In light of climate change and its rising challenges, the focus on renewable energy takes the central stage as a topic for businesses. To lower the use of fossil-based fuels in the European Union, the union promotes renewable energy sources through their legislative framework, most significantly the Renewable Energy Directive. This sets legal mandates for all Member States and across all sectors of the EU economy, to help reach climate neutrality by 2050.

Renewable Energy Directive and background information

The first RED was introduced in 2009 and describes a common framework for renewable energy production, including solar, wind, aerothermal, geothermal, ocean energy, biomass, sewage treatment plans, biogases, landfill gas and hydrothermal energy. The directive sets mandatory renewable energy targets for each EU Member State, for gross energy consumption and the transport sector. Additionally, by 2020, 20% of all energy usage in the EU needed to stem from renewable sources. This included at least 10% of all energy used in the transport sector. REDII introduced a higher target of 32% for 2030. It is estimated that these targets are unlikely to be met in this timeframe. The REDIII implementation is intended to aid in achieving these goals.

Fit for 55 and the REDII

Fit for 55 is a part of the larger European Green Deal, which was created to steer the EU towards climate neutrality by 2050. This legislative package was adopted by the European Commission in July 2021, to meet the greenhouse gas emission target set at a minimum reduction of 55% by 2030.

The Fit for 55 package aims to:

• Safeguard a just and fair transition towards renewable energy sources (RES) for everyone.
• Support innovation and competition within the EU industry, while simultaneously providing a level playing field for other economies in the world.
• Reinforce the EU’s leading global position in fighting climate change.

One element of the Fit for 55 package is the above-mentioned REDII, which heightens the overarching renewable energy target to 32% for the EU from 2018 onwards. This includes several rules and common principles for the transport sector, heating and cooling sector, and criteria for biomass. In addition, by 2030, 14% of all fuels for transport need to consist of renewable energy. Within the transport target, there is a sub-target for advanced biofuels produced from advanced feedstocks: at least 0.2% must be supplied to transport by 2022, 1% in 2025 and by 2030 at least 3%.

The new REDIII proposal

The current target for renewables is set at a general target of 23% for 2030. Projections however show that the present policies will only lead to a 24.3% share of renewable energy by 2050. To bridge this, another revision, the REDIII, was proposed by the Commission as a part of the ‘Fit for 55’ package. The new proposal is driven by the need for a faster transition towards renewable sources. The regulation will go into effect in January 2025 and include new targets for various industries and is an addition to REDII, with stricter targets for 2030. The new proposal aims to bridge the gap with additional national and regional measures.

Objectives and targets for the proposal

While many specifics of the revised regulation are still uncertain, we do have objectives and targets set for different sectors. More specific details are expected later. The REDIII proposal focuses on the following main aspects:

Overall target – Article 3

The overall target for the REDIII proposal is set at 42% renewable energy sources (RES) and exceeds the previous target of 32% by 2030 for the EU. There even is an ambition to reach 45% by 2030.

Permitting and authorisation – Article 15b, 15c, Article 16

All Member States need to provide a timely mapping of their distribution of renewable sources within their territory. This should include an assessment of the domestic capacity and available land (sub)-surfaces, both on sea and land inward.

Building, heating and cooling industry – Article 15a, Article 23, Article 24

New targets for the building, heating and cooling sectors are included in the new revision. Article 15a presents a target of 49% applicable to all. Member States need to specify a consistent indicative production share of renewable energy in the building sector, with a minimum level of RES in their national regulations. For the heating and cooling sector, an additional mandatory target is set for an increase of at least 0.8 per cent per year between 2021 and 2025 and up to 1.1 per cent per year between 2026 and 2030.

Industry – Article 22a, Article 22b

The industry sector will get a new, although not binding, increasing RES target of 1.6 per cent per year. Hydrogen used for industrial energy consumption is required and should focus on reducing hydrogen produced through fossil fuels. Renewable liquid and gaseous fuels of non-biological origin (RFNBOs) need to represent at least 42% of the used hydrogen by 2030, and 60% by 2050.

Transport - Article 25

Member States need to achieve a renewable share of at least 29% by 2030, or a greenhouse gas intensity reduction of at least 14.5% by 2030. A new binding sub-target is introduced through Article 25 of 5.5% for RFNBOs and advanced biofuels and biogas by 2030, produced from feedstocks listed in Annex IX Part A.

Guarantees of Origin - Article 19, Article 13a

Minor requirement changes are made for GOs, such as a standardised size of 1Mwh per certificate. Additionally, a link between “Proof of Sustainability” and GO certificates will be set up.

Sustainability criteria - Article 3, Article 29

New sustainability criteria are outlined, specifically for greenhouse gas emissions related to biogas, biomethane production and the use of specific feedstocks. A “hierarchy of end uses” is introduced, the so-called cascading principle.  The cascading principle means making efficient use of resources and re-using where possible. This ensures a maximum use of the available biomass in a given system.

Expected timeline

After formally endorsing the final text of the revised Renewable Energy Directive on June 16 2023, the EU parliamentary ITRE committee voted on the agreement on the 28th of June. A plenary vote took place on September 12, with 420 votes in favour and 120 against, with 40 abstentions. This means the legislation is now officially adopted and is to be endorsed by the Council. Once this is done the document will be published in the official EU journal, giving Member States 18 months to implement the REDIII into national legislation.

Implementation into Dutch Law

EU regulatory developments need to be implemented into national laws. On January 19th 2023, the Secretary of State Heijnen announced that the Dutch House of Representatives (Tweede Kamer) had started the implementation of the REDIII. In his letter, The Secretary of State concludes that it is crucial to implement all requirements set by the REDIII into national regulations, such as the Dutch Environmental Act (Nederlandse Wet Milieubeheer), the Energy Transport Decision (het Besluit energie vervoer) and associated regulations.
The implementation into Dutch regulation will look as follows:

• Previously announced revisions from the REDII will continue to be adapted, through the REDIII.
• A new obligation to support sustainable energy carriers is introduced for fuel suppliers to the transport industry. This will help to promote chain reduction in greenhouse gas emissions (well-to-wheel), instead of focusing on energy content and production solely. The focus will lie on CO2 reduction throughout the entire supply chain, which will provide incentives for better-performing energy carriers. The Dutch government aims to increase the mandatory share of renewable energy in the transport sector to 28.4% already in 2024.
• Sector-specific targets will be introduced for different transport sectors, such as the aviation and maritime industries.
• Further arrangements will be made to stimulate the hydrogen and RFNBO market.
• A better route should be established to encourage renewable hydrogen production.

The proposed legislative amendment will be presented to the House of Representatives (Tweede Kamer) at the end of Q4 2023.

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