This option would consist in the application of the REDII enhanced sustainability criteria to small
heat and power installations. It would involve applying option 2 also to small scale biomass-based
heat and power installations below a total rated thermal capacity of 20 MW (e.g. 10 or 5 MW), in
order to increase the amount of biomass covered by the EU sustainability safeguards and therefore
increase their overall environmental/climate effectiveness;
 Option 4: National caps on the use of high quality stemwood for energy.
Building on options 2 and 3, this option would involve introducing national caps fixed at Member
State level on the use of high quality stemwood for energy. The cap would grandfather existing
volumes in the period 2015-2020. Salvage logging (i.e. wood from storms, pests and diseases) would
not be included in the cap, nor coppicing wood. Only stemwood over a certain diameter and under
certain quality characteristics would be targeted by this cap; this diameter would be chosen at
Member State level and would depend on the different types of wood species, the objective being to
cap the use for energy of stemwood of industrial quality. The cap would also apply to biomass
imports. The technical details of this option would need to be further defined in a guidance
document, including on how to address possible impacts on the single market that could result from
different national approaches.
o Sub option 4.1: full exclusion of high quality stemwood as renewable energy source. This
sub-option would be achieved by limiting eligible forest bioenergy to waste and residues (e.g.
residues from timber harvesting and timber processing). The technical details of this option
would need to be further defined in a guidance document.
o Sub option 4.2: minimisation of national financial support for the use of high quality
stemwood for energy. This alternative sub-option would require Member States to design
their support schemes for bioenergy in a way that minimises the use of high quality
stemwood for energy purposes. Compliance with this new criteria will be assessed by the
Commission in the context of the state aid approval process, building on the current
assessment of compliance with the EU sustainability criteria. The technical details of this
sub-option would need to be further defined in a guidance document.
44
 Option 5: National caps on the use of forest biomass for energy
Building on options 2 or 3, this option would involve of a cap fixed at Member States level on the
use of all forest biomass for energy production. The cap would grandfather existing average volumes
of forest biomass used over the period 2015-2020. The cap would also apply to imports. Reaching
the national cap would mean that a given Member State would not be able to account the additional
forest bioenergy against the European/national renewable targets/mandates and would not be able to
provide financial support to it. The technical details of this option would need to be further defined in
an Implementing Act.
The Impact Assessment does not assess new options related to the REDII provisions on Indirect
Land Use Change of biofuels and on the definition of advanced biofuels (Annex IX). On both topics,
REDII already includes appropriate mechanisms for the review and revision, if necessary, of the
relevant provisions.
In line with the existing REDII provisions, economic operators in the EU outermost regions as
defined under article 349 TFEU, which are remote, isolated and not connected to the EU grid, may
benefit from a derogation of limited local impact and for a limited duration; provided that the
concerned Member States justify so on the grounds of energy independence and ensuring a smooth
transition to the sustainability, energy efficiency and greenhouse gas emissions saving criteria.
Stakeholder’s opinions
Overwhelming support for stricter criteria is found in environmental non-governmental
organisations and a large number of individual citizens (38700 answers) replying through a
coordinated NGO campaign in the OPC.
Not considering the contributions from the campaign, participants think sustainability criteria
for the production of bioenergy from forest biomass should not be modified (56% no to 44%
yes), with clear splits among different groups (NGOs, industry, Member States, academia).
A cap option is supported in particular by environmental NGOs, who point to the fact that
sustainability issues for bioenergy are sensitive to scale. On the other hand, forest owners and
bioenergy producers oppose a revision of the REDII sustainability criteria on the basis that
they have been recently revised and not yet still applied by Member States.
5.3.4. Flanking and enabling measures
In addition to the core objectives of the revision of this Directive to address the insufficient ambition
in a 2030 and 2050 perspective, to address the insufficient system integration, and to update
bioenergy sustainability provisions, a limited number of additional “flanking” or enabling measures
could contribute to the cost-efficient deployment of renewables, and are addressed in the section
below.
5.3.4.1 Measures to increase cross-border cooperation
Cross-border cooperation allows for a cost-efficient deployment renewable energy across Europe.
REDII includes options for Member States’ cross-border cooperation on a voluntary basis. However,
their use has been very limited, thus implying suboptimal results in terms of efficiency to reach the
overall renewable energy target. REDII has introduced provisions related to the opening of support
45
schemes to other Member States, but has left that option voluntary for Member States. REDII has
also created a platform aimed at facilitating statistical transfers between Member States. Finally,
REDII and the Governance Regulation have created a new cooperation tool, the Renewables
Financing Mechanism, which aims at organising tenders for new renewable projects involving
several Member States, but managed by the Commission. The use of this tool however depends on
voluntary contributions from Member States.
Options considered are:
 Option 0: No changes, maintain current policies under REDII (baseline scenario)
 Option 1: Issue updated Commission guidance on cross-border cooperation (non-regulatory
option), including design options for the different Cooperation Mechanisms and guidance on
cost-benefit-analysis and allocation
 Option 2: Obligation for Member States to test cross-border cooperation (pilot project) within
the next 3 years (paving the way for a partial opening of support schemes in the future)
 Option 3: Mandatory partial opening of support schemes (building on the indicative partial
opening of support schemes in Article 5 REDII and its revision clause).
 Option 4: Enhanced use of the Union renewable energy financing mechanism via Member
State under certain conditions (e.g. when below its target/ contribution trajectory)
While Options 1 and 4 could be complementary to the other options, options 2 and 3 are rather
alternatives to each other (with option 2 being a stepping stone to option 3).
5.3.4.2 Measures to promote and scale up offshore renewable energy
In line with long-term climate neutrality objective, the EU strategy on offshore renewable energy70
proposes to increase Europe's offshore wind capacity from the current 12 GW to at least 60 GW by
2030 and to 300 GW by 2050 and ocean energy to at least 1 GW by 2030 and 40 GW by 2050.
Currently, deployment plans and targets for offshore renewable energy and respective support
measures are generally set at national level, while regional cooperation takes place only to a limited
extent and is mainly based on best practice exchange.71
Options considered are:
 Option 0: No changes, maintain current policies under REDII (baseline scenario)
 Option 1: Obligation for Member States to conclude a non-binding political agreement to
cooperate on the amount of offshore renewable generation to be deployed within each sea
basin by 2050, with intermediate steps in 2030 and 2040
 Option 2: Introduction of one-stop shops for the permitting of the generation component of
cross-border offshore wind projects per sea basin. This would complement the introduction of
one-stop shops for the permitting of offshore grids under the TEN-E proposal.
These options can be complementary. Complementarity and coherence with the revised TEN-E
Guidelines will be closely monitored and ensured, given the strong interlinkages.
70
Commission (2020), An EU Strategy to harness the potential of offshore renewable energy for a climate-neutral future,
COM (2020)741.
71
For instance, within in the High Levels Groups for North Seas Energy Cooperation (NSEC) as well as the Baltic
Energy Interconnection Plan (BEMIP).
46
Stakeholder’s opinions
Participants to the OPC highlighted that simplifying administrative procedures for project developers
is among the 5 most important changes to be made in the revision of the Directive, behind a more
ambitious overall RES target and an increased transport target.
Further streamlining of permitting procedures (91%), fostering regional cooperation (88%) and
supporting PPAs (88%) were considered as the most appropriate measures to tackle remaining
barriers for a cost-efficient deployment of renewables in support of the higher ambition.
During the 1st stakeholder workshop it was made clear that participants also supported the uptake of
energy communities and self-consumption to tackle the remaining barriers for the uptake of
renewable electricity. In section 5.6 on discarded options it is explained why these measures are not
addressed by this revision.
5.3.4.3 Measures to increase renewable energy in industry
The industrial sector accounts for 25% of EU’s energy consumption, but has a relatively low share of
renewables (9% of direct renewable energy use, and 22% if the renewable energy share in electricity
is considered)72
. The CTP points to a share of around 37%, partly through an increase use of
electrification, partly through the use of renewable fuels, partly through the direct use of renewables.
Specifically renewables are primarily used in the wood, pulp and paper industry, but are largely
absent in other industry sectors. Since 2015, companies have started to build or purchase renewable
electricity to satisfy their electricity demand, but only 3.5% of industrial electricity consumption is
covered by such agreements. To achieve the objective of climate neutrality in 2050, industry is faced
with investment decisions that need to be taken ahead of 2030 and that will have long-term impacts
of the structure and ability of industry to be competitive within a climate neutral economy. Early
investments are needed to adapt production processes, e.g. through electrification, to the availability
of different renewable energy carriers.
RES in industry is not explicitly covered in REDII, but its transformation is critical to achieve the
EU’s objective of climate neutrality. The aim of the possible measures is to initiate an increasing
share of renewables, whilst supporting an emerging market for renewables-based products. This
tailor made approach for industry would provide investor certainty and ready-made solutions for this
sector with specific needs compared to others. Options are:
 Option 0A: No changes, maintain current policies under REDII (baseline scenario);
 Option 1A: Introduction of use of renewable energy in the audits required in the EED;
 Option 2A: Introduction of an EU methodology underpinning the labelling for green
industrial products in certain sectors, complementing the Sustainable Product Initiative.;
Stakeholder’s opinions
A majority of participants in the OPC are in favour of a RES obligation for industry, either on
industry in general (55%) or to specific industries (13%). Amongst all stakeholder groups,
stakeholders tend to agree that there should be obligations on industry to use a minimum
amount of renewable energy.
During the 1st
stakeholder workshop there was a common understanding from the participants
72
Eurostat (2020) Energy Balance Sheets EU27, June 2020.
47
that the industrial sector will be a major growth area for renewables deployment, especially
through electrification. Tools such as PPAs, state aid guidelines, (business model) innovation,
and the reduction of financial risks were seen as critical to ensuring sufficient low-cost
renewables.
5.4. The overview of policy options
An overview of the policy options described in section 5.3 is presented in the figure below.
Figure 3 - Overview of policy options
5.5.The core scenarios, variants and their use in this IA
This assessment uses the three core scenarios (based on CTP analysis) that achieve net 55% GHG
reduction in 2030 and confirm the cost-effective range for RES share in 2030 as already established
in the CTP (38-40%). All scenarios have been built on REF - as described in the section 5.1 and
these core scenarios confirm the cost-effective levels of renewables as described in Section 6.1.
These scenarios were developed and used to ensure coherence across the different impact assessment
of the “Fit for 55 Package”. In essence, the role of core scenarios is two-fold:
- To confirm (with respect to CTP) the internally coherent level of ambition that policy options
considered in the “Fit for 55” impact assessments need to deliver.
- To establish range of impact to be expected from all “fit for 55” legislative proposals.
The three core scenarios are:
 REG that relays only on intensification of energy and transport policies in absence of carbon
pricing beyond the current ETS sectors;
 MIX that relays on both carbon price signal extension to road transport and buildings and
intensification of energy and transport policies;
 MIX-CP that illustrates a lower ambition revision of energy policies (and CO2 standards for
vehicles), with a strong role for carbon price signals (as in MIX also extended to road
transport and buildings).
Detailed information regarding the policy scenarios: their assumptions and storylines as well as
modelling methodology can be found in Annex 4.
48
The core scenarios are cost-effective pathways that capture all policies needed to achieve the
increased climate target of 55% GHG reductions. The fundamental design of carbon pricing and
regulatory instruments working together put forward already in the CTP remains robust.
Already from the CTP analysis it is clear that carbon pricing working hand in hand with regulatory
measures helps avoid “extreme” scenarios of either:
 a very high carbon price (in absence of regulatory measures) that will translate into energy
prices for all consumers as illustrated by the MIX-CP scenario
 very ambitious policies that might be rejected by Member States (e.g. very high energy
savings or renewables obligations) because they would be too costly for economic operators
as illustrated by the REG scenario.
Therefore, the MIX scenario is the central one, where energy policies address market failures in a
targeted manner and provide investor/consumer certainty while pushing for the uptake of innovative
technologies. In the MIX scenario, both carbon pricing and energy policy actions are aligned to
trigger investments in clean energy technologies and infrastructure, or even to overcome financing
difficulties for certain groups of consumers (e.g. renovations shielding consumers from high energy
bills linked to fossil fuels based heating).
To some extent, the REG and MIX-CP scenarios are extremes showing the undesired impacts of
relying too strongly on only regulatory measures or carbon pricing. Still such scenarios could
materialise. The low ambition policy options consisting of additional guidance only considered in
this assessment would likely lead to results of the MIX-CP scenario. Conversely, the most ambitious
regulatory options would yield results similar to the REG scenario with no carbon price applied in
sectors beyond current ETS. Finally, low ambition outcome of the legislative processes or delays in
implementation - be it on regulations or on carbon pricing – would be illustrated by the MIX-CP or
REG scenarios, respectively.
The core ‘Fit for 55’ scenarios are complemented by the following variants73
(all built on MIX) that
help to assess some specific policy options:
- MIX-H2 that illustrates high uptake of hydrogen in final energy demand sectors already in
203074
aligned with the goal of the Hydrogen Strategy (40GW of electrolyser capacity in the
EU in 2030) while considering national hydrogen strategies and “Opportunities for Hydrogen
Energy Technologies considering the NECPs” by Fuel Cells and Hydrogen Joint
Undertaking75
. MIX-H2 is used for assessment of options including on the promotion of
RFNBOs in industry and in transport.
- MIX-LD (MIX-Lost Decade) that aims to assess the impacts of the revision of REDII only or
more precisely of the absence of such a revision rather than of the whole package of “Fit for
73
Further variants were developed with the METIS model for the specific options aiming at assessing the contribution of
demand-response measures (including dedicated RES-based signals to consumers) to enhance the integration of
renewable electricity use in transport, heating and cooling as well as other electricity end-consumption featuring demand
side flexibility.
74
Core scenarios project only a small uptake of hydrogen in 2030 but more significant in 2035.
75
https://www.fch.europa.eu/publications/opportunities-hydrogen-energy-technologies-considering-national-energy-
climate-plans
49
55” policies. This variant removes all drivers representing REDII revision while “freezing”
all other policies on their level of ambition/stringency as modelled in MIX. In this variant, a
gap to overall RES and sectoral ambition (especially in H&C) appears as well as gap to GHG
55% target. Bridging the gap can be attributed to revision of REDII. As this variant achieves
the carbon neutrality in 2050, MIX-LD has to considerably increase the efforts in renewables
deployment post-2030.
In chapter 6, economic, the social and environmental impacts of the core “Fit for 55” scenarios (and
for relevant options the variants) are part of analysis of impacts. The core “Fit for 55” scenarios can
be compared to each other in the way that the CTP IA did. Where relevant, this type of analysis is
performed in this impact assessment to show the advantages and disadvantages of stronger/weaker
regulatory actions (notably in case of RES H&C and RES-T obligation). As an alternative approach,
the MIX-LD variant provides insights about the impacts of the absence of revision of REDII in the
context of the MIX scenario – this is mostly discussed in section 6.1.2. Other variants are used for
specific policy options only as described above.
Importantly, some policy options analysed in this impact assessment revolve around the type or way
of implementation, and not the level of ambition of regulatory measures. Hence for such
measures the scenario results are only useful as “boundary conditions” showing the level of ambition
that has to be achieved regardless of the type of regulatory actions or way of implementing it (e.g.
nature of the targets).
5.6.Options discarded at an early stage
A number of policy options were discarded:
- on targets for renewable energy, possible scenarios representing an EU 2030 GHG
emissions reduction target below 55% or higher levels of ambition as requested by some
stakeholders were discarded as they did not fulfil the political mandate agreed by EU leaders
of achieving the 38-40% renewable energy.
- on the promotion of low carbon and renewable fuels, as noted in recital 2 of the (current)
Directive, its goal is to promote renewable forms of energy as one important part of the
Union’s energy policy. The Directive should continue to focus on this main objective. The
priority for the EU is to develop renewable fuels such as hydrogen produced from renewable
electricity and hydrogen-based synthetic fuels since renewables are projected to develop very
strongly in power generation already in this decade (and even more strongly afterwards)
while nuclear and CCS have more limited potential and, in some Member States encounter
public acceptance issues. Low carbon fuels will continue to play an important role to
decarbonise the energy sector for some time in particular in sectors where direct
electrification is not possible or renewable fuels are not yet available. This will be addressed
in other legislative proposals, including the forthcoming gas decarbonisation package
(revision of the gas directive) that will focus on ensuring internal market for low-carbon
gases.
- on revising the sustainability criteria for bioenergy, the option to apply sustainability criteria
at forest unit level was considered disproportionate and overly intrusive on Member States.
Introducing biogenic carbon emission factors in the calculation methodology for the lifecycle
50
greenhouse gas performance of forest biomass, in addition to supply-chain emissions was
considered unfeasible. It was not considered appropriate to introduce requirements for air
pollution related to solid biomass as this issue is effectively covered by existing EU
environmental legislation. In the energy field, it has also been addressed by new stricter
emission requirements for new solid fuel boilers and space heaters in the Eco-design
Directive (since January 2020). Applying the sustainability requirements to residential users
of biomass heating would imply a disproportionate administrative burden on Member States
and citizens. An option on new reporting requirements on forest biomass was also discarded
as current reporting obligations under the Governance Regulation are considered sufficient.
While requested by many individual citizens and NGOs, a complete ban of the use of woody
biomass for energy production was considered as a too radical measure which would have
significant impact on the ability of some Member States to reach the CTP objectives.
- A revision of Guarantees of Origins (GOs) for electricity was among the popular answers in
the public consultation to the question what should be amended in the Directive. On revising
the system of this option was discarded as the existing requirements of REDII and the
Directive on common rules for the internal market for electricity are expected to deliver
improvements when implemented.
- During the 1st
stakeholder workshop ‘further support the uptake of energy communities and
self-consumption’ was put forward as one the measures appropriate to tackle the remaining
barriers for the uptake of renewable electricity, however the current revision of RED II does
not plan to change provisions on energy communities as the new rules are still being
implemented in the Member States and the Commission has started non-legislative actions to
foster the roll-out of energy communities.
Please see Annex 6 for full details of the discarded options.
6. WHAT ARE THE IMPACTS OF THE POLICY OPTIONS INCLUDING FOR EFFECTIVENESS,
EFFICIENCY AND COHERENCE?
The following sections summarise the main expected economic (including specifically energy
system and macro-economic impacts), environmental and social impacts of the options considered
for each of the policy areas. The analysis of the different options for each policy areas also assessed
their effectiveness, coherence and, where relevant, administrative burden and compliance costs.
Part of this assessment is based on energy system modelling. As explained in Chapter 5, the three
core “Fit for 55” scenarios are used consistently for design and assessment of all the “Fit for 55”
initiatives. These scenarios establish boundary conditions for all policy options and the results of
these scenarios establish the range of expected impacts – of all “Fit for 55” initiatives acting
together. This is complemented with insights about impacts of specific measures considered for the
revision of RED II.
As explained in Chapter 5, the MIX scenario is the central one: carbon pricing is covering most of
the sectors and works in synergy with energy policies that address market failures in a targeted
manner and provide investor/consumer certainty while pushing for uptake of innovative
technologies. The MIX scenario is balanced, while the REG and MIX-CP scenarios are more
51
extreme outlooks showing the impacts of relying mainly on regulatory measures or mainly on
carbon pricing, respectively.
It is important to highlight that with a certain degree of simplification, low ambition policy options
considered in this IA consisting of additional guidance or other soft measures would likely lead to
the results of the MIX-CP scenario. Conversely (and again with certain degree of simplification), the
most ambitious regulatory options would yield results similar to the REG scenario with carbon price
likely at very low levels/irrelevant.
This is why the results of three core scenarios are used for the assessment. If relevant, additional
variants (presented in section 5.5) results are discussed notably as concerns the innovative renewable
fuels.
Finally, as an alternative approach, the MIX-LD variant provides insights about the impact of the
absence of revision of RED in the context of MIX scenario – mostly discussed in section 6.1.
6.1.Overall renewable energy target level and achievement
6.1.1. Level of overall renewable energy target resulting from core scenarios and
variants
As already explained in Chapter 5, the results of the “Fit for 55” core scenarios indicate a similar
range for EU level of ambition on overall RES share in 2030: 38-40% as necessary for the increased
climate target of 55% GHG reductions in 2030 – in agreement with CTP analysis. The RES shares in
the scenarios (overall and sectoral) are summarised in the table below.
Table 2 - Renewable energy shares in core scenarios; Source: PRIMES, ESTAT
Overall RES share RES-E RES-H&C RES-T
2005 10.2% 16% 12% 2%
2015 17.8% 30% 20% 7%
2030 REF 33.2% 59% 33% 21%
REG 39.7% 65% 41% 29%
MIX 38.4% 65% 38% 28%
MIX-CP 37.8% 65% 36% 27%
In the MIX-H2 variant, an increased overall RES share of 40.2% results from the higher uptake of
RFNBOs in line with the 40GW electrolyser capacity envisaged in the Hydrogen Strategy. This
variant is discussed in Section 6.6.
52
In the MIX-LD76
variant, a gap of 2.1 p.p. appears to overall RES share projected by MIX scenario
chiefly driven by the gap to the necessary RES-H&C share (2.9 p.p.) and to the RES-E share (2.7
p.p.).
Table 3 - Results of MIX-LD scenario; Source PRIMES
2030 Overall RES share RES-E RES-H&C RES-T
MIX-LD 36.3% 62% 35% 27%
This variant is counterfactual in the sense that in the absence of the REDII revision, carbon prices
would have increased, but such an outlook is already illustrated in the MIX-CP scenario. MIX-LD
also has useful insights post-2030. As this variant still achieves carbon neutrality in 2050, thus in the
absence of a REDII revision, efforts in renewables deployment post-2030 would have to be
considerably increased to bridge the gap that would be created in the current decade.
Finally, it also has to be stressed that this variant does not capture more granular measures of the
REDII revision concerning capacity building and local deployment, self-consumption and other
aspects and consequently the strong negative signal towards investor and consumer confidence that
the absence of a REDII revision would create.
6.1.2. Impacts projected by the core scenarios and MIX-LD variant
6.1.2.1 Economic (including Energy System) impacts
Energy system
The core scenarios lead to an acceleration of the clean energy transition. Even though their policy
drivers are differentiated as described in Chapter 5, the results in terms of fuel mix are very
convergent. In all core scenarios renewables deployment is the key avenue for the necessary
decarbonisation of the fuel mix. This is best illustrated by the changes in the fuel mix – both in the
Gross Inland Consumption (GIC) and in Final Energy Consumption (FEC). In GIC, the renewables
share grows from 15% in 2015 to already 27% in REF and then 30-31% in the core scenarios.
Bioenergy, that is today the main renewable source, has in REF in 2030 the same share in the GIC
mix as other renewable sources together. In 2030, in the core scenarios the share of bioenergy
remains stable compared to REF while other sources grow, notably wind and solar in power
generation.
In MIX-H2 variant, GIC in 2030 increases very slightly (1% compared to MIX) due to additional
electricity needs for RFNBOs production. Renewables share increases to 32% and it is due to higher
consumption of wind and solar energy in power.
76
As described in Chapter 5, the MIX-LD (MIX-Lost Decade) variant was developed to assess impacts of the absence of revision of RED. This variant
removed all drivers representing REDII revision while “freezing” all other policies (in particular carbon pricing) at their level of ambition/stringency as
modelled in MIX.
53
Figure 4 - Gross inland consumption in the core scenarios; Source PRIMES
In terms of fuel mix in final energy consumption the trends are less pronounced than in GIC, the
renewables share grows here from 10% in 2015 to 15% in 2030 already in REF and to 16% in the
core scenarios. The key trend in final energy consumption is electrification promoted by energy
efficiency, renewables and decarbonisation policies. With electricity increasingly relying on
renewables (see section 6.8) the electrification of final energy demand provides an additional pull for
renewables deployment in the power sector.
In MIX-H2 variant, FEC in 2030 is unchanged compared to MIX. While bioenergy consumption
decreases, the RFNBOs share increases but electrification remains the main trend and the renewables
shares grows to 17%.
Figure 5 - Share of energy carriers in final energy consumption; Source ESTAT, PRIMES
The MIX-LD variant shows that in the absence of the REDII revision, the energy system would have
lower renewables penetration both in GIC and FEC and thus would leave more space for natural gas
in heating and in power generation.
Energy system costs
54
The clean energy transition requires investments (CAPEX) but also enables a reduction in the energy
expenditure (OPEX) – both aspects are included in the energy system costs metric projected for all
core scenarios.
It is important to notice that energy system costs have been steadily increasing in recent years and
are projected to increase in the coming decade reflecting the effort needed to meet the current climate
and energy targets for 2030. From an estimated 1,284 billion EUR (or 9.7% of GDP) in 2015, system
costs (excl. carbon pricing and disutilities) are estimated to reach 1724 billion EUR (or 11.6% of
GDP) in 2030 in REF.
The climate and energy policies already in place (and thus included in the REF) lead to a relatively
limited increase in costs between the REF and the core scenarios. The REF already entails significant
investments in energy efficiency, renewable energy deployment and shifts to low carbon
technologies and fuels. This paves the way for costs reduction for energy-efficient and low-carbon
technologies and fuels, which help to reduce the additional energy costs for the core scenarios. The
table below shows the energy system costs (excluding carbon pricing payments and disutilities77
) in
the core scenarios.
Table 4 - Average annual Energy System Costs in the scenarios (excluding carbon pricing payments and disutility costs); Source
PRIMES
REF REG MIX MIX-CP
MIX-H2
variant
2030
i b € 1,724 1,777 1,769 1,753 1,784
% of GDP 11.6% 12.0% 11.9% 11.8% 12.0%
2021-30
average
annual
i b € 1,518 1,555 1,550 1,541 1,555
% of GDP 10.9% 11.2% 11.15% 11.1% 11.2%
The average annual additional energy costs/investments (excluding carbon pricing and disutilities)
show very small variations across the core scenarios as both the investments and energy expenditure
are similar. The average over the 2021-2030 decade increases from 10.9% of GDP in REF to 11.1% -
11.2% of GDP in the core scenarios. MIX-H2 variant has only slightly higher costs than scenario
MIX. In agreement with the results presented in the CTP Impact Assessment, system costs appear to
be slightly higher in the REG scenario that relies on stronger regulatory policies in absence of carbon
pricing.
Due to the higher carbon price in all core scenarios, when payments for carbon auctions are
accounted for and adding also disutilities, systems costs increase from 11.0% in REF to 11.5-11.8%
77
Disutility costs measure the difference in the use of energy services compared to a counterfactual scenario using the
income compensating variation method.
55
of GDP over the 2021-2030 decade. MIX-H2 variant has the same costs as scenario MIX. In
agreement with the results presented in the CTP Impact Assessment, system costs including carbon
pricing and disutilities are higher in MIX-CP scenario that relies on stronger carbon pricing.
Table 5 - Average annual Energy System Costs (including carbon pricing payments and disutility costs); Source PRIMES
REF REG MIX MIX-CP
MIX-H2
variant
2030
i b € 1,740 1,855 1,890 1,919 1,903
% of GDP 11.7% 12.5% 12.8% 13.0% 12.8%
2021-30
average
annual
i b € 1,535 1,598 1,630 1,647 1,634
% of GDP 11.0% 11.5% 11.7% 11.8% 11.7%
Energy system costs increases in the core scenarios are moderate because the additional investments
in new power capacity, buildings’ renovations or rolling stock are offset by savings on energy
purchase and in particular fossil fuels expenditure.
The MIX-LD variant shows that in the absence of the REDII revision, the system costs would be
lower but the difference would be rather small: only 4bn EUR/year in 2021-30 period (metric
excluding carbon pricing and disutilities). This is explained by the fact that while some investments
in renewable power generation/heating would not take place, investments in natural gas power
generation/heating would still be needed. Also no savings in energy expenditure can be achieved by
switching to renewables (many of them with zero operational costs).
In addition to the energy system costs assessment, it is also useful to assess impacts on security of
supply and savings in fossil fuels imports. The savings in energy expenditure have direct effect in
fossil fuels import bill savings as today most of energy expenditure is on fossil fuels. The table below
shows summary of the results of core scenario as well as MIX-H2 variant in this respect. It is clear
that renewables deployment that displace fossil fuels is the key factor of these savings. The REG
scenario has the highest savings.
MIX-LD variant shows that in absence of REDII revision, the fossil fuels import bill would be
higher as lower uptake of renewables would leave more energy demand to be satisfied by fossil
fuels. The savings between MIX and MIX-LD amount to 15bn EUR over the period 2021-30.
Table 6 - Impacts on security of supply and fossil fuels imports bill savings; Source PRIMES
REF REG MIX MIX-CP
MIX-H2
variant
Import dependency % 54% 52% 53% 53% 51%
Fossil fuels imports bill savings
compared to REF for the period 2021-
b €’ 5
- 136 115 99 134
56
Zooming in on investments that are an essential element of system costs, it can be seen that policies
already in place will require on average 297 billion € per year in the in the 2021-30 period (excluding
transport). This is a considerable increase from the estimated 184 billion € per year spent in the past
decade. When compared to the size of the European economy, the investment required in the next
decade under polices already in place will amount to 2.1% of the average GDP.
The projections confirm the main trends already observed in the CTP impact assessment. An
increased climate target for 2030 will require considerable additional investments. In the policy
scenarios annual investments excluding transport78
, increase to 379-417 bn € per year in the 2021-30
period. This is between 2.7- 3.0% of the European GDP. Investments are higher in the scenario based
on an intensification of policy measures (REG) than in a scenario with higher carbon price (MIX-
CP). This result illustrates the difference in effects of bottom-up policy measures that tend to
increase, for example, renovation rates in buildings compared to effects of carbon pricing that
promotes mainly fuel switch.
The MIX-LD variant shows that in absence of REDII revision, the investments would be lower but
the difference would be rather small: only 18bn EUR/year in 2021-30 period. This is explained by
the fact that while investments in renewable power generation/heating are lower in such a scenario
they are replaced by investments in natural gas power generation/heating.
The table below shows the investments by sector in the REF and in the policy scenarios. Apart for
transport, the residential sector is the sector requiring the higher amount of investment highlighting
the important role of buildings in emissions reduction.
Table 7 - Investment in REF and core policy scenarios (2021- a ual a erages, illio € 2015); Source PRIMES
I vest e ts b € 5 REF REG MIX MIX-CP
MIX-H2
variant
Average
2011-2020
Average 2021-2030
Investments in power grid 12.8 35.1 43.9 43.8 43.9 46.1
Investments in power plants 32.1 41.8 54.1 54.7 55.1 63.7
Investments in boilers 2.3 2.6 3.9 3.8 3.7 3.8
Investments in new fuels
production and distribution
0.0 0.0 0.7 0.7 0.6 7.3
Overall supply side investments 47.1 79.6 102.7 103.0 103.3 120.9
Industrial sector investments 10.2 17.0 23.7 24.7 24.1 24.4
78
Transport investments in PRIMES include vehicles replacement and are therefore not directly related to additional
decarbonisation costs.
57
Residential sector investments 87.8 125.5 193.8 180.1 157.6 179.7
Tertiary sector investments 40.2 74.6 97.0 94.2 94.5 94.4
Transport sector investments 474.3 647.4 650.6 649.3 648.2 654.1
Overal demand side investments 612.4 864.5 965.1 948.2 924.3 952.6
Overal energy system
investments
659.5 944.0 1067.7 1051.3 1027.6 1073.5
as % of GDP 5.4% 6.8% 7.7% 7.6% 7.4% 7.7%
additional to 2011-2020 annual
average
284.5 408.2 391.7 368.0 413.9
Overal energy system
investments excl transport
185.2 296.7 417.1 402.0 379.4 419.3
as % of GDP 1.5% 2.1% 3.0% 2.9% 2.7% 3.0%
Macro-economic impacts of core scenarios
Analysis with macroeconomic models confirms the results presented in the CTP impact assessment.
The impact on the European GDP of the increased climate target (or more precisely of the
investments necessary to achieve it) is small in any of the cases assessed. Projections obtained with
the GEM-E3 macroeconomic model indicate a small positive effect on GDP if assuming favourable
financing conditions. Compared to Reference projections, GDP is 0.52% higher in 2030. Assuming
crowding out of investments, however, GDP in 2030 is 0.2% below the Reference level. In line with
previous findings, result for the MIX and REG scenarios are very similar. The effect of stimulus
created by investments wanes after 2030.
Figure 6 - Macro-economic impacts of core scenarios; Source GEM-E3
58
6.1.2.2. Environmental impacts
All core scenarios, by construction, achieve the 55% net GHG target in 2030. Renewables
deployment stimulated by the overarching level of RES ambition as well as policies dedicated to
achieving it play an important role in GHG abatement – in synergy with other “Fit for 55” policies.
Renewable fuels are accounted as having zero emissions in the energy system and by displacing
GHG-emitting fossil fuels they lead to GHG emissions savings.
MIX-H2 variant only slightly overachieves 55% GHG reduction (it has 0.4 p.p. higher GHG
reductions than MIX looking at GHG emissions including intra EU aviation and maritime but
excluding LULUCF).
The MIX-LD variant in the absence of drivers illustrating revision of RED, would create a gap of 1.2
p.p. to GHG 55% target. Also some synergies with energy efficiency would be lost and using the
metric of the current EE targets, MIX-LD would lead to 35.0% of energy efficiency in final energy
consumption in 2030.
In addition to impacts on decarbonisation, all core scenarios lead to important overall benefits in
terms of heath protection and reduction of pollution. This is mainly due to the replacement of fossil
fuels by renewable energy sources, notably non-combustion ones. Combustion renewable energy
sources (bioenergy) emits air pollutants (PM2.5, PM10 and VOCs). The reduced air pollution
compared to REF was estimated at 10% in 2030. Reduced health damages and air pollution control
cost compared to REF were estimated at € 25-43 bn/year79
.
6.1.2.3. Social Impacts
The table below shows the energy-related costs incurred by households, which are key social impacts
of the core scenarios. In REF, the share of energy-related expenditures (comprising both equipment
and energy purchases related to both transport and buildings) as % of private consumption increases
slightly from 24.1% in 2015 to 25.1% in 2030. In the core scenarios, the share increases to 25.6-
25.8% in 2030 with little differentiation among scenarios. Importantly, between 2015 and 2030, the
absolute amount of energy-related expenditure (growing due to investments necessary for clean
energy transition and to carbon price mark-up) is moderated by the growth in overall private
consumption linked to economic growth and increasing welfare of the society.
The share of buildings-related expenditure in private consumption differs little across core
scenarios in 2030 (7.4-7.5% without counting disutilities) and in MIX-H2 variant (7.6%). Buildings-
related expenditure is dominated by energy purchase expenditure. In comparison, equipment and
renovation costs are smaller but also add up to the expenditure as expected from the trends in fuel
switch and renovation rates80
. The costs of heating equipment are the highest in REG, where the
highest uptake of renewables in the buildings sector leads to highest replacement rate of heating
equipment with households notably switching to heat pumps. Renovation costs are also the highest
in REG.
79
For complete discussion, please refer to IA accompanying ESR revision.
80
For analysis of renovation rates, please refer to IA accompanying revision of EED.
59
Transport related costs are dominated by capital and fixed costs of vehicles followed by
expenditure for transport services and energy purchase expenditure. For transport related costs alone,
their share in total households’ consumption is nearly stable between 2015 and 2030 in REF
reflecting the gains of fuel efficiency standards. The overall share of transport-related expenditure in
total household consumption differs very little across core scenarios in 2030 (18.1-18.5% without
counting disutilities) and MIX-H2 variant remains in this range.
The MIX-CP scenario relying on high carbon price leads to the highest expenditure for energy
purchases as carbon price mark-up is reflected in this expenditure. Conversely the REG scenario
relying on strong regulatory action leads to highest expenditure for renovations and H&C equipment.
By including more regulatory instruments alongside carbon pricing, notably via revision of RED, the
carbon price increase can be lower and thus impacts on energy bill kept in check – as illustrated in
the MIX scenario.
The MIX-LD variant shows that in the absence of a RED revision, energy-related share of household
consumption would be very similar to MIX case. This is again explained by the fact that no savings
in energy bill can be achieved by switching to renewables (many with zero operational costs) but
also no additional investments for fuel switching from fossil-fuel technologies are necessary to
replace renewables-based heating installation. Transport-related expenditure does not change as here
the ambition stems chiefly from NECPs and not RED revision.
Table 8 - Energy-related expenses in 2030 (excl. disutilities); Source PRIMES
2015 2030
REF REG MIX MIX-CP
Energy-related expenses as % share of
private consumption 24.1% 25.1% 25.6% 25.8% 25.8%
of which for related to buildings
(comprising fuel expenditure, exchange of
H&C and other equipment and building
shell renovation expenditure) 6.1% 6.9% 7.5% 7.5% 7.4%
of which related to transport 18.0% 18.1% 18.1% 18.3% 18.5%
The social impacts can be also analysed in terms of their distributional impacts on different income
groups81
. For low-income group, in all core scenarios, the share of energy-related expenditure in
their private consumption is higher (than for average of all income groups) indicating the need for
targeted policies addressing needs of vulnerable households. There is only a small differentiation of
results among the core scenarios and with the same logic as described for average results for all
income levels.
81
PRIMES model has only information rated to income groups in its buildings module.
60
Figure 7 - Energy-related expenses in 2030 (excl. disutilities) as % share of private consumption; Source PRIMES
Macro-economic impacts of core scenarios
Analysis with macroeconomic models confirms the results presented in the CTP impact assessment.
The impact on the employment in the EU of the increased climate target (or more precisely of the
investments necessary to achieve it) is small in any of the cases assessed. Projections obtained with
the GEM-E3 macroeconomic model indicate a small positive effect on employment if assuming
favourable financing conditions. Compared to Reference projections, employment is 0.36% higher in
2030. Assuming crowding out of investments, however, employment in 2030 is 0.3% below the
Reference level. In line with previous findings, result for the MIX and REG scenarios are very
similar. The effect of stimulus created by investments on job creation diminishes after 2030 but its
effects are stronger than in case of economic growth.
Figure 8 - Macro-economic impacts of core scenarios; Source GEM-E3
6.1.2.4. Distributional impacts
This IA, as a proportional exercise, focuses on the EU-level impacts, notably as projected by the core
scenarios. But the impacts on level of MS are also a key consideration for policy proposals and
national results from modelling are also available. Dedicated publication: “Technical Note on the
61
Results of the “Fit for 55” core scenarios for the EU Member States” is presenting the key impacts
on MS energy system and beyond (notably economy-wide GHG emissions) for the core scenarios.
Importantly, these impacts result from all “Fit for 55” initiatives and represent the situation in which
all MS would contribute cost-effectively to the EU-level targets. The real-life impacts will be
different considering that for most of energy legislation Member States have choice in how to
implement specific provisions in a way that is best suited to their own national circumstances in full
respect of subsidiarity principle. The case in point are revised 2030 RES and EE contributions that
Member States will be themselves putting forward. Also, the Member States’ ESR targets will build
on but deviate from the cost-effective contribution indicated by the core scenarios.
In this section, some key results of core scenarios are discussed without yet correction of possible
implementation on the national level and thus purely from the angle of cost-effective contribution to
the EU targets.
Aggregated impacts
On the most aggregated level, the energy system costs can be assessed and they are presented in
“Technical Note on the Results of the “Fit for 55” core scenarios for the EU Member States”. The
impact of the increased climate target and delivering the Green Deal (and increased RES and EE
uptake that go alongside) will represent the energy system cost increase for all MS. However most of
the projected increase in energy system costs will occur already in the in the REF2020. On the EU
level, between 2020 and 2030, energy system costs are projected to increase 20% in the REF2020
and 26-27% in the core policy scenarios.
Today, the share of GDP spent on energy system services varies considerably between Member
States: from 5.3% for Ireland in 2020 to 20.9% for Bulgaria. There are several reasons for this
divergence, notably including economic development. As household wealth and prices increase, the
national economies tend to specialise in activities with higher value added and lower energy intensity
(services). As households’ income increases, energy intensity of the economy tends to decrease.
Therefore, also energy system and mitigation costs expressed as a proportion of GDP decrease82
with
increasing household income. Considering together the impact of increased climate target and
increasing wealth shows small increases in energy system costs for all MS (core scenarios compared
to REF2020) and that disparities remain. In central MIX scenario83
, the share of GDP spent on
energy services varies from 6.1% for Ireland in 2020 to 26.8% for Bulgaria.
Still on aggregated level, the combined impacts for private consumption can be assessed and they are
also presented in “Technical Note on the Results of the “Fit for 55” core scenarios for the EU
Member States”. As for the system costs, with the growth of economy household wealth tends to
increase faster than energy costs. For wealthier Member States, energy expenditures represents a
lower share of households’ expenditures. Some MS with lower income (e.g. Bulgaria and Croatia)
spend today almost double of the average EU share (approximately 7% of household income) on
energy. The policies in the Fit for 55 package will increase the households energy expenses for all
Member States by a small amount and the disparities will still remain.
82
If no change of policies was assumed
83
Very similar MS results can be observed in all core scenarios. Consequently, this section discusses only the national
results of MIX scenario.
62
Looking at more detailed elements and most linked to revision of REDII, the changing fuel mix in
H&C and in electricity are analysed below and the impacts they have in terms of costs.
Fuel mix change in H&C sector impacts
The table below shows projections of MS RES-H&C shares in MIX and how they need to increase in
2030 between REF2020 and MIX scenario (in p.p). Importantly, RES-H&C shares cover residential,
services and industrial sectors. In all these sectors, a substantial fuel switch from fossil fuels to
renewable fuels/electricity occurs and thus lead to change in energy-related expenditure. While the
industrial and services sectors have the possibility of cost pass-through via the product prices, the
consumers in residential sector have to cover the expenditure themselves and thus impacts are easier
to assess. Two key elements of this residential expenditure are discussed in this section:
- fuel purchases, which have markedly higher share of renewables and electricity with the
remaining fossil fuels bearing a carbon price mark-up due to ETS extension;
- H&C equipment expenditure, which shows the cost relevant to replacement of H&C
equipment.
Table 9: National RES-H&C shares and impact on buildings-related expenditure (as share of private consumption); PRIMES,EC own
calculations
RES-H&C share
in MIX
in 2030
(% share)
Increase in RES-H&C
share between REF
and MIX in 2030 (p.p.
increase)
Change in share of fuel
expenditure as % of
private consumption
between REF and MIX
in 2030 (p.p. change)
Change in share of
H&C equipment
expenditure as % of
private consumption
between REF and MIX
in 2030 (p.p. change)
EU 38.0% 5.2% -0.1 0.3
AT 44.4% 2.4% -0.2 0.1
BE 17.0% 5.0% 0.1 0.4
BG 48.2% 3.7% -0.3 0.3
CY 55.5% 17.7% -0.8 1.6
CZ 34.6% 4.2% 0.2 0.0
DE 30.7% 7.0% 0.0 0.4
DK 61.5% 0.1% -0.1 0.1
EE 65.2% 1.1% -0.1 0.0
EL 49.7% 5.6% -0.5 0.7
ES 33.0% 0.8% -0.2 0.0
FI 63.9% 2.4% -0.4 0.6
FR 45.3% 6.4% -0.3 0.3
HR 49.8% 6.5% -0.6 2.2
HU 34.0% 7.0% 0.0 0.9
IE 40.4% 11.2% -0.4 0.0%
IT 37.6% 5.2% -0.2 0.3
LT 67.5% 0.2% -0.1 0.0
LU 33.8% 5.7% -0.1 0.1
LV 68.6% 1.7% 0.1 0.0
63
RES-H&C share
in MIX
in 2030
(% share)
Increase in RES-H&C
share between REF
and MIX in 2030 (p.p.
increase)
Change in share of fuel
expenditure as % of
private consumption
between REF and MIX
in 2030 (p.p. change)
Change in share of
H&C equipment
expenditure as % of
private consumption
between REF and MIX
in 2030 (p.p. change)
MT 39.6% 10.7% -0.1 0.0
NL 16.2% 2.2% -0.1 0.1
PL 34.4% 7.4% 0.5 0.7
PT 53.5% 1.2% -0.2 0.0
RO 38.2% 5.2% 0.1 0.0
SE 72.9% 1.3% -0.3 0.2
SI 48.2% 6.2% 0.1 0.5
SK 31.2% 7.9% 0.3 0.2
The MIX scenario projects that the share of renewables in H&C has to increase considerably in all
MS and this in close correlation with respective national potentials. However, the effort is balanced
across MS and the costs impacts for households are moderate. Largest fuels costs increase are mostly
incurred by MS still having high share of fossil fuels in their residential energy mix and lowest costs
increases are incurred by MS that have most significant fuel switch to renewables and electricity.
The largest decreases in fuel costs often go hand in hand with highest expenditure increases for H&C
equipment. These two elements to some extent balance out and the overall, buildings-related energy
expenditure share in private consumption (including also renovation costs and other energy-
consuming equipment costs) show rather small increases between REF2020 and MIX scenario in
2030 (see “Technical Note on the Results of the “Fit for 55” core scenarios for the EU Member
States”).
Fuel mix change in power generation impacts
The table below shows projections of MS RES-E shares and how they need to increase in 2030
between REF2020 and MIX scenario (in p.p). The increase of overall RES ambition is the driver
alongside the increase of the ETS price in the current scope. The impacts of renewables uptake in
power generation can be analysed:
- from the supply-side perspective - a substantial fuel switch from fossil fuels to renewable
solutions in power generation leads to a significant investment needs increase
- from the consumer perspective - in terms of electricity prices.
It can be observed that all MS need to increase considerably their investment in renewables in power
generation and the effort is, even more than for RES in H&C, differentiated across MS in line with
potentials for different technologies. Importantly, power generation is the sector where renewables
share is already very high in REF2020 or potential is still limited due to land constraints, more
remote locations and less mature technologies would be needed. Clearly, the MS with large offshore,
onshore or solar potential, including repowering, (still available in addition to ambitious
developments taking place already in the REF2020) have a most significant increase in investment
needs such as Czechia, Italy, Romania, and Slovenia. The investments in new installations are in
modelling recovered via electricity prices. It can be noticed that for most MS the electricity price
64
declines in 2030 (comparing MIX to REF2020) and often in the strongest manner for MS that have
the most ambitious developments in renewables.
Table 10: National RES-E shares and impact on investment needs in renewables in power generation and on electricity prices; Source:
PRIMES, EC own calculations
RES-E share
in MIX
in 2030
(% share)
Increase in RES-E
share between REF
and MIX in 2030
(p.p. increase)
Increase in investments
in renewable power
generation
84
(% change)
between REF and MIX
in 2021-2030
Change in electricity
prices (% change)
EU 64.8% 6.3 42% -1.3%
AT 93.6% 0.9 17% 0.1%
BE 40.4% 2.0 35% -1.2%
BG 37.5% 2.2 18% 7.1%
CY 40.9% 13.3 66% -1.0%
CZ 34.9% 15.7 220% 2.2%
DE 66.5% 4.4 39% 1.8%
DK 94.5% 1.0 4% -0.2%
EE 54.0% 10.9 24% 1.6%
EL 68.2% 2.6 13% -3.6%
ES 89.5% 2.6 20% -4.9%
FI 53.7% 1.6 33% -1.2%
FR 55.6% 4.3 27% -1.7%
HR 70.8% 6.4 88% 4.5%
HU 25.0% 4.3 65% -3.6%
IE 75.5% 5.6 13% -2.7%
IT 67.3% 16.8 166% -2.5%
LT 77.3% 18.6 79% -3.9%
LU 41.5% 1.3 8% -4.4%
LV 76.2% 1.8 9% 3.8%
MT 14.1% 3.5 161% -4.0%
NL 82.0% 9.8 26% -14.5%
PL 42.0% 11.0 93% 1.2%
PT 89.0% 2.3 16% -4.4%
RO 59.6% 10.3 109% -1.5%
SE 88.6% 5.8 220% -3.0%
SI 45.6% 10.0 151% 7.0%
SK 31.4% 7.1 83% 1.2%
84
Excluding biomass
65
6.1.3. Effectiveness
6.1.3.1 Level of target
The default Option 0 is the baseline in which the EU RES target is not increased to reflect the new
climate ambition. In effect the result would be that the 38-40% renewable energy target would be
aspirational rather than mandatory and would make it difficult to mobilise the necessary policy effort
at national level and make use of EU-level instrument in response to non-target achievement.
However, it is important to note that in the absence of an increased overall EU RES target and
further renewables-specific policy intervention, some effectiveness could be reached through other
regulatory instruments (EED, EPBD for example), or market based instruments with higher carbon
prices to partially compensate for not increasing the overall EU RES target.
Furthermore this option would also mean Member States are not bound to revise their national
contributions upwards and that there would be no action taken if Member State policy commitments
are insufficient to deliver the 2030 target. Thus, an EU RES share increase would rely on Member
States voluntarily revising their ambitions upwards in the context of national policy updates.
Options 1 and 2 would require increasing the EU target to at least 38-40%. Although Option 2 would
be the more effective option in contributing effectively for further GHG reduction, higher shares of
renewables would diverge from the cost-effective pathways established in the CTP. Furthermore
higher ambition for renewable energy share would have to be balanced with different levels of
ambition in other sectors hence departing from the coherence of the targets proposed under the CTP.
The level of ambition proposed in the context of this initiative is fully coherent with the analysis
provided in support of the CTP and would be effective in reaching the increased climate ambitions.
Feedback received through the open public consultation highlights broad support for increase of
climate and renewable energy targets with 80% of respondents in favour of an increase at least to the
level of the CTP and higher.
6.1.3.2 Nature and delivery of the target
Once the EU target has been raised, automatically an ambition gap emerges as the collective sum of
the national contributions currently documented in the NECPs are no longer sufficiently ambitious to
achieve the EU target.
Option 0 would imply no change and continue relying on the current Energy Union Governance
process, which is an important foundation for achieving the renewables target. In the first iteration of
the review process of national plans completed in 2020 this proved to be effective in achieving a
sufficiently high collective ambition for reaching the previous 2030 RES targets. Under the
Governance Regulation the Member States must submit their draft updates to their NECPs by June
2023.
In that draft NECP update Member States can already show their national contribution to a new
increased 2030 target and give some elements of how they are planning to reach the higher target. By
the submission of the final updated NECPs by end June 2024 the Member States will be able to
present concrete measures leading to more ambitious RES achievement.
However, there is no guarantee that such a process will deliver the EU-wide renewables target; it is
rather likely that an ambition gap remains once this has been completed. In this case, further
66
measures may need to be considered. One option could be that any Member State with contributions
below the level calculated under the RES formula are requested to either increase the ambition level
of their national contributions, as under the current Governance Regulation, or make a proportionate
payment to the Union Renewable Energy Financing Mechanism85
. Based on the total Member States
payments and the expected contribution from those, the mechanism would be assigned a renewable
energy target which would close (part of) the EU ambition gap. Given the competitive nature of the
mechanism (EU-wide tenders) this could also increase cost-effectiveness of reaching Member States
contributions and thus the overall EU renewables target (see also section 6.8.1 on cross-border
cooperation. Furthermore, sector-specific EU-wide targets and measures can be strengthened to the
extent needed to close the ambition gap, for example requiring higher RES shares in heating and
cooling, transport or electricity specifically after co-legislation through the governance process either
at EU or Member State level.
An alternative option to having gap filling instruments would be to return to a system of binding
national targets for Member States as per Option 1. This would be the most effective option to help
ensure target achievement. However, while a majority of OPC respondents supported this, Member
States are not likely to support any change to the political agreement in 2018 also because an EU-
level target has proven to be sufficient to reach the old 2030 objective.
The results of the modelling scenarios can help identify some important features regarding the
projected contributions Member States could make to achieve the 2030 target. The table below
illustrates the overall renewables shares across all Member States for a range of different scenarios
based on modelling together with those emanating from the updated formula parameters specifically
for a 40% EU RES Share target.
Table 11 - Renewable shares per Member States under various criteria; Source, EUROSTAT, PRIMES,EC calculations
2020 framework 2030 framework
MS 2019 2020 target MS Final NECP
contribution
Current RES
formula
benchmarks(based
on REDII)
Updated RES formula
benchmarks to reach
40% RES Shares
(indicative figures)
AT 33.6% 34% AT 46%-50% 46% 54%
BE 9.9% 13% BE 17.5% 25% 32%
BG 21.6% 16% BG 27% 27% 31%
CY 13.8% 13% CY 23% 23% 31%
CZ 16.2% 13% CZ 22% 23% 31%
DE 17.4% 18% DE 30% 30% 38%
DK 37.2% 30% DK 54-55% 46% 55%
EE 31.9% 25% EE 42% 37% 46%
EL 19.7% 18% EL 35% 31% 36%
ES 18.4% 20% ES 42% 32% 41%
FI 43.1% 38% FI 51% 51% 57%
FR 17.2% 23% FR 33% 33% 41%
HR 28.5% 20% HR 36.4% 32% 40%
HU 12.6% 13% HU 21% 23% 31%
85
Commission implementing regulation (EU) 2020/1294 on the Union renewable energy financing mechanism,
https://ec.europa.eu/energy/topics/renewable-energy/eu-renewable-energy-financing-mechanism_en
67
IE 12.0% 16% IE 34.1% 31% 40%
IT 18.2% 17% IT 30% 29% 36%
LT 25.5% 23% LT 45% 34% 45%
LU 7.0% 11% LU 25% 22% 34%
LV 41.0% 40% LV 50% 50% 57%
MT 8.5% 10% MT 11.5% 21% 27%
NL 8.8% 14% NL 27%-32% 26% 36%
PL 12.2% 15% PL 21%-23% 25% 31%
PT 30.6% 31% PT 47% 42% 48%
RO 24.3% 24% RO 30.75% 34% 38%
SE 56.4% 49% SE 65-67% 64% 71%
SI 22.0% 25% SI 27% 37% 43%
SK 16.9% 14% SK 19.2% 24% 32%
EU27 19.7% 20% EU27 33.1-33.7% 32% 40,0%
6.1.4. Administrative impacts
The impacts of an increased EU RES target on administrative burden will be limited as there would
be no recurring administrative requirements introduced by an increasing the RES target. It would
require Member States to update their renewable contributions in the national plans update under the
governance framework. The administrative costs for all policy options can be estimated to be low or
even close to zero as these targets can be monitored through official statistics (renewable energy
shares including sectoral and absolute amounts per technology) which are already readily available at
national level and from Eurostat. However, limited resources at the level of Member States to
develop new official statistics, combined with the absence of a formal legal basis for countries to
report data on the share of renewables to Eurostat, may be an obstacle to monitoring renewable
energy improvements in detail.
6.1.5. Coherence
Different combinations of policy instruments considered in the different scenarios achieving the
same 55% GHG target deliver only limited differences in energy savings and renewable energy
shares thus confirming the CTP findings about rather convergent pathways that represent cost-
effective solutions.
Table 12 - Interaction of the 2030 GHG ambition with renewable energy share and energy savings
2030, EU-27 results REF REG MIX MIX-CP
GHG reductions (incl intra EU aviation and
maritime, excl LULUCF) wrt 1990
% change from
1990
43% 53% 53% 53%
Overall RES share % 33,2% 40% 38% 38%
PEC energy savings % change from
2007 Baseline
-33% -39% -39% -38%
FEC energy savings % change from
2007 Baseline
-30% -37% -36% -35%
The REF and MIX-LD scenario show clearly that without an increase of renewable energy to at least
a binding 38-40% EU target there is a risk of not achieving the higher climate target ambition. In
68
REG and MIX scenario increased regulatory action is needed for achieving the necessary share while
in MIX-CP very high carbon price on fossil fuels (also in buildings and road transport) plays a
crucial role but also potentially exacerbates distributional impacts on poorer households. Absence of
regulatory drivers representing RED revision in the context of MIX scenario leads to 1.2 p.p. gap for
GHG 55% target as illustrated by MIX-LD variant.
Neither the overall level of ambition nor any changes to the policy architecture that are under
consideration in this impact assessment would take place in a policy vacuum. They are bound to
interact with existing and planned pricing and non-pricing mechanisms to reduce GHG emissions as
well as with policies promoting energy efficiency. Assessing the interplay of various elements of a
changed policy architecture – in particular the option of an expanded ETS – with existing related
EU-level and national level policies is key and reflected in the core scenario design.
As explained above, it is clear that the increased deployment of renewables must contribute to the
achievement of the increased 2030 EU climate target in a cost-efficient manner. Furthermore,
concrete policy measures in the field of renewables can help to address existing market barriers,
increase investors’ confidence in new technologies and redress distributional impacts. A generic
target of GHG reduction is not enough to promote renewables, while increasing the share of
renewable energy is essential to reducing GHG emissions. REDII is the instrument promoting the
uptake of renewable energy by targeted measures, including targets (and sub-targets, e.g. for
innovative technologies/fuels), covering different sectors and addressing different market
failures/non-market barriers (e.g. in terms of infrastructure, development of innovative technologies,
creation of lead markets, capacity building together with increasing consumer acceptance).
The revision of RED is a precondition for fulfilment of increased ESR national targets as necessary
to achieve the increased climate target. The REDII revision will ensure that Member States have the
right incentives and enabling framework to deploy much more renewables in the heating, cooling
and transport sectors. The uptake of renewables now has been already a key avenue to meet the
increased national ESR targets. Furthermore, the revision of REDII can have many positive
synergies with other elements of “Fit for 55” package as explained in section 1.2. The most relevant
interactions are with the Emissions Trading System, in the option which extends it to buildings and
transport.
The CTP analysis clearly showed that strengthening of regulatory measures promoting renewables
works in synergy with carbon pricing as discussed (see also section 5.2) and this finding is also
confirmed in the “Fit for 55” core scenarios. Such synergies are even stronger in the field of energy
efficiency as discussed in the EED IA. In the field of renewables, the regulatory measures such as
targets for innovative fuels or sectoral targets ensure that all sectors and all technologies contribute to
increased climate ambition. Also a number of regulatory measures (on PPAs, wind offshore,
renewable and low carbon fuel certification) establish an enabling framework that is essential for
investments to happen. Finally, a number of measures are proposed to Member States in the field of
H&C respecting national competences and yet providing a clear indication of effective measures.
All these measures enable balanced pathways towards an increased climate target in 2030 and avoid
the very high carbon price of the MIX-CP scenario (80€/t of CO2eq in buildings and road transport)
that could further aggravate energy poverty and increase distributional impacts.
When considering the nature of the target, Option 0 combined with the governance system would
guarantee that the EU target would be met while with leaving enough flexibility to Member States in
setting and adjusting their national targets/contributions. The Governance process also has the merit
69
of increasing the economic efficiency of its implementation, in that the need to consult neighbouring
Member States as part of the establishment of national plans means that decisions about managing
energy demand and deciding on supply options would be better coordinated among Member States
across the internal energy market rather than done in isolation.
On the other hand, national binding targets (Option 1) can be a strong driver for national action,
ensuring political accountability and commitment to deliver results while providing flexibility to
choose and apply the most suitable tools to achieve the target. However, important synergies in
policy making on EU level (e.g. cross-border cooperation) could be lost. Regarding coherence with
other legislation this approach would run counter to the recently established Governance framework
and might lead to increases in administrative costs linked to fragmented EU action and potential
harm to businesses operating across the internal market limiting the economic efficiency of this
approach.
Another important element is the coherence between the overall EU RES target and the specific sub-
targets specifically in sectors where renewable energy or renewable based fuels is still lacking, thus
hindering further system integration. These targets and benchmarks, generally build on the current
policy design in REDII while the level of ambition is consistent and coherent with other legislative
instruments under the ‘Fit for 55 package’ also providing investor certainty and spur innovation. The
assessment of the nature and design is assessed in the specific sections.
6.1.6. Stakeholders’ Opinions
Stakeholders’ Opinions
In the OPC, 43% of the respondents (that mostly came from academic/research institutions,
business associations and organizations, public authorities and trade unions, and even half of
the respondents coming from consumer organisations) stated that the target should be in line
with the CTP of achieving at least 38-40% of renewables in the gross final energy
consumption. 37% of the respondents (mostly environmental and non-governmental
organisations) indicated that the 2030 Union target should go beyond 40%. In the 1st
stakeholder workshop, the majority of respondents favoured an overall renewable target that
is binding at both EU and national level. In the discussions, the International Energy
Agency, business associations focused on transition and large energy/utility companies,
among others, clearly favoured a more ambitious overall RE target.
6.2. Heating and Cooling
The options are assessed against the objectives established in section 4.2. The impacts have been
assessed via ‘Fit for 55’ core scenarios complemented by additional modelling, analysis and case
studies carried out for this Impact Assessment. Further elaboration of impacts of specific measures
that can complement options on the target are set out in Annex 7. The options complement carbon
price mechanisms and energy efficiency measures (addressed under the EED, EPBD reviews and the
eco-design and labelling framework).
70
6.2.1 Target(s) and measures
The increase in RES H&C shares between 2009 and 2019 was only 5.3 p.p.86
with the EU expected
to achieve a 23.4% RES-H&C share by 2020. However, the situation varies significantly in Member
States, with the share in Nordic and Baltic Member States reaching as high as 55-70% RES H&C
share in 2020, and in the Netherlands, Belgium and Ireland as low as 6-8%. This reflects different
starting points, different potentials and thus national fuel mixes as well as the use of collective
heating and cooling systems vis-á-vis individual ones.
In CTP scenarios, the RES-H&C levels were projected to attain between 38-41% under policy
scenarios. The results of “Fit for 55” core scenarios are in agreement with the CTP analysis as
projected RES H&C shares are: 36-41%. MIX-H2 variant would be also within this range with no
uptake of RFNBOS projected in buildings but some uptake in the industry. See section 6.6.
As shown in the figure below, a strong increase compared to REF of ambient heat from heat pumps
and renewable derived heat consumption in district heating and cooling networks, buildings and
industry is needed.
Figure 9 - Decomposition of the renewables share in heating and cooling; Source EUROSTAT, PRIMES
The rationale for further action is that with the implementation of current practices (option 0), the EU
is projected to only reach 33% RES in H&C in 2030, contributing to the achievement of 33.2% in the
overall RES-share projected in REF, therefore hampering reaching the higher GHG ambition in 2030
in a cost-effective way, which was also highlighted by the dedicated variants in the impact
assessment. MIX-LD variant assessing impacts of the absence of revision of RED shows a gap of
2.9% percentage point (pp) to the necessary RES-H&C share. The fulfilment of the baseline binding
target only by Member States would thus not be sufficient.
86
EU 27 RES share in heating and cooling was 16.79 % in 2009.
71
Buildings have the largest share in overall heating and cooling consumption. Currently millions and
millions of boilers burning fossil fuels (natural gas, coal and heating oil) are installed in buildings.
Around 88% of heating is supplied from individual boilers in a highly decentralised and distributed
way. Around 12% of buildings are serviced from district heating systems. District heating is also
The current share of renewables in the EU overall buildings stock88
is
mostly based on fossil fuels87
.
only 23.5%89
, mostly representing biomass stoves and boilers. Heat pumps utilising ambient and
geothermal energy constitute yet only 2.5% and solar thermal around 1.2%. More details are found in
Annex 7 in the buildings section.
The key trend that can be observed historically and confirmed by the CTP modelling exercises, on
which this IA is based, is that buildings will experience a rapid growth of electricity consumption,
mostly coming from renewable sources and a decrease of fossil fuels (notably gas). As discussed in
the in-depth analysis accompanying the Clean Planet for All Communication, electrification of
demand combined with decarbonised electricity supply and self-generation of renewables are
fundamental drivers in reaching climate neutrality by 205090
. Electrification is driven by rapid
deployment of electric heating, most notably heat pumps, leading to efficiency gains in production
and further integration of variable renewable electricity. The increased efficiency of the use of
electricity in buildings is well illustrated by the limited growth in absolute electricity consumption.
For specific details on the fuel mix of space heating and the share of energy carriers please see the
buildings section in Annex 7.
Figure 10 - Final energy consumption in buildings; Source PRIMES
Buildings have a large potential to contribute effectively to GHG reduction through increased energy
efficiency and renewable energy. The share of renewables in buildings is expected to reach more
87
The share of renewables in district heating is 29%. Out of this 27% is biomass. Heat pumps have 1.2%, geothermal 0.7,
and solar thermal 0.1%. Natural gas’ share is 30%, coal and peat have 27% (2018). These shares have been calculated
based on Eurostat and Euroheat & Power data under the study ENER/C1/2018-496.
88
Residential, service and industrial sector buildings combined.
89
This share is calculated primary energy and includes the renewable sources and fuels used to generate electricity and
district heating. In final energy, the share of renewables is 16%.
90
The paper submitted by Energy Norway for example also mentions electrification of buildings and its dependency on
energy efficiency and infrastructure.
72
than 49% in 2030 mostly through direct renewable heat, such as solar thermal, geothermal, and
bioenergy, and through a threefold increase of renewable electrification and ambient energy (see
figure below). The increased renewable share also reflects reduced demand from increased energy
efficiency. The aim of Option 3d) under the H&C options is to assess the need to include a minimum
level of renewable energy in buildings that would complement Option 2 on the list of measures in
conjunction primarily with the EPBD, the revision of which is scheduled for the end of 2021.
Figure 11 - Final renewable energy consumption in total building stock (ktoes); Source PRIMES
Stakeholders’ Opinion
78% of those replying to the OPC, in particular environmental organisations (87%) and NGOs
(82%), expressed the view that there should be a minimum percentage of renewables in new and
renovated buildings. 15% of the participants indicated that this should only be only the case for new
buildings, and 3% indicated that this should only be only for buildings subject to major renovation,
and 22% of the participants think that there should not be a minimum percentage. ‘Yes’ is the most
common reply among all stakeholder groups (environmental organisations (87%) and NGOs (82%)
were the most adamant supporters and all other groups also tended to opt for this option more
frequently -more than 50% of the respondents in each stakeholder group). Regarding the question
which should be the minimum percentage, 45% of the participants chose the ‘other’ option. Amongst
the provided percentages, 50% of renewable energy is the preferred e most common response (34%
of EU/Non-EU citizens and 56% of respondents coming from academia/research institutions opted
for this choice); followed by a renewable share of 100% (42% of the respondents coming from
environmental organisations and 24% of the respondents coming from public authorities chose this
answer). About 18% of the respondents chose a percentage of 40% or lower which should be set at
50%, followed by 100%. 15% of the participants indicated that this should only be for new buildings.
All measures proposed to improve the replacement of heating systems were rated either appropriate
or very appropriate, with a combined approval ranging from 81% to 95%. However, panellists
present at the 1st stakeholder workshop warned that building-specific targets could become very
expensive and miss the level of heat needed. During the 2nd stakeholder workshop, the European
73
6.2.1.1. Impacts projected by the core scenarios and variants
Environmental impacts
A potentially significant environmental impact of increased renewable energy in heating and cooling,
together with other measures targeted at renewable heating and cooling, is pollution from inefficient
biomass use. This impact is dependent on the extent biomass is used to replace fossil fuels in heating,
the type of biomass and whether best available and state-of the art technologies are used, as these
factor can minimise such emission. These impacts are better addressed through existing horizontal
legislation as explained in more detail in Section 6.7 under bioenergy. The impact of increasing
GHG ambition and increased RES-H&C on biomass deployment, the MIX scenario shows the
aggregated final energy use for heating and cooling in the residential sector at EU-level.
The figure below depicts the potential evolution of the fuel mix used at residential level. The
outcome of this analysis is that the biomass use remains constant (and even decreases in absolute
terms) between 2020 and 2030, while oil and solid fuel use substantially decrease. This is also due to
additional energy efficiency measures, extension of carbon pricing to buildings and further
electrification in the heating and cooling sector. The overall combined impacts of policies targeting
heating and cooling on the environment is expected to be positive. As a result significant reductions
of CO2 emissions are achieved in both residential and services sector as illustrated in the table
below.
Table 13 - GHG emission reduction in buildings in 2030; Source: PRIMES
Buildings sector CO2 emissions in 2030 REF REG MIX MIX-CP
Residential sector (% change
from 2015)
-32% -56% -54% -50%
Services sector (% change
from 2015)
-36% -53% -52% -48%
Figure 12 - Final energy per energy carrier in residential heating and cooling demand; Source PRIMES
heating industry requested minimum targets for buildings and large renovation. Consumers requested
more information measures on heat pumps and they are of the opinion that low carbon hydrogen has
no place in residential heating.
74
Economic (including Energy System) and social impacts
Fuel prices and energy expenditure
A potentially important impact of additional measures in heating and cooling would be the energy
prices for households specifically for heating and cooling requirements. Using the core scenario
results, the expected evolution of energy prices91
at household level, shows an overall increase of
energy prices between 2021 and 2030 (around 39% on average92
) as shown in the figure below.
Electricity (more than 60% based on renewables) and biomass energy prices are set for a limited
increase (10% and 19% respectively). This increase is partially due to market developments, and
partially due to climate and energy policies. The impact assessment carried out for the CTP showed
that the scenario relying on high carbon pricing only, has the highest negative impact on low income
households.93
The scenario results in terms of social and distributional impacts across the core
scenarios are discussed in section 6.1.2.3 and 6.1.2.4.
However, the distributional impacts could be at least to some extent addressed if the revenues from
carbon pricing used in buildings would support low income consumers to decrease their energy bills,
by e.g. focusing on these target groups with deep renovation programmes, or provide subsidies for
the replacement of old and inefficient heating appliances (by renewable-based technologies such as
solar thermal or geothermal based technologies which do not entail fuel prices), or providing lump
sum support (possibly linked to the deployment of renewables). These targeted use of ETS revenues
could offer an opportunity to accelerate both energy efficiency and renewable technologies such as
heat pumps for space heating and cooling in buildings abating also air pollution especially in cities.
Such programmes should be adapted to overcome the lack of capital and other barriers that may
exist. The distribution of the costs and benefits of a binding H&C RES target across Member States
will depend to a large extent on how a MS intends to design its framework in order to meet the
target.
91
At the system level, the mainstreaming of renewable heating systems will present additional investment cost due to the
relatively low prices of oil and especially gas boilers, which have benefited from decades of market scaling, still ongoing
hidden and social price subsidies and a fully amortised gas distribution network built mainly with public money in the
previous decades. These legacy advantages are difficult to model together, and the relevance of locally and temporally
defined costs and benefits of specific heating technologies, which would give a positive comparison of renewable heating
are also not sufficiently reflected. This requires modelling tools integrating hourly resolution for demand and supply and
data from geographical information systems (GIS). Other constraints are the lack of comprehensive data sets of
consumption and technologies of heating and cooling as these end-uses are not directly reported in Eurostat and national
statistics, but must be calculated or derived from overall energy balances and other specific or sectoral statistics, such as
the recently introduced Eurostat household statistics. Thus data sets do not cover all sectors, and existing data sets are not
yet available for all Member States.
92
non-weighted average of Solids, Diesel, oil, LPG, Natural gas, Biomass, Electricity and Steam
93
SWD(2020) 176 final – Impact assessment accompanying the document “Stepping up Europe’s 2030 climate ambition
- Investing in a climate-neutral future for the benefit of our people”
75
Figure 13 - Evolution of end user energy prices for households in scenario MIX; Source PRIMES
Modern renewable heating systems (geothermal and air/water source heat pumps, solar thermal) do
not need fuel input for heating and energy consumption is limited to auxiliary energy to drive e.g.
heat pumps and control systems. These manifest in positive disposable income effects from lower
operating costs, reduced fuel expenditure and stable prices unaffected by global price fluctuation.
While some of the renewable heat appliances require higher upfront costs, they reduce household
expenditure once installed, and over their lifetime (20 years) they result in significant savings and
increased disposable income. When this target under Option 3d) and the complementing list of
measures under Option 2 are combined with stronger carbon pricing, as in the MIX scenario, the
value of initial upfront investment decreases in relative terms and the pay-back time shortens
improving the cost-benefit ratio for consumers.
In addition, some of the renewable heating appliances have lower upfront costs at installation and
lower levelised cost of heat (LCOH)94
than the reference gas (condensing) boilers (most used at EU)
which varies from country to country95
. Renewable solutions, such as heat pumps using ambient and
geothermal energy, solar thermal and biomass are already competitive with the dominant gas and oil
boilers. The fact that LCOH of renewable heating technologies is often already lower than that of
fossil fuels, yet their market take-up remains subdued demonstrates that other, non-market barriers,
such as lack of information, lack of coordination and level-playing field are at work. The list of
measures under Options 2 is thus necessary to complement both the target under Option 3d) and
increased carbon prices.
94
Constant unit cost (per kWh) of a payment stream which has the same present value as the total cost incurred by
installing and operating the energy/heat-producing installation over its lifetime.
95
TU-Wien, Fraunhofer and alia, ENER/C1/2018-494, on-going
0
500
1000
1500
2000
2500
3000
2010 2015 2020 2025 2030
END USER PRICE (in €/toe)
Solids Diesel oil LPG Natural gas Biomass Electricity Steam
76
6.2.1.2. Impacts and analysis not based on modelling
GHG reduction:
The switch from fossil fuels to renewable heating is the main way to reduce GHG and other air
pollutant emissions. Most renewable heating solutions achieve below 100 gram CO2/kWh emissions
compared to fossil fuels ranging from 240 gram CO2/kWh to above 400 CO2/kWh96
.
Transitioning their heating and cooling systems away from fossil fuels is a key component of
national strategies to achieve GHG reduction in a few Member States, which have elaborated such
strategies in line with their EU and Paris agreement obligations. Among these Member States, the
Netherlands, France and Germany conducted in-depth analysis and public consultation on how to
pave the way towards heat decarbonisation, while Poland set a more limited objective, focussing on
phasing out coal as a major source of GHG emissions and air pollution. These national strategies
foresee a considerable increase of the share of renewable energy sources, while the approach to
decarbonise the heating sector differs between the strategies. The Netherlands propose a district
approach, in which municipalities take the lead in the transformation through “heat visions”, which
are developed at municipal level. The decarbonisation measures proposed in the strategies of France
and Germany largely address building owners as well as professionals in the building sector. All
national strategies place heating decarbonisation in buildings and renewable space heating at their
core. While the strategies do not provide quantitative targets for individual renewable heat
technologies, they foresee subsidy schemes and regulatory measures (RES-quota) to increase the
share of renewable energies for heating.
Examples of national strategies are listed in the table below:
Climate Agreement (Netherlands) (Ministerie van Economische Zaken en Klimaat 2019)
French Strategy for Energy and Climate (Ministère de la transition écologique et solidaire 2018)
Heat Transition 2030 (Agora Energiewende 2017)
Energy Efficiency Strategy for Buildings (BMWi 2015)
Systemic challenges of Germany's heat transition (Fraunhofer ISE et al. 2020)
Energy Policy of Poland – Extract from draft (Ministry of Energy 2018)
Air pollution reduction
One of the expected impacts of the proposed Option 3d) combined with Option 2, is the significant
reduction in air pollution and CO2 emissions.
Switching for renewables from fossils in heating has been and is the main way to ensure clean air.97
This impact has been demonstrated by the results of national strategies and case studies.
96
Fossil heating systems CO2 emissions are based on JRC (Petten) analysis communicated under AA 2020-520.
77
One such examples is that of Poland, where coal based heating is a source of emissions of sulphur
compounds, nitrogen, benzopyrene and dust, as well as carbon dioxide. The main reason for poor air
quality in Poland is emissions from individual sources (apart from transport) of heat generation in
over 5 million buildings. Pollutants are introduced into the atmosphere from low chimneys in areas
with residential buildings. Approximately 3.5 million of these buildings are supplied with heat from
low-efficiency coal-fired sources. Old, energy inefficient boilers and furnaces fired with poor fuel
are the main cause of smog production.
To resolve this environmental and health crisis, the "Clean Heat 2030” strategy for Poland examined
how to make heating no longer a source of smog in Poland by 2030 in a cost-effective and socially
acceptable way98
. According to the analysis, health costs of pollutants can be reduced by 50% within
a decade and dust emissions from individual heating by 91%. At the same time, CO2 emissions from
heating will fall by 30%. The report refers to the whole area of heating, both district heating and
individual heating systems. Even with a conservative approach, the external costs of smog in Poland
today exceed PLN 16 billion annually. These heat production costs are not included in the production
price. Poles, however, bear these costs by paying for them with poorer health and suffering the
consequences of climate change. The report suggests the elimination of solid fuels from individual
heating by 2030. Domestic coal-fired furnaces should be replaced, depending on local conditions, by
connection to district heating networks and on the long-term by the electrification of heating. The
authors calculated that the share of heat cost in the household budget may increase by up to
2 percentage points in the short term and it will start to decrease in the long term.
Cooling
The global energy demand for cooling is growing rapidly. Cooling accounts for around 4% of final
energy demand in the EU, with about 130 TWh for space cooling and about 190 TWh for process
cooling99
. Cooling is currently 99% electricity-driven, such that unlike heating, cooling typically
does not involve the direct use of fossil fuels. 99% of cooling is provided by electric driven vapour
compression systems (heat pumps and reversible heat pumps). Only 1% is supplied by gas or heat
driven cooling generators (absorption cooling) used mainly in industry and district cooling systems.
More information is included in Annex 7.
Cooling demand in buildings currently accounts for around 2% of final energy consumption in the
EU, and process cooling in industry is an additional 2%100
. Cooling demand is rapidly growing due
to higher living standards, higher building energy performance standards and climate change. Space
cooling (SC) in residential and service sector consumes 81.5 TWh per year101
. Just a few countries
97
Air pollution reduction is conditional on the extent and quality of biomass use. Low quality and inefficient use of
biomass can still result in significant particulate emissions. However, the interplay between the H&C options and the bio-
sustainability options ensures that limitations are placed on the use of non-sustainable and inefficient use of biomass.
98
Clean heat 2030, Strategy for heating, Forum Energii, April 2019, available at:
file:///E:/Literature/Clean%20Heat%20for%20Poland%20strategia%20dla%20cieplownictwa_en_net.pdf
99
https://www.forecast-model.eu/forecast-en/aktuelles/meldungen/news-2016-05.php
100
Since cooling consumption has to be calculated
101
Renewable cooling under the revised Renewable Energy Directive, ENER/C1/2018-493 on-going. Please note that
cooling consumption is not reported in European energy statistics and have to be calculated from available data on
cooling stocks, building surface areas, etc.
78
account for the absolute majority of the final SC consumption amount of the entire EU27+UK.
Spain, Italy, France, UK, and Greece come out to account for more than 80% of Europe’s final SC
consumption for the residential and service sectors. For countries such as Malta and Cyprus, cooling
accounts for 25% and 40% in their heating and cooling mix and more than 16% and 13%,
respectively, in their total final energy consumption.
The definition and calculation methodology of renewable cooling has not yet been established due to
so far relatively low statistical weight of cooling in overall EU energy consumption (even if in
specific countries this share can be significant). REDII specifies that the Commission shall adopt
delegated acts to supplement the Directive at the latest by 31 of December 2021, including a
methodology for calculating the amount of renewable energy utilized for cooling and district cooling
(DC), a definition for renewable cooling, and amend the directive accordingly. In order not to
prejudge the outcome of the delegated acts, no specific options were included for cooling options
design.
NECPs assessment
According to the NECP assessment102
EU 27 anticipate a share of renewable energy in the heating
and cooling sector of 23% in 2020 and 33% in 2030. The 33% RES H&C share in 2030 was
facilitated by more than 10% decrease in the final energy consumption for H&C projected by
Member States from 2020 to 2030 in EU27103
.
The share of renewable energy is above 50% by 2020 in 5 MS (Denmark, Estonia, Finland,
Lithuania, and Latvia)104
. In Sweden, this share is above 60%105
. Several countries report a low share
of RES in the H&C sector and in three Member States the share of renewables is below 10%. In this
regard, the assessment clearly shows the diverse nature of Member States energy systems and their
starting points. Although Member States demonstrated significant efforts to decarbonise the H&C
sector in their NECPs, there were still many aspects that were not properly incorporated by all
Member States and measures were not sufficiently presented. As a result, there is a wide variation in
effort levels and contribution across Member States and the burden is not shared equally in
proportion of cost-effective potentials and GDP. More details are found in Annex 7.
Furthermore given the importance of the H&C sectors in the EU’s final energy consumption, no
action in this sector will clearly not deliver on the general and specific objective of this IA.
6.2.1.3. Effectiveness
102
Assessment of the heating and cooling related chapters of the NECPs, JRC (Petten) 2020, J. Carlsson, A. Toleikyte.
103
The final energy consumption (FEC) for heating and cooling represented about 46% of the total final energy
consumption in EU-27 calculated on the based on the Shares Tool (Eurostat Statistics) , which reflects national data
collection and do not fully report all types of consumption.
104
Above 50%, Member States has to achieve half of the renewable increase requirement, i.e. 0.55 percentage point per
year (Article 23(2)(c) of RED II).
105
Above 60%, Member States are not subject to the renewable increase requirement (Article 23(2)(b) of RED II).
79
The default Option 0 ‘No changes’ is the baseline and would result in the EU RES H&C share that
would be in line with the -55% GHG target remaining aspirational and not reflected in the legislation
with delivery of the overall RES ambition relying on other sectors or other instruments to deliver.
Option 1 ‘Non-regulatory measures’ – Guidance and Best Practice Exchange
This option involves only the use of non-regulatory measures. These offer the possibility to enhance
the correct implementation of REDII in a more harmonised manner by diffusing a common
understanding and best practices. The main instrument for this would be the Concerted Action of
Member States for the Renewable Energy Directive, which is a dedicated forum for informal
discussion and to share best practices on implementation.
These measures would at best help reaching full delivery of the current targets and better
implementation of measures. However, the current target is indicative and all measures are optional.
There would not be legal possibility to enforce implementation in case of those Member States that
despite receiving guidance and learning best practices would opt for low implementation efforts and
low prioritisation of heating and cooling. Maintaining the current indicative target and optional
measures would not raise the level of renewables sufficiently enough and would not incentivise a
step change towards carbon-neutrality. The option entails the risk of carbon lock-in, the continuation
of business-as-usual and failure of heating and cooling to contribute to carbon-neutrality. This would
put the burden on other sectors and force a much higher carbon price on consumers and businesses.
The cost-effective achievement of the 55% would suffer. There would be a risk to derail CTP and
EGD due to the large weight of this sector in the EU overall energy consumption.
This likelihood of such risks is demonstrated by the low ambition of the NECPs, where half of the
Member States failed to include trajectories and measures in line with the current provisions.
Option 2 ‘Extend the current list of measures of Article 23(4) in REDII’
This options introduces additional generic measures, which have proven to be essential building
blocks of successfully renewable mainstreaming and decarbonisation of heating and cooling.
Option 2 complements Option 3 on possible target design options. The list is not binding and its
main purpose is to provide templates how increased ambition in deploying renewable heating and
cooling could be achieved. Since the proposed additional measures are reflecting best practices of
effective heat decarbonisation, national implementation strategies will likely use many if not all the
measures in the list. The generic and essential nature of the measures in the list ensures that sufficient
freedom is left for Member States to adapt those to their specific national circumstances based on
subsidiarity.
Without specific measures to increase renewable’s competitiveness in both industry and building, the
risk remains high that renewable would not be taken up in the H&C sector. The alternative to enforce
the uptake of renewables via specific instruments would be increasing carbon pricing significantly.
However due to low elasticity of demand for heating, which is a basic necessity for both consumers
and industry, and the fact that once investment decision is taken, it cannot be corrected cost-
effectively during the lifetime of a heating asset (appliance, generation unit or infrastructure), high
carbon pricing would not be an effective drivers for a long time after a purchase and would thus lead
to significant wealth transfer from consumers without producing the desired outcome.
80
The extended list of measures are accompanying measures necessary to guide the transition process
to the medium goal of 55 GHG reduction and end goal of full decarbonisation of heating and
cooling. These extended list of measures are to guide actions to realise the cost-effective renewable
share in heating and cooling and thus are a necessary complement of Option 3 on target. The list of
measures together with a specific heating and cooling target and in synergy with strengthened but not
excessive carbon pricing, strengthened energy efficiency measures under the EED and EPBD,
complemented with a revised ETD together as a package lead to the most cost-effective and cost-
balanced delivery of the 55% GHG and carbon-neutrality by 2050.
Specific Measures:
Option 2-A1 Capacity building for national/local authorities to plan/implement renewable projects
and infrastructures, national and local heat planning
One of the challenges for Member States is to transition their heating systems from high carbon to
renewable and low-carbon heating at least and with minimum resources use. Local municipalities are
at the forefront of this transition due to the local nature of heating, as they will have to translate the
high-level EU and national objectives into concrete projects and actions. Municipalities and cities
thus need to be to map the availability of local renewable and other carbon-neutral, provide a
regulatory and project development framework for their mobilization, align spatial plans, coordinate
with building refurbishment and with all actors involved. They are the key to ensure that local energy
planning and ensuing actions, investment, projects are aligned with national energy objectives. This
requires specific capacities in planning and developing renewable projects and infrastructures and
coordinate among all interested actors. Option 2-A1 enables national and local authorities to gain the
knowledge and skills required for integrating renewables in heating and cooling, to make plans,
develop, finance and implement projects or programmes and to coordinate the many local actors.
Their capacity should also cover awareness raising campaign, training and qualification.
Coordinated infrastructure planning with more involvement of local and regional authorities could
result in important economic savings and avoid issues of mis-planning, mis-communication,
misinformation and lack of understanding of the local particularities, needs and opportunities
resulting in inefficiencies and enhanced energy system integration. It provides an enabling tool for
higher ambition in renewable heating and cooling, and increases the effectiveness of other measures,
not only planned replacement or targets but also with carbon pricing instruments. Heat planning
enables coordination with the Long-term Building Renovation Strategies (Article 2a of the revised
EPBD) and the Comprehensive Heating and Cooling Assessments (Article 14 of the EED and Article
15(7) of REDII) where MS integrated planning remains low106
. There are currently very limited
integrated planning in the MS, according to the JRC in 2018 only 26%107
of European cities had a
climate action plan or an energy transition strategy108 109
.
106
The Long Term Renovation Strategy of Ireland is one of the few integrated planning, which is mainstreaming
renewables into the renovation of the building stock(
https://ec.europa.eu/energy/sites/default/files/documents/ie_2020_ltrs.pdf)
107
Including cities in the UK.
108
Eurocities (2019) Cities Leading the Way on Climate Action
109
Galindo Fernández, M., Bacquet, A., Bensadi, S., Morisot, P. and Oger, A. (2021). Integrating
renewable and waste heat and cold sources into district heating and cooling systems, Publications Office of the European
Union, Luxembourg, 2021, ISBN 978-92-76-29428-3 (online), doi:10.2760/111509 (online), JRC123771
81
This shows that MS action alone would probably not have been sufficient to contribute to deploy
renewable in the H&C. Therefore, by reason of the effects of the variant, EU action would have an
added value, at least to incite MS to take think about integrated planning. This option thus is also key
to ensure effective coherence also with the EED and EPBD and effectiveness of carbon pricing.
Option 2a)-A2: Risk mitigation framework to reduce cost of capital for renewable heat projects
Investing in new heating and cooling systems entails risks for large and small projects alike. For
large projects project developers may have difficulties convincing banks and financial institutions
about their loan repayment capacity or would not easily be willing to assume all the risk and
uncertain or longer repayment time that the market generally allows. For small investors, banks and
financial institutions may not be willing to lend due to high administrative costs and limited return,
in turn small projects may face high transaction costs.
The option would effectively address risks inherent to large heat generation and heat infrastructure
projects, as well as investments in individual heating systems by households and small businesses
representing small capital volumes. 110
Although, there are currently no dedicated financing instruments for H&C at EU level, many generic
energy subsidies and grants are available and can be accessed for the purpose of financing H&C
initiatives111
. Given the lack of dedicated instruments, stakeholders need to have a good
understanding of the different financial instruments available to exploit them for the purpose of
financing green and low-carbon H&C projects. EU action is required to deliver economies of scale
and Union-wide coverage as well as to ensure a competitive single market for energy at least to
incite MS to take the required action.
Carbon pricing increases the attractiveness of renewable options in H&C by increasing the revenue
streams (or decreasing the operating cost compared to a fossil reference). With adequate and stable
carbon prices, the cost of de-risking instruments would reduce accordingly (e.g. risk insurance would
be reduced to reflect the risk). Such risk mitigation framework should recall that stable and visible
energy price evolution (incl. the carbon pricing components) would have a key role in mitigating the
risk.
Option 2a)-A3: Heat purchase agreements for corporate and collective small consumers
Heat purchase agreements can be an important tool to support the creation of heat markets and are
currently used much less frequently than power purchase agreements. A recent study shows that a
business model based on heat purchase agreements could be used to lower the barriers to heat pump
110
Daniilidis A.; Alpsoy, B.; Herber, R. (2017) Impact of technical and economic uncertainties on the economic
performance of a deep geothermal heat system
111
PNO, JRC (2019), Identification of EU funding sources for the regional heating and cooling sector. Available at:
https://op.europa.eu/en/publication-detail/-/publication/782b29a2-4159-11e9-8d04-01aa75ed71a1
82
adoption associated with their high upfront costs. The study is the first to consider economic analysis
of heat purchase agreements as a third-party ownership model for electric heat pumps.112
For the MS, the operating cost would be limited to the administrative costs to develop such global
framework and the cost for covering (backstopping) pilot or demonstration projects113
(such as for
the case of Bristol Energy). After such trial/demonstration period, operating costs would be tackled
by market actors, such as heat/fuel suppliers, to integrate directly in their new business models. This
could also provide some commercial advantages compared to formal suppliers not adapting their
business models to the needs of the transition to a low carbon heating and cooling system (driving
more energy efficiency and renewable, with energy utilities and other suppliers delivering new
services).
The example of Bristol Energy highlights a very big opportunity associated with this option –
consumer empowerment and increased awareness. Some of the key aspects highlighted during a
workshop held on September, 2019 on the topic of “heat as a service”, point out to consumer distrust
due to lack of information and the underdeveloped stage of this concept. In particular consumers
would be interested in having flexible contracts of no longer than 1-2 years and to be able to “roll-
over” unused usage under the “Energy as a Service” contracts (similarity with mobile phone plans).
Further, consumers need to be able to easily quantify the benefits and risks of taking up an offer and
how the technology and service is performing in real word scenarios. The design of these instruments
would be left to the MS, to comply with the implementation of the market design at national level,
and possibly with building codes or requirements (addressing comfort), as inviting MS to develop
such schemes would incentivise their development.
Furthermore, the success of this option is dependent on the development of adequate heat network
infrastructure, increased digitalisation of buildings and smart meter roll out. By tackling these issues,
authorities will support different professionals to developing new business models, helping
coordination between heat markets, electricity market, building design and performance. Carbon
pricing would also directly have an influence on supporting such heating purchase agreement
framework, increasing the attractiveness for renewables H&C, and the interest to develop adequate
business models, possibly based on a service concept.
Option 2a)-A4: Planned heating system replacement schemes:
The proposed options on targets for heating and cooling combined with the options proposed for
supporting measures (planned heating systems replacement) would ensure that the upcoming
replacement cycle is well-used to trigger a switch from fossil fuels to renewables and other carbon-
neutral solutions, and prevent the installation of new fossil appliances, which due to the long lifetime
of these assets, would result in carbon lock-in. This option would be effective to ensure several goals.
It would help accelerate and wide the deployment of renewables in heating and cooling, and
buildings. If applied together with heat planning, it could also ensure level playing field between
112
Kircher, K. Zhang, K. M. (2021). Heat purchase agreements could lower barriers to heat pump adoption. Available at:
https://www.sciencedirect.com/science/article/abs/pii/S0306261921000490
113
Heat as a service project in Bristol example: ttps://es.catapult.org.uk/news/bristol-energy-is-first-uk-supplier-to-trial-
heat-as-a-service/
83
individual and district heating and cooling solutions depending on whichever is the most cost-
effective.
The option on planned renovation is effective to ensure alignment with the CTP, which foresees the
need for annual 4% replacement rate of heating systems in building. Since the existing fossil heating
systems would be largely replaced with heat pumps and connection to modern district heating
systems would grow, planned replacement would also be effective in facilitating ESI and
electrification. According to ESI, in buildings, electrification is expected to play a central role, in
particular through the roll-out of heat pumps for space heating and cooling.
According to JRC’s NECP assessment, measures related to phasing out of fossil fuels in the heating
sector were expressed by eight member states, meaning these are probably already considered as
non-regret instruments. In addition to Austria and Germany, Ireland has also set up such scheme.
These schemes are concrete, driven by national or regional authorities, already implemented with
success and sometimes could be considered as the key pillar of decarbonising the H&C, depending
on Member States strategy. As these schemes would depend on many national/local factors, more
requirements from the EU would be counterproductive, although the EU could support the sharing of
best practices, and possibly provide some guidance.
Option 2a)-A5: Update of the qualification and certification requirements of installers (article 18
and annex VI), and enabling framework/obligation for technology providers and vendors, that
trained and qualified installers are available in sufficient numbers to service the required growth in
renewable heating and cooling installations in buildings and industry.
Investment in the training of skilled workers, the development of training courses, investing in
teaching resources for disseminating green skills and integration of climate, environment and green
energy knowledge in scholarship are measures where the initial costs associated with development
and implementation of such efforts is expected to result in broader knowledge dissemination and
awareness. Several literature studies highlight the importance of awareness raising and information
dissemination in achieving energy efficiency and renewable resources measures114
.
Furthermore, given that replacement of heating and cooling equipment is often a result of an
emergency (e.g. boiler breakdown), a lack of knowledge and information on the part of the installer
when having to make a swift decision on how to replace a broken installation could result in
technology lock-in115
and significant associated costs. Thus, enhancing the skills and knowledge of
installers and therefore removing a possible inclination towards the well-known (fossil based)
solutions should increase the extent to which actual substitution opportunities are recognised and
selected. Hence, a possible decision-bias towards fossil-based solutions would be reduced and the
114
Pantovic, V. S., et al., Rising Public Awareness of Energy Efficiency of Buildings Enhanced by »Smart« Controls of
the In-door Environment, Thermal Science, 20 (2017), 4, pp. 1307-1319
Ouhajjoua, N., et al., Stakeholder-Oriented Energy Planning Support in Cities, Proceedings, International Building
Physics Conference, IBPC 2015, Torino, Italy, Vol. 78, 2015, pp. 1841-1846
115
Davis, S. J. et al. (2016) Carbon Lock-In: Types, Causes, and Policy Implications.
84
competitive position of RES compared to fossil-based solutions improved, by increasing
significantly investor’s confidence, and hence certainty.
Furthermore, skills is an important area where the EU could ensure competitiveness. Increasing the
qualification and training installers would create more experience and share of practice that would
also benefit the manufacturer, and further RD&I.
6.2.1.4. Administrative burden and compliance costs
It is not expected that the target design as such would result in additional administrative burden or
increased compliance costs for Member States as no new obligations or additional reporting would
be required from the Member States compared to the current Article 23 of RED II or the Governance
framework.
As stated in Section 6.2.1.3, depending on the measures the Member States use to reach the target
there could be additional administrative burden, for example a scheme to subsidise the replacement
of heating systems would involve checking applications and that the criteria for funding were met.
Replacement schemes would mainly impact building owners (landlord and tenant), while tenants
would be impacted to a limited extent. Administrative burden and associated costs will vary per
Member State depending on the extent of multi-level governance between different levels of
government (national, regional, and municipal), the choice and level of ambition of the phase-out
and the existing administrative framework in place among many other variables. More details are
found in the Annex 7.
Targets: RES H&C target and renewable share in buildings and industry
Option 3 ‘Level and nature of the targets’
Option 3 explores three different target designs (3a)-3c) for the overall heating and cooling target,
which are mutually exclusive, and add a fourth target design, 3d)which is an indicative benchmark to
specifically monitor efforts in buildings and industry, which is complementary with the overall H&C
target designs.
Options 3a-3c assess the need to either increase or reinforce the ambition for the RES H&C related
target(s). A key issue for the design of the legislation is how to provide sufficient incentives for
continued delivery of national commitments and sufficiently ambitious pledges for increased
mainstreaming of renewables in the heating and cooling sector. Beyond the target an extended list of
measures to support higher ambitions are assessed below and in Annex 7.
Option 3a would transform the current 1.1%-pp annual increase target design as per Article 23 into a
minimum baseline complementing it with indicative additional efforts tailored to each Member State
to reach the desired RES H&C shares in agreement with the CTP and confirmed by the modelling
work carried out in this impact assessment. In this regard the revised Renewables Directive could
include indicative figures for Member States RES H&C shares to take into account when updating
their contributions to the EU renewables target under the governance framework in the NECPs by
June 2023. This would provide a positive incentive framework in the heating and cooling sector.
85
The option would incentivise the mainstreaming of renewables in the heating and cooling sector in
some Member States116
and avoid lock-in of fossil fuel technologies and ultimately stranded assets in
the future. In addition, Option 3a) allows for burden sharing in mainstreaming the renewable energy
deployment in the H&C sectors.
The Table below illustrates the 2020-2030 average renewable heating and cooling shares across all
Member States in REF and the range for the core scenarios. Furthermore, the table includes the
respective effort needed by each Member State that would close effectively the gap between the
modelling work carried out in this impact assessment and the estimated figure of RES H&C share at
EU, if Member States fulfil the 1.1% mandatory RES H&C shares117
to reach the desired RES H&C
levels in the core scenarios to be added to REF20. The gap has been redistributed based equally on
Member States cost-effective potential from core scenarios and their GDP118
.
Table 14 - 2020-2030 average and 2030 RES H&C figures for different scenarios per MS; PRIMES EC own calculations
MS REF20(p.
p)
Mandatory
increase in RES
H&C share(p.p)
Range of RES H&C
Shares in 2030 based
on core
scenarios(%)
Top ups to be
added to
REF20(p.p)
Resulting RES
H&C shares
with top ups(at
least) (p.p)
AT 0,7 1,1 44-47 0,8 1,5
BE 0,3 1,1 17-21 1,1 1,4
BG 0,9 1,1 45-54 0,5 1,4
CY 0,5 1,1 51-58 1,1 1,6
CZ 0,5 1,1 33-39 0,9 1,4
DE 0,9 1,1 29-34 0,6 1,5
DK 0,9 1,1 61-64 0,5 1,4
EE 1,2 1,2 65-65 0,3 1,5
EL 1,6 1,6 49-54 0,4 2,0
ES 1,1 1,1 33-35 0,3 1,4
FI 0,5 0,6 63-70 0,3 0,8
FR 1,4 1,4 42-46 0,4 1,8
HR 0,7 1,1 45-51 0,7 1,4
HU 0,9 1,1 33-36 0,6 1,5
IE 2,1 2,1 37-43 0,8 2,9
IT 1,2 1,2 33-43 0,4 1,6
LT 1,6 1,6 67-69 0,4 2,0
LU 2,0 2,0 33-34 0,7 2,7
LV 0,8 0,8 68-69 0,2 1,0
MT 0,5 1,1 34-41 1,0 1,5
116
For these Member States, the average increase would be effectively lower than 1.1% and their starting point is less
than the discounts that current exist under Article 23(1) of REDII
117
MS RES H&C shares in REF20(based on NECPs) below the 1.1% average 2020-2030 binding target(or half the
average annual increase for Member States above 50% and up to 60% of RES H&C shares in 2020) were increased to
this level. MS above these thresholds were kept at the same level as REF20
118
Based on Eurostat's GDP per capita index to the Union average over the 2015 to 2019 period, expressed in purchasing
power standard
86
NL 0,7 1,1 15-18 0,7 1,4
PL 1,0 1,1 34-40 0,5 1,5
PT 1,0 1,1 53-55 0,4 1,4
RO 0,6 1,1 37-38 0,8 1,4
SE 0,3 0,3 72-74 0,3 0,6
SI 0,7 1,1 46-52 0,7 1,4
SK 0,3 1,1 30-34 1,1 1,4
EU27 0,96 1,18 36-41 0,5 1,5
Option 3b proposes to raise the current 1.1 pp annual increase to the level of core scenarios119
and
make it binding. This would apply to all Member States equally. Although this option would be the
most effective option to help ensure target achievement and eliminate distortion between Member
States, this option is not considered proportionate and would go beyond cost-optimality for some
Member States, specifically those having already high RES H&C shares in 2020, above 50% and
60% respectively120
.
Option 3c would propose a binding EU H&C RES share. This would provide greater certainty that
the EU reaches the desired level of RES shares in H&C, however it does not exclude the risk of free
riding by Member States, who may choose to do little and instead rely on the efforts of others.
Option 3d would put forward an (indicative) EU RES benchmark of 49% for the EU building
stock121
and industry. This would add visibility and prioritisation of the need to step up the
integration of renewable energy in buildings as part of increasing their energy performance, in
particular in the context of the Renovation Wave objective to at least double the building renovation
rate, as heating system replacement and modernisation and are the easiest and most cost effective to
implement during and as part of building renovation. In addition, this option is also to ensure that at
least a 4% replacement rate of fossil based, old and obsolete heating systems with renewable based
heating, as indicated by the CTP is realised. The indicative RES benchmark would leave maximum
flexibility for Member States how to achieve it. It would build on the current requirement for
ensuring a minimum level of renewables in buildings. Its effectiveness would be ensured with
alignment with the review of the EPBD addressing gradual fossil phase-out from heating systems
tailored to main building archetypes. It will support the EGD carbon neutrality goal, consistent with
ESI and interact with the EPBD goal to decarbonise the EU building stock by 2050 as enshrined in
the EPBD. Complementarity and no duplication is ensured as REDII relates to the overall EU
building stock, while EPBD addresses energy performance at building level and by main building
archetypes. The added value of the option for heating and cooling to signal the level to which
renewable heating and cooling supply (sources, technologies, infrastructures) should be scaled up for
buildings. The EPBD on the other would address how to make buildings fit for renewables, as most
119
As discussed in Section 6.2.1.1 the RES H&C shares would translate to 1.3 pp-1.8pp depending on the core scenario
120
For the purpose of Article 23(1) of REDII when calculating the share of renewable energy in the heating and cooling
sector and its average annual increase Member States with renewable shares above 50% and up to 60% may count such
share as fulfilling half of the average annual increase. For Member States with renewable shares above 60% may count
any such share as fulfilling the average annual increase
121
A general numerical level of minimum RES use in national building stocks as a percentage of the overall energy use
87
renewables can work optimally only with high energy performance buildings (sufficient insulation
and adaptation of the internal energy distribution in technical building systems.
Furthermore under this option, an (indicative) EU RES benchmark in Industry of 1.1% annual
increase per year, reflecting the different starting points of the different MS and following the logic
of the heating and cooling target 2020-2030 would be put forward. Industrial investment cycles are
relatively long, and can set the direction for a company for multiple decades. A benchmark to
increase the share of renewables in industrial consumption would increase renewables, which could
take place through different pathways and energy carriers (including energy efficiency measures,
direct use of renewables, electrification, and renewable fuels, including renewable hydrogen) and
integrate industry further to the energy system. Setting such benchmarks early would provide a long-
term direction to the industry, and ensure that any existing investments are in line with our long-term
objectives of climate neutrality.
6.2.1.5. Coherence
The assessment of the above options is closely interrelated with measures on energy efficiency and
energy performance in buildings, which are respectively addressed in the initiatives for the revision
of the EED and the EPBD. In addition, policy interactions also exist with policies covering GHG
emissions (Effort Sharing Regulation but also by the horizontal EU carbon pricing instruments, such
as the EU Emissions Trading System). However, the impact of carbon pricing on renewable shares
and renewable deployment and respective impacts on energy costs is diverging and could cause high
distributional impacts when they fully materialise. The revision of RED is also a precondition for the
fulfilment of increased ESR national targets. The Member States will need to deploy much more
renewables in the heating, cooling (and transport sectors) in order to meet the increased national ESR
targets. Therefore re-enforcing the current heating and cooling target which covers all energy users
(industrial, residential and tertiary) and updating the illustrative policies measures remains necessary
and consistent.
Thus energy efficiency and carbon pricing can also play a role in increasing the share and
deployment of renewables in heating and cooling. However, energy savings should mostly affect
non-renewable heating, while the overall consumption of renewables in final heat remains constant
with the rest of the effort supported mostly by heat pumps. Carbon pricing alone could increase
direct renewable deployment as incentive fuel switching and allow for a fairer competition of
innovative solutions in markets. However carbon prices might need to be very high to achieve the
outcome, a risk which modelling and the resulting carbon price of EUR 80 in MIX CP indicate too.
As highlighted in the assessment of the measures, carbon pricing alone cannot overcome all barriers
such as unfit infrastructure planning, building codes and products standards, lack of skilled
workforce for installation and maintenance, lack of public and private financing instruments, and
lack of internalisation of CO2 costs in heating fuels for the heating and cooling sector as a whole also
due its fragmented nature. Such barriers hampers renewable uptake but also ESI. This translates into
low replacement rates of the EU fossil heating stocks, low development and modernisation of district
heating/cooling networks, and low building refurbishment rates. With the Renovation Wave
initiative, the Commission will ensure that the building framework is fit for a higher penetration of
renewable supply in buildings from all types of renewable sources and carriers, both via individual
appliances and district heating. It will also support training programmes under the Updated Skills
Agenda. This option is also coherent with and effective to implement the Renovation Wave
initiative, as it ensures a higher penetration of renewables in buildings.
88
Furthermore measures such as local planning has synergies and is coherent with Article 14 of the
EED on comprehensive heating and cooling assessments and with the long-term building renovation
strategies under Article 2a of the revised EPBD. It is also coherent with and fulfils actions of the
Energy System Integration Strategy while risk mitigation is already available under the EED and the
EPBD and new instruments under the Resilience and Recovery Funds and new EU budget.
In this regard, a fixed renewable energy heating and cooling target complimented by further policy
intervention would not only provide additional incentives to fuel-switching from fossil to renewable
energy in buildings but also in industry. It would also address persisting non-market barriers that
carbon pricing alone cannot fully address.
6.2.1.6. Stakeholders’ Opinions
Stakeholders’ Opinions
EU/Non-EU citizens as well as representatives of academic institutions (82%), consumer
organizations (80%), public authorities (52%), more often think that the target should be
binding. Those representing business associations (55%), companies/business organizations
(57%), environmental organisations (81%) and NGOs (74%) more often think that it should
not be binding.
Respondents representing academic/research institutions, business associations,
companies/business organizations most often think (70%, 49%, 51% respectively) that the
target should increase to match the Climate Target Plan ambitions. Citizens most often think
that the target should be increased to be more ambitious (39%). Environmental organizations,
NGOs and public authorities most often do not think that the target should increase (79%,
66% and 42% respectively).
In a poll conducted during the 1st stakeholder workshop, 75% of the respondents thought that
the current indicative target of achieving a 1.1 pp annual average increase in renewable
energy in heating and cooling set for the period of 2021-2030 in Article 23 should become a
binding target for Member States.
During the 2nd
stakeholder workshop, The European heating industry supported an increased
RES-E target and they favour a clearer role for hybrid heat pumps under the RED II. They
favour increasing the RES-H&C target and making it binding. Consumers favoured binding
H&C targets. The geothermal sector asked for a de-risking at EU level and thus changing the
burden from Member States to EU in article 3.5 of RED II. The heat pump industry favoured
increased targets. The solar thermal industry asked for the promotion of measures for
consumers to make the transition.
6.2.2 District heating and Cooling
Modern renewable-based efficient district heating and cooling (DHC) is at the very centre of heat
decarbonisation and an integrated energy system122
. The current provisions under REDII require
122
Overview of district heating and cooling markets and regulatory framework under the revised renewable energy
directive, ENER/C1/2018-496, Tilia, Fraunhofer, TU-Wien, IREES – ongoing; Integrating renewable and waste heat and
89
Member States to endeavour to increase the share of renewables by an annual average 1%-point
increase or implement network access for renewables, waste heat and cogeneration. Several
drawbacks remain allowing ‘de-facto’ 100% fossil systems continue indefinitely in the future.
Consumer information and rights also need to be improved.
Updated and strengthened measures are needed to ensure cost-effective contribution and align DHC
with the Green Deal, the Energy System Integration and the Hydrogen Strategies and the Renovation
Wave. In particular, the Energy System Integration Strategy calls to accelerate investment in smart,
highly-efficient, renewables-based district heating and cooling networks, if appropriate by proposing
stronger obligations through the revision of REDII and the EED. The energy system integration
potential of DHC123
would not materialise by lack of a clear EU framework guiding local actors and
encouraging their efforts to link district heating networks with renewable electricity, waste heat and
renewable gases’ deployment. Consumer information as regards the climate performance of these
systems should in parallel be improved to ensure level playing field, greater transparency and fair
competition with alternatives. The proposed measures are necessary to ensure that the next inevitable
and imminent investment cycle in district heating is not wasted, but instead directed towards future
proof solutions when replacing the current old and obsolete heat generation units (around two thirds
of the generation assets). The Renovation Wave highlights the role of district approaches as they can
transform entire neighbourhoods and create new business opportunities. Synergies between business
renovation and the roll-out of modern district heating systems become evident when scaled up to
district and community approaches. Aggregating projects at this level may lead to zero-energy or
even positive energy districts (e.g. advanced district heating and cooling systems with large potential
for renewables and waste-heat recovery). These offer cheaper ways to decarbonise heating and
cooling and increase system efficiencies at an industrial scale by fuel switch, increased flexibility
and thermal storage. Additional positive impacts including creating space for nature and mobility,
contribute addressing socio-economic issues.
Current situation
District heating is present everywhere but in a few Member States in Europe. It has significant heat
market shares in Northern, Central- and Eastern Europe and in the Baltic States. District heating is
growing in Western Europe and the northern regions of Southern European countries. There is no
district heating in Cyprus and Malta, while in Portugal and Spain district heating is marginal and
limited to a few systems. At EU level, the share of district heating is 12%. The fuel mix of district
heating varies from Member State to Member State, as illustrated by the figure below124
.
cold sources in district heating and cooling systems, Case studies analysis, replicable key success factors and potential
policy implications, External study performed by Tilia for the Joint Research Centre, 2021.
123
Interaction of District Heating with the Electricity System, Provision of Balancing Services, JRC, Jiménez-Navarro,
J.P., Boldrini, A., Kavvadias, K., Carlsson, J, 2021. Heat Roadmap Europe
124
Cyprus, Malta do not have district heating systems. District heating capacity is statistically so small in Luxembourg,
Portugal and Spain that there representation in chart is closed to zero. These countries were not included in Figure 16.
90
Figure 14 - District heating fuel mix and cogeneration share in 2018 (Source: Study by Tilia under ENER/C1/2018-496)
As shown in the figure below, natural gas is the major source of heat used. In many countries the
share is around 60% and more in Member States such as Bulgaria, Croatia, Hungary, Italy,
Netherlands, and Romania. Biomass, biofuels, and renewable waste are the second most used source
of heat in the Member States with significant shares in many countries such as Austria, France,
Scandinavian and Baltic countries. Coal and peat, as a third most used source of heat, has a high
share in Poland, Czech Republic, Greece, Germany, Slovakia, and Slovenia.
In aggregate, natural gas has the highest share in the EU-27 district heating fuel mix accounting for
30.1% followed by biomass, biofuels, and renewable waste with a share of 26.9%, and coal and peat
with a share of 26.7% (see figure below). In total, two-thirds of the district heat supply is generated
with fossil fuels in the EU-27 Member States.
Figure 15 - EU-27 District heating supply fuel mix in 2018(Source: Study by Tilia under ENER/C1/2018-496)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Austria
Bulgaria
Croatia
Czech
Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Italy
Latvia
Lithuania
Netherlands
Poland
Romania
Slovakia
Slovenia
Sweden
EU-27
United
Kingdom
Iceland
Norway
Ukraine
District heating fuel mix and cogeneration share in 2018
Other
Industrial excess heat
Heat pumps incl. electricity
Solar thermal
Geothermal
Biomass, biofuels and renewable
waste
Non-renewable waste
Coal and peat
Oil
Gas
Cogeneration share (GWh)
Gas; 30,4%
Oil; 2,4%
Coal and peat; 26,7%
Non-renewable waste
; 7,2%
Biomass, biofuels and
renewable waste ;
26,9%
Geothermal; 0,7%
Solar thermal ; 0,1%
Heat pumps incl.
electricity; 1,2%
Industrial excess heat;
1,7%
Other; 2,9%
EU-27 District heating fuel mix in 2018
91
The decomposition of RES used for district heating reveals that bioenergy fuels (biomass, biofuels
and renewable waste) are currently by far the main renewable sources (see figure above). In the EU-
27 they constitute almost 88% of the renewable heat produced, followed by industrial excess heat
(waste heat) with 6%, heat pumps with 4%, geothermal with 2% and solar thermal with a negligible
share of around 0,5%.
6.2.1.1. Impacts projected by core scenarios
There was no specific modelling for the full district heating and cooling supply chain however the
figure below presents the evolution of the energy mix in district heating.
Figure 16 - Fuel input in district heating units and total production of derived heat in distribution networks (in ktoe); Source PRIMES
The key trend that can be observed is a decrease of fossil fuels (notably oil and solids). Although gas
remains stable between 2015 and 2025, increasing energy efficiency, renewable policies and further
sector integration coupled with more ambitious climate policies (increased ETS price signal and
extension of ETS to buildings) help in the overall efficiency and fuel switching in this sector.
Biomass increases from 2010 but remains constant after 2015 and reduces marginally until 2030.
Electricity and other renewable sources such as geothermal and solar have been increasing since
2015 to more than 40% of fuel input in DH units in 2030. When it comes to heat supplied and
consumed through DH networks, the renewables shares increase to more than 50% in 2030 (at least
2.1 pp yearly increase between 2020 and 2030) which strengthens the case of a greener, smart and
integrated district heating networks.
6.2.1.2. Impacts and analysis not based on modelling
GHG reduction and energy saving:
The deployment of renewables via district heating in cities and heat pumps in rural areas combined
with energy savings results in significant greenhouse gas greenhouse gas (GHG) emissions reduction
and primary energy savings as demonstrated by several studies. The Heat Roadmap Europe projects
concluded that a reduction by 80-95% compared to 1990 levels was possible by 2050, entailing also
a reduction of 13% or 120 TWh in primary energy consumption and cost reduction of 6 billion EUR
92
compared to alternative decarbonisation scenarios125
. More information on case studies on efficient
renewable based and smart DHC systems are found in Annex 7.
Modern district heating and cooling can be an effective cost-effective solution to integrate
renewables at large scale in heating and cooling serving buildings and small enterprises alike. This is
demonstrated by the Action Plan of France with 25 actions to be implemented as of 2020126
.
Figure 17 - French 2030 objectives in DH development (total and low-carbon/green)
A host of innovative district heating and cooling systems already operating in the EU demonstrating
that modern low temperature district heating systems are able to integrate renewable energy into
heating and cooling at large scale at moderate and low cost and are competitive vis-à-vis fossil fuels.
A list of such systems is presented in the figure below indicating the renewables’ shares in this
systems, the types of renewables used and the installed capacities for district heating and district
cooling. More details and examples are found in the Annex 7.
125
Towards a decarbonised heating and cooling sector in Europe, Aalborg University Denmark, prepared under the Heat
Roadmap Europe project, available at: https://heatroadmap.eu/
126
The resulting Action Plan was presented in October 2019: Réseaux de chaleur et de froid: une filière d’avenir (link to
Press release), see Tilia GmbH, Integrating renewables and waste heat and cold sources in district heating and cooling
systems, 2021.
93
Figure 18 - disaggregation of DHC systems, including energy carriers; Source https://heatroadmap.eu/
The potential of district heating as a key heat transition instrument has been demonstrated in the Heat
Roadmap Europe study127
, which looked at the decarbonisation potential by DH and its cost and
benefits in 14 Member States. It concluded that the European energy systems could be decarbonised
by 2050 by expanding district heating in urban areas to meet up to 50% of heat demand. The Heat
Roadmap Europe (HRE4) project drew up low-carbon heating and cooling strategies for 14 EU
countries. The figure below illustrates the number of new DHC systems to be developed across the
14 Member States of the HRE4.
Figure 19 - Approximate newly established and total amount of district heating systems in the 14 countries of HRE4 and Denmark
needed for fulfilling the potential of distribution grid investments below 4 EUR/GJ; Source: Heat Roadmap Europe
128
Based on the Pan-European Thermal Atlas (PETA)129
geographical information system, the study
conducted by HRE4 identified prospective supply districts areas with a potential for district heating.
An annualised distribution grid investment cost of 4 EUR/GJ was used as the minimum threshold, in
addition to a minimum heat demand density of 20 TJ/km2. A potential of around 25,000 areas in the
127
https://heatroadmap.eu/
128
https://vbn.aau.dk/ws/portalfiles/portal/316535596/Towards_a_decarbonised_H_C_sector_in_EU_Final_Report.pdf
129
https://ec.europa.eu/environment/europeangreencapital/launch-of-the-the-pan-european-thermal-atlas/
94
EU was identified, allowing to reach the target of a 50% district heating share by 2050. This is a 7-
fold increase in the number of district heating systems across Europe compared to the situation in
2019130
.
Replacement costs are mitigated by the fact that only around one third of oil and gas boilers and CHP
units are relatively new. More than one third is beyond that lifetime and almost one third is in the
second part of the lifetime. That means that two third of the capacity will need to be replaced in the
next 5-8 years. The figure below shows the age.
Figure 20 - Installed capacity by age (GWh) District heating and supply; Source [ongoing ENER/C1/2018-494 Renewable Space
Heating Study ]
Carbon pricing could result intrinsically in cost-optimal emission reductions in the buildings. Hence,
pushing for emission reductions through specific measures such as forcing RES deployment will be
less cost-effective as long as the carbon price is not high enough to enable H&C RES to become
competitive in DHC.
However, the currently limited uptake of renewables to support the DHC to reduce their emissions
can be linked to the low competitive advantage of renewable fuels (due to the current low carbon
price level, and to the other more cost effective solutions such as fuel switch – from coal/oil and
natural gas), and to the lack of knowledge and risk management compared to individual fossil based
appliances. With an increasing carbon price, renewables may become more attractive and deploy
without any further intervention or policy action than carbon pricing. However there is probably no
such guarantee without additional intervention in the frame of the RED, either with additional
measures, or with a specific target for H&C in DHC.
The table below provides a comparison of upfront costs, O&M costs, payback periods and number of
jobs created per MW for both fossil-based DHC and renewable supply of heat in DH networks.
Table 15: Comparison of Financial data for different DHC supply technologies
131
Natural Gas Coal Biomass Solar
Thermal
Geothermal Heat Pumps
130
Source: ENER/C1/2018-494, ongoing.
131
KeepWarm: Renewing District Heating project (2020) Keeping our cities sustainably warm – facilitating a switch
towards sustainable district heating
95
Upfront costs 0.5 M€/MW 1.2-2.8
M€/MWe
0.3-.07
M€/MW
200-500
€/m2
0.7-1.9
M€/MW
0.45 – 0l85
M€/MW (elec)
0.35 – 0.5 M
€/MW
(absorption)
O&M costs 3% of
investment +
40-60
€/MWh
variable fuel
costs
1.5% of
investment +
3 €/MWh
variable fuel
costs
1.8 – 3% of
investment
1-3
€/MWh
2.5% of
investment
2-3% of
investment
Payback period N/A N/A 3-13 years 6-15 years 5-10 years 8-9 years
Jobs 0.95/MW 1.01/MW 0.78-
2.84/MW
0.81/MW 1.7/MW NA
Without specific measures to increase renewable’s competitiveness, the risk remains high that
renewable would not take up in the DHC. The two options would then be either to increase carbon
pricing significantly (which is out of scope), or to enforce the uptake of renewables via specific
instruments. In the first, accompanying measures would be necessary to guide the integration of
renewable in all DHC. In the second, accompanying measures will also be necessary, in addition to
specific renewable targets.
More details on cost –effectiveness of DHC are found in the Annex 7.
6.2.1.3. Effectiveness
Measures
Option 0 and Option 1 would not be effective to drive that step change needed for district heating
and cooling to update its fossil fuels and conventional biomass based business model, contribute to
the heating and cooling target and develop its full potential for renewable energy, energy efficiency
and sector integration. Information for consumers on the energy performance and renewables shares
would remain limited. District heating would keep enjoy monopoly positions without increased
accountability to consumer and shielded fully from competition, while its market share could
potentially expand. 100% fossil district heating could continue indefinitely and receive public
support.
Option 2 on strengthened existing measures would be effective to ensure the necessary
minimum adjustments on consumer information, renewable heat suppliers’ network access and to
update ESI measures in line with the Energy system integration strategy.
Option 2b)-B0: Align the definition of ‘efficient district heating and cooling with the CTP and EGD.
The option would ensure that district heating systems adopt a higher standard, gradually evolve to
become strong contributor for renewable mainstreaming, GHG reduction and savings objectives in
energy supply and buildings. It would also ensure that public support is directed for district heating
system investing in modernisation and new systems developed according to a new business model
aligned with CTP and EGD.
96
The current definition is spelled out in Article 2(41) of the EED and integrated into REDII by
reference in its Article 2(20). This definition provides the criterion as regards which DHC systems
should allow disconnection, network access or should align with the 1 ppt annual renewable increase
rate under REDII. The current definition makes it possible for 100% fossil fuel systems to be
qualified efficient indefinitely in the future. The review of the definition is an option under the EED
review and therefore is not proposed as an option under the REDII review. Full consistency of the
EED review should be ensured with the REDII review.
Option 2b)-B1: Eliminate exceptions and make access to networks mandatory for renewables and
other carbon-neutral sources (waste heat), including from prosumers, in large DHC networks
(Please refer to Annex 7 for the detailed description of this option).
The option aims to ensure minimum competition in district heating systems, which are natural
integrated monopolies. The lack of EU level minimum access rights would risk locking out
renewable and other carbon-neutral energy suppliers, while allowing incumbent operators to
continue the current fossil based business models indefinitely in the future shielded from competitive
pressures. However, considering the specificities of DHC systems with unique and specific
adaptation features to local circumstances, as well as technical constraints (already recognised in the
current provisions), third party access should not cover small networks and its design should remain
adaptable and minimally harmonised at EU level.
The option would cover only large systems as network access to small systems by third party
suppliers is less or not economic and is technically difficult to implement. It would not impose
disproportionate administrative and compliance burdens and would be effective to trigger more
competition and thus bring on the market more renewable heat and cold supply.
The option builds on the current provisions. It would thus not entail significant additional
administrative and compliance costs. As described in the introduction, such network access is in one
form or another already is in place in large systems. Connection of prosumers is also possible already
in some systems, enhancing consumer rights and promoting active consumers.
Via stimulating more renewable heat and cold supply and increase efficiency – and in conjunction
with the option on corporate and collective consumer heat purchase agreements - the option is in line
with the CTP, the EPBD and the EED.
Option 2b)-B2 Enhanced ESI between DHC systems and other energy networks
This option would be effective to expand and replicate the already existing examples of smart district
heating systems, which operate as local ESI hubs and contribute to ESI and the cost-effective
deployment of renewables, including renewable electricity. The model of cooperation with the
electricity DSOs and TSOs is well-developed and commercially attractive in those few Member
States132
, where the regulatory framework is sufficiently adapted. It allows DHC systems to provide
balancing services to the electricity grid by absorbing surplus variable renewable electricity through
132
Interaction of district heating and cooling with the electricity system, JRC, 2021. See also Towards a smart energy
system approach in Europe – Enabling robust and renewable energy investment strategies, Smart Energy System and 4th
Generation District Heating, Brian Vad Mathiesen, reINVEST project, 2017.
97
demand response/management measures and thermal storage. They can also feed electricity back to
the electric grid from their CHP units, when renewable electricity (wind and solar) is scarce.133
Option 2b)-B3 Enhance ESI for waste heat and cold use via a coordination framework for key actors
This option has similar objective as above in terms of ESI and would also be effective in facilitating
the reuse of waste heat from industrial sites and data centres, through a coordination framework
coupled with possible options on strengthened requirements for connection to district heating
networks, energy performance accounting and contractual frameworks, as part of the revision of the
Renewable Energy Directive and of the Energy Efficiency Directive (June 2021) as stipulated by
ESI.
Option 2b)-B4 Strengthen information provisions for consumers, such as:
o requirement to include a specific RES share and a numerical energy performance
number (PEF) in the information district heating/cooling systems provide to
consumer (e.g. on bills, suppliers/regulators’ websites);
o Energy label (voluntary or mandatory) for DHC systems.
The option in the first bullet point on increasing information to consumers about the performance of
district heating and cooling system is highly effective to ensure that district heating and cooling
providers become more transparent, strengthen consumer rights and improve consumer perception
and acceptance. The option foresees the inclusion of clear and simple numerical values on RES share
and primary energy factor. Since this builds on and merely complement the current provisions, the
administrative burden is limited.
Target options
Option 3a, leaving the current, optional and indicative target unchanged. Since only eight
countries addressed Article 24(4a) - which lays down the optional indicative 1 percentage point
increase target for DHC -, in their NECPs, continuing with the current provisions would not be
effective to increase renewables, waste heat and energy efficiency in existing district heating
systems, and would leave new DHC developments without clear direction, while other sectors would
carry higher burden. This would not ensure that district heating and cooling contributed to the
deployment of renewables in heating and cooling in line with the CTP and EGD. It would not be
effective to make these networks contribute to the increased deployment of renewables and ESI in
line with their cost effective potentials.
Option 3b) by adding an indicative EU renewable target for renewables’ share in DHC would
set a clear yardstick against which the development of district heating and cooling systems could be
evaluated and their compatibility with the CTP and EGD could be measured. This could be a
significant improvement in the effectiveness of current framework and would provide clear signals
for investors. Option 3b) would also inspire the development of new networks as regards the level of
133
Interaction of district heating and cooling with electricity system, JRC Technical Report, finalised draft with limited
distribution, 2021
98
renewables desired in their generation mix. While it may not be enough to change in existing DHC
network, combined with an appropriately strong overall heating and cooling target to which DHC
would contribute, it would be effective to ensure that old systems transform and new systems
develop sufficiently to harness the full cost-effective potential of modern DHC for the large scale
integration of renewables in heating and cooling. Since this option does not impose specific
obligation on Member States, the administrative cost would be minimal, while the Governance
framework already in place could provide the implementation and monitoring framework with no
additional cost.
Option 3c) by increasing the indicative 1%-point annual increase target to 2.1 percentage point
annual increase in agreement with the CTP and the modelling work carried out in this impact
assessment. The increase would provide a clear signal as regards the needed level of contribution in
renewables’ deployment from district heating systems. This would ensure coherence with the overall
renewable framework and ensures a level playing field with individual heating systems to contribute
to heating and cooling decarbonisation. While in itself Option 3c) may not be enough to drive change
to the extent cost-effective, combined with an appropriately strong overall heating and cooling target
to which DHC would contribute, it would be effective in ensuring that these systems participate in
renewable deployment and sector integration, and harness their cost-effective potential for large
scale renewable integration in heating and cooling. As this option builds on current provisions, the
administrative cost would be minimal.
Option 3d) by increasing the current 1%-point increase target to 2.1 percentage point annual
increase and making it binding would be effective in ensuring DHC participation in renewable
deployment. However, due to the uniformly binding nature of an increased target relevant for all
existing systems, it may be disproportionate for those systems that already have high renewable
shares and could also lead to the dismantling of those systems where a binding higher increase would
impose high investment costs in a relatively short time. Since this options builds on current
measures, there would be no additional administrative costs; however due to the binding nature,
compliance costs could be significant.
6.2.1.4. Administrative burden and compliance costs
Option 2b)-B0 aligns the definition with the European Green Deal thus providing clear direction and
provide certainty for policy makers and investors. It does not impose new administrative burden and
compliance cost as it defines the type of systems that are to be promoted, included via public budgets
and state-aid. Option 2b-B2 represent a clarification of the current provisions rather than a new
measures. On the other hand, Option 2b-B3 extends the current coordination and common
assessment requirements from the electricity grid to other energy grids. Such data would not be
complicated to gather and disclose for the most efficient and smart systems, which could also be an
incentive to upgrade DHC. Option 2b-B4 could be effective, however entails more administrative
burden, as such harmonised label does not yet exist. However although, setting up a labelling scheme
may be complex and long, especially in the case of a mandatory scheme. If the labelling remains
voluntary, the administrative burden could be reduced significantly. Support from EU-funded
projects such as EcoHeat4Cities can also decrease the administrative burden by providing capacity
building and information.
99
Options 3a-3d will not increase administrative cost but will have compliance cost for DHC systems,
as they will have to gradually transform. However, combined with the ETS, EED and EPBD
reviews, clear targets and policy direction will provide benefits for DHC systems, notably by raising
their competitiveness in the green economy, consumer acceptance and market share.
Member States are already required to report in their NECPs on their measures to increase
renewables in district heating and cooling in terms of how it will contribute to the annual increase of
1%ppt. No significant increase in administrative burden or compliance costs is therefore expected
from Options 2 and 3 apart from the creation of a possible energy label.
6.2.1.5. Coherence of the target options
All but Option 3a) are coherent with the Energy System Integration Strategy, which calls to
accelerate investment in smart, highly-efficient, renewables-based district heating and cooling
networks, if appropriate by proposing stronger obligations through the revision of REDII. The
proposed Union target for share of renewables in district heating and cooling is coherent with, and a
logical corollary of, the target for heating and cooling. The level and nature of the targets will be
aligned. Promoting district heating and cooling systems is also linked to the requirements under the
EPBD, as such systems work best in energy efficient buildings, the renovation rate of which is
addressed in the Renovation Wave and the EBPD revision.
A specific target for the H&C in DHC remains important and would complement carbon pricing
instruments and market stimuli, by providing the needed trend to fully decarbonise DHC. Having in
mind the full decarbonisation of the DHC by 2050, such target also supports overcoming no-
economic barriers, such as the basic lack of awareness (e.g. in the industry where renewable is not
associated to the core business), the administrative barriers, the lack of information (to final
consumers) and public perception, the high upfront investments. However, a DHC RES target
without a strong policy framework setting up a real level playing for renewable would lead to
disproportionate costs and loss of value, putting the existing assets at risk.
6.2.1.6. Stakeholders’ Opinions
Stakeholders’ Opinions
The respondents of the OPC representing environmental organisations, NGOs and public
authorities more often think that the current indicative target for renewable energy in district
heating and cooling should not become binding (78%, 67% and 64% respectively). The other
stakeholders tend to think that it should be binding (70% of those representing academia and
75% of those representing consumer organisations). Those representing companies/business
organisations are split 50% to 50% or close. The majority of respondents representing
Member States were also against the target becoming binding.
During the 1st stakeholder workshop, the International Energy Agency mentioned the need
for a decent playing field for economic and regulatory deployment of District Heating &
Cooling. Local governments stressed that it is key that District Heating & Cooling should be
the obvious choice when compared to fossil fuels and that therefore EU level and national
level should come in with technical and financial support.
During the 2nd stakeholder workshop, consumer organisations requested a clear planning for
District Heating & Cooling.
100
6.3.Transport
The quantitative assessment of policy options for transport is aligned to the CTP analysis but differs
to the extent that it takes better into account the policies and objectives formulated by the Member
States in their NECPs, which leads to an increase of the RES-T share to 21% in the Baseline (CTP
BSL projected 18%). Further, the options consider the dedicated measures under the ReFuelEU
Aviation and FuelEU Maritime proposals.
Based on the current RES-T134 target calculation, the core scenarios lead to 27-29% RES-T shares
(applying the accounting methodology set out in current legislation) with the REG scenario having
the highest share thanks to strong energy efficiency measures.
Figure 21 - RES-T share in core scenarios; Source PRIMES
As shown in the figure above, renewable electricity would contribute around 10-12% for the target in
the core scenarios (against 8% in REF), chiefly due to higher uptake of new electric vehicles driven
by assumptions on vehicles standards. Liquid and gaseous biofuels have the biggest role in
achievement of high RES-T shares and increase most in the core scenarios, representing in all core
scenarios a share of 17%, compared to 13% in REF. With conventional biofuels and Annex IX part
B biofuels capped, it is advanced biofuels that represent the highest share (8-9%).
The allocation of fuels between transport modes varies across transport modes. The maritime and
aviation sectors, which mostly do not have electricity as decarbonisation option, rely chiefly on
biofuels and, to lower extent, on innovative renewable and low-carbon fuels (including RFNBOs).
Advanced biofuels and, in the longer run innovative renewable and low-carbon fuels would become
even more important in these sectors post-2030 as the use of oil would be incompatible with carbon
neutrality objectives and only limited possibilities for negative emissions are projected in most of
scenarios. In other transport modes like road transport, other alternative like electrification already
exist (especially for light duty vehicles), with lower environmental impacts (e.g. land use, air
pollution).
134 Articles 25-27 REDII where specific caps and multipliers apply for different renewable fuels
101
6.1.7. Impacts projected by the core scenarios and MIX-H2 variant
Economic (including Energy System) and social impacts
The figures below shows the change in the transport fuel mix resulting from all drivers present in the
core scenarios as well as in MIX-H2 variant discussed in Section 6.6. The growth in electrification
and uptake of biofuels are the most visible trends.
They figures show not only the increase in penetration of alternative fuels but also the reduction of
transport energy demand due to vehicle and overall transport system efficiency. Overall transport
demand is also shown in the first figure - including international aviation and international maritime
transport.
The second figure shows the share of alternative fuels135
, including natural gas. The alternative fuels
are projected to represent 13% of transport energy demand in REF by 2030. Not considering
multipliers present in the RES-T formula around 7% of all transport fuels in 2030 would be of
biological origin - driven by ambitious Member States plans to expand the use of advanced biofuels
as put forward in the NECPs.
In the core scenarios the share of alternative fuels would go up to 15-16% by 2030. Biofuels and bio-
methane would represent up to 8% in all core scenarios thanks to dedicated fuel policies, including
for aviation and maritime navigation. E-fuels would represent 0.2-0.4% of the transport energy
demand. Dedicated variant MIX-H2 (discussed in the Section 6.6) shows a possibility for a higher
penetration of RFNBOs in 2030.
Figure 22 - Energy consumption in transport (incl. international aviation and maritime) in the EU; Source PRIMES
135
According to the Directive 2014/94/EU, ‘alternative fuels’ means fuels or power sources which serve, at least partly,
as a substitute for fossil oil sources in the energy supply to transport and which have the potential to contribute to its
decarbonisation and enhance the environmental performance of the transport sector. They include, inter alia: electricity,
hydrogen, biofuels, synthetic and paraffinic fuels, natural gas, including bio-methane, in gaseous form (compressed
natural gas (CNG)) and liquefied form (liquefied natural gas (LNG)), and liquefied petroleum gas (LPG).
102
Figure 23 - Share of alternative fuels in Transport (incl. aviation and maritime navigation); Source PRIMES
The increase in ambition of the core scenarios in terms of alternative fuels uptake would lead to a
moderate increase (compared to REF) of transport energy cost in private consumption - see table
below. This increase would be most pronounced in the MIX-CP scenarios which has the highest
mark-up in terms of carbon pricing on fossil fuels and the least ambitious energy efficiency
measures.
Table 16 – Costs related to energy use in transport; Source PRIMES
EU, 2030 2015 REF REG MIX MIX-CP
MIX-H2
variant
All energy expenses related
to transport as share of
private consumption (%)
18.0% 18.1% 18.1% 18.3% 18.5% 18.3%
Energy purchase expenses
related to transport as
share of private
consumption (%)
4.3% 3.5% 3.4% 3.6% 3.8% 3.6%
There is a strong interlinkage between uptake of alternative fuels and a possible ETS extension to
transport. As outlined in the CTP, such an extension could drive the quicker diffusion of the use of
renewable energy in transport and hence help achieving the objectives and obligations under the
Renewable Energy Directive. Such effects would however strongly depend on the level of the carbon
price. While there is possible overlap between REDII and ETS coverage of road transport, as both
could incentivise the use of renewable and low carbon fuels, it is unlikely that ETS extension to
transport would have a significant impact, as the abatement costs of renewable and low carbon fuels
are relatively high, If combined with a high ETS price, a drawback from a social perspective are the
higher energy prices for consumers in the transport sector.
Environmental impacts
103
All core scenarios significantly reduce GHG emissions in transport compared to the REF – see table
below136
.
Table 17 - GHG reductions in transport sector; Source PRIMES
EU, 2030 REF REG MIX MIX-CP
MIX-H2
variant
Transport (incl. domestic and intra
EU aviation and navigation) CO2
emissions
(% change from 2015)
-17% -22% -21% -21% -23%
6.1.8. Impacts and analysis not based on modelling
Environmental impacts
Given that the policy options reflect the same ambition level as the MIX scenario, all options would
lead to a significant reduction of the nominal level of GHG emissions in transport compared to the
Baseline. Still, differences can be expected due to the distinct policy designs of the options.
In the short term the GHG emission savings will not be significantly affected by the increase of the
sub-target for advanced biofuels and the introduction of a sub-target for RFNBOs in Options 1A and
1B, respectively, because the corresponding amounts of fuels are relatively minor and other
decarbonisation options are available to achieve the same result. However, promoting these fuels
with dedicated sub-targets prepares the ground for their upscaling after 2030 when large amounts of
such fuels are needed to decarbonise hard to abate sectors such as aviation, maritime and long haul
transport. Setting out sub-targets for advanced biofuels and RFNBOs is therefore serving the long-
term decarbonisation effort. The increase of the sub-target for advanced biofuels leads to an increase
in the biomass demand. This increase, however, is minor compared to the overall demand for
biomass. Sustainability will be ensured by applying the preferred options assessed in section 6.7 on
the target strengthening of the bioenergy sustainability criteria.
Expressing the obligation on fuel suppliers in terms of energy including minimum shares for
advanced biofuels and RFNBOs (Option 2A) serves this long-term aspiration as it increases the
likelihood that these fuels are commercially deployed and become available at scale after 2030. The
emission-based approach (Option 2B) represents in principle a very effective tool to reduce GHG
emissions as it promises a high emissions savings at low costs. However, as explained in the section
on effectiveness in further detail, it provides a less clear signal for investments into innovative fuels
such as advanced biofuels and RFNBOs. This implies risks for the future availability of these fuel
options in the long term.
In addition, the environmental performance of the emission-based approach depends on the way it is
implemented in practise. In order to implement the approach, it is required to measure GHG
emission savings precisely, to incentivise investments into efficient production processes and to
ensure that claims about the emission intensity of fuels are correct. Experience shows that, so far, the
136
Biogenic emissions are considered under the LULUCF accounting.
104
implementation of the emission-based approach faced challenges in this regard. This is for several
reasons:
 GHG emissions of fuels are measured applying a sophisticated life cycle assessment (LCA)
methodology. This methodology, however, can take only emissions that are directly related to
the production of the fuels into account. Emissions from indirect land use change and
resource competition are not considered given that estimates of such indirect emissions are
associated with a high degree of uncertainty and are therefore unsuitable to be applied137
. The
relationship between direct emission savings and overall emissions savings is not necessarily
straightforward138
.
 The LCA methodology is designed to correctly represent the direct emissions arising over the
whole production process of renewable and low carbon fuels but does not differentiate
between emissions reductions that have been actively achieved and windfall gains. This can
be best seen in Germany, which adopted it in 2015. Since then the reported emission intensity
of biofuels has substantially decreased. This decrease is due to two main drivers: an increased
use of feedstock yielding high direct emissions savings such as used cooking oil and palm oil
(which is associated with high indirect emissions) and as substantial reduction of the reported
emission intensity of conventional biofuels139
. The share of advanced biofuels did not
substantially increase and RFNBOs are not used at all. The average emissions savings
reported for rapeseed biodiesel, palm oil, biodiesel and corn ethanol have increased to 70%,
80% and 88.6%, respectively140
. The observed improvements of emissions savings reported
for cellulosic ethanol were moderate in comparison (97% instead of 85%). The reported
decrease of the emission intensity of conventional biofuels cannot be explained by increases
of the processing efficiency. Biodiesel is in the regard the most important factor as it
represents slightly more than 80% of total EU biofuel consumption: In case of crop-based
biodiesel the bulk of emission are due to the cultivation of the feedstock (~70% in case of
rape seed). The price signal for low carbon feedstock is unlikely to affect agricultural
practises, however, the feedstock is sourced from commodity markets which do not take the
carbon footprint into account in the price. Rather than changing the cultivation practises of
feedstock, demand for feedstock with low emission footprint will promote the use of
feedstock from regions, which are characterised by a low carbon footprint due to favourable
natural conditions141
. The origin of feedstock used for biofuels consumed in Germany has
indeed changed substantially over time leading to an increase of imports. While it can be
argued that the biodiesel from produced from such feedstock has indeed a lower emissions
137
Woltje et al 2017: https://ec.europa.eu/energy/studies/analysis-latest-available-scientific-research-and-evidence-
indirect-land-use-change-iluc_en
138
Biofuels produced from wastes and residues will have the lowest indirect emissions if produced from feedstock which
has little alternative uses. This will often be feedstock with physical characteristics that make it unsuitable for other uses.
Turning such feedstock into biofuels, however, will also be more challenging and is often associated with slightly higher
direct emission than using feedstock of higher quality with more alternative uses. Similarly, the mobilisation or
production of additional feedstock will come with a higher direct emission impact than diverting feedstock from existing
uses.
139
BLE Evaluation and Progress Report 2018.
140
The typical values set out in RED II for biodiesel produced from most types of vegetable oils are ~50%
141
Cultivation emissions for biofuel feedstock differ between regions due to differences in the level because differences
in the climatic. Selecting feedstock from regions with low cultivation emissions can significantly improve estimated
emission intensity but does not reduce the emissions of the economy.
105
intensity, the overall emissions of the economy remain unchanged as this is a pure
reallocation effect.
In case of bioethanol which represents slightly less than 20% of total EU biofuel
consumption142
, there is more scope to reduce processing emissions e.g. by changing the type
of process energy, however, the increase in reported emission savings of conventional ethanol
in Germany (to 88.6% in 2018) cannot be explained by efficiency improvements, neither143
.
Indeed the most cost efficient way to increase the emission savings of conventional ethanol is
the capture and use of CO2 during the production process. Incentives for capture and use of
CO2 in ethanol plants, however, result only in reduction of the overall level of emissions if
the useful demand for CO2 is increased144
.
Verifying compliance with the GHG emission-based approach is complex, as the emission intensity
of fuels cannot be measured when the fuel is placed on the market. Instead, authorities have to rely
on the claims made by economic operators. Given that fuels with higher savings achieve higher
prices and the renewable fuel market is very competitive, the emissions approach may incentivise
operators to optimise the calculation of actual values or even to make false claims. It is therefore
important to verify the claims made by the economic operators thoroughly. Given these challenges, it
is therefore important to make adjustments to the LCA methodology that address the issue of
windfall gains and resource competition e.g. by removing the possibility to claim emission savings
due to carbon capture and replacement, the use regional values for cultivation emissions. The use of
credits for emission savings due to improved agricultural practises, unless evidence can be provided
that these measures do not lead to negative environmental effects and excessive incentives the use of
feedstocks that while qualifying as wastes or residues are fit for use in the food or feed market.
Furthermore, it is important to maintain measures that address the issue in indirect land use change.
Option 2D combining the emission-based approach with energy-based sub-mandates and an
improved LCA methodology would ensure that innovate fuels with a high decarbonisation potential
are promoted .
Impact on air pollution
Vehicles propelled by internal combustion engines are one of the drivers for local air pollution in
cities and electrification of transport is seen as one of the main options to address a major part of this
problem. Options 1 and 2 would contribute towards a further reduction of air pollution given that
they would provide further incentives to electrify road transport. Setting out further details, how
renewable electricity supplied to electric vehicles and ships should be considered under the
obligation on fuels e.g. by the e introduction of the credit mechanism would provide incentives to
invest into public recharging infrastructure and hence facilitate the electrification of road transport
and accordingly decrease local air pollution.
Social impact
142
EurObserv’er 2019 report
143
According to Appendix 2 of the JEC WTW report version 5, bioethanol production continues to use natural gas a
process energy.
144
Ethanol plants capture CO2, which is used in the beverage industry but do not increase the overall demand for CO2
which means that less CO2 is captured in other industries.
106
Employment
The increase of the ambition level foreseen under Options 1 and 2 is expected to create a moderate
number of direct jobs. The largest increase is expected to be created in the production of advanced
biofuels followed by hydrogen-based synthetic fuels. Figures do not include indirect jobs created in
the supply chain for feedstock or in the construction of renewable electricity generation capacity
where the most important effect can be expected145
but also disregard potential losses in other
industries. Overall polices promoting renewable energy have moderate positive net benefits on
employment.
Table 18 - Dire t jo s reated i re e a le fuel i dustr ; Sour e: Te h i al support for RES poli de elop e t a d i ple e tatio :
delivering on an increased ambitio through e erg s ste i tegratio ENER/ C / -440
Economic impacts: Fuel prices
Innovative renewable fuels are more expensive than fossil fuels. The figure below shows estimated
ranges of production costs of emerging innovative fuels and observed market prices for fuels which
are already on the market146
. Prices and costs estimates for liquid renewable fuels range from ~6
ct/kwh to ~24ct/kwh while prices for petrol and diesel are currently ~ 3ct/kwh at a very low level.
Assuming a blend of 10% renewable fuels priced at 6ct/kWh increases the fuel price by ~3 ct/l.
depending of the type of fuels costs can be higher. While measures such as the introduction of new
fuels blends and the introduction of the credit mechanism for fuel suppliers would facilitate
compliance and help to reduce costs, s the increase in the ambition level foreseen under Options 1
and 2 would still lead to an increase in combustion fuel prices. The increase in fuel costs would be
limited, though, as the share of renewable fuels does not increase significantly between the main
options and the baseline. The cost would be mostly borne by the aviation and maritime sectors, with
costs passed on to consumers, as consumption of renewable and low carbon fuels in road transport
remains stable and more expensive options are only marginally reaching the road sector
145
IRENA 2019: Renewable Energy and Jobs
146
In case of hydrogen estimated costs for delivery of fuels in filling stations are included
0
20
40
60
80
100
120
0
10.000
20.000
30.000
40.000
50.000
60.000
Min Max Min Max Min Max Min Max
Advanced biofuels Annex IX B biofuels RFNBO-H2 RFNBO-liquid
Fuel
quantities
[Twh/a]
Direct
jobs
[#]
Direct jobs in 2030 (CTP 2030 scenario MIX)
Direct jobs in 2030 Fuel quantities
107
In the short to medium term fuels costs would increase more under Options 1A, 1B, 2A and 2D as
those scenarios would lead to a more pronounced uptake of innovative renewable and low carbon
fuels which will be initially more expensive. Due to increased technology learning, the long-term
costs would be lower after 2030.
Figure 24 - Produ tio osts a d pri es of differe t t pes of re e a le a d lo ar o fuels; Sour e Te h i al support for RES poli
development and implementation: delivering on an increased a itio through e erg s ste i tegratio ENER/ C / -440
6.1.9. Effectiveness
The increase of the ambition level in the core options is defined by design as capable of meeting the
2030 targets which are “Fit for 55” as well as to contribute to the commercial development and
deployment innovative renewable and low-carbon fuels.
The most relevant indicator for effectiveness of the options is the ability to reach cost-effectively and
sustainably the “Fit for 55” ambition level. The pace of development and deployment of fuels with
high decarbonisation potential is instrumental as an indicator to measure the achievement of the
overall target. The measures in place will aim at promoting the commercial development of
innovative fuels with high decarbonisation potential as this is a prerequisite for achieving climate
neutrality by 2050.
There are barriers in promoting innovative fuels which are not yet fully competitive. Advanced
biofuels for example, may encounter difficulties fulfilling the existing 2030 requirements with regard
to their volume availability as well as technological availability. As stated by the Sustainable
0
5
10
15
20
25
Bioethanol…
Biodiesel
(FAME)*
Biodiesel
(RME)*
Biodiesel
(SME)*
Cellulosic…
Methanol
(biomass)
Liquid
fuels…
Biodiesel
(UCOME)*
Biodiesel
(TME)*
RFNBO
hydrogen…
RFNBO
hydrogen…
RFNBO
hydrogen…
RFNBO
hydrogen…
Low-carbon…
Low-carbon…
RFNBO
Fischer-…
Food/feed Advanced RFNBO-H2 RFNBO-liq
Production
costs
[ct/kWh]
Note: Values marked with * are based on market price data.
108
Advanced Biofuels Technology Development Report 2020147
, advanced biofuels production for the
transport sector remains limited on a commercial scale notably due to technological challenges.
However in the last decade, considerable progress in technology development has been made.
Another main barrier may be the feedstock supply, especially with regard to the possibility to find
materials not used by other sectors, in order to have the possibility to limit costs and price volatility.
Production could be supplemented by imports, although in general it is only practical to import
feedstocks which have a high energy density. Sugar and starch crops, oil crops, and waste fats and
oils are already commonly traded internationally. Forestry residues may also be traded, but typically
over shorter distances due to their lower energy density and the fact that there are no well-established
trading markets in these products yet.148
For all other feedstocks, it is likely that they would be
converted into fuel near to their point of production, meaning the final fuel would need to be
imported.
On the one hand, the setting of energy based sub-targets combined with sub-mandates in the fuel
supply obligation (Option 1A, 1B, 2A and 2D) are more effective in supporting innovate renewable
and low carbon fuels. Option 1B is in the regard more effective than Option 1A as it sets out also a
sub-target for RFNBOs, which have a high potential but are still very expensive. This maximises the
chances that these fuel technologies are further developed and sufficiently mature to be deployed at
large scale after 2030. Option 2B applying an emission-based approach also features a higher level of
ambition, but would risk promoting mostly mature fuels with comparatively low production costs
and high direct emission savings such as biofuels produced from feedstock listed in Part B of Annex
IX, biofuels produced from other types of residues as well as conventional biofuels. While RFNBOs
and advanced biofuels achieve high emissions savings and have large cost reduction potential, they
face higher technology risks and are not yet competitive with mature types of fuels on this basis (See
figure below). Setting of energy based sub-targets combined with sub-mandates in the fuel supply
obligation (Option 1A, 1B, 2A and 2D) may be effective in supporting innovate renewable and low
carbon fuels. Option 1B is in the regard more effective than Option 1A as it sets out also a sub-target
for RFNBOs, which have a high potential but are still very expensive. This maximises the chances
that these fuel technologies are further developed and sufficiently mature to be deployed at large
scale after 2030. Option 2B applying an emission-based approach also features a higher level of
ambition but would risk promoting mostly mature fuels with comparatively low production costs and
high direct emission savings such as biofuels produced from feedstock listed in Part B of Annex IX,
biofuels produced from other types of residues as well as conventional biofuels. While RFNBOs and
advanced biofuels achieve high emissions savings and have large cost reduction potential, they face
higher technology risks and are not yet competitive with mature types of fuels on this basis (See
figure below).
147
Sustainable Advanced Biofuels - Technology Development Report 2020;
https://ec.europa.eu/jrc/en/publication/sustainable-advanced-biofuels-technology-development-report-2020
148
LBST, E4tech, S.E.E.C. (2020): Modalities to foster use of renewable energy sources in the transport sector by the
Energy Community Contracting Parties; https://author.energy-community.org/enc-author-prd/dam/jcr:67ca5b20-edf1-
4dd1-b9f9-80c9cc7d7711/RECG_LBST_0420.pdf
109
Figure 25 - GHG e issio redu tio osts of differe t t pes of re e a le a d lo ar o fuels e l. ILUC effe ts ; sour e Te h i al
support for RES policy de elop e t a d i ple e tatio : deli eri g o a i reased a itio through e erg s ste i tegratio
ENER/ C1/2020-440
The experience with the implementation of the emission-based approach in Germany as well as the
data set out in the Figure above on the estimated GHG emission reduction costs demonstrate that
innovative fuel technologies such as RFNBOs and advanced biofuels are not yet competitive with
mature renewable fuel technologies. Otherwise, at least advanced biofuels would have already
emerged in the market as Germany adopted the emission-based approach in 2015. Apart from
operating costs, the main competitive disadvantage for innovative fuels is that production facilities
for mature types of renewable fuels are already in place while only a few installations producing
advanced biofuels and RFNBOs at commercial scale exist, capex costs are high and technological
risks remain. When applying an emission-based approach RFNBOs and advanced biofuels would
enter the picture only at the moment the limit for conventional biofuels and the resource limits for
Annex IX Part B biofuel would apply. Combining the emission-based approach with energy-based
sub-mandates for advanced biofuels and RFNBOs would address this issue.
The revision of existing technical standards of fuels traded in the EU with respect to the maximum
levels of bio-based content is relevant for all options as it facilitates the achievement of higher targets
including the introduction of B10, which is currently not provided for in the FQD in the interest of
vehicle compatibility. In such event, the introduction of an EU-wide B7 protection grade is
recommended as a significant share of vehicles not compatible with B10 expected to be present in
the fleet by 2030 (potentially 28%). The specific assessment of the introduction of new fuel blends is
provided in Annex 10.
110
6.1.10. Administrative impacts
All core options would reduce the administrative burden for public authorities compared to the
baseline as all options would eliminate the current overlaps between the FQD and REDII. These
overlaps have made it impossible for economic operators and national authorities to disentangle
administrative costs under the two Directives. Administrative costs induced by the current
monitoring and reporting obligations under Article 7a of the FQD and REDII149
amount to around 1-
2 FTEs per year and fuel supplier ranging between €41.000 and €82.000150
. In most cases, operators
and Member States indicate 1 FTE handling administrative obligations, while 2 FTEs result from the
choice to include monitoring regulatory trends as an administrative cost. On the EU27 scale, this
corresponds to 27-54 FTEs - an equivalent of EUR 1.7-2.9 million per year. One Member State
reported 15 FTE, and is considered as an exception as it assigns administrative costs to wider
monitoring activities, such as the national trading system.
None of the policy options are likely to raise administrative costs, given the monitoring and reporting
system is already in place for both FQD and RED implementation. Option 2B and 2D, however,
would require a higher effort from public authorities and certification schemes to verify the claims
made by economic regarding the emission intensity of renewable and low carbon fuels than the
options based on the energy-based approach because operators are incentivised to determine the
specific greenhouse has emission intensity of their production and their claims would need to be
thoroughly verified in order to avoid unfair advantages of individual producers. The application of a
union wide approach as foreseen under options 2A, 2B and 2D, however, would lead to more
harmonised national rules, which would reduce administrative costs for fuels suppliers.
6.1.11. Coherence
All policy options apart from the baseline are coherent with the objectives of the CTP as well as
related Union policies but the degree of coherence differs between the options.
All options apart from the baseline complement policy measures aiming at the reduction of GHG
emissions such as the ETS and the ESR by providing incentives for the promotion of renewable and
low carbon fuels in sectors, which are difficult to decarbonise via the ETS carbon signal. All options
are complementary in this regard as they directly promote the use of low carbon energy carriers and
provide incentives for the deployment of renewable and low carbon fuels formulated using different
metrics.
The increase of the ambition level for RFNBOs and advanced biofuels is consistent with the
additional demand stemming from the Refuel EU Aviation and Fuel EU maritime initiatives which
will contribute towards the fulfilment of the target. If a stronger emphasis is put on the promotion on
149
Administrative costs were obtained from the stakeholder consultation exercise in the framework of
CLIMA.A4/FRA/2009/0011 support study. Stakeholders' views were collected through a targeted written survey and
scoping interviews with industry and Member States.
150
Estimate assume a labour cost according to Eurostat data: 37.1 average hours per week, 56 weeks in a year, €20
average hourly labour cost levels (plus taxes minus subsidies) in the EU-27 for administrative and support service
activities [lc_lci_lev]
111
RFNBOs as set out in option 1B, this choice would also need to be reflected in potential sub-targets
under the Refuel EU Aviation initiative. Focussing on the promotion of RFNBOs and advanced
biofuels under Refuel EU Aviation would also avoid the reallocation of existing biofuels from road
transport to aviation which could have negative effects on parts of the existing biofuel industry
which cannot be transformed to produce aviation fuels. While the supply obligation for renewable
fuels envisaged under the Refuel EU Aviation initiative could have been integrated into the RED,
which would have made it easier to maintain the consistency between the legal instruments and
would have provided the Member States with more flexibility, integrating this measure into a
dedicated Regulation applying directly to the suppliers of aviation fuels has the advantage of creating
a fully harmonised system, which is particularly important in the aviation sector151
. A continuation of
the 1.2 multiplier for the use of fuels in the maritime sector under the energy based options would
further provide incentives that the demand for renewable and low carbon fuels stemming from the
obligation on fuel demand set out under the Fuel EU Maritime initiative will be met with renewable
fuels.
Setting out a target for renewable energy in transport will further complement legislative instruments
aiming at the promotion of zero emission vehicles such as the CO2 standards for vehicles, the AFID
and the EPBD by endorsing the measures taken by the Member States to promote sales of electric
vehicles and investments into the recharging infrastructure. Requiring the implementation of
measures such as the set-up of a credit mechanism would facilitate the participation of electricity
providers to contribute towards the fulfilment of the targets and provide incentives to invest into
public recharging infrastructure. An uptake of renewable electricity coupled with smart charging
would promote both maximum use of renewable electricity for charging, and cost efficient
integration into the power system. The promotion of zero emission vehicles will also contribute in
the same way to other environmental objectives such as the reduction of local air and noise pollution.
6.1.12. Stakeholders’ Opinions
Stakeholders’ Opinions
In the replies to the Roadmap, businesses & associations from the biofuels sector called for
an increase of the 14% transport target. Actors from the renewable and low-carbon fuel
sectors called for the establishment of sub-targets for synthetic fuels in different sectors.
Several companies called for the introduction of a minimum target for renewable gas. The
EV industry, representing a minority of the stakeholders that responded, pleaded for an
increase of the transport target. On another side, some actors called for recycled carbon fuels
(RCF) to be excluded from the transport target.
In the OPC, Business associations and company/business organizations agree that the target
in transport should increase but in a more ambitious way than indicated in the 2030 Climate
Target Plan. Environmental organisations and NGOs tend to disagree more (47% and 30%,
respectively, of these stakeholder groups do not think that the level of the renewable target in
transport should increase). Stakeholders from business associations, public authorities and
NGOs mention how more ambitious targets are necessary to achieve the Paris Climate
Agreement. With regard to representatives form Member States responding to the OPC,
151
See IA of Refuel EU Aviation initiative for details.
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opinions were almost split: half of the respondents were against an increase in the target for
transport, while the remaining were in favour of the increase but had differing views in terms
of how ambitious, compared to the CTP, the new target should be.
During the 1st
stakeholder workshop, all the speakers agreed that efforts for promoting
renewables in transport should be stepped up. There was a clear consensus that an overall
sub-target for RFNBOs is critical for decarbonizing all the transport sectors. Some panellists
agreed that a better harmonisation of policy instruments in RED II is desirable while some
others worried about the effect of the review of RED II on policy certainty and investments.
Different views were expressed on the importance of biofuels and hydrogen-based fuels for
transport decarbonisation and the way electrification of road transport should be promoted.
During the 1st
stakeholder workshop, NGOs argued that it would be better to have a lower
target of sustainable fuels than higher targets fulfilled with unsustainable fuels (quality over
quantity). Regarding electrification they requested a coordinated approach across sectors,
including aviation and shipping. They also favoured the phase-out of high-ILUC fuels such as
fuels from palm or soy oil and favoured the shift to more advanced biofuels, while RFNBOs
should focus on long-distance transport. Although the multiplier for renewable electricity in
transport is too generous, they favoured keeping it, in light of the absence of a better system.
The biofuel sector requested only a minimal revision of the provisions regarding the transport
sector, for the sake of regulatory stability and not to harm ongoing investments; The biofuel
industry warned against the risk of an inflation of multipliers. The shipping industry,
acknowledged the sense of urgency and requests a strong regulatory framework, certification
that rewards first movers. However, they prefer a revision of the Fuel Quality Directive rather
than a revision of RED II. They favour a solid fuel certification system. Maritime and
aviation sector favours that the existing multipliers should be increased.
6.4. Measures to enhance the contribution of transport and heating and cooling to the
system integration of renewable electricity
Modelling was conducted to assess the effects of various levels of integration of distributed loads
(heat pumps and electric vehicles) and the availability of RES-share information, in overall system
costs and levels of decarbonisation reached. This analysis should be considered in a broader context
for the promotion of renewable electricity use in transport, heating and cooling, charging of home
stationary batteries, as well as other types of electricity use featuring demand side flexibility or the
capacity to be used as electricity storage. The financial aspects of reaching high levels of integration
were specifically analysed with respect to the deployment of the needed smart charging
infrastructure.
Further qualitative analysis was conducted to identify and address barriers to the integration of such
distributed loads within the energy system and to the establishment of competitiveness and level
playing field for the benefit of the energy system and the consumers.
Integrating renewable electricity
The Electricity Regulation and the Electricity Directive, as part of the Clean Energy package, have
laid down the foundations of a new market design for electricity which will enable better rewards for
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flexibility, by providing adequate price signals, and will ensure the development of functioning
integrated short-term markets. However, the current legislative framework does not provide for
signals to consumers and market players that are specific to renewable based electricity penetration,
nor does it entail specific clauses for integration of small and mobile storage assets such as domestic
batteries and electric vehicles, whose numbers are increasing fast. It was therefore deemed necessary
to assess the impact of certain legislative measures to enhance integration of renewable electricity in
the system. If such measures prove insufficient, additional technical rules can be put in place through
the Commission’s empowerment for network codes provided by the Electricity Regulation.
Both the electricity price and RES-E share information are available in nearly real time in the
electricity market system as auctions are cleared every 30 minutes (or less) and Transmission System
Operators (TSOs) have access to this data. In addition, Distribution System Operators (DSOs) have
own data of RES-E production from self-production within their grid. Heat pumps, buildings’
Energy Management Systems and Smart Charging infrastructure for electric vehicles could be
configured in a way that they do not only take into account the electricity market price signal, but
also information on the RES-E share in the system. Shifting power demand for heating and cooling
(via controlling the operation of heat pumps and thermal storage systems) and EV charging into
hours with high RES-E share would thus favour the use of renewable electricity and incentivise the
absorption of RES generation in real-time.
Aggregators and other stakeholders have informed on the need on such additional “RES signal”
would complement the incentives provided by electricity prices, which would enable them to offer
“real” time renewable services when managing the charging and discharging of distributed loads.
Currently such information is mostly not readily available and needs to be estimate through
cumbersome and risky calculations. Such information is also used differently than guarantees of
origin (GOs) and they are relevant to different types of consumers and service products.
It should also be noted that although low electricity prices sometimes coincide with the availability
of renewable energy in the system, the relationship between the two is many times coincidental and
not always that of cause and effect. Electricity prices are at times low due to the must-run
requirements of other generation assets such as nuclear or coal in conjunction with low demand,
while in other occasions prices are high at times when both demand and RES production (PV) are
high.
Deployment of smart and bidirectional charging infrastructure
EVs, if well integrated into the electricity system can reduce investment needs in other flexibility
assets, including back-up generation facilities and align their demand with the penetration of
renewable electricity in the system, thus reducing both system costs and GHG emissions. On the
contrary, if EVs are not charged in line with the overall system conditions, they can increase both
investment needs and the overall system GHG emissions.
The level of integration depends on the access to intelligent charging infrastructure with the ability to
vary charging intensity according to certain signals, the availability of bidirectional flow between
charger and vehicle (V2G) and the availability of near-real time information on pricing and RES-
share of the grid to EV users and EV fleet aggregators. Especially as intelligent charging and V2G
become widely accessible technologies, EVs will act not only as a valuable flexibility and storage
service to the grid, but also as an additional remuneration stream for EV users, thus further
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incentivising the penetration of electric vehicles in the market and their contribution to the energy
system.
Adequate integration of EVs would be needed, especially in situations where they are parked for
long periods of time, either at private (e.g. home, office, depots, etc.) or public places (e.g. on-street
parking, off-street parking, shopping centres, etc.). The role of charging stations at public parking
areas, especially on-street parking used over-night at residential areas, or over-day when users park
near the place of employment, will become increasingly important as EVs become mainstream152
and
will increasingly need to park in such areas.
Currently there are no requirements on installed charging infrastructure to be integration-ready (i.e.
to be able to support intelligent charging and/or V2G). As non-supportive charging stations continue
to be installed, their operation will limit or even negate their contribution to the grid for their entire
lifetime. With regard to V2G specifically, it is still largely unavailable in the EU because a
supporting protocol (ISO 15118-20) has not yet been agreed.
Ensuring level playing field in the integration of distributed assets through aggregation
The role of aggregators is considered vital in enabling home batteries and EVs to integrate with the
grid, as they will be carrying out the task of using market signals to control the charging and
discharging of the home battery systems and the intelligent charging and V2G operation of the
vehicle fleets they aggregate. For the EVs specifically, such control needs be enabled while they are
parked and plugged-in, regardless where (home, work, on-street, off-street). It is therefore essential
to ensure a level playing field in the aggregation and electromobility service market and the
electricity supply market, especially through aggregation.
Access to basic battery information, such as State-of-Health, capacity, power set-point and State-of-
Charge by independent market players and aggregators153
is currently restricted or controlled by the
manufacturer / OEM. Knowledge of this information is necessary in order to optimally handle
domestic, industrial and EV batteries during intelligent charging, discharging and V2G operations.
Without access to such information certain operations cannot be performed or are performed with
limitations and risks to the battery’s value. As stakeholders point out, without free and open access to
such information, the development of competition in aggregation and electromobility service markets
will be hampered, with limitations in the quality and value of services offered to consumers.
In addition, publicly accessible charging infrastructure and in general charging infrastructure not
operated for own use, is usually not available to all electromobility service providers, unless it is
operated based on transparent and not discriminatory terms, which is not always the case. This
further limits the development of electromobility services, especially through aggregation, since it
hampers the development of competition. Although updates to other legislation include non-
discriminatory terms for pricing (including provisions for availability ad-hoc prices), this is not
sufficient to ensure competition in the more complex electromobility services which are critical for
the integration of EVs.
152
About half of the publically accessible parking in EU is on-street; Scope of Parking in Europe – Data Collection by
the European Parking Association (2013) www.europeanparking.eu
153
Not affiliated to battery or vehicle manufacturers
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Charging infrastructure is a limited infrastructure resource, especially in urban areas and service exits
on highways, therefore lack of open access to the current and future developed charging
infrastructure, would have negative impact on its effective use and the quality and quantity of
integration services provided. This has also been a top-priority request from stakeholders, while
interviews with operators who operate their charging infrastructure under open access parameters in
certain Member States attest to its feasibility and benefits to market participants, system and users.
Unless competition in the electromobility services for integrating EVs is safeguarded at these early
stages, especially through aggregation, the market’s ability to develop would be rather questionable.
Drawing from experience in development of electricity and gas infrastructure, non-discriminatory
access would be much preferred than applying other methods later, such as unbundling or third party
access which would bring unnecessary market disturbance and higher cost for both businesses and
administration.
At Member State level there are also different terms of operation between small storage devices (e.g.
home batteries), or mobile storage devices (e.g. EVs), vs large stationary facilities. For example
home storage is usually required to conform to the same high security standards as large facilities in
order to offer balancing services, which causes a disproportionate cost to the owner. In other cases
only stationary storage systems are exempted from grid charges, which substantially limits the
profitability of storage services through EVs.
6.1.13. Impacts projected by scenarios produced with METIS model
To estimate the effect of various levels of demand response from heat pumps and EVs to flexible
pricing and real-time RES-share information, modelling of additional variants was carried out by
METIS, with hourly based granularity and joint dispatch and capacity optimisation of the MIX
scenario.
The variations considered for 2030 with the energy capacity mix according to the MIX scenario for
2030, with 30% price driven demand response from heat pumps and EVs (baseline), 70% price
driven demand response (HighDR), 70% price driven demand response with V2G (HighDR+V2G),
and 70% demand response driven by price signals and real RES information but with no V2G
capability (HighDR + vRESshare).
It should be noted that the above scenarios assume that when these EVs are parked for long time
periods (e.g. over-day or over-night), whether at private or public locations (e.g. on-street parking),
they are plugged to an intelligent charger or intelligent charger with V2G respectively. For heat
pumps, it is assumed that intelligent meters and energy management systems are available. The
model also assumes that flexible tariffs are made available to consumers, including vehicle users or
those acting on their behalf (i.e. aggregators or mobility service providers).
The contribution of EVs was found to be substantially higher in all cases (about 70-75%) and are
considered the predominant driver, in comparison to heat pumps. This dominance is expected to
increase significantly post 2030 as the EV proliferation increases.
In solar countries especially, while achieving a cost-efficient integration of renewables, consumers
provide flexibility by adjusting their EV charging or heat pump engagement patterns to hours of
large renewable generation during daytime. As shown in the figure below, increasing the flexibility
share in the high-DR model run enables electric vehicles to shift their consumption pattern to match
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PV peak generation. EVs featuring V2G are able to integrate further PV generation at mid-day, and
return electricity to the grid at night when flexibility needs are stronger due to low renewable
generation.
Figure 26 - Example - Average EVs daily consumption profile, for different DR strategies.
The most significant impact from a decarbonisation perspective, is shown by the analysis on the
GHG emissions of the system. As shown in the GHG results illustrated in the below, a reduction of
GHG emission would only be possible when flexibility services are combined with near-real time
information on the RES share or CO2 content of the grid. Based on the modelling results, the high
level of GHG reduction is also attributed to the re-optimisation of the electricity production mix (i.e.
reduction of electricity production from coal and lignite), made possible with the availability of
information on such information.
Figure 27 - CO2 emissions, compared to Baseline
According to the model results on system costs, the increase of intelligent charging from 30% to
70% is accompanied by 1.2 Billion Euro annual savings in the overall system. With the addition of
V2G, those savings increase to 1.6 Billion Euro. If V2G capability is removed and real time RES-
share information is added, the savings are limited to 0.6 Billion Euro (more storage will be
necessary in the system, since demand is shifted and EVs don’t contribute their storage). In practice,
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the revenues from EV sales would be reinvested in RES production and storage solutions, which
would tend to compensate for the reduced system savings. It should be understood that RES installed
capacities were constrained by the model based on the MIX central scenario produced by PRIMES –
i.e. it was excluded that the additional demand for RES would trigger additional investments in RES
new capacity.
6.1.14. Impacts and analysis not based on modelling – qualitative analysis
Policy options 1.1-1.2, 2.1-2.2 and 3.1-3.3 aim to facilitate the necessary infrastructure and market
conditions so that the deep and renewable-specific integration of distributed loads such as heat
pumps, domestic battery systems and EVs, can be achieved in practice and competitively. Options
2.1-2.2 and 3.3 are specific to charging infrastructure.
The measures described in options 2.1-2.2 aim to increase the availability of intelligent charging and
V2G enabled charge points, to the level necessary to sufficiently integrate EVs in the electricity
system while parked for long periods of time (over-night, while at work, at shopping outlets etc.).
Such infrastructure requirements largely exceeds the needs for keeping EVs charged for mobility
purposes, as required within the scope of AFID and its revision.
For reducing system costs and for decarbonisation purposes, EVs should be connected to the system
via intelligent charging infrastructure, otherwise their charging will begin on the instant of
connection and continue at steady rate until the desired charge is reached, which would have
negative instead of positive consequences to system stability and decarbonisation. In order to achieve
the positive effects projected by the modelling on system cost reduction and decarbonisation, such
technical availability is considered a prerequisite at a level matching that of corresponding share of
contributing EVs (30% / 70% respectively). The availability of bidirectional (V2G) functionality in
the charging infrastructure would increase the benefits to integration and decarbonisation even
further.
Options 2.1 and 2.2 examine the deployment of intelligent charging infrastructure and bidirectional
charging infrastructure (V2G) respectively, with variants offering flexibility to the Member States to
decide on the level of deployment of these two technologies, depending on their specificities and
level of EV rollout.
The two option groups have different potentials for contribution to the overall goal of integrating
EVs, since intelligent charging is widely considered as the most cost optimal and contributes to
system decarbonisation to the largest extend (between 60-80 %) in comparison to bidirectional
charging. The contribution of the latter can also vary according to the specificities of the energy
system, such as the type of renewable energy production (solar pv or wind) which have different
time variation characteristics.
Options 3.1-3.3 aim to provide a level playing field for the aggregation market. Option 3.1 eliminates
potential discrimination against small/domestic energy storage assets or mobile storage devices, in
comparison to large stationary storage facilities. This is relevant for home battery management and
V2G services and aims to safeguard that charges and fees payed by the two types of storages, as well
as the technical and security requirements to enable their participation to the market are not
disproportionate. Otherwise homes and EVs injecting electricity back into the market would be at a
competitive disadvantage compared to stationary storage systems, which will eventually diminish
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their potential to contribute to the electricity system, thus raising system costs and limiting the
penetration of renewable electricity (e.g. by self-production).
Option 3.2 aims to provide equal access for independent electricity suppliers and electromobility
service providers (especially when acting as aggregators to the necessary battery information (i.e.
State-of-Health, State-of-Charge, etc.), so that they can manage domestic batteries and EVs via
intelligent charging / V2G services in an optimal manner. This would foster a level playing field and
facilitate competition in the market of aggregation of building energy management and electro-
mobility services. Consequently, it would enable consumer choice and facilitate their ability to
provide balancing and flexibility services to the electricity market, while being remunerated, thus
bringing positive effects in the quality and cost of services provided to home owners and EV users.
Most importantly, since many EV manufacturers, while in control of the access to battery
information, are now becoming active in electricity supply and electromobility services, the measure
is expected to alleviate any lock-in effects placed on consumer choice for electricity and
electromobility supplier services, in link with the choice of vehicle brand and vice-versa. Electricity
suppliers and electromobility service providers interviewed have expressed strong concerns with the
current situation and explained the difficulties faced when trying to access basic battery data to offer
services to their customers. Some vehicle manufacturers allow such access at a fee or through an
affiliation agreement, while others refuse access.
Option 3.3 deals with open access to the publicly available intelligent charging infrastructure,
especially at locations where EVs are left for long hours (e.g. over day, or overnight). In locations of
high demand for parking spaces, such as dense urban or residential areas, this would enable EV users
to find a charging station with access to the aggregator / service provider of their choice. This would
also reduce the need for infrastructure duplication, since less stations will be used by more
aggregators and mobility providers. As aggregators will have much more infrastructure available to
offer their services, such measure would facilitate increased competition in the electromobility
services market and the development of best technology to cater for customer needs. Last, the
measure will reduce the lock-in and market fragmentation trends of current practices and eliminate
any chance of distortion of the EV market in areas where charging services might become affiliated
with specific vehicle brands.
The basic characteristics of an openly accessible charging infrastructure would be the following:
 It is functioning based on open, non-proprietary and non-discriminatory communication
protocols;
 The process of how an EMSP can conduct a bilateral agreement with the CPO is transparent,
with defined timeframes and same for all interested parties. As best practice this includes a
standardised requirement list, which includes registration and credit check requirements;
 Terms and conditions for access are fair, non-discriminatory and made known upfront to
interested EMSPs, or made publically available. As best practice this includes a standardised
contract and pricing policy.
 CPOs are free to set their prices, which could be different depending on the location of
certain charge points, and could also be differentiated based on the volumes of various
EMSPs. However, there can be no discrimination between EMSPs, or in transparent ways of
rejecting access.
 Security Certificates are usually registered and managed by an authority, or recognised body.
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The need for open access to the charging infrastructure aims to address two main issues, one being
the lack of consumer choice and the other being the limitations on competition of recharging and
integration related services. In many cases one does not actually choose their charging point, as it is
physically linked to the place they need to park and integrate their vehicle with the electricity system.
In such situations, often the case where people park overnight at their place of residence or while at
work, but also elsewhere, without open access the EV-user would be captive to the mobility service
provider affiliated with the specific charge point. This would also limit the ability of the EV-user’s
provider of choice to integrate the EV at the locations where the EV is usually parked.
Integration is done via aggregation of many individual EVs, under contractual agreement with their
aggregator (EMSP / electricity supplier) of choice. EV-users enter in such contracts after carefully
understanding and agreeing on a complicated set of terms and conditions which involve personal
data handling (location, driving habits), battery management and risk of degradation, preferences of
type of electricity (e.g. renewable), remuneration for flexibility / balancing / storage services offered
via the EVs etc. This is a strong consumer protection side of the benefit of having one subscription,
which has been carefully conducted once, being honoured in multiple charging points.
This also allows EMSP-aggregators to “follow” the EVs of their fleet, and predict the interaction
between EVs and electricity system, knowing the specific routine habits of EV-users and the
available capacity in their battery beforehand. They will combine this information with the dynamic
signals they get from the electricity market (prices, renewable electricity share, congestion etc), to
offer best value added to their EV-users according to their preferences, as well as the grid operators.
Most importantly, they can influence the charging behaviour of EVs via their daily interaction with
their EV-users.
From analysis and interviews conducted with numerous market players of the energy and
electromobility ecosystem, such as electricity suppliers, electromobility service providers, charging
point operators, research institutions, technical consultants, providers of specific technological
solutions and others, additional benefits of open access were identified as follows:
- It facilitates bilateral agreements between EMSPs and CPOs, since the connection
requirements and pricing policies are known ahead of time and parties will approach each
other if there is mutual interest.
- It reduces the need for infrastructure, in contrast to proprietary deployment. Since more EV-
users and EMSPs would be served by the same number of charging points, there would be
less charging points needed to cover the needs of the EV fleets, Open access would improve
the economics of charging points by increasing the utilization rate, which is a key driver in
the cost per kW of charging given the high fixed costs of charging point deployment. The
example in highways where many CPO/EMSP groups are represented at the same exit, each
one with their own stations, may already be an indication of infrastructure redundancy, since
they all need to be present at certain distances.
- It ensures that small, new players, both CPOs and EMSPs can enter the market and have a
level playing field to grow. Open access to infrastructure would be necessary for start-up or
independent EMSPs and electricity providers, in order for them to have an unobstructed route
to offer their services to EV-users. Open access is very favourable for small EMSPs, because
they can offer services through many CPOs without building their own infrastructure.
Otherwise, small EMSPs could only rely on their own infrastructure or suffer a difficult
negotiation with a CPO/EMSP group they won’t have much leverage on. Open access would
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be favourable to small CPOs as well, who can offer their infrastructure both to large EMSPs,
thus securing volume, and to smaller upcoming ones with innovative solutions, thereby
offering a diversified range of value added services to EV-users. Otherwise the small CPOs
could only rely on their affiliated EMSPs.
- It brings multiple revenue streams to CPOs, since more EMSPs can be connected to their
infrastructure and therefore bring more users. This works specifically well with independent
CPOs, and to their experience well justifies any administrative burden, which may stem from
the once-off conducting of numerous bilateral contracts.
- It provides the opportunity of EV users to use their electricity supplier of choice to charge
and integrate their electric vehicle, in an analogous way to the wright of supplier choice that
other electricity final-customers have for their homes or businesses154
.
- It enables competition to develop based on the innovation and value added of the services
offered and not through restricting access to infrastructure on specific locations.
To ensure that the measure does not bring any negative impact on the continuing deployment of
charging infrastructure, any negative impact on the business case of CPOs had to be carefully
examined. Towards this end, interviews were conducted specifically with CPOs whose main
business interest and main revenue stream is directly linked to the operation of charging points. This
was done to set aside any influence of the measure to any other business interest aside from charge
point operation. CPOs interviewed have confirmed that operating their infrastructure under open
access conditions increases their profitability. Those CPOs are represented with over 500,000
charging points across 27 Member States.
It is also noted that provisions for open access to charging infrastructure, as well as much stronger
conditions of access regulation and governance measures, are currently requested by many public
authorities, especially in urban settings155
.
Further quantitative analysis could be conducted, if data can be available from CPOs on the various
revenue streams from different EMSPs, as well as other sources. However, such auditing analysis
would require consent and independent verification. From the information received through the
interviews and the argumentation results of the qualitative analysis, it is not expected that a
quantitative approach would yield a different conclusion.
Open access has also been implemented at Member State level. In The Netherlands, interoperability
of the charging network and open access practices and bilateral contracts between all market players
have been established early-on, on the onset of the shift to electromobility. Currently (2020 figures),
The Netherlands also host the highest number of recharging points in EU156
.
With regard to any need for limiting the scope of application of an open access requirement, all
benefits brought by the measure should be considered. It could be the case that certain situations
154
From a strictly legal interpretation of the provisions of the Directive (EU) 2019/944, EV-users are considered final-
customers according to the definition in Article 2(3) of the Directive, since they purchase electricity for own use and
would therefore be entitled to choose their electricity supplier.
155
Sustainable Transport Forum, ‘Recommendations for public authorities on: procuring, awarding concessions, licences
and/or granting support for electric recharging infrastructure for passenger cars and vans’, adopted on 26 November
2020. The STF was established by Commission Decision C(2015)2583.
156
Link to Commission’s rollout plan for alternative fuels infrastructure, once published
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provide more opportunities for integration than others, where EVs only park briefly to recharge and
continue on a journey. Although limiting the scope of application of the measure to the locations
where EVs park for long periods of time will still have almost the same positive impact to
integration, it would fall short of bringing the benefits of open access to other charging situations,
where it could also be beneficial. Innovative recharging services geared specifically for highways,
for example inviting ad-hoc approaching cars when shares of renewable electricity sharply increase
in a specific area, could also immerge. Keeping the scope of application universal, would ensure that
the benefits of level playing field to competition and innovation can be applied to the entire
ecosystem of electromobility.
6.1.15. Effectiveness
Response to pricing and RES-share information
As illustrated by the modelling analysis, the increase in the demand-side-related flexibility potential
across the different scenarios triggers such response that brings a re-optimisation of the electricity
generation capacity mix, as demand-response makes the system less reliant on expensive peak
generation technologies from gas turbines, with investments reduction of the order of 13-23% to
those technologies, such as Open Cycle Gas Turbine (OCGT).
In addition, the implementation of option 1.1, which adds information on RES-share information, has
a clear, positive effect in reducing the GHG emissions of the energy system. In contrast, analysis of
scenarios where demand response was engaged only through price-signals, regardless of the level of
engagement (i.e. share of participating heat pumps or electric vehicles), has shown no effect on GHG
emissions. This constitutes a strong indication that for demand response to contribute towards
decarbonisation, real time information on variable RES share or carbon content of the grid must be
provided, in addition to price signals. In case forecasting is provided where available, the
predictability of the contribution of the EV fleets, as they are mobile assets, would increase the
measure’s effectiveness even further.
The introduction of RES share information also shows the tendency to further optimise the
investment and use of conventional sources, while giving more priority to less polluting ones.
Specifically, the corresponding scenario has shown a decrease in generation from lignite-based
power plants by 7% and from coal-based power plants by 9%. Generation from natural gas CCGTs
has also indicated an increase of 2.5%.
In addition, the introduction of such information could be used by the market for the delivery of
advanced digital products and solutions in energy and other areas.
Option 1.2 would have some positive effects in improving consumer information, by complementing
the information provided through guarantees of origin (and their residual mix for other customers), it
would bring limited added value in terms of inducing behavioural reactions to near-real-time system
conditions.
In order for the benefits of option 1.1 to be facilitated in practice, preferred options from options
groups 2 and 3 are considered as below.
Deployment of Intelligent and bidirectional charging infrastructure
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Options 2.1C would be the preferred option in terms of intelligent infrastructure deployment (smart
charging functionality), as they would help ensure the availability of the required intelligent charging
infrastructure in an optimized way. While option 2.1A ensures that the negative lock-in effects
associated with the deployment of non-intelligent chargers are avoided while satisfying the EV
mobility needs, 2.1C adds the additional smart charging infrastructure required for EV integration by
providing flexibility to the Member States and Regulators to optimise it according to their
specificities.
Most EVs are currently parked within private premises (homes, offices, depots, etc.). However, as
proliferation of EVs continues and since half the parking locations in the EU are on-street, it is
expected that other parking areas such as off-street parking premises as well as on-street parking
locations would be required to host EVs and therefore would need the installation of additional
intelligent chargers in order to keep these vehicles integrated into the grid while parked. Applying a
universal requirement for intelligent charging (public, private for own use and private for wider use
locations) would facilitate a much broader integration share of EVs and would cover any gaps
stemming from legislations with specific scope (EPBD/AFID).
With regard to bidirectional charging, option 2.2B is preferred, which requires Member States to
assess where V2G would be relevant in their systems and proceed accordingly. As V2G may bare
additional costs and since the benefits depend on various system factors, it was deemed necessary to
provide such flexibility so that they can to act specifically according to their national conditions (e.g.
share of home / office / public charging) and degree of EV proliferation.
Since the measures described in the selected options (2.1C and 2.2B) aim to increase system
integration and are specific to the benefit of the electricity system, it would be best that the relevant
assessments and recommendations are carried out by the National Regulatory Authorities, in
cooperation with the TSOs and DSOs. Member States would then proceed to the appropriate
measures based on such recommendations.
Competition and Level Playing Field – access to infrastructure and information
With regard to the aggregation market, Option 3.1 aims at eliminating any regulatory barriers against
balancing and electricity storage services provided by domestic batteries and EVs, in participating in
the electricity markets. This would ensure that small and mobile electricity storage systems will be
competing on an equal footing with larger stationary storage facilities. Without such conditions the
business case for domestic battery management and V2G would be substantially diminished and
domestic batteries and EVs would not be able to contribute in lowering the system costs associated to
storage capacity. This option does not concern intelligent charging or behind the meter discharging,
therefore its effectiveness, although substantial, would be applicable less broadly. Nonetheless,
judging from the low implementation costs, it is still considered as a no-regrets measure thus it is
recommended that it is applied in parallel with options 3.2 and 3.3.
Option 3.2 is considered the most effective in setting a level playing field from the early stages of
market development, therefore its early implementation would bring positive long term effects in the
availability, quality and cost of services provided to domestic battery owners and EV users. This is
considered the most preferred and timely required option from the group. Such an option could be
easily applied in practice, as basic battery information such as State of Health and State of Charge
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can be made available by manufacturers in many ways, either via the connection to the grid or over
the internet (through the back-end). With regard to interoperability of information, a common format
is essential and can be agreed through the preparations of protocol ISO 15118-20, currently under
development.
It is important however, that the provision of such information is not made available at a cost or
based on other bilateral agreements – access should be provided under open and free conditions.
Besides been supported by comments received by stakeholders, free and open access to basic battery
data was considered crucial for competition and a level playing field in the electromobility and
aggregation markets by the extensive study recently conducted by the Commission on EV integration
“Best practices and assessment of regulatory measures for cost-efficient integration of electric
vehicles into the electricity grid”157
Option 3.3 is expected to become increasingly pertinent in the near future as the proliferation of EVs
becomes mainstream. However, based on the current market dynamics, it would be critical to address
early on any market barriers or foreclosure tendencies, which would hinder market development.
Enacting the measures under option 3.3 would effectively make all public intelligent charging
infrastructure available to the general pool of electromobility service providers and their customers
especially through aggregation. This would in turn increase the efficiency of infrastructure
deployment and increased its accessibility, especially in areas of high parking demand, with
substantial added value to competitiveness and innovation in the electromobility and electricity
supply services market. As explained above, it is recommended that the measures of options 3.1, 3.2
and 3.3 are applied in parallel, since they are not mutually exclusive.
6.1.16. Administrative impacts
No considerable administrative burden is expected from the suggested options. With regard to the
provision of information (e.g. RES share or carbon intensity of the grid), the information is already
available internally by the network operators and the administrative costs of making it available to
the public is expected to be marginal (in certain Member States this is already available on the
internet on a real-time basis and accompanied with forecasting). In contrast, the automation brought
by the use of digital technologies is expected to increase by large the efficiency of transactions and
procedures associated with system integration. Therefore, no considerable administrative burden is
expected to arise from implementing option 1.1.
For implementation of option 2.1C and with regard to the cost difference between an ordinary
charger and a smart charger, based on the aforementioned study conducted by the Commission on
EV integration, the current cost difference for a charger up to 22kW is calculated to be 300 Euro per
charger, with an estimated decrease to 136 Euro per charger by 2025 and to 113 Euro per charger by
2030. For public charging points specifically, these costs also need to be considered in connection to
the other cost parameters associated with the installation of a charger (construction works, cabling,
connection fees, etc.) which brings the overall costs to several thousands of euros per charging point,
depending on the situation and therefore makes the cost difference attributed to smart functionality
marginal. For the cases of private charging stations, where the cost difference between a smart and a
non-smart charger could bare more consideration, incentives such as subsidies may help. However,
157
Link to study when published
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the short-medium term financial benefits of the intelligent charger option to the EV-user and system
operators, are expected to outweigh its cost difference considerably and be amortised within the first
three years of operation.
With regard to the overall financial impact of the implementation to the energy system, the
modelling has shown that the additional cost incurred, for example the added installation of
stationary electricity storage to accommodate availability of renewable electricity at times of reduced
production, will be driven and supplied by market dynamics as a result of preferential demand. Once
the optimisation gains are considered, the net costs to the energy system are expected to be negative
(i.e. savings) between 0.6 and 1.6 billion Euro annually. The financial benefits are additional to the
overall benefits of GHG reduction.
With regard to the assessments relevant to options 2.1C and 2.2B, it is estimated that such
assessments could incur costs in the order of 10,000 – 100,000 Euro per Member State depending on
the population, which are considered marginal (e.g. 0.5 – 5 Euro cents per citizen). Regulators and
operators would also be able to reclaim such costs through tariffs and licencing fees.
With regard to the implementation of measures of Option 3.1, it is anticipated that the regulatory
adaptation would not be substantive and would in any case be part of the overall transition /
transposition process for implementing the Electricity Market Regulation and Directive. Option 3.2
would require some software adaptation on behalf of the manufacturer, in order to allow access to
the data to third parties, which is not expected to be of substantial cost, since the data is already
collected by the Battery Management Systems and the software update will be replicated
automatically via a download process.
For Option 3.3 specifically, some admin cost may arise to CPOs, switching from a proprietary
system to an open access system in two ways. First, Any CPOs using outdated or highly proprietary
hardware, on which open protocols and standard identification software cannot be installed, may
need to gradually update their infrastructure. In such case, exceptions can be considered for existing
infrastructure. This is however not common and it was not encountered during the interviews with
various CPOs and market players. In any case, hardware interoperability will need to be in place in
order to allow ad-hoc transactions, as required by AFID.
Second, CPOs switching to operation based on open access, would need to gradually come into
bilateral agreements with EMSPs who would be interested in accessing the charging infrastructure to
serve their EV-users. It is expected that only EMSPs active in the area of the CPO would have any
incentive to enter in such agreement, since it would be an administrative cost for them also, which
they wouldn’t wish to endure without expecting revenue. In addition, once a CPO starts operating
their infrastructure based on open accessibility, it is expected that the transparency in his
requirements, procedures and pricing policy would by itself prevent a substantial part of the
administrative cost of reaching an agreement, since any interested EMSP will know what to expect
before deciding to approach for a bilateral agreement. As explained in section 6.4.2, according to the
experience of CPOs currently practicing open access policies, the additional financial benefits of
having multiple bilateral agreements with EMSPs, largely offsets the initial, once-off administrative
burden. For a complete picture, the additional revenue stream for the electricity suppliers and EMSPs
should also be taken into account.
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6.1.17. Coherence
The suggested measures aim to increase the level of absorption of renewable electricity by the end-
use sectors, through the availability of interoperable information on the near-real time share of
renewable electricity and its forecasting, access to the necessary infrastructure, as well as putting in
place the needed provisions to facilitate competition in the market and level playing field. This
would work in conjunction with a high level of integration of EVs and other distributable loads such
as heat pumps in the electricity system, so that they are able to respond to the above information. The
measures aim to facilitate market dynamics to work towards further decarbonisation of the electricity
system and trigger more demand for renewable electricity.
The integration of EVs is specifically considered within this context, as opposed to the adequacy of
recharging infrastructure for mobility purposes158
, or the need to reduce the environmental impact
and oil-dependence of the transport sector159
, or the need for regulatory framework to facilitate the
connection of such recharging infrastructure and the neutrality of DSOs160
.
In particular, option 1.1 will enable EVs, heat pumps, domestic batteries and other distributable loads
in end-use sectors adjust their energy absorption to the times of most availability of renewable
electricity, thus reducing GHG emissions and enhancing RES penetration through system
integration. This stems directly from the key actions of the ESI Strategy, calling for the development
of specific measures for the use of renewable electricity in transport. The suggested options 2.2, 3.1,
3.2 and 3.3 aim to ensure the availability of appropriate intelligent infrastructure, access to
information and the necessary level playing field in the energy aggregation market, in order to
achieve GHG reduction and increased penetration of renewable electricity through mobilizing
market dynamics.
Option 3.2 specifically, is complementary to the provisions on access to battery data related to the
process of repurposing a used battery for 2nd
life, currently present in the proposed Commission
regulation ‘concerning batteries and waste batteries, repealing Directive 2006/66/EC and amending
Regulation (EU) No 2019/1020/EC. The measure suggested under Option 3.2 adds dynamic access
to data and access to information on ‘state of charge’, as well as ensuring that this access is provided
during the use of the battery in the vehicle, necessary to facilitate operations related to system
integration (smart charging, bidirectional charging).
The EPBD and the Alternative Fuel Infrastructure Directive focus on the deployment and planning of
charging infrastructure in thermally enclosed buildings and publicly accessible areas, respectively. A
gap therefore exists for structures and areas not within the above, such as multi-storey parking
structures and off-street parking areas with controlled access. In addition, AFID’s scope is specific
for ensuring infrastructure adequacy to support EV fleets for mobility, instead for facilitating system
integration. . For example, the currently proposed ad-hog payment in the revision of AFID may solve
many mobility related concerns, however it is not sufficient to cater for the requirements and
purposes of integration of electric vehicles, as they are described in section 6.4.2. A gap in regulatory
scope is therefore clearly present, both in terms of geographical application and in terms of purpose,
which does not enable legislating for the desired location, type and number of charging infrastructure
158
Article 4(1) of Directive 2014/94/EU
159
Article 1 of Directive 2014/94/EU
160
Article 33(1)&(2) of Directive 2019/944/EU
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fit for EV integration in a universal and coherent manner. The suggested measures within the RED
will complement these two legislations and their upcoming revisions, by creating transversal
requirements for charging points to be deployed and operated in a manner that optimizes their
contribution to the system integration of renewable electricity.
6.5. Certification of renewable and low carbon fuels
6.1.18. Impacts and analysis not based on modelling work
Adjusting the scope of REDII by including new definitions of renewable and low carbon fuels will
allow certification schemes to subsequently adjust the scope of the certification services they
provide. This will in turn enable a larger number of options in terms of energy carriers to be
considered on the market for achieving the energy targets. Extending the scope of the Union
database would support this process by providing more transparency and traceability of the different
energy carriers in all end-market segments.
Economic impacts
Overall, the application of an EU-wide certification system, based on common standards and
supported by a transparent and comprehensive information system to trace all energy carriers would
bring about economic benefits for all economic operators in these supply chains in addition to the
positive effects on consumers disclosure. This would also allow bringing closer supply and demand
of sustainable energy in a cost efficient way leading to additional economic benefits along the supply
chains.
The introduction of the union database for centralising the tracking of fuels in a mass balance system
on EU level would have a significant positive effect on centralising the available information and on
preventing the risk of fraud. Apart from the transport sector, the risk of fraud is substantially higher
for heating and cooling, since in case of gases and electricity, the data on produced volumes can be
checked by Transmission System Operators and Distribution System Operators. The renewable fuels
used in heating and cooling are more easily replaceable with other non-renewable fuels and therefore
require higher cost of auditing161
.
The inclusion of RFNBOs, waste heat and RCFs into the accounting for demonstrating the
compliance with sectoral targets would level the playing field for those fuels with standard
renewable fuels, potentially opening new demand for them and increasing their revenues. It can be
expected that the potential benefits for these new actors in the renewable supply chain will largely
compensate the additional compliance costs, that they will incur to demonstrate their compliance
with the certification system (to get involved into certification system and costs connected e.g. to
acquiring certificates). The harmonisation of certification schemes into one database will also enable
more cross-border trading, increasing competition on the markets. This is particularly valid for the
gas market, where the proposed flexible implementation of the mass-balance system supported by
161
Verwimp et al (2020). Technical support for RES policy development and implementation. Establishing technical
requirements & facilitating the standardisation process for guarantees of origin on the basis of Dir (EU) 2018/2001.
Available at: https://www.aib-net.org/news-events/aib-projects-and-consultations/fastgo/project-deliverables.
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the Union database would be expected to contribute greatly to overcome national markets
fragmentation162
.
Environmental impacts
Addressing the interaction between the system of guarantees of origin (GOs) and the certification
system, based on a mass-balance system, would bring more clarity to the accounting. Including
information on carbon content would also significantly improve the information for energy
consumers. The data on the certification system will be centralised in one system, making it easier to
compile national data.
Social impacts
Integrating and centralising in the Union database data on all renewable and low-carbon energy
carriers (except electricity), based on an EU-wide harmonised certification system would make the
system more understandable to the general public and therefore also more trustworthy.
6.1.19. Effectiveness
The specific combination of measures extending terminology under REDII, improving traceability of
energy carriers through the Union database, as well as mainstreaming the mass-balance system
supported by the Union database will allow the effective assessment of the sustainability potential of
the different energy solutions. The results of this assessment through the certification will allow
market operators and policy makers to take the right decisions for their energy mix. In addition, the
overall transparency and effectiveness of the energy system would be strengthen avoiding any risks
of double counting by solving the issue of co-existence of a certification system, based on a mass
balance with a GOs system. This will be done by defining the boundaries and rules to follow when
GOs have been issued for consignments of energy which will have to be transferred into the Union
database.
Specifically for gases, an EU-wide certification system, combined with a tailor-made mass-balance
system would very much support the cross-border trade of renewable and low carbon gases, bringing
supply and demand closer.
Including low carbon fuels as a category under the terminology of RED II combined with respective
requirement for its certification (based on a specific threshold for GHG emission savings) will
basically allow to certify low carbon hydrogen as a decarbonisation option in the energy mix, since
recycled carbon fuels are already part of it under RED II. This will provide a shared understanding of
what low carbon fuels are, which is a prerequisite for a wider promotion of low carbon fuels also
outside the RED II, namely through national support schemes or at EU level outside of RED II (i.e.
FuelEU Maritime). This way an important complementarity of legal tools can be ensured.
162
Renewable and low carbon gases injected into a grid could be retrieved in a flexible manner at any other point of the
grid provided the grid is interconnected.
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6.1.20. Administrative impacts
Extending the current certification scheme to cover low carbon fuels and waste heat will entail some,
but limited administrative burden for MS administrations since MS will have to implement the
definitions will be set out in REDII.
As presented below some compliance costs for industry to get these new fuels certified can occur but
it can be expected that they will be largely compensated by the market opportunities, which the
certification and respective labelling would provide to them. Current fees, which existing voluntary
schemes charge to economic operators active in the biofuels supply chain, contain two components,
namely annual audit fee and annual licencing fee. The annual audit fee cost vary depending on the
audit complexity within a range of 800 euro- 2000 euro per day, while such audits normally take 1-2
days. On that basis, we can conclude that depending on the complexity of the audit and the size of
the economic operator, the annual audit fee for an economic operator would be in the range between
1600 euro to 4 000 euro per year. In addition to that the annual licencing fee is normally calculated
based on the size of the economic operator.
Below there are a few examples of such fees being charged by voluntary schemes.
ISCC (the biggest certification scheme) charges from 50 euro to 500 euro per year for issuing the
certificate + an annual fee between 0.08 euro and 0.010 euro per tonne of sustainably certified
product. 163
Another certification scheme (RSB) 164
charges primary producers the following fees
based on the size of their farms, namely:
- No charge for up to 150 hectares,
- 151 to 500 hectares $0.95 per ha
- 501 to 1,000 hectares $0.75 per ha
- > 1,000 hectares $0.50 per ha.
RSB charges feedstock processors and fuels producer annual fee based on the volume of certified
production, namely:
- for the portion between 0 – 250,000 metric tons $0.14/ ton
- for the portion between 250 – 400,000 metric tons $0.10/ ton
- for the portion above 400,000 metric tons $0.00/ ton
Applying a mass balance system for gases will not bring additional burden or costs since the physical
tracing of the molecules will not be required. On the contrary, this will strongly support the EU-wide
energy trade.
The extension of the Union database may to a certain extent increase the administrative burden and
costs for economic operators, voluntary schemes and Member States. However, the development of
the Union database is already part of the baseline as it is an existing obligation for liquid and gaseous
transport fuels under RED II. Therefore, its extension to other sectors would have only marginal
163
https://www.iscc-system.org/wp-content/uploads/2017/02/ISCC-Fees.pdf
164
https://rsb.org/wp-content/uploads/2020/07/20-07-06-Bio-based-and-Advanced-Liquid-Fuels-for-web.pdf
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additional costs, which can be expected to be compensated by the benefits of having a harmonised
information system tracing energy carriers through the supply chain and in all end-sectors.
In addition, for those MSs already maintaining national databases, there will be only minimal
additional costs compared to current situation. Integrating the certification systems across the EU
into the union database, can also be expected to have a positive medium and long term effect on
decreasing the overall costs of system maintenance. The same is valid for existing industry-based
databases, covering parts of the supply chains, if they wold be integrated in the Union database.
Consumers that have to demonstrate renewable energy share in consumed fuels are already used to
work with databases, so adapting to the Union database should not bring substantial new costs.
6.1.21. Coherence
The Energy System Integration strategy includes as one of its key actions to propose a
comprehensive terminology for all renewable and low-carbon fuels and a European system of
certification of such fuels, based notably on full life cycle greenhouse gas emission savings and
sustainability criteria. The Hydrogen Strategy also calls for European-wide criteria for the
certification of renewable and low-carbon hydrogen. With the exception of Recycled Carbon Fuels,
low carbon fuels are however not objectives part of the REDII. A political decision will need to be
made whether for coherence reasons low-carbon fuels can be included in the wider scope of REDII,
or whether the certification of such fuels should be addressed in the Hydrogen and Decarbonised Gas
Market Package.
6.1.22. Stakeholder’s Opinions
Stakeholders’ Opinions
In the OPC, regarding GOs, the majority of respondents (64% among which: 70% of the
respondents from academia and 66% of business associations, 75% of consumer
organisations) agree that the obligation for electricity suppliers to certify to consumers the
share of energy from renewable sources by guarantees of origin, should be extended to both
renewable fuels and low-carbon fuels. This view is shared consistently across all stakeholder
types, with the exception of environmental organizations. Their views were split along the
different options, with some being in favour and some against the abovementioned obligation
(32% were in favour of the obligation to certify for renewable fuels only, 32% were in favour
of the obligation for renewable fuels and low-carbon fuels, while 37% were against it).
With regard to renewable hydrogen and whether it should be added to the cooperation
mechanisms, the majority of respondents (60%) think that cooperation mechanisms set out in
RED II should be extended to cover renewable hydrogen regardless of its end use, to allow
Member States to support renewable hydrogen projects in other Member States and in third
countries while counting the energy produced as their own. However, this view is not shared
by all stakeholder types—academic/research institutions, environmental organisations,
NGOs, and trade unions do not agree with this. A large majority of these stakeholders (55%,
83%, 71% and 67% respectively) selected “no” as a response.
During the 1st
stakeholder workshop, energy traders favoured a cross-sectoral, cross-
commodity, technology neutral approach. Certification organisations, referring to the fact that
RED has demonstrated that sustainability requirements can be introduced for specific sectors,
favoured a dedicated regulation. The hydrogen sector favoured the development of a new
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system for hydrogen certification.
6.6. Promotion of innovative renewable and low carbon fuels
Innovative renewable fuels (RFNBOs) and innovative low-carbon fuels165
, both gases and liquids,
especially hydrogen produced from electricity and its derivatives (so-called “e-fuels”) can offer
solutions to decarbonise the economy in sectors where electrification are not feasible, not efficient or
have higher cost.
The analysis in the CTP shows that such fuels are essential for achievement of climate neutrality but
appear in all scenarios in significant quantities only post-2030. This is especially driven by high
production costs for hydrogen and high conversion losses, which especially occur at the production
of liquid hydrogen-based energy carriers. Currently, these fuels are not competitive with
conventional fuels (in transport or heating) or with current processes for hydrogen production (in
industry, currently mainly based on steam methane reforming).
However, it can be argued that technological and commercial readiness of these fuels should be
demonstrated already by 2030 in order to create investor certainty and allow the necessary
deployment at scale after that period thanks to accelerated costs reductions. According to the CTP,
neither carbon price alone nor the intensification of regulatory framework in the current architecture
(i.e. without dedicated pull for such innovative fuels) would sufficiently trigger demonstration and
deployment of innovative renewable and low carbon fuels in transport and industry sector at a
significant scale in 2030.
6.1.1. Impacts projected by the core scenarios and MIX-H2 variant
In the REF scenario, innovative renewable and low-carbon fuels are virtually non-existent in 2030
and only marginal in 2050 (it is mostly hydrogen for heavy-duty vehicles (HDVs)). In the core
scenarios (that achieve also carbon neutrality), innovative renewable and low-carbon fuels appear in
2030166
thanks to HDVs standards and aviation and maritime fuel mandates. By 2050, they are,
however indispensable for achievement of carbon neutrality and this in significant quantities. By
2050, these fuels represent visible shares of final energy consumption in buildings, industry and
transport. These results are fully in agreement with the CTP analysis.
In order to test higher uptake of RFNBOs for the purpose of this IA, an additional variant was
developed: MIX-H2 (see description in section 5.5). This variant illustrates a sizable uptake of
renewable hydrogen and its derivatives (e-fuels) in final energy demand (and other) sectors already
in 2030 in line with Hydrogen Strategy aiming for 40 GW of electrolysers capacity producing
165
According to the Energy System Integration Strategy, low carbon fuels comprise also recycled carbon fuels and these
fuels have a role to play in the transition phase of the decarbonisation of the energy sector. The promotion of recycled
carbon fuels (fossil fuels produced from non-recyclable waste streams) is already possible today under the RED II
Directive, on voluntary basis by Member States. Therefore, this Impact Assessment considers specific targeted support
measures for specific sectors and the extension and revision of the accounting methodology, as well as more specific
options to support the uptake of RFNBOs and low-carbon fuels in the different end-use sectors.
166
Core scenarios project only small uptake of hydrogen in 2030 but more significant in 2035.
131
renewable hydrogen already by then167
. This variant shows much higher uptake of RFNBOs in
transport and in industry in 2030. By 2050, however, the amounts of RFNBOs are similar between
MIX-H2 and core scenarios and shown figure 28 . It shows that RFNBOs could represent in 2030 in
the EU:
- 2.4%168
of fuels consumed in industry in final energy consumption and non-energy
purposes;
- 2.6% of fuels consumed in all transport modes (including international aviation and
international marine bunkers and hydrogen consumed in energy branch)
Figure 29: RFNBOs use in energy system; Source PRIMES
The current provisions on RFNBOs under REDII are limited in scope and apply to transport only.
They do not provide the necessary support to foster the required market ramp-up leading to a cost
reduction of RFNBOs. From the analysis of MIX-H2 scenario it is clear that either dedicated support
for electrolyser capacity, subsidies for fuels or end-use targets are needed in order to bring RFNBOs
to the market in sizeable amounts, already in 2030. The MIX-H2 scenario makes assumption that
certification system is in place and producers of RFNBOs can demonstrate the additionality principle
as required by the REDII currently.
In 2030, with the electrolyser capacity ramped up in this variant to 40 GW (in line with the
Hydrogen Strategy) and production of some 16 Mtoe of RFNBOs (all being e-fuels) for the
167
This variant also took into account national Hydrogen strategies as well as “Opportunities for Hydrogen Energy
Technologies considering the NECPs” by Fuel Cells and Hydrogen Joint Undertaking.
168
To direct the use of RFNBOs to those industrial applications and in those Member States where hydrogen is a ‘no-
regret’ option, the sub target should be calculated on the basis of the total hydrogen consumption in industry in 2030.
This requires consideration of the consumption of hydrogen, which is produced on-site as a byproduct. Based on FCH JU
hydrogen observatory, which collects this data annually, the total consumption of hydrogen produced as a by-product is 3
Mtoe (FCH JU, 2021). Based on this data, as well as estimations for hydrogen required for ammonia production in 2030,
total hydrogen consumption in 2030 can be estimated as 14.52 Mtoe, excluding the use of hydrogen in refineries.
Considering the RFNBO uptake of 7.64 in this sector, the total share of RFNBO in industry, excluding refineries, is
estimated to be 52.6%.
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consumption169
, the overall RES share reaches 40.2% (according to current formula) or 38.8%
(according to formula counting RFNBOs consumption rather than renewable electricity to produce
them – see the following paragraph). Importantly this variant is still comparable with other core
scenarios as it only slightly overachieves 55% GHG reduction (it has 0.4 p.p. higher GHG reductions
than MIX170
). The overshoot is limited since RFNBOs displace the advanced biofuels in maritime
and aviation sectors. Consequently, Part A biofuels share amounts to 6.8% compared to 8.5-8.7% in
core scenarios – calculated according to the current formula).
This variant provides also results that are useful for consideration of the alternative formula for the
overall and sectoral RES shares. RFNBOs are according to current legislation accounted via the
renewable electricity used in the Member State where RFNBOs are produced, and not in the Member
State where they are consumed.171
This is not consistent with the accounting methodology for other
renewable fuels and the implications of such accounting on the overall and sectoral RES Shares
would be important for several Member States. While the main impact of the formula revision would
be on the overall RES share, also sectoral shares RES-E and RES-T (that applies RES-E shares for
electricity consumed in transport) would be affected as electricity used to produce RFNBOs should
not be counted twice also in the RES-E share. The impacts would be, however, very small in 2030.
The current formula also leads to inefficiencies and possible misallocations due to the high
conversion losses during the production of RFNBOs (conversion efficiency of 70% for hydrogen via
electrolysis and about 50% for further processing into liquid RFNBOs), and is not fully compatible
with the requirement for additionality (RFNBOs should be produced by new RES installations) set
by the legislator. The Commission is currently developing a delegated act setting out appropriate
rules to approach the question of additionality.
The table below shows the impact on the EU level of the change of the formula for the overall RES
share.
Table 19: Illustration of RFNBO accounting on overall RES Shares; Source PRIMES
Overall RES shares MIX MIX-H2
2030
Baseline: Accounting RFNBOs with amounts of renewable
electricity used to produce them (and thus in place of production)
38.4% 40.2%
Accounting RFNBOS with their actual amounts (and thus where
they are consumed)
37.8% 38.8%
Ramping up the electrolyser capacity has benefits in terms of demonstrating the technology already
in 2030 and thus a smoother pathway towards quantities necessary post-2030. But as technology is
not yet cost-competitive, both cost increase and an investment challenge arise.
Looking at the investments that are an essential element of system costs, it can be seen that
delivering on the 40 GW of electrolysers producing renewable hydrogen would require on average
22 billion € per year in the in the 2021-30 period (including transport) increase compared to MIX
169
In MIX-H2 scenario there is also some 4 Mtoe of hydrogen as transformation input into e-gas and e-liquids.
170
Without considering impact of reduced biofuels demand on LULUCF.
171
Article 7(4)(a)
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both for supply and demand side investments. The impact on overall system costs172
would be
limited: € 5bn more on average in the current decade compared to MIX scenario.
In exchange, there is a higher GHG reduction that in MIX scenario (additional 0.4 p.p. reduction in
the way the overall GHG target is measured) as well as higher security of supply benefits (additional
€ 19bn of savings on the fossil fuels import bill in the current decade).
6.1.2. Energy System impacts not based on modelling
Option 0 only provides limited support for RFNBOs and low carbon fuels, including the possibility
for streamlining the permitting process for renewable hydrogen production technologies. Non-
regulatory measures such as financial support through national and EU research programmes cover
both RFNBOs and low carbon fuels. These measures alone, however, will most probably not be
sufficient to provide the investment certainty and trigger the private sector investment needed to
scale up these options whilst those fuels are still not cost-competitive, and prepare the ground for a
stronger uptake in view of carbon neutrality objective.
For a large-scale market ramp-up of up to 40 GW Electrolyser capacity or 10 Mt hydrogen use as
outlined in the Hydrogen Strategy173
, incentives for a bigger market for renewable and low carbon
fuels should be given, so that customers are willing to pay the price premium for renewable or low
carbon fuels compared to fossil-based technologies. An important element could be the
implementation of a carbon contract for difference system (CCfD) in industry, steering investments
into renewable and low-carbon technologies by providing investment security. The introduction of a
carbon border adjustment mechanism (CBAM) would help minimising the risk of carbon leakage
and to ensure fair competition with non-EU companies.
Option 1 would extend the accounting beyond the transport sector, and consider the use of RFNBOs
in the industrial end-use sector as well. An important element would be to account for the uptake of
RFNBOs as a feedstock for the production of chemicals, which is currently not considered in the
accounting of renewables uptake. Furthermore, the accounting rules would need to be adapted to
ensure that RFNBOs are accounted in the Member States where they are used, and not, as it is
currently the case in REDII, in the Member State producing the electricity for its production. Such a
measure would eliminate the risk of double counting and create a more consistent framework for the
calculation methodologies. Moreover, it would contribute to a higher ambition to achieve renewable
energy targets in the electricity producing countries.
Accounting RFNBOs towards the H&C sector could support their deployment in hard to decarbonise
industrial sectors if the H&C target is set at an ambitious level, contributing to the creation of an
early market demand for RFNBOs. However, other renewable alternatives for the building and the
industrial sectors remain more competitive than RFNBOs, and may be preferred solutions to reach
the H&C target.
172
Excluding carbon pricing and disutilities.
173
COM (2020) 301 final“…In a second phase, from 2025 to 2030, hydrogen needs to become an intrinsic part of an
integrated energy system with a strategic objective to install at least 40 GW of renewable hydrogen electrolysers by 2030
and the production of up to 10 million tonnes of renewable hydrogen in the EU…”
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Furthermore, there is a question on whether the criteria put in place for RFNBOs for the transport
sector (REDII, recital 90) need to be expanded if RFNBOs are use in other sectors. The overarching
objective of these criteria is to ensure that RFNBOs contribute to greenhouse gas reductions, and that
the electricity used for the fuel production is from renewable origin. This objective is also applicable
to the use of RFNBOs in other end-use sectors, and as such could be applied accordingly, including
to ensure a level-playing field for the consumption of RFNBOs across different end-use sectors. At
the same time, the specific criteria introduced in the REDII can be relaxed in the medium-term,
especially in those cases where the share of renewable power generation in the electricity mix is
sufficiently high to ensure greenhouse gas reductions174
.
Additionally, the REDII requires that the production of RFNBOs should be based on renewables and
follow the additionality principle175
- meaning that the fuel producer is adding to the renewable
deployment or to the financing of renewable energy. Assuming that hydrogen consumption in end-
use sectors is consumed on the basis of the breakdown in the Hydrogen Roadmap (FCH JU, 2019)176
,
a significant increase of RES production would be needed in order to achieve the objective of 10 Mt
hydrogen outlined in the Hydrogen Strategy. This requires a quadrupling of the renewable power
generation capacity installed today (from around 500 GW to almost 2000 GW). Compared to what is
currently planned in the NECPs, it would mean 8% more power generation.
Including low carbon fuels in the accounting towards the renewable energy sub-targets (Option 2)
could provide an incentive for the uptake of low-carbon fuels, but would not create a level-playing
field between decarbonisation options and not support the uptake of RFNBOs. In particular, it is
important to recognise that the production of low-carbon fuels can build upon existing infrastructure
and existing assets, such as the retrofitting of existing natural-gas based steam methane reforming
plants. In contrast, there is no existing asset base for the production of RFNBOs and the additionality
requirements means that additional investments in renewable power generation capacity are needed
to create a dedicated renewables resource base. Furthermore, RFNBOs are more compatible with a
future energy system that will increasingly be based on renewable energy sources. This risk could be
reduced through a separate target for low carbon fuels, separate from renewable targets However,
this option was discarded early (see also Annex 6) as it would lead to reduced investments into
renewables as long as renewable fuels are more costly.
Options 3 and 4 for the RFNBOs target setting would provide stronger incentives by including
renewable fuels into sectoral targets. Sector-specific targets in hard to decarbonise sectors will create
an early market demand for RFNBOs. This is necessary, given the current low carbon price (ETS) as
well as high production costs for RFNBOs. RFNBOs are far from competitive regarding kerosene
(aviation), maritime fuels or on-site production of hydrogen via steam methane reforming for
industry purposes. The production of low-carbon hydrogen should, based on the latest estimates,
become cost-competitive through an increase in the expected carbon price under the EU ETS, with
estimates for cost-effectiveness ranging between €55-90/tCO2177
.
174
For example, a greenhouse gas emission intensity of 46g CO2/kWh can result in a 80% reduction in greenhouse gas
emissions compared to the use of fossil fuels. In comparison, the greenhouse gas emission intensity of electricity in the
EU is still 226g CO2/kWh (EMBER (2021) EU Power Sector in 2020).
175
Recital 90
176
The roadmap assumes 7% of hydrogen blending, which is considered for industrial purposes instead.
177
EU Hydrogen Strategy, COM (2020)301.
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Around 8-10 million tonnes of hydrogen produced from natural gas is used in industrial processes, in
22 MS. 45% of hydrogen is consumed in refineries, primarily as feedstock. 38% is used for the
production of ammonia, and 8% is used for the production of methanol. The consumption for MS
differs substantially, ranging from 2.3 Mt in Germany to less than 0.2 Mt in about 6 Member States.
Several Member States do not consume any hydrogen.
There exists a clear opportunity to replace the existing use of fossil-based hydrogen (produced from
natural gas) with renewable hydrogen. The PAC energy scenarios estimates a potential of 71 TWh of
direct use of renewable hydrogen to replace fossil-based hydrogen, and a potential of 68 TWh for
replacing fossil fuels in steel production. FCH JU (2019) identifies a comparable value of 62 TWh of
renewable hydrogen consumption in the steel sector, with fossil-based hydrogen consumption in the
chemicals sector primarily decarbonised with CCS.
Considering the objective of producing 10 million tonnes of renewable hydrogen by 2030, a target of
5 million tonnes of renewable hydrogen consumption in industrial applications is a do-able and
politically feasible option. Considering the diverse consumption patterns per MS, the most
appropriate target would be to set a target for RFNBOs for those Member States consuming
hydrogen. Such targets will create investment security for a respective market ramp-up of production
facilities as well as the required renewable electricity potential.
Defining a target for RFNBO consumption in industry could either be accomplished through a
demand-side obligation on the respective industries, or a supply-side obligation on energy suppliers
to these respective industries. However, industry is much more diversified in terms of sectors,
applications, fuels, and suppliers. Furthermore, there is only a very limited market for hydrogen with
the majority of production and consumption of fossil-based hydrogen locked in through existing
supply contracts. Nevertheless, a supply-side obligation would require significantly less
administrative resources from the economic operators affected. As for transport, RED II already
works with supply side obligations to increase the share of RES in the sector, a supply-side
obligation specifically for RFNBOs would follow the same logic. Following the hydrogen strategy
and numerous studies178
the industry and transport sector are the two priority areas for the
deployment of RFNBOs. A generic target for RFNBO could lead to hydrogen deployed in non-
priority sectors. Considering that energy consumption in industry and transport are covered by
different policy tools and involve different stakeholder groups, Option 2 of splitting the requirements
across these two sectors based on the most cost-effective allocation as identified in the CTP analysis.
For more details for RFNBOs in transport please look at the Transport Section 6.3.
Environmental impacts
Renewable fuels can contribute to GHG emissions reduction in different hard-to-decarbonise sectors.
To a lesser degree, this is also the case for low carbon fuels. As to RFNBOs, the high efficiency
losses that occur during production of liquid RFNBOs have however to be taken into account. They
should therefore only be used as a decarbonisation option when electrification or even RFNBOs with
lower efficiency losses, such as hydrogen, are not feasible.
178
final_insights_into_hydrogen_use_public_version.pdf (europa.eu)
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The introduction of sector-specific targets for RFNBOs will support the introduction of RFNBOs
with a small CO2 footprint in sectors, where decarbonisation via direct electrification is difficult, and
could thus in the case of renewable hydrogen lead to less air pollution and higher GHG emissions
reduction The impact on air quality will depend on the mix of RFNBOs and to what extent their
replace traditional fossil fuels. The air pollution of synthetic fuels (Power to x) should be minimised
by focussing on sectors which are difficult to electrify and where direct use of hydrogen faces
technical barriers. Given the high costs of synthetic fuels as well as emission standards for vehicles
provide can ensure that the development goes in this direction. Where relevant, the matter should be
addressed in dedicated legislative instruments.
An RFNBO target for hard-to-decarbonise industry sectors would have positive direct environmental
impacts as GHG reductions take place in the EU. However, carbon leakage will lead to increased
GHG emissions outside the EU, potentially even overcompensating the GHG reductions in the EU
without accompanying measures.
Economic impacts
RFNBOs, despite their potential, suffer still from low competitiveness due to high production costs.
The EU Hydrogen Strategy has set the objective to increase the renewable hydrogen production
capacity by the installation of at least 40 GW electrolysers by 2030. Based on an analysis of the
Hydrogen Council179
, a significant cost reduction in renewable hydrogen production will be achieved
spurred by further technology development due to high deployment rates (in case of 90 GW globally
by 2030). Cost for renewable hydrogen from electrolysis have already fallen by 60% since 2010 to
about 6 $/kg180
hydrogen (average case, offshore wind). Large scale manufacturing as well as low
cost for renewable electricity will further decrease the cost, enabling hydrogen production at about
2.6 $/kg181 in 2030 in regions such as e.g. Northern Europe with high wind potential.
Figure 30 - Estimated cost reduction for renewable hydrogen from offshore wind in Europe until 2030 (Source: Hydrogen Council,
2020)
179
Hydrogen Council: Path-to-Hydrogen-Competitiveness, 2020
180
Equivalent to about 5.40 €/kg or 16.3 ct./kWh, assuming an exchange rate of 1 $ = 0.9 €.
181
Equivalent to about 2.34 €/kg or 7.1 ct./kWh, assuming an exchange rate of 1 $ = 0.9 €.
137
In hard-to-decarbonise industry sectors such as steel, ammonia and methanol production or the
production of high-value chemicals, which are included in the ETS, an RFNBO target could raise the
costs for these sectors. Further support mechanism such as CCfD and carbon boarder adjustment
mechanism may be required to provide a level-playing-field with producers in non-EU countries.
Early support to the development of this new technology is expected to have large mid and long term
benefits and is mentioned in the Commissions Recovery Plan as one important element to be
addressed in the clean transition. Europe is highly competitive in clean hydrogen technologies
manufacturing and is well positioned to benefit from a global development of clean hydrogen as an
energy carrier. Cumulative investments in renewable hydrogen in Europe could be up to €180-470
billion by 2050, and in the range of €3-18 billion for low-carbon fossil-based hydrogen182
.
Social impacts
Increased hydrogen production and supply offers potential in particular to EU Member States with
high renewable potential, since they can supply hydrogen and RFNBOs to the main industry and
demand centres. This can stimulate job creation along the different supply chains, either for RFNBOs
or for low carbon fuels. Hydrogen and hydrogen technologies in particular promise the creation of an
entirely new supply chain with high added value in the domestic economy, the application of liquid
RFNBOs as drop-in fuel to conventional transport fuels also supports existing industries like
maritime and aviation propulsion systems.
An increase in the production of RNFBOs within the EU may lead to distributional effects among
Member States. For north-western Europe with its strong industrial clusters and high energy demand,
a deep electricity sink of 325 TWh (without hydrogen production) and 467 TWh (with hydrogen
production) has been identified for 2050183
. Regions with a high renewables surplus in northern or
southern Europe could supply electricity or renewable fuels with the necessary energy infrastructure
in place. The requirement for cheap hydrogen production could also lead to a relocation of energy-
intense industries due to lower energy prices.
182
https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1257
183
Wuppertal Institut: Infrastructure Needs for Climate-Neutral Industry in Europe, Policy Brief, 10.06.2020. Available
at https://wupperinst.org/fa/redaktion/downloads/projects/INFRA_NEEDS_Policy_Brief.pdf (accessed on 02.02.2021)
138
Figure 31 - Balance of renewable generation potential and demand with electricity for hydrogen in Europe 2050
184
The impact of the use of RFNBOs in specific transport sectors (maritime and aviation) has been
shown in the relevant Impact Assessments (Refuel Aviation and Maritime).
6.1.3. Effectiveness
The increase of the ambition level foreseen under Options 1 and 2 would set strong incentives for the
development of RFNBOs and low carbon fuels respectively, while Option 0 will not contribute
sufficiently in this respect.
The extension of the scope of accounting of RFNBOs and the improvement of its consistency
(Option 1) would also provide a stimulus for further RFNBO deployment, and in particular address
misallocations under the current system if RFNBO production takes up. Due to the high energy
needs for their production, it would be more effective to account RFNBOs in the Member State
where it is consumed rather than in the Member State where it is produced. This would reduce the
incentive that RES electricity used for the production of RFNBOs substitutes renewable electricity
generation needed elsewhere, although the energy is not usable for final consumption due to high
conversion losses.
Table 20 - Effectiveness
Total Hydrogen e-gas e-fuels
Conversion efficiency (%) - 70% 55% 30%
RFNBO (TWh) 1447 671 212 564
184
See also G. Kakoulaki, I. Kougias, N. Taylor, F. Dolci, J. Moya, A. Jaeger-Waldau, Green hydrogen in Europe – A
regional assessment: Substituting existing production with electrolysis powered by renewables, Energy Conversion and
Management, Volume 228, 15 January 2021, 113649
139
Share in FED (%) 19.36% 8.97% 2.83% 7.55%
Required RES electricity (TWh) 3224 959 385 1880
Share in FED (%) with RED II methodology
(considering RES electricity)
34.84% 10.36% 4.17% 20.32%
The effectiveness of introducing a RFNBO target (Option 4) depends on its scope, nature and level.
A specific target for industry might force industry to use renewable energies which are less
competitive than their fossil-based counterparts. A lower target limited to transport would be
effective in increasing renewable fuels in a cost-effective way. Specific targets for innovative low
carbon fuels (Option 5 and 6) would bear the risk to crowd out renewable fuels and create a barrier to
their market development in particular until 2030/2035.
6.1.4. Administrative impacts
The extension of the scope of accounting of RFNBOs and the improvement of its consistency
(Options 1) would require Member States to change their accounting methodology which would
have very limited costs taking into account their small market share today. Also, a specific targets for
RFNBOs (Option 2) set at an early market development stage would allow Member States to
integrate this in their mid-term energy planning and NECPs at low cost. For industry, the
introduction of a specific sub-target for RFNBOs would bring, as described above, additional costs in
the short term.
6.1.5. Coherence
Promoting the use of renewable fuels is fully in line with the CTP, and specifically highlighted in the
Energy System Integration Strategy and the Hydrogen Strategy. This is in particular valid for the
options 1 and 2 focusing on RFNBOs. A specific promotion of low carbon fuels would change the
main objective of REDII aiming at promoting renewable sources. This would correspond to the
opinion of stakeholders including from NGOs, while concerned industry associations would support
a consideration of low carbon fuels. With the exception of Recycled Carbon Fuels, low carbon fuels
are not addressed in REDII. The certification of low-carbon fuels should be rather addressed in a
separate legislative proposal such as the Hydrogen and Decarbonised Gas Market Package.
As industry will also be subject to any increased requirements relating to renewables in heating and
cooling, the impacts of the level and nature of a benchmark need to take that into account. In
particular, this would address other barriers to the deployment of renewables in industry than only
the cost differential with fossil fuels, including a lack of experience and trust in new technological
solutions.
Even though the ETS price has increased recently, the effective price, taking into account free
allocation, is still rather low and as a consequence GHG abatement in industry happens at a relatively
low pace. The revised and improved ETS is expected to significantly increase the carbon price, and
accordingly the incentive to invest and use renewable and low-carbon sources. However, due to the
lock-in effects of investments cycles in the industry, this does not directly materialises in investments
to increase the share of renewables in the period up to 2030. At the same time, this will lead to
substantial challenges to rapidly increase the share of renewables immediately after 2030. Mandating
a renewable energy benchmark for industry will allow industries to already consider renewables
within the period up to 2030, avoiding any lock-in situations after 2030.
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6.1.6. Stakeholders’ Opinions
Stakeholders’ Opinion
In the OPC, when asked which type of renewable and low carbon fuels should be supported,
advanced biofuels and RFNBOs are among the three top choices (behind “other fuels”).
Participants from NGOs and environmental organisations as well as citizens think that only
renewable fuels should be promoted. Promotion of advanced biofuels is chosen by those from
academia, trade unions and other organisations, compared to other stakeholder groups in
terms of stakeholder group share. RFNBOs have high support among business and
companies.
A majority of stakeholders in the 1st
stakeholder workshop favoured REDII and other
relevant EU legislation having a clear, consistent, and transparent European definition of
renewable hydrogen across all European policies and laws.
During the 1st
stakeholder workshop, environmental transport NGOs requested RED II to
phase out crop-based biofuels, to introduce a dedicated credit mechanism at the EU-level to
make sure the potential of renewable electricity is fully reflected and to not broaden the scope
of RED to include low carbon fuels, while some business organisations, in particular Gas
transmission system operators favoured the extension of the RED II scope to include low
carbon fuels with simple accounting rules, clear sub targets but no additionality principle.
In the 1st
stakeholder workshop, the International Energy Agency emphasised that he focus
for hydrogen should be on establishing the enabling conditions, including infrastructure,
standards & certification, and investments in electrolyser to further reduce costs.
6.7. Bioenergy sustainability criteria
6.1.1. Current and projected bioenergy demand and supply in the EU
According to the CTP and previously also the “a Clean Planet for all” Communication185
, bioenergy
use is projected to increase in a limited way up to 2030. However, in the period thereafter, bioenergy
demand would increase significantly as it replaces fossil fuels in hard to decarbonise sectors
including industry and long-distance transports, and delivers negative emissions through biomass-
based Carbon Capture and Storage (BECCS). This trend is confirmed by the core scenarios.
The REF scenario shows that the use of bioenergy186
will increase by 13% between 2020 and 2030
under the currently agreed targets (from 147 Mtoes in 2020 to 166 Mtoes in 2030). In the REF
scenario the bioenergy is chiefly used in thermal power and heat generation (demand is stable
between 2020 and 2030) and in all final energy consumption sectors (and here mostly for residential
and tertiary sectors where its use increases by 17% between 2020 and 2030).
As illustrated in the figure below going to the 55% GHG target as illustrated by the core scenarios
would then allow a decrease (10% on average for all core scenarios) in 2030 compared REF (or to
put it differently to come back to 2020 levels) chiefly driven by a decrease of bioenergy use in
185
COM (2018) 773
186
In PRIMES, bio-energy and waste (including non renewable waste) are reported together and projections cover
bioenergy, renewable and non-renewable waste (the latter representing only small amounts).
141
residential and tertiary sectors. This is because buildings heating largely electrifies and buildings
renovations increase their efficiency (bioenergy for heating is expected to decrease from 56 Mtoes in
REF to 35-39 Mtoes in the core scenarios).
Biomass use in industry is also expected to decrease (12% for all core scenarios), from 29 Mtoes in
REF to 25 Mtoes in the core scenarios. This decrease of bioenergy use in the residential and tertiary
sectors as well as in the industry largely compensates the increase in bioenergy used in transport
(notably in aviation and maritime sectors, which so far have limited decarbonisation alternatives).
Bioenergy use in the thermal power (and heat) generation in the core scenarios would remain stable
compared to REF levels (around 50 Mtoes).
It can be noted that in MIX-H2 variant, the bioenergy demand would slightly decrease below the
levels of the core scenarios as RFNBOs substitute some amounts of advanced biofuels in transport.
The combination of feedstock used to supply the demand in bioenergy by 2030 is similar to today’s
needs with in particular biofuels relying on cereal and oil crops. In all the scenarios, more than 90%
of the bioenergy used in the EU economy is produced domestically in 2030 and there is sufficient
supply of sustainable biomass. These modelling results should however be contrasted with final
NECPs, where the majority of Member States foresee an increase in bioenergy use from 2021-2030,
without assessing the related impacts on LULUCF and biodiversity.
Figure 32 - Biomass-waste use in Gross Available Energy in core scenarios and Reference, Source: PRIMES
According to the core scenarios, there would be significant increases in bioenergy consumption post-
2030 as needed to achieve carbon neutrality. More specifically demand in thermal power stations
would grow as growth in electrification requires significant increase of power supply even if
considering that demand response and newer technologies will to some extent reduce the amounts of
necessary bioenergy use in power (needed to balance variable renewables). In the 2050 perspective,
there is also an increased demand for biomass in high temperature industrial processes in industry
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and for advanced biofuels, especially in maritime and aviation sectors. As a result, in core scenarios,
the overall bioenergy demand grows by, on average, 69% in 2050 compared to 2030.
The majority of bioenergy is today sourced from forest and other woody biomass. According to JRC
report data, woody bioenergy is largely (66%) based on residues and wastes from logging and timber
processing (e.g. branches and tops, saw dust, waste wood). The remaining 34% is supplied from so-
called ‘primary biomass sources’, which include low-quality stemwood and thinnings (20%). It is
estimated that at least half of this stemwood used for energy is derived from coppice forests (also
known as low forest in Mediterranean countries). Only 4% of total wood energy demand for energy
is supplied by industrial stemwood. Wood-pellets imports from US have a minor role in the EU after
Brexit. The USA, Canada and Russia are together responsible for supplying 89% of the EU import of
wood pellets.
The JRC analysed statistics about the growing stock (volume of living trees), the quantities of
roundwood and residuals removed from forests and the net annual increment (NAI) of forest volume
(see figure below). It concluded that, while the harvest to increment ratio appears to be increasing
(resulting from increasing harvest levels and a relatively stable NAI) removals are still below the
level of growth. This leaves a margin for further sustainable extraction of forest biomass for the
wider bioeconomy use, including bioenergy.
Figure 33 - Net annual increment, removals, and fellings in the EU FAWS. Source: Camia et al. 2018
Going forward, according to the CTP modelling, the use of harvested stemwood is projected to stay
at 2015 level in all analysed scenarios while the sustainable extraction of forest residues increases, in
total the forest sector provides 60 to 65 Mtoe of wood for energy. Other sectors will also contribute
to deliver bioenergy supply. For instance, due to the implementation of the EU waste legislation, a
significant share of the feedstock used to produce bioenergy is projected to come from the waste
sector that could supply about 100 Mtoe of feedstock to the energy sector by 2050. Biogas or
biofuels produced from food crops will be very marginal in EU by 2050 but more agriculture
residues are used for the production of biogas or solid biomass. The optimisation of the sustainable
exploitation of all these classical sources of biomass could supply just over 200 Mtoe of feedstock
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for bioenergy production to the EU economy. Fast growing energy crops will provide for the rest of
needs in biomass. Scenarios vary substantially in their demand for these new energy crops. Most of
the demand is supplied via lignocellulosic grass such as switchgrass and miscanthus while short
rotation coppices, poplar and willow, provide only 20 to 25% of the demand in energy crops.
6.1.2. Impacts not based on modelling
Economic impacts
Economic impacts will affect both economic operators - both in the energy (bioenergy generators
and other renewable energy producers) and forest sectors (forest owners, forest industry) - which
need to deliver action on the ground, and national policy-makers, who will be responsible for
implementing and verifying compliance with the different options. More in general, the economic
impacts will affect all European and world citizens, as climate and biodiversity action is a public
good that is cross-border in nature. The overall cost of the identified policy options will be driven by
changes in the volume of bioenergy use affected by each option.
The reduction of total bioenergy demand due to the effects of policy options 1-2 is likely to be very
small. Where such reductions occur, they will lead to compensation with other renewable energy
sources in order to meet the renewable energy targets, with effects on gross added-value, investment
costs and employment. Strengthened sustainability criteria may also reduce biomass imports from
outside the EU, as operators in third countries choose not to comply with them and redirect their
export away from the EU.
Option 3 would apply the EU sustainability criteria set out in option 2 to installations below 20 MW,
thus affecting a larger share of biomass use. It should be noted that the solid biomass sector is
relatively fragmented and heterogeneous. Half of the solid biomass for energy is consumed by
households. The consumption of solid biomass by commercial and industrial installations is more
concentrated in larger plants. In particular, around 75% of the solid biomass supply is consumed in
installations larger than 20 MW, while 25% is consumed in smaller installations (1 MW to 20 MW).
There are a high number of small installations using wood chips, over half of the installations are
below 5 MW (see figure below). The majority of biomass used in commercial and industrial
installations is in form of woodchips used in large (above 20MW) plant (see figure below).
Extending sustainability criteria to installations below 20 MW would cover largely woodchip used in
heat only and CHP plants.
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Figure 34 Share of installations and share of consumption by installation size
Figure 35 Consumption of woodchips and pellet by use and installation size
Depending on the level of the threshold, compliance costs could have a moderate impacts on
bioenergy production and on the overall costs of achieving the renewable energy target. But this
could again be compensated by increased investment in other renewable energy sources. It could also
have minor positive effects in other economic sectors, including certification services.
Option 4 and 4.2 could result in a stagnation in the use of bioenergy or in a slower increase of the
final renewable energy share. According to the JRC, today 20% of woody biomass use is supplied by
stemwood, and 4% from industrial stemwood and 4% from industrial quality stemwood,
corresponding respectively to ~14% and ~1.5% of renewable energy use.
If bioenergy use was in addition restricted to wastes and residues only (option 4.1), this could lead to
a significant decrease in bioenergy production from forest biomass. At least at third of this
production is supplied by primary biomass sources, or roughly 20% of the current final renewable
energy. Other renewable energy sources, like solar, wind and geothermal, will need to develop
further to compensate the lost bioenergy production. It should be noted that to achieve the higher
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RES 2030 target, the installed capacity of wind and solar power need already to double and triple
compared to 2020 level, respectively.
Bioenergy heating is currently one of the cheapest forms of renewable heating. A reduction in
bioenergy could lead to price increases in the heating sector while overall societal costs linked to air
pollution might decrease. In the power sector, wind and solar prices are by now significantly lower
than bioelectricity. Therefore, a decrease in costs can be expected, if those sources are used instead
of bioelectricity. Options 4, 4.1 and 4.2 would have different economic impacts depending on how it
is actually implemented by Member States and how much high quality stemwood is used for energy
production. The impact of these options on biomass import levels would depend on the availability
of wood pellets made from other sources than stemwood, in particular from industrial residues.
Other indirect effects could be expected. For instance, under option 4.1 the price of sawmill by-
products (such as sawdust) might increase, leading to an increased profitability of sawmills. On the
other hand, a higher price of by-products might lead to increased competition for resources for the
pulp and panel industries with the sectors manufacturing wood-based panels and pulp and therefore
to lower feedstocks availability for material use.
Option 5 could result in significant impacts on overall bioenergy use (60% of today renewable
energy use), leading to either a slower increase of the final renewable energy or higher shift from
bioenergy to other renewable energy sources. In the heating/CHP and industrial sectors, this could
lead to increases in total costs for achieving the increased sectorial renewable energy targets, because
of bioenergy being among the cheapest energy sources. In the power sector, this would lead to a
decrease in generation costs if production is shifted to cheaper renewables. At the same time,
bioenergy can provide the needed flexibility to the power sector to facilitate the cost-effective
integration of variable renewable energy sources such as wind and solar. This option would also risk
creating significant regulatory instability and undermine existing investments in the whole bioenergy
sector — two issues that were pointed out by economic operators in their response to the public
consultation. On the other hand, having strengthened sustainability rules in place that are consistent
with the higher renewable energy ambition could stimulate market signals for faster deployment of
other forms of renewables such as wind and solar, or new technologies
Environmental impacts
The most important impacts of the revision of the EU bioenergy sustainability criteria will be on the
EU climate and environmental objectives, including biodiversity conservation and air quality. By
promoting a swift and robust implementation of the existing REDII criteria, option 1 would lead to
positive biodiversity impacts compared the baseline, albeit limited.
Option 2 would lead to important positive biodiversity and climate impacts. Applying the existing
REDII no-go areas for agricultural biomass also to forest biomass would ensure that the latter is not
sourced from primary and highly biodiverse forests thus avoiding the risk of significant carbon and
biodiversity impacts, as highlighted in the JRC report on the use of woody biomass for energy. As
such, option 2 would be in line with the Biodiversity strategy goal of increasing the protection of
primary forests, including old grown forest, and would also help further protecting the EU and global
forest sink.
Primary forests, including old-growth forests, in the EU are rare, small and fragmented. These forests
represent below 3% of the total forest extent of the EU. About 90% of the reported primary and old-
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growth forests in the EU is located in Sweden, Bulgaria, Finland and Romania (see table below). The
share of primary forest out of national forest is the highest in Sweden, Bulgaria, Slovenia and
Romania. The mapped area of primary and old-growth forests in the EU is ~1.35 million hectares.
However, there is a pronounced mapping deficit estimated at ~4.4 million hectares (an area equal to
the size of the Netherlands).
Table 21 - Area of primary forests in EU countries. Forest area according to FOREST EUROPE (2020).
Figure 36 - Map of pri ar forests ross the EU; Sour e: Sa ati i, FM, Burras a o, S, Keeto , WS, et al. Where are Europe’s last
primary forests? Divers Distrib. 2018; 24: 1426– 1439.
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Table 22 - Area of primary forests in EU (Sabatini et al. 2020) and percentage falling in Natura 2000 sites (EEA
2020) and in IUCN protected areas
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Figure 37 - Share of forest undisturbed by man in the total forest area, by country, Forest Europe 2020
Option 2 would have different implications at Member States level and vary according to whether
logging is currently allowed in forests not strictly protected. About 93% of the mapped primary and
old-growth forests are part of the Natura 2000 Network, and 87% are strictly protected (, i.e. IUCN
categories Ia, Ib and II). However, if we exclude Finland, which represents most of the mapped
primary and old-growth forests in the EU, these shares drops to 87% and only 57%, respectively.
Considering the wide data gaps in mapping, however, these figures should be considered with
caution. Nevertheless, it is important to note that timber harvesting and salvage logging is allowed in
many national parks in Europe (outside core areas). This means that forest biomass may still be
extracted from strict protection areas. However, the data presented suggests that most Member States
protect primary forests, but gaps exists. Therefore a restriction on forest biomass extracted from
primary forests is expected to have limited impact on European production, but would ensure that
primary forests in countries with lower coverage are protected.
Option 2 is expected to also impact more significantly biomass imports from 3rd countries, where
most of the world primary forests are located (see figure below). According to the Global Forest
Watch initiative187
, primary forest occupies 11% of the world (1.28 Gha). Together, Russia, Canada
and Brazil account for 53% of the world’s primary forest. Extending the no-go areas as part of option
2 will reduce the forest area available to be harvested for the purpose of bioenergy. The level of
impact will depend on the current level of protection for old-growth forest in place. While in the EU
there is a significant level of protection, and the impact on total available forest area will be minimal,
this option is expected to lead to a reduction of imports by 7% by 2030 as criteria would exclude
some non-EU supply. The decrease on imports due to inability to comply with more stringent
requirements may lead to a rebound effect on EU production, increasing their prices.
187
https://www.globalforestwatch.org/
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Figure 38 – Area and global share of primary forest in top 10 countries (and EU27). Source: Global FAO forest cover
Additional no-go areas would include highly biodiverse forests. These would broadly include areas
included in Natura 2000188
, areas covered by the EU Nature Directives, protected areas defined by
Member States, Important Bird & Biodiversity areas and IUCN Key Biodiversity Areas (KBA). To
date, no clear mapping of these areas is available. The Commission is currently working to identify
criteria to define which habitats should be included to reach the 30% target land area protected set in
the Biodiversity Strategy. According to the Strategy, this 30% target is equal to an extra 4% for land
and 19% for sea areas, as compared to today.
By extending the REDII GHG saving criteria to existing installations, option 2 would also lead to
exclusion of the less-carbon efficient production pathways, thus further ensuring direct GHG
emission savings. Applying the GHG saving criteria to existing heat and power installations using
biomass would impact over 540 installations over 20 MW189
(where the 88 largest plants account for
over 30Mt biomass per year). Option 2 would also include a stricter minimum level of thermal
efficiency requirement for large (above 100MW) electricity-only plants (e.g. 38% compared to the
36% threshold set out in REDII). This requirement could apply only to new electricity-only
installations, in order to protect existing investments. A threshold increase of the efficiency criteria
would lead to taking into account only the most efficient power-only plants into account for the
purpose of renewable generation, given that currently Best Available Techniques (BAT) efficiency
ranges for solid biomass and peat boiler large combustion plants are 33.5% - 38% for new units and
28% - 38% for existing units. Both the number of planned large electricity-only biomass power
plants in the EU and the share of this which would be captured by the efficiency requirement are
difficult to ascertain. While some analysis, suggest significant planning for new coal-to biomass
conversion190
, modelling carried out for the Climate Target Plan projects very little new biomass-
based electricity-only capacity for the 2020-2030 period (~1% of total solid biomass consumption
between 2020 and 2030). Everything considered and based on the available data, it can be assumed
that the current 36% threshold is already sufficient to exclude all but a few electricity-only plants.
This option would also lead to an improvement of ambient air quality.
188
https://natura2000.eea.europa.eu/
189
Bioenergy Europe 2016 – BASIS bioenergy project
190
https://ember-climate.org/wp-content/uploads/2020/10/Ember-Playing-With-Fire-2019.pdf
150
Option 3 is likely to lead to increased environmental and climate benefits given that a larger share of
biomass for heat and power will be subject to the enhanced EU sustainability criteria, thus avoiding
potential leakages of impacts from larger installations to small ones. Depending on the threshold
applied, the administrative burden associated to verification of the sustainability criteria and the
related certification requirements could result in additional compliance costs. As smaller plants also
use local non-recyclable waste and residues with positive environmental impact, this could have the
negative environmental effect of excluding local waste biomass supply, which is generally
considered the most sustainable191
.
Options 4, 4.1 and 4.2 would have positive effects on biodiversity and climate compared to option 2
on which it is constructed. These options would help addressing the Biodiversity Strategy goal of
minimising the use of wholetrees for energy use. Option 4.1 would add further environmental
safeguards by limiting forest bioenergy feedstock only to residues and waste from timber harvesting
and processing. On the other hand, a cap of stem wood could negatively affect the demand for the
large diameter stemwood of low quality. This option could increase demand for industrial wood
residues that are largely used for manufacturing wood-based panels and pulp, resulting in lower
feedstocks for material use. This option could have other unintended indirect effects which could
undermine its environmental ambition, such as incentivising unsustainable changes in forest
management to harvest just before the maximum diameter for energy is reached, thus leading to
younger (i.e. with lower average carbon stock) and even less biodiverse forests.
In this respect, modelling conducted for the Commission192
in 2016 suggests that an exclusion of the
use of stemwood for energy could be compensated by an increase in stemwood use in the material
sector (to substitute for by-products diverted to energy use)193
. According to this study, this could
therefore imply that the overall effect on the level of wood harvest and related climate benefits from
a cap on stem wood could be relatively small. However, these results should be read in conjunction
with the strong assumptions made in the study, including a stable demand for bioenergy.
The diversion of harvest to long lived products could also underpin a more ambitious climate policy
in the LULUCF sector.
Option 5 would ensure that no further expansion of energy from forest biomass would take place,
thus very likely reducing further pressure on forest biodiversity. However, this option would
indiscriminately cap all forest bioenergy pathways and origins, both those detrimental for carbon
stocks and biodiversity and those beneficial for them. The JRC study has identified a limited number
of potential bioenergy pathways can be considered a win-win solution. Thus it can be expected that
overall environmental impacts will be positive. Stopping additional timber harvest for energy use
could appear a simple and direct approach to increase the net forest sink in the short-medium term.
191
Smaller plants have the potential to use local waste and residues, with positive environmental (e.g. forest cleaning to
avoid forest fires, use of biomass non-recyclable waste from industry or households) and social (additional revenues for
small farmers) impacts
192
ReCeBio’ project 2016. https://op.europa.eu/fr/publication-detail/-/publication/5dd96712-27c8-11e6-914b-
01aa75ed71a1
193
According to the modelling, the resulting gap in the feedstocks for bioenergy in the EU is, in this scenario, fulfilled by
industrial by-products, mostly through a change in the feedstock composition within the pulp and board industries
towards use of stem wood instead of by-products, and an increase in sawn-wood production, since sawmills become
more profitable as the by-products are in high demand for bioenergy and achieve high market prices
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At the same time, this approach could lead to a net forest sink saturation in the medium-long term. In
this respect, it should be noted that the LULUCF regulation, while not imposing a direct cap on
harvests, already places responsibility for excess accounted emissions upon Member States if their
harvest rates would exceed the levels encapsulated in the LULUCF Forest Reference Level and
reporting framework. The review of the LULUCF Regulation further upgrades this stringency,
including through new LULUCF targets for Member States by 2026.
All options including a reduction of combustion of solid bioenergy use are expected to lead to a
decrease in air pollution, which is especially caused by inefficient space heaters and boilers.
Social Impacts
A quantitative assessment of the social impact has not been undertaken. Bioenergy is the largest
renewable energy source in terms of direct and indirect employment, providing 703,200 jobs and a
turnover of 66.6 billion euros194
, in particular in rural areas.
Option 1 is not expected to significantly alter underlying trends in bioenergy use and production, and
therefore minimal social impacts are expected. The more prominent ones would be associated with
skills and knowledge of sectoral workers.
Overall, option 2 may have marginal employment effect in the energy sector compared to baseline,
as they would mostly depend on additional job opportunities in the certification industry and the
additional jobs created by operators in order to cope with the additional requirements. Small negative
employment effects could arise for forest owners or farmers linked to additional certification costs.
Option 2 would further reduce the risks of unintended social impacts on local communities
associated to forest biomass sourcing in primary forests, particularly in third countries.
Option 3 is likely to lead to negative employment effects as small heat and power installations could
be unable to comply and are forced to close. Positive employment impacts will also arise as a result
of the small shift from bioenergy to other renewable energy in the policy options, due to a higher
labour-intensity of other renewable energy sources.
Options 4, 4.1, and 5 could also lead to negative employment impacts because of the significant
administrative burden on forest owners and forest communities. Option 4.2 would minimise such
negative impacts by reducing the administrative burden on economic operators, depending however
on the way it will be implemented by Member States. In particular, option 4.1 could have high socio
economic impacts on primary producers of forest biomass with its likely impact on reducing biomass
use for energy. This would be felt mostly in countries with the largest workforces employed in
forestry and logging activities (Poland, Romania, Sweden, Germany and Italy), and where forestry
and logging activities occupy the largest share of active population (Latvia, Slovakia, Estonia,
Croatia, Lithuania)195
. However, for all options which would lead to a reduction in bioenergy use, an
increase in employment in other renewable technologies can be expected.
194
Eurobserver 2019
195
Eurostat, National accounts employment data by industry
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All options including a reduction of combustion of solid bioenergy would result in reduced air
emissions and associated health benefits, especially in case of installations located in densely
populated areas.
6.1.3. Administrative impacts
Administrative impacts are understood in terms of regulatory costs that affect the economic operators
to take action on the ground and demonstrate compliance with the identified options and those that
affect Member States authorities in charge of implementing the EU sustainability criteria and other
related measures.
Option 1 is the only option that may reduce overall administrative burden and compliance costs with
the REDII sustainability criteria for economic operators. Providing guidance at EU level could also
generate (modest) compliance cost savings for national authorities in charge of implementing
bioenergy sustainability criteria. Guidance and tools may also limit administrative costs of future
heat and power installations by providing a tool for the calculation of GHG savings.
Option 2 is likely to moderately increase the administrative burden and compliance costs for
economic operators. Administrative costs for bioenergy operators may increase because of additional
certification costs to demonstrate compliance with new sustainability criteria. Fuel cost for biomass
plants owners may also increase, due to producers passing the additional costs and, to some extent,
reduced supply (particularly for biomass imports). However these administrative costs can be
minimized if existing datasets and remote sensing technologies are exploited. National authorities are
likely to face moderately increased administrative burden associated with the monitoring of the new
no-go areas.
Applying the REDII GHG saving criteria also to existing installations would lead to limited increases
in administrative costs for economic operators (chiefly related to collect evidence of GHG savings of
the biomass pathways used). Increasing the energy efficiency threshold for electricity only plants
would not add administrative costs compared to the baseline. However, considering that few
biomass-based electricity-only plants met the current level of 36%, an increase to this energy
efficiency requirement is likely to stop any new coal-to-biomass conversion or new investments in
power-only plants running on biomass.
Options 3 is likely to increase the administrative costs for small heat and power installations under
20MW which would have to demonstrate compliance with sustainability and GHG criteria. The
majority of administrative costs in both cases are expected to be associated with certification costs,
rather than compliance and change of operational practices. For a hypothetical 1 MW heating plant,
the cost of certification are estimated to be on at least 10% of the fuel cost. However, these costs
could be higher for more complex supply chains where audits and certification costs will be charged
to all operators along the value chain. As fuel quantities increase with plant size, the cost of
compliance as a share of fuel cost would also decrease, because the cost of certifying a 1MW and a
15MW plant are not expected to be substantially different. On the other hand, supply’ chain
compliance and administrative costs would be reflected in the fuel price, which would vary by the
same amount in both cases.
This option would also indirectly affect local forest owners and forest-based industries, as they often
provide biomass to these smaller plants. For smaller forest owners and agriculture biomass
producers, certification costs may be prohibitive, as biomass is a by-product. National authorities are
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also likely to face some additional monitoring and verification costs associated with the increased
number of installations subject to the sustainability criteria. Extending the sustainability criteria to
smaller installations would have the following impacts on currently existing installations196
:
 The existing 20 MW threshold covers 75% of commercial woody biomass used in plants
above 1MW, while affecting 15% of wood chip plants
 Lowering the threshold to 10 MW would capture 85% of commercial woody biomass used in
plants above 1MW, while affecting 25% of the wood chip plants (~400 additional plants);
 Lowering the threshold to 5 MW would capture 93% of commercial woody biomass used in
plants above 1MW, while affecting 42% of the wood chip plants (~500 additional plants);
 The Member States most affected by an extension of the minimum threshold from 20 MW to
10 MW are Sweden, France, and Austria. They remain the most affected countries even when
the threshold is lowered to 5 MW.
The Member States most affected by an extension of the minimum threshold from 20 MW to 10 MW
are Sweden, France and Austria. They remain the most affected countries even when the threshold is
lowered to 5 MW.
Table 23 - Share of consumption of woody biomass for energy by plant size class
Plant size
1-5
MW
5-10
MW
10-20
MW
20+
MW
Total
Number of installations 1,961 595 388 546 3,490
% wood chips installations 58% 17% 10% 15% 100%
% wood chips consumption 7% 8% 11% 74% 100%
% wood pellet consumption 15% 8% 2% 76% 100%
% woody biomass consumption 7% 8% 10% 75% 100%
Table 24 - Number of biomass plants by size and Member State
197
Member Sate/ Size 10 MW -20 MW 5 MW - 10 MW
Sweden 81 81
France 69 142
Austria 46 69
Germany 40 41
Finland 35 59
Lithuania 24 15
Latvia 17 45
196
Data from BASIS project, BioenergyEU, 2016
197
Data for Austria is incomplete
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Spain 16 27
Slovakia 16 24
Denmark 13 28
Italy 8 24
Other EU 42 103
Total 407 658
Options 4, 4.1 and 5 would lead to significant administrative impacts on public administrations.
Increased compliance and monitoring costs for forest owners are expected to be associated with both
the need to tracing and certification all wood assortments to demonstrate compliance with the
required dimension and quality characteristics. The need to establish a tracking system from forest
plot to the factories would be necessary. Certifications and audit costs will be charged to all the
market actors participating in the transaction. Each intermediary step of the value chain needs to be
certified and bear the costs of auditing and certifications, having the potential to impact biomass
fuels costs and the bioheat/bioelectricity costs. In some cases, compliance costs could be also related
to changes in forest management practices. Administrative burden is likely to be high for many
SMEs.
In case options 4, 4.1 would involve a monitoring obligation on forest owners, the administrative
costs would be higher and have a much more significant impact. This is because often forest owners
are small holders and for them logging is a secondary activity, e.g. providing an income of few
thousands euros per year. Analysis carried out in 2017 with the Green-X model198 estimates 1.2
million EU forest owners, grouped into 1,452 forest entities would be needed to produce 110 Mtoe of
bioenergy. In 2020, bioenergy from forest amounted to 80Mtoe, which suggests 0.87 million forest
owners may be affected. However, reliable and wide-ranging estimates on costs are not available
because compliance and certification costs depend on a wide range of factors.
Under options 4, 4.1 and 5, national authorities are also likely to face significantly increased
administrative costs for setting up national systems and procedures to monitor and verify the type
and quality of stem wood assortments going to the energy sector. In particular for option 4 and 5
(national caps on stemwood / on overall forest bioenergy), Member States would need to improve the
statistics and monitoring systems in order to set up and enforce this option, and take them into
account when setting up support schemes for bioenergy. Option 4.2 would offer an alternative
solution which would be easier to implement.
6.1.4. Coherence
The initiative for the revision of the REDII sustainability criteria is part of the EGD and a wider
package of initiatives that cover in particular the review of sectorial legislation in the fields of
climate, energy, transport, and taxation. Different options score differently in terms of coherence
with other initiatives.
Option 1 maintains a level of coherence (albeit weak) with the EGD, by strengthening the
implementation of the EU bioenergy sustainability criteria but would only address the concerns
198
https://www.bioboost.eu/uploads/files/bioboost_d1.1-syncom_feedstock_cost-vers_1.0-final.pdf
155
raised in the Biodiversity strategy if Member States would implement e.g. new guidance on
cascading use of woody biomass.
Options 2 and 3 exhibit a high level of coherence with other EU initiatives, particularly the
Biodiversity Strategy, including its goals to protect primary forests and old grown forests, and the
LULUCF Regulation, including its review which aims to also to protect high carbon stock areas.
These could produce synergies of protecting forest stock (i.e. areas where harvest would risk
releasing large levels of CO2), while also enlarging the effectiveness of the EU sustainability criteria.
Options 4, 4.1, 4.2 would be also in line with the Biodiversity Strategy goal of minimizing the use of
wholetrees for energy. Due to its significant implementation/verification challenges, increased
administrative costs for economic operators, options 4 and 4.1 would likely significantly impact the
deployment of bioenergy, which in turn could make it more difficult to reach future climate and
energy targets cost-effectively, especially after 2030.
Option 5 would be in line with the Biodiversity Strategy objectives. However this option may not be
in line with the CTP as it would both eliminate climate beneficial bioenergy pathways and affect the
cost-efficient achievement of the EU 2030 renewable targets.
All options should also be seem in the context of parallel other initiatives under the Fit for 55
Package, in particular the review of the LULUCF Regulation and of the EU ETS, which are aimed at
introducing additional safeguards for promoting sustainable forest biomass production for all uses,
not limited to bioenergy.
Synergies and trade-off between the bio-economy and forest carbon sinks.
Land Use, Land Use Change and Forestry presently absorbs more CO2, by storing it in biomass or in
soil carbon, than it releases to the atmosphere. The forest-based bio-economy can contribute to
climate change mitigation through various options: by increasing carbon stocks in the forest pools
(living biomass, dead organic matter and soils) and in the harvested wood products, and through so-
called substitution effects, i.e. using wood to replace energy-intensive materials (e.g. cement, steel,
etc.) and/or fossil-fuels. While changes in carbon stock are accounted under LULUCF, the
substitution benefits are accounted in other sectors.
Trade-offs and synergies exist among these options, along different time scales. In the short-term
(less than 10 years), a trade-off occurs between increasing the carbon stocks of forest pools and
making more wood available for the other options, because more harvest typically decreases the net
forest sink. In the medium-term (approx. > 20 years), only measures to substantially increase the
total forest net annual increment (e.g. active sustainable forest management practices and new forest
plantations) would allow to reverse the current trend of declining sink (bringing it in line with the EU
climate neutrality target by 2050) and at the same time provide additional biomass for the wider bio-
economy. Furthermore, in the longer-term (> 50 years) additional trade-offs may occur, e.g. a low
harvest rate could slow down forest growth, with a likely consequent decrease (saturation) of the net
forest carbon sink.
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The more ambitious LULUCF Regulation presented in the Fit-for-55 package support the REDII
review, by creating additional policy incentives for further encouraging climate-positive bioenergy
pathways and minimize possible trade-offs. This is because any additional forest harvest is expected
to be guided by a more careful assessment of its carbon impacts in the short term, which are negative
on the LULUCF sink and positive on material and energy substitution (recorded in non-LULUCF
sectors). In addition, increased afforestation will provide additional biomass for the wider bio-
economy, while increasing the forest carbon sink and enhancing biodiversity.
6.1.5. Stakeholders’ Opinions
Stakeholders’ Opinions
During the OPC bioenergy sustainability attracted strong views throughout the questionnaire One
question received over 38,700 answers, of which 38,313 thorough a coordinated campaign. The
campaign chose not to answer the other questions concerning bioenergy sustainability.
The question whether there should be limits to the type of feedstock used for bioenergy production
under RED II was answered by more than 38,700 participants. 99% said that REDII should be
changed to remove biomass from the list of renewable resources, limiting the use for bioenergy to
locally-available waste and residues, and that this should be accompanied by a moratorium or a
cap on the total amount of solid biomass in electricity and heating, by an accelerated phase-out of
high ILUC risk fuels, and by the removal of incentives for bioenergy.
Participants think that the sustainability criteria for the production of bioenergy from forest
biomass should not be modified by a small margin (56% no to 44% yes), with clear splits among
different categories (this question was not answered by the individual citizens stating their
objection to the use of biomass). Overwhelming support for stricter criteria is found among
NGOs/environmental organisations and individuals. A 50-50 split is found concerning the
extension of criteria to installation below 20MW for solid biomass and 2 MW for biogas.
Industry, trade unions and several Member States authorities opposed the revision of the
sustainability criteria for forest biomass bioenergy industry and forest owners did not want a
revision of Articles 29 - 31 given that they have not been applied yet and to ensure regulatory
stability to support the required investments. The remaining 44% of respondents, chiefly from
environmental NGOs, academia and individuals, but also some Member States, support the
strengthening of the REDII criteria.
During the 1st stakeholder workshop, industry and forest owners saw the REDII sustainability
criteria (complemented by the LULUCF Regulation) as important steps forward, calling for a
stable regulatory framework to support investments, while NGOs considered REDII insufficient
and called for stricter sustainability criteria, including limits on roundwood use for energy.
Research institutes argued that the focus for bioenergy should be on sectors that are hard to abate.
Environmental NGOs argued to keep woody biomass out of the renewables mix. The bioenergy
sector highlighted, among other arguments, that compared to solar and wind, bioenergy has added
value as a flexibility source and can deliver negative emissions with coupled with CCS. This
sector stresses that they are already subjected to substantial sustainability criteria compared to
other economic sectors. They request to keep a simple and stable regulatory approach.
During the 2nd stakeholder workshop, NGOs called for a cap on bioenergy, to end support for
burning biomass and for a feedstock based approach. Industry advocated that current RED II
sustainability criteria should not be changed to avoid regulatory instability.
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6.8. Flanking and enabling measures
Impacts projected by the core scenarios in the electricity sector
The below assessment analyses impacts related to the increase of renewable electricity stemming
from ETS and enabling conditions in electricity sector assumed in the core scenarios. Actions
facilitating offshore renewable energy and uptake and cross-border cooperation are key enabling
conditions for renewable deployment in the electricity sector. Specific impacts and qualitative
assessment for both cross-border cooperation and offshore renewable energy are discussed in
sections 6.8.1 and 6.8.2.
Economic (including Energy System) and social impacts
According to the core scenarios and in agreement with the CTP analysis, the electricity sector will
see a high share of renewables (i.e. RES-E share): 65% in all core scenarios compared to 59% in
REF (in 2030) and around 30% today. By 2050, renewables in power generation are projected to
have around 85% share. The strongest drivers of renewables deployment in the electricity sector are
carbon price and so-called RES values199
representing the support policies that would need to happen
as a result of RED revision and the necessary additional actions by Member States in the electricity
sector. Of course there are also other strong drivers of the change in the power generation system:
coal phase-out and national plans for phase/out or expansion in nuclear generation – all already
present in the REF.
In MIX-H2 variant the penetration of renewables in electricity would be even higher but these would
be amounts dedicated to RFNBOs production.
Between 2015 and 2030, the share of wind and solar energy in gross electricity generation is
projected to increase from 13% to 41% in REF and to 48% in all core scenarios. In 2030, wind
energy would be also the largest electricity source, providing 34% of gross electricity generation in
all core scenarios. Solar energy would have a 14% share in all core policy scenarios.
199
The renewables value is a shadow price, a signal of potential costs per unit of renewable energy not achieved (relative
to the target) which is internalized in the optimized behaviours of actors and thus leads to higher renewables uptake.
Renewables values do not describe in detail the renewables supporting policies, but are introduced if needed, in addition
to the supporting policies, so as to complement them and reach the renewables target. The renewables value should not
be confused with feed-in tariffs or green certificates. Renewables projects compete on equal economic grounds with
other forms of energy.
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Figure 39 – Gross electricity generation in the EU; Source EUROSTAT, PRIMES
Due to the variable load factors of renewables the total installed capacity will have to increase more
than the rate of the electricity produced. In the REF, the installed capacity increases from some 870
GW in 2015 to nearly 1200 GW in 2030 and to nearly 1350 GW in the core scenarios.
By 2030, wind energy is projected to have the highest installed capacity (nearly 430 GW in the core
scenarios), with most of the installed capacity being located onshore. As already shown in the CTP
IA and confirmed by the EU strategy on offshore renewable energy200
, offshore wind would reach in
2030 nearly 60 GW in the REF scenario and some 10 GW more in the core scenarios. Another fast
development would take place for solar energy that would grow to some 300 GW in the REF
scenario and to some 380 GW in the core scenarios.
Figure 40 - Installed power production capacities; Source EUROSTAT, PRIMES
As a result of high uptake of renewables, by 2030 the installed fossil-fuel capacity will decrease both
in REF and in policy scenarios compared to 2015. By 2030, the combined installed capacity of the
EU’s nuclear power plants is also projected to decline as result of planned phase-outs in several
Member States.
Policy options in the electricity sector considered in the sections below were captured in the core
scenarios only in an implicit manner as so called “enabling conditions” and not differentiated among
the scenarios. The key drivers remain the ETS price and generic incentive in support of renewables
200
COM(2020)741
159
uptake in power generation (the RES value). The lower RES-E value in core scenarios compared to
REF indicates that with current assumptions on the cost of technology, the projected ETS prices and
necessary enabling conditions, the policy incentive can be smaller so that mature renewable
technologies are competitive with fossil fuel technologies.
Table 25 - Incentives in power generation sector and electricity prices; Source PRIMES
2030, EU REF REG MIX MIX-CP
RES-E value (€/MWh) 54 51 51 51
ETS price in the current
sectors (€/tCO2)
30 42 48 52
RES-E share 59% 65% 65% 65%
Average price of
electricity for final
consumers (€/MWh)
158 156 156 157
The average price of electricity for final consumers (including charges and levies) is 156-157
EUR/MWh in the core scenarios and stable compared to REF. This shows that renewables
investment costs (recuperated by utilities through electricity prices) do not lead to a significant
increase in electricity prices benefiting from economies of scale and better storage possibilities as
electricity system continues to grow.
Environmental impacts
Strongly increased penetration of renewables in power generation combined with coal phase-out and
only slightly decreasing share of nuclear (both aspects already captured in REF), lead to strong
reductions of GHG emissions in power sector as illustrated in the table below.
Table 26 - GHG reduction in power generation; Source PRIMES
2030, EU REF REG MIX MIX-CP
Power generation CO2 emissions
(% change vs 2015)
-51% -64% -65% -67%
6.1.1. Cross-border Cooperation
The rationale for cross-border cooperation on support schemes for renewable energy is that a more
cooperative approach can help Member States to achieve the EU target cost-effectively, tap into
additional renewable energy potential (that one Member State alone would not be able to realise) and
limit negative impacts on the internal energy market. This can also allow for a strategic and long-
term energy cooperation, for instance through joint projects, where Member can share the added
value of the project and also benefit from knowledge transfer and joint learning.
The default Option 0 is the baseline in which provisions under REDII on regional cooperation
remain unchanged and no additional action is taken. The assessment compares this baseline to
additional measures taken to enhance regional cooperation. 4 options are being assessed: guidance on
cross-border cooperation (option 1), obligation to implement a pilot project (option 2), mandatory
160
partial opening of support schemes (option 3) and an enhanced use of the Union renewable energy
financing mechanism (option 4).
Given that the required level of cross-border cooperation across the four options differs from low
(option 1) to moderate/high (options 2 and 3) and highest (option 4), the impacts described below
refer to all options while the extent of their impacts increases with increased cooperation levels
introduced by the options. Impacts relating to specific options are indicated below.
The results of the assessment incorporates finding from modelling undertaken by Trinomics/Artelys
(METIS model) and results from other studies, in particular the AU RES II project.
6.8.1.1. Impacts and qualitative assessment
Economic impacts
Enhanced cross-borders cooperation results in lower capital expenditures. This is primarily due to
geographical shifts of installations to better sites, in particular those with higher renewables potential
with more load hours that require less renewables capacity to produce the same amount of electricity.
Moreover, sites with lower cost of capital could be thus privileged.
When looking only at the levelised cost of electricity (LCOE), according to modelling undertaken by
Trinomics/Artelys201
, savings on LCOE may reach up to 60% given the significant heterogeneity in
climatic conditions across all EU Member as well as differences in capital costs (WACC).202
While
this part of the analysis does not factor in renewables integration and additional interconnector
capacity needs, it gives an indication of the available potential for cost reductions resulting from
different LCOEs. Looking specifically at option 3 and taking such factors into account the analysis
from a partial opening of support scheme of 10% as of 2025 estimates savings on system cost to
amount to 520 million €/year. In addition, such a partial opening of support schemes would also
reduce renewables curtailment by 20%.
Furthermore, regional cooperation helps to mobilise larger investments compared to what a single
Member State could do on its own. It can enable larger projects (e.g. for important offshore wind
parks/ hybrid projects which might be too large to fit to the energy planning of one Member State but
be suitable if developed by two Member States203
) as well as enable riskier projects (e.g. applying
less mature technologies, such as floating offshore wind) to materialise that would not necessarily be
financed by a single Member State. Risk sharing between Member States and exploitation of cost-
effective potentials drives down costs.
201
“Technical support for RES policy development and implementation: delivering on an increased ambition through
energy system integration” ENER/ C1/2020-440, study performed by consortium led by Trinomics B.V.
Impact Assessment for the revised Renewable Energy Directive [adapt to title of final report].
202
For instance, the load factor of Denmark is nearly twice as high as the one in Cyprus. For solar PV, the most
beneficial hosting countries under the given assumptions include Cyprus and Spain, as they feature high capacity factors
and favourable WACC conditions. For onshore wind, the most attractive hosting countries are the Nordic countries
(Denmark, Sweden, Finland) as well as France.
203
E.g. a joint offshore wind park as discussed between Estonia and Lithuania, where a project with a commercially
viable size would likely be too large for one of the Member States to develop alone.
161
The access to more favourable renewable energy potentials via cross-border cooperation also allows
for a reduction of support cost. For instance, as part of the AU RES II project, TU Vienna estimates
reduced support expenditures for new renewables installation of 3.2 to 3.4 bn EUR annually for the
period 2021 and 2030 in case of regional cooperation compared to a scenario without cooperation.204
In addition, results from a case study analysis assessing joint support schemes between Hungary and
the neighbouring countries Austria, Romania and Slovakia, revealed significant reductions of total
cost of support to reach the respective renewable energy targets: 87-89% in the case of Austria and
Romania, 7-31% in the case of Hungary and Austria and 6-13% in case of Hungary and Slovakia
(range depending on renewables demand level).205
Furthermore, increased cross-border cooperation
on supporting renewable energy can lead to sharing best practices and a joint learning process
resulting in better alignment of support schemes which can increase internal market distortions and
investor’s transaction costs due to different regulatory national regimes.
Relating specifically to the Union Renewable Energy Financing Mechanism, quantitative results are
not yet available given the novelty of the instrument, with first potential tender rounds being
prepared by the end of 2021. In the first expression of interest phase a number of Member States
already officially indicated interest to participate in the mechanism, either as contributing or host
Member State, in addition to some Member States who indicated that they are potentially interested
to participate at a later stage. Expected economic benefits for contributing Member States include
more cost-effectiveness to reach national renewables shares, by accessing more favourable
renewables potentials in other Member States leading to support cost savings compared to purely
national RES deployment206
. This would be particular the case when focussing on established and
mature renewable energy sources.
Environmental impacts
Cross-border cooperation can help to encourage renewables deployment in countries that have a
large unused renewable energy potential but often still rely on a large fossil fuel share in their energy
mix. It can also help to use renewables in energy-intensive economies that do not have a high
renewables production potential. For instance, an industrial region formerly based on coal can
develop renewable hydrogen or other innovative technologies, thanks to cooperation to other regions
with high renewables potential, but not industrialised to the same extent. Thus, entering into such
cooperation on renewable energy is likely to result in a reduction of fossil fuels combustion and
associated air and water pollution and lead to GHG emission reductions in the hosting countries207
.
Cross-border cooperation helps to reduce the negative impact on use of natural resources. It allows
Member States to make use of most favourable sites in terms of natural resources. This implies that
less capacity is required for a given amount of energy needed which in turn translates into higher
resource efficiency. Therefore, cooperation may reduce environmental impacts of renewable energy
deployment related to for instance land use, impacts on ecosystems and species, and use of raw
204
AU RES II (2020), Central vs Decentral Policy Making for RES: the need for both and the role of RES Cooperation
[presentation – update with final publication title expected by end March 2021]
205
AU RES II (2020), Proposal for a cross-border auction design for Hungary.
206
See also more detailed overview of benefits for contributing and host countries in AURES II (2020), The new
renewable energy financing mechanism of the EU in practice, p. 11 ff.
207
[Potentially add data on fuel avoidance from upcoming publication AU RES II (2020), Central vs Decentral Policy
Making for RES: the need for both and the role of RES Cooperation (expected by end March 2021)]
162
materials for the manufacturing of renewable energy installations. It may also reduce pressure on
environmentally protected areas, by providing a larger pool of potential sites for RES investments
projects than what would be possible if based on national approaches only208
.
Social impacts
For Member States, entering into cross-border cooperation can be challenging due to – anticipated or
actual – low public acceptance. This might be particularly the case when a Member State supports
renewable energy projects in another Member State and might face difficulties in explaining to
national taxpayers or consumers that part of their funds may be used to support renewables projects
in other countries and explaining the overall positive cost-benefits analysis of the cooperation. Here,
benefits associated with the deployment of renewable energy such as local added value and
employment, emission reductions, additional security of energy supply might be considered to be
lost while the host Member State would receive these benefits.
However, this possible negative perception can be counteracted by the positive impact that cross-
border cooperation would have on the total cost of support passed on to the final customers. For
instance, opening auctions for renewable energy to sites in other Member States allows projects with
more favourable conditions to participate that can compete at a lower price. Such benefits in terms of
reduced support costs for renewable energy deployment are described above (subsection on
economic impacts). In addition, with the increasing deployment of renewable energy, available land
and cost-effective potential may become increasingly limited in some Member States, making cross-
border cooperation the means to still contribute to the overall EU target in a cost-effective way.
Moreover, depending on the type of cooperation, Member States can decide to enter into a more
strategic and long-term energy cooperation, for instance through joint projects, where Member can
also benefit from knowledge transfer and joint learning which might entail additional advantages
compared to simpler forms of cooperation such as statistical transfers.
6.8.1.2. Effectiveness
Given the gradual increase of the required cross-border cooperation over the four options, their
effectiveness can be summarized as low for option 1 (given its voluntary nature), moderate/high for
options 2 and 3 (given their mandatory nature) and high for option 4 (given its possible wider scope
and mandatory nature).
Options 0, 1 and 2 seem politically feasible as they respect the principles of proportionality and
subsidiarity allowing Member States to test the implementation of cross-border projects. Option 3
with the partial mandatory opening as the core concept is similar to what the Commission proposed
under REDII but changed to a voluntary opening by the co-legislators in the legislative process.
Thus, the general political constraints against this option might still remain. At the same time, given
the enhanced framework facilitating the implementation of cross-border projects - notably funding
opportunities under the revised Connecting Europe Facility 2021-2027, the Union renewable energy
208
See also AURES II (2020), The new renewable energy financing mechanism of the EU in practice, p. 11 ff., while the
benefits referred to also hold true for the other options of increased cross-border cooperation
163
financing mechanism and the Union renewable energy development platform for statistical transfers
– Member States now have greater opportunities to implement cross-border projects. Option 4, of
mandatory Member State use of the financing mechanism, may be more politically challenging as it
would in certain cases oblige Member States to use the European tender scheme on which they have
limited influence. However, if linked to certain objective criteria of when its use would be mandatory
(e.g. when a Member States is below its target/ contribution trajectory) this could increase
acceptability.
6.8.1.3. Administrative impacts
Given its voluntary and non-regularly nature, Option 1 does not include any additional administrative
burden or compliance cost for Member States. However, as described above its effectiveness is also
estimated to be lowest. Option 2 involves certain administrate and compliance efforts as for Member
States without any experience on cross-border cooperation a pilot project can imply challenges as
with the introduction of any new instrument. However, this option should be assessed in the context
of being an interim step to a potentially wider cooperation in the future after successful
implementation of a pilot project. Option 3 includes moderate administrative efforts which should
however be outweigh by the benefits. Option 4 would rather lower than increase administrative
burden on Member States as auctions under the Union Renewable Energy Financing are designed
and implemented by the Commission209
.
6.8.1.4. Coherence
The options are coherent with other EU instruments and initiatives, in particular the Union
Renewable Energy Financing Mechanism, the new window for cross-border cooperation in the field
of renewable energy under the revised Connecting Europe Facility and the proposal for the revised
TEN-E Guidelines.
6.8.2. Offshore renewable energy
In order to meet the goals set in the EU strategy on offshore renewable energy, Europe's offshore
wind capacity will need to massively scale up until 2030 and beyond.210
The default Option 0 is the baseline in which provisions under REDII energy remain unchanged and
no additional action is taken. The assessment compares this baseline to additional measures taken to
enhance the planning and permitting of offshore energy deployment. Two options are assessed:
mandatory joint offshore energy capacity planning per sea basin (option 1), and a one-stop shop for
permitting of cross-border projects (option 2). These options can be complementary.
The options would complement the provisions as included in the Commission proposal on a revised
TEN-E Regulation. The proposal foresees joint agreements by Member States per sea basin on the
deployment of offshore renewable generation and the creation of ‘offshore one-stop shops’ for
facilitating and coordinating the permit granting process for offshore grids and the coordination
209
Also compare assessment in AURES II (2020), The new renewable energy financing mechanism of the EU in
practice, p. 11 ff.
210
From an offshore wind capacity of currently 12 GW to at least 60 GW by 2030 and to 300 GW by 2050 and for ocean
energy to at least 1 GW by 2030 and 40 GW by 2050.
164
between the permitting process for the energy infrastructure and the one for the generation assets.
Under option 2 the designation of an ‘offshore one-step shop’ for offshore generation assets would
complete the framework to facilitate offshore developments. The regional approaches to both grid
and energy generation capacity planning are complementary and build upon each other. The results
of the assessment incorporate elements from the impact assessment of the Commission’s proposal
for the revised TEN-E Regulation211
as similar aspects where addressed there as well as other study
results, in particular from COWI212
and Roland Berger213
.
6.8.2.1. Impacts and qualitative assessment
Option 1: Joint offshore energy capacity planning per sea basin
Economic impacts
An optimised and long-term offshore renewable capacity planning is paramount for investment
certainty and for making best use of the limited available resources. Joint capacity planning provides
visibility of the planned accumulative capacity in sea basins allowing long-term and sound
investment decisions. Such joint planning and cooperation in its rollout can lead to significant cost
savings. For instance, for the Baltic Sea region, an analysis study revealed that regional cooperation
on offshore power hubs and interconnections could lead to savings of aggregated generation costs of
700–900 million €/year in 2050214
.
In addition, given the scope, complexity and still innovative nature of offshore renewable energy
projects a joint approach on offshore renewable energy planning would facilitate a joint learning
curve and could help expand offshore technologies, including less established ones, in sea basins
where they are less common today. This could have significant positive impacts on turnover and
employment by contributing to maintain Europe’s technological leadership in this area.
Environmental impacts
A joint planning of offshore renewable energy projects could result in significant environmental
benefits. Offshore renewable energy projects could be optimised regardless of territorial borders.
This would enable planners to better take into account environmental concerns in the siting
decisions, e.g. impacts on seabed, biodiversity and environmental protection areas. It can incentivise
the choice of places and approaches benefitting also biodiversity, in line with the Biodiversity
Strategy. Additionally, if grid planning is taken into account as proposed by the Commission in the
revised TEN-E Regulation, the required grid expansion related to the new offshore projects can be
made in an environmentally optimal manner. Joint offshore energy planning per sea basin could
make more sites available for renewable energy expansion while respecting the environment and
biodiversity objectives.
211
Commission (2020), Impact Assessment accompanying the document proposal for a regulation of the European
Parliament and of the Council on guidelines for trans-European energy infrastructure and repealing Regulation (EU) No
347/2013, SWD(2020) 346 final.
212
COWI (2019), Study on Baltic Offshore Wind Energy Cooperation under BEMIP.
213
Roland Berger (2019), Hybrid projects: How to reduce costs and space of offshore developments - North Seas
Offshore Energy Clusters study.
214
COWI (2019), Study on Baltic Offshore Wind Energy Cooperation under BEMIP.
165
Social impacts
As set out in the strategy on offshore renewable energy, a large-scale increase in the deployment of
offshore renewable energy and the related value chain should benefit a large number of regions and
territories. It may provide an opportunity for the regions most affected by the transition to a climate-
neutral economy to diversify their economies, ranging from carbon-intensive and coal regions,
regions where gas and oil offshore industry needs to reconvert, to peripheral and outermost regions.
It could offer alternative high quality employment opportunities to skilled workers affected by the
transition. Maintaining offshore energy infrastructure could also have balancing economic effects in
locations with highly seasonal industries (tourism, fishing, etc.) by providing a stable and predictable
work stream for local workers and for SMEs all year round. Currently about 62.000 people work in
the offshore wind industry and 2.500 in the ocean industry sector in the EU. Studies on offshore
wind and ocean industry employment show that the right framework and investments could generate
between 0.8 and 1.8 million jobs by 2050. These job creations in the offshore renewable sector
should of course not happen at the expense of other maritime economic actors and sea users, such as
fisheries, shipping or tourism. The Offshore energy strategy puts a strong emphasis on developing a
balanced and sustainable multi-use/multipurpose approach for the use of the sea space. It builds in
particular on Maritime Spatial planning, as an essential and well established tool to anticipate
change, prevent and mitigate conflicts between policy priorities while also creating synergies
between economic sectors.
Option 2: A one-stop shop for permitting of cross-border renewable energy projects
The revised TEN-E Regulation proposes to establish one-stop shops for infrastructure related
permitting processes. The activities of such one-stop shops could be expanded to cover the
permitting for the generation assets for offshore projects that are not limited to the territorial waters
of one Member State.
Economic impacts
Building on the findings of the impact assessment for the revised TEN-E Regulation, the creation of
a one-stop shop per sea basin could have positive economic benefits for offshore renewable
generation located in the territorial waters of more than one Member State by accelerating the
permitting for such projects. This could help avoid a costly duplication of procedures.
Environmental impacts
As described in the impact assessment for the revised TEN-E Regulation, the creation of a one-stop
shop per sea basin could mitigate negative impacts or even bring positive environmental impacts as
strategic environmental assessments could be performed at sea basin level. Moreover, with one entity
being responsible for coordinating the permitting process of cross-border projects could also lead to a
better coordination of the environmental impact assessment across borders.
6.8.2.2. Effectiveness
Given the binding nature of Option 1, this option would be very effective to ensure a joint planning
and target setting per sea basin. Option 2 can be expected to have good effectiveness of facilitating
permitting of cross-border offshore renewables projects, which would increase with the number of
concerned projects.
166
6.8.2.3. Administrative impacts
Option 1: Joint offshore energy planning per sea basin
Long-term planning and long lead times are required in offshore energy. Planning already takes
place at a national level: Member States plan the capacity they wish to install nationally. The
Maritime Spatial Planning Directive already requires Member States to consult each other on their
maritime spatial planning. The administrative burden linked to this option would therefore be limited
to a better coordination of planning processes. In some sea basins, regional cooperation forums, such
as NSEC or BEMIP already exist and facilitate the joint capacity planning.
Option 2: A one-stop shop for permitting of cross-border renewable energy projects
If the one-stop shop is established based on the one-stop shop established in the proposal for the
revised TEN-E Regulation, it would require very limited additional resources as the assessment
would continue to take place on the basis of the national requirements for the different Member
States on the territory of which the project is located. The one-stop shop would ensure a single point
of contact for the project promoters and the coordination of the national one-stop shops. As the
current renewable energy directive established single contact points for developers of renewable
energy projects at national level, a one-stop shop at sea basin level would only have to bring together
the involved national contact points. Currently the number of projects located across territorial
waters is very limited but could increase with the right regulatory framework at European level.
6.8.2.4. Coherence
The options are coherent with other EU instruments and initiatives, in particular the proposal for the
revised TEN-E Guidelines. The options complement the proposed revised TEN-E Guidelines that
focus on similar provisions in the infrastructure part, while in this proposal parallel required
measures are addressed with regard to planning of renewable offshore energy generation.
Moreover, the options are coherent with other EU instruments aiming at facilitating cross-border
cooperation in the field of renewable energy such as the Union Renewable Energy Financing
Mechanism and the new window for cross-border cooperation in the field of renewable energy under
the revised Connecting Europe Facility.
6.8.3. Industry
As mentioned in the CTP, in order to further reduce emissions from industry in line with the higher
climate target for 2030, major changes need to be made in the way industry consumes energy and
produces its products. 80% of the emissions are related to direct and indirect energy consumption
(supplies of electricity and steam), with 70% of the energy demand used for heating and cooling
purposes. The other 20% of emissions are due to process emissions, primarily related to the cement
industry215
.
215
The CTP modelling does not integrate the energy and emissions savings coming from the circular economy,
especially in hard-to-abate sectors like cement or steel
167
At present, GHG emissions from energy-intensive industries are mainly regulated through the
European Emission Trading Scheme (EU ETS), however roughly 30% the industrial GHG
emissions and associated energy consumption does not fall under the EU ETS, and is covered under
the Effort Sharing Regulation instead. Furthermore, the indicative targets set in the REDII to increase
the share of renewables in heating and cooling partly target the industry sector.
Despites these measures in place, heating and cooling demand in the industrial sector is for 91%
supplied with fossil fuels. Yet 50% of heating and cooling demand is low-temperature (<200 °C) for
which there are ample renewable energy options.
Figure 41 - Final energy demand in industry for H&C by end use (EU28, 2015); Source: Heat Roadmap Europe216
Industries are increasingly using corporate sourcing of renewables to directly purchase or use
renewable electricity to power their facilities and processes. However, energy accounts in most cases
for less than 6% of the production costs, which means that there is limited economic incentive to
change energy sources. Furthermore, 90% of all industrial companies are small- and medium-size
enterprises with limited ability to dedicate resources to energy issues.
216
Heat Roadmap Europe (2017) Profile of heating and cooling demand in 2015. Available at:
https://www.isi.fraunhofer.de/content/dam/isi/dokumente/cce/2017/3-
1_Profile_of_the_heating_and_cooling_demand_in_the_base_year_in_the_14_MSs_in_the_EU28.pdf
168
Figure 42 - Energy costs as a share of total production costs for different sectors in 2017; Source EC
217
Despite facing strong international competition, European industry has adapted its business models
and practices in line with the climate and energy ambitions of Europe, and in a viable economic
manner. However, given that additional effort between 2030-2050 would be required to decarbonise
when EU’s climate neutrality ambition will require industry to reduce its emissions to around 90-
95% compared to 1990 levels, as explained in the Long Term Strategy coupled with significant and
long investment cycles in industry, increased effort is needed already by 2030.
Recent reports shows that an EU industry with net-zero emissions is possible with limited impacts on
end-user/consumer costs (<1%), but with increases in near-term capital investments (an additional 25
to 60%) to invest in new production processes (ECF, 2019) in almost 80 percent of the existing
industrial production sites218
(McKinsey, 2020) However, these investments decisions need to be
taken within the next decade to avoid any stranded assets.
A number of studies have identified the significant potential and need to increase the share of
renewable energy in industry beyond the current 9% in industrial heating and cooling (which is
primarily biomass), and beyond the current 16% across the consumption of all energy sources.
For heating and cooling, IRENA has identified a cost-effective potential to increase the renewables
share to 20% without carbon prices, and to 34% assuming a CO2 price of €70/t CO2 in 2030. In
comparison, in all the CTP scenarios the share of renewables in heating and cooling only increases
from 9% in 2020 to 10% in 2030, despite a carbon price of €65/tCO2. At the same time, there is a
rapid growth of renewables after 2030, with all scenarios reaching at least 15% in 2040. Given the
time sensitive nature of industry investments, it is important to ensure that a growth of renewable
energy use is already initiated ahead of 2030 avoiding stranded assets and lock-in at a later stage.
217
European Commission, (2020) Study on energy prices, costs and their impact on industry and households
218
McKinsey & Company (2020) Net-Zero Europe
0%
2%
4%
6%
8%
10%
12%
14%
C235
-
Cement,
lime…
C233
-
Clay
building…
C171
-
Pulp
and
paper
C231
-
Glass
C241
-
Iron
and
steel
C206
-
Man-made
fibres
C232
-
Refractory…
C201
-
Basic
chemicals
C239
-
Abrasive
products
C245
-
Casting
of
metal
C234
-
Porcelain
and…
C237
-
Stone
C244
-
Non-ferrous
metals
C161
-
Sawmills
C106
-
Grain
products
C103
-
Fruit
and…
C172
-
Articles
of
paper
C222
-
Plastics
products
C132
-
Textiles
C25
-
Fabricated
metal…
C192
-
Refineries
C11
-
Beverages
C21
-
Pharmaceutical…
C32
-
Other…
C33
-
Repair
of
machinery
C27
-
Electrical…
C28
-
Machinery
and…
C29
-
Motor
vehicles
C26
-
Computer
and…
C30
-
Other
transport…
Share
of
energy
costs
in
production
costs
(%)
169
In all scenarios, electrification based on high shares of renewable power generation will also play an
important role in decarbonising the heating and cooling demand. In the CTP, the share of electricity
in industrial energy consumption is expected to grow to 40%, whilst the PAC219
energy scenarios
foresees a share of 47%. The PAC energy scenario foresees almost all low-temperature heat provided
through electrification or direct use of renewables, including industrial excess heat recovery.
Similarly, McKinsey foresees electrification and the use of renewables in low- and medium-
temperature heat increase from 28% to 60% by 2030, and the share of renewables through
electrification and direct use in high-temperature heat increase from 0% to 35% by 2030220
.
Furthermore, there exist a clear opportunity to replace the existing use of fossil-based hydrogen
(produced from natural gas) as feedstock in refineries (153 TWh) and the production of ammonia
(129 TWh) and methanol (27 TWh) with renewable hydrogen. The PAC energy scenarios estimates
a potential of 71 TWh of direct use of renewable hydrogen to replace fossil-based hydrogen, and a
potential of 68 TWh for replacing fossil fuels in steel production. FCH JU (2019) identifies a
comparable value of 62 TWh of renewable hydrogen consumption in the steel sector, with fossil-
based hydrogen consumption in the chemicals sector primarily decarbonised with CCS221
.
Furthermore, there are significant opportunities to increase the share of renewable electricity
consumption, with the commercial and industrial sector accounting for 69% of EU electricity end-
use222
. If EU companies would acquire all newly built solar and wind power capacity in the period up
to 2030, the share of renewable electricity consumption would increase from 3.5% to 28% and
supports corporate social responsibility and an increasing demand from consumers for renewables-
based products223
. Other studies also indicate that a supporting regulatory framework that will
promote the deployment of such technologies is necessary224
, both on the production side, but also
on the side of demand, creating for example lead markets for renewable products225
.
Based on these drivers, there are two general approaches that can be considered to increase the
uptake of renewables in the industrial sector. A technology-push approach (options- 1) includes
options to request the industry to invest in cost-effective options to increase the renewable
consumption in their facilities and processes by introducing audits. A market demand approach
(option 2) would allow consumers to differentiate between industrial processes and products that are
produced from renewable energy.
219
https://caneurope.org/building-a-paris-agreement-compatible-pac-energy-scenario/
220
McKinsey & Company (2020) Net-Zero Europe
221
https://www.fch.europa.eu/news/hydrogen-roadmap-europe-sustainable-pathway-european-energy-transition
222
DG ENER (2019) Competitiveness of corporate sourcing of renewable energy. https://op.europa.eu/en/publication-
detail/-/publication/8a262c4f-c486-11e9-9d01-01aa75ed71a1/language-
en?WT.mc_id=Searchresult&WT.ria_c=37085&WT.ria_f=3608&WT.ria_ev=search
223
DG ENER (2019) Competitiveness of the renewables industry.
224
Wyns et. al., (2019), Industrial Transformation 2050 – Towards an Industrial Strategy for a Climate Neutral Europe,
IES
225
CF & DIW (2020), Industrial Innovation: Pathways to deep decarbonisation of Industry. Part 3: Policy Implications
170
6.8.3.1. Impacts projected by core scenarios
The CTP assessed the differences in fuel consumption of the various policy scenarios against the
baseline and the finds remain largely unchanged in this assessment. The figure below226
reports these
differences on the left hand side for 2030 and in the centre for 2050, while on the right side one can
see the fuel mix of the REF.
Figure 43 - Final energy consumption in industry; Source PRIMES
In 2030, fuel switching will still remain limited, however a rapid uptake would be required
immediately thereafter to be able to achieve the 2050 targets. Instead by 2050 significant fuel
switching is displayed with associated energy savings, with almost all natural gas being replaced by
low-carbon gases, i.e. hydrogen, e-gas and some biogas. There is, additionally, some more
electrification, including a higher share of energy produced by CHP.
An important conclusion results from this modelling exercise. Firstly, with carbon prices increasing
up to €65/tCO2, additional GHG reductions compared to 2015 are lower than other sectors except
transport. The industrial sector has already significantly invested in improving its energy efficiency,
mainly to address its high energy costs compared to its international competitors, however,
strengthening energy efficiency policies, mainly targeting the increase of waste heat recovery, are
insufficient to drive significant additional emissions reductions.
6.8.3.2. Impacts and analysis not based on modelling
The impacts of the different options can be measured at three different levels. First, there is the
impact on the individual companies. For the majority of companies, the energy costs will not have a
major impact on the profitability of their business today. However, the future impacts can be relative
large depending on: 1) the future costs and uncertainties associated with the availability of fossil
fuels, and 2) the future demand for green products and processes. As such, upfront investment
decisions to support the uptake of renewables should not only be considered on the basis of the pay-
back time for investments based on the cost differential between renewable and fossil fuel energy
226
It is important to note that these figures do not include main consumers of non-energy related resources such as
refineries.
-50
0
50
100
150
200
250
300
REF REG MIX MIX-CP REF REG MIX MIX-CP
2000 2015 2030 2050
Mtoe
Electricity
Other RES
Bioenergy
Marketed Heat
Hydrogen
e-gas
Natural gas*
Oil
Coal
171
alone, but also on their impact on the profitability and stability of the company, their goods and
services. This impact is particularly relevant for option 1A, because it would allow companies to
identify those investments that are economically competitive already today. Furthermore, it is
important for option 2 as it would allow a company to remunerate its investments by putting
premium value products and services onto the European market. A methodology underpinning green
labels for industrial products (Option 2A) is considered to have a positive impact on consumers’
behaviour, leading to possibly more responsible consumption and use of products.
Second, the use of renewable energy in industrial processes has important implications in the context
of maintaining a competitive level playing field for the industry across the different EU Member
States, as well as with competitors that are importing their products and services to Europe. This
impact is particularly relevant for option 2A, as it will change the European market demand for
products and services produced on the basis of renewable energy, and for the costs associated with
the production of industrial products and services that are placed on the European market.
6.8.3.3. Effectiveness
The industrial sector accounts for 25% of EU’s energy consumption, but has a relatively low share of
renewables (8% of direct renewable energy use, and 22% if the renewable energy share in electricity
is considered). The CTP results show that existing measures to increase greenhouse gas emission
reductions, such as the EU ETS and an increased overall target for renewable energy alone, will not
as such lead to significant increases in renewable energy shares in the industry sector. As there are
currently no specific requirements in REDII to increase the use of renewable energy in industry, the
measures assessed are considered to be effective in ensuring some level of increase in the use of
renewable energy.
The introduction of energy audits under the EED (Option 1A) will be very effective in increasing
awareness and identifying cost-effective options for increasing the share of renewable energy
consumption in industrial processes. This is particularly relevant for low-temperature heating and
cooling, which is 50% of the heating and cooling demand. Including RES as part of the audit process
for energy efficiency would lead to only limited ongoing administrative costs.
Energy labels for consumer information are now a well-established and understood instrument. They
have had a very positive effect on consumer choices227
, and have been effective in informing
consumers and persuading them to purchase labelled products. They are shown to have a positive
effect, albeit limited, and their effectiveness increase with time, as they become more established and
known by the general public.
A recent research by the ITC228
found that Sustainable product sourcing has become a top priority for
retailers in key European Union markets229
. Retailers report an increase in sale of sustainable
products and expect this trend to continue. Nearly all retailers have created strategies that include
provisions to increase the proportion of their sourcing that benefits the environment and the people
227
The label had an influence in 79% of Europeans’ purchase choices when buying appliances, Eurobarometer 492, 2019
228
International Trade Centre (2019). The European Union Market for Sustainable Products. The retail perspective on
sourcing policies and consumer demand. ITC, Geneva
229
The study covered France, Germany, Italy, the Netherlands and Spain.
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along their supply chains. Sixty per cent of retailers use their own-label products to meet their
sustainability commitments, while other rely on other knows labels such as “organic”.
Any commitment to renewables is found only concerning the retailer’s own energy use, rather than
energy used as part of production. However, these commitments are also appearing across the full
supply chain, for example with more than 280 companies having a commitment towards 100%
renewable energy consumption as part of the RE100 initiative230
. This includes companies in some
of the most polluting industrial sectors231
(steel, cement) are actively considering options to reduce
GHGs emissions by switching to hydrogen or renewables in their production processes.
It is important that any claims for the use of renewable energy in the industrial products and
processes are consistent, and are built on robust methodologies and provide more credible claims
compared to claims made on the basis of own methodology. As such, they would be a very effective
instrument in creating a premium market for green products. There would be costs involved in using
such a label, but as it would be voluntary, companies would be free to choose to use it or not. The
voluntary nature would minimise the possibly negative impact of a labelling scheme on international
trade.
In the EU and globally, there are a number of initiatives that are providing labels to provide
environmental information about products (goods and services) and organisations, including a
number that specifically focus on the renewable energy content232
. A joint initiative from DG ENV
and DG Just is already tackling the proliferation of inconsistent methods and initiatives, which could
result in misleading environmental claims on the market, whilst the Sustainable Products Initiative is
revising the Eco-design Directive to ensure products that are more durable, reusable, repairable,
recyclable, and energy-efficient.
Considering that a number of companies are developing their own labels to put ‘green products’
produced from renewables on the market, it is important that such labels do not mislead the
consumer. Therefore, an EU-wide methodology could be developed that companies or labelling
scheme would be required to use if they want to report on the share of renewable energy used in the
manufacturing of a product (or company). As such, the REDII would not propose any new labels, but
ensure that any labels that are being developed are consistent and use the same criteria. Such a
methodology would also be consistent with the joint initiative by DG ENV and DG JUST, and could
also become part of any methodology developed under the Sustainable Product Initiative.
6.8.3.4. Administrative impacts
For the introduction of energy audits that include renewable energy assessments, there would be one-
time costs of updating auditing methodologies, guidelines and reporting procedures, and operating
costs to run the appropriate training on a regular basis, also considering the rapid evolution of
technology developments. The cost to industry will not be high as all non-SMEs are already required
to undertake such audits every four years, and adding one more element will add little to the expense.
230
https://www.there100.org/
231
https://www.ft.com/content/46d4727c-761d-43ee-8084-ee46edba491a
232
The Ecolabel index lists over 46 ecolabels globally (www.ecolabelindex.com)
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For those companies that choose to use labels (Option 2A), there would be a cost to put this in place,
but it can be expected that they would only do it if the advantages vis-a-vis consumers outweighed
the costs.
6.8.3.5. Coherence
Increasing the use of renewable energy in industry is in agreement with the CTP, and with the
principle of energy system integration, to ensure that each sector plays its part in working towards a
climate neutral economy.
The introduction of energy audits regarding the use of renewable energy is fully in line with the
current requirements under article 8 of the EED, which already mandates energy audits for
companies with more than 50 employees, or an annual turnover exceeding €50 million and annual
balance sheet exceeding €43 million. The revision of the EED proposes to implement an energy
management system for enterprises with an average annual consumption higher than [100TJ, an
energy management system or an energy audit for enterprises with an average annual consumption
higher than [10 TJ], and to encourage energy audits for all other enterprises, including SMEs. The
proposal for including renewable energy in the audits will follow the scope of the EED proposal.
Expanding the energy audit to include the consumption renewable energy will not incur a substantial
administrative costs, because: 1) the existing parameters for such an analysis will already be derived
from any energy audit on energy efficiency, and 2) there is already an established European network
of organisations and bodies conducting renewables-related audits. Furthermore, these audits could
substantially improve the economic competitiveness of businesses, based on the evidence in DG
ENER study on corporate sourcing of renewables (2019).
For renewable energy labels to be effective (option 2), any proliferation of inconsistent methods and
initiatives used to communicate information about environmental performance of products (goods
and services) would need to be avoided. Currently, two parallel but interlinked initiatives are
attempting to tackle this problem. One focusses on methodologies and presentation of environmental
performance claim, the other aims to help consumers to play an active role in the green transition by
giving them useful information and protection from certain misleading commercial practices. To
ensure consistency and effectiveness, it is envisaged that option 2 would be implemented together
and broadly relying on these ongoing initiatives, so that calculation and audit requirements are
consistent building on eco-design and eco-label work.
6.8.3.6. Stakeholders’ Opinions
Stakeholders’ Opinions
In the replies to the roadmap, very few stakeholders expressed their views on the use of RES
in industry. The main point raised by these stakeholders is the increased costs for industry if
the targets are increased. In the dedicated stakeholder workshop on renewable energy use in
industry, 88% of the respondents (n=82) supported obligations to use a minimum share of
renewables in industry.
In the OPC, a relatively high amount amongst stakeholders representing business
associations, companies and public authorities think that there should not be an obligation
(40%, 43% and 39% of these stakeholder groups, respectively, replied negatively). They also
find financial support mechanisms as crucial for a transition in industry, while support for
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innovation programmes, R&D and the creation/support of industrial parks/clusters is a
common suggestion across most stakeholder types, including, besides the aforementioned,
academia and environmental organizations. However, one stakeholder representing a
business association warns not to provide additional support measures to industrial
parks/clusters since these already get enough support under existing EU and national
legislation.
7. HOW DO THE OPTIONS COMPARE AND CONCLUSIONS
This Chapter summarizes the policy options assessed in Chapter 6 which were compared from
several angles in line with the Better Regulation criteria:
1. Effectiveness: the extent to which proposed options would achieve the specific objectives of
this Impact Assessment as presented in section 7.1 ;
2. Efficiency and impacts: Analysis of benefits versus the costs as presented in Section 7.2.
Naturally, it is the level of ambition that determines the high-level economic, environmental
and social impacts and consequently mainly modelling results shed light on such impacts.
Scenarios capture the options on the level of ambition of targets. Other options, which
concern how the preferred level of ambition should be achieved are mainly analysed in other
sections.
3. Coherence: Coherence of each option with the overarching objectives and other EU policies
4. Administrative burden and compliance costs: what is the cost and additional burden due to
the increased ambition
5. Subsidiarity and proportionality: to which extent are distributional impacts minimised
The table below summarizes the comparison of effectiveness, efficiency, coherence and
proportionality of the options assessed across policy areas in Chapter 6 for the specific objectives
in Chapter 4.
Table 27 - Comparison of policy options
Specific
Objective
Policy Area Policy Options Effectiveness
Cost-
Efficiency
Coherence Proportionality
1.
Developme
nt of RES
to deliver
the overall
and sectoral
shares of
renewables
in line with
the CTP;
mobilising
contributio
Overall RE
Target level
and
achievement
Level of Target
Option 1 ++ ++ ++ ++
Option 2 ++ + + ++
Nature of Target
Option 1 ++ + + 0
RES-H&C Measures
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n of all
sectors
Option 1 0 ++ + +
Option 2a * * * *
Target
Option 3a ++ + ++ +
Option 3b ++ - ++ -
Option 3c ++ + ++ 0
Option 3d ++ ++ ++ ++
*This would depend on MS choice of measures in fulfilling the target (as per
Section 6.2.1.3)
DH&C
Measures
Option 1 0 ++ + +
Option 2 ++ + ++ +
Target
Option 3a - - + + +
Option 3b + + + +
Option 3c ++ + ++ 0
Option 3d ++ - ++ -
RES-T
Level of Target
Option 1 + ++ ++ ++
Option 1A + ++ ++ +
Option 1B ++ ++ ++ +
Measures
Option 2A ++ + ++ +
Option 2B 0 + 0 +
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Option 2C ++ + + +
Option 2D ++ + 0 +
Specific
Objective
Policy Area Policy Options Effectiveness
Cost-
Efficiency
Coherence Proportionality
2. Improve
energy
system
integration
by
facilitating
the reuse of
waste heat,
promoting
RES-based
electrificati
on and use
of
renewable
and low-
carbon
fuels
Mainstreami
ng
renewable
electricity in
heating and
cooling and
transport
RES Share
Information
Option 1.1 ++ + + ++
Option 1.2 + 0 + +
Availability of
intelligent
infrastructure
Option 2.1A + + + +
Option 2.1B + + + 0
Option 2.1C ++ ++ ++ ++
Option 2.2A + -- + --
Option 2.2B ++ + ++ +
Access to
infrastructure
and information
Option 3.1 + ++ ++ +
Option 3.2 ++ ++ ++ +
Option 3.3 ++ ++ ++ ++
Terminology
and
certification
of renewable
and low-
carbon fuels
Terminology
Option 1 0 0 0 0
Option 2 + + + +
Option 3A ++ ++ + +
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Option 3B ++ ++ ++ ++
Certification
Option 1A ++ + ++ +
Option 2A 0 + + ++
Traceability
Option 1B ++ ++ ++ ++
Promotion
of renewable
and low-
carbon fuels
Extension of the
scope of
accounting
Option 1 + + + +
Option 2 + + -- -
Creation of
specific sub-
targets for
RFNBOs
Option 3 ++ + ++ +
Option 4 + + + +
Option 5 + + -- -
Option 6 + + -- -
Specific
Objective
Policy Area Policy Options Effectiveness
Cost-
Efficiency
Coherence Proportionality
3. Ensure
that the
revised
RED II
provisions
on
bioenergy
Bioenergy
Sustainabilit
y
Option 1 0 + 0 +
Option 2 + ++ ++ ++
Option 3 ++ + ++ +
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sustainabilit
y prevent
unintended
environmen
tal impacts,
in line with
the
ambition
set in the
Green Deal
Strategy
and
Biodiversity
Strategy
Option 4 + - 0 --
Option 4.1 + - 0 --
Option 4.2 ++ + ++ +
Option 5 + - 0 --
7.1.Effectiveness
The effectiveness of the options is examined against the baseline in achieving the policy objectives
identified in Chapter 4. All options assessed contribute effectively in fulfilling the policy objectives,
including the flanking and enabling measures.
7.1.1 Area I: Insufficient ambition in EU and MS legislation both in 2030 and 2050
perspective
7.1.1.1 Overall renewable energy target level and achievement
As assessed in section 6.1, for the level of the target, Option 0 would provide no means of ensuring
that the EU-wide, the renewable energy target is deployed to reach at least 38-40% share in final
energy consumption. It would likely not be effective. Option 2 would be effective but potentially
lead to, either overshooting the climate target or lack of coherence with other EU legislative
instruments, thus straying from cost-effective pathway already identified in the CTP. In contrast,
Option 1 is effective and has not drawbacks hence it is preferred one.
Regarding the nature of the target, national targets, requested by a majority of stakeholders, would
not be more effective than the EU-level target (combined with Governance process) and could create
subsidiarity issues. Thus keeping EU-level targets is the preferred option.
7.1.1.2 H&C
It would be unlikely that Option 0 of continuing with current practice would lead to the desired
outcome. Option 1 builds on Option 0 but will also not trigger Member States to increase efforts in
RES H&C sector to at least 1.1 p.p. increase in RES H&C share over the period 2020-30. On the
other hand, translating the EU RES H&C ambition in agreement with the CTP and assessment
carried out in this impact assessment into a binding uniform increased annual average share for all
Member States as per Option 3b while effective, is not considered proportionate.
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The level of renewables in H&C needed in 2030 could also be set as a target as proposed in Option
3c but would depart from the current model and could be potentially disruptive for the already on-
going implementation efforts, although it would have the added benefit of setting the end-goal in
2030 clearly. An increased flat rate target and made binding as proposed in Option 3d complements
the heating and cooling baseline with an indicative EU RES benchmark for the EU building stock
and industry.
Considering the assessment carried out, Option 3a combined with sector and EU RES buildings and
industry benchmarks of appropriate design (Option 3d) would be effective in providing the right mix
of drivers for integrated further these two sectors into the energy system. Out of the target options,
Option 3a would set a minimum flat rate of RES growth by making the current indicative annual
increase target of 1.1 p.p. as minimum required effort and complement it with “top-ups”
redistributing the additional efforts to the desired level of renewables in 2030 among Member States
along GDP and cost-effectiveness based on the level of ambition in agreement with the CTP and
assessment carried out in this impact assessment for the EU RES H&C share in 2030 which would
be used as benchmark. The additional Member States specific increase rates could provide a means
of assessing the relative level of ambition of each Member States in the heating and cooling sector
but also as a potential gap filler measure to close the gap, if other sectors than H&C would fail to
deliver, the 38-40% overall RES target
In the light of the importance of the heating and cooling sector in reaching the EU GHG target and
mainstreaming renewable energy, and given the fact that just over half of the Member States have
put RES H&C shares in line or above the requirements specified in Article 23, making the current
target of 1.1 p.p. as minimum requirement proposed in Option 3a is considered effective and
proportionate. The design would include already indications for the additional average increase on
top of the minimum 1.1 p.p. tailor-made according to cost-effectiveness and GDP to set clear
directions/trajectories and objectives. Furthermore this design would leave each Member State free
to choose the most cost-effective measures in its given context. The design of the preferred option
takes into account the need to accommodate specific decarbonisation pathways suited for specific
conditions in Member States while providing a clear EU framework, and would retain the existing
exemptions and flexibilities for Member States to reward early action and high progress levels. It sets
the overall objective and cost effective trajectories, but does not prescribe how these should be
reached. Subsidiarity is ensured through the freedom left to each Member State on how to fulfil the
heating and cooling target via measures in buildings, industry and district heating and cooling.
The possibility for Member States to choose between an extended list of measures as per Option 2a
allows flexibility at national level and ensures proportionality, while providing a tool box of
measures and guidance as regards essential building blocks that proved effective in implementing the
heat transition. The design respects national and local diversities in conditions and starting points,
and provide a clear framework for actors at all levels (national, regional, local) and of all types (from
utilities and companies to municipalities to citizen consumers/prosumers). However should carbon
pricing and revised NECPs not be sufficient, additional sector-specific measures could also proposed
on the EU-level and/or increase of RES ambition in DHC, Industry and Buildings could also be
proposed by the Commission to close the gap.
The design builds on current provisions in REDII and the Governance Regulation. The governance
process have proved effective for Member States to develop their national overall RES contributions
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and provide long term signal also in heating and cooling. The proposed uniform minimum flat rate of
1.1%-point increase combined with EU-target incentivising addition (top-up) efforts for each
Member State would provide criteria for Member States for developing their RES HC trajectories
and the revised renewables heating and cooling contributions in the next update of the NECPs and
ensure a transparent and predictable mechanism to close the residual gap highlighted if Member
States deliver strictly on the 1.1% point increase compared to the level of ambition in agreement with
the CTP and assessment carried out in this impact assessment, cost effectively, should this be needed
if the measures or carbon pricing fails to deliver. These figures will also provide a means of
assessing the relative level of ambition of the heating and cooling sector in the NECPs and contribute
to ensure a cost effective and equitable outcome of the process. Overall this approach is based on
subsidiarity, and allows Member States to develop the measures that are best suited to their own
national circumstances.
7.1.1.3 District H&C
Out of the target options assessed in section 6.2.2, Option 3c is the preferred target design as it would
provide the missing common EU framework to steer district heating developments towards
integrating more renewable energy and ensure coherence with the CTP and carbon-neutrality goals,
while respecting the wide variety of situations in Member States. Option 3b with an indicative EU
headline target could give similar direction as Option 3c but departs from the current provisions and
could be disruptive for already ongoing implementation. Option 3d would be the most effective
target design, but is too stringent and leave less room for Member States as regards to which extent
and how they would like to use district heating in their overall strategies for delivering higher
ambitions in renewables and greenhouse gas reduction. Option 3a would make it possible for district
heating to indefinitely continue with the fossil model and thus is not coherent with the review
objectives.
Option 2 can be self-standing or complementary, as it gives a clearer enabling framework to
transform district heating and cooling, make it into an enabler of renewable energy supply in
buildings and to become a key heat decarbonisation instrument, while enhancing energy sector
integration in national and EU energy systems.
Overall combining Option 2 on measures and with the preferred target design in Option 3c is the
preferred option. The combination option would provide a more effective EU framework to ensure
that the district heating and cooling aligns with the EGD and becomes an enabler to deliver on the
CTP and ESI goals. Together with the options on overall heating and cooling and buildings, this
option would make district heating and cooling an additional key instrument in the national
portfolios of measures for heating and cooling decarbonisation, and would also establish a more
effective enabling framework to develop and expand modern renewable based smart district heating
and cooling systems.
7.1.1.4 Transport
Of the options considered under section 6.3, a combination of Option 1B with Options 2A, 2C or 2D
would perform the best overall. While all options apart from Option 1 deliver on the needed level of
ambition, there are substantial differences. The energy-based options may have the advantage in
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promoting the development and production of innovative renewable and low carbon fuels as they
provide the most predictable and stable policy framework for investments into such technologies. On
the other hand, the GHG-intensity based options can stimulate supply chain improvements and
technology efficiency in renewable and low carbon fuels, where costs of production are higher, not
limited to compliance with minimum emission reduction thresholds. This is particularly important in
a complex sector with increasing technological choices available and significant innovation potential.
This, however, would require applying changes to the methodology applied to determine the GHG
emission intensity.
Given the early stage of development of innovative fuels such as advanced biofuels, hydrogen and
hydrogen-based fuels and the important role these fuels have to play after 2030 to decarbonise
transport, the ability to promote such fuels has priority over short-term cost minimisation. The
strength of Option 2C compared to Option 2A and 2D relates primarily to the aspects of subsidiarity
and political feasibility. The Commission had proposed in 2016 to introduce an energy-based supply
obligation and the co-legislator decided to leave the choice of the right support instrument to the
Member States. Option 2D (GHG based approach) combines advantages of both approaches. While
Option 2C represents an acceptable outcome, would have the advantage of ensuring consistency with
the approach chosen under the Fuel Quality Directive while specifically promoting innovative fuels.
7.1.2 Area II: Insufficient promotion of ESI in REDI
7.1.2.1 Measures to enhance the contribution of transport and heating and cooling
to the system integration of renewable electricity
As assessed in section 6.4, Option 1.0 is not expected to reduce the GHG emissions from demand
response of heat pumps, domestic batteries or electric vehicles, creating serious concerns regarding
the objectives of 2030, and to achieve climate neutrality in 2050. Option 1.1 would provide an
effective means to introduce market incentivising signals that relate directly to renewable penetration
and carbon reduction, without any administrative burden and in coherence with existing legislation.
It is therefore considered a preferred and no-regrets option. Option 1.2 would have some positive
effects on consumer information, complementing the information provided by guarantees of origin,
however it would otherwise bring limited added value for the near-real time integration of renewable
electricity.
Options 2.1-2.3 approach different aspects of optimizing the intelligent charging infrastructure, with
varying levels of positive contribution to overall implementation costs and benefits to the economy.
As a first priority, it was considered necessary for all newly installed charging points to offer smart
functionalities with additional deployment of charging points for purposes of integration based on
assessment by the NRA (option 2.1C). With regard to bidirectional functionalities, the variations
allowing implementation based on national assessment was preferred (option 2.2B), thus providing
flexibility to Member States.
Options 3.1-3.3 address various obstacles in the aggregation and mobility service provision market,
which hinder the development of competition. Option 3.1 is a no-regrets option which would
eliminate any regulatory barriers against domestic battery systems and V2G services (it doesn’t
affect intelligent charging or behind the meter discharging). Option 3.2 is necessary in setting a level
playing field and its early implementation would bring positive long term effects competition,
consumer choice, innovation and in the availability, quality and cost of services provided to domestic
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battery owners and EV users. Option 3.3 is also important to facilitate competition and consumer
choice and it is expected to become increasingly beneficial as the proliferation of EVs becomes
mainstream and it is recommended that it is applied on the on-set, so that infrastructure and market
deployment can proceed optimally.
7.1.2.2 Terminology and certification of renewable and low carbon fuels
Based on the assessment of the portfolio of options compared with the baseline scenario, the
objective of deploying an EU-wide certification system can be achieved by a combination of the
policy options presented above.
Two options, based on their scores and importance, can be part of any combination of preferred
options, namely extending the terminology under REDII and improving traceability of energy
carriers through the Union database, combined with mainstreaming the mass-balance system
supported by the Union database (Option 1B). Regarding the different options for terminology
assessed the best scoring option is the option 3A/B where the extension of terminology includes low
carbon fuels together with a threshold for GHG emission savings.
Two alternative options have been assessed, regarding the way the certification system can be
deployed. Option 1A assessed the extension of the current certification system to new fuels, while
option 2A assessed the further development of the content and harmonisation of standards of the
existing GOs system in order to transform it into a certification system fit for purpose.
Extending the existing certification system may entail some additional costs for economic operators,
which however can be expected to be outweighed by the future economic returns of entering the
market of sustainable fuels through certification. While a similar result can be expected by
transforming the existing GOs system, it would come with a much higher effort and administrative
burden on the side of the Member States. This could be expected to be a major negative barrier. In
addition, option 1A would have good potential to achieve a positive synergy in combination with
Options 1B and 3A/B (terminology), making a good contribution to strengthening the system,
avoiding any risks of double counting by solving the issue of co-existence of a certification system,
based on a mass balance with a GOs system. A political decision will need to be made whether to
address the certification of low-carbon fuels for coherence reasons or in a separate legislative
proposal such as the Hydrogen and Decarbonised Gas Market Package.
7.1.2.3 Promotion of renewable and low carbon fuels
Promoting the use of renewable fuels is fully in line with the Energy System Integration Strategy and
the Hydrogen Strategy as well as the CTP especially if considering post-2030 perspective. Taking
the analysis further, this IA shows that a realistic sub-target for RFNBOs for the transport and
industry sectors would support their large scale development post 2030. All options on target setting
or accounting are equally effective but the choice remains on their scope.
7.1.3 Area III: Ensure bioenergy sustainability
The impact assessment identified a number of key biodiversity and climate risks (harvesting in
primary and highly biodiverse forests, unsustainable biomass sourcing (e.g. wholetree harvesting),
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and impacts on the forest carbon sink) which could be linked to the increased use of forest biomass
for energy.
Option 1 is supported by some Member States and sectoral industry stakeholders and would facilitate
the implementation of the REDII sustainability criteria. However, this option would not include
additional safeguards to address the identified risks.
Option 2 would provide the most direct safeguard against the risks of production of forest biomass in
highly biodiversity areas, such as primary forests - in line with the Biodiversity Strategy and the
LULUCF review. It would also introduce additional safeguards promoting optimal lifecycle GHG
emission saving and avoiding inefficient biomass use in the power sector.
Option 3 would further add to the effectiveness of option 2 by regulating a larger amount of biomass
use for energy in the EU. This option would reduce the potential risk of leakage (i.e. unsustainable
biomass is diverted from large to small scale uses to avoid sustainability compliance). It would also
help improving public monitoring on biomass production and use – in line with the JRC report
recommendations.
Building on options 2 or 3, options 4, 4.1 and 4.2 would also address the potential risk of increased
use of stemwood for energy - in line with the Biodiversity Strategy goal of minimizing wholetree
harvesting, with 4.2 focusing on public support schemes for bioenergy. However, option 4 and 4.1
could also lead to indirect negative effects on forest-based industries. In addition, the
verification/tracking of high quality stemwood use would be rather complex. Therefore, options 4
and 4.1 would result in relatively higher administrative burden for economic operators and public
authorities – depending on the implementation by Member States. The administrative complexity
and costs would be significantly lower under option 4.2. These options would not respond to the
opinion by sectoral industry to keep the regulatory framework as set by the RED II.
Option 5 would take up the wish expressed by NGOs and the citizens participating in the Public
Consultation to limit the use of forest biomass, and would lead to a strong reduction of identified
risks associated to increased forest bioenergy demand. However, it could make it more difficult to
reach future climate and energy targets cost-effectively, especially after 2030.
7.1.4 Flanking and enabling measures
Promotion of Cross-border cooperation
As assessed in Section 6.8.1, given the gradual increase of the required cross-border cooperation
over the options, their effectiveness can be summarized as low (option 1) to moderate/high (options 2
and 3) and high (option 4), with option 2 expected to be more politically acceptable.
Promotion offshore renewable energy deployment
Given the binding nature of Option 1, this option would be very effective to ensure a joint planning
and target setting per sea basin. However, the effectiveness would depend on the actual binding
nature of the measure (obligation to agree on a common target, vs obligation to enter into an
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agreement to cooperate). Option 2 can be expected to have good effectiveness of facilitating
permitting of cross-border offshore renewables projects.
Industry
As assessed in section 6.8.3, Option 0 is not expected to increase the share of renewable energy
consumption in the industry sector, creating serious concerns regarding the objective to reduce
greenhouse gas emission reductions by 2030, and to achieve climate neutrality in 2050. Option 1A
would provide an effective means to introduce industrial actors to existing cost-effective solutions to
switch to renewable energy, without any administrative burden and in coherence with existing
legislation.
Option 2A provides an effective means to create a uniform and coherent market for those companies
that are placing products and services produced from renewable energy on the market. However, a
mandatory labelling would create concerns regarding compatibility with WTO and would possible
lead to a proliferation of labelling requirements.
Options 1A and 2A would be complementary and would all be effective options.
7.2.Efficiency and impacts
As explained Chapter 5, the level of ambition for policy options has been derived from the core
scenarios: REG, MIX and MIX-CP, building on analysis in CTP IA, fine-tuned to the newest
Baseline and key policy options considered in all “Fit for 55” initiatives. Modelling tools and their
underlying assumptions are explained in Annex 4. The key policy options in this Impact Assessment
do not concern the level of ambition (which is considered as agreed based on the CTP analysis) but
the ways of implementing this level of ambition.
It is, however, the level of ambition that determines the high-level economic, environmental and
social impacts and consequently it is only the core scenarios that can shed light on such impacts –
they are presented in the table below. MIX scenario is the central one: carbon pricing is covering
most of the sectors and works in synergy with energy policies that address market failures in a
targeted manner. The REG and MIX-CP scenarios are extreme outlooks showing the impacts of
relying too much on only regulatory measures or only carbon pricing, respectively. With a certain
degree of simplification, low ambition policy options consisting of additional guidance would likely
lead to the results of the MIX-CP scenario. Conversely (and again with certain degree of
simplification), the most ambitious regulatory options would yield results similar to the REG
scenario with carbon price likely at very low levels.
Importantly, the core scenarios show the impact of all “Fit for 55” initiatives and not just the revision
of RED. This is why the variant MIX-LD is also contrasted with the central MIX scenario in the
table to show the impacts of the absence of the revision of RED.
Table 28 – Efficiency and impacts of core scenarios and MIX-H2 variant; Source PRIMES, GAINS models
2030 unless otherwise stated REF REG MIX MIX-
CP
MIX-
H2
metric
Key results
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2030 unless otherwise stated REF REG MIX MIX-
CP
MIX-
H2
GHG emissions* reductions (incl. intra EU
aviation and maritime, incl. LULUCF)
% reduction from
1990
45% 55% 55% 55% -
GHG emissions reductions (incl intra EU
aviation and maritime, excl LULUCF)
% reduction from
1990
43.4% 53.0% 52.9% 52.9% 53.3%
Overall RES share (current formula) % 33.2% 39.7% 38.4% 37.8% 40.2%
Overall RES share (proposed new formula) ** % - 39.1% 37.8% 37.2% 38.8%
RES-E share % 58.5% 64.8% 64.8% 65.2% 68.0%
RES-H&C share % 32.8% 41.1% 38.0% 36.4% 37.8%
RES-T share % 21.2% 28.8% 27.7% 27.2% 28.0%
PEC energy savings % reduction from
2007 Baseline
33% 39% 39% 38% 38%
FEC energy savings % reduction from
2007 Baseline
30% 37% 36% 35% 36%
Environmental impacts
CO2 emissions reductions (intra-EU scope,
excl. LULUCF), of which
(% change from
2015)
-30% -43% -42% -42% -43%
Supply side (incl. power generation, energy
branch, refineries and district heating)
(% change from
2015)
-49% -62% -63% -64% -63%
Power generation (% change from
2015)
-51% -64% -65% -67% -65%
Industry (incl. process emissions) (% change from
2015)
-10% -23% -23% -23% -24%
Residential (% change from
2015)
-32% -56% -54% -50% -54%
Services (% change from
2015)
-36% -53% -52% -48% -51%
Agriculture energy (% change from
2015)
-23% -36% -36% -35% -35%
Transport (incl. domestic and intra EU
aviation and navigation)
(% change from
2015)
-17% -22% -21% -21% -23%
Non-CO2 GHG emissions reductions (excl.
LULUCF)
(% change from
2015)
-22% -32% -32% -33% -33%
Reduced air pollution compared to REF (% change) -10%
Reduced 2030 health damages and air
pollution control cost compared to REF - Low
estimate
(€ billion/year) 24.8
Reduced 2030 health damages and air
pollution control cost compared to REF - High
estimate
(€ billion/year) 42.7
Energy system impacts
Primary Energy Intensity toe/M€'13 83 75 76 76 76
Gross Available Energy (GAE) Mtoe
1,289 1,194 1,198 1,205 1,206
- Solids share % 9% 6% 5% 5% 6%
- Oil share % 34% 33% 33% 33% 32%
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2030 unless otherwise stated REF REG MIX MIX-
CP
MIX-
H2
- Natural gas share % 21% 20% 20% 21% 19%
- Nuclear share % 10% 11% 11% 11% 11%
- Renewables share % 26% 31% 30% 30% 31%
- - Bioenergy share % 13% 13% 12% 12% 12%
- - Other Renewables than bioenergy share % 13% 18% 18% 18% 19%
Gross Electricity Generation (TWh) TWh
2,996 3,152 3,154 3,151 3,359
- Gas share % 14% 12% 13% 14% 10%
- Nuclear share % 17% 16% 16% 16% 15%
- Renewables share % 59% 65% 65% 65% 68%
Economic impacts
Investments (excl. transport) (2021-30) bn €'15/year 297 417 402 379 419
Investments (excl. transport) (2021-30) % GDP 2.1% 3.0% 2.9% 2.7% 3.0%
Additional investments to REF bn €'15/year 120 105 83 123
Investments (incl. transport) (2021-30) bn €'15/year 944 1068 1051 1028 1073
Investments (incl. transport) (2021-30) % GDP 6.8% 7.7% 7.6% 7.4% 7.7%
Additional investments to REF bn €'15/year 124 107 84 129
Additional investments to 2011-20 bn €'15/year 285 408 392 368 415
Energy system costs excl. carbon pricing and
disutility (2021-30)
bn €'15/year 1518 1555 1550 1541 1555
Energy system costs excl. carbon pricing and
disutility (2021-30)
% GDP 10.9% 11.2% 11.15% 11.1% 11.2%
Energy system costs incl. carbon pricing and
disutility (2021-30)
bn €'15/year 1535 1598 1630 1647 1634
Energy system costs incl. carbon pricing and
disutility (2021-30)
% GDP 11.0% 11.5% 11.7% 11.8% 11.7%
ETS price in current sectors (and maritime) €/tCO2 30 42 48 52 45
ETS price in new sectors (buildings and road
transport)
€/tCO2 0 0 48 80 45
Average Price of Electricity233
€/MWh 158 156 156 157 153
Import dependency % 54% 52% 53% 53% 51%
Fossil fuels imports bill savings compared to
REF for the period 2021-30
bn €'15 136 115 99 134
Energy-related expenditures in buildings
(excl. disutility)
% of private
consumption
6.9% 7.5% 7.5% 7.4% 7.6%
Energy-related expenditures in transport (excl.
disutility)
% of private
consumption
18.1% 18.1% 18.3% 18.5% 18.3%
233
Price for for all final demand sectors, including refineries and energy branch
187
188
GDP impacts GEM-E3 projections:
- A small positive effect on
GDP if assuming favourable
financing conditions.
Compared to Reference
projections, GDP is 0.52%
higher in 2030.
- If assuming crowding out
of investments, GDP in
2030 is 0.2% below the
Reference level.
Employment impacts GEM-E3 projections:
- A small positive effect on
employment if assuming
favourable financing
conditions. Compared to
Reference projections,
employment is 0.36%
higher in 2030.
- Assuming crowding out of
investments, employment in
2030 is 0.3% below the
Reference level.
Notes:
*All scenarios achieve 55% net reductions in 2030 compared to 1990 for domestic EU emissions, assuming net LULUCF
contributions of 255 Mt CO2-eq. in 1990 and 225 Mt CO2-eq. in 2030 and including national, intra-EU maritime and
intra-EU aviation emissions
234
.
** Proposed new formula for accounting RFNBOS with their actual amounts (and thus where they are consumed)
rather than electricity to produce them in the overall RES share. The sectoral shares are, however, not adjusted to this
new accounting.
As an alternative approach, the MIX-LD (MIX-Lost Decade) variant was developed that aimed to
assess impacts of the absence of revision of REDII. This variant removed all drivers representing
REDII revision while “freezing” all other policies (in particular carbon pricing) at their level of
ambition/stringency as modelled in MIX.
The differences between scenarios MIX (with REDII revision) and MIX-LD (without REDII
revision) are summarised and interpreted in the table below.
234
Emissions estimates for 1990 are based on EU UNFCCC inventory data 2020, converted to IPCC AR5 Global
Warming Potentials for notably methane and nitrous oxide. However, international intra-EU aviation and international
intra-EU navigation are not separated in the UNFCCC data from the overall international bunker fuels emissions.
Therefore, 1990 estimates for the intra-EU emissions of these sectors are based on (a combination of) data analysis for
PRIMES modelling and 2018-2019 MRV data for the maritime sector.
189
Table 29 - Differences between scenarios MIX and MIX-LD capturing RED revision; Source PRIMES, EC calculations
2030, EU unless otherwise
stated metric MIX MIX-LD
Difference MIX vs
MIX-LD illustrates
impact of drivers
representing
revision of RED
working together
with other "Fit for
55" proposals
RED revision brings:
Benefits
Costs
GHG emissions reductions
(incl intra EU aviation and
maritime, excl LULUCF)
% change
from 1990
-53.3% -52.1% 1.2
1.2 p.p. of necessary GHG
reduction compared to
1990
Overall RES share % 38.4% 36.3% 2.1
2.1 p.p. bigger share of
total RES in final energy
consumption in 2030
RES-E share % 64.8% 62.1% 2.7
2.7 p.p. bigger share of
RES in electricity in 2030
RES-H&C share % 38.0% 35.1% 2.9
2.9 p.p. bigger share of
RES in H&C in 2030
RES-T share % 27.7% 27.2% 0.5
0.5 p.p. bigger share of
RES in transport in 2030
PEC energy savings
% change
from 2007
Baseline
-38.9% -38.2% 0.6
0.6 p.p. bigger primary
energy savings in 2030
FEC energy savings
% change
from 2007
Baseline
-35.7% -35.0% 0.6
0.6 p.p. bigger final
energy savings in 2030
Investment expenditures (excl
transport) av annual (2021-
30)
€' /year 402 384 18
Average annual
investment needs higher
y € 8
Energy system costs incl
carbon pricing and disutilities
av annual (2021-30)
€' /year 1630 1626 4
Average annual system
osts higher y €
ETS price in current sectors
(and maritime)
€/tCO 48 48 0
no significant change -
level of carbon price was
frozen between MIX and
MIX-LD
ETS price in new sectors
(buildings and road transport)
€/tCO 48 48 0
no significant change -
level of carbon price was
frozen between MIX and
MIX-LD
Average Price of Electricity €/MWh 156 156 0 no significant change
Fossil fuels imports bill
savings compared to REF2020
for the period 2021-30
€' 115 100 15
Savings on fossil fuels
import bill are higher by
15 bn
Energy-related expenditures
related to buildings as % of
private consumption (excl
disutilities)
7.5% 7.4% 0.1
Energy-related
expenditures related to
buildings as % of private
consumption are 0.1 p.p.
higher
190
Energy-related expenditures
related to transport as % of
private consumption (excl
disutilities)
18.3% 18.3% 0.0 no change
7.3. Coherence
The REDII is a, well-established, cross-sectoral instrument promoting the uptake of renewable
energy by targeted measures covering electricity, H&C and transport sectors. In H&C and transport,
the Directive incentivises mostly the national action while the European component is stronger in the
electricity sector. Detailed assessment on the coherence of the specific policy options are elaborated
in detail in Chapter 6.
The REDII incentivises action in two respects:
- addressing market failures/non-market barriers (e.g. in terms of infrastructure, development
of innovative technologies, creation of lead markets or increasing consumer acceptance and
uptake)
- ensuring that the overall renewables target is met via national contributions through the
Governance process (including an indicative formula representing the objective criteria as a
basis for the Commission’s assessment of national ambition).
The increase of the overall renewable energy target to the levels recommended in the Climate Target
Plan (38-40%) and confirmed by the preferred option in this IA will guide the overall efforts to
increase renewables uptake.
The revision of RED and the revision of the ETS are complementary and mutually reinforcing in
driving accelerated fuel switch to renewable fuels. Targeted regulatory measures under RED are
necessary for local renewables uptake through planning and capacity building, for further ESI
(notably through direct electrification of end use sectors) and for the uptake of innovative renewable
fuels such as advanced biofuels and/or RFNBOs. Without such policies, a very high carbon price
signal would have to be put in place to deliver the necessary GHG reductions235
.
The revision of RED is also a precondition for fulfilment of increased ESR national targets. The
Member States will need to deploy much more renewables in the heating, cooling and transport
sectors in order to meet the increased national ESR targets. The RED revision is expected to
contribute to further mainstreaming of RES in heating and cooling and in transport, as projected in
highlighted in Chapter 5.
In the transport sector, the revision of RED will increase the overall renewable energy consumption
in transport, including sub-targets for advanced biofuels and RFNBOs. The revision of RED will
work in synergy with the CO2 standards for vehicles: vehicles regulations will push the deployment
of electrified road transport while the RED will addition provide the push on the energy supply side
235
68€/tCO2eq in 2030 in MIX-CP scenario in the extended scope of the ETS and this still without significant impact on
innovative renewable fuels uptake (that are essential for achievement of carbon neutrality.
191
by introducing a credit mechanism facilitating the participation of electricity providers and
incentivising public recharging infrastructure.
A targeted strengthening of the EU bioenergy sustainability will bring co-benefits for other land-
related policy objectives, such as biodiversity conservation and protection of the forest carbon sink,
thus being coherent with the LULUCF revision.
The preferred policy options for renewables promote electrification and waste heat use that work in
synergy with energy efficiency measures – as both instruments aim to deliver on the integrated
energy system envisaged in the Energy System Integration strategy. Moreover, deployment of
renewables (other than bio-energy) helps to achieve energy efficiency in primary energy
consumption. Electricity-based H&C and transport technologies can also help to accommodate
higher shares of variable renewable energy in power generation as demand can be better
synchronised with power supply.
The preferred options of RES in H&C provide an opportunity for fuel switching especially in
buildings, local heat planning and efficient district heating and cooling, aligned with the revision of
the EED and EPBD and contributing to the Renovation Wave.
7.4.Administrative and monitoring impacts
The administrative and monitoring impacts of the specific policy options have been assessed in
dedicated sections in Chapter 6. The revision of RED II would maintain the current framework for
monitoring the Renewable Energy deployment in the EU and Member States progress through the
Governance. Hence, in general, the administrative and monitoring impact for the options appear
limited.
The impacts on administrative burden of the assessed options related to targets and benchmarks will
be limited as there would be no recurring administrative requirements as for all policy these can be
generally monitored through official statistics which are already readily available at national level
and from Eurostat. However, limited resources at the level of Member States to develop new official
statistics, combined with the absence of a formal legal basis for countries to report data on the share
of renewables to Eurostat, may be an obstacle to monitoring renewable energy improvements in
detail as mentioned in Section 9.
In terms of policy choices, for heating and cooling this also depends on Member States choice of
policy instruments to comply with implementation of REDII framework especially when
certification and audits are required, as explained in Chapter 6 and Annex 7.
The same applies for bioenergy in particular on the options of national caps on stemwood were
Member States would need to improve the statistics and monitoring systems in order to set up and
enforce this option, and take them into account when setting up support schemes for bioenergy.
Option 4.2 would offer an alternative solution which would be easier to implement.
192
7.5.Subsidiarity and proportionality
All options assessed are all in line with the intervention logic and all options are based on the already
existing instrument, the REDII and its architecture as already established. This includes the overall
target, how it is delivered by national contributions via governance process, sectoral targets and their
supporting measures or enabling conditions. The exceptions are RFNBOs targets and measures
promoting electrification for transport, which would be new elements of revised REDII but are
essential in the light of Hydrogen and Energy System Integration strategies and the need to promote
innovative fuels needed for carbon neutrality.
In terms of proportionality, the initiative is limited to REDII adjustment needs that are
commensurate with increased climate target and the cost-effective deployment of renewables that
goes together with it as already established in the CTP. A number of enabling conditions is also
analysed that can be brought forward in order to make deployment of renewables easier for
economic operators and consumers.
Additional costs for consumers and economic operators due to the increased level of ambition of the
REDII together with other “Fit for 55” initiatives are expected to be kept to a minimum, given that
regulatory measures such as those envisaged under REDII revisions address market failures/non-
market barriers while the carbon price incentivises emissions reduction by operators with the lowest
abatement costs.
To conclude, all options analysed for revision of REDII are considered proportional as they do not
go beyond what is necessary to achieve the objectives as set out in the intervention logic. Enabling
conditions are not essential for could help make deployment of renewables easier for economic
operators and consumers.
The conformity of options in terms of subsidiarity could vary. The options that bring uniform
obligations on Member States, especially at national or local levels, would have allowed no
flexibility in terms of implementation and would have had rather detrimental impact on subsidiarity.
Based on the assessment of final NECPs, it can be established that the current REDII (with
flexibilities provided to Member States) is effective in achieving the EU-level renewables target as
the Reference scenario shows the EU slightly exceeding the 32% target for 2030. While the overall
level of ambition has to be increased commensurate with the increased climate target and the current
measures in REDII need to be reinforced, there is no need for reduction of Member States
flexibilities to the detriment of subsidiarity.
Heating and cooling will carry the largest effort in terms of renewables deployment. As indicted in
Chapter 3.2, action at EU-level in combination with action at Member State level is needed and is the
most effective. The preferred options are thus articulated around (1) locking-in a minimum cost-
effective deployment of renewables in all Member States and (2) adding to the existing list of
measures in REDII.
As discussed in Section 7.1.1.2 the targets for RES H&C could be effective but with diverse
subsidiarity and proportionality issues. Although Option 3b would be the most effective, it would
raise proportionality, distributional and cost-effectiveness concerns given the wide diversity in
Member States’ starting points and situation. Option 3a in combination with option 3d is
193
proportionate, as it entails incremental change building on the current target and leaves freedom for
Member States to choose their measures.
The list of measures already exists in REDII and has been extended in the IA to give a broader
choice in view of the different national circumstances in Member States, but also to provide
additional guidance to Member States in a sector which is very fragmented and covers several
subsectors. Member States can choose from these building blocks according to their national
circumstances to address the most pertinent non-market barriers and to help them reaching the
proposed binding minimum annual increase in renewable heating and cooling. With no specific
obligation to implement specific or a number of expanded list of measures full flexibility has been
granted to Member States. Depending on Member States choice of measures the extended measures
listed, is an effective means to not only achieve the average annual increase in renewables but aims
to overcome non-market barriers and complement carbon price signals by strengthening aspects of
REDII with measures covering clearer and credible information to energy customers or reducing the
risk for more local renewable energy sources deployment through a risk mitigation framework. On
top of that, one of the measures to be chosen Member States could be any other policy measure with
an equivalent effect, to reach the annual increase, including fiscal measures, support schemes or
other financial incentives. This option further adds a great deal of flexibility in how they fulfil the
target.
Subsidiarity aspect was also assessed for the options concerning sustainability of bioenergy.
Although different Member States have different traditions in terms of bioenergy harvesting and use,
the need to preserve forest biodiversity is a Europe-wide, indeed global, issue. It is also an issue that
attracts a high level of public attention, see for example the 38,000 replies to the OPC. It is therefore
appropriate for the revision of REDII to propose measures to further protect primary forests and
highly biodiverse forests which may affect how Member States manage their forests
The preferred options in Chapter 8 are considered to strike the correct balance between the need to
increase level of ambition commensurate with increased climate target and the need to leave
flexibility to Member States to decide which measures are best suited and the most effective for
them. Overall this approach is based on subsidiarity, and allows Member States to develop the measures
that are best suited to their own national circumstances.
8. PREFERRED OPTION AND CONCLUSIONS
When proposing its updated 2030 greenhouse gas emissions reduction target of at least 55%236
, the
European Commission described the actions across all sectors of the economy that would
complement national efforts to achieve the increased ambition. A number of impact assessments
have been prepared to support the envisaged revisions of key legislative instruments.
Against this background, this impact assessment has analysed the various options through which a
revision of the RED could effectively and efficiently contribute to the delivery of the updated target
as part of a wider “Fit for 55” policy package.
236
Communication on Stepping up Europe’s 2030 climate ambition - Com(2020)562
194
8.1.Methodological approach
Drawing conclusions about preferred options from this analysis requires tackling two methodological
issues.
First, as often the case in impact assessment analysis, ranking options may not be straightforward as
it may not be possible to compare options through a single metric and no option may clearly
dominate the others across relevant criteria. Ranking then requires an implicit weighting of the
different criteria that can only be justifiably established at the political level. In such cases, an impact
assessment should wean out as many inferior options as possible while transparently provide the
information required for political decision- making.
Secondly, the “Fit for 55” package involves a high number of interlinked initiatives underpinned by
individual impact assessments. Therefore, there is a need to ensure coherence between the preferred
options of various impact assessments.
8.2.Policy interactions
Given the complex interdependence across policy tools and the interplay with the methodological
issue outlined above, no simultaneous determination of a preferred policy package is thus possible. A
sequential approach was therefore necessary.
First, the common economic assessment237
underpinning the “Communication on Stepping up
Europe’s 2030 climate ambition” looked at the feasibility of achieving a higher climate target and
provided insights into the efforts that individual sectors would have to make. It could not, however,
discuss precise sectoral ambitions or detailed policy tools. Rather, it looked at a range of possible
pathways/scenarios to explore the delivery of the increased climate ambition. It noted particular
benefits in deploying a broad mix of policy instruments, including strengthened carbon pricing,
increased regulatory policy ambition and the identification of the investments to step up the climate
ambition.
An update of the pathway/scenario focusing on a combination of extended use carbon pricing and
medium intensification of regulatory measures in the economy, while also reflecting the COVID-19
pandemic and the National Energy and Climate Plans, confirmed these findings.
Taking this pathway and the Communication on Stepping up Europe’s 2030 climate ambition as
central reference, individual impact assessments for all “Fit for 55” initiatives were then developed
with a view to provide the required evidence base for the final step of detailing an effective, efficient
and coherent “Fit for 55” package.
At the aggregate level, these impact assessments provide considerable reassurances about the policy
indications adopted by the Commission in the Communication on Stepping up Europe’s 2030
climate ambition. This concerns notably a stronger and more comprehensive role of carbon pricing,
energy efficiency and renewable energy policies, the land sector, and the instruments supporting
sustainable mobility and transport. These would be complemented by a carbon border adjustment
237
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020SC0176; https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A52020SC0331
195
mechanism and phasing out free allowances. This would allow to continue to address the risk of
carbon leakage in an efficient manner. It would also preserve the full scope of the Effort Sharing
Regulation for achieving the increased climate target.
Various elements of the analyses also suggest that parts of the revenues of a strengthened and
extended ETS should be used to counter any undesirable distributional impacts such a package
would entail (between and within Member States). While the best way to do this is still to be
determined, this would seem a superior alternative to foregoing the relevant measures altogether or
simply disregarding the uneven nature of their distributional impacts. Under both these alternatives,
the eventual success of any package proposed would be at risk.
8.3.Preferred policy options
Assuming this fact and the analysis above as the framework for the aggregate “Fit for 55” package,
the specific analysis carried out in this impact assessment comes to the main following conclusions
and would suggest the following preferred policy options for the revision of the RED focusing on
key measures to ensure the achievement of the 55% GHG reduction objective, including for Heating
& Cooling and Transport, as well as to strengthen biomass sustainability criteria. This will be
accompanied by additional flanking measures to foster renewables in electricity and in industry.
Building on Chapter 7 the preferred option is a package of measures. In line with a coherent
approach across policies, the preferred option for an increased Union Renewable Energy Target is at
least 40% which falls in the range indicated by the Climate Target Plan (38-40%) and confirmed also
by the core scenarios. Such an increased target should be binding at EU level, with national
contributions as currently required under REDII and the Governance Regulation.
Increasing renewables ambition in the Heating and Cooling sector is a central piece for delivering the
overall RES ambition given that heating & cooling constitutes around half of the EU's final energy
consumption covering a wide range of end-use applications and technologies in buildings, industry
and district heating and cooling. Here, the preferred option is an expanded list of measures that cover
also enabling measures for district heating and cooling and buildings. This will go together with an
obligation for an annual average 1.1 p.p. increase at Member State level (reflecting the current
indicative figure under REDII) and an indicative Member State-specific top-up (catering for the
increased ambition under the CTP and confirmed by the modelling work carried out in this impact
assessment). For district heating and cooling, the current indicative target in REDII will be increased
to 2.1%. EU indicative benchmarks for RES of in buildings of 49% and in industry of 1.1% average
increase per year will also be introduced to guide Member states efforts and monitor progress.
Increasing renewables ambition in transport is also crucial taking into account the wider policy
context and the fact that transport is the only sector where GHG emissions have increased: the
preferred option is to increase the overall ambition level for renewables in transport in agreement
with the Climate Target Plan and the modelling work carried out in this impact assessment. This
includes sub-targets for advanced biofuels of 2.2%238
and RFNBOs(see below) set out in a consistent
way with the aviation and maritime fuel initiatives. The overall transport target and the sub-targets
238
Without multipliers in all transport modes, including international aviation and international marine bunkers
196
for innovative fuels as well as RED sustainability criteria will frame and support the dedicated
obligations set out in these sectoral initiatives.
In order to pursue the objectives of the Energy System Integration Strategy, further mainstreaming of
renewable electricity in transport and heating and cooling is needed and here the preferred options
are: information on RES content of the electricity made available to all users, smart charging
functionality in all charging pointswith the possibility of additional deployment based on NRA
assessment, non-discriminatory participation of small and/or mobile storage devices to the electricity
system, open access to battery information and open access to charging infrastructure unless it is for
own use.
Also in line with ESI strategy, the terminology and certification of renewable fuels needs to be
improved and extended. The preferred options are: extension of the scope and content of the current
terminology to include all fuels covered by REDII and this being the basis for the EU certification
system; include in REDII the definitions of all renewable fuels in REDII, and develop a single
information and tracing system (Union database). As to the certification of low-carbon fuels, the
importance of which has been underlined in the Energy System Integration Strategy, a political
decision should be made whether such fuels should be addressed in this review or in a separate
legislative proposal such as the Hydrogen and Decarbonised Gas Market Package.
Going beyond certification, the promotion of renewable fuels is a necessary aspect of the ‘Fit for 55’
package and, even more so for achieving carbon neutrality in 2050 (for which innovative renewable
and low carbon fuels are indispensable). Here the preferred options are: extension of the scope of
RFNBOs accounting beyond transport, including heating & cooling and industry together with the
creation of specific sub-targets for RFNBOs in hard-to-decarbonise sectors such as transport of
2.6%239
and in industry of 50% of fuels of hydrogen used in industry as feedstock and in final energy
consumption. The target applies for those Member States that consume hydrogen as feedstock or
direct use. The option to specifically support low carbon fuels beyond the inclusion into the
certification scheme has been discarded as REDII should remain an instrument to support
renewables.
Bioenergy represents an important share of sources of renewable energy needed to reach climate
neutrality and it is projected to increase in line with the Climate Target Plan, notably after 2030. To
comply with the higher biodiversity ambition of the European Green Deal and taking also into
consideration the review of the LULUCF Regulation, a targeted revision is necessary to respect the
do-no-harm principle. The preferred options are: extending the existing agricultural biomass no-go
areas also to forest biomass, applying the existing GHG saving criteria to new heat and power
installations, applying the EU sustainability and GHG saving criteria to small-scale biomass-based
heat and power installations equal or exceeding 5 MW, and to require Member States to design their
support schemes for bioenergy in a way that minimises the energy use of high-quality stemwood.
While deployment of renewables in the electricity sector is expected to become increasingly cost-
competitive through lowering costs of technology and higher carbon prices, an enabling framework
is required to ensure the significant scale up in additional renewable power generation required in the
period up to 2030 to achieve the targets. This includes fostering cross-border cooperation on
239
Without multipliers in all transport modes, including international aviation and international marine bunkers and
hydrogen consumed in energy branch)
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renewables through setting up pilot projects within the next 3 years. In addition, specifically for
harnessing the potential for offshore renewable energy, there is a preferred package of options
including an obligation for Member States to define and agree to cooperate on the amount of
offshore renewable generation to be deployed within each sea basin by 2050, enhanced cross-border
cooperation on offshore energy projects (guidance, cost-benefit-analysis, Union renewable energy
financing mechanism), and the proposal to set-up one-stops shop for permitting of cross-border
offshore wind projects per sea basin.
The industry sector is currently only covered by RES H&C actions. Additional actions are needed
and the preferred options are: introduction of renewable energy use in the audits required under the
EED, developing a common EU methodology for green industry labels, and the introduction of an
EU benchmark for renewable energy consumption in industry to monitor progress, together with a
dedicated target for RFNBOs (see above).
8.4.Investments underpinning the preferred policy option
Increased GHG ambition entails significant investments in energy efficiency and renewable energy.
Against this background, the policy options highlighted above for the RED aim at facilitating
investments, reducing their perceived risks, increasing the effectiveness in the use of public funding
and helps mobilise private financial resources, in line with the priorities identified in the European
Semester, National Energy and Climate Change Plans (NECPs), and Just Transition and Recovery
Plans.
8.5.Ensuring coherence in the finalisation of the package
The final step of the sequential approach outlined above for the coherent design of the “Fit for 55”
proposals will be carried out on the basis of the analysis of this and the other impact assessment
reports. The choices left open for policy-makers will be taken, measures fine-tuned and calibrated,
and overall coherence ensured. Until that stage, all indications of preferred measures are to be
considered preliminary as preserving overall effectiveness, efficiency and coherence may require
adjustments as the final package takes shape.
In general, emissions trading can achieve GHG emissions reductions cost-effectively and provides a
sound price signal that influences the decisions of operators, investors and consumers. However,
carbon pricing does not address all non-market barriers to the deployment of renewable and low-
carbon solutions and therefore additional policy actions are necessary to ensure that other obstacles
to investments in clean energy technologies and infrastructure are removed and that investors are
thereby provided with additional incentives. Thus, while carbon pricing and renewables policies both
work towards fuel switching, renewables policies put in place more specific enabling measures for
local uptake of renewables (e.g. capacity building, consumer information and local heat
infrastructure planning for more locally integrated renewable solutions) and for the uptake of
innovative renewable fuels such as advanced biofuels or RFNBOs. Both tools are thus
complementary and mutually reinforcing.
The interaction between the approach to energy efficiency and renewable energy shows broad
coherence, reflecting the fact that both instruments can promote electrification in line with ESI
strategy and stronger efforts on energy efficiency are necessary for a cost effective deployment of
renewable energy in view of meeting both energy and climate targets.
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Carbon price signals contribute to the penetration of renewable energy in the power sector as
confirmed in the last years, demonstrating full synergies of both regulatory and market instruments.
If the political decision is to not extend the ETS to other sectors (e.g. buildings and transport), further
strengthening of regulatory measures, including in the field of renewable energy, would be needed to
increase the main decarbonisation efforts.
The measures considered under ReFuel EU Maritime and under the Refuel EU Aviation initiatives
have been fully considered in this IA and would contribute towards the achievement of the target for
renewable energy in transport. If these measures were not adopted, the promotion of renewable fuels
and low carbon fuels in the aviation and maritime sectors would depend largely on the RED. In
absence of the uplift obligation considered under the Refuel EU aviation initiative, the effectiveness
of a dedicated supply obligation for sustainable aviation fuels, however, would be negatively
affected, at least in the long term. It should therefore be considered to continue with the use of
multipliers to incentivise the uptake of renewable fuels in both the aviation and maritime sectors.
In addition, a continued accountability and action by Member States for national emission reductions
in these sectors, incentivised by national targets under the ESR, would be even more important as an
ultimate safeguard. The synergies between the ESR and renewables regulatory tools would become
even more important.
Generally, a targeted strengthening of the EU bioenergy sustainability criteria can bring co-benefits
for other land-related policy objectives, such as biodiversity conservation and protection of the forest
carbon sink, and it is therefore coherent with the parallel revision of the LULUCF Regulation and the
ETS. In particular, the measures considered under the review of the LULUCF Regulation have been
fully considered in this impact assessment and would contribute to a better protection of areas of
high carbon and biodiversity values, such as primary forests and old grown forests. As such, a
targeted strengthening of the REDII bioenergy sustainability criteria and a more ambitious LULUCF
Regulation are mutually supportive and reinforcing in protecting carbon and biodiversity rich areas,
while ensuring sustainable harvesting levels and contributing to enhancing the LULUCF sink.
A complementary document to the full set of individual impact assessments looking at the
effectiveness, efficiency and coherence of the final package accompanies the “Fit for 55” proposal.
8.6.REFIT (simplification and improved efficiency)
Given its relatively recent adoption, this review of REDII is limited to what is considered necessary
to contribute in a cost-effective way to the Union’s 2030 climate ambition, and is not a full revision
of the Directive. Identified possibilities for simplification of legislation and reduction of regulatory
costs are:
REFIT Cost Savings – Preferred Option(s)
Description Amount Comments
Renewable energy target for transport Low Overlaps between FQD and REDII
should be eliminated, leading to greater
efficiency and lower costs for
administrations.
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9. HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED?
Monitoring and evaluation of progress towards the policy objectives should be done using, to the
greatest extent possible, existing instruments and data already available from Eurostat. In addition,
new official statistics will need to be developed to monitor renewable energy in areas covered by the
revision of REDII such as renewable cooling, renewable energy in buildings, industry, RFNBOs,
hydrogen, trade of bio-methane and biofuels and Member States should ensure they can produce
high-quality statistics. Additional monitoring requirements can be covered through other means,
including the Energy Union governance framework.
Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action established
an integrated energy and climate planning, monitoring and reporting framework, which allows
monitoring progress towards the climate and energy targets in line with the transparency
requirements of the Paris Agreement.
Under the Governance Regulation, Member States had to submit to the Commission their integrated
national energy and climate plans by the end of 2019, covering the five dimensions of the Energy
Union for the period 2021-2030. For renewable energy, the plans had to contain information on
progress towards the Union’s overall 2030 target of at least 32%, estimated trajectories for the
sectoral share of renewable energy in final energy consumption from 2021 to 2030 in the electricity,
heating and cooling and transport sectors as well as information on their policies and measures to
achieve the targets.
The Commission assessed the plans and concluded that collectively, they achieved the EU binding
target for renewable energy240
. The assessment of the individual plans led to the issuing of specific
recommendations to the Member States241
. In addition the Commission can, if need be, propose
further Union level measures to ensure targets are collectively achieved242
.
Member States must report biennially on the progress made in implementing the plans, including on
climate, renewables and energy efficiency. In addition, by 30 June 2023 they must notify the
Commission of their draft updates of the plans, with the final updates due on 30 June 2024. This
update would cover any new targets agreed in the revision of REDII.
The reporting system under the Governance Regulation is considered to have been effective in
monitoring Member States’ progress towards the Union and national level renewable energy targets.
The Governance Regulation also gives the Commission tools for dealing with both an ‘ambition’ and
a ‘delivery’ gap which are considered adequate.
The transposition and implementation of the Directive will followed up by the Commission after the
transposition deadline, through checking the notification of national measures and whether they
correctly transpose the provisions of the Directive, with infringement procedures launched if
necessary.
240
2020 report on the State of the Energy Union pursuant to Regulation (EU) 2018/1999 on Governance of the Energy
Union and Climate Action, COM(2020) 950 final
241
https://ec.europa.eu/energy/topics/energy-strategy/national-energy-climate-plans/individual-assessments-and-
summaries
242
Article 31 Regulation(EU) 2018/1999
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In addition the Commission will work with the Member States through the Concerted Action on the
Renewable Energy Directive which provides a structured dialogue on transposition as well as
providing a forum for the exchange of best practice.
10. LIST OF TABLES AND FIGURES
List of tables
Table 1 - Overview projected sector shares; Source ESTAT, PRIMES................................................................ 25
Table 2 - Renewable energy shares in core scenarios; Source: PRIMES, ESTAT ............................................... 51
Table 3 - Results of MIX-LD scenario; Source PRIMES....................................................................................... 52
Table 4 - Average annual Energy System Costs in the scenarios (excluding carbon pricing payments and
disutility costs); Source PRIMES ........................................................................................................................ 54
Table 5 - Average annual Energy System Costs (including carbon pricing payments and disutility costs);
Source PRIMES................................................................................................................................................... 55
Table 6 - Impacts on security of supply and fossil fuels imports bill savings; Source PRIMES.......................... 55
Table 7 - Investment in REF and core policy scenarios (2021- a ual a erages, illio € ); Sour e
PRIMES............................................................................................................................................................... 56
Table 8 - Energy-related expenses in 2030 (excl. disutilities); Source PRIMES................................................. 59
Table 9: National RES-H&C shares and impact on buildings-related expenditure (as share of private
consumption); PRIMES,EC own calculations..................................................................................................... 62
Table 10: National RES-E shares and impact on investment needs in renewables in power generation and on
electricty prices; Source: PRIMES, EC own calculations.................................................................................... 64
Table 11 - Renewable shares per Member States under various criteria; Source, EUROSTAT, PRIMES,EC
calculations........................................................................................................................................................ 66
Table 12 - Interaction of the 2030 GHG ambition with renewable energy share and energy savings ............. 67
Table 13 - GHG emission reduction in buildings in 2030; Source: PRIMES ....................................................... 73
Table 14 - 2020-2030 average RES H&C figures for different scenario per MS; PRIMES EC own calculations 85
Table 15: Comparison of Financial data for different DHC supply technologies............................................... 95
Table 16 – Costs related to energy use in transport; Source PRIMES............................................................. 102
Table 17 - GHG reductions in transport sector; Source PRIMES..................................................................... 103
Table 18 - Dire t jo s reated i re e a le fuel i dustry; Sour e: Te h i al support for RES poli y
development and implementation: delivering on an increased ambition through energy system integratio
ENER/ C1/2020-440......................................................................................................................................... 106
Table 19: Illustration of RFNBO accounting on overall RES Shares; Source PRIMES....................................... 133
Table 20 - Effectiveness................................................................................................................................... 139
Table 21 - Area of primary forests in EU countries. Forest area according to FOREST EUROPE (2020). ........ 147
Table 23 - Area of primary forests in EU (Sabatini et al. 2020) and percentage falling in Natura 2000 sites (EEA
2020) and in IUCN protected areas................................................................................................................. 147
Table 23 - Share of consumption of woody biomass for energy by plant size class ....................................... 154
Table 24 - Number of biomass plants by size and Member State................................................................... 154
Table 25 - Incentives in power generation sector and electricity prices; Source PRIMES .............................. 159
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Table 26 - GHG reduction in power generation; Source PRIMES.................................................................... 160
Table 27 - Comparison of policy options......................................................................................................... 175
Table 28 – Efficiency and impacts of core scenarios and MIX-H2 variant; Source PRIMES, GAINS models ... 185
Table 29 - Differences between scenarios MIX and MIX-LD capturing RED revision; Source PRIMES, EC
calculations...................................................................................................................................................... 189
List of figures
Figure 1 - RED II Interactions with other key legislation affecting Renewable Energy ....................................... 9
Figure 2: Intervention logic ............................................................................................................................... 24
Figure 3 - Overview of policy options................................................................................................................ 47
Figure 4 - Gross inland consumption in the core scenarios; Source PRIMES.................................................... 53
Figure 5 - Share of energy carriers in final energy consumption; Source ESTAT, PRIMES................................ 53
Figure 6 - Macro-economic impacts of core scenarios; Source GEM-E3 .......................................................... 57
Figure 7 - Energy-related expenses in 2030 (excl. disutilities) as % share of private consumption; Source
PRIMES............................................................................................................................................................... 60
Figure 8 - Macro-economic impacts of core scenarios; Source GEM-E3 .......................................................... 60
Figure 9 - Decomposition of the renewables share in heating and cooling; Source EUROSTAT, PRIMES ........ 70
Figure 10 - Final energy consumption in buildings; Source PRIMES ................................................................. 72
Figure 11 - Final renewable energy consumption in total building stock (ktoes); Source PRIMES................... 72
Figure 12 - Final energy per energy carrier in residential heating and cooling demand-MIX; Source PRIMES 74
Figure 13 - Evolution of end user energy prices for households in scenario MIX; Source PRIMES .................. 75
Figure 14 - District heating fuel mix and cogeneration share in 2018 (Source: Study by Tilia under
ENER/C1/2018-496)........................................................................................................................................... 90
Figure 15 - EU-27 District heating supply fuel mix in 2018(Source: Study by Tilia under ENER/C1/2018-496) 91
Figure 16 - Fuel input in district heating units and total production of derived heat in distribution networks
(in ktoe); Source PRIMES................................................................................................................................... 91
Figure 17 - French 2030 objectives in DH development (total and low-carbon/green) ................................... 92
Figure 18 - disaggregation of DHC systems, including energy carriers; Source https://heatroadmap.eu/.......... 93
Figure 19 - Approximate newly established and total amount of district heating systems in the 14 countries
of HRE4 and Denmark needed for fulfilling the potential of distribution grid investments below 4 EUR/GJ;
Source: Heat Roadmap Europe ......................................................................................................................... 93
Figure 20 - Installed capacity by age (GWh) District heating and supply; Source [ongoing ENER/C1/2018-494
Renewable Space Heating Study ]..................................................................................................................... 94
Figure 21 - RES-T share in core scenarios; Source PRIMES.............................................................................. 100
Figure 22 - Energy consumption in transport (incl. international aviation and maritime) in the EU; Source
PRIMES............................................................................................................................................................. 102
Figure 23 - Share of alternative fuels in Transport (incl. aviation and maritime navigation); Source PRIMES102
Figure 24 - Production costs and prices of different types of renewable and low carbon fuels; Source
Te h i al support for RES poli y de elop e t a d i ple e tatio : deli eri g o a i reased a itio
through energy syste i tegratio ENER/ C / -440.............................................................................. 107
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Figure 25 - GHG emission reduction costs of different types of renewable and low carbon fuels (excl. ILUC
effe ts); sour e Te h i al support for RES poli y de elop e t a d i ple e tatio : deli eri g o a
i reased a itio through e ergy syste i tegratio ENER/ C / -440.............................................. 109
Figure 26 - Example - Average EVs daily consumption profile, for different DR strategies............................ 116
Figure 27 - CO2 emissions, compared to Baseline .......................................................................................... 117
Figure 28: RFNBOs use in energy system; Source PRIMES.............................................................................. 132
Figure 29 - Estimated cost reduction for renewable hydrogen from offshore wind in Europe until 2030
(Source: Hydrogen Council, 2020)................................................................................................................... 137
Figure 30 - Balance of renewable generation potential and demand with electricity for hydrogen in Europe
2050................................................................................................................................................................. 138
Figure 31 - Biomass-waste use in Gross Available Energy in core scenarios and Reference, Source: PRIMES 141
Figure 32 - Net annual increment, removals, and fellings in the EU FAWS. Source: Camia et al. 2018 ......... 143
Figure 33 Share of installations and share of consumption by installation size ............................................. 144
Figure 34 Consumption of woodchips and pellet by use and installation size ............................................... 145
Figure 35 - Map of primary forests cross the EU; Source: Sabatini, FM, Burrascano, S, Keeton, WS, et al.
Where are Europe’s last pri ary forests? Di ers Distri . 8; : – 1439........................................... 147
Figure 36 - Share of forest undisturbed by man in the total forest area, by country, Forest Europe 2020 ... 148
Figure 37 – Area and global share of primary forest in top 10 countries (and EU27). Source: Global FAO forest
cover................................................................................................................................................................ 149
Figure 38 – Gross electricity generation in the EU; Source EUROSTAT, PRIMES ............................................ 158
Figure 39 - Installed power production capacities; Source EUROSTAT, PRIMES ............................................ 159
Figure 40 - Final energy demand in industry for H&C by end use (EU28, 2015); Source: Heat Roadmap Europe
......................................................................................................................................................................... 168
Figure 41 - Energy costs as a share of total production costs for different sectors in 2017; Source EC......... 168
Figure 42 - Final energy consumption in industry; Source PRIMES................................................................. 171