The proposed new EU renewables directive: interpretation, problems and prospects

Under the proposed renewables Directive, Member States would commit to delivering additional renewable energy so that collectively they would generate 20% of energy from renewable sources by 2020. The requirements for each Member State are linked to their GDP. The Proposal offers two options for inter–Member State cooperation, based upon the assumption that it may be advantageous to develop additional renewables in countries with good resource basis to meet the target in countries with higher GDP. Either Member States can transfer guarantees of origin for renewables between governments or they can implement a system for private international trade of guarantees of origin. The paper discusses the economic and legal implications for national support schemes and suggests possible extensions and amendments to enhance legal certainty for investors. The Proposal also makes provision for national action plans to support Member States in the implementation of national frameworks. We discuss the interaction of GO trade with national support mechanisms for renewables and with international trading and transfers, and the importance of credible responses in the case of non–compliance