EU Policy

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Geothermal energy is a dynamic and flexible source of renewable energy, which is recognised as being pivotal contributor for Europe’s energy mix now, and also in the future. On this page you will find information on European policies related to renewable energy, as well as EGECs analysis and reactions to these legislative and political debates.

In addition, you can find more information on EGECs involvement in the Renewable Heating and Cooling Technology Platform, as well as the Technology Platform on Geothermal electricity.

To discover more about how geothermal energy is approached at a European level, click on the topics below.


 

EU climate and energy policy

Geothermal is fully recognised to be a safe, reliable, environmentally benign renewable energy source. For this reason geothermal energy technologies can benefit from any climate mitigation policies. And it is no wonder that the so-called 20-20-20 targets endorsed by EU leaders in March 2007 within the framework of the EU action on climate change are some of the main drivers for the market growth of geothermal technologies.

The 20-20-20 goals, which are headline targets of the European 2020 strategy for growth, are:

  1. Reduction of at least 20% in greenhouse gas (GHG) emissions compared to 1990 levels;
  2. 20% of the final energy consumption to come from renewable sources;
  3. Improvement of energy efficiency by 20% compared to projections made in 2007.

In October 2014, EU leaders agreed on a new 2030 policy framework for climate and energy setting new targets for Europe’s GHG emissions reductions, energy efficiency and renewable energy sources towards 2030:

  1. Reduction of at least 40% in greenhouse gas (GHG) emissions compared to 1990 levels;
  2. 27% of the final energy consumption to come from renewable sources;
  3. Improvement of energy efficiency by 20% compared to projections made in 2007.

The directives forming the basis of the 2030 climate and energy framework will be revised in the coming years: the ETS Directive (2015), the RES Directive (2016), the Energy Performance in Buildings (2016), the Energy Efficiency Directive (2016).

EGEC response to public consultation on Green Paper “A 2030 framework for climate and energy policies”, July 2013.
Heat Coalition statement on Green Paper “A 2030 framework for climate and energy policies”, July 2013.
European Council conclusions, 23-24 October 2014.

On 25 February, the European Commission released its new Strategic Framework for an Energy Union. Presented as one of the Juncker Commission’s top priorities, this new strategy officially aims to achieve a resilient Energy Union with a forward-looking climate energy policy. The Commission’s proposal includes several measures which will be followed by legislative proposals. The proposed strategy is based on five key dimensions:

  1. Energy security, solidarity and trust;
  2. A fully integrated internal energy market;
  3. Energy Efficiency as a contribution to the moderation of energy demand;
  4. Decarbonisation of the economy;
  5. An Energy Union for Research, Innovation and Competitiveness.

How to become Number 1 in Renewables: A contribution from the biomass, geothermal, solar thermal sectors , March 2015
EGEC reaction to the Framework Strategy for an Energy Union
EGEC policy recommendations for a secure, competitive, sustainable Energy Union, December 2014.

The EU imports more than half of all the energy it consumes. Its import dependency is particularly high for crude oil (more than 90%) and natural gas (66%). The EU’s total import bill is more than €1 billion per day. Also, many member states are heavily reliant on a single supplier, including some that rely exclusively on Russia for their natural gas.

In response to these challenges, the European Commission released its Energy Security Strategy in May 2014. The Strategy officially details a series of short-term and long-term measures in order to ensure a stable energy supply to Europe.

European Commission communication on the European Energy Security Strategy, May 2014.
EGEC position paper “Renewables for Heating and Cooling and EU Security of Supply”, May 2014.

The future of the European Energy Sector has been plotted in several reports, among which:

International Energy Agency’s “Technology Roadmap: Geothermal Heat & power” published in 2011.

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Legal framework

Renewable Energy Directive

The Directive on the promotion of the use of energy from renewable sources (2009/28/EC) –RES Directive has been the most significant legislation for geothermal. Adopted on 23 April 2009, this directive builds on the 2001 Renewable Electricity Directive, which had set indicative targets for renewable electricity in the EU, but expands its scope to include the heating and cooling and the transport sectors. Amongst other things, the RES Directive sets legally binding targets for Member States and puts forward a number of measures aiming to overcome the following crucial barriers preventing renewables from entering the energy market: long and discriminatory administrative procedures, rigid local plans, lack of information, shortage of skilled workers, and unfair regime to access to the grid. A list of the key provisions in the RES Directive is reported in Table below.

Directive 2009/28/EC

Table 1: Key provisions in the Renewable Energy Directive

The definition of appropriate methodologies for accounting for the contribution of heat pumps to the renewable energy targets was seen since the beginning as a significant implementation challenge given the diversity of heat pump applications and the current scarcity of statistical data.

Lack of reliable statistics has also sometimes acted as a barrier for the development of the technology, notably as it was difficult to quantify the energy and thereby other impacts of the technology. Setting up a methodology is a long and complicated process but it should contribute to the removal of this “statistical barrier”.

As explained by recital 31 of the RES Directive “the energy used to drive heat pumps should be deducted from the total usable heat. Only heat pumps with an output that significantly exceeds the primary energy needed to drive it should be taken into account”
Accordingly Article 5(4) provides that “aerothermal, geothermal and hydrothermal heat energy captured by heat pumps shall be taken into account for the purposes of paragraph 1(b) provided that the final energy output significantly exceeds the primary energy input required to drive the heat pumps. The quantity of heat to be considered as energy from renewable sources for the purposes of this Directive shall be calculated in accordance with the methodology laid down in Annex VII”:

ERES = Qusable * (1 – 1/SPF)

where:

ERES = amount of energy captured by heat pumps to be considered energy from renewable energy sources for the purposes of this Directive;  

Qusable = the estimated total usable heat delivered by heat pumps fulfilling the primary energy efficiency criterion, and

SPF = the estimated average seasonal performance factor for those heat pumps

Analysing the details of the above methodology is far from the objectives of this paper. However, it should be mentioned that in line with Annex VII, on 1st March 2013 the European Commission adopted a decision (C(2013) 1082 final) establishing how Member States shall estimate the two parameters “Q usable” and SPF, taking into consideration differences in climatic conditions. The guidelines may be revised and complemented by the Commission by 2016, if statistical, technical or scientific progress necessitates it.

Commission decision of 1 March 2013 establishing the guidelines for Member States on calculating renewable energy from heat pumps from different heat pump technologies pursuant to Article 5 of Directive 2009/28/EC of the European Parliament and of the Council

According to Article 4 of the RES Directive, Member States shall adopt a National Renewable Energy Action Plan (NREAP) setting out national targets for the share of energy from renewable energy sources consumed in electricity, heating and cooling, and transport, and adequate measures to be taken to achieve those targets. All member states have now presented their NREAP.
The 2020 targets for geothermal set out in the NREAPs are presented in the two graphs below.

Source: EGEC Market Report 2012/2013, p.11.
Source: EGEC Market Report 2012/2013, p.11.

An evaluation of NREAPs submitted to the Commission has been undertaken by EGEC and its members. It aims at presenting the positive aspects contained in the NREAPs in addition to some of the inaccuracies, and most notably to assess the measures as presented.

If it is to be argued that in general NREAPs propose more ambitious targets for RES electricity than for RES H&C, this is not true for geothermal. The potential of geothermal power is nearly ignored. However some Member States do support the development of geothermal direct uses and geothermal heat pumps.

EGEC Evaluation of NREAPs, August 2011.
EGEC national targets, December 2009.

Article 22 of the RES Directive requires Member States to prepare bi-annual reports on progress in the promotion and use of energy from renewable energy sources. These reports should describe the overall renewable energy policy developments in each Member State and its compliance with the Directive and the NREAPs. On the basis of the national reports received, the EU Commission publishes an assessment of the progress made towards the 2020 RES target.

National Progress Reports 2011 & 2013
2013 Renewable Energy Progress Report
2011 Renewable Energy Progress Report

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Geothermal and Energy Efficiency

Buildings account for over 40% of the EU’s final energy demand and are a major source of greenhouse-gas emissions, making energy-savings there a key element of the European climate change strategy. The Directive on energy performance of buildings (2002/91/EC) is the main legislative instrument at EU level to achieve energy performance in buildings. Under this Directive, Member States must apply minimum requirements concerning the energy performance of new and existing buildings.

On 18 May 2010, the European Council and the European Parliament adopted a recast of the directive on energy performance of buildings (2010/31/EU). The new directive aims at strengthening the energy performance requirements and at streamlining some of its provisions. It provides that the public sector must lead the way: all new buildings owned or occupied by public authorities must become “nearly zero-energy” by the end of 2018. This provision shall be extended to all new private buildings by the year 2020.

Directive 2010/31/EU

EGEC’s position on the review of EPBD

On 25 October 2012, the EU adopted the Directive on energy efficiency (2012/27/EU) repealing the Cogeneration Directive and Energy Services Directive.

The EED establishes a common framework of measures for the promotion of energy efficiency within the Union in order to ensure the achievement of the Union’s 2020 20 % headline target on energy efficiency and to pave the way for further energy efficiency improvements beyond that date.

  • The EED Directive sets out the following key provisions: The obligation, as from 2014, to renovate 3% of the total floor area of heated and/or cooled buildings owned or occupied by central government;
  • Member States have to set up energy efficiency obligation schemes to achieve new savings each year of 1.5% of the annual energy sales to final customers.
  • Member States must assess the potential for the application of high-efficiency cogeneration and efficient district heating and cooling as a basis for a sound planning of efficient heating and cooling infrastructures. Member States shall carry out and notify their assessments to the EU Commission by the end of 2015.

Directive 2012/27/EU

EGEC’s position on the review of EED

Table 2: Timeline for the promotion of RES for energy efficiency purposes
 

Geothermal heat pumps are covered under both Ecodesign and energy labelling legislation, which are two of the most effective policy tools in the area of energy efficiency. Ecodesign aims to improve the energy and environmental performance of products throughout their life cycle, while energy labelling requirements aim to provide citizens with information about the environmental performance of products and thereby incentivise industry towards the development of further improved products and innovations beyond minimum levels.

On 18 February 2013, the European Commission adopted a package of regulations supplementing Directive 2010/30/EU regarding energy labelling and Directive 2009/125/EC on eco-design requirements of space and combi-heaters (Lot 1), and water heaters and storage tanks (Lot 2).

As of 26 September 2015, transparent information obtained by reliable, accurate and reproducible measurement and calculation methods shall be provided to consumers, including on the level of efficiency of space and combi-heaters and water heaters with a rated heat output ≤ 70 kW. The package covers heat pumps, including Ground source heat pumps, which are amongst the few technologies able to comply with the most efficient energy class (A++ as of 2015 and A+++ as of 2019).

The regulations are available on the Official Journal of the EU.

Figure: First energy label for brine-to water heat pumps

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EU Internal Energy Market

In order to achieve their renewable energy targets, the RES Directive allows Member States to make use of national mechanisms of support for the promotion of energy from renewable sources provided that they are compatible with EU State aid rules (Article 3 RES Directive).

Over the last years Member States have been using a wide range of public policy mechanisms to support the development of geothermal technologies. They can take the form of investment aid (capital grants, loans – including from EU Structural Funds, risk insurance) or operating aid (price subsidies- e.g. feed-in tariffs or premiums, renewable energy obligations with green certificates, and tax exemptions or deductions on the purchase of goods).

These kinds of aid, when granted by Member States, may be compatible with EU law only:

a) if it promotes the execution of an important project of common European interest or to facilitate the development of certain economic activities (such as environmental protection);
b) where such aid does not adversely affect trading conditions to an extent contrary to the common interest (Art. 107 of the Treaty on the Functioning of the EU – TFEU).

Within the framework of the State aid modernisation initiative, the European Commission adopted in 2014 new rules on public support for projects in the field of environmental protection and energy (Environmental and Energy Aid Guidelines- EEAG). The EEAG set the criteria by which the Commission will approve new subsidy schemes from July 2014 until the end of 2020.

The standard rule is as follows: as of 2016 operating aid for renewable installations above 0.5MW should be granted by way of a premium or certificates to operators which sell the electricity directly on the market and bear all balancing costs. From 2017 this aid allocated via a technology-neutral process open to all technologies regardless of their maturity.

EGEC response to Commission’s consultation on Environment and Energy Aid Guidelines (EEAG), February 2014.
EGEC response to Commission’s consultation on the revision of the General Block Exemption Regulation (GBER), February 2014.
ECOFYS Final Report, Subsidies and cost of EU energy, November 2014.

On 13 October 2014, the European Commission published a Communication on the Progress towards completing the internal energy market acknowledging that it has fallen short of its promise to ensure the full completion of the internal energy market by 2014. Despite positive developments, work still needs to be done:

  • More investments in infrastructure – including smart grids- should be made in order to end the isolation of energy islands;
  • Provisions ensuring the functioning of the internal energy market have not been transposed and implemented in all Member States. This notably impedes the liberalisation of the internal energy market and the phasing out of regulated prices.
  • A stronger emphasis on regional cooperation to bring faster results and to better address local needs.
  • Retail and wholesale markets should be better linked so that lower wholesale prices lead to lower consumer prices.

EGEC view on the New Electricity Market Design

The electricity system in Europe is currently undergoing a revolution. The centralised conventional system, based on fossil fuels and nuclear and built under monopolistic market conditions, is being transformed by market liberalisation and the recent large penetration of renewable energy sources (RES). Nonetheless, the way the market works has not changed sufficiently to accommodate this transformation. A new market design is therefore required in order to ensure a flexible, secure, and truly European power system.

Urgent measures to increase system flexibility and ensure a reliable provision of electricity are needed. Geothermal power plants can provide this flexibility: see the Factsheet on Geothermal Flexibility

EGEC welcomes the discussion on the New Electricity Market Design and provides here its position.

 

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Environmental Legislation

Regulations aiming to preserve and improve the environment can also affect the development of geothermal systems. It is not possible to cover the entire EU environmental acquis in this section. We will therefore just limit to mention the main EU environmental regulations affecting the geothermal sector: the regulations on water and environmental assessment. Thanks to this legislation the development of geothermal is ensured to be compatible with other environment objectives.

Directive 2000/60/EC establishing a framework for Community action in the field of water policy (WFD) requires member states to implement the necessary measures to prevent deterioration of the status of all bodies of surface water and to prevent or limit the input of pollutants in groundwater in order to achieve good quality status by 2015.

The application of water legislation to geothermal energy depends on whether a system is an open or closed-loop system. It is relevant to highlight that Article 11 of the WFD gives member states the option to authorise the reinjection into the same aquifer of water used for geothermal purposes provided it does not compromise the environmental objectives of the directive. It is therefore within the competence of the national governments to decide as to whether reinjection of the geothermal fluids is required.

Directive 2000/60/EC

An environmental assessment is a procedure aiming to ensure that the environmental implications of are made. Environmental assessments can be undertaken for individual projects on the basis of Directive 2011/92/EU (EIA Directive) or for public plans or programmes on the basis of Directive 2001/42/EC (SEA Directive). The common principle of both Directives is to ensure that plans, programmes and projects likely to have significant effects on the environment are made subject to an environmental assessment prior to their approval or authorisation.

According to the EIA Directive it is for the national authority to determine whether and which geothermal drilling projects should be subject to an environmental impact assessment.

Finally, a geothermal project shall comply with Directive 92/43 on the conservation of natural habitats and of wild fauna and flora (Habitats Directive). In accordance with Article 6 (3) of the directive, if a proposal is considered to have a significant effect on the conservation objectives of a Community Site an appropriate assessment will be required.

Directive 2011/92/EU
Directive 2001/42/EU
Council Directive 92/43/EEC

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EU ETS- Emission Trading Scheme

NER 300 is a funding mechanism managed by DG CLIMA, the European Investment bank, and Member states which is funded through the sale of 300Mio allowances under the EU ETS scheme.

The Revised EU ETS Directive was adopted on 17 December 2008. One of the main elements of the compromise is the use of the revenues generated from the auctioning of allowances to notably develop renewable energies to meet the commitment of the Community to using 20% renewable energies by 2020.

On 2nd of February 2010, the European authorities found an agreement on the text for disbursement of the NER 300. On 18th December 2012, the European Commission published a decision awarding NER300 funds from the first call to the Geothermal South Hungarian Enhanced Geothermal System (EGS) Demonstration Project.

The second and final call for projects from the NER 300 Programme opened on the 2rd April 2013, with the results announced in July. Two more geothermal projects have received funding from this second stage. The two projects are:

-    Geothermae (Croatia)
The project concerns the production of electricity and heat from a geothermal aquifer and its associated natural gas. The project, in Draskovec, close to the city of Prelog in Croatia, will generate 3.1 MWe from geothermal hot brine using an Organic Rankine Cycle (ORC). 1

-    Geostras (France)
The French-German cross border project aims to produce electricity and heat from a high temperature geothermal resource near Strasbourg. It involves creating a circulation loop several kilometres long at a depth of between 4 km and 5 km that will function as a semi-open underground heat exchanger. The proposed geothermal plant is expected to produce 6.7 MWe electricity and 34.7 MWth heat.

NER300 is providing a much needed boost to the demonstration of innovative renewable energy technologies, including EGS in Europe, helping them progress towards commercialisation. In July 2014, EGEC, together with other European RES associations, publicly called for the renewal of the NER 300 or the creation of a new NER 300-like instrument in a public letter sent to the European Commission.

In October 2014, EU leaders decided to renew and upgrade the NER300 facility, with its scope extended to low carbon innovation in industrial sectors and the initial endowment increased to 400 million allowances (ie. NER400).

EU Commission Press Release on NER 300EGEC Reaction on the establishment of the NER 300, 2010.
Material on the EGEC workshop on NER 300, 2013
DG Climate Action Webpage on NER 300
EGEC and RES associations public letter on the renewal of NER 300, July 2014.
European Council conclusions, 23-24 October 2014

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EGEC Policy & Position Papers

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