# EUR-Lex - 52013DC0175 - EN

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# 52013DC0175

**REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Renewable energy progress report /* COM/2013/0175 final */**

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REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE
AND THE COMMITTEE OF THE REGIONS

Renewable energy progress report

1.           introduction

The Renewable Energy Directive 2009/28/EC
("the Directive") established a European framework for the promotion
of renewable energy, setting mandatory national renewable energy targets for
achieving a 20% share of renewable energy in the final energy consumption and a
10% share of energy from renewable sources in transport by 2020. These goals
are headline targets of the European 2020 strategy for growth, since they
contribute to Europe's industrial innovation and technological leadership as
well as reducing emissions, improving the security of our energy supply and reducing
our energy import dependence. The Directive also requires the simplification of
the administrative regimes faced by renewable energy, together with
improvements to the electricity grid, to improve access for electricity from
renewable energy. It established a comprehensive sustainability scheme for
biofuels and bioliquids with compulsory monitoring and reporting requirements.
All biofuels used for compliance with the 10% target and that benefit from
national support are required to comply with the scheme.

The purpose of this Report is to assess
Member States' progress in the promotion and use of renewable energy along the
trajectory towards the 2020 targets and to report on the sustainability of
biofuels and bioliquids consumed in the EU and the impacts of this consumption
in accordance with the Directive[1].
The assessment covers recent developments and is based on the latest Eurostat
data on renewable energy (for 2009 and 2010), Member State renewable energy
progress reports submitted to the Commission in 2011[2], the Commission's own research,
as well as research carried out for the Commission[3].

As outlined in detail below, an impression
is gained of a generally solid initial start at EU level but with slower than
expected removal of key barriers to renewable energy growth, with additional
efforts by particular Member States being necessary. Deviations from national
plans increase the regulatory risk faced by investors and barriers that should,
but have not yet been addressed through the implementation of the renewable
energy Directive remain to be overcome. At EU and Member States level, further
efforts are needed in terms of administrative simplification and clarity of
planning and permitting procedures and for infrastructure development and
operation. And further efforts are needed regarding the treatment and inclusion
of renewable energy production within the electricity system. The general
economic conditions in the EU today together with disruptive changes to support
schemes for renewable energy (again, raising regulatory risk), add to the
conclusion that further measures will be needed at Member State level in order
to stay on the trajectory and for the targets to be achieved. Addressing such
barriers will contribute significantly to the cost effective deployment of
renewable energy and the achievement of the EU's targets. Technology
development and cost reductions are also critical, and these will be explored
in the Commission's forthcoming Communication on energy technology and
innovation.

2.           progress in renewable
energy development

With the implementation of the Renewable
Energy Directive and national policies set out in National Renewable Energy
Action plans ("plans"), most Member States experienced significant
growth in renewable energy since the Commission's last progress report[4].

Sectoral and overall growth of renewable
energy in the EU (Eurostat)

In fact, the 2010 renewable energy shares of 20 Member States and the EU as a whole were at the level of or above 2010 commitments set out in
their national plans and above the first interim target for 2011/2012[5].

However a further analysis undertaken for
the Commission modelling current policy initiatives and various barriers to
renewable energy development[6]
(See Staff Working Document and associated report for further details[7]) reveals a less optimistic
outlook for 2020. The analysis, which provides a conservative estimate of
renewables growth compared to other sources, limits policies to those already
in place, and reflects the economic crisis, ongoing administrative and
infrastructure barriers and policy and support schemes disruption. This suggests
future investment may decline or be delayed unless further measures are taken
by Member States to achieve their targets. Given investment lead times of eight
to ten years, any major disruption of investment today will have significant
impact on renewable energy production over the coming years and has become
cause for concern. Hence, many Member States will need further measures to
ensure the achievement of their targets.

Planned (blue) versus estimated (red/dotted) trend in EU renewable
energy

This conclusion is underpinned by the sectoral
developments in electricity, heating and cooling and transport. 15 Member
States failed to reach their indicative 2010 targets[8] for the share of renewable
energy in the electricity mix. In the transport sector, 22 Member States failed
to achieve their indicative 2010 target of 5.75%[9].

The heating and cooling sector has not had
any, even indicative targets, and has experienced slow growth since 2005.
Moreover the analysis undertaken for the Commission suggests that the share of
renewable energy in the heating and cooling sector may actually decline
in the coming years.

The failure to comply with national plans
is most evident in the wind sector. According to Member State plans, wind capacity is expected to reach 213 GW in 2020 (169 GW onshore and 44 GW
offshore). Electricity generation from offshore capacity is planned to
reach 140 TWh (roughly 12 Mtoe). However, according to the Commission's
analysis, it may only reach 43 TWh (3.7 Mtoe) due to reduced national efforts
and infrastructure difficulties.

Planned (blue) versus estimated (red/dotted) trend in EU offshore
wind energy

Despite
the recent strong growth in the onshore wind industry of recent years, Member
States' plans for onshore wind production 354 TWh may fall short. Further
efforts will be needed to reinforce measures and improve infrastructure, or
only an estimated 210 TWh might be achieved.

Planned (blue) versus estimated (red/dotted) trend in EU onshore
wind energy

Total wind
generation may therefore fall short of expectations. Whereas Member State plans foresee wind generation of almost 500 TWh, current trends point to the risk
of achieving only half of it, i.e. 253 TWh.

For all biomass, the trend is also
negative but not as extreme as for wind:

Planned (blue) versus estimated (red/dotted) trend in EU biomass
energy

Here, however, the scale of production in the
sector is far greater than for wind or solar power. Planned production is
intended to reach 104 mtoe by 2020 (for both the electricity (232 TWh or 19
mtoe) and heating sectors (around 85 mtoe), compared however, to expected
production for 2020 of 86 mtoe. This deviation could be linked to the production
cycles of the wood, pulp and paper industries, whose wastes and residues
constitute a significant part of biomass feedstock. The Commission's intended report
on biomass and sustainability will explore this matter in greater depth[10].

For photovoltaics, the story and
expectations are different. The strong growth of the last few years has seen a
surplus created that will continue for some time:

Planned (blue)
versus estimated (red/dotted) trend in EU PV energy

An optimistic and
secure EU market helped lead to a build-up of global PV production capacity, as
 China, India and the US entered into a new, EU-triggered global PV market. The
resulting overcapacity has brought production costs down significantly. However
rigid national support schemes were generally unable to adapt rapidly enough to
such falling costs, raising profits and creating a rate and scale of
installations in some countries almost excessive in a time of general economic
crisis. The result has been sudden and unpredictable changes to a number of
national support schemes, which will, again, curtail investment such that there
remains a risk that the current surplus of PV over planned levels (46TWh rather
than 35TWh) will disappear and become a deficit by 2020 (see section below for
further discussion of support schemes.)

For biofuels (biomass consumed in the
transport sector), the prognosis is more like that of biomass in general: a
slight surplus over the planned trajectory will decline and, unless further
measures are taken, will result in a deficit. In addition, the Commission has
proposed an amendment to the 10% target for renewable energy in the transport
sector, requiring greater use of non-food feedstock to contribute towards the
target. Greater reliance on advanced feedstock (which produces higher
greenhouse gas savings than food-related feedstock) clearly requires additional
measures for the target to be reached.

Planned (blue) versus estimated (red/dotted) trend in EU biofuels

From all of the above data it can be concluded that overall, by
sector and across technology, there has been a strong initial start in EU
renewables growth under the new regime of the Renewable
Energy Directive. However, as we look at their future
evolution, it seems that the economic crisis is now affecting the renewable
energy sector, particularly its cost of capital, as it has all other sectors of
the economy. This, combined with ongoing administrative barriers, delayed
investment in infrastructure and disruptive changes to support schemes, means
further efforts are needed to achieve the 2020 targets.

When assessing national results for the
initial, interim targets, it must be recalled that the 2010 plans and 2011/2012
interim targets are just the starting point of the trajectory that gets steeper
towards 2020. In fact, if the growth rates achieved in 2009/2010 were
maintained to 2020, eleven Member States would still fail to reach their
target. In many Member States currently implemented policies (chiefly sub
optimal support schemes and addressing administrative
barriers) risk being insufficient to trigger the
required renewable energy deployment
to reach the 2020 targets. The financial crisis also affects these developments, since the cost of capital has risen in several Member States. Thus
low cost measures that reduce administrative burdens
and that increase energy
efficiency (lowering total
energy demand and therefore raising the share of
renewable energy) are even more important policies for achieving the targets.

A summary of current national performance
is contained in Annex 1.

3.           Policy measures

Until such time as Europe has achieved an
open and competitive single energy market, with market failures corrected and
external costs internalised, policy measures, be they financial, regulatory or
administrative, are needed to boost the growth of renewable energy. Europe is still striving to make the energy market work. Market failures include fragmented
markets, low levels of competition, and significant external costs related to
climate change, environmental pollution, security of supply, and technological
innovation (spill over effects and first move advantages). To compensate for
the market failures, Europe has a range of policy measures in place including
support schemes, standards, and administrative rules to promote renewable
energy development.

Direct EU measures to support renewable
energy include EU R&D expenditure and the allocation of revenues from the
sale of ETS allowances (the "NER300" programme). The scope to promote
innovative technologies in the future will be explored in the Commission's
forthcoming Communication on energy technologies and innovation. In addition,
the key European instrument for internalising the external costs of climate
change, the EU ETS, is entering its third phase. To date, however, the (low)
carbon price has not provided investors with sufficient incentive and has not
succeeded in being a major driver towards long term low carbon investments.

Administrative procedures

Authorisation and planning procedures and
the slow pace of electricity infrastructure development were identified as
important challenges to the renewable energy growth in the last progress report[11]. Article 13(1) of the
Renewable Energy Directive requires Member States to ensure that permitting
procedures for renewable energy are transparent, proportionate, coordinated and
limited in time, and are facilitated for smaller or decentralized projects. The
Directive also requires Member States to report on progress achieved in
addressing these barriers.

The Commission's analysis of Member States'
2011 progress reports[12]
indicates that progress in removing the administrative barriers is still
limited and slow. Many Member States do not even address in their reports
the administrative reforms specifically listed in Article 22 (3) of the
Directive. The Commission will continue to investigate Member States' removal
of these barriers and will launch infringement proceedings where Member States
fail to act.

There are concerns about slow progress
regarding online applications, administrative time limits for planning and
permitting decisions, and transparent approval processes. The availability of a
single administrative body for dealing with renewable energy project
authorizations and assistance to applicants is still limited. Only Greece and
Portugal reported newly introduced "one-stop-shop-agencies" since the
plans were published; a few Member States had them in place before for some
technologies (e.g. wind) or in some parts of the country (e.g. in Germany or in
Sweden). Only Denmark, Italy and the Netherlands have a single permit system
for all projects. These concerns are particularly acute in the heating and
cooling sector, where the disparate nature of the different possible
technologies hinders the development of uniform administrative approaches.

Sub optimal administrative arrangements
clearly raise the costs of renewable energy and their removal normally has low
fiscal implications: simplifying and speeding up administrative procedures does
not need to cost public administrations more, and the reduction in uncertainty
and regulatory risk for investors can significantly reduce the cost of capital.
For energy transmission infrastructure, such measures have been addressed at
European level through the regulation on guidelines for trans-European
infrastructure which defines responsibilities for coordinating and overseeing
the permit granting process, sets minimum standards for transparency and public
participation and fixes the maximum allowed duration of the permit granting
process. Such measures are urgently needed under Article 13 of the Renewable
Energy Directive for energy installations.

The Electricity Grid

Renewable energy for generating electricity
must be integrated into the market. However some of the major future renewable
energy sources – mainly wind and solar power – have inherently different
characteristics from conventional sources in terms of cost structure, dispatch
ability and size, and cannot simply "fit" into existing market
structures without any adaptation. Infrastructure investments are clearly and
urgently needed and electricity grid operations also need to be updated.

Article 16 of the Directive requires
reforms of electricity infrastructure, operation and development and the rules
for grid access and cost sharing, with a view to increasing the contribution of
electricity from renewable energy sources. Member States are also required to
report on these reforms. Analysis of Member State progress in ensuring the
transmission and distribution of electricity from renewable sources and the
improvement of the renewable energy integration rules indicates that most
Member States have made some progress in tackling their grid barriers. However,
further progress improving the transparency and consistency of network rules is
still needed.

Given the longer term expectations of the
growing share of EU electricity coming from renewable energy sources, full
implementation of Article 16 of the Directive is important. The current failure
to modernise the grid as the energy mix is changing is causing problems for the
development of the internal market, technical problems related to loop flows,
grid stability and growing power curtailment, and investment bottlenecks
resulting from delayed connection of new power producers. Adaptation of the
electricity grid and system operation, including by improving storage capacity,
better system controls and forecasting will improve the efficiency with which
current infrastructure is used. And more efficient use and management of the
grid can also avoid transport losses. Together with rapid progress in
implementing the Member States' Ten Year Network Development Plan and in
determining and starting the Projects of Common Interest established under the regulation
on guidelines for trans-European energy infrastructure, such improvements are
necessary for the equal treatment of renewable energy and the proper
integration of renewable energy producers into the electricity market.

Arrangements and cost sharing rules for using
the grid also need modernising to reflect the changing nature of the
electricity generation mix and progressively increase the balancing
responsibility of renewable energy producers as dispatchable electricity
producers. The final aim should be that renewable energy is fully competitive
and that producers act and are treated as equal market players. The increase of
transparency and equitable grid connection and the development of cost sharing
rules will provide the incentives on all producers to improve system-wide efficiency
and not to make production decisions or location decisions in isolation.

It should also be recalled that
infrastructure concerns for clean energy are not limited to the electricity
sector. The need to reduce fossil fuel dependence in the transport sector also
requires new infrastructure investments. So to foster the deployment of
alternative fuels infrastructure in transport, the Commission has published the
'Clean Power for Transport' package[13]
proposing a Directive on the deployment of alternative fuels infrastructure
including binding targets for infrastructure uptake.

Support schemes

There has been a discussion about the
effectiveness and the efficiency of different types of renewable energy support
schemes for at least a decade. Multiple schemes exist, with good and bad
features and impacts. In 2011 the Commission suggested guidance would be useful
to help Member States identify best practice4. Following discussions
with Member States, the Commission's 2012 report "Renewable
Energy: a major player in the European energy market" [14]
announced plans to produce such guidance. Given the prominent role that
financial support schemes play in developing renewable energy today, and given
the growing prominence (and cost) of renewable energy use in the electricity
sector, urgent efforts are needed to reform support schemes to ensure that they
are designed in a cost effective, market-oriented manner. The
Commission's guidance is necessary to ensure that support schemes are adjusted
regularly and quickly enough to take account of falling technology costs and to
ensure reforms make renewable energy producers part of the energy market (such
as by moving from feed in tariffs to feed in premiums or quotas, and using tendering
to avoid over compensation etc.); to ensure such market interventions are
correcting market failures and not adding or maintaining market distortions.
The Commission's forthcoming revision of state aid guidelines will also take
this into account. Regarding the uncertainty of support schemes for biofuels in
particular, the lack of progress on the adoption by the Council of a new legal
framework for taxation of energy products[15]
is a concern, since the scope to use tax incentives would expire by 2020 under
the current legal framework.

Many national reforms have had a negative
impact on the investment climate. Most critical have been changes that reduce
the return on investments already made. Such changes alter the
legitimate expectations of business and clearly discourage investment, at a
time when significantly more investment is needed. Thus there is a need for
guidance on the reform process itself, to ensure support schemes are cost
effective but not disruptive. The Commission also feels more action is needed
to ensure convergence and the Europeanisation of energy: in addition to
developing common approaches to supporting renewable energy, growing
cross-border cooperation must occur. The current legal framework for such
cooperation is the Renewable Energy Directive's cooperation mechanism
framework. This includes joint projects, where common approaches can be
developed based on specific renewable energy projects, technologies or regions
as well as joint support schemes such as the Swedish-Norwegian scheme, feasible
within well connected regional markets where consumers will also physically
profit from renewable energy capacity installed in a neighbouring country. Such
instruments provide the pathway to the European development of renewable
energy, where resource development in a single energy market occurs on a common
and cost effective basis. To this end, in addition to the forthcoming guidance
on cooperation mechanisms, the Commission will promote the emergence of
regional (and possibly sectoral) joint support schemes between Member States
based on cooperation mechanism, such as a common, European approach to
offshore wind development in the northern seas).

All four elements of renewables reform
and integration (strong growth, cost control, market integration and
Europeanisation) will be explicitly addressed in the Commission's forthcoming Guidance.
This will contribute to policy coherence and making sure that any market
interventions are correcting market failures without adding or maintain
existing market distortions.

4.           Sustainability of
biofuels

Not all Member States have developed their
biofuels markets and the bulk of EU biofuels production and consumption is dominated
by five Member States (France, Germany, Italy, Spain and UK). In 2010, Eurostat reported that 1.4% (177 ktoe) of all EU consumed biofuels was
produced from wastes, residues, non-food cellulosic material, and
ligno-cellulosic material (although other, unofficial statistics indicate approximately
9%, including recycled cooking oil). Articles 17, 18 and 23 of the Directive
require the Commission to monitor a range of issues surrounding biofuels and
bioliquids, including their impact on sustainability, biomass markets,
commodity and food prices, and the need for measures on soil, water and air
protection. This is fully addressed in the staff working document accompanying
this Report. The Commission is also studying the sustainability of biofuels
from a consumer perspective as a part of a broader study on the functioning of
the fuels market[16].

A key element in
such monitoring is information regarding the origin of the fuels. 60% of EU consumed biodiesel feedstock in 2010 was produced within
the EU. Argentina was the largest biodiesel exporter to the EU. Most – about
80% - of the EU consumed ethanol feedstock for transport was produced in the
EU, while the largest share of imports came from Brazil and the U.S., although imports from Brazil almost halved in comparison to 2008.

Origin of final biofuels consumed in the EU in 2010[17]

|| Biodiesel || Bioethanol

|| Volume (ktoe) || Share || || Volume (ktoe) || Share

EU || 8,270 || 83.2% || EU || 2,243 || 80.1%

Argentina || 1,003 || 10.1% || Brazil || 234 || 8.4%

Indonesia || 285 || 2.9% || U.S. || 121 || 4.3%

Malaysia || 123 || 1.2% || Peru || 26 || 0.9%

China || 67 || 0.7% || Kazakhstan || 24 || 0.8%

U.S. || 61 || 0.6% || Bolivia || 20 || 0.7%

Other countries || 129 || 1.3% || Egypt || 15 || 0.5%

|| || || S.Korea || 16 || 0.6%

|| || || Other countries || 101 || 3.6%

Total || 9938 || || || 2800 ||

Source:
EUROSTAT, COMTRADE.

Origin of all biofuel feedstock consumed in the EU in 2010

EU || Argentina || Indonesia || Brazil || U.S. || Canada || Ukraine || Malaysia || Paraguay || Other

63.9% || 9.7% || 6.6% || 5.3% || 3.0% || 2.4% || 2.3% || 1.7% || 1.5% || 1.3%

|| || || || || || || || ||

Russia || China || Switzerland || Peru || Bolivia || Peru || Egypt || Guatemala || ||

1.0% || 0.5% || 0.2% || 0.2% || 0.2% || 0.2% || 0.1% || 0.1% || ||

The Commission's scrutiny of Member States'
transposition of the biofuel sustainability criteria shows that there
are some gaps, and legal proceedings have begun to ensure that effective
sustainability regimes are in place in all Member States. At the same time, 13
"voluntary schemes" for certifying the sustainability of biofuels
have been approved by the Commission, enabling biofuel producers around the
world to comply with high EU standards. In addition, key export countries (Argentina, Brazil, Indonesia, and Malaysia) have adopted new regulatory measures to improve their
environmental practices in biofuels related areas.

The Commission and Member States'
monitoring of the need for specific measures for air, soil and water
protection generally find that all current EU agricultural practices obligatory
under EU Common Agricultural Policy and environmental legislation apply to
biofuel feedstock production (since the bulk of biofuels are produced from
agricultural crops) and as such, separate biofuels-specific measures are not
necessary. In fact, the current sustainability regimes and voluntary schemes
often include requirements of good agricultural practice and so best
agricultural practice for air, soil and water protection is encouraged by the
schemes. However, as pressure on agricultural resources increases, it will be
important to ensure protection measures in place continue to be adequate.

Global net land use for biofuels consumed
in the EU is less than 3Mha. Within the
EU, and whilst not all Member States have reported on areas planted with biofuel
feedstock, estimates range from 2% (Poland) to 6% (France) of national
cropland, within the EU.

Regarding the "social sustainability"
of biofuels, the Commission is also required to report on land use rights,
since EU demand for biofuels adds to existing international demand for food and
non-food agricultural exports and so to the pressure in developing countries to
convert more land for such cash crops. Given the time lags between land
acquisition and biofuels production and flaws on the ILC Land Matrix database,
it is not yet clear if EU biofuels demand contributes any abuse of land use
rights. The Commission and Member States' monitoring of this issue must,
however, continue. Given the significant food price increases and impact
on food affordability that occurred in 2008 and 2011 and the poor U.S. 2012
harvest, it is important to assess whether EU biofuels consumption has
contributed in any way or whether other factors such as bad weather, bad
harvests, rising global demand, increased oil prices, etc. are more important.
Commission analysis has found that grain use for bioethanol production
constituted 3% of total cereal use in 2010/2011 and is estimated to have minor
(1%-2%) price effect on the global cereals market. EU biodiesel consumption is
greater, and the estimated price effect on food oil crops (rapeseed, soybean,
palm oil) for 2008 and 2010 was 4%[18].
It also appears that biofuel demand is more price sensitive than the food
market and so demand declines more in response to rising prices. That said, the
Commission will continue to monitor and improve its analysis of EU biofuel
demand in the global agricultural market, food prices and food price volatility.
Moreover the interactions between biofuels and other sectors of the bio-economy
are also still evolving and the impacts on traditional users of biomass, such
as the oleo chemical industry continue to need to be explored.

The Directive also requires the Commission
to report on the compliance with a wide range of international conventions
(such as on labour conditions and biodiversity) of all countries providing
feedstock for EU biofuels consumption. Whilst most non EU countries have
ratified the fundamental conventions, enforcement is lower than in the EU or in
the US which has not ratified many such conventions. Thus efforts across the
board must continue to encourage countries to fully apply these conventions.
Turning to the social benefits of EU biofuels consumption, is estimated
to have generated 220,000 jobs in the EU and 1.4m jobs globally, in 2010.

Finally, it is important to consider the greenhouse
gas emissions saving resulting from switching to biofuels. Whilst imported mineral
oil still constitutes the vast bulk of fuel used in the transport sector, the
4.7% share of biofuels is estimated to have generated 25.5 Mt CO2eq
savings, based on national reporting (22.6 Mt CO2eq based on the
application of global default values). This estimate does not include indirect agricultural
intensification effects or indirect land use change effects which reduce the CO2
savings available from biofuels. When these emissions are included, estimated
savings are significantly reduced, reflecting the dominance of "1st
generation", often food crop-based biofuels which have lower or no estimated
greenhouse gas emissions savings. For this reason the Commission has proposed
amendments to the Fuel Quality and Renewable Energy Directives, to more firmly
take account of indirect land use change effects resulting from EU biofuel
consumption[19].
The proposal includes limiting the contribution that food-based biofuels can
make towards the 10% target to 5%, enhanced incentives to encourage the
development of second generation biofuels from non-food feedstock, like waste
or straw are proposed. This proposal is now with Parliament and the Council of
Ministers, and will clarify EU biofuels policy up to 2020.

5.           Conclusion

Spurred on by the adoption of the 2009
Renewable Energy Directive and the legally binding renewable energy targets,
renewable energy grew strongly. The data and analysis for the renewable energy
progress report shows that while the EU as a whole is on its trajectory towards
the 2020 targets, some Member States need to undertake additional efforts (see
annex). In addition, the analysis suggests there are reasons for concern about
future progress. The transposition of the Directive has been slower than
desirable and the trajectory grows steeper in coming years so that in reality
most of Member States' effort is needed towards the end. Whilst Member States
have had seven years to achieve the first 20% of their target for 2012,
thereafter they have only two years to achieve the next 10% for 2014, 15% for
2016 20% for 2018 and 35% for 2020. In addition, the significant change in
economic circumstances in Europe will result, according to analysis undertaken
for the Commission, in current policies being insufficient to
trigger the required renewable energy deployment in a majority
of Member States.

Member States deviations from their own
national renewable energy action plans reflect policy changes which reduce
clarity and certainty for investors, increasing their exposure to regulatory
risk. The deviation from the plans' expectations regarding sectoral and
technology trends also indicate where further efforts may be needed. Other
reasons for concern include the failure to address barriers to the uptake of
renewable energy: administrative burdens and delays still cause problems
and raise project risk for renewable energy projects; slow infrastructure
development, delays in connection, and grid operational rules that
disadvantage renewable energy producers all continue and all need to be
addressed by Member States in the implementation of the renewable energy
Directive.

The changed economic climate has also
clearly had an impact on the development of new renewable energy projects. One
aspect is the increased cost of capital in general. Another aspect is the
increase in risk resulting from Member Sates changes to support schemes. The
Commission's planned guidance on support schemes and reform is intended to ensure
that such support is cost effective and helps integrate renewable energy
production into the energy market.

The results of the current debate on the
2030 framework for energy and climate to which this progress report contributes
and the Commission's proposal to amend the renewable energy and fuel quality
Directives to improve the incentives for advanced biofuels rather than for
first generation biofuels are also elements that will play a role in the years
to come up to 2020 and are elements that need to be taken into account when
looking at the 2011/2012 compliance with the trajectory. The Commission will also
continue to examine Member States' implementation of the Directive and take
legal measures wherever necessary. The Commission has already launched a number
of infringement cases for Member States' non transposition of the Directive[20]; further infringements will
follow if implementation is incomplete. Complying with obligations under the
Renewable Energy Directive, the Commission has also assessed the
implementation, effectiveness and impacts of the EU's biofuel sustainability
regime and biofuels policy. Whilst Member States' implementation of the
biofuels sustainability regime is too slow, the possible negative impacts of EU
biofuels consumption do not appear to warrant further or specific policy
intervention beyond proposals already made. In addition, the greenhouse gas
savings as reported by member States (and not yet including indirect effects)
appear positive.

In its Communication of June 2012[21], the Commission committed
itself to driving forward the integration of renewable energy in the internal
market and address incentives for electricity generation investment. It also
intends to prepare guidance on best practice for cost effective and consistent
renewable energy support schemes, to provide further guidance for the use of
cooperation mechanisms to achieve renewable energy targets at lower cost and to
work on improved regulatory framework for energy cooperation with third
countries. These actions all require the rigorous and complete implementation
of Renewable Energy Directive and commitments made in the National Renewable
Energy Action Plans. Progress on these elements must be maintained. In
addition, support in the new EU multi-annual budget framework for new energy
technologies and energy infrastructure should help ensure continued growth for
the renewable energy sector in Europe. With such progress, the EU can expect the
renewable energy industry to be a thriving, mature and globally competitive one
in the lead up to 2020 and beyond.

Annex
 I. Overview of Member States' progress

Member State || 2005 RES share || 2010 RES share || 1st interim target || 2020 RES target

Austria || 23.3% || 30.1% || 25.4% || 34%

Belgium || 2.2% || 5.4% || 4.4% || 13%

Bulgaria || 9.4% || 13.8% || 10.7% || 16%

Cyprus || 2.9% || 5.7% || 4.9% || 13%

Czech Republic || 6.1% || 9.4% || 7.5% || 13%

Germany || 5.8% || 11.0% || 8.2% || 18%

Denmark || 17% || 22.2% || 19.6% || 30%

Estonia || 18% || 24.3% || 19.4% || 25%

Greece || 6.9% || 9.7% || 9.1% || 18%

Spain || 8.7% || 13.8% || 10.9% || 20%

Finland || 28.5% || 33% || 30.4% || 38%

France || 10.3% || 13.5% || 12.8% || 23%

Hungary || 4.3% || 8.8% || 6.0% || 13%

Ireland || 3.1% || 5.8% || 5.7% || 16%

Italy || 5.2% || 10.4% || 7.6% || 17%

Lithuania || 15% || 19.7% || 16.6% || 23%

Luxembourg || 0.9% || 3% || 2.9% || 11%

Latvia || 32.6% || 32.6% || 34.0% || 40%

Malta || 0% || 0.4% || 2.0% || 10%

Netherlands || 2.4% || 3.8% || 4.7% || 14%

Poland || 7.2% || 9.5% || 8.8% || 15%

Portugal || 20.5% || 24.6% || 22.6% || 31%

Romania || 17.8% || 23.6% || 19.0% || 24%

Sweden || 39.8% || 49.1% || 41.6% || 49%

Slovenia || 16.0% || 19.9% || 17.8% || 25%

Slovakia || 6.7% || 9.8% || 8.2% || 14%

UK || 1.3% || 3.3% || 4.0% || 15%

EU || 8.5% || 12.7% || 10.7% || 20%

The
most objective measure is to judge Member States against their first interim
target, calculated as the average of their 2011/2012 shares. Whilst on average
such progress to 2010 is good, this does not reflect the policy and economic
uncertainties that renewable energy producers appear to face currently.

Progress towards the first interim target:

>2% above
interim target

<1% from or <2%
above interim target

>1% below interim
target

[1]               Specifically, Articles 17 (7), 18 (2), 18 (9) and 23
(1-6).

[2]               Member State biennial renewable energy progress reports (2011): http://ec.europa.eu/energy/renewables/reports/2011_en.htm

[3]               Renewable energy progress and biofuel
sustainability, ECOFYS et al, 2012 http://ec.europa.eu/energy/renewables/reports/xxxxx
en.htm).

[4]               Renewable
Energy: progressing towards the 2020 target (COM (2011) 31 and SEC (2011) 130)

[5]               Interim
targets are set out in the indicative trajectory established in Part B of Annex
I of Directive 2009/28/EC. The EU interim target for 2011/2012 was 10.7%.
National results are given in Annex I of this Communication.

[6]               Green-X
model was used to perform a detailed quantitative assessment of the future
deployment of renewable energy on country, sector and technology level. The
model drew on assessments of national policies and plans up to mid- 2012.
Details are contained in the report noted in footnote 3.

[7]               Renewable
energy progress and biofuel sustainability, ECOFYS et al, 2012 http://ec.europa.eu/energy/renewables/reports/xxxxx
en.htm).

[8]               Agreed under Directive 2001/77/EC. Austria, Cyprus, Czech Republic, Greece, Finland, France, Italy, Luxembourg, Malta, Poland, Romania, Sweden, Slovenia, Slovakia, UK.

[9]               Established under Directive 2003/30/EC. Austria,
Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Greece, Spain,
Finland, Hungary, Ireland, Italy, Lithuania, Luxembourg, Latvia, Malta,
Netherlands, Portugal, Romania, Slovenia, UK.

[10]             In COM(2010)11 the Commission committed to reporting on
the impacts of biomass sustainability regimes.

[11]             Renewable Energy: progressing
towards the 2020 target (COM (2011) 31 and SEC (2011) 130)

[12]             Member State biennial renewable energy progress reports
(2011): http://ec.europa.eu/energy/renewables/reports/2011_en.htm

[13]             (COM(2013) 18 final)
http://ec.europa.eu/transport/themes/urban/cpt/index_en.htm

[14]             COM(2012)271

[15]             Commission proposal for revision the Energy Taxation
Directive COM(2011) 169 final.

[16]             The study (to be published by the end of 2013) explores
whether consumers are able to make informed choices, by looking into consumer
understanding and the transparency of information. It is expected to generate
recommendations on improving and harmonising fuel labelling at the pump across
EU Member States. The study also tackles the issue of the availability of
different fuels and retailers, and retail prices.

[17]             Trade
of biodiesel and of bioethanol is analysed on basis of Eurostat trade
statistics by CN8 (dataset DS_016890: code HS 3824.90.91 for biodiesel, codes
HS 2207.20.00, HS 2207.10.00, HS 220890.91, HS 2208.90.99 and HS 2909.19.10 for
ethanol) and Comtrade (code 382490 for biodiesel, codes 2207, 2208 and 2909 for
ethanol).

[18]             Renewable
energy progress and biofuel sustainability, ECOFYS et al, 2012 http://ec.europa.eu/energy/renewables/reports/xxxxx
en.htm

[19]             COM(2012)
595 final http://ec.europa.eu/energy/renewables/biofuels/land_use_change_en.htm

[20]             Cases are open and Reasoned Opinions have been sent to Austria, Bulgaria, Cyprus, Czech Republic, Finland, Hungary, Ireland, Latvia, Luxembourg, the Netherlands, Poland and Slovenia.

[21]             Renewable Energy: a major player in the European energy
market COM(2012)271