Description of the policy options

Based on existing studies, on the inputs from stakeholders and on internal analysis, a range of policy options and measures for each policy area were screened to respond to the problems identified in the problem definition.

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 options⁴⁸, 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.

48 Where results of the Open Public Consultation are given as percentages, this refers to the replies given to individual questions and not to percentage of the total number of replies.

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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 2030⁴⁹) are not ambitious enough compared to the level of renewable energy shares needed to reach the -55%

reduction of GHG emissions included in the CTP⁵⁰⁵¹ 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 consultation⁵² 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.

49 Based on the assessment of the National Energy and Climate Plans: COM (2020) 564 final.

50 RES Shares need to reach 38-40% in 2030: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0562&from=EN.

51EU Leaders Council conclusions: https://www.consilium.europa.eu/en/meetings/european-council/2020/12/10-11/.

52 Plus one Member State responding separately

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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 increased⁵³. 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,⁵⁴ 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:

53 NECPs showed only a modest 0.9% point increase

54 Article 23 of REDII includes an indicative average increase for the 2020-2030 period for all MS specifically for the whole H&C sector. There is no inclusion of an EU level RES H&C target or targets for buildings or industry

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Option 0: No changes, maintain current indicative 1.1%-point average increase in