Revision of the Renewable Energy Directive (REDII): How to improve tendering, planning and tracking rules to deliver the European Green Deal

In July 2021, the European Commission (EC) will announce a targeted revision of the Renewable Energy Directive (REDII) as part of the “Fit for 55” Package.

In light of increasing EU climate ambitions, the recently approved Climate Law, and discussions of the roles for hydrogen and biofuels in the energy transition, the revision of REDII will be instrumental in contributing towards the (now legally-binding) 55% reduction in greenhouse gas emissions by 2030.

Advocating for the EC’s proposed two-step approach (a short-term targeted revision, limited-in-scope, followed by a longer-term revision – or REDIII – in the future), this CERRE Energy & Sustainability report focuses on three specific aspects that the revision should address to achieve higher renewable energy targets under REDII:

• Renewable energy support schemes and tendering procedures;
• Coordinated planning and integration of energy systems;
• Rules for the tracking and valorisation of renewable energy, specifically Guarantees of Origin (GOs).

“We need a big push towards renewables, which means higher targets and a higher volume of renewable energy generation,” said Catherine Banet, CERRE Research Fellow and author of the paper. “But this brings with it many challenges, such as securing financing and public acceptance.”

Support schemes and tendering procedures

The EU must set higher renewable energy targets, but achieving these targets demands infrastructure and funding that could potentially exacerbate public opposition, owing to the proximity and cost of renewable energy (RE) projects. With this in mind, along with the COVID-19 recovery and EU Industrial Strategy, the paper stresses the importance of including criteria on local benefits provided by RE projects within competitive tendering procedures for granting support, on top of suggesting that local communities and authorities are involved with the tendering process to optimise benefits, location and local acceptance.

Given that similar proposals are hinted at in the forthcoming State aid guidelines for climate, environmental protection and energy (CEEAG, expected in 2022) and that the EEAG revision is running in parallel with the REDII revision, Professor Banet recommends a discussion of which elements should be mirrored in the two revisions.

Coordinated planning and integration

Coordinated planning across Member States and integration of their energy systems will be crucial in the pursuit of net zero emissions by 2050. The paper suggests that REDII should facilitate coordinated and integrated planning of the energy system as a whole, noting that the need for a more coordinated approach in energy system planning will only increase with energy system integration. The paper recommends either:

• Developing guidance on best practices for coordinating the different planning procedures amongst Member States, with a view to delivering RE objectives; or
• Defining a joint requirement to assess interaction and consistency between these different planning procedures, ensuring RE objectives are taken into account.

Rules for tracking and valorisation of renewable energy

The report deals specifically with Guarantees of Origin (GOs), which are used by producers to comply with energy disclosure requirements and by consumers to stay informed on the origin of the energy they purchase.

According to Professor Banet, the legal regime for GOs has improved as a result of the implementation of REDII. The author, therefore, recommends the following:

• Any amendment of the legal regime for GOs in the REDII revision should ensure and improve transparency and consumer protection; support the reinforcement and improvement of the GO system; and enhance the benefits of the GO system in more sectors through market support for increasing renewable energy generation capacity.
• Allow the issuance of GOs in relation to Corporate Renewable Power Purchase Agreements (PPAs) as a means of providing additional market support for RE generation;
• Clarify the link between Article 27.3 (the minimum share of RE in the transport sector) and Article 19 (the use of GOs) of REDII in the context of the European Commission’s plans to clarify rules with which transport operators must comply;
• Consider introducing full production disclosure and full consumption disclosure in a broader revision of REDII, in other words, in REDIII.

Based on a thorough legal and regulatory analysis, this recommendation paper aims to contribute to the EC’s reflection process for the revision of REDII, and also to feed into the European discussion of a longer-term revision and possible REDIII.

The recommendations of this paper and wider policy framework was debated during a CERRE webinar in September 2021. Watch the video here. You can also listen to author Catherine Banet’s podcast on the European Commission’s proposed revision of the recast Renewable Energy Directive as part of the ‘Fit for 55’ package here.