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EU update – September 2022

30/09/2022

Renewable Energy Directive (RED)

On Wednesday 14September, European lawmakers adopted in plenary their position on the revision of the Renewable Energy Directive (RED) with a majority of 418 votes in favor, 109 against and 111 abstentions. MEPs voted to raise the share of renewables in the EU’s final energy consumption to 45% by 2030, a target also backed by the European Commission under its “RepowerEU” package. The legislation also defines sub-targets for sectors such as transport, buildings, and district heating and cooling.

• In the transport sector, the text includes an increase from 13% to 16% in the greenhouse gas emission reduction target for transport, through the use of higher shares of advanced biofuels and a more ambitious quota for renewable fuels of non-biological origin such as hydrogen.
• The text adopted also wants renewable fuels of non-biological origin (RFNBOs) to comprise at least 2.6% of the energy supplied to the transport sector by 2028, and at least 5.7% by 2030. It also requires that fuel for the maritime sector be at least 1.2% RFNBOs and renewable hydrogen.
• Industry should boost its use of renewables by 1.9 percentage points per year, and district heating networks by 2.3 points.
• Each member state will have to develop two cross-border projects for the expansion of green electricity. Member states with an annual electricity consumption of more than 100 terawatt-hours (TWh) will have to develop a third one by 2030.
• However, an amendment by a group of MEPs from the Socialists & Democrats, the Greens and The Left proposing to restrict the production of certain biofuels in times of “severe disruption on food markets” when such fuels are “in competition with crops” did not pass.
• MEPs backed the proposal by the European People’s Party, Renew Europe and the S&D to stop subsidizing the production of energy using primary woody biomass, and to progressively stop counting the use of this type of biomass toward the EU’s renewable energy target. Under the proposal, the amount of energy produced from primary woody biomass that can count toward the EU renewable’s goal would be capped to its average share for the period 2017-2022 and then progressively phased down by 2030. However, an amendment by Nordic MEPs across parties proposing to restrict what counts as primary woody biomass did not pass.
• On top of that, the MEPs did not accept the Greens/EFA proposal to make the sub-target for the heating and cooling sector binding (as proposed by the Commission).
• The Greens and The Left also tried to push for an even higher renewable target of 55-56% by 2030 to reach 100% renewables by 2040.
• In the end, the proposed definition of primary woody biomass is less broad than the one advocated by the Parliament’s Environment Committee (ENVI). Other REPowerEU goals such as the definition of “go-to areas” and faster permitting procedures for renewable energies were not included in this version of the directive.
• As for the definition of “green” hydrogen from renewables, MEPs deferred the matter to another EU law that will also define “low-carbon” hydrogen produced for instance from nuclear energy.

Now that the report has been adopted, inter-institutional negotiations between the Parliament and the Council of the EU are expected to start in the coming weeks. A new revision of the directive (RED IV) will be presented at the end of September, with the idea to merge the two revision procedures during final talks with EU member states later in the year.

Reactions from stakeholders:

• The eFuel alliance, a Berlin-based interest group, welcomed the 5.7% target as an acknowledgement by lawmakers of the role synthetic fuels can play in the transition to a sustainable energy supply.
• However, the rejection of proposals by MEPs from the Socialists & Democrats, Greens and The Left to curb or halt the production of biofuels triggered a major disappointment for NGOs that had campaigned against the use of crop fuels as a response to the global food crisis. “The outcome of today’s vote is deadly for the hundreds of millions of people who are staring straight into the jaws of hunger,” Oxfam’s Economic Justice expert Marc-Olivier Herman said in a statement.

Energy Efficiency Directive (EED)

MEPs adopted on Wednesday 14September with 469 votes in favour, 93 against and 82 abstentions, the revision of the Energy Efficiency Directive (EED), the law that sets energy-saving targets in both primary and final energy consumption in the EU. The voting session did not lead to any major changes to the text approved by the Parliament’s Committee on Industry, Research and Energy (ITRE) last July.

• MEPs supported an increase of 14.5% of the target for reducing energy consumption in the EU by 2030 (compared to the 2020 baseline projections). This is an increase of 5.5 percentage points compared to the target originally proposed by the European Commission and 1.5 percentage points compared to the update following Russia’s invasion of Ukraine in REPowerEU.
• This increase means that member states must collectively ensure final energy consumption is reduced by at least 40% by 2030 and 42.5% in primary energy consumption compared to 2007 projections, compared to 36% and 39% in the Commission’s original proposal. This corresponds to 740 and 960 million tonnes of oil equivalent (Mtoe) for final and primary energy consumption, respectively. Current legislation sets this target at 32.5% (without distinguishing between primary and final energy consumption).
• Among other things, MEPs decided to make Member States’ national contributions binding and to set interim national targets in 2025 and 2027.
• Parliament changed the energy saving obligation between 2024 and the end of 2030. During this period, Member States would be required to make annual energy savings of at least 2% of annual final energy consumption, compared to 1.5% in the Commission’s original proposal. They also obliged Member States to renovate at least 3% of the total floor area of public buildings each year. The targets will be met through measures at local, regional, national and European levels, in different sectors – e.g. public administration, buildings, businesses, data centres.

Now that the report has been adopted, inter-institutional negotiations between the Parliament and the Council of the EU are expected to start in the coming weeks in order to finalize the law before the end of the year.