European Parliament adopts ambitious position on clean energy package

This story was originally published for ICIS Power Perspective subscribers on 17 January 2018 17:11 CET.

On Wednesday (17 January) the European Parliament agreed its negotiating position in the form of a general approach on three pieces of draft legislation related to the European Commission’s clean energy package: the renewable energy directive, governance regulation and energy efficiency directive.

With the European Council having recently adopted its own position on the three legislative items, the parliament, council and commission can now enter trilogue negotiations.

Overall, the parliament’s position is more ambitious than that proposed by the council and would have a more bearish impact on wholesale power prices through to 2030 if it were to be adopted.

Key parliament positions

• Renewable energy directive
  • A binding, EU-wide target of at least 35% renewables in final energy consumption by 2030
  • Indicative national targets for 2030, with some leeway provided to member states if they can demonstrate ‘exceptional and duly justified circumstances’ for missing their target. In this case, a country can deviate from the binding target by a maximum of 10%
  • Target for at least 12% renewables in final energy consumption from the transport sector in each member state by 2030
  • Member states should endeavour to increase the share of renewables within their heating and cooling sector by at least two percentage points every year, expressed as the share of final energy consumption
  • Member states shall ensure that at least 8% of newly supported renewable capacity in each year from 2021-2025 is open to installations in other member states – this increases to 13% from 2026-2030
• Governance directive
  • Lays out that member states must state their contribution towards EU targets regarding energy efficiency, share of renewable energies and interconnection capacities
  • The first plan for the 2021-2030 period needs to be submitted by 1 January 2019
  • In order for member states to meet their indicative renewable energy shares, three milestones were included for reaching 20% of their target in 2022, 45% in 2025 and 70% in 2027
• Energy efficiency directive
  • A binding, EU-wide target of at least 35% energy efficiency in 2030
  • Indicative national targets for 2030

Analysis

• Renewable energy directive
  • The main elements of the agreed proposal did not change from those adopted by the industry, research and energy committee in November
  • Parliament’s proposal is more ambitious than the council, which has proposed a 27% binding EU-wide target for renewables in final energy consumption by 2030
  • The council had avoided stipulating any targets for individual member states for 2030
  • The annual 2 percentage point increase in heating and cooling is above the 1 percentage point increase put forward by the council
  • The only area in which the parliament was less ambitious than the council was in the 12% target for renewables in the transport sector for each member state – the council had called for a 14% target for 2030
• Governance directive
  • Overall, the parliament’s position includes more ambition with stronger reporting obligations and stricter milestones for the 2030 targets, compared to the council’s proposals
  • The council’s position is for lower indicative milestones for the 2030 RES target with member states to reach 24% of the RES target in 2023, 40% in 2025 and 60% in 2027
• Energy efficiency directive
  • The parliament’s position is again more ambitious than the council, which had called for only a 30% indicative target at EU level
  • However, the overall target is below the parliament’s original proposal for 40% energy efficiency in 2030
  • A proposal for binding national targets was also rejected

Next steps

• We expect trilogue negotiations to start shortly – it remains to be seen how both EU legislators reconcile the difference between their two positions of the files
• When trilogue negotiations come to an agreement, the proposal needs to be ‘rubberstamped’ in both the council and the parliament to come into force
• In our opinion, we expect both files to be a high priority for EU legislators and expect a strong push for a swift adoption – potentially by summer 2018 or in the case of delays in the fall 2018
• The directives will very likely be agreed by March or April 2019 at the latest as the Parliament will then be dissolved due to 2019 elections

Reporter: Matthew Jones, Analyst: Yann Andreassen

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