Power Perspective: EU reaches almost 18% RES in 2018 but 2020 target in danger

Author: ICIS Editorial

2020/01/10

This story has originally been published for ICIS Power Perspective subscribers on 10 January 2020 at 15:01 CET.

In 2018, the European Union reached a 17.97% renewable share of final energy consumption, according to provisional results released by Eurostat. The results mean that the bloc requires a further jump of 2.03 percentage points between 2018 and 2020 to achieve the binding 20% target, which may prove beyond reach. At the member state level, 12 countries had met their 2020 targets already in 2018, while the remaining 16 countries are between 0.1 and 6.6 percentage points below their targets. While many of these will be able to catch up, several large countries will struggle to reach their targets.

Background

  • The EU as a whole has a binding target of 20% renewables in final energy consumption to reach by 2020, laid out in the 2009 renewable energy directive
  • Each member state has an individual binding target for the share of renewables in their final energy consumption in 2020
  • Moreover, each member state, as well as the EU as a whole, also has a binding target of 10% RES in the transport sector
  • The EU statistical agency Eurostat announces the official RES share statistics with one-year delay after a year in question is completed
    • In January 2020 it is due to announces the statistics for the complete 2018
    • Eurostat has already uploaded the preliminary 2018 results on the designated site
    • The official data to use the member states 2020 target achievement will come from the final Progress Report due by 30th April 2022

Analysis

Latest statistics

  • According to the preliminary Eurostat results, the European Union in 2018 reached 17.97% RES share in 2018 and still falls short by around 2 percentage points (p.p.) from the 2020 target
    • The total number of countries that have already reached their 2020 target did not change from 2017: 12 countries have reached their 2020 target in 2018, and 16 are behind
    • However, there was a redistribution of the countries: in 2018, Hungary and Romania fell back and no longer reached the 2020 target that they had achieved earlier, but Greece and Latvia have reached it
      • Greece landed exactly on its 18.00% target
      • Latvia reached 40.32%, whereas the target is 40.00%
    • Below you can see the graph with 2018 distance to the 2020 target by member state

Major countries lagging

  • While the majority of EU countries are expected to meet or exceed their 2020 targets, several major countries are lagging behind, with the Netherlands and France the two worst performers in the bloc
  • The UK, Poland and Spain are also among the eight worst performers, while Germany remains 1.6 p.p. away from its target and is not guaranteed to achieve it
  • Given the larger weighting of the biggest countries towards the overall EU goal, if these major countries fail to reach their targets then the EU as a whole is also likely to miss the target

Statistical transfers

  • The Eurostat data shows that Luxemburg started using statistical transfers from Estonia and Lithuania in 2018
    • In 2018, Luxembourg received from Estonia and Lithuania each 47.3 ktoe renewable energy statistics (in total 94.6ktoe)
    • This allowed Luxemburg to increase its RES share by nearly 3 p.p. from 6.29% in 2017 to 9.06% in 2018 and step closer to its 11% 2020 target
    • The Lithuanian share accordingly decreased by 1.6 p.p. from 26.04% in 2017 to 24.45% in 2018 (the 2020 target 23%)
    • However, despite statistical transfers, Estonian RES share grew by 0.7 p.p. from 29.14% in 2017 to 29.85% in 2018
  • More statistical transfers are expected to be seen across Europe over the rest of the year as a way of enabling overachieving countries to monetise their success while allowing struggling countries to move towards their targets

Outlook

  • It is now too late for results of underperformance on renewable targets to lead to an expansion in renewable capacity (as we saw in 2016/2017). This is because projects could not come online quickly enough to influence the targets
  • However, struggling countries still have an incentive to increase their renewable shares in the early 2020s so as to potentially reduce the severity of fines

Vija Pakalkaite is Analyst - EU Carbon & Power Markets at ICIS. She can be reached at Vija.Pakalkaite@icis.com

Matthew Jones is Senior Analyst - EU Carbon & Power Markets at ICIS. He can be reached at Matthew.Jones@icis.com

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