COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - The share of renewable energy in the EU - Commission Report in accordance with Article 3 of Directive 2001/77/EC, evaluation of the effect of legislative instruments and other Community policies on the development of the contribution of renewable energy sources in the EU and proposals for concrete actions {SEC(2004) 547}

TABLE OF CONTENTS

Executive Summary

1. Introduction

1.1. The global challenges

1.2. Europe's role

1.3. Scope of this Communication

1.4. New Member States

2. Commission report on national progress towards electricity produced from renewable energy sources (RES-E) targets

2.1. Information sources used

2.2. The overall picture

2.3. Assessment of progress at the national level

2.4. Practical requirements laid down in Directive 2001/77/EC

2.5. Guarantees of origin

2.6. Clarification of the role of the guarantee of origin in the calculation of progress towards national targets

2.7. Infringement procedures

2.8. Development of electricity from wind, biomass and solar

2.8.1. Wind energy

2.8.2. Electricity from biomass

2.8.3. Electricity from solar photovoltaics

2.9. Conclusions on the development of electricity from renewable energy sources

3. Efforts and results for 2010

3.1. The legislative framework developed since 2000

3.2. Member State Actions

3.3. Community support instruments

3.3.1. Community support programmes

3.3.2. Dissemination - Public Awareness Campaigns

3.4. Achieving the 12% target - the impact of Community legislation

3.4.1. Energy efficiency legislation

3.4.2. Legislation on electricity from renewable energy source

3.4.3. Biofuels

3.5. Renewable energy for heat production

3.5.1. The trend in geothermal

3.5.2. Solar thermal heat.

3.5.3. Biogas

3.5.4. Woody Biomass

3.5.5. Summary

3.6. Conclusion: Scenario for the renewable energy share in 2010

4. Concrete Actions

4.1. New initiatives to reinforce the financing of renewable energy - action by Member States

4.2. New initiatives to reinforce the renewable energy and energy efficiency - action at European level

4.3. Other measures

4.3.1. A Community plan for biomass

4.3.2. Developing renewable energy in heating

4.3.3. Offshore wind policy

4.3.4. Electricity from solar irradiation

4.3.5. Research and technological development

4.3.6. Using major Community financing instruments

4.3.7. Placing biofuels on the market

4.3.8. Timely data

5. International political context and EU perspectives beyond 2010

5.1. The Lisbon process and the environmental dimension

5.2. The Johannesburg conference and its follow-up

5.3. The role of targets at EU level

6. Conclusions

Executive Summary

1. As set out in the Green Paper on security of energy supply (2000), key priorities for European Union energy policy are to address the Union's growing dependence on energy imports from a few areas of the world, and to tackle climate change. Looking ahead to the next twenty to thirty years, the Green Paper drew attention to the structural weaknesses and geopolitical, social and environmental shortcomings of the EU's energy supply, notably as regards European commitments in the Kyoto Protocol.

The promotion of renewable energy has an important part to play in both tasks. Since 1997, the Union has been working towards the ambitious target of a 12% share of renewable energy in gross inland consumption by 2010. In 1997, the share of renewable energy was 5.4%; by 2001 it had reached 6%.

2. This Communication assesses the state of development of renewable energy in the European Union. It serves three purposes:

- The formal report that the Commission is required to make under Article 3 of Directive 2001/77/EC, evaluating the progress made by the EU15 towards achieving national targets for 2010 for electricity from renewable energy sources;

- Assessment of the prospects for achieving the target of a 12% share of renewable energy in overall energy consumption in the EU15 in 2010 (including heating, electricity and transport), taking into account EU legislation since 2000 and other measures in renewable energy and energy efficiency;

- Proposals for concrete actions at national and Community level to ensure the achievement of EU renewable energy targets for 2010, in the context of the Bonn World Renewable Energy Conference (June 2004) and, building on this, the line to take on the scenario for 2020.

3. In accordance with Directive 2001/77/EC, all Member States have adopted national targets for the share of electricity production from renewable energy sources. These are mostly in line with the reference values given in Annex I of the Directive.

If Member States adopt the measures necessary for the achievement of their national targets, the share of electricity from renewable energy sources in EU15 electricity production should approximate to the share of 22% targeted by the Directive.

However, analysis of the progress reports that Member States have submitted to the Commission shows that policies and measures currently in place will probably achieve a share of only 18-19% in 2010 compared to 14% in 2000.

One of the reasons for this discrepancy appears to be that a number of Member States have not yet introduced active policies in line with the targets that they adopted.

The Commission will closely monitor the situation in those Member States, and the full implementation of all requirements of the Directive, in order to prepare follow-up actions at a later stage.

4. Since 2000 the Commission has proposed a considerable number of new legal instruments to promote renewable energy and energy efficiency. The European Parliament and Council have adopted most of them. The remainder are in an advanced stage of the inter-institutional process.

The adopted proposals are:

- Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources (OJ L283/33, 27.10.2001)

- Directive 2003/30/EC on the promotion of biofuels (OJ L123/42, 17.5.2003)

- Directive 2002/91/EC on energy performance of buildings (OJ L1/65, 4.1.2003)

- Directive 2004/8/EC on the promotion of cogeneration (OJ L52/50, 21.2.2004)

- Directive 2003/96/EC for the taxation of energy products and electricity (OJ 283/51, 31.10.2003)

- Directive 2000/55/EC on energy efficiency requirements for ballasts for fluorescent lighting (OJ L279/33, 01.11.2000)

- Commission Directive 2002/40/EC on labelling of electric ovens (OJ L128/45, 15.05.2002)

- Commission Directive 2002/31/EC on labelling of airconditioners (OJ L86/26, 03.04.2003)

- Commission Directive 2003/66/EC on labelling of refrigerators (OJ L170/10, 09.07.2003)

- Regulation 2422/2001/EC on Energy Star labelling for office equipment (OJ L332/1, 15.12.2001)

The proposals under examination by the European Parliament and Council are:

- COM (2003)453 of 01.08.2003 on Eco design requirements for energy using products

- COM (2003)739 of 10.12.2003 on energy efficiency and energy services

5. The Commission also brought forward a proposal for the multiannual programme Intelligent Energy - Europe (EIE), building on the successes of previous Community support programmes (ALTENER, SAVE and RTD). The European Parliament and Council adopted the proposal in June 2003 with a budget of EUR250 million.

6. With the measures that have been put in place, the Commission estimates that the share of renewable energy sources in the EU15 is on course to reach 10% in 2010. The shortfall compared to the 12% target is caused by sluggish growth of renewable energy markets for heating and cooling, leading to the conclusion that considerable extra action is needed in this sector to enable the full 12% target to be reached.

However, this assessment assumes full implementation of the requirements of EU legislation by national and local authorities. The example of Directive 2001/77/EC demonstrates that this cannot be taken for granted. If this directive delivers only a 18-19% renewable energy share of the electricity market in 2010, then the share of renewable energy in energy consumption as a whole will reach no more than 9%.

With a framework of Community legislation in place, it is to Member States that responsibility falls for ensuring that the agreed targets and measures are, in fact, implemented on the ground. This will require a wide range of national actions, including efforts to ensure that established firms in the energy supply industries pay a share of the costs of promoting renewable energy.

The Communication also announces a number of additional concrete actions at Community level in order to support Member States' efforts to achieve the EU15 12% share.

7. The World Renewable Energy Conference, to be held in Bonn in June 2004, will address the promotion of renewable energy across the globe as a means to combat climate change, promote the security of energy supply and - notably for developing countries - reduce poverty.

A European preparatory conference held in Berlin in January 2004 considered that the use of overall, general targets for renewable energy should be extended beyond 2010. It noted a range of technical studies that suggest a target of at least 20% of renewable energy in overall energy consumption in the EU25 in 2020, using the tools established in existing Community legislation and additional actions to deliver results.

The Commission is committed to contributing to the successful outcome of this conference and has highlighted a number of actions it will offer as an input the International Programme of Action.

1. Introduction

1.1. The global challenges

As set out in the Green Paper on security of energy supply (2000), key priorities for European Union energy policy are to address the Union's growing dependence on energy imports from a few areas of the world, and to tackle climate change. Looking ahead to the next twenty to thirty years, the Green Paper drew attention to the structural weaknesses and geopolitical, social and environmental shortcomings of the EU's energy supply, notably as regards European commitments in the Kyoto Protocol.

The promotion of renewable energy has an important part to play in both tasks. Since 1997, the Union has been working towards the ambitious target of a 12% share of renewable energy in gross inland consumption by 2010. In 1997, in the EU15, the share of renewable energy was 5.4%; by 2001 it had reached 6% (for comparison, oil contributes 40%, natural gas 23%, nuclear power 16% and solid fuels 15%).

In addition to that, renewable energies contribute to improve air quality, innovative capacity, creation of new business, employment and rural development, in the context of strengthening the 3 pillars of sustainable development.

At the global level, energy consumption is growing fast - by 15% over the decade 1990-2000. It is expected to grow even faster between 2000 and 2020.

Fossil fuels (coal, gas and oil) account for about 80% of world energy consumption. Global consumption of fossil fuels grew in line with overall energy consumption during the 1990s. Fossil fuel use is expected to grow even faster than overall consumption in the period up to 2020.

Fossil fuels offer many advantages. They are relatively cheap to extract, convenient to use and widely available. The infrastructure to deliver them is in place. The industries that supply them are well organised and offer supplies in most parts of the world.

They have two main disadvantages. First, when they are burnt, they emit pollutants and the greenhouse gases that are causing climate change. Second, countries without adequate reserves of fossil fuels - especially oil - are facing increasing risks to the security of their energy supplies. Import dependence and rising import ratios may lead to concern about the risk of interruption to or difficulties in supply. However, security of supply should not be conceived as merely a question of reducing import dependency and boosting domestic production. Security of supply calls for a wide range of policy initiatives aimed at, inter alia, diversification of sources and technologies and without ignoring the geopolitical context and its implications.

The European Commission has set out elsewhere its ideas about how to tackle these problems, notably in its Green Paper on security of energy supply (2000) [1] and its communication on Energy cooperation with the developing countries (2002). [2]

[1] "Towards a European strategy for the security of energy supply", COM (2000) 769.

[2] "Energy cooperation with the developing countries", COM (2002) 408.

As a substitute for fossil fuels, renewable energy can help tackle climate change. It can improve the security of supply by boosting diversification of energy production. The case for renewable energy is strengthened by its effects in protecting air quality and creating new jobs and businesses - many of them in rural areas.

Today, investment in renewable energy is generally not the cheapest way to reduce greenhouse gas emissions. It is cheaper to use energy more efficiently. However, investment in renewable energy is vital from a longer-term perspective. Experience in sectors like wind energy has shown that sustained investment leads to innovations that make the use of renewable energy cheaper. By contrast, the cost of additional energy efficiency measures rises after the "low-hanging fruit" is harvested. Investment in both is needed.

1.2. Europe's role

The European Union, even enlarged to 25 members, is expected to account for only 7% of the growth in global energy consumption between 2000 and 2020. More than a third is expected to come from China and India. Decisions here and in other industrialising countries will have an increasing influence on the level and pattern of world energy use.

The European Union and other OECD countries have a moral and practical part to play in making it possible for industrialising countries to adopt policies that will help secure their energy supplies and hold climate change in check without jeopardizing their economy growth.

The average citizen of the EU25 consumes about five times as much fossil energy as the average citizen of Asia, Africa and the Middle East (the same is true of citizens of the Japan-Pacific region. Citizens of the United States consume nearly 12 times as much). If the richest countries do not moderate their consumption of fossil fuels, they have little prospect of persuading less well-off ones to do so - especially when so many people in developing countries lack adequate energy services.

The European Union has made a specific practical contribution in the field of renewable energy, namely by working out better and cheaper technical and institutional solutions. Europe is the pioneer in developing and implementing modern renewable energy techniques. Western Europe, with its 16% of world energy consumption, accounted for 31% of the world increase in electricity generation from biomass between 1990 and 2000; 48% of the increase in small hydropower; and 79% of the increase in wind power. The European Union and its Member States have pioneered the policy and regulatory arrangements, such as targets, and the financial schemes needed to drive renewable energy forward. European companies lead the world in renewable energy technology.

If Europe is to continue to play its part, it must not be complacent. As the charts show, renewable energy's contribution in Europe still lags behind those of solid fuels, oil, gas and nuclear power.

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The European Union needs affordable renewable energy to contribute solving its own security of supply problems and meeting its targets for reducing greenhouse gas emissions. Recognising the wide benefits of renewable energy, Europe is pushing the development of technological and institutional solutions that can also be applied on a global scale.

But while renewable energy has a significant part to play, it is important not to ignore certain difficulties.

First, there are technical and practical limits on the cost-effective availability of renewable energy. There are major geographical variations in the incidence of wind and solar power.

Biomass production must compete with other land uses, notably agriculture. There is a limit to the number of valleys that can be used for hydroelectric power. The Commission Staff Working Document that is published alongside this communication includes a careful analysis of the potential of renewable energy in each Member State. More in-depth analysis is forthcoming as announced in this Communication

Second, renewable energy sources need conventional energy sources as back-up. Wind and solar power are intermittent and unpredictable. Climatic factors can produce big variations in the availability of biomass and hydropower from one year to the next. For these reasons, there are limits on the proportion of renewable energy that our present-day energy supply systems can absorb. This may give rise to a spare overcapacity of traditional sources entailing some additional costs. The development of renewable energy may also require new investments in existing energy systems, such as electricity grids. Energy policy needs the development of a range of different energy sources - having learnt the lesson of the need for diversification, this should not be forgotten.

Finally, the development of a more diverse and secure energy system including a higher share of renewable energy remains today, in general, a policy of higher costs. It is true that hydropower and traditional uses of wood are competitive with conventional forms of energy, and that wind power is approaching competitiveness in some onshore locations with high average wind speeds. Nevertheless, many forms of renewable energy - for example biomass electricity and biofuels - costs two or more times as much as their conventional alternatives if compared on an individual basis without considering the impact of the total energy system cost. Others, such as photo-voltaic power, are more expensive still. [3]

[3] "Wind energy - the facts" (European Wind Energy Association, 2004) gives costs for the best wind power generation of the order of 4 to 5 EUR-cents per kWh. "Renewables for power generation" (International Energy Agency, 2003) gives costs for photovoltaic power of at least 17 EUR-cents per kWh; and costs for biomass electricity plants of 7 EUR-cents per kWh or more. However costs can be reduced when biomass is used in combined heat and power plants (down to 5 to 6 EUR-cents per kWh) or for co-firing with fossil fuels, where investment costs on the power cycle are avoided (down to 2-4 EUR-cents per kWh). For comparison, the wholesale cost of electricity produced by conventional power plants is currently around 3 EUR-cents per kWh. The Commission's communication on "Alternative fuels for road transportation and on a set of measures to promote the use of biofuels" (COM (2001) 547) quotes costs of the order of EUR500/1000 litres for biofuels, compared with EUR200-250/1000 litres for oil-based fuels at USD30/barrel.

There therefore remain certain barriers to the development of renewable energies. Whilst the present state of technological development prohibits to envisage a world in which conventional energy sources are totally replaced by renewable energy a more step-wise approach can certainly be envisaged.

Improved analytical and management tools are already emerging that should allow to develop a proper response to these challenges and key barriers. These include more sophisticated costing models that take account of the impact of increased shares of renewable energy on the total energy system cost, sophisticated weather forecast tools can be integrated in modern energy management systems to better match supply with demand. Additional analysis is therefore set to take place in due course as announced later in this document.

1.3. Scope of this Communication

Since 1997, the Union has been working towards the general target of an increase to 12% in renewable energy's share of gross inland energy consumption in the EU15 in 2010, compared with 5.2% in 1995. The biggest risk for the achievement of this target is the imbalance between different countries' levels of commitment to the development of renewable energy.

To provide a focus for faster progress, the European Union has since 2000, set through legislation two indicative targets for renewable energy:

- an increase to 22% in the share of electricity generated by renewable energy in 2010 for the EU15 (this compares with 14% in 2000); [4]

[4] Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources in the internal market.

- an increase to 5.75% in the share of biofuels in diesel and gasoline used for transport in 2010 (this compares with 0.6% in 2002). [5]

[5] Directive 2003/30/EC on the promotion of the use of biofuels or other renewable fuels for transport. The figures include the contribution of the 10 acceding countries. The EU15 figure in 2000 was 0.7%.

The Commission has also proposed a considerable number of new legal instruments to promote energy efficiency. The European Parliament and the Council have adopted the majority of these proposals and the remainder is at an advanced stage of the inter institutional process.

This Communication serves three purposes:

- The formal report that the Commission is required to made under Article 3 of Directive 2001/77/EC, evaluating the progress made by the EU15 towards achieving national targets for 2010 for electricity from renewable energy sources;

- Assessment of the prospects for achieving the target of a 12% share of renewable energy in overall energy consumption in the EU15 in 2010 (including heating, electricity and transport), taking into account EU legislation since 2000 and other measures in renewable energy and energy efficiency;

- Proposals for concrete actions at national and Community level to ensure the achievement of EU renewable energy targets for 2010, in the context of the Bonn World Renewable Energy Conference (June 2004) and, building on this, the approach to adopt for the 2020 scenario.

1.4. New Member States

The EU's ten new Member States are subject to the requirements of Directive 2001/77/EC on electricity from renewable energy sources. National indicative targets for the share of electricity from renewable energy in each new Member State are set out in the Accession Treaty. Taken together, these mean that the collective target for the EU25 is for the share of renewable energy to reach 21% in 2010.

In the case of the EU15, the Directive requires the Commission to adopt a first progress report during 2004. Chapter 2 of this communication serves that function. For that reason, it concentrates on the EU15. In the case of the new Member States, the first progress report, on the basis of national reports to be made by the Member States in question, is not due until 2006. Therefore, their position is not assessed in Chapter 2. However the chapter cites, for information, some examples of good developments in the generation of electricity from renewable energy sources in the new Member States.

The new Member States are subject to the requirements of the biofuels Directive (2003/30/EC). The Commission will make a first progress report on this directive in 2006. It will cover all 25 Member States.

The target for a 12% share of renewable energy in overall energy consumption is an EU15 target. Progress towards this target is assessed in Chapter 3 of this communication. Like Chapter 2, this chapter therefore concentrates on the Member States to which the target applies. Again, it cites individual examples from the new Member States for illustrative purposes.

Chapters 4 and 5 address future policies and actions. These concern the whole EU.

The Commission Staff Working Document that is published alongside this communication covers all Member States.

2. Commission report on national progress towards electricity produced from renewable energy sources (RES-E) targets

2.1. Information sources used

Under article 3.4 of Directive 2001/77/EC, the Commission is required to assess to what extent:

"- Member States have made progress towards achieving their national indicative targets,

- the national indicative targets are consistent with the global indicative target of 12% of gross national energy consumption by 2010 and in particular with the 22.1% indicative share of electricity produced from renewable energy sources in total Community electricity consumption by 2010."

According to Articles 3.2 and 3.3 of the Directive, Member States must adopt national reports setting their national targets and analysing their success in meeting them.

Reports on national targets were due in 2002. All EU15 Member States have adopted them.

Reports on progress towards national targets were due by October 2003. All Member States except Finland, Luxembourg and Italy have sent them to the Commission (see Commission Staff Working Document).

The Commission has analysed these reports and commissioned several consultancies to make assessments of the impact of the measures they describe (see Commission Staff Working Document).

2.2. The overall picture

A first conclusion is that the target adopted by each Member State is consistent with the national reference value listed in Annex I of Directive 2001/77/EC, although Sweden has used a different method to fix a different value [6]. If Member States meet these national targets, the overall share of renewable electricity in the EU15 will achieve the target of about 22% in 2010, as required by the Directive.

[6] Sweden has set a target for 2010 of an additional 10 TWh of electricity from renewable energy sources other than hydro, compared with 2002. The Swedish hydro figures are based on an average calculated on a 50 year base. This makes it difficult to convert the figures given by Sweden into a percentage.

Unfortunately, the national policies, measures and achievements reported by Member States paint a less rosy picture.

It should be underlined that it is difficult to predict exactly how measures now adopted will affect the share of electricity from renewable sources in 2010. However, the extrapolation scenarios set out in the Commission Staff Working Document lead to the second conclusion that, although progress towards meeting the targets has begun, the 2010 target will not be achieved under current policies and measures, even under a scenario that builds in reductions in total electricity demand as a result of new energy efficiency measures. Instead, currently implemented policies will probably result in a share of between 18% and 19% in 2010 (see charts).

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A third conclusion is that the main reason why the target is not being achieved is because the production of electricity from biomass has not been as high as initially previewed. The main difference between 2nd chart (showing the effect of national policies and measures now in place or recently planned) and 3rd chart (showing a practicable scenario for achieving the 22.1% target set in the Directive) is the size of the biomass (green area) contribution.

2.3. Assessment of progress at the national level

Country reports indicate considerable differences between Member States. Figure 1, based on the detailed information in Commission Staff Working Document, arranges Member States in three groups according to the probability that, with the energy policies currently adopted, they will achieve their national targets. The first group (Germany, Denmark, Spain, Finland) is on track. The countries in the second group (Austria, Belgium, Ireland, the Netherlands, Sweden, the United Kingdom, France) have started to implement appropriate policies. For this group there is a mixture of positive and negative indications regarding the achievement of the 2010 targets. The countries in the third group (Greece, Portugal) are not on track to achieve their national targets.

Italy and Luxembourg adopted new laws in March 2004. It has not yet been possible to assess their likely effects. However, only limited progress can be recorded for these two Member States during last 3 years. See Commission Staff Working Document for more details.

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Figure 1: Member States' progress towards achieving their national indicative target by 2010

On track. Denmark, if it maintains its active approach, is likely to achieve the 2010 target (29%) as early as 2005. Denmark has increased the share of electricity from renewable sources from 8.9% in 1997 to 20% in 2002. Germany has increased the share from 4.5% in 1997 to 8% in 2002 (national target of 12.5%) with wind generation growing from 3 TWh in 1997 to 17 TWh in 2002 (equal to 3% of the total electricity consumption in 2002). Spain is the second European country for wind power although its biomass policy needs to be given higher priority.

According to Finland's national report, the contribution of electricity from renewable energy, passed from 7 TWh in 1997 to 10 TWh in 2002 excluding hydro. Although 2002 was a bad year for hydropower in Finland, the evolution of biomass has been impressive in the recent years.

One of the drivers of success in all four countries was an attractive support system in a stable and long-term framework.

About to be on track. For electricity from renewable energy, United Kingdom and Netherlands have actively invested in a new policy although the full results still have to materialise. Ireland has set up a support system through tendering but there are big difficulties in connecting wind electricity to the grid. Since 2002, Belgium has a new green certificate system. For the moment this does not show visible results.

France recently put in place a new tariff system. The attractiveness of the tariffs is, however, reduced by the upper limit of 12 MW for each project. This particularly affects wind energy. In addition, long approval procedures and grid connection problems remain major obstacles.

Sweden implemented a green certificate system in May 2003. Electricity generation from renewable energy rose hardly at all in Sweden between 1997 and 2002. But signals from 2003 are much better.

Austria has a good perspective for growth. Such a development is facilitated by the feed-in tariffs introduced in January 2003, however not excluding a streamlining of the support scheme with additional efficiency requirements.

Not on track. So far, the development of electricity from renewable energy has been held back in Greece. Administrative barriers prevent exploitation of the high potential that exists both in wind, biomass and solar. Portugal has increased its non-hydro production of electricity from renewable energy by only 1 TWh since 1997. A further 14 TWh are still needed to achieve its national target.

2.4. Practical requirements laid down in Directive 2001/77/EC

In addition to the requirement for national indicative targets, the Directive lays down practical requirements for Member States in four areas. These are designed to ensure stable investment conditions for electricity from renewable energy:

1) the implementation of attractive support schemes, which should be as efficient as possible,

2) the removal of administrative barriers,

3) the guarantee of fair grid access,

4) the issuing of a guarantee of origin.

Most Member States have implemented a support system for renewable energy. These take the form of feed-in tariffs, quota obligations and/or green certificates.

National reports show that appropriate financial mechanisms are not enough. In several cases, take-off is blocked by complex licensing procedures, poor integration of electricity from renewable energy in regional and local planning and opaque grid-connection procedures. The table gives an overview of the situation in the Member States.

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Table 1: Overview of Member States's administrative and grid barriers

In accordance with the Directive, the Commission will report in 2005 on support systems (Article 4.2) and best practices in administrative procedures (Article 6.3).

2.5. Guarantees of origin

Article 5 of the Directive requires Member States to implement a system for a guarantee of origin by 27 October 2003.

Implementation is in several stages. The most important of these are: implementing legislation, appointing the body for issuing the guarantees of origin and establishing an accurate and reliable system including the preparation of documents and registries.

Based on national reports and supplementary information, the situation in March 2004 is the following:

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Full implementation - 3 "completed" boxes - means that a guarantee of origin can actually be issued. Although the table shows more green than red, implementation is not yet complete.

The Commission will consider the practical implementation of guarantees of origin in its report on support systems in 2005. It will look at the validity of guarantees and the need for redemption, the reliability of the system, and the inclusion of guarantees of origin into the different support schemes, as appropriate.

In accordance with Article 5 of the Directive, the Commission will consider the desirability of proposing common rules for guarantees of origin.

2.6. Clarification of the role of the guarantee of origin in the calculation of progress towards national targets

In the Directive (Article 3), national targets are defined in terms of the consumption of renewable electricity from renewable energy sources as a percentage of total national electricity consumption. The consumption of electricity is defined as national production plus imports minus exports. In the Directive's Annex I, reference values for national targets are determined solely as percentages of national production.

The question that arises is under what conditions can a Member State consider that imported renewable electricity is contributing to the achievement of its target under the Directive.

A Member State cannot meet its targets with imports from outside the EU. This is made clear in a footnote to the table in the Annex I, which states that in ".... the case of internal trade of RES-E (with recognised certification of origin registered) the calculation of these percentages will influence 2010 figures by Member States but not the Community total."

However, the situation is not so clear regarding imports from within the EU.

The Commission acknowledges the need to clarify how progress towards national targets is to be calculated. In particular, it is important to define the role of guarantees of origin.

The Commission has decided to apply the following principle in assessing the extent to which national targets are met:

A Member State can only include a contribution from import from another Member State if the exporting state has accepted explicitly, and stated on a guarantee of origin, that it will not use the specified amount of renewable electricity to meet its own target and thereby also accepted that this electricity can be counted towards the importing Member State's target.

It should be emphasised that trade in renewable electricity should occur. Consumer preferences may in any case generate trade. However, in the absence of the agreement of the exporting country, the production will be counted towards the target of this exporting country.

Exporting Member States could include this agreement directly in guarantees of origin for renewable electricity produced on their territory. If they do not do so, importing Member States could ask for a supplementary approval with reference to the guarantee of origin in question.

2.7. Infringement procedures

The Commission will examine the transposition of the binding text of Directive 2001/77/EC, in particular regarding the practical requirements described above. It will take into account the national report and will take infringement action where appropriate.

2.8. Development of electricity from wind, biomass and solar

In total, renewable energy accounts in 2002 for about 15.2% of total electricity generation. Nuclear energy accounts for 33%. Fossil fuel thermal processes account for the remainder.

The EU15 is using nearly all its large hydro potential. The contribution of this renewable energy source is high but the total capacity will remain stable. The two technologies that can be expected to deliver most of the increase in electricity from renewable sources in EU15 for 2010 are wind and biomass. However, in the new Member States - particularly in Slovenia, Hungary and Lithuania - there is still an important potential to increase hydro energy generation.

Output expectations from the different biomass uses need to be reassessed taking into account its efficiency and availability. Section 2.2 showed clear differences in their growth rates of both energy sources. In addition, for strategic reasons on a medium time horizon (towards 2020 and beyond), solar energy is also observed.

2.8.1. Wind energy

The European wind industry has 90% of the world equipment market. Nine of the world's ten largest wind turbine manufacturers are based in Europe. The industry employs 72,000 people, up from 25,000 in 1998. Costs per kWh have fallen by 50% over the last 15 years.

Installed capacity in the EU15 grew by 23% in 2003, to a total of more than 28 GW (Figure 2). In an average wind year this capacity can produce 60 TWh of electricity, approximately 2.4% of EU electricity consumption.

This success story is not the result of a common European effort. As the chart shows, Germany, Spain and Denmark contribute 84% of total EU15 wind power capacity.

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Figure 2: Wind energy capacity growth in EU15 1997-2003 - three leading markets

In 1997 and as part of the 12% target, the Commission hoped to see 40 GW of wind power capacity installed by 2010. This will clearly be exceeded. Industry estimates now suggest that 75 GW could be installed by 2010 [7] (generating approximately 167 TWh per year).

[7] Source: Wind energy -The Facts - March 2003.

However, the final result for 2010 will depend on the efforts of those Member States where wind energy has not yet taken off.

There are positive signals from UK, Austria, the Netherlands and Italy due to an improved policy framework. In other countries wind power is growing only slowly. In France, 91 MW was added in 2003 (as against 2.645 MW in Germany in the same year), with total capacity reaching 239 MW. In Greece 3.715 MW had been given first-step approval under national administrative procedures by September 2003 - but installed capacity was only 375 MW.

The experience of the three leading countries suggests that successful expansion of wind power benefits from:

- an attractive long-term financial framework,

- removal of administrative barriers through the implementation of uniform planning procedures and licensing systems,

- guarantee of a fair grid access and non-discriminatory tariffs,

- least-cost network planning.

The estimate of 75 GW of installed wind power capacity in 2010 includes 10 GW offshore. Offshore wind power will become more and more important as good wind sites on land are used up. Offshore wind power has several advantages. The wind is stronger and more reliable at sea (most marine sites in northern European waters are expected to deliver between 20% and 40% more wind energy than good shoreline sites). Neighbours fearing disturbance are fewer. However, the cost of generating electricity from offshore power plants is currently higher than from onshore plants.

Denmark, with the highest wind power share of any Member State, is pioneering offshore wind power. The UK announced in July 2003 that it would sponsor offshore projects. These are positive developments which other Member States could follow.

2.8.2. Electricity from biomass

Unfortunately, the success of the wind sector is not outweighing the slow growth of biomass electricity.

Between 1997 and 2001, Finland, Denmark and the UK (mainly using biogas) were the only countries in which biomass electricity grew steadily. In some countries the biomass contribution grew comparably but intermittently, and in others it stayed small. In general, coordinated policies are lacking and financial support is little.

In 1997, the Commission expected that 68% of the growth in electricity from renewable energy sources would come from biomass. 24% could come from wind power and 8% from a mixture of hydro, geothermal and photovoltaic power.

Now, the strong growth of wind power means that it can be expected to contribute 50% of the increase needed to achieve the target set in the Directive. Hydro, geothermal and photovoltaic power can be expected to contribute 10%. Consequently, the target will only be achieved if biomass contributes the remaining 40%. It will need to grow from 43 TWh in 2002 [8] to 162 TWh. This will require biomass electricity to grow by 18% a year - compared with a rate of only 7% a year over the past 7 years (see chart). [9]

[8] Source: Eurostat. Non-consolidated figures.

[9] The 22% objective does not detail the penetration of the different sources of RES-E. It is the Member States' responsibility to detail the mix of renewables. Therefore, the sectoral breakdown of the target sketched here must be treated only as an estimate.

In most of the new Member States there is an important potential for the use of biomass for both electricity and heat generation. This is particular true for the widely unexploited potential for electricity generation in Hungary, the Czech Republic, Slovakia, Latvia, Lithuania, and Estonia.

>REFERENCE TO A GRAPHIC>

This requirement should be seen in the context of the need for increased quantities of biomass not only for electricity generation, but also for heating and transport (see Chapter 3), and the biomass potential for cogeneration applications.

2.8.3. Electricity from solar photovoltaics

In 2003, the photovoltaic industry produced some 740 MWp of photovoltaic modules world-wide, and it has become a 4 bill. EUR business. In the past 5 years, the yearly growth rate was more than 30% on average. Besides the exponential increase of the world market, the faster increase of the Japanese production capacities is of particular European concern.

Since the introduction of the German Feed-in Law in 1999 the European PV production grew in average by 50% /year and has reached 190 MW in 2003. Europe's world market share rose in the same time from 20% to 26%, whereas the US share decreased due to a weak home market and the Japanese share increased to 49%. European PV industry has to continue this growth over the next years in order to maintain its share. This however will only be possible, if reliable political framework conditions are created, in order to enable a return on investment for the PV industry. Besides this political issue targeted improvements of the solar cell and system technology are still required.

Although PV output is still small, its EU growth rate curve quite exactly mirrors that of wind power, with a delay of approximately 12 years. European installed PV capacity doubled between 2001 and 2003, Germany accounting for more than 70% of the total. However, PV also doubled in Spain and Austria, whereas Luxembourg achieved the highest PV power per inhabitant: 8W per capita. If the whole EU did likewise, it would produce around 3.6 TWh/annum on 3.6 GWp installed PV capacity.

2.9. Conclusions on the development of electricity from renewable energy sources

Directive 2001/77/EC was the first legislative text to be adopted by the Council and the European Parliament explicitly aimed at the development of renewable energy.

In October 2002 Member States confirmed their national targets. Collectively, Europe confirmed its intent to achieve a 22% share of electricity from renewable energy sources by 2010.

October 2003 was the deadline for Member States to put in place the laws and administrative provisions necessary to comply with the Directive. All Member States have reported on their measures.

During 2002 and 2003 nine Member States implemented a new policy for the promotion of electricity from renewable energy (see Commission Staff Working Document). Two countries already had active measures in place. Progress towards meeting the targets set in the Directive has begun.

However, an analysis of national report shows that policies and measures currently in place will probably achieve a renewable energy share of only 18%-19% of the electricity market in 2010.

Administrative barriers such as long and complex authorisation procedures persist in some Member States due to insufficient coordination between different administrative bodies (Article 6). Current regulations on grid access do not guarantee a legal framework based on objective, transparent and non-discriminatory criteria (Article 7). Further progress in improving grid access for electricity from renewable energy is essential for stable growth.

Slow growth in the biomass sector is caused by inadequate support systems and a lack of coordinated policies. Support systems and policy refinements should be improved to enhance biomass energy use taking into account biomass potentials at regional and national levels.

Wind energy has grown impressively in three Member States and this success story should be extended to other Member States, implementing the success factors mentioned in Chapter 2.8.1. But even the booming of wind energy will not be enough to outweigh the slow development of biomass.

Extra efforts are needed, notably in the different biomass uses, offshore wind and financial support in general. Support also needs to continue for geothermal, mini-hydro and photovoltaic power (Japan has overtaken Europe in this field).

The Commission will closely monitor the situation in all Member States and the full implementation of all requirements of the Directive in order to prepare follow-up actions.

3. Efforts and results for 2010

3.1. The legislative framework developed since 2000

Since 1997, the EU15 have been working towards the general target of an increase in renewable energy's share of gross inland energy consumption to 12% in 2010, compared with 5.2% in 1995.

To achieve this target, the Commission has adopted and proposed a considerable number of new legal instruments since 2000 aimed at promoting renewable energy and energy efficiency. The European Parliament and Council have adopted most of these proposals. The remainder are at an advanced stage of the inter-institutional process.

The legal instruments that have been adopted into law are notably:

- Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources (OJ L283/33, 27.10.2001)

- Directive 2003/30/EC on the promotion of biofuels (OJ L123/42, 17.5.2003)

- Directive 2002/91/EC on energy performance of buildings (OJ L1/65, 4.1.2003)

- Directive 2004/8/EC on the promotion of cogeneration (OJ L52/50, 21.2.2004)

- Directive 2003/96/EC for the taxation of energy products and electricity (OJ 283/51, 31.10.2003)

- Directive 2000/55/EC on energy efficiency requirements for ballasts for fluorescent lighting (OJ L279/33, 01.11.2000)

- Commission Directive 2002/40/EC on labelling of electric ovens (OJ L128/45, 15.05.2002)

- Commission Directive 2002/31/EC on labelling of airconditioners (OJ L86/26, 03.04.2003)

- Commission Directive 2003/66/EC on labelling of refrigerators (OJ L170/10, 09.07.2003)

- Regulation 2422/2001/EC on Energy Star labelling for office equipment (OJ L332/1, 15.12.2001)

And the proposals:

- COM (2003)453 of 01.08.2003 on Eco design requirements for energy using products

- COM (2003)739 of 10.12.2003 on energy efficiency and energy services

The impact of one measure - Directive 2001/77/EC - was analysed above. The impact of others will be addressed in this chapter. Calculation of their impact is possible on the assumption of full compliance and rigid implementation by national, regional and local authorities. However, the example of Directive 2001/77/EC demonstrates that this should not be taken for granted.

There is abroad consensus that the EU Emissions Trading Scheme (ETS) will have a positive effect of the renewable energy uptake in the EU from 2005 onwards. In addition, the recently agreed Linking Directive will have a similar impact on the uptake of these technologies in developing countries and in economies in transition The EU ETS will by itself not guarantee that the 2010 target renewable targets will be reached as the scheme only covers the greenhouse gas benefits of renewable energies. The positive effect will affect the 2010 extrapolations, although this might be premature as the allocation of allowance has not yet been finalised.

It should also be taken into account that several measures, especially in the field of energy efficiency, will not have their full effect in the short or even the medium term (e.g. building improvements). This means that for these measures extrapolation of current trends is not possible and prognoses for 2010 can not yet include their full effect.

3.2. Member State Actions

Over the last two years, Member States have been implementing new policies in renewable energy. Legal frameworks are more structured and financial conditions are clearer.

But the overall picture is not so positive. There exists an imbalance between different countries' commitment to develop renewable energy.

The situation would be very different if wind energy performed across the Community at the level achieved by Denmark, Germany and Spain if biomass heating was as dynamic everywhere as it is in Finland or if geothermal energy managed the level of development being achieved in Sweden and Italy.

At Community level, the necessary legal and policy framework has been put in place, but responsibility for progress lies clearly with the Member States. Now is the time for Member States to step up their own action at local, regional and national level.

Member States are invited to maximise the use of the funds made available through the Structural Funds, to promote actions in favour of the renewables.

3.3. Community support instruments

The Community has only limited means for funding renewable energies. It can only intervene as a catalyst and supporting actor. The following actions were undertaken.

3.3.1. Community support programmes

Intelligent Energy - Europe programme (2003-2006) [10]

[10] Decision No 1230/2003/EC of the European Parliament and the Council of 26 June 2003 concerning a multiannual programme for action in the field of energy, OJ L 176 of 15.7.2003, p 29.

The multiannual programme Intelligent Energy - Europe (EIE) adopted in June 2003 builds on the success of programmes Save and Altener which have supported actions in the fields of energy efficiency and renewable energy since the early 1990s. It is important to note the growth of the Community budget allocated to action in Member States. The combined budget for both previous programmes in the decade 1993-2002 was 220 million euros, while the budget allocated to the new programme for the period 2003-2006 is 250 million euros.

EIE is intended to improve energy efficiency (Save actions), to promote new and renewable energy sources (Altener actions), to support initiatives tackling the energy aspects of transport (Steer) and to promote renewable energy and energy efficiency in developing countries (Coopener).

The EIE programme supports the implementation of Community legislation by catalysing national, regional and local efforts across the EU. It focuses on the removal of non-technical barriers, the creation of market opportunities, the drawing-up of standards and the setting up of training structures as well as on the development-planning and monitoring tools. It complements the RTD programmes, by tackling the market barriers which are frequently identified when implementing demonstration projects. It also encourages actions by local communities and by municipal and regional administrations and agencies, which are vital to establish sustainable markets for renewable energy.

The increasing importance and volume of the Community support has lead to the creation of the Executive Agency for Intelligent Energy to assist the Commission in the implementation of the EIE programme.

Research, Technological Development and Demonstration

The Sixth RTD Framework Programme (2002-2006) [11] contributes to the Union's efforts to promote sustainable development and the knowledge-based economy. Priority 6 of the current programme includes Sustainable Energy Systems. From a total RTD budget of EUR17.500 million, EUR810 million have been allocated to Sustainable Energy Systems: EUR405 million for medium and long-term research and EUR405 million for medium and short-term demonstration.

[11] Decision No 1513/2002/EC of the European Parliament and the Council of concerning the Sixth Framework Programme of the European Community for research, technological development and demonstration activities (2002-2006), OJ L232 , 29.08.2002

The short to medium term part of the programme concentrates on five research priorities:

- cost-effective supply of renewable energies,

- large-scale integration of renewable energy,

- eco-buildings,

- polygeneration,

- alternative motor fuels.

Within this part of the Programme the Commission has launched a major initiative - Concerto - which supports demonstration projects that are focused on optimising the energy flows in local communities through innovative integration of renewable energy and energy efficiency technologies. This initiative also addresses the important objective of involving local communities in sustainable development activities. A similar initiative - Civitas - draws both on transport and research budgets to promote sustainable urban transport, including alternative motor fuels. The Commission has also launched several major initiatives including the Hydrogen and Photovoltaics Technology Platforms designed to provide a long-term vision and strategic roadmaps in these two key technologies.

In relation to renewable energies, the medium to longer term research programme includes the following research priorities:

- new and advanced concepts in renewable energy technologies,

- new technologies for energy carriers/transport and storage, in particular hydrogen,

- fuel cells, including their applications,

- socio-economic, energy and environmental modelling.

Besides, the Commission is launching two major initiatives in the field of Land Use and of Agriculture, which seek to contribute to design the EU Sustainable Development Strategy through the development of tools and methods for impact assessment of alternative policies. Among the agricultural and forestry land uses that will be considered, attention will be given to the production of biomass for renewable energy purposes. Finally, under the umbrella of the Environment Technologies Action Plan launched by the Directorate General for Research, renewable energy technologies will be analysed and promoted.

3.3.2. Dissemination - Public Awareness Campaigns

The Campaign for Take-Off (2000-2003)

The Commission launched the Campaign for Take-Off (CTO) for Renewable Energies [12] in 1999. It aimed to provide quantitative targets for 8 renewable energy sectors, serving as benchmarks for decision makers and planners to disseminate successful initiatives and to spread best practice and to raise the awareness of decision makers at local, regional, national and European level.

[12] Commission staff working paper - Energy for the future: Renewable Sources of Energy (Community Strategy and Action Plan) - Campaign for Take-Off, SEC (1999) 504

More than 125 renewable energy programmes and projects involving more than 600 partner organisations in the European Union - municipalities, agencies, technological institutes, regional authorities, national institutions, universities and enterprises - joined the Campaign as Renewable Energy Partners in 2000-2003.

3.4. Achieving the 12% target - the impact of Community legislation

3.4.1. Energy efficiency legislation

Energy efficiency is as important as renewable energy in increasing security of energy supply and reducing emissions of greenhouse gases.

EU energy efficiency policy has developed in a different way from policy for renewable energy.

Renewable energy policy began with a general target (the "12% target"). Next came sectoral directives for electricity and transport.

EU energy efficiency legislation dealt with individual products first. Before 2000, it covered minimum energy efficiency and labelling requirements for a variety of products - plus a voluntary agreement with car makers (the "ACEA agreement"). [13]

[13] Although this agreement is expressed in terms of reductions in CO2 emissions, it is being implemented mainly through improvements to the energy efficiency of cars.

In the years since 2000 the Union has continued with energy efficiency legislation for individual products, setting efficiency requirements for ballasts (a component of fluorescent lights) [14] and new labelling requirements for refrigerators, freezers, air-conditioners and household electric ovens. [15]

[14] Directive 2000/55/EC on energy efficiency requirements for ballasts for fluorescent lighting (OJ L279, 01.11.2000)

[15] Directive 2003/66/EC of 03.07.2003 amending Directive 94/2/EC implementing Council Directive 92/75/EC with regard to energy labelling of household electric refrigerators, freezers and their combination, OJEU L170, 09.07.2003

At the same time, the Union began to adopt legislation that addresses energy efficiency across whole sectors with directives covering energy efficiency in buildings, and combined heat and power. [16]

[16] Directive 2002/91/EC on the energy performance in buildings, OJ L1, 04.01.2003; Directive 2004/8/EC on the promotion of cogeneration, OJ L52, 21.02.2004

In mid-2003 the Commission proposed a framework Directive on Ecodesign for energy using products that should make it possible to set active minimum efficiency requirements or to promote the voluntary agreements in this field.

Finally and most recently, the Commission has proposed establishing for the Union a general energy efficiency target - by law. The Energy Services Directive would require Member States to reduce the amount of energy distributed to final customers by 1% a year.

The European Parliament and Council are currently considering Commission proposals for directives on Ecodesign and on Energy efficiency and energy services.

Energy efficiency measures can make it easier to achieve the 12% target for renewable energy by reducing the total volume of energy consumption against which this share is calculated.

The table shows the estimated impact of the adopted energy efficiency legislation on total EU15 energy consumption by 2010.

// Savings in primary energy consumption (Mtoe)

Buildings directive // 9

Cogeneration directive // 10

Ballasts directive // 1

Oven and air-conditioner labelling // <0.5

Refrigerator labelling // 1

Energy Star regulation [17] // estimate: 1

[17] Commission endorsed voluntary programmes, which will save at least another 1 Mtoe: GreenLight, Motor Challenge, the standby-power saving agreements for Digital TV and Power Supplies, and the CEMEP motor Agreement.

TOTAL // 22

The Commission predicts that as a result of this new legislation total EU15 energy consumption in 2010 will be 1556 Mtoe, rather than 1578 Mtoe under the Commission's baseline scenario.

It should be emphasised that this estimate is not a full assessment of the impact of EU legislation because several measures will have their main impact only after 2010.

Directive 2002/91/EC on energy performance of buildings addresses the household and tertiary sector responsible for around 40% of the final energy demand in EU. The long term potential for energy savings is estimated at around 22%. The Directive introduces a common methodology for integrated energy performance standards for buildings, including integration of renewable energy supply and cogeneration. The standards are applied not only to new buildings but also in the event of the major renovation of large existing buildings. Buildings and dwellings must be certified when sold or rented out and energy saving measures must be identified. Boilers, heating and cooling installations must be inspected regularly and possible energy savings assessed. The Directive is to be transposed into Member States legislation at the latest in 2006.

The impact by 2010 is estimated to be primary energy savings of 9 Mtoe and reduced CO2-emissions of 20 mtCO2. This estimate is based on a model in which a fixed amount of improvement occurs each year, and this over a 6 year period.

Directive 2004/8/EC on the promotion of cogeneration aims to increase the share of high-efficiency cogeneration from the present level (2000) of 10% of all electricity consumption in EU. The Directive clarifies that good quality cogeneration of heat and power (CHP) saves at least 10% of primary energy consumption compared with separate production. Average primary energy savings are likely to be around 20-25%. The potential share that can be delivered by high-efficiency cogeneration has earlier been calculated at 18% in 2010, but this will be reconsidered in the light of the reports Member States are due to make in 2006 on their national potential for high-efficiency cogeneration. Guaranteed grid access on fair terms, streamlining of administrative procedures and a system offering a guarantee of origin to help operators to promote high-efficiency cogeneration are the other instruments in the Directive. The Directive is fuel-neutral. It will promote renewable energy cogeneration alongside fossil cogeneration.

If the share of cogenerated electricity reaches 18% in 2010 this will result in primary energy savings of 18 Mtoe and a drop in CO2 emissions of 42 mtCO2 compared with a baseline of 13% CHP. The half-way scenario (15.5% CHP), shown in the table above, leads to primary energy savings of 10 Mtoe and emission reductions of 24 mtCO2.

Energy efficiency should also be seen in a broad sense, like an extensive integration of processes both on the side of generation and consumption. Town planners inter alia have to be made aware of the substantial benefits of energy efficiency.

3.4.2. Legislation on electricity from renewable energy source

The generation of electricity accounts for about 45% of the energy consumed in the EU25. [18]

[18] Substitution method; this is a share of gross consumption not final consumption; excluding non-energy uses.

Electricity produced from renewable energy sources amounted to 384 TWh in the EU15 in 2001. This corresponds to a share of 15.2% (consolidated figures for 2002 are not yet available).

A detailed analysis of the Directive on electricity from renewable sources has already been given in Chapter 2.

3.4.3. Biofuels

By 2002, the market share of biofuels had peaked in France (1.3%). Across the whole EU15 the share of biofuels was 0.6% of the petrol and diesel market. In the Czech Republic biofuels had already a share of 1.3% of all automotive fuels in 2001. Poland has also adopted a new law on the promotion of biofuels entered into force on 1 January 2004.

Biodiesel from oilseeds is the commonest biofuel. It is blended with diesel. Bioethanol, made from sugarbeet or wheat, comes second [and is growing apace]. It is blended with petrol, partly in the form of alcohol, partly after transformation into ETBE. Other biofuels, derived from wastes and residues, account for only a small share.

Biofuels are relatively expensive although the additional costs are justified by benefits across several policy fields. In particular, they would provide additional and alternative supplies for fuelling the transport sector, which is almost completely dependent on one fuel - oil - and accounts for more than 30% of final energy consumption in the Community. Biofuels are at present the only technically viable means of using renewable energy to replace oil as a transport fuel. This means that biofuels offer particularly clear advantages in terms of security of supply. Some of these advantages could be derived from biofuel imports given that biofuel has a different geopolitical origin to oil.

In addition, biofuels have a good employment balance - about 16 jobs per ktoe, nearly all in rural areas.

Taking into account the advantages of biofuels in terms of climate change, security of supply and rural employment, in 2001 the Commission proposed legislation to set targets for the use of biofuels in transport. A second proposal allowed Member States to exempt biofuels from fuel taxation without needing the prior approval of the Commission. These proposals led in 2003 to the adoption by the Council and European Parliament of the biofuels directive [19] and a provision in the energy taxation directive. [20]

[19] Directive 2003/30/EC of the European Parliament and of the Council of 08.05.2003 on the promotion of the use of the biofuels or other renewable fuels for transport, OJ L123, 17.05.2003

[20] Council Directive 2003/96/EC of 27.10.2003 restructuring the Community framework for the taxation of energy products and electricity, OJ L283, 31.10.2003

The biofuels directive states that Member States "should ensure that a minimum proportion of biofuels and other renewable fuels is placed on their markets, and, to that effect, shall set national indicative targets". It sets reference values for these targets: 2% by the end of 2005 and 5.75% by the end of 2010. Member States are to report to the Commission each year on the measures taken to promote biofuels and on the share of biofuels placed on the market in the previous year. The first report, due by the end of June 2004, must contain a national indicative target for 2005. The report due in 2007 must do the same for 2010.

The Commission is required to report on progress by the end of 2006, and then every two years. If the report concludes that the indicative targets are not likely to be achieved for reasons that are unjustified, the Commission should make proposals that "address national targets, including possible mandatory targets, in the appropriate form".

The energy taxation directive states that - for as long as Community law does not lay down mandatory targets - Member States may exempt under fiscal control biofuels from fuel taxes, or apply a lower rate of tax. However, if Community law would impose mandatory targets, Member States could continue to grant tax reductions/exemptions in favour of biofuels through the procedure set by Article 19 of the Energy Tax Directive (proposal of the Commission, authorising decision by the Council). The present situation (as of March 2004) is that seven Member States have partly or completely detaxed biofuels (Austria, France, Germany, Italy, Spain, Sweden and the United Kingdom).

If the objectives set in the biofuels directive are achieved, the contribution of biofuels will increase from 1.4 Mtoe in 2001 to 19 Mtoe in 2010 - an increase of 18 Mtoe.

The Commission will closely follow up the biofuels market and the transposition of the biofuels Directive, due for December 2004.

The progress of biofuels up to 2010 and beyond will be strongly influenced by and depend on developments in fuel quality standards, namely the competitiveness of biofuels, the development of new biofuels technologies, and the sourcing of biomass for biofuels.

3.5. Renewable energy for heat production

Renewable energy in heating has grown slowly over the last seven years. The directive on the promotion of cogeneration (CHP directive) and the Building directive have a direct impact on efficient heat use. But there is no legislation in place addressing renewable heat production. It is still a sector dominated by traditional biomass use and a new dynamism is needed to deliver the necessary contribution to achieve the objective of a 12% share in renewables and to develop the sound potential that exists in the new Member States.

Heat from renewable energy sources is used in many different ways. Heat demand for industrial purposes often calls for high temperatures or steam at high pressure. For such requirements renewable heat will typically be provided via the combustion of biomass (wood or industrial waste and residues) preferably with co-firing of fossil fuels in boilers or CHP. When heat is needed for heating buildings and hot water, the demand can be met by a wider range of technologies and sources. For larger-scale demand such as district heating and major buildings (commercial/public/residential), centralised supply is possible and economies of scale can encourage investment in technology (large boilers, geothermal, CHP). Domestic heat demand and other small-scale demands can be met using other technologies such as solar panels, wood stoves, geothermal sources, etc.

3.5.1. The trend in geothermal

Direct heat is the oldest and the commonest use to which geothermal energy is put. Space and district heating, agricultural applications and aquaculture and industrial uses are well known examples.

Following the introduction of ground coupled heat pumps, space heating and cooling has expanded considerably over recent years. Sweden is at the top of the list with a capacity estimated at 1 GWth for 176,000 units in 2002, representing one-third of all the heat pumps installed in Europe. Germany and France come next. Italy is the leading country in the European Union for low-energy applications of geothermal energy with a capacity of 0.44 GWth, followed by France and Germany.

With 10% annual growth for heat pumps (the 2002/2001 growth rate was 14%), the target calculated in 1997 of 5 GWth to be achieved by 2010 would be exceeded by 60%.

Geothermal energy is a well-developed energy source in Hungary where the amount of power installed is similar to France. The Czech Republic, Slovakia, Slovenia and Poland use this renewable energy source mainly in the form of direct heat.

3.5.2. Solar thermal heat.

Solar thermal energy has taken off only in Germany, Greece, Austria and Cyprus. At the end of 2002 the installed surface of solar collectors in the EU15 was nearly 12.8 million square metres, compared with around 11.8 at the end of 2001. This increase was led by the German market. In 2002, 80% of the total solar thermal capacity of the EU15 was installed in the three leader countries. Austria, for example, has 9 times more thermal collectors than Spain. Among the new Member States, Cyprus stands out with about 600,000 square metres installed.

Solar thermal collectors cover two thirds of the warm water needs of Greek households, in Cyprus up to 90%, and nearly 10% in Austria. In Spain, Portugal and Italy only a marginal 0.5% of warm water needs is covered.

Solar thermal collector production has over the last four years grown at a rate of around 9%. However, unless far more significant steps are taken, the 1997 objective of installing 100 million m of solar collectors in the EU15 by 2010 will not be achieved.

3.5.3. Biogas

Since the "environment" has become a full-fledged economic sector, the biogas sector has undergone constant development in most of the countries of the European Union. Biogas has the dual advantage of eliminating pollution while producing energy at the same time. Methanisation units have appeared across Europe. The biogas sector gives a value to different types of waste. This gas can be used to produce electricity, heat or as transport fuel. 60% of biogas is used in electricity production and 40% in heat production.

In 2002, EU15 biogas production was 2.8 Mtoe - 10% higher than in 2001. This growth rate is too slow to achieve the 15 Mtoe proposed for 2010.

>REFERENCE TO A GRAPHIC>

>REFERENCE TO A GRAPHIC>

Biogas development needs coordinated policy in the fields of energy, environment and agriculture (cattle manure is one source of biogas).

3.5.4. Woody Biomass

Most of the biomass needed for heating is still, as it always was, wood - especially domestic use of wood. The biomass market for space heating is stagnant. Significant incentives are needed to overcome this problem and to encourage more efficient wood-burning stoves and boilers. CHP generation is a good option for the industrial-scale use of wood. The mid-term potential for the EU15 shows a more balanced split between the three technologies considered: biomass heat, geothermal heat and solar thermal installations (geothermal heat includes geothermal heat pumps).

Other forms of biomass, such as purpose-grown energy crops have been well proven and the technology and logistics to use them have been developed. They should be encouraged and significant incentives are initially necessary.

>REFERENCE TO A GRAPHIC>

Examples of good practice are the Austrian programme to commercialise the use of wood and the French "Plan du Bois" which promotes the installation of efficient individual stoves and communal heaters. All such means to disseminate the spread of efficient practices in the use of wood as a fuel are to be encouraged.

3.5.5. Summary

There are some national success stories in woody biomass and solar heat. Geothermal heating is growing at a good speed. Nevertheless, the overall development of renewable energy in heating does not give rise to optimism. According to the figures shown in the table below, even if the targets for renewable electricity generation and biofuels are met, extra 29 Mtoe of renewable energy for heat production would still be needed to achieve the 12% objective by 2010.

>TABLE POSITION>

3.6. Conclusion: Scenario for the renewable energy share in 2010

The trends set out in the Commission Staff Working Document lead to the conclusion that, although progress towards meeting the targets has begun, the 2010 target will not be achieved under current policies and measures.

There is a strong need for more political will to invest in the EU into renewables.

- The share of renewable energy increased from 5.4% in 1997 to 6% in 2001.

- If present trends continue in heating, and if Member States implement the national plans they have put in place in electricity and fulfil the requirements of the biofuels directive in transport, the share will reach 9% in 2010.

- In addition, if Member States fulfil in full the requirements of the directive on electricity from renewable energy sources, the share will reach 10%.

- Fulfilment of the 12% target for 2010 will require a step change in national policies towards the use of renewable energy in heating.

>TABLE POSITION>

4. Concrete Actions

4.1. New initiatives to reinforce the financing of renewable energy - action by Member States

Growth in the use of renewable energy is too slow to give confidence that the European Union's targets for 2010 will be met.

In electricity, the European Council and Parliament agreed in 2001 to aim for a renewable energy share of 22.1% in the EU15 by 2010. National targets adopted in 2002 were consistent with this objective. But the practical measures that Member States have put in place so far are estimated to deliver a share of only 18-19%.

In heating, most Member States have done little to stimulate new action.

In transport, only six Member States have made a start on the production of biofuels. Prospects will be clearer early in 2005 following transposition of the biofuels directive.

For renewable energy as a whole, the Community has been working since 1997 towards a renewable energy share of 12% by 2010. At best, with present trends and measures, the share achieved will be 10%. At worst, it will not rise above 8%.

Renewable energy's contribution remains marginal in most Member States, apart from two old-established uses: electricity from hydropower and traditional uses of wood for heating. However, renewable energy has begun to move from the wings to centre stage. This move must gather pace if the Union is to meet its objectives for sustainable development and security of energy supply. At Community level, the necessary legal and policy framework has been put in place. Now it is time for Member States to speed up their own action at local, regional and national level.

One important aspect is the financing of renewable energy. One estimate puts the gross investment cost for the EU15 to achieve the 12% target at EUR10-15 billion per year. [21] While Community funding plays a crucial catalytic role (see next section), the Community has still limited means to support the real development of renewable energy. Member States and the energy industries themselves have the resources needed to deliver this level of investment.

[21] A. Zervos, "Updating the impact of the Community strategy and action plan for renewable energy sources", draft final report, 2003 (based upon 2001 prices).

Over time, each energy source in turn has benefited from substantial public funding and risk support in its development. The established energy supply industries now have an income of over EUR200 billion a year in the EU15 alone. For the support of renewable energy sources different means are available to be used by Member States, like feed-in tariffs, green certificates, market based mechanisms, tax exemptions... It is time for all Member States to put these ideas into practice. Member States need to create a level playing field in the energy sector, by including external societal benefit/costs in their energy policy framework.

4.2. New initiatives to reinforce the renewable energy and energy efficiency - action at European level

Clean energy policy shares fundamental goals with a wide range of such Community policies as enhancing competitiveness and cohesion for growth and employment, ensuring access to basic goods and services, and promoting the EU as a sustainable development partner. [22] Renewable energies and energy efficiency can do a great deal to address the challenges that other policies face. A coordinated approach is needed across the range of Community policies that have energy impacts.

[22] Communication from the Commission to the Council and the European Parliament "Building our Common Future: Policy challenges and Budgetary means of the Enlarged Union 2007-2013", COM(2004) 101 final of 10.2.2004

The Union's future financial framework for 2007-2013 should have explicit provisions so that clean and efficient energy concepts are a visible part of the Union's priorities, strategies and commitments. It is the opportunity for the enlarged Union to express its political determination to change course and direct its efforts towards sustainable energy, by allocating adequate resources to boost its goals in this field.

The Community's main financial instruments - notably the future structural and cohesion funds, the financial support made available through the Community's international co-operation programmes, and the Common Agricultural Policy - all need to be mobilised.

In this respect, it is important to note that in February 2004 the Commission adopted a Communication regarding the reform of structural funds for the period 2007-2013. This report highlights the development and use of renewable energy, energy efficiency measures, the development of eco-industries, cleaner methods of transport and sustainable urban public transport as priority themes for future support.

Supplementary action could be explored in four fronts.

First, to bridge the gap between successful demonstration of innovative technologies and their effective entrance on the market to achieve mass deployment and to boost large-scale investment across the EU in new and best performing technologies.

To achieve this, a new instrument is needed that operating at EU level could be tailored to accommodate the diversity and specificity of the renewables and energy efficiency sectors. This instrument should support the first market replications of just-proven technologies of European relevance. In this way the Union will share the risk that is involved in the economic exploitation of RTD results.

This new instrument could be the main component of the successor to the current "Intelligent Energy-Europe, 2003-2006" programme. It would ensure better exploitation (through large-scale application across the Union and on export markets) of projects' results and promote the substantial stock of technologies that are close to being competitive. Action at EU level, in concert with national initiatives and with action by international financial institutions, is needed to tackle this task effectively.

Second, this future Community programme "Intelligent Energy Europe" should also strengthen support for action at local and regional level. The main aim is to enable citizens to make informed decisions about energy and help to remove non-technological barriers to clean energy such as institutional capacity, public awareness, available technology at affordable prices, well-trained specialists and effective mechanisms for the exchange of know-how and best practice. A better focus is also needed for sharing European experience and technologies with third countries. This future programme should also continue to support the EU policy development and implementation in the renewables and energy efficiency fields.

Third, it is necessary to strengthen support and accelerate the pace of public support for research, technological development and demonstration in renewables and energy efficiency in Europe.

Fourth, it is necessary to capitalise on the important role that energy plays in sustainable development and share the responsibility with other Community policies.

In the framework of the reform of the Common Agricultural Policy a new aid of 45 EUR per hectare will be introduced for areas sown to energy crops. Furthermore, non-food production, for instance of energy crops will continue to be permitted on set-aside land.

The European Investment Bank has already set itself the target of increasing the share of renewable energy in its loans for energy from 8% to 16%. It could contribute to the financing of national, regional or private investment funds for renewable energy, along with contributions from other public sources at Community, national or regional level.

4.3. Other measures

4.3.1. A Community plan for biomass

In 2001 the EU15 used about 56 Mtoe of biomass for energy purposes. Achieving the Union's renewable energy targets for 2010 would need approximately 74 Mtoe more - 32 Mtoe for electricity generation, about 18 in the form of biofuels and 24 for heating (total: 130 Mtoe)

An indicative figure on the biomass availability for energy purposes at EU15 level is 150 Mtoe (additional 32 Mtoe for EU-10 and Romania and Bulgaria). [23]

[23] The estimation of this figure considers 10% of the arable land (half for biofuels and half from solid biomass), forest by-products, wet manure and organic waste. Source BTG Interim Report.

The biomass potential needs further assessment, especially in terms of land availability, land use for different renewable biomass applications (heat, electricity, transport biofuels, and forest products) and the difference in benefits these various applications might have, for instance in terms of greenhouse gas emissions in a life cycle perspective.

However, effective use of biomass for energy purposes depends on the market developments as well as on the interactions between public policy in the fields of energy, agricultural, waste, forestry, industry, rural development, environment and trade policy. Community institutions play a key role in all these policy areas. By the end of 2005, the Commission will bring forward a coordinated biomass plan with a clear approach to securing adequate supplies of biomass through European, national and regional/local action across them all. This plan should ensure that the use of biomass for energy purposes does not lead to the undue distortion of competition. The plan will orientate and optimise Community financial mechanisms, re-direct effort within the policies concerned and tackle the obstacles to biomass deployment for energy purposes. Specific attention will be paid to the new Member States, taking into account the high and unexploited biomass potential that many of them have.

4.3.2. Developing renewable energy in heating

Targets for renewable energy sources' heating would be difficult to establish because there is no single "heating supply industry" to whom they could be addressed.

Instead, some specific initiative linked to heating and cooling applications will be brought forward as a first step.

The Community has already adopted directives on the energy performance of buildings [24] and cogeneration [25]. These will encourage greater use of renewable energy in heating. There is a need for the buildings directive to be implemented in a way that stimulates the integration of efficient biomass systems, geothermal heat pumps and solar thermal heating in residential and tertiary-sector buildings. The decentralised energy supply based on renewable energy that is envisaged under the Buildings Directive should look to the potential of using renewable energy for heating and cooling, in particular through integrating solar heating panels in buildings. Micro-turbines fired by biomass are another possibility for using renewable energy in buildings. There is also a need to encourage a greater share of biomass in cogeneration and in district heating systems, especially where existing systems can be economically refurbished (which is the case in many of the new Member States).

[24] Directive 2002/91/EC on the energy performance in buildings, OJ L1, 04.01.2003

[25] Directive 2004/8/EC on the promotion of cogeneration, OJ L52, 21.02.2004

The Commission will bring forward further initiatives - if necessary, legislative proposals - to accelerate the fulfilment of the potential of three key technologies - modern biomass heating, solar heating and geothermal heat. These initiatives could include targets for specific technologies, or requirements for suppliers of heating oil and gas to supply e.g. wood pellets and biogas.

4.3.3. Offshore wind policy

To give legal certainty for offshore wind development, governments will need to establish legal regimes that give them relevant jurisdiction for the area outside the territorial seas (12 nautical mile limit), and quick procedures for giving consent for development.

An off-shore wind policy for the EU will need to strengthen the necessary grid infrastructure. The Trans-European Energy Networks Programme has started to support investments for the grid adaptation and optimisation for the integration of off-shore projects.

It is important to ensure that the development of offshore wind is not stifled by a false assessment of potential problems such as its coexistence with birds, trawling and shipping, the development and application of national planning rules, the source of funds to extend and upgrade the grid, the availability of insurance cover and the provision of legal protection against damage to structures outside states' territorial waters. The Commission will systematically review the obstacles and objections that may block the development of offshore wind, the environmental requirements that need to be met and will develop guidelines for Member States, by offering proposals for legislation if necessary.

The Commission will also support research and development support to improve turbines and installation technology for use at sea and to improve the stability of the grid for wind energy penetration above 20%. It will also encourage the coordination of research being sponsored by national authorities on the effects of wind turbines on marine life and the marine environment.

4.3.4. Electricity from solar irradiation

Contrary to Japan, a strategically conscious industry policy, systematically developing towards a multi 10 billion EUR business is lacking in Europe. Despite the growth rate of European production during the last years and the strong European RTD and innovation base available, Europe is still a net importer of photovoltaic cells.

Continued, but evermore targeted RTD funding leads to new developments with respect to raw material use, evermore benign production technologies, optimised, often building integrated device design, reliability and efficiency of PV systems.

A further option is solar thermal electricity production, with some promising pilot projects just being launched in Southern Europe. This technology has the additional advantage that it can be cost-effectively combined with modern gas turbines, therefore overcoming the problem of intermittency of the solar irradiation and enabling a base load share of solar energy without storage technology.

4.3.5. Research and technological development

Several renewable energy technologies that could make a big contribution by 2020 need more research and development. The European Union has played a leading role in renewable energy research, demonstration and dissemination for more than 20 years and will continue to do so.

OECD data indicate that only 10% of government energy R&D budgets are related to renewable energy, in contrast with more than 50% for conventional (fossil fuel and nuclear) energy technologies. As indicated in paragraph 4.2, and in order to support the longer term expectations regarding the penetration of renewables, it is therefore necessary to strengthen support and accelerate the pace of public support for research, technological development and demonstration in renewables in Europe.

Under the 6th Framework Programme, the Union is focussing on bringing costs down and on the large-scale integration of renewable energies in the energy supply system. For the short to medium term the programme is addressing electricity production from biomass, wind, photovoltaic power, tidal stream, wave and other renewable sources, heating and cooling technology, and the production and processing of liquid and gaseous biofuels. Long-term research looks at how to achieve significant cost reductions in bio-energy, photovoltaics, and other renewable energies including wind, ocean, concentrated solar, and geothermal as well as improving the reliability, safety, availability and durability of renewable energy systems. The programme also addresses the issues of distributed electricity generation, hydrogen and fuel cells which have an impact on the further development of renewable energy systems.

4.3.6. Using major Community financing instruments

The Commission intends from 2004 onwards to place special emphasis on the deployment of renewable energy and energy efficiency by using the structural and cohesion funds, and the EU development funds. Renewable energies could also play in the future an important role in the further evolution of the relevant rural development measures (second pillar of the Common Agricultural Policy).

4.3.7. Placing biofuels on the market

The fuel quality directive [26] lays down minimum specifications for gasoline and diesel. These limit the blending of biofuels. Higher blending limits would make it easier to fulfil and go beyond a 5.75% share for biofuels. The scope for raising these limits is the subject of technical debate. The Commission is evaluating the arguments. It will bring forward new proposals, if necessary, by the end of 2005.

[26] Directive 98/70 of 13.10.1998 relating to the quality of petrol and diesel fuels (OJ L350/58, 28.12.1998), amended by directive 2003/17 of 03.03.2003 (OJ L76/10, 22.03.2003)

Member States may require each company to place on the market on the Member State's territory a given quantity of biofuels, but may not require that all fuel sold is blended with biofuels. Alongside its review of fuel quality specifications the Commission will consider whether this needs to change.

4.3.8. Timely data

Official European data on renewable energy sources' contribution is currently available about 18 months after the end of the calendar year in question. The Commission will make data available more quickly. It will examine how extrapolation from samples could give an earlier indication of progress and how data gathering could be linked to the certification of renewable energy, as well as techno-scientific efforts to identify and validate trends.

5. International political context and EU perspectives beyond 2010

5.1. The Lisbon process and the environmental dimension

The European Council of Lisbon of March 2000 agreed in its Conclusions (5) on a "new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion".

Increasing the share of renewable energy sources in the energy mix contributes to the goal of the Lisbon process to become capable of sustainable economic growth.

The wind industry currently employs 75 000 people in the EU15. The German Government has confirmed the net creation of 135 000 jobs through its national policy on renewable energy up to 2003. Nearly 100% of renewable energy production uses European technology. Increasing the share of renewable energy sources creates new jobs - in research, industry and building sectors, agro and forest-based industry, waste treatment and consulting - by developing new technologies and by encouraging research and technical innovation. It is estimated that if renewable energy supplies 12% of EU15 energy consumption in 2010, the sector will employ between 500 000 and 650 000 people in serving this EU market. It is for Member States to decide to put in place an energy policy that can deliver significant employment benefits.

European industry is the world leader in wind technology and holds a good position in hydro, photovoltaic and geothermal power. Export markets constitute a huge potential for the European renewable energy industry, which will benefit from the expertise gained in the domestic market. Export of renewable energy technology will create a significant number of extra jobs.

The Göteborg European Council of June 2001 agreed on a strategy for sustainable development and added an environmental dimension to the Lisbon process. In its Conclusions (21) it "invites the industry to take part in the development and wider use of new environmentally friendly technologies in sectors such as energy and transport" and "stresses the importance of decoupling economic growth from resource use."

5.2. The Johannesburg conference and its follow-up

The World Summit on Sustainable Development (WSSD) held in Johannesburg in September 2002, addressed the broad aspects of sustainable development with a strong focus, on the need to alleviate poverty as a matter of urgency. One of the main outcomes of the WSSD, was the general acceptance that energy, and in particular renewable energy, was one of the key priorities to alleviate poverty and to achieve long-term sustainable development.

In Johannesburg, the EU committed itself to taking a lead through the EU Energy Initiative for Poverty Reduction and Sustainable Development (EUEI) and through the Johannesburg Renewable Energy Coalition (JREC). One of the first concrete actions taken by the Commission in support of the EUEI was to launch COOPENER within the Intelligent Energy - Europe programme, to encourage the provision of sustainable energy services for poverty alleviation in developing countries.

The support to the provision of water access and modern energy services in the framework of poverty eradication is now a commitment of European Development Aid entered at WSSD. Renewable energy deployment and technology transfers to developing countries contribute to poverty eradication and to raising the standards of living in the poorest countries.

Since its launch, JREC developed its activities in close partnership and with the support of a broad stakeholder community, including business, NGOs and academia. JREC membership is nevertheless the privilege of national governments. As of March 2004, 87 countries joined the Coalition and more are expected to do so.

JREC meetings have already offered a unique platform for a constructive dialogue between many governments from the Northern and Southern hemisphere. In this context, and based on discussion amongst JREC Members following the WSSD, it is for example clearly acknowledged that the respective member-governments are best placed to develop and adopt ambitious national and regional time-bound targets.

JREC Members are equally committed to identify and remove financing gaps and obstacles, including obstacles for the effective delivery of existing - but often untapped - public and private resources needed to develop and strengthen renewable energy markets with a particular focus on the needs of developing country members.

JREC priorities and actions have been developed during informal high-level conferences and meetings, which have also served as a high-level platform to increase the regional and international awareness of the actions undertaken by pro-active governments thereby also assisting them in attracting interest from the finance and business community.

The International Conference for Renewable Energy, to be held in Bonn in June 2004, will follow up the Johannesburg conference. It aims to produce a strong political declaration together with an ambitious international action plan accompanied including various commitments and guidance for good policy.

In its capacity of hosting the JREC secretariat, the Commission started two key initiatives, to support the JREC and in particular the developing country members [27], i.e.:

[27] The Commission has carefully selected and developed these initiatives in view of the developing country needs whilst also considering the need to complement existing and new instruments developed under the COOPENER, EU EI and other related programmes.

- A global on-line renewable energy policy and measures database to tackle the significant information deficit in the area of policy design and implementation, in particular at the level of non-OECD countries;

- A feasibility study for the creation a public-private fund-based mechanism for the creation and delivery of "patient risk capital" to offer renewable energy business and project developers - in particular in developing countries and economies in transition, increased access to risk capital and to encourage a more significant engagement from international and local financial intermediaries and corporate investors. [28]

[28] This study is carried out by a consortium of financial engineers, private equity layers and technology consultants. Provided it could be established, patient risk capital would be a type of equity or quasi-equity finance obtained from blending public and private sector investment resources and requirements. It would provide equity funding in the expectation of a return, but on a less demanding basis than pure market private equity capital.

The Commission will further develop these cross-cutting actions with interested JREC members and other stakeholders.

In January 2004, a European preparatory conference organised by the European Commission and held in Berlin concluded that:

- Implementation of Community Directives in Member States should provide for long-term domestic support that guarantees stable investment conditions. Administrative barriers to the distribution