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 Trends and Future Development in Renewables Support 
New Governance and 2030 Climate and Energy Framework

With the publication of the Communication on a new policy framework for climate and energy policy on 22ndJanuary 2014,[1] the Commission put forward a binding EU level headline target of 40% reduction of domestic EU greenhouse gas (GHG) emissions in 2030 compared to emissions in 1990. This target is supposed to shape  the European climate and energy policy from 2020 till 2030. Notably, no binding national renewable energy targets were proposed, rather the Commission similarly proposed a binding EU level headline target as well, this time of 27% renewables by 2030. In order to reach this binding EU level headline target for renewables, the Commission proposed a new governance framework based on national plans. Based on upcoming guidance by the Commission, these plans shall be prepared by the Member States under a common approach, which shall ensure stronger investor certainty and greater transparency, and shall enhance coherence, EU coordination and surveillance. An iterative process between the Commission and Member States is supposed to guarantee the plans are sufficiently ambitious, as well as their consistency and compliance over time. However, there have been questions as regards what this “New Governance” actually is, and in particular which powers the Commission may have under it in order to make sure that the EU level binding renewable energy target is reached.

To that end, we will first look into the definition and the history of the New Governance approach. Then we will turn to its application in practice and see how it normally works, before we look at some areas in which it has been used so far. After that we will turn to the criticism issued on the New Governance approach, applied in other areas, and will draw parallels to renewable energy policy. Finally, we will conclude on the consequences for the binding EU level renewable energy target.

 

[1]              European Commission (2014) A policy framework for climate and energy in the period from 2020 to 2030, COM(2014) 15 FINAL, Brussels, 22.1.2014

Support Schemes and Free Movement Law

I.               Background

Lately, there has been quite some discussion in the media whether national renewable energy support schemes, i.e. support schemes which only benefit renewable energy installations which are located within the territory of the respective Member State maintaining the support scheme, would be against primary European law and would thus have to be abolished. The Renewable Energy Directive 2009/28/EC was said to be invalid and would have to be changed by the European Commission. In consequence, it was said, Member States would have to support renewable energy installations anywhere within the European Union.

This paper seeks to provide an overview over the legal framework of national renewable energy support schemes, starting with the rules on free movement of goods, their interpretation with relation to renewable energy so far given by the European Court of Justice, turning to the Renewable Directive and the regime it presents for national renewable energy support schemes and ending with the conclusions of the Advocate General at the European Court of Justice, who lately had to give his conclusions in two specific cases relating to this topic, and to a certain extent caused the discussions. 

It will not be argued in favor or against a certain interpretation, but it is the intention purely to inform.

However, in an outlook at the very end, the potential future developments will be briefly summarized.

Dynamic development of support schemes – the impact of the State aid Guidelines

In June 2014, the European Commission adopted new Guidelines on State aid for environmental protection and energy 2014–2020 (the Guidelines). One of the main points of the Guidelines is to determine the rules for granting state aid for energy generated from renewable sources so that it is compatible with European competition law. The Guidelines were published in the Official Journal on 28 June 2014 and since 1 July 2014 are applied to all new State aid measures, as well as to existing ones already in the assessment procedure.  However, as there are many questions relating to the future design and development of existing renewable energy support scheme, this paper shall – based on two examples – show how Member States can fill in the requirements under the Guidelines.[1]

 

[1] See also: Understanding State aid in European Law, updated July 2014, available for download under: http://keepontrack.eu/contents/virtualhelpdeskdocuments/update-state-aid.pdf.

Changes to renewables support schemes under the State aid Guidelines

Since the entry into force of the Guidelines for Environmental and Energy Aid 2014-2020 (Guidelines),[1] renewable energy support schemes that constitute operating aid will have to correspond to certain requirements. In a nutshell, the Guidelines foresee the introduction of market premiums (instead of feed-in tariffs) and competitive tendering procedures for renewable electricity.[2] The Guidelines not only apply to new support schemes, but also to existing ones, provided that they constitute State aid in accordance with the definition in Art. 107 Treaty on the Functioning of the European Union (TFEU).

Here, the Guidelines foresee a special regime: While all other State aid measures will have to be brought in line with the Guidelines by 2016, for existing renewable energy support schemes, par. 250 of the Guidelines provides:

“Where necessary, existing aid schemes within the meaning of Article 1(b) of Council Regulation (EC) No 659/1999 (105) concerning operating aid in support of energy from renewable sources and cogeneration only need to be adapted to these Guidelines when Member States prolong their existing schemes, have to re-notify them after expiry of the 10 years-period or after expiry of the validity of the Commission decision or change (106) them.”

In footnote 106,one can find the explanation that a “change” has to be understood as “any notifiable change within the meaning of Article 1(c) of Regulation (EC) No 659/1999.”

Thus, existing (i.e. notified and approved at the time the Guidelines entered into force) support schemes for renewable energy only need to conform with the Guidelines upon prolongation (i.e. Member State decides that while e.g. originally support scheme only planned to be in force until 2017, now it should last until 2020), re-notification (i.e. the decision of the European Commission approving the support scheme has expired and thus re-notification is necessary, even if the scheme if the scheme shall be continued) or a change within the meaning of Article 1(c) of Regulation (EC) No 659/1999.”

While the first two events are rather clear, the question arises what such a change could constitute. As will be seen in the following overview, this question can however not be answered globally, but it will depend on the exact circumstances of the case. Nevertheless, the applicable rules will be outlined briefly below.

 

[1] Communication from the Commission — Guidelines on State aid for environmental protection and energy 2014-2020, OJ C 200, 28.6.2014, p. 1–55.

[2] Compare par. 124f. Guidelines, see also: D. Fouquet, J. Nysten, Keep on Track! The Legal Helpdesk, Application Package, How to design tendering procedures for renewable electricity, available at: http://keepontrack.eu/contents/virtualhelpdeskdocuments/tendering-rules-for-res_8501.pdf; as well as: D. Fouqet, J. Nysten, Keep on Track! The Legal Helpdesk, Dynamic Development of Support Schemes – the impact of the State aid Guidelines, available at: http://keepontrack.eu/contents/virtualhelpdeskdocuments/updatedynamicdevelopment.pdf.