EUROPEAN COMMISSION Brussels, 1.2.2017 COM(2017) 57 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Renewable Energy Progress Report



INTRODUCTION Renewable Energy is at the core of the Energy Union's priorities. The Renewable Energy Directive has been and will continue being a central element of the Energy Union policy and a key driver for providing clean energy for all Europeans, in view of making the EU world number one in renewables while contributing to the five dimensions of the Energy Union. First, renewables have played a major role in energy security. Their estimated contribution to fossil fuel import savings in 2015 was €16bn and it is projected to be €58bn in 2030 . Second, thanks to fast decreasing costs owing to technological advancement, especially in the power sector, renewables can also be gradually further integrated in the market. The recast of the Renewables Directive for the period after 2020 together with the Market Design proposals as part of the Clean Energy for all Europeans package will further enable renewables participation on equal footing with other energy sources. Third, renewables also walk hand and hand with energy efficiency. In the electricity sector, fuel-switching from combustible fossil fuels to non-combustible renewables could reduce primary energy consumption. In the building sector, renewables solutions can improve the energy performance of building in a cost-effective way. Fourth, renewables are also a crucial driver for the decarbonization of the Union's energy system. In 2015, renewables contributed to gross avoided greenhouse gases (GHG) emissions of the equivalent of the emissions of Italy. Last but not least, renewables play a major role in making the EU a global leader on innovation. With 30% of global patents in renewables, the EU has been a pioneer in this field, and is committed to prioritise research and innovation to further drive the energy transition. In addition, the benefits of renewables expand well beyond the above. Renewable energies are source of economic growth and jobs for Europeans. They also contribute to lowering air pollution and helping developing countries with access to affordable and clean energy. In 2014, the EU and a vast majority of Member States were on track to their 2020 binding targets. Progress has been fastest in the electricity sector, while the largest absolute contribution continues to be provided in the heating and cooling sector. Progress in transport has been slowest so far. The existence of a large untapped potential in the heating and cooling and transport sectors calls for further action as set out in the proposal for a recast of the Renewable Energy Directive for the period after 2020, as part of the Clean Energy for all Europeans package presented in November 2016. This package confirms the commitment of the European Commission to make the European Union the world number one in renewables and provide a fair deal for energy consumers. In accordance with the requirements set out in the Renewable Energy Directive, this report provides a comprehensive overview of renewable energy deployment in the EU. It also includes an assessment of administrative barriers, as well as biofuel sustainability. Unless otherwise specified, data from 2004 to 2014 is based on Eurostat Shares and 2015 data from early estimates. Overarching progress is assessed versus trajectories set out in Annex I of the Renewable Energy Directive, while sector- and technology-specific assessments are performed versus the trajectories from Member States' National Renewable Energy Action Plans (NREAPs). 2020 projections are based on PRIMES Ref2016 scenario .

1. PROGRESS IN DEPLOYING RENEWABLE ENERGY a.EU28 progress in deploying renewable energy In 2014, the share of renewable energy sources (RES share) reached 16% of gross final energy consumption. The average RES share of the EU-28 in 2013/2014 amounted to 15.5%, substantially above the indicative trajectory (2013/2014) for the EU-28 of 12.1%. In 2015, RES shares are estimated to be around 16.4% of gross final energy consumption, while the indicative trajectory for 2015/2016 is 13.8%. However, as the trajectory becomes steeper in the years ahead, efforts to keep on track will need to intensify, as shown in Figure 1 . Figure 1: Renewable energy shares in the EU vs. Renewable Energy Directive (RED) and National Renewable Energy Action Plan (NREAP) trajectories (based on EUROSTAT, Öko-Institut) As shown in Figure 2 , heating and cooling remains the largest sector in terms of absolute renewable energy deployment. The highest RES share and the largest growth are however in the electricity sector, where the RES share grew by 1.4 percentage points per year between 2004 and 2014. The RES share in the heating and cooling sector grew by 0.8 percentage points per year over the same period of time, while the transport sector showed the slowest growth, with 0.5 percentage points on average per year. Figure 2: final energy consumption in the EU28 in 2015 (source: Öko-Institut)

I.Heating and cooling Figure 3 : EU-28 renewable heating and cooling production by source (source: EUROSTAT, Öko-Institut) With an estimated renewable share of 18.1% in 2015, the EU as a whole is above its aggregated NREAP trajectory when it comes to heating and cooling. As shown in Figure 3 , solid biomass continues to remain by far the largest contributor (82%) to renewable heat production (72 Mtoe). The production from heat pumps steadily increased from 1.8 Mtoe in 2004 to 9.7 Mtoe in 2015, exceeding the indicative trajectory from NREAPs (7.3 Mtoe). Italy is the leading country in its deployment, with most heat pumps however primarily used for cooling. Although the EU market of heat pumps has been slowing down since 2013, has potential to increase in the coming years. Renewable waste deployment amounted to 3.4 Mtoe in 2015. While the share of biogas in heating and cooling was negligible in 2004 (0.7 Mtoe), in 2015 it surpassed the projected values with 3.2 Mtoe. Solar thermal heat production, with 2.0 Mtoe in 2015, failed to keep up with the projections included in the NREAPs (3 Mtoe). The annual capacity installed in 2015 was below what had been installed in 2006, influenced by warm winters, low fossil prices, but also the competition of other renewable technologies such as heat pumps or solar photovoltaic. With output approximated at 0.7 Mtoe in 2015, geothermal deployment is below the NREAPs anticipated trajectory. Due to their high natural potential, three countries (Italy, France and Hungary) are leading the European geothermal production. The slow deployment of this technology is mainly due to very high capital expenditures. II.Electricity Figure 4 : EU-28 renewable electricity production by source (source: EUROSTAT, Öko-Institut) With an estimated 28.3% RES-E in 2015, the EU is well ahead of its aggregated NREAP trajectory for renewable shares in electricity. National support schemes vary across the Union and have been subject to numerous changes. The proposal for a recast of this Directive contains several provisions aiming at increasing investor confidence by having a more Europeanised and market-based approach and preventing retroactive changes that compromise the economics of the supported projects. Hydropower still generates the largest share of renewable electricity, while its share declined from 74 % in 2004 to 38% in 2015. In 2015, the EU-28 was on track with its aggregated planned NREAPs trajectory. Sweden, France, Italy, Austria and Spain have around 70 % of all hydropower in the EU-28. The deployment of wind power more than quadrupled over the period 2004-2015, and currently accounts for around one third of renewable electricity. Onshore wind deployment is rather close to the anticipated trajectory throughout the years. The largest contributions have come from Germany and Spain. Regarding offshore wind, four countries (Sweden, Germany, the United Kingdom and Denmark) are also estimated to be above their anticipated 2015 trajectory. However, at EU level, offshore wind has shown a slower progress than expected, with a -12% deviation from the NREAP trajectory in 2015, mostly due to initially high costs (now substantially decreasing) and grid connections issues. The development has nevertheless accelerated significantly in recent years. Solar photovoltaic (solar-PV) increased rapidly and in 2015 accounted for 12% of all renewable electricity. In 2013 its deployment had surpassed that of solid biomass for the first time. In 2015, 38 % of the solar-PV electricity in the EU-28 was produced in Germany, Italy and Spain. The considerable growth in solar-PV electricity has been driven by rapid technological progress, cost reductions and relatively short project development times. This has not only enabled a rapid and cost-efficient deployment, it has also contributed to putting the consumer at the centre of the energy transition. This ambition regarding consumer empowerment has been confirmed by the proposal for a recast of the Renewable Energy Directive and the Market Design proposals. Regarding regional cooperation, in July 2016, Denmark and Germany signed a cooperation agreement on the mutual opening of auctions for solar-PV installations. This agreement goes in the direction of the opening up of support schemes to cross-border participation that the recast of the Renewable Energy Directive proposes. Electricity generation from biomass on EU-28 level grew from around 9 Mtoe in 2010 to 13 Mtoe in 2015. However, this technology did not reach the level planned for that year. The deployment of biogas and bioliquids combined, both at negligible levels in 2004, reached 7% of renewable electricity in 2015. For what concerns biogas, its use has grown faster than expected, especially in Germany and Italy.

III.Transport Figure 5: EU-28 renewable energy in transport, by source (source: EUROSTAT, Öko-Institut)

Transport is the only sector which is currently below aggregated NREAP trajectories at EU level, with a 6 % share of renewable energy in 2015. This confirms a rather slow progress to the mandatory 10% target in transport, due to various difficulties including relatively high GHG mitigation costs and regulatory uncertainty. Renewable energy in this sector comes largely from biofuels (88%), with electricity playing a more limited role at this stage. Biodiesel is the main biofuel used for transport in the EU, representing 79% of total use of biofuels in 2015. Despite this leading position, biodiesel did not reach the expected deployment anticipated by the NREAPs trajectory for 2015 (10.9 Mtoe instead of 14.4 Mtoe). The main consumers of biodiesel are France, Germany and Italy. Bioethanol is the second largest contributor of renewable energy sources to the transport sector and represents 20% of biofuels. However, its use did not reach by far the level expected in NREAPs in 2015 (2.6 Mtoe instead of 4.9 Mtoe). Main consumers in 2015 were Germany, the United Kingdom and France, followed by Spain, Sweden, Poland and the Netherlands. Renewable electricity contributed 1.7 Mtoe to gross final energy consumption in transport in 2015, which is 13% lower than the expected aggregated NREAP trajectory. Other renewable energy sources (including biogas) do not play a prominent role in the transport sector at EU-28 level, but are deployed in some Member States (e.g. in Sweden and Finland). The share of biofuels produced from wastes, residues, ligno-cellulosic and non-food cellulosic material in the EU biofuel mix has increased from 1% in 2009 to 23% in 2015, mostly driven by Sweden, the United Kingdom and Germany. At EU level, these biofuels exceeded by three times the planned trajectory, with around 3 Mtoe in 2015, mainly because of the utilization of used cooking oil. b.Detailed assessment by Member State and projections All but one Member State (the Netherlands) showed average 2013/2014 RES shares which were equal or higher than their corresponding indicative RED trajectory. According to 2015 estimates, 25 Member States already exceeded their 2015/2016 indicative RED trajectories in 2015. Three Member States (the Netherlands, France and Luxembourg) had 2015 RES estimated shares below their 2015/2016 indicative RED trajectory (see Figure 6 ). Figure 6 : Member States current progress towards their 2013/2014 and 2015/2016 indicative RED targets. (source: Öko-Institut, EUROSTAT) The PRIMES Reference Scenario 2016 assumes that the EU as a whole and a majority of Member States will take sufficient action up to 2020 to achieve their targets. Member States which are currently projected not to meet their national RES binding targets by 2020 will have the possibility to use cooperation mechanisms. Table 1 summarizes past, current and expected renewable deployment at Member States level, including current trajectory in the transport sector compared with the 10% specific target. Table 1: Overview of Member States' progress towards 2020 targets in renewable energy (source: Öko-Institut, EUROSTAT) 2. OVERVIEW OF ADMINISTRATIVE PROCEDURES Administrative barriers entail additional development costs stemming from uncertainty, which especially impacts renewable projects with higher capital costs compared to conventional energy projects. Such barriers can lead to delays in deployment or even prevent projects from being realised. With rapidly decreasing technology costs, administrative procedures are proportionally gaining weight in the overall cost of renewable projects. The Renewable Energy Directive requires Member States’ permitting procedures for renewable energy projects to be proportionate and necessary. It also includes the obligation for Member States to outline, in their first progress report, whether they intended to (i) establish a single administrative body for applications for renewable energy installations; (ii) provide for automatic approval of permit applications where the authorizing body has not responded within the set time limits; (iii) and indicate geographical locations suitable for exploitation of energy from renewable sources. Member States have made progress on reducing administrative burden since the entry into force of the Renewable Energy Directive. The majority of them have established maximum time limits for permitting procedures as well as facilitated procedures for small-scale projects, and most of them identify geographical sites for renewable projects. Furthermore, an increasing number of Member States offer project developers the possibility to submit online applications. However, as shown in Figure 7 , barriers remain, e.g. for one-stop shops or automatic permission granting after the deadline. In comparison to 2012, in 2014 the situation hardly changed regarding the implementation of a one-stop shop. Only a few countries like France, Belgium and Luxemburg adopted this measure. A slight improvement took also place regarding online applications, which Austria and Bulgaria started to implement. Furthermore, the application of maximum time limits did extend to almost all Member States. However, the number of Member States applying facilitated procedures for small scale projects decreased. Table 2 provides a comprehensive overview of facilitated procedures at Member State level. Figure 7: Administrative barriers in the EU in 2014 (number of Member States concerned) (source: Öko-Institut)





Table 2: State of play of the availability of facilitated administrative procedures in EU Member States in 2014 (source: Öko-Institut)



3. ASSESSMENT OF SUSTAINABILITY OF EU BIOFUELS a.GHG emission performance The Member States reported net savings in greenhouse gas emissions resulting from the use of renewable energy in transport of around 35 Mt CO2-equivalent in 2014.Most of these reported savings came from the use of biofuels, with a small but growing role of renewable electricity. These savings cover only direct emissions and do not include emissions from Indirect Land Use Change (ILUC). ILUC emissions associated to biofuels consumed in the EU are estimated to be 23 Mt CO2-equivalent, leaving a net saving of 12 Mt CO2-equivalent . Applying the associated sensitivity range as set out in Annex VIII of the Renewable Energy Directive, ILUC emissions would range between 14 and 28 Mt CO2-equivalent and the corresponding net savings between 7 and 21 Mt CO2-equivalent. Recent modelling work of the ILUC impacts of individual biofuel feedstock confirms that ILUC emissions can be much higher for biofuels produced from vegetable oils compared to biofuels produced from starch or sugar. Advanced biofuels from non-food crops have generally very low or no ILUC emissions. b.Trade and main supplier countries In 2014, around 10% of bioethanol and around 26% of biodiesel consumed in the EU was imported. The main exporting countries were Malaysia for biodiesel and Guatemala, Bolivia, Pakistan, Russia, Peru for bioethanol. Three of them participate in the EU Special Incentive Arrangement for Sustainable Development and Good Governance ("GSP+"). The first Report on the Generalized Scheme of Preferences for the period 2014-2015 provides an analysis of the situation on human and labor rights, environmental protection and good governance in these countries. In 2015, imports of bioethanol and biodiesel decreased with largest decrease of ethanol imports from GSP+ countries. Data regarding the disaggregation by feedstock for production of bioethanol and biodiesel consumed in the EU differs depending on information source . All available sources however confirm that EU ethanol is mainly produced from wheat, maize and sugar beet, and that in 2014, more than 50% of biodiesel consumed in the EU was produced from rapeseed while the use of waste oils and fats but also of palm oil has significantly increased since 2010. In accordance with industry data, more than 60% of biodiesel and more than 90% of bioethanol consumed in the EU was produced from the EU feedstock. Non –EU bioethanol feedstock is imported from Ukraine (maize, wheat), Canada (wheat), Russia and Moldova (barley, ray), and Serbia (sugar beet). The largest exporters of biodiesel feedstock to the EU were Indonesia and Malaysia (palm oil), Brazil and the US (soybean) . The majority of rapeseed oil is of EU origin. Feedstock potential for advanced renewable fuels is very large, but production facilities at commercial scale are still limited. Table 3 : Feedstock base of the EU-28 bioethanol and biodiesel production in 2014 (source: USDA FAS 2016) c.Land use and land use change While the forest area, natural area and artificial area increased in the EU between 2000 and 2016, grassland decreased. In 2015, the ratio of grassland to agricultural land declined by 2.01% as compared to the reference ratio calculated on the basis of 2005 data . The loss of permanent grassland between 2006 and 2016 amounted to 3 Mha (-4.9%) . While a direct causal relationship between the loss of grassland area and an increase in the area of cropland used for the production of biofuels could not be found in the Union as a whole, it has been reported by one Member State.