In the European Union at present the electricity market is significantly distorted to the detriment of renewable energy generators: access to grids is restricted; excessive transmission costs are applied to renewables; there is still no internalisation of environmental and social costs;, embedded generators do not receive remuneration for the savings they create. These factors and the use of nearly fifteen billion ECU in direct subsidies to the conventional generation sector all contribute a market distortion that continues to hold back the harnessing of renewable energy in the European Union.

1. A Directive is called for, with legally binding minimum targets for each Member State, to promote the accelerated take-up of renewably generated electricity in the EU.

   Rationale:

   To provide safeguards and balances for the rapidly expanding, innovative and international renewable industry in the face of the significant instabilities created by the deregulation of the energy sector.

   Legally binding EU minimum targets are an essential pre-requisite for the Union to meet its climate protection obligations under the Kyoto Protocol, and to position itself for faster and deeper reductions beyond the first commitment period.

2. The directive must allow the most appropriate mechanisms for the delivery of the minimum target to be chosen by the individual Member State (subsidiarity) until such time as effective mechanisms have been proven by actual delivery of the renewable energy percentage minimum target.

   Rationale:

   Whilst the objective of a single EU system harmonised with a liberalised energy market is a desirable goal, it is essential that the renewable energy directive does not de-stabilise the successful renewables markets or threaten the flow of long term renewable investment.

   A variety of mechanisms are currently being used in the EU and others - as yet untried - have been proposed by the European Commission. However, none have yet been successfully integrated into a liberalised energy market. It is sensible therefore that a variety of mechanisms should co-exist, including both minimum price based systems and percentage quota based systems, allowing effective mechanisms to emerge, without restrictions due to competition law in the period of implementing the initial minimum targets.

3. The directive minimum target must be the same for each Member State, and be set as a percentage of the electrical energy consumed. Appropriate monitoring and compliance systems should be specified.

   Rationale:

   A simple, equal minimum target for all countries is a step required in order that EU domestic power retailing companies may in future operate under comparable conditions.

   The phase-in of renewable energies and emissions reductions due to displaced conventional generation must be fully transparent.

4. The directive minimum targets for each member state and therefore the goal for the EU as a whole must be:
   At least 8% of consumed electricity by 2005, with a minimum increase* of 4%.
   At least 16% of consumed electricity by 2010, with a minimum increase* of 8%.
   An increase by 2% per year thereafter.
   *Based on the year the directive goes into force, to cover those countries which are close to or already exceeding the 2005 and 2010 minimum targets.

   Rationale:

   The overall minimum targets are in line with the target for renewable energies to provide 12% of energy consumption by 2010, as agreed by the EU energy ministers in the ‘renewables’ White Paper (see also principle 10).

   A target for 2005 is necessary to meet the Kyoto Protocol's requirement that Parties make demonstrable progress by 2005.

   The longer term continuing minimum target of 2% per year is necessary to ensure
   i) That mechanisms are in place for a steady phase-in of renewable energies and
   ii) That the deep emission reductions to be achieved in the second and subsequent commitment periods of the Kyoto Protocol can be met.

5. The directive must promote technical diversity and geographical diversity in the distribution of renewable energies, with an onus on the development of a regionally appropriate, environmentally sound renewable energy infrastructure.

   Rationale:

   The implementation of the full range of renewable technologies is key to unlocking the vast and diverse renewable resources available across the European Union and to avoid regional over concentration of projects.

   The varied degree of commercial maturity of the different new renewable technologies must be recognised, and appropriate mechanisms put in place to accelerate the integration of each of the technologies. Although this would be subject to subsidiarity, this could include variable minimum pricing or technology banding.

6. The directive must address the extensive anti-competitive mechanisms and substantial subsidies for conventional generation throughout the EU, and ensure removal of such barriers and/or application of appropriate compensatory measures via reduced taxation or other fiscal measures.

   Rationale:

   Subsidies and anti-competitive mechanisms result in significant market distortions to the detriment of renewable technologies within the EU.

   The environmental benefits of renewables, including the avoided social and environmental external costs associated with conventional generation, as demonstrated by the EU research program, ExternE, must be recognised and reflected in the price of power and the differentiated application of ecotaxation.

7. The directive must provide for EU wide priority grid access policies for embedded generators. This would also benefit embedded generation using high efficiency technologies such as environmentally sound Combined Heat and Power facilities. These policies must set out clear terms for connection, with fair and transparent pricing for access and transmission.

   Rationale:

   Fair and transparent pricing is required not only to specify the value of electricity at a given point in the grid, but also to specify the value of the embedded benefits for the recipient distribution utility, including avoided transmission losses, avoided transmission costs and avoided infrastructure charges.

8. The minimum targets set out for renewables must not include any new large hydro-electric plant (greater than 10MW) or in any manner energy produced by the incineration of municipal waste, nor contain any process that includes the direct or secondary incineration of any non-bio-organic matter.

   Rationale:

   Municipal waste incineration which includes material of fossil fuel based origin should not be classified or supported as a renewable energy technology. With regard to greenhouse gas effects, studies show that recycling is better than both incineration and landfill. Member States should instead give priority to full implementation of sustainable waste management policies within which best available technology, low emission energy recovery may in some cases be appropriate as an alternative to landfill.

9. The directive should provide for the pursuit of best practice in the renewable energy industries, thus maximising the environmental and social benefits including local participation in construction, ownership, employment and training, as well as the process of capacity building.
10. This directive must be the first of a series of directives that cover each aspect of renewable energy production and consumption in the European Union, namely; electricity, thermal energy and transportation.