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SUPPORT FOR RENEWABLE ENERGY IN THE EUROPEAN UNION A review of the regulatory framework and suggestions for adjustment

After putting renewable energy policy support in an overall policy perspective, some key EU renewable energy policy documents are reviewed. Recently promulgated EU policies on automotive biofuels are given special attention. The report generally questions the soundness of the basis on which the EU has set indicative targets for renewable energy, renewables-sourced electricity, and renewable fuels. The justification provided for the ‘reference values’ with respect to the use of renewable fuels (that is, automotive biofuels) is found particularly wanting and the European Commission is urged to more credibly account for the alleged positive impacts of the targeted penetration of automotive biofuels on aggregate income and employment. The European Commission should also fully address the issue of the low efficiency of this policy instrument, relative to other options, in securing energy supply and reducing greenhouse gas emissions. Lessons from the Common Agricultural Policy should be taken to heart by fully charting the risks of creating new vested interests. The current support frameworks for electricity from renewables (RES-E) at Member State level are reviewed. The EU and some of its Member States have taken a leading role in the design of innovative policies in support of renewable energy. But much EU policy making is still to be done if a genuine EU-wide RES-E electricity market is to be created. Renewable energy targets need to be redefined at the Community level using a long-term framework and making due allowance for the three foremost energy policy concerns, namely: • overall competitiveness of the EU economy, • security of energy supply, • environmental protection. The report outlines the design of a Community framework for harmonisation of national RE support frameworks. Issues addressed include the choice of framework model for market development support to distinct eligible RES-E technologies and the relationship between the RES-E market and automotive biofuels.