'Red alert': EU Renewable Energy Directive's third edition rolls out in the Netherlands

The implementation of the EU's updated legislation for renewable energy, which entered into force in 2023, is making progress in the Netherlands as the first milestone date passed this summer with a second now approaching in May next year and a third in early 2026.

On 20 November 2023, Directive (EU) 2023/2413 revised the Renewable Energy Directive (EU) 2018/2001 (RED III) with the first implementation deadline for Member States now passed on 1 July and the next date ahead on 31 May 2025 followed by 21 February 2026.

RED I

The original Renewable Energy Directive, also referred to as RED I, was adopted by the European Parliament on 23 April 2009 (Directive 2009/28/EC). The objective of RED I was to establish a framework for the promotion of energy from renewable sources and to set binding national targets for the overall share of energy from renewable sources in gross final consumption of energy and for the share of energy from renewable sources in transport. It furthermore provided a basis for cooperation between member states on projects, guarantees of origin and sustainability criteria for biofuels and bioliquids.

RED II

On 11 December 2018, (Directive (EU) 2018/2001) amended RED I and supplemented it with RED II. Where RED I set targets for 2020, RED II set new more ambitious targets for 2030.

Under RED II all Member States collectively needed to ensure that the share of energy from renewable sources in the EU gross final consumption of energy in 2030 would be at least 32%.

European Green Deal and 'Fit for 55'

On 14 July 2021, the European Commission adopted the “Fit for 55” package, a set of proposals to prepare implementation of the European Green Deal (EGD) (established on 12 December 2019).

The EGD is the more general plan against climate change, while Fit for 55 includes specific topics to be addressed. More specifically Fit for 55 aims to reduce greenhouse gas emissions by at least 55% percent by 2030.

Fit for 55 also proposed raising the target from 32% (RED II) to 40% of renewable energy in the total energy consumption. In order to meet that goal, the EU needs to increase its share of renewable energy in the energy generation mix, which is the objective of RED, and increase energy efficiency – the objective of the Energy Efficiency Directive.

REPowerEU

On 18 May 2022, the Commission also launched its communication on its REPowerEU plan in response to the Russia's invasion of Ukraine and its implications for EU energy supplies.

The objective of REPowerEU is to rapidly reduce EU dependence on Russian fossil fuels by fast forwarding the clean transition, achieving a more resilient energy system and a true energy union. REPowerEU can be seen as catalyst for the targets set by Fit for 55 while also adding more actions and more ambitious targets to the list.

RED III

On 18 October 2023, the EU directive (EU) 2023/2413 was adopted, including various amendments to directive (EU) 2018/2001 (recast) (RED I and RED II), Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652. The directive (EU) 2018/2001 as amended by the directive 2023/2413 is referred to as RED III (last consolidated version of RED can be found here (including updates up to 26 June 2024).

Renewable energy target

Under the RED II requirements of 2018, the target per centage of renewable energy of total energy consumption was set at 32% for 2023.

RED III increases this ambition to 42.5% in 2030 – which even exceeds the ambition of a 40% target proposed by Fit for 55.

Goals for transport

At least 29% share of renewable energy in the final consumption of all energy used in transport, including maritime, aviation and rail, is proposed by RED III, of which 5.5% would be advanced biofuels and renewable fuels of non-biological origin (RFNBOs) in the final consumption of all energy supplied to transport, with a 1% RFNBO minimum share. Alternatively, the goal is of a minimum of a 14.5% reduction in greenhouse gas compared to emissions that would have been created by fossil fuel use instead.

Examples of RFNBOs include green hydrogen and ammonia, as well as e-diesel and e-methanol. There is an indicative goal in place of at least 1.2 % of energy used in maritime transport to come from RFNBOs in 2030.

This means that electricity for road transport will play a key role in achieving the EU transport target in 2023. RED III includes a number of multipliers – a different set than RED II – that facilitate meeting the these targets. For instance, a share of renewable energy can use a multiple of 4x when delivered to road vehicles and RFNBOs to maritime transport may use a multiplier of 1,5x. The introduction of the multipliers has been criticised by various market parties who argue that it produces a distorted view of where things really are in terms of renewable targets for transport.

Industrial uptake targets

Under RED III, renewable energy use in the industrial sector must increase by 1.6% annually. By 2030, 42% of hydrogen in industry must come from renewable fuels of non-organic origin. By 2035, it must be 60%.

EU Member States can reduce the share of renewable fuels of non-organic origin by 20% if they meet their expected national contribution to the binding overall EU target, and their share of hydrogen from fossil fuels is no more than 23% in 2030 and 20% in 2035.

Buildings, heating and cooling

RED III sets a target of at least 49% of renewable energy in buildings in 2030. In the period up to 2026, the change needs to be 0.8 percentage points and from 2026 to 2030 1.1 percentage points per annum. These are binding targets.

In addition, there are country-specific indicative top-up targets included in annex 1A of RED III. For the Netherlands, these are 1.1 percentage points per year in the period 2021 to 2025 and 0.8 percentage points in the period 2026 to 2030. The binding and top-up targets combined result in a target for growth in renewable heat of 1.9 percentage points per year over the entire 2021–2030 period.

'Mapping' obligation

RED III includes an obligation for Member States to map the available areas needed for the deployment of renewable energy projects both onshore (including on and under the land surface), offshore and on inland waterways. This obligation is intended to enable member states to achieve their national contribution to the renewable energy target set out in Directive (EU) 2018/2001.

Following this "mapping’, member states must draw up one or more plans within the zones concerned, identifying renewable energy accelerated deployment areas. These are specific zones identified by Member States as particularly suitable for the construction and operation of renewable energy projects.

The selection of these acceleration zones is done on the basis of the priority and exclusion scheme set out in RED III. Any plan to designate acceleration zones must be subject to an environmental impact assessment according to the provisions of the European Strategic Environmental Directive. If the plan in question may have significant effects on Natura 2000 sites, an appropriate assessment according to article 6(3) of the Habitats Directive must also be carried out.

Status of implementation in the Netherlands

In his letter of 7 June to the Netherlands Parliament, the minister for climate and energy policy, Rob Jetten, updated on the status of the implementation of RED III (having a general deadline of 20 May 2025). Although the minister was positive on the achievability of most targets, he raised a number of concerns.

He warned that the 1 July deadline for the implementation of the RED III provisions to speed up the permit procedures would be missed, due to the length of the legislative process in the Netherlands. Although not the type of changes referred to in RED III , there are other legislative initiatives taking place to speed up procedures for electricity projects. In May, the Dutch government launched a consultation on the procedural acceleration of electricity projects.

For the RED III goals for the use of RFNBOs, it is uncertain how calculations will be made, with the roll-out dependent on development of necessary infrastructure. However, there is discussion on policy with regard to hydrogen.

The RED III goals for buildings, heating and cooling will most likely not be met. This is also because of the additional top-up that is applicable for the Netherlands, as outlined in the Dutch government's Climate and Energy Outlook 2023. In addition there are uncertainties over the calculation methods to be used.

Municipalities and provinces had been asked to propose by 1 October – at the date hereof we have not any publication on this – areas for the deployment of renewable energy and associated infrastructure and storage for the purpose of mapping. These can be designated as acceleration areas after conducting an environmental impact assessment. The mapped areas will be periodically reviewed and, if necessary, updated. There are, however, concerns about the uncertainty over whether RED III provides a solution for the nitrogen problem (stikstofproblematiek), since all proposed activities will have a negative impact on that (during the building phase or after).

The letters do not yet give any indications on the feasibility and progress of the 21 February 2026 deadline for the adoption of plans for the designation of renewable acceleration areas.

Guidance needed

It appears that Member States are struggling with the deadlines imposed and also with regard to the interpretation of the complex provisions set out in RED III. For measures that have such an enormous impact not only on the environment but also on economies, it needs to be very clear what needs to happen. Although somewhat late, the Commission has fortunately adopted four guidance documents on 2 September 2024 on heating and cooling, energy system integration and RFNBOs.

Osborne Clarke conclusion

The renewable targets set by the EU seem to be set higher each time a target gets in range. Meanwhile, governments in all Member States seem to be struggling to meet set deadlines and it remains to be seen whether all Member States can meet the proposed targets.

Due to uncertainty over policy and deadlines, the sectors affected by RED III are struggling to prepare for the future. In order for governments to make policies and legislation, they need to have clarity and guidance with regard to the complex RED III. Fortunately, the Commission is now issuing guidance on several crucial areas of concern but it remains to be seen if that is on time to reach the deadlines for implementation.