EUROPEAN COMMISSION Brussels, 9.4.2019 COM(2019) 225 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



1. INTRODUCTION With the entry into force of the Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources (RED II) on 24 December 2018, a new future-proof framework is established towards meeting the binding Union target of at least 32 % renewable energy in gross final energy consumption by 2030. This framework will build on the progress being achieved under the current Directive including inter alia the obligation for Member States to keep the 2020 targets as baseline of their respective trajectories for the next decade. This is further complemented by the other elements of the Clean Energy for All Europeans package. Renewable energy is at the core of the Energy Union’s priorities. The Directive 2009/28/EC on the promotion of the use of energy from renewable sources (RED I) is a central element in the Energy Union policy and a key driver for meeting the renewable energy targets for 2020. The political priority of the European Union to become the global leader of renewables is underpinned by the presence of renewables in all five dimensions of the Energy Union. In terms of energy security renewables reduce the import dependency of fossil fuels. It is estimated that the increase in the use of renewable energy compared with the level of renewable energy consumption in 2005 allowed the EU to cut its demand for fossil fuels by 143 Mtoe in 2016 (approximately 12 % of total primary fossil fuel consumption). Similarly, Europe’s energy import dependence, notably as regards imports of oil and gas, will fall from todays 55% to 20% in 2050 thanks to a primary energy supply that would largely come from renewable energy sources. For the internal energy market, renewables play an increasing role in particular for the power market where close to one third (30.8%) of the EU 28 gross electricity production was generated by renewables in 2017. Also for renewable gases an increasing role is observed. An illustrative example is that the share of biogas in relation to the total consumption of gas was 18.6% in July 2018 in Denmark, which is an increase of 50% compared to the year before. On energy efficiency, a reduced energy consumption is tightly linked to the reaching a higher share of renewables and the increased integration of small-scale renewables in buildings, improving the energy performance in a cost effective way. Furthermore, renewable energy plays a significant role for decarbonisation and in 2016 renewables have contributed to 460 Mt of gross avoided CO2 emissions (more than the total GHG emissions of Italy in 2016) and it is estimated to grow to 499 Mt in 2017. Additionally, renewables are a key contributor to the innovation dimension. In the area of renewables, 53% of inventions from EU based companies acquire patent protection outside Europe. This demonstrates high-value of the innovation, since the protection is done with the view that it has scope to reach, and be successful in foreign markets. This makes the EU a global innovation leader as it is a higher share than any of the other major economies. In this respect, as recognised by the International Renewable Energy Agency (IRENA), Europe has become a lighthouse in showing successful pathways to a renewables-based energy future, being at the forefront in energy innovation. The leadership is also present for the different renewable technologies along their supply chains. For some technologies, like wind turbines, EU manufacturers accounted for at least 41 % of the new global installed capacity in 2016. As regards EU PV industry, EU PV equipment manufacturers are leading with a global market share of 50%, while EU inverter manufacturers have a global market share of above 18%. Further, to maintain and expand its position as the global leader in emerging renewable ocean energy technologies, for instance, the Commission engaged with Member States to join efforts to increase deployment and meet the cost-reduction targets set out in the SET-Plan. The Commission has set up the Clean Energy Industrial Forum on Renewables to strengthen industrial basis for renewables in Europe. In close cooperation with the key actors of the sector, the Forum proposes actions to improve the competitiveness of the European supply chain for renewables. The benefits of renewables expand well beyond the impacts on the five political dimensions above. Renewable energies are a source of economic growth and jobs for Europeans, in particular local jobs with more than 1.4 million people that are currently working in the sector and with a related turnover that is estimated to €154.7 billion.The recent report on energy prices and costs in Europe documents furthermore positive impacts on industrial competitiveness since the greater amounts of renewable energy are a key factor behind the fall in wholesale energy prices in recent years. As highlighted by IRENA, the growing deployment of renewables has also set in motion a global energy transformation with significant implications for geopolitics and the EU is clearly in a frontrunner position. They also contribute to lowering air pollution and helping developing countries with access to affordable and clean energy. Between 2011 and 2016, renewable power generation capacity grew with almost 10 GW and the number of people benefiting from off-grid renewable energy solutions grew six-fold, reaching more than 133 million. It is estimated that by 2030, renewable energy sources will power over 60% of new electricity access, and stand-alone and mini-grid systems will provide the means for almost half of new access. Last but not least, and most important, the lower cost of the technology, combined with digitalisation is making renewables the real driving force for consumers to be empowered and to play a key role in the energy transition. This report provides the latest insights into progress made up to 2017 towards the 20% target for renewable energy in 2020 and addresses other European Commission reporting obligations under RED I and the Directive on Indirect Land Use Change (ILUC). The statistics on energy transmitted by Member States to Eurostat up to January 2019 are used as primary data source for evaluating progress towards the 2020 target. This report builds on the Member States 4th biannual renewable energy progress report covering the period 2015/16, as well as complementary technical analysis made in the course of 2018. It also includes an overview of the potential in terms of co-operation mechanisms and assessments of the administrative frameworks and biofuels sustainability. 2. EU-28 PROGRESS IN DEPLOYING RENEWABLE ENERGY In 2017, the EU reached a share of 17.52% of renewable energy in gross final energy consumption, against a target of 20% for 2020, and above the indicative trajectory of 16% for 2017/2018. In addition, the EU as a whole is also above the slightly more ambitious trajectory defined by Member States themselves in their National Renewable Energy Action Plans (NREAPs). The EU is on track to reach its 2020 target. Over the past years, at EU level, there has been a continuous increase in the overall share of renewable energy sources (RES) and in the sectoral shares of renewable energy in electricity (RES-E), heating and cooling (RES-H&C), and, to a lesser extent, transport (RES-T). However, the pace of increase of the renewable energy share has slowed down since 2014. Comparing to the share of 16.19% in 2014, the average increase over the period 2014-2017 was only of 0.44 percentage points a year, lower than the annual average increase of 0.83 percentage points a year that will be required to reach a 20% share in 2020. As the indicative trajectory from RED I is steeper in the last years, a sustained effort will be required to meet targets. With regard to individual sectors, at EU level the renewable energy share in electricity and heating and cooling has been systematically above the levels defined by Member States in their NREAPs, while for transport, the share of renewables is basically following the planned trajectory. Figure 1: Actual and planned renewable energy shares for the EU 28 (2005-2020, %). Source: Eurostat and National Renewable Energy Action plans (NREAP) In terms of the absolute consumption of renewable energy, the heating and cooling sector provides the largest contribution with a total of 102 Mtoe in 2017, closely followed by renewable electricity, with a consumption of 86.7 Mtoe, and the transport sector, with a consumption of 23.65 Mtoe . The main renewable sources used in energy consumption were biomass for heating and cooling, hydropower and wind for electricity, and biofuels for transport. In the electricity sector, a clear paradigm shift is happening towards renewables. One of the key factors has been the decline in the cost of electricity from solar PV and wind power, which over the period from 2009 to 2018 fell with nearly 75% and about 50% (depending on the market) respectively, due to capital costs reductions, advances in efficiency and supply chain improvements and competitive tendering for support schemes. In 2018, the Ourika project in Portugal was the first European solar project developed without any kind of public support. In Germany, the market premiums paid for a 1.4 MW solar PV project was below the market value for solar power in summer 2018, and in Denmark new wind power projects were developed for a fixed feed-in tariff of 2.5 EUR/MWh. In both Germany and the Netherlands, the tenders for the development of a 1610 and 700 MW offshore wind parks received zero-subsidy bids.

The decline in costs is also one of the key drivers for an increase in corporate sourcing of renewables, especially in the case where corporate energy users sign a direct power purchase agreement with a renewable energy developer. Over the period from 2015 to 2018, corporate power purchase agreements for renewable electricity in Europe quadrupled from 506 MW to 1967 MW. 3. DETAILED ASSESSMENTS OF MEMBER STATES PROGRESS AND PROJECTIONS BY 2020 1.Progress in electricity, heating & cooling and transport The renewable energy shares reflect the historic diversity in Member States’ energy mix and their differences in renewable energy potential, with shares ranging from 6,4% in Luxembourg to 54,5% in Sweden in 2017 (see figure 2). Figure 2: EU and Member States renewable energy shares in gross final energy consumption 2015-17 vs. trajectories set in RED I (source: Eurostat) On the basis of the 4th renewable energy progress reports of the Member States (“progress reports”), that cover the period 2015-2016, 25 Member States were above their indicative trajectory of RED I for the period 2015/2016. Among the 3 Member States that were below their RED I trajectories, the Netherlands shows the largest gap, with an actual average share of 5.9% for 2015/2016, versus an indicative RED trajectory of 7.6%. The gap to the planned NREAP share of 9.7% renewable energy in 2016 is even larger. The country continues to be behind the planned RES-E trajectory and also somewhat delayed regarding its planned RES-T development. Luxembourg and France were also below their indicative RED I trajectories for 2015/2016, although only by a limited margin. The Eurostat figures for 2017 do not show any significantly different picture. There are 11 Member States (Bulgaria, the Czech Republic, Denmark, Estonia, Finland, Croatia, Hungary, Italy, Lithuania, Romania, and Sweden) that have already achieved a share corresponding to their 2020 target. Out of the remaining 17 Member States, 10 Member States are already on, or above, their interim trajectories set in RED I for 2017-2018. The remaining 7 Member States (Belgium, France, Ireland, Luxembourg, the Netherlands, Poland, Slovenia) would need to step up efforts to comply with the average 2017-2018 trajectory towards 2020. Looking at the absolute levels of consumption of renewable energy in EU 28, there is a significant increase from 189 Mtoe in 2015 to 204 Mtoe in 2017 i.e. 8%. However, in the same period the gross final consumption of energy raised from 1125 Mtoe to 1159 Mtoe, which resulted in a decreasing impact for renewable energy share, since this is calculated as the final renewable energy consumption divided with the gross final consumption of energy. This demand increase is one of the underlying key factors behind the lowering of the renewable energy share in 2017 compared to 2016 in 9 Member States (Austria, Bulgaria, Czech Republic, Hungary, Poland, Portugal, Romania and Slovakia). Sectorial renewable energy shares grew for a large majority of the Member States between 2015-2017. However, for some Member States, the sectorial shares change by only less than 0.3 percentage points. This is the case for 9 Member States in RES-E (Bulgaria, Czech Republic, Spain, Hungary, Poland, Romania, Slovenia, Slovakia, Sweden), 7 in RES-H&C (Czech Republic, Germany, Hungary, Austria, Poland, Slovenia, Slovakia), and 10 for RES-T (Czech Republic, Denmark, Estonia, Hungary, Cyprus, Latvia, Luxembourg, Austria, Poland, Finland). For the transport sector, where all Member States should reach the same target of 10%, this slowdown could be challenging in the 8 Member States (Estonia, Greece, Hungary, Cyprus, Latvia, Lithuania, Poland, Slovenia) that have less than 5% renewable energy consumption in the transport sector and that would therefore need a steep increase to reach the 10% target. The recourse to statistical transfers for the transport sector, enabled by the ILUC Directive is also a possible avenue to explore. 2.Co-operation mechanisms Co-operation mechanisms are based on Articles 6 to 11 of RED I. They include several mechanisms through which Member States can cooperate on renewable energy such as statistical transfers, joint projects and joint support schemes. Statistical transfers are particularly relevant to facilitate target achievement since they enable Member States that have reached a higher renewable energy share than their national target to transfer their surplus to another Member States. There are currently two agreements to make use of these statistical transfers between Luxembourg and Lithuania and between Luxembourg and Estonia. In both cases, they stipulate that Luxembourg will receive statistical transfers for the period 2018 – 2020. According to the estimates that Member States have included in their progress reports, there would be an overall 12564 ktoe excess production of renewable energy, compared to the indicative trajectory, available for potential statistical transfers in 2020. This corresponds to around half of France gross final consumption of energy from renewable sources. For a Member State that may not meet the 2020 target using their own renewable sources, this could be a viable option to meet their target cost-effectively (see table 1). 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Belgium 0 0 0 0 0 0 0 0 0 0 Bulgaria 372 357 528 641 601 610 691 420 471 411 341 Czech Republic 0 0 0 0 1145 1039 947 863 892 678 643 Denmark 694 834 1123 1106 1223 1452 552 619 63 Germany 6895 8436 6546 9390 7272 7911 4130 5976 3065 Estonia 101 117 135 122 75 94 154 163 186 235 279 296 Ireland 93 -14 111 79 26 -142 -12 -239 -366 Greece 137 201 320 242 195 137 -162 737 743 683 529 Spain 2290 3083 2720 3357 1990 2963 2049 2793 839 France -641 -2708 -1877 -1565 -3721 -4048 -4075 0 0 0 0 Italy 8324 8613 7405 10011 10937 9343 9468 7789 7259 5828 4462 3397 Cyprus 0 -11 28 44 45 43 29 29 57 34 21 0 Latvia -69 -127 Luxembourg 0 0 0 0 0 0 0 0 0 -50 -120 Hungary 968 1150 1213 1295 883 970 803 Malta 4 10 0 Netherlands 0 0 0 0 0 0 Austria 0 0 0 0 0 0 0 0 0 0 0 0 Poland 543 729 929 530 93 174 -260 968 968 587 Portugal 83 82 84 144 128 154 81 131 -4 50 Romania 1153 1306 794 942 645 692 1089 886 258 405 263 0 Slovenia 0 0 0 0 0 0 0 0 0 0 0 0 Slovakia 302 254 142 222 305 364 90 110 0 Finland 0 0 0 0 0 0 0 0 0 0 0 0 Sweden 2407 2141 2482 3318 3214 3335 3347 3475 3215 3610 3428 3241 Total 11985 13544 20838 28332 26660 27033 23901 23038 20722 22752 9982 12564 Table 1: Actual and estimated excess and/or deficit production of renewable energy in Member States compared to the indicative RED trajectory (ktoe). Source: Navigant 2019, Member States reports. 3.Projections In order to assess the feasibility of 2020 target achievement, a modelling exercise has been carried out for the Commission. The analysis explores to what extent Current Policy Initiatives (CPI) on renewable energy (as reported by the Member States in their progress reports), complemented by Planned Policy Initiatives (PPI), would be sufficient to trigger the targeted renewable energy deployment in the running up to 2020, for each Member State. This modelling finds that a renewable energy share of 18.1% to 20.7% can be expected for 2020 at EU level with currently implemented and planned renewable energy policy initiatives . A number of Member States is expected to perform well in the remaining years, reaching deployment levels beyond their target levels. However, for 11 Member States (Belgium, Cyprus France, Greece, Ireland, Luxembourg, Malta, the Netherlands, Poland, Portugal and the United Kingdom), currently implemented renewable energy policies and already planned renewable energy policy initiatives appear today to be insufficient to trigger the required renewable energy volumes purely domestically.

In addition, for 7 Member States (Austria, Germany, Latvia, Romania, Slovenia, Slovakia and Spain) there is some uncertainty related to 2020 renewable energy target achievement. Their capability of meeting their 2020 national binding targets will to a great extend depend on the levels of energy demand in case there would be a large increase in energy demand that brings their energy consumption back in line with the original trend indicated by the latest EU reference scenario. Taking into account the agreed co-operation mechanisms for Luxembourg, Estonia and Lithuania, the results are shown in figure 4. Figure 3. Expected renewable energy share in 2020 vs. 2020 RED targets and 2020 planned (NREAP) targets (%) excluding cooperation. (Navigant 2019) Figure 4. Expected renewable energy shares in 2020 vs. 2020 RED targets and 2020 planned (NREAP) targets, including cooperation mechanisms (MS, %). Source: Navigant 2019. Due to the relatively low total energy consumption of Luxembourg, the transfers from Estonia and Lithuania have a significant impact on Luxembourg’s capability to achieve its target: Luxembourg is expected to meet its 11% 2020 target in the most optimistic scenarios. These same transfers have a limited impact for both Estonia’s and Lithuania’s renewable energy share, which only decrease by 0.7% for Estonia and 0.9% for Lithuania in the worst case scenario. Going forward, according to their draft 2030 National Energy and Climate Plans, all Member States have already tabled their national contributions to the EU level binding target of at least 32 % which would make renewables the backbone of the Union energy system. By June 2019, the Commission will assess whether these national contributions, and the associated policies and measures, are in line with the EU ambition, and, if appropriate, issue recommendations to Member States. 4.Administrative barriers In their 4th national renewable energy progress reports, Member States report on measures to streamline administrative procedures for renewable energy projects (pursuant article 13 of RED I). According to external analysis , in global terms, a large share of the relevant measures in the REDI have been successfully implemented across the Member States. These measures include, amongst others: facilitated procedures for small-scale projects, requirements on system operators to provide cost estimates and other necessary information, requirements on the distribution of costs of grid development and grid connection of renewable energy, consideration of RES-E in the national network development plan, and the existence of support schemes promoting the use of renewable energy. However, barriers related to building and planning procedures have increased in recent years. For the electricity sector, the development towards larger projects has imposed some barriers, since such projects have additional requirements in terms of spatial and environmental planning. For the heating and cooling sector, the barriers are mainly due to shortcomings related to the capacities of the district heating networks, while the transport sector mainly sees barriers arising from the lack of adequate infrastructure both for biofuels and electric vehicles. The integration of the increasing RES capacities in the grid is also a persisting challenge for the majority of the Member States. The barriers mainly arise from high cost of grid connection as well as from the lack of predictability and transparency of the grid connection procedures. 4. ASSESSMENT OF SUSTAINABILITY OF BIOFUELS 1.Overview of biofuel consumption in the EU In 2016, the EU consumption of sustainable biofuels amounted to 13,840 ktoe. Of this, 11,083 ktoe (80%) was biodiesel and 2,620 ktoe (19%) was bioethanol. Most (64%) of the biodiesel consumed in the EU in 2016 was produced from feedstocks from the EU, mainly from rapeseed (~38%), used cooking oil (13%), animal fat (8%) and tall oil (2.5%). Of the remaining 36% of biodiesel consumed in the EU, 19.6% was palm oil from Indonesia (13.3%) and Malaysia (6.3%), 6.1% was rapeseed from mainly Australia (2.6%), Ukraine (1.8%) and Canada (1.2%), 4.8% was used cooking oil from various countries outside the EU and 4.3% was soybean from mainly the United States (1.5%) and Brazil (1.5%). Ethanol consumed in the EU is produced also mainly from EU feedstocks (65%), including from wheat (~25%), corn (~22%) and sugar beet (17%) and only a small amount (~1%) from cellulosic ethanol. Ethanol-based feedstock from outside the EU includes corn (16.4%), wheat (2.9%) and sugar cane (2.9%) from various parts. The main third countries producing feedstock for bioethanol consumed in the EU include Ukraine (9.8%), Russia (2.1%), Brazil (1.8%), the US (1.7%) and Canada (1.6%). It is estimated that almost all biogas consumed in the EU in 2016 was sourced from domestic feedstock, chiefly from crops and agro/food waste (including manure) (75%), followed by landfill gas (16%) and sewage sludge gas (9%). The origin of bioliquids, which in 2016 accounted for less than 1% of all bioenergy consumed in the EU, is difficult to ascertain as Member States do not split between feedstocks used for biofuels and bioliquids. Biogas Biogasoline Biodiesel Other liquid biofuels Bio jet kerosene Total Liquid biofuels Total Road 131 2,619 11,041 4.5 - 13,664 13,796 Rail 0.0 32.9 0.0 - 32.9 33.1 International aviation - 0.0 0.0 0.0 0.0 0.0 0 Domestic aviation - 0.0 0.0 0.0 0.0 0.0 0 Domestic Navigation 0.0 1.4 3.5 0.0 - 5.0 5.0 Non-specified transport 0.5 0.0 6.2 0.0 0.0 6.2 6.7 Total 132 2,620 11,083 4.5 0.0 13,708 13,840 Table 2: Final bioenergy consumption in EU transport (2016, ktoe). Source: Eurostat 2.Impacts of biofuels consumed in the EU It is estimated that 4.9 Mha of land was required for the production of crops for EU biofuel consumption in 2016, based on an analysis of the origin of biofuels feedstock. Of that amount, 3.6 Mha (73%) is located within the EU and the remaining 1.3 Mha (26%) is located in third countries. In terms of the total amount of cropland dedicated to biofuel production, in the EU it was 3.1% (on the basis of an estimate of total EU cropland of 115 Mha), with rapeseed representing 56% of the share of the total land used for biofuels production. From the four main countries outside the EU supplying crops for the production of biofuels which are consumed in the EU (Ukraine, Brazil, Indonesia and Malaysia), less than 0.5% of their total cropland was attributed to this use. According to information reported by Member States, total emission savings from the use of biofuels in transport in the EU amounted to 33.2 Mtonne CO2eq in 2016. Taking into account ILUC emissions estimated using 2016 crop feedstock volumes multiplied by the corresponding mean ILUC values from the ILUC Directive, total emission savings from the use of biofuels in transport in the EU are reduced to 11.8 Mtonne of CO2eq (with a range from 7.4 to 20.4 Mtonnes of CO2eq savings) .