REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Renewable energy progress report
Date: 2013-03-27
Institutions: European Commission
Subjects: EU programme, EU statistics, energy consumption, reduction of gas emissions, renewable energy, transport network

EUROPEAN 
COMMISSION 

Brussels, 27.3.2013  
COM(2013) 175 final 

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

Renewable energy progress report 

{SWD(2013) 102 final} 

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

Renewable energy progress report 

1. 

INTRODUCTION 

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

The purpose of this Report is to assess Member States' progress in the promotion and use of 
renewable  energy  along  the  trajectory  towards  the  2020  targets  and  to  report  on  the 
sustainability  of  biofuels  and  bioliquids  consumed  in  the  EU  and  the  impacts  of  this 
consumption in accordance with the Directive1. The assessment covers recent developments 
and  is  based  on  the  latest  Eurostat  data  on  renewable  energy  (for  2009  and  2010),  Member 
State  renewable  energy  progress  reports  submitted  to  the  Commission  in  20112,  the 
Commission's own research, as well as research carried out for the Commission3.  

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

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Specifically, Articles 17 (7), 18 (2), 18 (9) and 23 (1-6). 
Member State biennial renewable energy progress reports (2011): 
Renewable energy progress and biofuel sustainability, ECOFYS et al, 2012 

http://ec.europa.eu/energy/renewables/reports/2011_en.htm 

http://ec.europa.eu/energy/renewables/reports/xxxxx en.htm

).  

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2. 

PROGRESS IN RENEWABLE ENERGY DEVELOPMENT 

With the implementation of the Renewable Energy Directive and national policies set out in 
National  Renewable  Energy  Action  plans  ("plans"),  most  Member  States  experienced 
significant growth in renewable energy since the Commission's last progress report4. 

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

In fact, the 2010 renewable energy shares of 20 Member States and the EU as a whole were at 
the  level  of  or  above  2010  commitments  set  out  in  their  national  plans  and  above  the  first 
interim target for 2011/20125.  

However  a  further  analysis  undertaken  for  the  Commission  modelling  current  policy 
initiatives  and  various  barriers  to  renewable  energy  development6  (See  Staff  Working 
Document and associated report for further details7) reveals a less optimistic outlook for 2020. 
The analysis, which provides a conservative estimate of renewables growth compared to other 
sources,  limits  policies  to  those  already  in  place,  and  reflects  the  economic  crisis,  ongoing 
administrative  and  infrastructure  barriers  and  policy  and  support  schemes  disruption.  This 
suggests  future  investment  may  decline  or  be  delayed  unless  further  measures  are  taken  by 
Member States to achieve their targets. Given investment lead times of eight to ten years, any 
major  disruption  of  investment  today  will  have  significant  impact  on  renewable  energy 
production over the coming years and has become cause for concern. Hence, many Member 
States will need further measures to ensure the achievement of their targets. 

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

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Renewable Energy: progressing towards the 2020 target (COM (2011) 31 and SEC (2011) 130) 
Interim targets are set out in the indicative trajectory established in Part B of Annex I of Directive 
2009/28/EC. The EU interim target for 2011/2012 was 10.7%. National results are given in Annex I of 
this Communication. 
Green-X model was used to perform a detailed quantitative assessment of the future deployment of 
renewable energy on country, sector and technology level. The model drew on assessments of national 
policies and plans up to mid- 2012. Details are contained in the report noted in footnote 3.  
Renewable energy progress and biofuel sustainability, ECOFYS et al, 2012 

http://ec.europa.eu/energy/renewables/reports/xxxxx en.htm

). 

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This  conclusion  is  underpinned  by  the  sectoral  developments  in  electricity,  heating  and 
cooling and transport. 15 Member States failed to reach their indicative 2010 targets8 for the 
share  of  renewable  energy  in  the  electricity  mix.  In  the  transport  sector,  22  Member  States 
failed to achieve their indicative 2010 target of 5.75%9. 

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

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

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

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

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9 

Agreed under Directive 2001/77/EC. Austria, Cyprus, Czech Republic, Greece, Finland, France, Italy, 
Luxembourg, Malta, Poland, Romania, Sweden, Slovenia, Slovakia, UK. 
Established  under  Directive  2003/30/EC.  Austria,  Belgium,  Bulgaria,  Cyprus,  Czech  Republic, 
Denmark,  Estonia,  Greece,  Spain,  Finland,  Hungary,  Ireland,  Italy,  Lithuania,  Luxembourg,  Latvia, 
Malta, Netherlands, Portugal, Romania, Slovenia, UK. 

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

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

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

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

Here,  however,  the  scale  of  production  in  the  sector  is  far  greater  than  for  wind  or  solar 
power.  Planned  production  is  intended  to  reach  104  mtoe  by  2020  (for  both  the  electricity 
(232 TWh or 19 mtoe) and heating sectors (around 85 mtoe), compared however, to expected 
production for 2020 of 86 mtoe. This deviation could be linked to the production cycles of the 
wood,  pulp  and  paper  industries,  whose  wastes  and  residues  constitute  a  significant  part  of 
biomass  feedstock.  The  Commission's  intended  report  on  biomass  and  sustainability  will 
explore this matter in greater depth10. 

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

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

10 

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

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

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

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

From all of the above data it can be concluded that overall, by sector and across technology, 
there  has  been  a  strong  initial  start  in  EU  renewables  growth  under  the  new  regime  of  the 
Renewable Energy Directive. However, as we look at their future evolution, it seems that the 
economic crisis is now affecting the renewable energy sector, particularly its cost of capital, 
as  it  has  all  other  sectors  of  the  economy.  This,  combined  with  ongoing  administrative 

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barriers,  delayed  investment  in  infrastructure  and  disruptive  changes  to  support  schemes, 
means further efforts are needed to achieve the 2020 targets. 

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

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

3. 

POLICY MEASURES 

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

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

Administrative procedures 

Authorisation  and  planning  procedures  and  the  slow  pace  of  electricity  infrastructure 
development  were  identified  as  important  challenges  to  the  renewable  energy  growth  in  the 
last  progress  report11.  Article  13(1)  of  the  Renewable  Energy  Directive  requires  Member 
States  to  ensure  that  permitting  procedures  for  renewable  energy  are  transparent, 
proportionate, coordinated and limited in time, and are facilitated for smaller or decentralized 
projects.  The  Directive  also  requires  Member  States  to  report  on  progress  achieved  in 
addressing these barriers. 
The Commission's analysis of Member States' 2011 progress reports12 indicates that progress 
in removing the administrative barriers is still limited and slow. Many Member States do 
not even address in their reports the administrative reforms specifically listed in Article 22 (3) 

11 
12 

Renewable Energy: progressing towards the 2020 target (COM (2011) 31 and SEC (2011) 130) 
Member State biennial renewable energy progress reports (2011): 
http://ec.europa.eu/energy/renewables/reports/2011_en.htm 

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of  the  Directive.  The  Commission  will  continue  to  investigate  Member  States'  removal  of 
these barriers and will launch infringement proceedings where Member States fail to act.  

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

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

The Electricity Grid 

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

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

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

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for  trans-European  energy  infrastructure,  such  improvements  are  necessary  for  the  equal 
treatment of renewable energy and the proper integration of renewable energy producers into 
the electricity market.  

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

It should also be recalled that infrastructure concerns for clean energy are not limited to the 
electricity  sector.  The  need  to  reduce  fossil  fuel  dependence  in  the  transport  sector  also 
requires  new  infrastructure  investments.  So  to  foster  the  deployment  of  alternative  fuels 
infrastructure  in  transport,  the  Commission  has  published  the  'Clean  Power  for  Transport' 
package13  proposing  a  Directive  on  the  deployment  of  alternative  fuels  infrastructure 
including binding targets for infrastructure uptake. 

Support schemes 

There  has  been  a  discussion  about  the  effectiveness  and  the  efficiency  of  different  types  of 
renewable  energy  support  schemes  for  at  least  a  decade.  Multiple  schemes  exist,  with  good 
and bad features and impacts. In 2011 the Commission suggested guidance would be useful to 
help  Member  States  identify  best  practice4.  Following  discussions  with  Member  States,  the 
Commission's  2012  report  "Renewable  Energy:  a  major  player  in  the  European  energy 
market" 14 announced plans to produce such guidance. Given the prominent role that financial 
support  schemes  play  in  developing  renewable  energy  today,  and  given  the  growing 
prominence  (and  cost)  of  renewable  energy  use  in  the  electricity  sector,  urgent  efforts  are 
needed to reform support schemes to ensure that they are designed in a cost effective, market-
oriented manner. The Commission's guidance is necessary to ensure that support schemes are 
adjusted  regularly  and  quickly  enough  to  take  account  of  falling  technology  costs  and  to 
ensure  reforms  make  renewable  energy  producers  part  of  the  energy  market  (such  as  by 
moving from feed in tariffs to feed in premiums or quotas, and using tendering to avoid over 
compensation etc.); to ensure such market interventions are correcting market failures and not 
adding or maintaining market distortions. The Commission's forthcoming revision of state aid 
guidelines will also take this into account. Regarding the uncertainty of support schemes for 
biofuels  in  particular,  the  lack  of  progress  on  the  adoption  by  the  Council  of  a  new  legal 
framework for taxation of energy products15 is a concern, since the scope to use tax incentives 
would expire by 2020 under the current legal framework. 

Many  national  reforms  have  had  a  negative  impact  on  the  investment  climate.  Most  critical 
have been changes that reduce the return on investments already made. Such changes alter the 
legitimate  expectations  of  business  and  clearly  discourage  investment,  at  a  time  when 
significantly  more  investment  is  needed.  Thus  there  is  a  need  for  guidance  on  the  reform 
process  itself,  to  ensure  support  schemes  are  cost  effective  but  not  disruptive.  The 
Commission also feels more action is needed to ensure convergence and the Europeanisation 
of  energy:  in  addition  to  developing  common  approaches  to  supporting  renewable  energy, 

13 
14 
15 

(COM(2013) 18 final) http://ec.europa.eu/transport/themes/urban/cpt/index_en.htm 
COM(2012)271  
Commission proposal for revision the Energy Taxation Directive COM(2011) 169 final. 

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growing  cross-border  cooperation  must  occur.  The  current  legal  framework  for  such 
cooperation  is  the  Renewable  Energy  Directive's  cooperation  mechanism  framework.  This 
includes  joint  projects,  where  common  approaches  can  be  developed  based  on  specific 
renewable energy projects, technologies or regions as well as joint support schemes such as 
the  Swedish-Norwegian  scheme,  feasible  within  well  connected  regional  markets  where 
consumers  will  also  physically  profit  from  renewable  energy  capacity  installed  in  a 
neighbouring country. Such instruments provide the pathway to the European development of 
renewable  energy,  where  resource  development  in  a  single  energy  market  occurs  on  a 
common  and  cost  effective  basis.  To  this  end,  in  addition  to  the  forthcoming  guidance  on 
cooperation  mechanisms,  the  Commission  will  promote  the  emergence  of  regional  (and 
possibly  sectoral)  joint  support  schemes  between  Member  States  based  on  cooperation 
mechanism,  such  as  a  common,  European  approach  to  offshore  wind  development  in  the 
northern seas). 

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

4. 

SUSTAINABILITY OF BIOFUELS 

Not  all  Member  States  have  developed  their  biofuels  markets  and  the  bulk  of  EU  biofuels 
production  and  consumption  is  dominated  by  five  Member  States  (France,  Germany,  Italy, 
Spain and UK). In 2010, Eurostat reported that 1.4% (177 ktoe) of all EU consumed biofuels 
was  produced  from  wastes,  residues,  non-food  cellulosic  material,  and  ligno-cellulosic 
material  (although  other,  unofficial  statistics  indicate  approximately  9%,  including  recycled 
cooking  oil).  Articles  17,  18  and  23  of  the  Directive  require  the  Commission  to  monitor  a 
range of issues surrounding biofuels and bioliquids, including their impact on sustainability, 
biomass markets, commodity and food prices, and the need for measures on soil, water and air 
protection. This is fully addressed in the staff working document accompanying this Report. 
The Commission is also studying the sustainability of biofuels from a consumer perspective 
as a part of a broader study on the functioning of the fuels market16. 

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

16 

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

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Origin of final biofuels consumed in the EU in 201017  

Biodiesel 

Volume (ktoe) 
8,270 
1,003 
285 
123 
67 
61 
129 

Share 
83.2% 
10.1% 
2.9% 
1.2% 
0.7% 
0.6% 
1.3% 

EU 
Argentina 
Indonesia 
Malaysia 
China 
U.S. 
Other countries 

Total 

9938 

Source: EUROSTAT, COMTRADE. 

EU 
Brazil 
U.S. 
Peru 
Kazakhstan 
Bolivia 
Egypt 
S.Korea  
Other countries 

Bioethanol 
Volume (ktoe) 
2,243 
234 
121 
26 
24 
20 
15 
16 
101 
2800 

Share 
80.1% 
8.4% 
4.3% 
0.9% 
0.8% 
0.7% 
0.5% 
0.6% 
3.6% 

Origin of all biofuel feedstock consumed in the EU in 2010  

EU 
63.9% 

Argentina 
9.7% 

Indonesia 
6.6% 

Brazil 
5.3% 

U.S. 
3.0% 

Canada  Ukraine 

2.4% 

2.3% 

Malaysia 
1.7% 

Paraguay  Other 
1.3% 

1.5% 

Russia 
1.0% 

China 

0.5% 

Switzerland 
0.2% 

Peru 
0.2% 

Bolivia 
0.2% 

Peru 

0.2% 

Egypt 

0.1% 

Guatemala 
0.1% 

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

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

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

Regarding the "social sustainability" of biofuels, the Commission is also required to report on 
land use rights, since EU demand for biofuels adds to existing international demand for food 
and  non-food  agricultural  exports  and  so  to  the  pressure  in  developing  countries  to  convert 
more  land  for  such  cash  crops.  Given  the  time  lags  between  land  acquisition  and  biofuels 
production  and  flaws  on  the  ILC  Land  Matrix  database,  it  is  not  yet  clear  if  EU  biofuels 
demand  contributes  any  abuse  of  land  use  rights.  The  Commission  and  Member  States' 

17 

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

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11 

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monitoring of this issue must, however, continue. Given the significant food price increases 
and  impact  on  food  affordability  that  occurred  in  2008  and  2011  and  the  poor  U.S.  2012 
harvest, it is important to assess whether EU biofuels consumption has contributed in any way 
or whether other factors such as bad weather, bad harvests, rising global demand, increased 
oil  prices,  etc.  are  more  important.  Commission  analysis  has  found  that  grain  use  for 
bioethanol production constituted 3% of total cereal use in 2010/2011 and is estimated to have 
minor  (1%-2%)  price  effect  on  the  global  cereals  market.  EU  biodiesel  consumption  is 
greater, and the estimated price effect on food oil crops (rapeseed, soybean, palm oil) for 2008 
and 2010 was 4%18. It also appears that biofuel demand is more price sensitive than the food 
market and so demand declines more in response to rising prices. That said, the Commission 
will  continue  to  monitor  and  improve  its  analysis  of  EU  biofuel  demand  in  the  global 
agricultural market, food prices and food price volatility. Moreover the interactions between 
biofuels  and  other  sectors  of  the  bio-economy  are  also  still  evolving  and  the  impacts  on 
traditional  users  of  biomass,  such  as  the  oleo  chemical  industry  continue  to  need  to  be 
explored. 

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

Finally,  it  is  important  to  consider  the  greenhouse  gas  emissions  saving  resulting  from 
switching to biofuels. Whilst imported mineral oil still constitutes the vast bulk of fuel used in 
the transport sector, the 4.7% share of biofuels is estimated to have generated 25.5 Mt CO2eq 
savings,  based  on  national  reporting  (22.6  Mt  CO2eq  based  on  the  application  of  global 
default values). This estimate does not include indirect agricultural intensification effects or 
indirect land use change effects which reduce the CO2 savings available from biofuels. When 
these  emissions  are  included,  estimated  savings  are  significantly  reduced,  reflecting  the 
dominance  of  "1st  generation",  often  food  crop-based  biofuels  which  have  lower  or  no 
estimated  greenhouse  gas  emissions  savings.  For  this  reason  the  Commission  has  proposed 
amendments  to  the  Fuel  Quality  and  Renewable  Energy  Directives,  to  more  firmly  take 
account  of  indirect  land  use  change  effects  resulting  from  EU  biofuel  consumption19.  The 
proposal  includes  limiting  the  contribution  that  food-based  biofuels  can  make  towards  the 
10%  target  to  5%,  enhanced  incentives  to  encourage  the  development  of  second  generation 
biofuels from non-food feedstock, like waste or straw are proposed. This proposal is now with 
Parliament and the Council of Ministers, and will clarify EU biofuels policy up to 2020.  

5. 

CONCLUSION 

Spurred on by the adoption of the 2009 Renewable Energy Directive and the legally binding 
renewable  energy  targets,  renewable  energy  grew  strongly.  The  data  and  analysis  for  the 
renewable  energy  progress  report  shows  that  while  the  EU  as  a  whole  is  on  its  trajectory 
towards  the  2020  targets,  some  Member  States  need  to  undertake  additional  efforts  (see 
annex). In addition, the analysis suggests there are reasons for concern about future progress. 

18 
19 

Renewable energy progress and biofuel sustainability, ECOFYS et al, 2012 
COM(2012) 595 final http://ec.europa.eu/energy/renewables/biofuels/land_use_change_en.htm  

http://ec.europa.eu/energy/renewables/reports/xxxxx en.htm 

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The  transposition  of  the  Directive  has  been  slower  than  desirable  and  the  trajectory  grows 
steeper in coming years so that in reality most of Member States' effort is needed towards the 
end. Whilst Member States have had seven years to achieve the first 20% of their target for 
2012,  thereafter  they  have  only  two  years  to  achieve  the  next  10%  for  2014,  15%  for  2016 
20%  for  2018  and  35%  for  2020.  In  addition,  the  significant  change  in  economic 
circumstances in Europe will result, according to analysis undertaken for the Commission, in 
current policies being  insufficient to trigger the required renewable energy deployment in a 
majority of Member States.  

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

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

The results of the current debate on the 2030 framework for energy and climate to which this 
progress  report  contributes  and  the  Commission's  proposal  to  amend  the  renewable  energy 
and fuel quality Directives to improve the incentives for advanced biofuels rather than for first 
generation biofuels are also elements that will play a role in the years to come up to 2020 and 
are  elements  that  need  to  be  taken  into  account  when  looking  at  the  2011/2012  compliance 
with  the  trajectory.  The  Commission  will  also  continue  to  examine  Member  States' 
implementation  of  the  Directive  and  take  legal  measures  wherever  necessary.  The 
Commission  has  already  launched  a  number  of  infringement  cases  for  Member  States'  non 
transposition  of  the  Directive20;  further  infringements  will  follow  if  implementation  is 
incomplete.  Complying  with  obligations  under  the  Renewable  Energy  Directive,  the 
Commission  has  also  assessed  the  implementation,  effectiveness  and  impacts  of  the  EU's 
biofuel  sustainability  regime  and  biofuels  policy.  Whilst  Member  States'  implementation  of 
the  biofuels  sustainability  regime  is  too  slow,  the  possible  negative  impacts  of  EU  biofuels 
consumption do not appear to warrant further or specific policy intervention beyond proposals 
already made. In addition, the greenhouse gas savings as reported by member States (and not 
yet including indirect effects) appear positive.  
In its Communication of June 201221, the Commission committed itself to driving forward the 
integration  of  renewable  energy  in  the  internal  market  and  address  incentives  for  electricity 
generation investment. It also intends to prepare guidance on best practice for cost effective 
and consistent renewable energy support schemes, to provide further guidance for the use of 
cooperation  mechanisms  to  achieve  renewable  energy  targets  at  lower  cost  and  to  work  on 

20 

21 

Cases are open and Reasoned Opinions have been sent to Austria, Bulgaria, Cyprus, Czech Republic, 
Finland, Hungary, Ireland, Latvia, Luxembourg, the Netherlands, Poland and Slovenia. 
Renewable Energy: a major player in the European energy market COM(2012)271 

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improved regulatory framework for energy cooperation with third countries. These actions all 
require  the  rigorous  and  complete  implementation  of  Renewable  Energy  Directive  and 
commitments  made  in  the  National  Renewable  Energy  Action  Plans.  Progress  on  these 
elements  must  be  maintained.  In  addition,  support  in  the  new  EU  multi-annual  budget 
framework  for  new  energy  technologies  and  energy  infrastructure  should  help  ensure 
continued growth for the renewable energy sector in Europe. With such progress, the EU can 
expect the renewable energy industry to be a thriving, mature and globally competitive one in 
the lead up to 2020 and beyond. 

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Annex I. Overview of Member States' progress 

1st interim 
target 

Member State 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Republic 
Germany 
Denmark 
Estonia 
Greece 
Spain 
Finland 
France 
Hungary 
Ireland 
Italy 
Lithuania 
Luxembourg 
Latvia 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Sweden 
Slovenia 
Slovakia 
UK 
EU 

2005 
RES 
share 
23.3% 
2.2% 
9.4% 
2.9% 
6.1% 
5.8% 
17% 
18% 
6.9% 
8.7% 
28.5% 
10.3% 
4.3% 
3.1% 
5.2% 
15% 
0.9% 
32.6% 
0% 
2.4% 
7.2% 
20.5% 
17.8% 

39.8% 

16.0% 
6.7% 
1.3% 
8.5% 

2010 
RES 
share  
30.1% 
5.4% 
13.8% 
5.7% 
9.4% 
11.0% 
22.2% 
24.3% 
9.7% 
13.8% 
33% 
13.5% 
8.8% 
5.8% 
10.4% 
19.7% 
3% 
32.6% 
0.4% 
3.8% 
9.5% 
24.6% 
23.6% 
49.1% 
19.9% 
9.8% 
3.3% 
12.7% 

2020 
RES target 

34% 
13% 
16% 
13% 
13% 
18% 
30% 
25% 
18% 
20% 
38% 
23% 
13% 
16% 
17% 
23% 
11% 
40% 
10% 
14% 
15% 
31% 
24% 
49% 
25% 
14% 
15% 
20% 

25.4% 
4.4% 
10.7% 
4.9% 
7.5% 
8.2% 
19.6% 
19.4% 
9.1% 
10.9% 
30.4% 
12.8% 
6.0% 
5.7% 
7.6% 
16.6% 
2.9% 
34.0% 
2.0% 
4.7% 
8.8% 
22.6% 
19.0% 
41.6% 
17.8% 
8.2% 
4.0% 
10.7% 

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

Progress towards the first interim target: 

>2% above interim target 

<1% from or <2% above interim target 

>1% below interim target 

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