The Impact of Renewable Energy Directive (RED) on the EU’s Renewable Energy Landscape 

Posted on 08 December 2023

Thanuja Bandara
Engineering Analyst – RE24

Comes from a background of Chemical Engineering and specialised in energy market research and biofuel techniques.

In a world where environmental sustainability is a major concern, legislative initiatives play a pivotal role in shaping the future of energy. The Renewable Energy Directive (RED), the legal framework for the development of clean energy across all sectors of the EU economy, is one such legislatives. It reflects the European Union’s (EU’s) efforts to transition towards a greener and more sustainable energy landscape. It supports cooperation between EU countries towards clean energy development. 

The use of renewable energy in the European Union notably grew after enacting RED (2009/28/EC). It increased from 12.5% of total energy mix in 2010 to a substantial 21.8% in 2021. 

Initiatives of RED I & II  

RED I & II, the precedents of RED III set forth the following targets, legal frameworks, and innovations. 

RED IRED II
Enactment 2009 2018 
Renewable energy Increase the EU’s renewable energy share from 12.5% in 2010. A target of 32% renewable energy in the overall energy mix by 2030. 
Legal aspects Established the foundational legal framework for the development of clean energy Allowed member states to choose diverse and cost-effective renewable energy solutions 
Cross-border electricity Enhanced cross-border cooperation among Member States 
Power Purchase Agreements (PPAs) Addressed barriers and facilitated the adoption of renewable PPAs 

RED III 

Renewable Energy Directive 3, or RED III, is the latest installment in the EU’s sustainable energy journey. Building upon the successes and lessons learned from its predecessors, it introduces new and ambitious targets, reflecting the EU’s commitment to accelerating the transition to renewable energy sources. 

On October 9, 2023, the European Council adopted RED III, a revised Directive for promoting renewable energy, amending the 2018/2001 Directive. This was, officially published in the Official Journal of the European Union on October 31, 2023, came into force on November 20, 2023. Member States must incorporate RED III into their national laws by May 21, 2025. However, certain provisions, especially those related to expediting permit-granting procedures, must be enacted by July 1, 2024. 

Key Features of RED III: 

  • Increased Renewable Energy Targets: Raises the bar by setting more ambitious renewable energy targets for EU Member States. This directive aims to achieve 42.5% by 2030 of renewable energy in the overall energy mix. 
  • Guarantees of Origins (GOs): Power Purchase Agreements (PPAs): The timestamp on GOs is encouraged. A GO shall be of the standard size of 1 MWh. Where appropriate, such standard size may be divided into a fraction size, provided that the fraction is a multiple of 1 Wh. There GO Expiry is clarified as a 12-month transaction time and 18-month cancellability before expiry. Member States must issue a GO to renewable energy producers. This includes the non-biological gaseous renewable fuels like hydrogen, upon request. 
  • Power Purchase Agreements (PPAs): Member states are needed to assess and remove unjustified barriers to renewable PPAs. Member States are required to create a framework, which may involve support schemes and measures to facilitate the adoption of renewable power purchase agreements, promoting the use of renewable electricity. A new link or a loose, between PPAs and GOs is introduced. Accordingly, Member States must guarantee that renewable energy agreements are not subjected to disproportionate or discriminatory procedures or charges. Additionally, any related guarantees of origin should be transferable to the buyer in renewable energy purchase agreements. 
  • Technology Neutrality: A notable aspect of RED III is its emphasis on technology neutrality. Unlike previous directives that may have favoured specific renewable technologies, it encourages a diverse and inclusive approach, allowing member states to choose the most suitable and cost-effective renewable energy solutions for their unique contexts.
  • Cross-Border Cooperation: Recognizing the interconnected nature of energy systems, RED III places a strong emphasis on cross-border cooperation. In RED II there was a non-binding obligation on Member States to co-operate on joint projects. Enhancing that, Member States are encouraged to collaborate on renewable energy projects establishing a framework, fostering a more integrated and resilient European energy grid. 
  • Energy Communities and Citizen Participation: Another aspect of RED III is its focus on energy communities and citizen participation. The directive encourages the active involvement of citizens in the production, consumption, and management of renewable energy, in many sectors including industries and transportation sector. The aim is to foster a sense of ownership and responsibility among the general populace.

Challenges and Opportunities: 

While RED III represents a significant step forward in the EU’s commitment to renewable energy, it also poses challenges. Implementing ambitious targets requires substantial investments, infrastructure development, and overcoming regulatory hurdles. However, these challenges also present opportunities for innovation, job creation, and economic growth in the renewable energy sector.

Conclusion:

RED III, with its forward-looking approach and ambitious targets, sets the stage for a more sustainable and resilient energy future in the EU. As member states work towards achieving the outlined objectives, the directive is not just a policy framework but a catalyst for positive change, driving innovation, fostering collaboration, and empowering citizens to actively contribute to a cleaner and greener tomorrow. RED III is not merely a set of directives; it is a roadmap towards a more sustainable and harmonious coexistence with our planet. 

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