Renewables, carbon free energy sources and increased energy efficiency are essential to achieve EU’s climate neutrality goal by 2050

Renewables, carbon free energy sources and increased energy efficiency are essential to achieve EU’s climate neutrality goal by 2050. Fortum has provided responses to the EU consultations regarding these issues.

Fortum’s key messages on the revision of the EU Renewable Energy Directive (REDII) and the Energy Efficiency Directive (EED)

• Revision of the Renewable energy directive (RED II) is not appropriate at the moment, due to unfinalized implementation of the previous version. However, if revised we would opt for the necessary changes implementing Green Deal. It is of high importance to provide coordination between REDII and the parallel revision of Energy efficiency directive (EED) and upcoming revision of the Energy performance of buildings directive (EPBD) to secure the policy coherence.
• The renewables, waste heat and all low carbon energy sources and technologies (like hydrogen and nuclear) should be treated in equal manner as all of those are adequately supporting the achievement of EU carbon neutrality target.
• Heating and cooling related regulations have to respect the locality of the markets and allow for further utilization of waste heat sources on parity with renewables. In addition to that, the nearby and on-site solutions should be equally enabled and promoted.
• The dedicated regulatory framework for hydrogen should be developed as a whole (at the moment hydrogen market model is described in several directives), and in our view Renewables Directive is not the appropriate place to describe all the aspects related to this technology. Moreover CO2 free and green hydrogen should be given the parity in terms of promotion and adequate enablers.
• It is important to promote well-functioning power markets and allowing support for less-mature technologies in a transitional phase, such as Carbon Contracts for Difference to cover the cost gap between conventional and low-carbon technologies, and avoid market distortions stemming from such support.
   
• Including the buildings in the EU ETS should be primary tool to the decarbonization and improved energy efficiency of heating and cooling sectors as well as creating a level playing field amongst all heating and cooling solutions.
• The principle of energy efficiency first remains at the core of EU’s de-carbonization agenda. The focus should be on saving primary energy by measures covering the whole energy value chain. Therefore EU’s energy efficiency target can be binding but national targets should remain indicative. The revision of EED needs to address the CO2 free electrification of both H&C sector and industries, and to promote the cost-efficient use of CO2 free gases like hydrogen (energy system integration perspective).
• The more ambitious promotion of efficient heating and cooling, will require dedicated EU steering combined with sufficient national flexibility, for example by: alignment of heating and colling policies (under EED/RED II) with national renovation strategies (EPBD), creating a market-driven support for upgrading existing and building new efficient DHC infrastructure in urban areas, utilization of urban and industrial waste heat through the district heating networks, removal of regulatory barriers for energy system integration i.e., in electricity network regulation.