EU remains on course for 2020 RES target, though some member states see worsening performance

02 February 2018 11:30 Source:ICIS

This is a condensed version of our analysis for ICIS Power Perspective subscribers that was originally published on 26 January 2018 17:26 CET.

On Thursday (25 January) Eurostat published the latest figures for the share of renewables in each member state in 2016. The results show that while the EU remains on course to reach its 2020 target, some countries remain significantly behind their binding commitment. The results also show that twelve member states recorded a worse result in 2016 than in the previous year.

Background

  • Each member state, as well as the EU as a whole, has a binding target for the share of renewables in their final energy consumption in 2020, laid out in the 2009 renewable energy directive
  • Eurostat is the official data source of the European Commission, meaning that its findings in 2020 will be used by the Commission to determine whether countries have achieved their targets
  • Member states that fail to reach these targets could face financial penalties

Eurostat data

  • Among the 28 member states, 11 exceeded the level required to reach their binding target: Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Finland, Hungary, Italy, Lithuania, Romania, and Sweden
  • In contrast, 17 member states had not yet reached the required level
    • Five countries – France, Ireland, Luxembourg, the Netherlands and the UK – are all more than 5 percentage points away from their target
  • Sweden achieved the highest overall share with 53.8% RES in 2016, while Luxembourg had the lowest share at 5.4%
  • Croatia was most in excess of its 2020 target, with an 8.3 percentage point surplus, while the Netherlands was furthest behind its target with a gap of 8 percentage points
  • Twelve member states saw their renewables share fall in 2016: Czech Republic, Greece, Croatia, Italy, Cyprus, Latvia, Lithuania, Hungary, Poland, Slovenia, Slovakia, Finland

Analysis

  • Decline in performance in 2016
    • Eurostat clarified the reasons why twelve member states saw a worse performance in 2016 than in the previous year:
      • Czech Republic: Slight decrease in solar PV capacity and production, added to the fact that the total consumption of energy increased
      • Greece: A decrease of the consumption of biomass in the residential sector (though 2016 data estimated)
      • Croatia: Minor decrease in the consumption of biomass in the residential sector and a significant decrease in the consumption of sustainable liquid biofuels in road transport
      • Italy: A decrease in the consumption of biomass in the residential sector
      • Cyprus:  An increase in the total consumption of energy (with the increase supplied by fossil fuels), despite the fact the they didn't decrease the total production of renewables
      • Latvia: The calculation methodology played a significant role; the country significantly increased its hydro capacity, but did so either near the end of the year or the production was not as high as expected for that capacity; this is something that is penalised by the calculation methodology; as a result, Eurostat suggests that Latvia might see a significant increase in the renewable share next year
      • Lithuania: An increase in the total consumption of energy (mostly supplied by fossil fuels) plus a slight decrease in the consumption of sustainable liquid biofuels in road transport
      • Hungary: An increase in the total consumption of energy (with the increase supplied by fossil fuels)
      • Poland and Slovenia: An increase in the total consumption of energy (with the increase supplied by fossil fuels) and a slight decrease in the use of sustainable liquid biofuels in transport
      • Slovakia: An increase in the total consumption of energy (with the increase supplied by fossil fuels) plus a decrease in the consumption of biomass in the industrial sector
      • Finland: A very significant decrease in the use of sustainable liquid biofuels in transport
    • Worst performers
      • Among the countries with the largest gap to make up by 2020, the UK and France made significant progress in 2016, increasing by 0.8 and 0.9 percentage points respectively
      • However, both countries remain significantly behind their 2020 targets, with France in particular likely to miss its binding commitment according to our analysis
      • The Netherlands saw an increase of just 0.2 percentage points in 2016, which suggests the country remains almost certain to fall short of its commitment
    • Last chance saloon
      • Countries that have fallen behind on their 2020 target are running out of time in which to take action to support new capacity
      • Given that most new renewable capacity takes at least two years to come online, new capacity would need to be supported before the end of 2018 in order to come online in time to impact the 2020 RES share
    • Statistical transfers
      • Member states that are struggling with their target are likely to turn to statistical transfers over the next two years, whereby they buy a specified amount of renewable energy from another member state
        • The transaction is only in statistical terms, with the volume of energy taken from one country’s calculations of renewables in final energy consumption and added to the other’s
        • There is no physical transfer of energy
      • The system provides an incentive to member states currently exceeding their 2020 targets to continue expanding renewable capacity with the aim of effectively selling the surplus output
      • It also enables countries falling behind on targets to avoid handing out large sums in subsidies to try to bring online more renewable capacity by 2020, or paying fines to the Commission for missing their binding targets
      • The first statistical transfer deals in Europe were signed in late 2017, with Luxembourg arranging to buy power from both Lithuania and Estonia
    • EU target
      • The EU as a whole is on course to meet its 2020 commitment, having reached 17% renewables in 2016, just 3 percentage points away from the 2020 target
      • The recast renewable energy directive for the period 2021-2030 is to be negotiated by the European Parliament and Council, with trilogues to begin in late February or early March
      • The Council supports an EU-wide target of 27% renewables in 2030, while the Parliament has a more ambitious target of 35%

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

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By Staff Reporter