Leg. Dev.: Directive 2001/77/EC on the Promotion of Electricity Produced From Renewable Energy Sources in the Internal Electricity Market

8 Colum. J. Eur. L. 363 (2002)

Ernst Tremmel.

Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources in the electricity market is a further step towards the establishment of a competitive electricity market and is also an important contribution to environmental protection and sustainable development in the European Union (EU). Renewable energy sources (“RES”) within the meaning of the Renewables Directive are defined by its Article 2(a) as those “renewable non-fossil energy sources (wind, solar, geothermal, wave, tidal, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases).

The initial step for the liberalization of the EU electricity market was taken in 1998 with the entry into force of a Directive concerning common rules for the internal market in electricity. The Electricity Directive provided only a mechanism for the favorable treatment of RES electricity insofar as it allowed Member States to require system operators, when dispatching generating installations, to give priority to generating installations using RES. Given that in the short run the costs of electricity generation from RES in general will remain significantly higher than those of conventional sources of energy, such discretionary RES promotion through Member States proved insufficient for increasing the share of RES Community wide, in particular to an extent satisfying the Kyoto targets.

In line with the main priorities of EU energy policy – competitiveness, security of supply and environmental protection – Article 2 of the Renewables Directive requires each Member State to take appropriate measures to achieve a specific indicative target for the consumption of electricity produced from RES. The goal is to reach by 2010 both an indicative share of gross national electricity consumption (12%) and a share of total Community electricity consumption (22%) to be produced by RES. An annex sets out the different consumption targets to be achieved by the Member States. On the basis of Member States’ individual reports on achieving the targets, the Commission shall assess to what extent the Member States’ progress is consistent with the 12% and 22% targets; if inconsistent, the Commission shall make a proposal addressing national targets, including possible mandatory targets.

The Renewables Directive does not prescribe specific measures as to how to achieve the national targets, nor does it dictate a specific support scheme for RES. “[l]n view of the limited experience with national schemes and the current relatively low share of price supported electricity produced from renewable energy sources, the Renewables Directive refrains from harmonizing the different support schemes which may be operated in the Member States; these mechanisms include green certificates, investment aid, tax exemptions or reductions, tax refund and direct price support schemes.” However efficiently national measures taking into account regional particularities may promote the use of RES, these measures must not affect the internal market in electricity and must not distort competition. Aware of potential conflicts, Article 4 obliges the Commission to monitor the application of national support schemes, to present a report thereon and if necessary to make a proposal for a Community framework RES support scheme.