EUROPEAN COMMISSION Brussels, 14.7.2021 SWD(2021) 621 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT REPORT

Accompanying the Proposal for a Directive of the European Parliament and the Council amending Directive (EU) 2018/2001 of the European Parliament and of the Council, Regulation (EU) 2018/1999 of the European Parliament and of the Council and Directive 98/70/EC of the European Parliament and of the Council as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652 {COM(2021) 557 final} - {SEC(2021) 657 final} - {SWD(2021) 620 final} - {SWD(2021) 622 final}







Table of contents 1.Introduction: Political and legal context 1.1.Key aspects of the 2018 Renewable Energy Directive (REDII) 1.2.The Renewable Energy Directive and interactions with the key ‘Fit for 55’ legislation/initiatives and others 2.Problem definition 2.1.What are the problems? What are the problem drivers? 2.2.How will the problem evolve? 3.Why should the EU act? 3.1.Legal basis 3.2.Subsidiarity: Necessity of EU action 3.3.Subsidiarity: Added value of EU action 4.Objectives: What is to be achieved? 4.1.General objectives 4.2.Specific objectives 4.3.Intervention logic 5.What are the available policy options?

5.1.Baseline 5.2.Scope of this initiative and alignment with the Climate Target Plan 5.3.Description of the policy options 5.4.The overview of policy options 5.5.The core scenarios, variants and their use in this IA 5.6.Options discarded at an early stage 6.What are the impacts of the policy options including for effectiveness, efficiency and coherence? 6.1.Overall renewable energy target level and achievement 6.2.Heating and Cooling 6.3.Transport 6.4.Measures to enhance the contribution of transport and heating and cooling to the system integration of renewable electricity 6.5.Certification of renewable and low carbon fuels 6.6.Promotion of innovative renewable and low carbon fuels 6.7.Bioenergy sustainability criteria 6.8.Flanking and enabling measures 7.How do the options compare and conclusions 7.1.Effectiveness 7.2.Efficiency and impacts 7.3.Coherence 7.4.Administrative and monitoring impacts

7.5.Subsidiarity and proportionality 8.Preferred option/CONCLUSIONS 8.1.Methodological approach 8.2.Policy interactions 8.3.Preferred policy options 8.4.Investments underpinning the preferred policy option 8.5.Ensuring coherence in the finalisation of the package 8.6.REFIT (simplification and improved efficiency) 9.How will actual impacts be monitored and evaluated? 10.List of tables and figures



Glossary Term or acronym Meaning or definition REDII Directive (EU) 2018/2001of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources, OJ L 328, 21.12.2018, p. 82–209 CTP 2030 Climate Target Plan EGD European Green Deal GHG Greenhouse gas LULUCF Land use, land-use, change and forestry, Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework, and amending Regulation (EU) No 525/2013 and Decision No 529/2013/EU, OJ L 156, 19.6.2018, p. 1–25 ILUC Directive Directive (EU) 2015/1513 of the European Parliament and of the Council of 9 September 2015 amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources, OJ L 239, 15.9.2015, p. 1–29 NECP National energy and climate plan TFEU Treaty on the Functioning of the European Union GO Guarantee of origin, based on article 19 of REDII and defined in Article 2(12), , is an electronic document which has the sole function of demonstrating to a final customer that a given share or quantity of energy was produced from renewable sources BDS Biodiversity Strategy ESI Energy System Integration CCS Carbon Capture and Storage CCU Carbon Capture and Use RFNBO Renewable fuel of non-biological origin, according to Article 2(63) of the Renewable Energy Directive. This includes for instance renewable hydrogen and hydrogen based synthetic fuels. FQD Directive 2009/30/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 98/70/EC as regards the specification of petrol, diesel and gas-oil and introducing a mechanism to monitor and reduce greenhouse gas emissions and amending Council Directive 1999/32/EC as regards the specification of fuel used by inland waterway vessels and repealing Directive 93/12/EEC, OJ L 140, 5.6.2009, p. 88–113 Governance Regulation Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council ,OJ L 328, 21.12.2018, p. 1–77 ETS Emissions Trading System EED Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC, OJ L 315, 14.11.2012, p. 1–56 EPBD Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings OJ L 153, 18.6.2010, p. 13–35 Union database Database to be established under Article 28 of RED II with the aim to increase cooperation between national systems tracking renewable fuels in order to improve the data availability on the EU level and minimise the risk of fraud and double counting of fuels. It shall be set up for fuels that are: ·Eligible for being counted towards the target (specifically the numerator referred to in point (b) of Article 27(1) – the renewable transport target); ·Suitable for measuring compliance with renewable energy obligations; ·Eligible for financial support for the consumption of biofuels, bio-liquids and biomass fuels. AFID Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure, OJ L 307, 28.10.2014, p. 1–20 Part A advanced biofuels Biofuels for transport made from the feedstocks listed in Part A of Annex IX to REDII Part B advanced biofuels Biofuels for transport from the feedstocks listed in Part B of Annex IX to REDII RLF Renewable and Low Carbon Fuels H&C Heating and Cooling DH District Heating DHC District Heating and Cooling 4GDH 4th Generation District Heating system is a coherent technological and institutional concept which by means of smart thermal grids assists the appropriate development of sustainable energy systems. FTE Full time equivalent (employment) PPA A contract under which a legal or natural person agrees to purchase renewable electricity directly from an electricity producer. Mtoe Million tonnes of oil equivalent



1.Introduction: Political and legal context The European Green Deal establishes the objective of becoming climate neutral in 2050 in a manner that contributes to European competitiveness, growth and jobs. This objective, and the objective of a 55% reduction in GHG emissions by 2030 as confirmed by EU Heads of State and Government in the European Council in December 2020, requires an energy transition and significantly higher shares of renewable energy sources in an integrated energy system. The increased use of energy from renewable sources is crucial to combat climate change, protect our environment and health and reduce our energy dependency, as well as to contribute to the EU’s technological and industrial leadership and the creation of jobs and growth. REDII sets a binding EU target to reach at least a 32% share of renewables in the energy mix in 2030. It moves away from the national binding targets which were set within the 2020 framework to national contributions to the Union target as set by the Member States in their National Energy and Climate Plans (“NECPs”). On 17 September 2020, the Commission adopted the 2030 Climate Target Plan (“CTP”), which explores options to achieve a new 2030 climate target of at least 55% GHG emissions reductions. This target was endorsed both by the European Parliament and by the European Council. As stated in the CTP, renewable energy plays a fundamental role in delivering the European Green Deal and for achieving climate neutrality by 2050. The energy sector contributes over 75% of total GHG emissions in the EU and energy efficiency. Renewable are therefore central to achieving the higher climate ambition for 2030. According to the CTP, achieving at least 55% GHG emissions reductions would result in an accelerated clean energy transition and a greener energy mix, with renewable energy seeing its share reaching 38% to 40% of gross final energy consumption by 2030.

The acceleration of the ongoing energy transition requires a real paradigm shift and profound changes in the way how we produce and consume energy. This requires significant investments in new technologies, materials and fuels. Such profound changes do not happen overnight and the magnitude of investment is a challenge. To further leverage this step change, investors need certainty on the direction to go and where to invest. Compared to other “Fit for 55” measures, the revision of RED can deliver best on specific support measures for new renewable solutions and create certainty for investors to make the accelerated energy transition happen. This revision of RED II builds on the CTP and the impact assessment that underpins it, as do all the ‘Fit for 55’ initiatives. Implementing the EGD roadmap, the Commission has adopted several strategies that require a review of different elements of the EU’s renewable energy policy: ·The Energy System Integration Strategy and the Hydrogen Strategy aim to build an integrated energy system fit for climate neutrality and to turn hydrogen, especially renewable hydrogen, into a viable solution to contribute to this vision. Both strategies propose a number of actions to be addressed through the review of REDII, including promoting the principle of energy efficiency first, moving towards a more “circular” energy system by reusing waste heat and biomass wastes and residues, promoting renewable-based electrification in sectors such as transport, buildings, industry and promoting the use of renewable and low carbon fuels, including hydrogen, for hard-to-decarbonise sectors; ·The Renovation Wave initiative, which aims to at least double the current low renovation rates in the EU and highlights the need to speed up the integration of renewables in buildings as well as the decarbonisation of heating and cooling; ·The Offshore Renewable Energy Strategy, which sets out the scaling up of offshore renewable energy and its use as an EU priority; ·The EU Biodiversity Strategycalls for better protection of and increasing the quantity, quality and resilience of Europe’s forests, including primary forests. It also includes a mandate to the Joint Research Centre to carry out a study on use of forest biomass for energy production and related biodiversity risks, in order to inform the review of REDII. Furthermore, in response to the COVID-19 induced economic crisis effects on the European economy the Commission adopted an Economic Recovery Package to facilitate investments to accelerate the transition towards a climate neutral economy (amongst other matters). The review of REDII must been seen in this context as a tool to complement the Recovery Package by helping to create a legal framework that sets the right incentives for a smooth and cost-effective energy transition that supports Europe’s recovery and resilience efforts, making Europe a healthier continent. The review of REDII does not stand alone. It is part of a broader exercise that affects other energy and climate legislation and policy initiatives, as announced in the EGD roadmap, and in the Commission work programme for 2021 under the title “Fit for 55 package”. Therefore, close coordination is undertaken with the other proposals that are part of the June 2021 ‘Fit for 55’ package (see section 1.2). 1.1. Key aspects of the 2018 Renewable Energy Directive (REDII) REDII is the main EU instrument dealing with the promotion of energy from renewable sources. It was adopted in 2018 and has to be fully implemented by Member States on 1 July 2021. A full review of the Directive is therefore not yet possible, and the Impact Assessment will focus on a targeted review to ensure the implementation of the Climate Target plan and other key Commission initiatives such as the Energy System Integration Strategy and the Biodiversity Strategy, while ensuring coherence with the other initiatives under the “Fit for 55” package. It establishes an EU-level binding renewable energy target for 2030 of at least 32 % to be collectively delivered by Member States on the basis of voluntary national contributions, calculated according to an indicative formula included in the Governance Regulation. The national (binding) 2020 targets set in REDI also act as a minimum share of renewables (“baseline”) that Member States are obliged to maintain after 2020. REDII also sets an indicative target to increase renewables in the heating and cooling sector by 1.3 percentage point yearly. The targets are accompanied by a list of optional measures that Member States may choose to take and an obligation to, assess the potential of the use of renewables and waste heat and cold in the heating and cooling sector including District heating and cooling. Member States must introduce appropriate measures in their building codes to increase the level of renewables in the building sector, in particular requiring minimum levels of renewable energy in new buildings and those undergoing major renovation. General requirements on basic information provisions and disconnection rights for consumers in district heating and cooling are also included. REDII includes a sectorial binding target for transport of 14%, to be met by an obligation on fuel suppliers. It includes a cap of 7% of food based biofuels and a specific sub-target for advanced biofuels of 3.5%. Electrification of transport is only incentivised in a residual manner. The use of renewable energy in certain sectors (road transport, rail transport, maritime and aviation) is only incentivised through “multipliers”, allowing to account more than the actual energy content consumed. The consumption of renewable electricity is also incentivised through such multiplier, as well as that of advanced biofuels. REDII strengthens the EU sustainability framework for bioenergy. It includes enhanced sustainability criteria covering also biomass/biogas in heat and power, in addition to biofuels/biogas for transport (as under REDI). REDII includes new biodiversity and climate safeguards for forest biomass. Also, REDII lays down minimum GHG emission saving thresholds, requiring biomass in heat and power to emit 70% fewer GHG emissions (on lifecycle basis) compared to fossil fuels (increasing to -80% in 2026). Minimum energy efficiency requirements for biomass electricity production have also been introduced. REDII promotes the shift from conventional to advanced biofuels. Finally, article 3 of the Directive requires that, amongst other, Member States design their support schemes with due regard with the waste hierarchy, to aim to avoid undue distortions of the biomass raw material market. These criteria have not yet taken effect, as the deadline for transposition by Member States is June 2021. REDII also includes a number of enabling measures aiming to increase the renewable energy shares in the EU. These measures were calibrated in the Clean Energy for All Package with other energy, climate, environmental but also consumer legislation. They include the right for renewable self-consumers and renewable energy communities to generate, store and sell electricity without being subject to disproportionate procedures and to be fairly remunerated for the electricity they feed into the grid. Furthermore, measures to simplify and speed up administrative and permitting procedures to ease the administrative burden for renewable projects developers. The Directive also includes general principles for the design of support schemes, in order to provide visibility to both Member States and investors on their possible design. Schemes are also subject to a voluntary opening to neighbouring Member States, with a review clause to reassess the possibility of a mandatory opening.

1.2.The Renewable Energy Directive and interactions with the key ‘Fit for 55’ legislation/initiatives and others In conjunction with the REDII, the current EU climate and energy policy framework already presents several elements of synergies as shown in the figure below. Specific interlinkages between legislative instruments are explained in detail and where relevant in Chapters 5 and 6. The interactions are the strongest with the ETS – especially if extended to sectors of road transport and buildings. The analysis supporting the CTP shows that carbon pricing works best hand in hand with regulatory measures, and that this helps avoid “extreme” scenarios of either: ·very high carbon prices that can translate, in the absence of regulatory measures addressing market failures and barriers, into high energy prices for consumers (representing the highest burden for vulnerable individual consumers energy intensive industry etc.); ·very stringent energy policy requirements (e.g. very high energy savings or renewables obligations) that may be rejected by Member States because it would not give them much flexibility and would be too costly for economic operators struggling to mobilise the necessary investments and ultimately passing it through to consumers. The proposed approach is to adjust and review the various complementary policy instruments to address various and distinct challenges in the pursuit of climate neutrality and European Green Deal objectives. The IA is fully aligned with the GHG targets proposed in the Climate Law for 2030 and 2050, as the IA is based on the Climate Target Plans scenarios achieving those two targets. The IA focuses on how to deliver the necessary level of ambition, mindful of interaction with other instruments, the governance process and subsidiarity principles. It looks at ways to formulate the sectoral RES targets, what fuels are eligible to fulfil them, which tools are proposed for Member State choice and which elements are binding. In addition to delivering the RES levels of ambition as defined in the CTP, the revision of REDII also assesses certain tools to achieve better energy system integration (ESI) and ensure that biomass sustainability criteria are fit for purpose. In order to address the key interactions with legislative instruments mentioned above, scenarios (so-called “Fit for 55” core scenarios) were modelled to show how all instruments together can deliver the increased climate target of 55% net GHG reductions. REDII revision is reflected in those scenarios – please see methodology explained in Chapter 5. 2.Problem definition 2.1.What are the problems? REDII was designed and adopted to achieve a share of at least 32% renewable energy in gross final energy consumption in a cost-effective and sustainable way by 2030, as part of a broader 2030 climate and energy framework, which set a 40% GHG reduction target. However, the EGD and its follow-up initiatives have increased the ambition of the Union climate and energy policies. This new ambition can only be achieved with considerably increased volumes of renewable energy in the system in addition to a strong improvement in energy efficiency. The common economic analysis underpinning the 2030 Climate Target Plan shows that, in the pathway/scenario focusing on a combination of carbon pricing and medium intensification of regulatory measures in all sectors of the economy, the current REDII fails to contribute sufficiently to the increased ambition and new policies adopted under the EGD in three ways. First, the targets and measures set in the Directive are not sufficiently ambitious to achieve the general and sectoral shares in heating and cooling and transport sectors of renewables the CTP indicates as cost-effective to achieve an at least 55% of GHG emissions reduction in 2030 and climate neutrality by 2050. While in the electricity sector the penetration of renewables has been the fastest, it will need to be scaled up substantially compared to historic rates of deployment. The key drivers remain the ETS price, energy taxation and taxonomy as well as further reducing technology costs through further enabling measures in renewables legislation in the electricity and industry sectors. Second, the Directive does not properly reflect the measures proposed in the Energy System Integration and Hydrogen strategies to advance towards a more integrated energy system where there is, inter alia, a more energy efficient and circular energy system, further renewables-based electrification and further use of renewable and low-carbon fuels in those sectors where electrification is not yet a viable option. These three goals are essential to reach the 2030 ambition in a cost-effective way. This is in particular valid for sectors that are difficult to de-carbonise such as transport, heating & cooling and industry. Furthermore, the current certification system has already shown good results but its scope and content does not cover new fuels such as innovative renewables of non-biological origin (RFNBOs). All renewable and low-carbon fuels need robust certification across the life cycle to help achieve of both energy and climate targets. Finally, the current REDII sustainability criteria for bioenergy need to be reinforced in a targeted way in light of the increased climate and biodiversity ambition of the EU Green Deal. The clean energy transition will result in an overall increasing demand for biomass (particularly after 2030), be it for bioenergy or alternative uses in products, while at the same time the EU land use sink needs to be maintained and enhanced and EU biodiversity safeguarded. According to the National Energy and Climate Plans, a majority of Member States plan to increase their use of bioenergy, but in most cases without assessing the impacts on LULUCF sinks and biodiversity (see Annex 8).

Energy policy is only one among several factors influencing forest management. Nevertheless if an increased uptake of renewable energy is met through unsustainable forest biomass sourcing, this could put further pressure on the forest sink and the biodiversity in forests. A. In addition, the combustion of biomass in inefficient energy installations can affect air quality objectives. At the same time, the Climate Target Plan pointed out to the need for increased use of sustainable bioenergy in order to achieve the 55% target by 2030 and climate neutrality by 2050. It is therefore essential to ensure that RED II in combination with the LULUCF Regulation and other climate and environment legislation) further minimises trade-offs and maximises synergies between biomass production and biodiversity and climate protection. Stakeholder views The vast majority of the contributions to the Inception Impact Assessment reflected a positive attitude towards the increase of the climate ambition set in the European Green Deal and towards a revision of the Directive. A small number of stakeholders pointed out the negative impact such an early revision of the Directive could have for the stability of the regulatory framework and investor certainty. Regarding the question in the OPC ‘Does REDII need to be modified?’, across all stakeholder groups, the majority agreed that RED II needs to be modified, and that it needs to be more ambitious as a result of the higher climate ambition in the European Green Deal and Climate Target Plan. Top of the list for change was targets, followed by transport, and the number of replies on forest biomass shows the public interest on the issue of bioenergy sustainability. 2.2.What are the problem drivers? 2.2.1. Insufficiently ambitious targets and measures for renewables deployment in EU and Member State legislation both in 2030 and 2050 perspective 2.2.1.1. Insufficient ambition to achieve the overall renewable energy target in 2030 As indicated in the latest Renewable Energy Progress Report, if Member States meet the national contributions for renewable energy they have set in their NECPs, the Union is expected to reach a share of renewables between 33.1% and 33.7% by 2030 that would contribute to -41% GHG emission reduction thereby overachieving the current 32% RES target set in REDII while being significantly lower than the necessary 38% to 40% share set out in the CTP to be consistent with the overall EU target of at least 55% GHG reduction by 2030. Apart from these identified shortcomings regarding the EU overall renewable energy target, an assessment per sector also reveals that REDII’s ambition and measures are not sufficient to deliver the EGD and CTP ambition. Market barriers and lack of incentives, particularly in end-use sectors such as heating and cooling or transport, hinder further penetration of renewables, either through electrification, or via the penetration of renewable and low-carbon fuels such as advanced biofuels and renewable and other sustainable alternative fuels and gases. Further cross –border cooperation and integrated approach to develop and deploy further renewable technologies like offshore renewable energy and in industry is still missing. Enhanced and expanded measures, including flanking and enabling measures, under RED II could deliver a larger uptake of renewable energy in the EU. 2.2.1.2. Insufficient ambition for renewables deployment in the heating and cooling sector Heating and cooling currently accounts for half of the EU energy consumption. 60% of heating is consumed in buildings and around 40% in industrial process heating. More than three quarters of heating is supplied from fossils fuels. 80% of energy demand in residential buildings is driven by heating and cooling needs, and around 60% in service sector buildings. Many heating systems are old and inefficient and half are beyond their service lifetime. The replacement of half of the current heating stock and even more in district heating networks will have to occur in the next 5-8 years. A clear and ambitious policy framework is essential to ensure that investments for building renovation are cost-efficient and facilitate replacing fossil fuel boilers with more sustainable alternatives. The share of renewables in this sector in the EU in 2019 was 22.1%, with only a 5.3 percentage point increase over the last 10 years . In district heating the share of renewables is slightly higher around 28.9% but is mainly attributable to the use of biomass (26.9%), while other renewable heat technologies (heat pumps, solar and geothermal) amounting to only 2% are used only in a few innovative networks. In industry, only 9% of the heating requirements are supplied by renewable energy. In their NECPs, around half of the Member States did not present sufficient trajectories and measures to fulfil the current indicative heating and cooling target of an 1.1 percentage point (ppt) average annual increase (or 1.3 ppt if waste heat is used) over the 2021-2030 period, while the other half indicated the achievement of this target in their plans . Likewise the gradual modernisation and building of renewable based district heating and cooling systems remained unaddressed by but a handful of Member States, even where this type of heating has a significant share. Overall the insufficiency of ambition in planned measures and trajectories signals a significant risk of long-term carbon lock-in, which will be difficult and expensive to correct if steps are not taken in the period until 2030. According to the aggregated projected trend in the NECPs, is only enough to reach a 33% RES share in H&C in 2030, in contrast with the 38-41% estimated necessary in the CTP. Without a clear policy framework to roll-out renewable heating technologies in buildings and district heating as the main pillar of decarbonisation, replacement of heating systems will be sporadic and in many cases be based on uninformed decisions taken under duress in winter break-downs leading to replacing current fossil systems with the same and leading to fossil lock-in for the next 20-30 years. The synergies with energy efficiency and especially with building renovations are important to harness, as well insulated buildings are a pre-condition to replace old heating systems in buildings with efficient renewable heating or make connection with low-temperature modern district heating networks possible. As almost 75% of the existing buildings in the EU inefficient, they become a key barriers for deploying renewables to cover building’s heating needs. Addressing this barrier, requires a framework amenable to increase the annual heating system replacement rate to at least 4% per annum as indicated in the Climate Target Plan as an integral part of building renovation. The EU Renovation Wave therefore sets heating and cooling decarbonisation as one of its key areas for actions and calls for strengthened heating and cooling targets and minimum levels of renewables to be part of the REDII review. The accelerated deployment of renewable heating and district heating via strengthened measures to facilitate heat planning and planned replacement schemes, ensure risk mitigation and capacity building for consumers and public authorities is critical to scale up projects and investment and ensure level playing field for an orderly and cost-effective decarbonisation of heating. Effective market and regulatory frameworks to guide the transition to the 2030 critical milestones and towards carbon-neutrality in 2050 are missing in all but a few Member States. With the possible extension of carbon pricing instruments, non-market barriers such as lack of sufficient capacity for heat and project planning, lack of information and coordination, lack of skills to enable the switching to renewables that still exist would need to be overcome for carbon price signals to fully exercise their impacts while allowing for a fair, effective and cost-efficient achievement of the climate goals, consistent with the energy and climate policy architecture as a whole. In this regard, multi-level coordination across the many actors (local, national and EU) is needed and the key building blocks for success (clear targets and horizontal measures supporting their delivery) are developed but not sufficiently understood, diffused and applied across the EU. The lack of clear and effective EU framework jeopardises progress due to the large size of the sector and the high correlation it has with the overall RES shares. 2.2.1.3. Insufficient ambition for renewables deployment in transport sector Transport is the only energy sector that has seen an increase in GHG emissions in the past decades, increasing mobility needs as well has a high reliance on fossil fuels being the main drivers. This is happening despite the technological developments in the sector, where transport means (cars, planes) are much more energy efficient than some years ago. Furthermore, transport is the end-use sector where renewable energy is being developed at the slowest pace, with an EU 8.9% share of renewables in 2019. REDII replaced the 10% target set in REDI for 2020 by an obligation on fuel suppliers, which must be designed in a way that allows the Member States to achieve their target of 14% renewables and a sub-target of 3.5% advanced biofuels by 2030. The achievement of the target is facilitated by several multipliers on energy content both for transport sectors and for specific fuels. In addition to technical standards of fuels traded on the EU market, the FQD sets out a 6% target for the reduction of the greenhouse gas intensity of transport fuels by 2020, but does not set out a dedicated target for the promotion of innovative fuels. Following the recast of the RED, the sustainability framework in the FQD is now outdated. For these reasons it is relevant to assess whether elements of the FQD are still appropriate to avoid them acting as a barrier to the achievement of the revised ambition level of the RED. There are two main technology options to reduce this dependency on fossil fuels and decrease the sector’s GHG emissions: Firstly, penetration of transport electrification and its deep, smart integration with the energy system for enhanced system flexibility and increased use of renewable electricity; secondly, in sectors that are more difficult to electrify such as aviation and maritime, increased use of renewable and low carbon fuels. As to electricity in transport, in addition to missing price signals, barriers for electrification and its integration in the energy system are mainly the narrow range of electric vehicle models across all budgets, and insufficient recharging infrastructure, especially with intelligent or bidirectional functionality. The conditions for innovative mobility services such as aggregators are not yet in place, including access to data of vehicles, electricity grid and charging. Different charging infrastructure types and payment models also complicate the access for consumers to the infrastructure. Neither consumers, charge point operators, aggregators nor mobility service providers have access to information on the RES share or carbon intensity of the system in an interoperable manner. Further, REDII, apart from counting the contribution of renewable electricity towards the renewable energy target in transport, does not set out any mechanism ensuring that operators of recharging infrastructure are rewarded for supplying renewable electricity to electric vehicles under the obligation on fuel suppliers. This fails incentivising investments into recharging infrastructure and limits the contribution of renewable electricity contribution to the target. The main market barrier for the use of renewable and low carbon fuels are the higher costs of such fuels compared to fossil fuels. Higher costs and low technological and commercial maturity limit the supply potential of innovative renewable fuels such as advanced biofuels and renewable fuels of non-biological origin (RNFBOs), mainly renewable hydrogen and renewable hydrogen-based synthetic fuels, which have decarbonisation potential despite their intrinsic energy inefficiency. REDII already limits the amount of biofuels produced from food and feed crops that can be counted towards the renewables targets due to their impact on indirect land use change and limited decarbonisation contribution. The 2030 CTP Impact Assessment shows that with existing policies the transport sector would fall short in delivering the contribution needed to achieve the economy-wide target of at least 55% GHG emissions reduction by 2030 and climate neutrality by 2050. The results also show that after 2030 a further significant scale up of the production of renewable and low carbon fuels is required on the pathway to achieve climate neutrality. With respect to the level of ambition, the CTP indicates that for 2030 the share of RES in transport should reach 27-29% including a substantial contribution of advanced biofuels, which is significantly higher than the current 14% target set in REDII for transport. That assessment further demonstrated the importance of RNFBOs for the achievement climate neutrality in order to provide a decarbonisation pathway for hard to abate sectors. While REDII covers these fuels and sets out a framework ensuring that they achieve emission savings, it does not include specific incentives for their use. Given their early stage of technological development and high costs, a lack of dedicated incentives may slow down their commercial deployment, which would endanger the rapid uptake of renewable and low carbon fuels that is required after 2030. A possible extension of carbon pricing instruments alone would not be sufficient to drive the development of such fuels, and would create the risk to sustain less sustainable low carbon and biofuels. Other instruments that are relevant for the promotion of low carbon technologies such as the ETS are more suitable to promoting the switch to mature low carbon technologies but cannot provide by themselves the strong investment signal needed to develop new innovative technologies. Such investment signals could also keep increasing costs for consumers by carbon taxes and ETS in check.

2.2.2. Insufficient promotion of ESI in REDII The current model, where energy supply and consumption for supply for electricity, heating and cooling, transport, industry, gas and buildings takes place in ‘silos', each with separate value chains, rules, infrastructure, planning and operations - cannot deliver the increased climate targets in 2030 and climate neutrality by 2050 in a cost-efficient way. The lack of integration of the energy system results in greater costs, inefficiencies, lost opportunities and a disproportionate burden on the power sector, which cannot alone deliver the overall decarbonisation effort required at EU level. In the end, it would lead to higher costs to households and businesses. Several barriers, not appropriately addressed in REDII, still prevent the emergence of a truly integrated energy system, in particular (i) the slow rate of electrification of certain end-use sectors, (ii) the slow uptake of renewable sources in heating and low penetration of renewable and low-carbon fuels, such as biofuels, biogas, hydrogen and synthetic fuels, in particular in certain transport applications and in industry, as well as (iii) a still limited contribution to new distributed loads (electric vehicles, heat pumps) to the system integration of variable renewable electricity. Smart and renewable use of power is crucial for heating and cooling systems, as well as electric vehicles, to live up to the European Green Deal objectives aiming to a reduction of 90% of the transport sector’s GHG emissions by 2050. The fast uptake of electric vehicles (EVs) is expected to follow exponential tendencies, with an estimate of more than 30 million electric cars by 2030. The potential of EVs to absorb further renewable electricity and decrease system GHG emissions has to be well appreciated and fully utilised through appropriate measures, as stipulated in the Energy System Integration Strategy. REDII provides only limited incentives for the electrification of end-use sectors. There are no specific provisions encouraging the electrification of heating and cooling, apart from the general, indicative heating and cooling target and the equally indicative and optional district heating and cooling target (the denominator of which can be reduced through electrification). The transport obligation is also rather designed to incentivise the uptake of specific fuels, in particular advanced biofuels, with electricity only incentivised through the use of a “multiplier”. REDII does not yet include specific provisions aimed at ensuring that distributed assets such as home batteries and electric vehicles contribute to the system integration of variable renewable electricity. The Clean Energy package has brought about a significant redesign of electricity markets to ensure that all forms of flexibility are in principle able to participate in electricity markets, however regulatory gaps still exist on the specific conditions necessary to ensure a level playing field in the participation of such small or mobile distributed assets in practice, both individually as well as through aggregation. The AFID and EPBD also regulate the deployment of EV charging points, however through fragmented scopes of application. Provisions are missing to ensure coverage at all types of locations (publicly accessible, private for own use, and private with broad access), as well as to ensure that the deployed charging points are indeed fit for system integration purposes by offering smart charging or even vehicle-to-grid functionalities. Specific measures are also necessary to ensure that integration can be supported by a competitive and innovative services market through a level playing and enhanced consumer choice. Regarding certification systems, REDII does enable the tracing of renewable transport fuels and some low carbon transport fuels. However, this system does not allow a sufficiently clear distinction between renewable and low-carbon fuels (including hydrogen) on the one hand and more polluting energy sources on the other hand, and does not allow tracing in the transport/transmission system from production facilities to consumption centres. Moreover, the two parallel systems for tracking the consumption of renewable energy under REDII (‘book & claim’ system based on guarantees of origin and a certification system based on mass balance) do not sufficiently promote further the integration of the energy system. 2.2.3. Insufficient sustainability criteria safeguards for bioenergy Today bioenergy represents the largest single source of renewable energy in the EU, making up about 60% of final renewable energy consumption, of which 60% comes from forestry. In order to further inform the review of REDII, the Biodiversity Strategy has mandated the JRC to conduct a study on the use of woody biomass for energy and its potential climate and environmental impacts. While bioenergy production can have positive climate and biodiversity impacts, JRC has identified a number of potential bioenergy pathways that should be avoided for biodiversity and climate protection. For example, an excessive removal of harvest residues, or the removal of stumps, for bioenergy use can harm soil productivity, biodiversity, and water flows. In addition, the conversion of primary and highly biodiverse forests to plantations, aiming to provide wood for material and energy use, can be extremely negative for local biodiversity and climate mitigation in the short-medium term and lead to irreversible damage. The JRC study has found that a robust and effective implementation of the REDII sustainability criteria for forest biomass could effectively minimise/avoid several of the identified risks. However, the study has concluded that additional safeguards are needed to address the existing policy gaps in the context of future biomass demand increases. More specifically, JRC has recommended the following two key measures: a) applying the existing no-go areas for agricultural biomass also to forest biomass, in order to avoid the risk of biomass sourcing from primary and highly biodiverse forests: b) applying the EU sustainability criteria to smaller installations (below the current threshold of 20 MW) in order to regulate a larger share of biomass use, thus avoiding possible ‘environmental leakage’ risks. According to JRC data, the majority of woody biomass for energy use comes from timber residues and waste produced either from the forest-based industries and post-consumer wood (49%), or from timber logging (17%). At the same time, 20% of total woody biomass supply comes from stemwood, of which at least half is from coppice forests. About 4% of total woody biomass use for energy comes from industrial quality stemwood. This finding highlights the need for Member States to further promote the cascading use of woody biomass when designing their support schemes for bioenergy. In this respect, the Biodiversity Strategy has also called for the use of whole tree harvesting for energy production – whether produced in the EU or imported – to be minimised. Inefficient biomass combustion is also a source of air pollution. According to the World Health Organisation, residential heating with solid fuels (coal or wood) is an important source of particulate matters and carcinogenic compounds, especially in Central Europe. In particular, biomass combustion in old and inefficient households and other small installations could compromise local and regional air quality objectives. While REDII does not include specific air quality criteria for biomass combustion, it should be noted that air pollution of fuels is effectively addressed through EU environmental legislation including a number of different measures. Under the energy legislation, the Eco-design Directive has been identified as the most appropriate tool to set stricter emission requirements for new solid fuel boilers and space heaters, which are applicable since 1 January 2020. 2.3. How will the problem evolve? REDII is the main Union instrument for the promotion of renewable energy . To meet the share of 38% to 40% renewable energy in 2030 set out in the CTP, an increase in renewable energy is needed as a consequence of the proposal by the Commission endorsed by the European council and confirmed by co-legislators in the Climate Law, to step up the ambition of the climate target 2030 to at least -55%. According to the 2020 Renewable Energy Progress Report, based on the existing framework of REDII and analysis of the NECPs submitted by the Member States, projects that the EU’s renewable energy share will reach between 33.1% and 33.7% in 2030. Leaving the ambition level of the Renewable energy directive unchanged would put additional burden for increased decarbonisation on other instruments such as the Energy Efficiency Directive as well as other instruments such as the Emissions Trading System, and the LULUCF and Effort Sharing Regulations. This could increase economic costs and distributional impacts especially in sectors included in the ETS. It would also fail to incentivise the market to invest more in renewables and innovate sufficiently. In heating and cooling, the low ambition shown by many of the Member States in their NECPs in relation to the indicative renewable heating and cooling target and the indicative renewable district heating and cooling target set in REDII would continue. The current target ambition, coupled with no additional measures to tackle long-entrenched barriers across the whole heating and cooling sector means there would be slow progress, technology lock-in and lack of engagement from citizens, consumers and investors to contribute to the decarbonisation of this sector. In transport, it is clear that several Member States have high ambition for greening road transport, in particular by looking into policies strongly discouraging the use of cars and vans with internal combustion engine. Direct electrification with renewable electricity, in conjunction with deep integration of electric vehicles in the electricity system, are considered to be the main options to reduce GHG emissions of cars and light duty vehicles. However, there are other transport modes, such as aviation and maritime but also long-haul transport, which cannot today be easily electrified and where renewable and low-carbon fuels including renewable hydrogen will be needed to replace fossil fuels, complementing energy efficiency improvements, modal shift and electrification efforts. Such innovative fuels will not be sufficiently promoted by other means such as ETS. Renewables are developing strongly in the power generation sector through lower technology costs and stable ETS prices, but this is not enough to decarbonise the electricity sector at the pace required to cut emissions in the EU by 55% by 2030. New market avenues to develop additional renewable power generation, e.g. through merchant projects or corporate PPAs, are emerging, but still at a limited scale and in only a few Member States. The use of measures for cross-border cooperation has been limited in the past. With a view to 2030, very few Member States included concrete plans in their NECPs to implemented cross-border cooperation projects in the future, and this leads to lost opportunities. With regard to offshore renewable energy, the sector has shown great progress over the past years. However, to complement the provisions on grid related planning and cooperation addressed in the proposal for the revised TEN-E Guidelines, more ambition and increased efforts on deployment plans, joint projects and regional cooperation on renewable offshore generation are essential in order to tap the huge potential offered by offshore energy needed by 2030 and beyond and to do so in a cost-effective way. As there are no specific requirements on industry to increase the level of renewable energy use under REDII, it is to be expected that the uptake of renewable energy will continue to stagnate as it has done over the past decade, and GHG emissions from industry will not decrease. Regarding buildings, on average, the percentage use of renewables in buildings is 23.5%. Without new measures to increase the use of renewable energy in buildings generally and to encourage the move away from oil and coal- boilers, emissions from the buildings sector will be very slow to decrease.

In terms of energy system integration, the further penetration of electricity and other decarbonised energy carriers such as renewable and low carbon fuels is expected to be moderate and uneven. Without further action to improve integration of the energy system, the burden of decarbonisation would continue to fall predominately on the power sector, and the substantial potential for decarbonisation and increased renewable energy use in end-use sectors, such as buildings, heating and cooling, transport and industry, would be partly foregone. Regarding the system integration of variable renewable electricity, the Clean Energy Package has introduced a number of provisions ensuring that electricity markets are fit for renewables. However, such provisions could be complemented by more sector-specific measures aimed at reaping the full benefit of distributed assets, such as heat pumps or electric vehicles and stationary batteries, for the integration of variable renewables. In hard-to-decarbonise sectors such as maritime, aviation and industry, the current framework will offer limited incentives to promote innovative fuels such as RFNBOs and low-carbon fuels by 2030. While REDII sets a target of 3.5% for advanced biofuels in transport, high upfront capital investment needs and higher costs for RFNBOs and low carbon fuels will not allow them to penetrate these sectors before 2030 and thus provide the basis for a more significant uptake after 2030. Renewable and low-carbon fuels (including hydrogen) can be promoted most effectively if they can be easily distinguished from more polluting energy sources. Without a certification system and the provision of information to the market and policy makers about the environmental and energy efficiency performance of energy carriers, the promotion of promising energy solutions would be jeopardised. REDII extended the EU bioenergy sustainability framework to cover also large-scale use of biomass and biogas in heat and power and it included new risk-based criteria for forest biomass and for agriculture biomass. It also includes minimum GHG saving criteria for biofuels for transport and biomass/biogas in heat and power and minimum efficiency criteria for biomass based electricity production. In addition, it requires Member States to design their support schemes with due regard to the waste hierarchy to avoid undue distortions of the raw material market, and not to support waste to energy in case they have not met the separate sorting obligations under the Waste Framework Directive. However, these criteria will be effective only from the transposition deadline in June 2021 and there is no information on their effectiveness. The use of bioenergy is projected to increase moderately between 2020 and 2030 (in some scenarios biomass consumption is even projected to decrease, mitigating possible conflicts with biodiversity objectives). Post-2030 sustainable bioenergy is set to gain increasing importance, particulary in the electricity, transport and industry sectors, with the view to contribute to carbon neutrality goal by 2050. While the EU sustainability criteria have been reinforced under REDII, they do not fully address the risks of sourcing forest biomass from primary and highly biodiverse forests (unless they are protected by national or international competent authorities). In addition, the exemption of installations equal or above 20MW still leaves a large share of biomass unregulated (25% of commercial woody biomass plus households use for space heating). Furthermore, thanks to the Renovation Wave, the replacement rate of inefficient biomass boilers is projected to increase, with related reduced emissions. Finally, Member States provide important financial support to bioenergy production. In 2018 the total EU27 biomass support amounted to 10.3 billion EUR, and biogas received 3 billion EUR, and when subsidies could not directly assigned to any of the two (biomass-biogas), the support amounted to 1.5 billion EUR. Without a reinforced application of the cascading principle, this national financial flows could lead to undue distortions of the raw material market, and even divert high quality wood to energy market, with associated negative impacts on resource efficiency, biodiversity and carbon sinks. The projected reduction of biomass use by households for local space heating, due to more efficient housing and higher electrification, will result in a reduction of related air emissions. 3.Why should the EU act? 3.1. Legal basis The proposal is based on Article 194(2) of the Treaty on the Functioning of the European Union (TFEU), which provides the legal basis for proposing measures to develop new and renewable forms of energy, one of the goals of the Union’s energy policy, set out in Article 194(1) (c) TFEU. REDII, which will be amended by this proposal, was also adopted under Article 194(2) TFEU in 2018. It is an initiative in an area of energy, which is a shared competence between the EU and the Member States. 3.2. Subsidiarity: Necessity of EU action A cost-efficient accelerated development of sustainable renewable energy within a more integrated energy system cannot be sufficiently achieved by Member States alone. An EU approach is needed to provide the right incentives to Member States with different levels of ambition to accelerate, in a coordinated way, the energy transition from the traditional fossil fuel based energy system towards a more integrated and more energy-efficient energy system, based on renewables-based generation. The CTP establishes that renewables have a key role to play to decarbonise the Union’s economy and must be substantially increased to respond to the Union’s new climate ambition. Taking into account the different energy policies and priorities among Member States, action at EU level is more likely to achieve the required increased deployment of renewables than national or local action alone. This collective effort is also more likely to succeed in reaching Union climate targets, as can be seen by the 2020 renewable energy target, with some Member States likely to deliver below their national contribution but others above, so that in total the contributions exceed the Union target. The EU common framework and targets leave discretion for Member States to set concrete policies and actions that contribute to the national contributions and EU targets while respecting their right to decide their energy mix. 3.3. Subsidiarity: Added value of EU action EU action on renewable energy brings added value because it is more efficient and effective than individual Member States’ actions, avoiding a fragmented approach by addressing the transition of the European energy system in a coordinated way, ensuring net reduction of greenhouse gas emissions and pollution, protecting biodiversity, harnessing the benefits of the internal market, fully exploiting the advantages of economies of scale and technological cooperation in Europe, and giving investors certainty in an EU-wide regulatory framework. In its Conclusions of 10 and 11 December 2020, the European Council endorsed a binding EU target of a net domestic reduction of at least 55% in greenhouse gas emissions by 2030 compared to 1990. The analysis in the CTP indicated that the least cost pathway to achieve greenhouse gas reduction targets in 2030 is for the renewable energy share to increase. A revised EU-wide energy and climate framework for renewable energy in 2030 will also help to steer Member States energy policies to achieve a sustainable, secure and integrated energy system for European citizens. The increase of renewable energy across the EU benefits from coordination at the EU level given the EU’s single market. An increase in the 2030 target for the EU’s Renewable energy share will impact all sectors and has a much greater chance of leading to the necessary transformation, acting as a strong driver for a cost-efficient change and resilient to external shocks. This impact assessment looks at how to increase the share of renewable energy in different sectors by 2030 to contribute effectively to the goal of GHG emissions. The analysis of the Member States’ NECPs is fully taken into account. Where targets are considered, this is because having ambitious Union targets will also drive ambitious contributions from the Member States. Collective achievement of the Union target will be facilitated by the measures set out in this assessment, which will give Member States the tools and the flexibility necessary to increase the share of renewable energy in their overall consumption. By acting at EU-level in combination with action at Member State level, several barriers to public and private investments can be tackled and this will effectively supplement and reinforce national and local action. Addressing the lack of coordination between various bodies at national level as well as improving administrative and technical capacity will incentivise cost-optimal deployment of renewables at city and community level, where issues such as heating, cooling and hot water use remain key and are not decarbonising rapidly enough with more details under the assessment of the measures (Section 6.2.1.3). The role of Member States is crucial to achieve the increased overall EU GHG ambition and putting in place measures at Union level aims to focus action at nation level where it can be most effective, taking into account the very varied situations on in Member States. This is fully in line with Article 194(2) of the Treaty on the Functioning of the European Union, which states that the Union policy on energy shall aim, in a spirit of solidarity between Member States, to promote the development of new and renewable forms of energy. Simply setting targets at EU levels and leaving Member States complete freedom as to how to achieve them would however not be an effective way to achieve the agreed targets, as has been recognised by the co-legislators when they agreed the specific measures in the current REDII and the reporting and governance structure set out in Regulation 2018/1999. It also risks causing distortions to the internal market, and would lead to a less effective preservation and improvement of the environment, one of the specific aims of Article 194 TFEU. Important national prerogatives such as the Member State's right to determine the conditions for exploiting their energy resources, their choice between different energy technologies and the general structure of their energy supply, remain fully untouched. The balance between obligations and the flexibility left to the Member States on how to achieve the objectives is considered appropriate given the imperative of achieving, ultimately, climate neutrality. In terms of consistency with the Charter for fundamental rights, the overarching aim of this review is to increase the use of renewable energy and reduce GHG emissions, and this is entirely in line with Article 37 of the Charter under which a high level of environmental protection and the improvement of the quality of the environment must be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development.

4.Objectives: What is to be achieved? 4.1. General objectives The general objective of this initiative is to ensure that the revised REDII is fit to contribute to the achievement of at least 55% of GHG emissions reduction in 2030 and to do so in a cost-effective and sustainable way. This needs to be done in complementarity with the other initiatives of the “Fit for 55” package and consistently with other EGD objectives and initiatives. 4.2. Specific objectives The initiative will contribute to the achievement of the general objective by pursuing the following specific three objectives: ·To increase sufficiently the renewables share in final energy consumption. This will ensure that the overall and sectoral deployment of renewable energy in 2030 is in line with the CTP findings, thus contributing cost-effectively to the increased 2030 climate target of at least 55% as well as climate neutrality objective in 2050 (which requires the large scale rollout of innovative technologies including RFNBOs and advanced biofuels after 2030). For this objective, regulatory and non-regulatory options will be explored on the following topics: overall target, heating and cooling, including buildings, transport, accompanied by flanking and enabling measures in electricity and industry. ·To increase energy system integration by promoting electrification based on renewable electricity, to create a level playing field for all innovative renewable and low carbon fuels and to specifically promote innovative renewable fuels (such as hydrogen and its derivatives produced from renewable electricity). This will ensure that the increase in the RES share in final energy consumption is cost-effective by promoting ESI in line with the CTP and the ESI strategy and that innovative fuels are promoted strongly considering that they are indispensable for carbon neutrality. For this objective, regulatory and non-regulatory options will be explored on the following topics: promotion of renewables-based electrification, measures to improve the system integration of renewables, and definition, certification of all innovative renewable and low carbon fuels and promotion of innovative renewable fuels. ·To ensure that renewables, in particular produced from forest biomass, are sustainable. This will ensure that forest biomass consumed in the EU is produced sustainably, including by minimising the risk of significant negative environmental and climate impacts, in line with the ambition set in the EGD and the BDS.

4.3. Intervention logic The figure below visualizes the intervention logic, linking the problem, problem drivers, specific objectives and general objectives. The policy options described in section 5 are defined to address these objectives. 5.What are the available policy options?

5.1.Baseline The baseline for this initiative is the recast of REDII as described in Section 1.1 The EU Reference Scenario 2020 (REF) and its Member States specific results reflect implementation of REDII recast. REF is the baseline in the impact assessments for all the initiatives of the “Fit for 55” Package, including in this one. Complete information about preparation process, assumptions and results are included in the Reference scenario publication. The most relevant information for this assessment is also presented in Annex 4. REF reflects the agreed 2030 EU climate and energy targets: at least 40% GHG reduction, at least 32% renewables share and at least 32.5% energy efficiency (energy efficiency target is, however, not achieved – see below). REF also reflects main policy tools at EU level to implement these targets and, to the extent possible, the complete range of foreseen of bottom up national policies and measures of the final NECPs that Member States submitted in 2019/2020 according to the Governance Regulation. The REF also takes into account the energy system impacts of the COVID-19 crisis that already heavily impacted the EU and Member States’ economies in 2020/2021. For 2030, REF projects for the EU a 33.2% share of renewable energy in gross final energy consumption. It also projects that final energy consumption is 883 Mtoe, which is 29.6% below the 2007 Baseline and thus an ambition gap to the agreed 2030 energy efficiency target of at least 32.5%. For the ESR, an overall reduction of emissions of 30.7% by 2030 as compared to 2005 is projected. These projections are in line with the Commission’s assessment of final NECPs. Taking into account the national contributions and policies put forward in the final NECPs, the REF scenario achieves 33.2% renewable energy share in 2030, and thus overachieves the current EU 32% renewable energy target. All sectoral shares show growth in renewable energy deployment compared to historical levels, which reflects the ambitious policies of the Member States. Those policies and the resulting renewables deployment are, however, not sufficient for achieving the level of ambition commensurate with the increased climate target (38-40% according to CTP). Naturally, also all sectoral shares are below the levels projected in the CTP scenarios - as illustrated in the table below. Total RES share RES-E RES-H&C RES-T 2005 10% 16% 12% 2% 2015 18% 30% 20% 7% 2030 REF 33% 59% 33% 21% 2030 CTP : ranges for 55% GHG scenarios 38-40% 64-67% 39-42% 22-26% 2030 RED IA: core scenarios ranges for 55% GHG scenarios 38-40% 65-66% 36-41% 27-29% While not all trends can be captured in energy system modelling, the REF shows the impacts of several trends described in section 2.3 above. According to REF, GHG emissions from the European Union in 2030 (incl. intra EU aviation and maritime and incl. LULUCF) would be 45% below the 1990 level. An EU allowance price of 30 EUR/tCO2eq. in 2030, national policies and lowering costs of renewable technologies would drive the emissions reduction in the ETS sector. REF models the impacts of targets and policies already adopted, but not the target of net-zero emissions by 2050. As a result, there are no additional policies driving decarbonisation after 2030. However, climate and energy policies will likely not be rolled back after 2030 and several of the measures in place today will continue to deliver emissions reduction in the long term. By 2050, some 60% GHG reductions (with regards to 1990) are projected to be achieved. 5.2. Scope of this initiative and alignment with the Climate Target Plan All “Fit for 55” initiatives, including this one build on the CTP and its underpinning impact assessment, but they also expands CTP analysis looking more in detail of actions in different sectors and creation of necessary enabling conditions. The CTP showed, on the basis of scenarios, that achievement of increased climate target of at least 55% net GHG emissions reduction in 2030 is feasible and enables a smoother trajectory to climate neutrality in 2050 but it requires that all sectors contribute to the increased effort. With the energy sector contributing currently to just over 75% of GHG emissions, the clean energy transition in the current decade plays a central role. This transition has to accelerate significantly compared to scenarios leading to the previously agreed climate target (of at least 40% GHG reduction in 2030). They key finding from CTP modelling was that achieving in the cost-efficient manner the 55% GHG target in 2030 would mean a share of renewables in final energy consumption of 38%-40% in 2030. A significant additional uptake of energy efficiency will also be necessary. CTP assessment indicated that achieving 55% GHG reductions in 2030 requires savings of 36-37% of the final energy and savings of 39-40% of the primary energy. Likewise, the CTP established the desired reductions in the GHG emissions in the current ETS and ESR sectors.more details are included in Annex 5. Consequently, the scope of this initiative is to deliver, together with other “Fit for 55” proposals, the necessary and cost-effective deployment of renewables (via increasing the targets and addressing the market failures/non-market barriers) to contribute achievement of increased climate target. The updated core scenarios confirmed that the range for renewables deployment in order to reach 55% GHG target cost-effectively is 38-40%. Several other “Fit for 55” proposals affect the scope of this initiative, notably extension of carbon pricing. This fundamental interaction is portrayed by core scenario set-up discussion on the core scenario results interpretation in section 5.5. Other interactions and key findings of the CTP and how these findings were fine-tuned based on the “Fit for 55” IA work are discussed in Annex 4. The updated core scenarios have an important role in this assessment as the policy options on the level of targets (overall, sectoral) are aligned with core scenario findings (while considering also options proposed by stakeholders). In addition, a number of policy options concerns how these options can be delivered - i.e. the ways to establish targets or enabling conditions for their achievement. Policy options such as the ones revolving around advanced biofuels and RFNBOs are based on a dedicated variant (MIX-H2) coherent with other “Fit for 55” policy options, still lead to 55% GHG target but are in line with the goals of the Hydrogen Strategy in order to provide a stronger push to mainstream such fuels (see section 5.3). 5.3.Description of the policy options

A set of policy options and measures under each policy area including non-legislative and legislative alternatives are considered below in order to address the drivers of the problems identified above. The concrete figures supporting the policy options are assessed in detail in Chapter 6. A ‘snapshot’ of stakeholders’ views is included for each set of options, with further details in the text and a comprehensive overview in Annex 2. How policy options are structured Policy options are structured into four main areas. The three first areas are directly linked with the specific objectives of the initiative and thus are deemed crucial to achieve those. The fourth area contains flanking and enabling measures that are supportive of those objectives. Core policy options 1.Options linked to the insufficient ambition of existing legislation to reach climate neutrality. This includes options about the overall target, heating and cooling, including buildings, and transport. 2.Options linked to the need to increase energy system integration. This includes options to promote electrification and the certification and promotion of innovative fuels. 3.Options linked to ensure the bioenergy sustainability. Flanking and enabling measures 4.In addition, to the specific objectives of the revision of this Directive, a limited number of additional flanking or enabling measures could contribute to the cost-efficient deployment of renewables. This includes measures to foster regional cooperation, offshore renewables deployment and the uptake of renewable energy in industry that would complement also carbon price instruments while further reducing technology costs. 5.3.1. Area I: Insufficient ambition in EU and MS legislation both in 2030 and 2050 perspective 5.3.1.1. Options to increase and ensure the achievement of the overall renewable energy target in 2030 As shown in the REF scenario both the current EU renewable energy target (at least 32% by 2030) and the aggregated ambition of the Member States (between 33.1% and 33.7% by 2030) are not ambitious enough compared to the level of renewable energy shares needed to reach the -55% reduction of GHG emissions included in the CTP and agreed by EU leaders. This is problematic as without sufficiently high ambition levels, it is less likely that the share of renewable energy will increase at the rate required for reaching the GHG reduction target in a cost-effective manner. Options considered are: Level of the target ·Option 0: No change to the target i.e. keep at least 32 % (baseline scenario). ·Option 1: A minimum target in the range of 38-40% ·Option 2: A higher target than 40% Nature of the target ·Option 0: No change to the nature of the target and EU target which is fulfilled by national contributions, i.e. EU binding target and national voluntary contributions ·Option 1: National binding targets in addition to the EU binding target Stakeholders’ opinions In the OPC, a majority of respondents favoured a target of at least 38-40% (43% of respondents) or higher (37% of respondents). All respondents expressed a very strong preference (71% or higher) for the target being binding at both EU and national level. 22% of respondents believe that the target should be binding only at EU level. All 11 Member States responding to the consultation were in favour of at least increasing the target in line with the CTP (if not beyond 40%). Regarding the binding nature of the target, most MS opted for the target to be binding at least at EU level -if not at both EU and national levels, while only two MS responding to the OPC opted against the target being binding at either level. 5.3.1.2. Options to increase renewable energy in the heating and cooling sector (RES-H&C)

For the H&C sector to contribute effectively to the overall RES Share levels indicated the CTP , Member States’ efforts in this sector should be increased. Heating and cooling are local and diverse across Member States. leading to highly fragmented industry and stakeholder structure, which constitutes a barrier for sharing knowledge and have access to a common framework of measures and tools (regulatory, financial, etc.), which could facilitate actions at national and local levels. EU framework in this sector is recent and incipient leading to limited EU value added and capacity to harness synergies from shared knowledge and capacity building, common regulatory framework and investment risk mitigation instruments. Clearer overarching EU objectives and more comprehensive list of measures and instruments are needed to support and guide national efforts in Member States by public authorities, citizens and businesses and scale-up the capacity of the heating and cooling industry to supply technologies and solutions. An expanded and comprehensive list of measures would diffuse best practices and would provide a list of policy instruments to guide national efforts while aiming to address non-market barriers, complementary with carbon pricing instruments, while ensuring effectiveness, cost efficiency in a balanced manner. The options aim to ensure that renewable energy supply (sources, technologies and infrastructures) is sufficiently available and deployed, including via district heating and cooling, and that buildings becomes fit for the integration of renewables to gradually replace fossil based heating and cooling systems in line with the CTP and the Renovation Wave. When it comes to Industry, the pace of RES uptake is clearly insufficient to contribute adequately to an increased 2030 climate target in line with the CTP. Furthermore, early investments are needed to adapt production processes, e.g. through electrification, to the availability of different renewable energy carriers. Introducing more specific provisions covering the use of renewables in industry could help accelerate the cost-efficient uptake of RES in industry. To overcome non market barriers from the fragmented nature and the limited capacity to tap on common instruments of the heating and cooling sector, the proposed options revolve around two core issues: (1) Measures to address non market barriers in the area of heating and cooling for further fuel switching to renewables, coherent with carbon price mechanisms and energy efficiency measures that would complement the current list of measures in Article 23(4) which also, for example, cover buildings. (2) Assessing the level and nature of RES H&C targets, including renewable energy in buildings and industry, that lead to the necessary deployment of renewables in the H&C sector, contributing to overall 2030 national RES contributions and thus fulfilment of overall RES target. Options considered are: Option 0: No changes, maintain current indicative 1.1%-point average increase in renewables at Member State level under REDII and the list of measures (baseline) ·Option 1: Non-regulatory measures - Guidance and Best Practice Exchange This option involves the use of non-regulatory measures alone to support the full implementation of REDII provisions. These activities would take the form of Guidance and Best Practice Exchange without using legally binding measures. These could help to address those weaknesses that were identified during the assessment of the NECPs and in discussions with Member States, mainly using the forum of the Concerted Action to prepare the implementation of RED II. These could cover the following areas: RES heating and cooling share accounting; interpretation of relevant definitions and provisions (e.g. in relation to waste heat, ambient energy); guidance on possible measures, renewable cooling following the adoption of the delegated act on calculation methodology foreseen for 31 of December 2021 and also specific guidance on the current measures in Article 23(4)In terms of H&C shares, the existing indicative increase target in REDII would continue to apply unchanged. ·Option 2: Regulatory Measures - Extend the current list of measures of Article 23(4) in REDII Clarify and complement the current list of measures to ensure the availability of a core set of generally applicable instruments at EU level, as common buildings blocks of common relevance, applicability and replicability for heating and cooling decarbonisation. The extended list of measures will provide the missing common EU framework to ensure level playing field and enhance regulatory certainty. The list of measures an extended list of measures to cover capacity building, risk mitigation, heat purchase agreements, planned replacement schemes, renewable heat planning and updated training and qualification requirements for installers that Member States can use to implement the overall heating and cooling RES target. (See Annex 7 for detail of measures);

This option aims to overcome non-market barriers and complement carbon price signals by ensuring better coordination and planning, increasing capacity for heat system replacement and project development, ensuring accurate and sufficient information for informed decision making, reducing risks of investment and ensuring engagement of local authorities and consumers. Lack of such measures would necessitate much higher carbon prices signals, would delay the translation of carbon pricing into concrete consumer investment decision and increase cost burden for consumers, in particular low-income households and vulnerable consumers. ·Option 3: Level and nature of the targets oOption 3a) make the current 1.1%-point average increase at Member State level as a minimum baseline complemented by an indicative Member State-specific top-up based on the EU’s RES H&C share as carried out in dedicated modelling work for this impact assessment in agreement with CTP analysis. oOption 3b) make an annual average increase binding at Member State level translated based on the EU’s RES H&C share as carried out in dedicated modelling work for this impact assessment in agreement with CTP analysis to reach the overall RES 38-40% shares.. oOption 3c) a binding EU target for RES heating and cooling only oOption 3d) (Indicative) EU RES benchmarks of 49% for the EU building stock (a general numerical level of minimum RES use in national building stocks as a percentage of the overall energy use) and for renewable energy consumption of 1.1% yearly average over the 2020-2030 period in industry to monitor progress and efforts. This set of options involves possibilities to strengthen the current target. Option 3a) makes the current target mandatory, while also adjusting its design to higher ambition in a way that reflects national circumstances in a proportionate way (indicative top-ups). Options 3b) increases the current target in a uniform way and makes it binding for all Member States. Option 3c) introduces a new design in the form of an overall EU target. Options 3a), 3b) and 3c) present different mutually exclusive design options. Options 3d) is complementary with 3a), 3b) and 3c) and can be applied to reinforce these other options. Stakeholders’ opinions Overall RES heating and cooling targets: In the replies to the Roadmap, most stakeholders asked for a stronger H&C target of at least 50% share of RES by 2030 and called for a higher annual RES-H&C target of 3,1%. Stakeholders also called for making the H&C target in Article 23 binding. Several gas industry stakeholders called for quotas for renewable gas and renewable hydrogen and the inclusion of these new innovative renewable fuels in the accounting for the RES H&C sub-target. Heating and cooling was the second most popular sector (after transport) for additional efforts to increase the share of the renewable energy according to the replies to the OPC. When it comes to the MS’ answers to the OPC, most of them opted against both increasing the target and making it binding. RES in buildings: In the replies to the Roadmap there was a strong call to increase the share of RES in buildings, and some stakeholders suggested specific targets (e.g. 50% of RES share in buildings, ensuring that 40% of heating is provided by heat pumps in 2030 and 70% in 2050). 78% of those replying to the OPC, in particular environmental organisations (87%) and NGOs (82%), expressed the view that there should be a minimum percentage of renewables in new and renovated buildings. 5.3.1.3. Options to increase renewable energy in the district heating and cooling sector (RES-DH&C) Examples of modern renewable-based efficient district heating and cooling (DHC) demonstrated cost-effective solutions for high renewable energy integration, increased energy efficiency and energy system integration. However, while the potentials have been demonstrated in scientific studies and by numerous examples, such examples remain few and far between. The current provisions under REDII require Member States to endeavour to increase the share of renewables by an annual average 1%-point (100% of this target can be fulfilled by waste heat and cold), or implement network access for renewables, waste heat and cogeneration. These provisions, weak as they are, include several exemptions allowing Member States to do nothing even where their systems are old, mostly based on fossil fuels (for example coal still has a significant share) and subject to consumer dissatisfaction in several Member States, where DHC has significant market share (14%-50% in Northern, Central and Eastern Europe, and above 50-80% in certain cities). The NECPs analysis has shown a general lack of measures and trajectories to address DHC in line with the REDII. For example only three MS provided targets and trajectories for renewables in DHC, while the role of these networks is significant or increasing in all but a few countries. The current provisions make it possible for ‘de-facto’ 100% fossil systems to continue indefinitely in the future, while other segments of the heating sector (e.g. individual heating technologies and fuels) are becoming subject to increasingly stricter requirements to decarbonise, even when their potentials are weaker, more expensive and remote in the future. The lack of EU action in this sector would allow business-as-usual to continue with ensuing lock-in-effects, wasted cost-effective possibilities to harness (especially local) renewable sources (ambient, geothermal energy via heat pumps or bespoken technologies, solar thermal, cheap waste based bioenergy or waste heat, etc.). Similarly the demonstrated energy system integration potential of DHC would not materialise by lack of a clear EU framework guiding local actors and encouraging their efforts to link district heating networks with renewable electricity, waste heat and renewable gases deployment. Consumer information as regards the climate performance of these systems should in parallel be improved to ensure level playing field, greater transparency and fair competition with alternatives. The proposed measures are necessary to ensure that the next inevitable and imminent investment cycle in district heating is not wasted and directed towards future proof solutions when replace the current old and obsolete heat generation units (around two thirds of the generation assets). The current measures should be aligned with the higher ambition and decarbonisation policies laid down in the European Green Deal, the ESI and the Hydrogen Strategies and the Renovation Wave. In particular, the ESI Strategy calls to accelerate investment in smart, highly-efficient, renewables-based district heating and cooling networks, if appropriate by proposing stronger obligations through the revision of REDII and the Energy Efficiency Directive. The Renovation Wave highlighted the role of district approaches to building renovation creating new business opportunities and reducing overall costs. District approaches where the simultaneous deployment of modern district heating and cooling systems offer cost-saving synergies with building renovation by allowing the scaling and aggregating projects making zero-energy or even positive energy districts possible through modern district heating and cooling systems with large potential for renewables and waste-heat recovery. The EED review complements the REDII review by revising the definition for efficient district heating and cooling. This definition should be updated to CTP and EGD goals to make exemptions from the annual average target, network access and disconnection justifiable. The ambition level should be raised to give clear signals for investment decisions even if the target remains indicative to allow sufficient flexibility to cater to specific national conditions. The coordinated review of the EED and REDII aims to increase complementarities and synergies between renewables and energy efficiency in developing modern renewable DHC by enhancing the EED focus on primary energy savings and REDII focus on renewables in DHC; renewables thus can contribute to energy savings, while higher requirements for efficiency enable renewables and make them cheaper to implement. Thus the same renewables in DHC help achieving the renewable heating and cooling, district heating and cooling and overall renewable targets, while also contributing to the energy efficiency targets. Options, in conjunction with the revision of the EED and the EPBD, are:

·Option 0: No changes, maintain current policies under REDII (baseline scenario); The baseline scenario assumes continued implementation of the existing framework without changes to the REDII. Enforcement takes place through established methods - the annual monitoring of Member States' performance under the Governance Regulation, continuous dialogue with Member States under the Concerted Action, if needed supported by further Commission recommendations to Member States, and infringement proceedings where relevant. ·Option 1: Non-Regulatory Measures - Guidance and Best Practice Exchange covering provisions that are either new or high-level making room for diverging interpretation and implementation by Member States. Such Guidance and Best Practice Exchange could cover clarification of the following provisions: ‘efficient district heating and cooling’; DHC target accounting; information provisions for consumers; network access and exemptions; sector integration between district heating systems and the electricity grid. Option 1 could in addition cover best practice exchange on areas identified by Member States, such as support schemes and financing, waste heat and renewables connection, links with buildings, flexibility and sector integration or any other element of the current framework. This option would help address the weaknesses identified during the assessment of NECPs and the discussions with Member States preparing the implementation of RED II. It would cover the following areas: RES DHC share accounting; interpretation of relevant definitions and provisions (e.g. in relation to waste heat and ‘efficient district heating and cooling’); guidance on the role of district heating in energy system integration; renewable district cooling following the adoption of the delegated act on calculation methodology. ·Option 2: Strengthening existing measures on improved information for consumers, strengthened rights of renewable heat suppliers to access networks, improved and extended ESI with other energy carriers and networks. As exemption from access rights and other measures (disconnection, target) are based on the definition of efficient district heating and cooling, this definition also needs to be revised to align it with the European Green Deal. The review of the definition is undertaken jointly by the EED and REDII reviews, as both directives use the same definition. The shared definition and its joint review ensure coherence and synergy between the two directives. This option aims to improve the REDII current framework for the development of modern DHC systems and ensure their greater contribution to heating and cooling decarbonisation in alignment with EGD/CTP and the options on H&C. It complements the EED and ensures better synergies between EED and REDII. ·Option 3: Level and nature of the target oOption 3a) No changes; maintain current indicative 1% point average increase at Member State level oOption 3b) add indicative EU renewable target for renewables’ share in DHC; oOption 3c) increase the indicative 1%-point increase target; oOption 3d) increase the 1%-point increase target and make it binding; This option involves possibilities to strengthen the current target. Option 3a) keeps the status-quo. Option 3b) introduces a new design in the form of an overall EU target. Option 3c) increases the current target but leaves it indicative. Option 3d) increases the current target and makes it binding. Options 3a)-3d) are mutually exclusive. Stakeholders’ opinions Most respondents in the Open Public Consultation indicated that the use of waste and renewable heat (94% of the respondents of who 50% rated it as very appropriate and 44% as appropriate) and increased energy efficiency (93% of the respondents of who 64% rated it as very appropriate and 29% as appropriate) is believed to be (very) appropriate for increasing the uptake of renewable energy in district heating and cooling networks. Participants expressed a mild preference for a binding target for renewable energy in district heating and cooling (53% yes to 47% no) and for increasing the current target (51% yes to 49% no). Environmental organisations and NGOs are distinctly against both propositions (only group of stakeholders expressing this preference), a similar view expressed for the heating and cooling target, because of the effect such a target may have on demand for biomass.

5.3.1.4. Options to increase renewable energy in the transport sector (RES-T) RED II requires Member States to set an obligation on fuel suppliers to ensure that the share of renewable energy in the transport sector achieves a 14% target - and a 3.5 % sub-target for advanced biofuels. The focus of the measure is to set out a policy framework that promotes renewables in transport. Decisions on the concrete design of obligation are largely left to the Member States. Contribution of conventional biofuels is capped based on their share in 2020. The Fuel Quality Directive (FQD) includes in addition to fuel quality standards a 6% target to reduce GHG emissions of transport fuels and an outdated set of sustainability criteria. The options under this section aim to deliver to achieve the ambition level of the Climate Target Plan 55% GHG reduction across the economy while applying different implementation options. The measures to limit the contribution of conventional biofuels and the flexible limit on Annex IX Part B biofuels are maintained under all options to minimise indirect land use change-risks and to take into account the limited feedstock supply, respectively. The use of multipliers in the calculation of the share of renewable energy in the transport sector is maintained in view of the Decision of the co-legislator in 2018 on this matter. However, the multipliers are adjusted to better reflect the maturity of different types of fuels and the energy efficiency of electric vehicles. Where necessary the nominal level of the target is adjusted to maintain the level of ambition. Options in this section are assessed based on their capacity to achieve the ambition level of the Climate Target Plan 55% GHG reduction across the economy as carried out in dedicated modelling work for this impact assessment in agreement with CTP analysis. Options are: Baseline ·Option 0: No change in the current legislation (baseline scenario); Level and nature of the targets ·Option 1: The ambition level for renewables in transport is increased and new fuel blends are introduced to facilitate the achievement of the higher targets. The 6% emission reduction target set out in the FQD is removed. ·Option 1A: The target for renewables in the transport sector is increased and the sub-target for advanced biofuels is increased. ·Option 1B: In addition to the increase of the target and the sub-target for advanced biofuels a dedicated sub-target for RFNBOs is introduced. Measures ·Option 2: The Member States are required to set out an obligation on fuel suppliers that ensures the achievement of the target. The Directive would set out design features of the obligation to harmonise the way the contribution of renewable electricity supplied to electric vehicles is taken into account and to avoid overlaps with measures implemented under the ReFuel EU Aviation initiative. Further, the following sub-options are considered: ·Option 2A: The obligation on fuel suppliers is expressed in terms of energy i.e. fuel suppliers are required to incorporate a minimum share of renewable energy in the fuels they supply to the market including minimum shares for advanced biofuels and RFNBOs. All fuels need to achieve minimum emission savings requirements; ·Option 2B: The obligation on fuel suppliers is expressed in terms of emission savings i.e. fuel suppliers are required to reduce the emission intensity of fuels placed on the market. There would be no sub targets for advanced biofuels and RFNBOs; ·Option 2C: The choice between the approaches described under A and B is left to the Member States (as currently);

·Option 2D: The obligation on fuel suppliers is expressed in terms of emission savings but operators are required to achieve minimum shares for advanced biofuels and RFNBOs; Apart from raising the level of ambition for the share of renewables in transport including for renewable fuels of non-biological origin (RFNBOs), renewable electricity in transport and advanced biofuels, the options concern the design of the obligation on fuel suppliers including the question whether it should be expressed in terms of emission savings or supplied renewable energy and how it can better promote the use of renewable electricity in electric vehicles. The options are aligned, and complementary to the ReFuel EU Aviation and Fuel EU Maritime initiatives. The role of RED II in this context is to set the overarching framework and targets for the promotion of renewables in the transport sector, including for innovative renewable fuels, while ReFuel EU Aviation and Fuel EU Maritime initiatives aim to address sector specific sectorial challenges with dedicated measures. ReFuel Aviation for example proposes sector-specific blending mandates by imposing a minimum share of SAF (Sustainable Aviation Fuels) to be supplied to airlines, and an uplift obligation on airlines to take such fuels at EU airports. The overall availability as well as the terminology and the certification scheme of renewable fuels will be ensured through the RED II framework. Both measures contribute towards the achievement of the targets set out in RED II. Stakeholders’ opinions Transport was the most popular sector for additional efforts to increase the share of the renewable energy according to the replies to the OPC. The majority of replies were in favour of an increase in the renewables target for transport, with 43% suggesting this should be more ambitious than the 2030 CTP, 34% that it should be as ambitious as the CTP, and 9% that it should be less ambitious. A very large majority of respondents (86%) think that the renewables target in transport should be increased in some way. 5.3.2. Area II: Insufficient promotion of energy system integration in REDII 5.3.2.1. Measures to enhance the contribution of transport and heating and cooling to the system integration of renewable electricity With the extended use of heat pumps in heating and cooling, the deployment of stationary batteries, and especially with the proliferation of electric vehicles (EVs around 30 million vehicles expected in the EU by 2030 based on conservative estimates), it is necessary to ensure that these assets can fully contribute to the system integration of renewable electricity, and thus facilitate reaching higher shares of renewable electricity in a cost-optimal manner, while ensuring a secure and reliable supply of electricity. The Clean Energy package introduced a number of general provisions aiming at ensuring that various storage assets can gain access to balancing markets without discrimination. Such provisions can be complemented by targeted measures aiming at ensuring that small and mobile distributed assets are sufficiently integrated within the electricity system in a manner that maximizes their potential contribution to the system integration of renewable electricity. For EVs specifically, their contribution to system integration largely depends on the access to smart charging infrastructure with the ability to vary charging intensity according to certain signals, the availability of bidirectional flow between charger and vehicle (Vehicle to Grid, V2G) and the availability of near-real time information on pricing and share of renewable electricity. In order for integration to take place efficiently and competitively, market players such as electricity suppliers and electromobility service providers also need to have access to basic battery information and be able to offer their services via sufficient and non-discriminatory access to charging infrastructure. The EPBD and the Alternative Fuel Infrastructure Directive focus on the deployment and planning of charging infrastructure in thermally enclosed buildings and publicly accessible areas, respectively. A gap therefore exists for structures and areas not within the above categories, such as multi-storey parking structures and off-street parking areas with controlled access. In addition, AFID’s scope is specific for ensuring infrastructure ade