Green Deal climate crisis, European Green Deal, and competition terms for a just and participatory energy transition

Recently, the European Commission published the "Fit for 55%" legislative package, which aims to align European Union (EU) legislation with the increased climate ambition of reducing greenhouse gas emissions by 55% by 2030 to tackle the climate crisis. This legislative package includes new legislative texts as well as proposals to revise existing Regulations and Directives, such as the Renewable Energy Directive (RES) and the Energy Efficiency Directive.

With regard to energy communities, the changes to both these Directives signal the European Commission's growing recognition that these communities can play different roles in the energy system. The revisions to the Renewable Energy Directive include provisions requiring Member States to achieve 49% of their national target for renewable energy in buildings.

Among other things, it states that Member States should take measures to promote the development of energy communities in order to achieve this target.

Overall, climate change is a global challenge with an extremely significant impact on our lives. The EU has set ambitious targets for tackling it, with a view to achieving the goal of the Paris Agreement, and is devoting considerable amounts of money. In particular, one third of the 1.8 trillion Euros investments from the NextGenerationEU Recovery Plan, and the EU’s seven-year budget will finance the European Green Deal which aims to transform the EU into a modern, efficient and competitive economy with:

• no net emissions of greenhouse gases by 2050
• economic growth decoupled from resource use
• no person and no place left behind.

The decarbonisation of our energy system is a central pillar for meeting the EU climate targets, as energy production and consumption account for over 75% of greenhouse gas emissions. Thus the transition towards a European energy sector based on renewable energy sources, high energy efficiency and rational energy consumption is a cornerstone of European policy.

To this end, the European Green Deal aims to put citizens at the heart of the energy transition by ensuring fairness and inclusiveness. The Clean Energy Package follows this objective and acknowledges "renewables self-consumers", "Renewable Energy Communities" (RECs) and "Citizen Energy Communities" (CECs) as prominent actors in the energy market. In the same context, competition rules and state aid guidelines should also contribute to the implementation of the Green Deal and allow citizens and energy communities to participate in the energy market in a non-discriminatory way.

The existing 2014 Guidelines on State aid for environmental protection and energy (EEAG) contributed to the creation of some barriers to the development of energy communities, as they failed to recognise the different factual and legal situation of smaller and non-commercial market actors such as the latter.

The legal framework for energy communities created by Green Deal intended to remedy market failures and create a favourable policy and legal framework to allow these communities to develop at national level.

Unfortunately, the new draft Guidelines on State aid for climate, environmental protection and energy (CEEAG) published by the European Commission do not align with this Green Deal approach.

More specifically, the Renewable Energy Directive acknowledges that energy communities are associated with many additional benefits, such as enhancing the social acceptance of renewable energy projects, increasing the capital available for local investments and increasing citizen participation in the energy transition. The Directive also notes that energy communities help to address socio-economic issues, such as energy poverty, and allow groups, such as vulnerable consumers, to actively participate in the energy transition.

Article 22(4) of the Renewable Energy Directive requires Member States to establish a legislative framework that allows for the promotion of the development of energy communities. These frameworks must include policies and measures to remove unjustified regulatory and administrative barriers and tools to help communities access financing and information, among other things.

In addition, Article 22(7) of the same Directive guarantees a level playing field for energy communities in national support schemes for RES. More specifically, it requires Member States to "take into account specificities of renewable energy communities when designing support schemes in order to allow them to compete for support on an equal footing with other market participants".

Firstly, this amounts to a procedural requirement for Member States to take into account specific challenges that energy communities may face in participating in competitive processes.

Second, it amounts to a substantive requirement to correct any challenges faced by these communities.

The unique characteristics of energy communities, including their different business model, the fact that their primary purpose is to provide environmental, economic and social benefits for their members and the local community rather than financial profits, their size, their professional and organisational structure and the way they finance projects, place them in a different legal and factual position compared to other entities.

In accordance with the legal principle of equality, these distinct characteristics of energy communities and the challenges they face when participating in tendering procedures justify their different treatment. This is also supported by the Court of Justice of the EU[i].

How can the CEEAG[ii] guidelines be aligned with the Green Deal?

Paragraph 123 of the existing guidelines (EEAG) states that while State aid to renewable electricity should in principle contribute to the integration of renewable electricity into the market, for certain small types of installations this may not be feasible or appropriate. In addition, the European Commission has confirmed that the EEAG guidelines should be adapted, revised and aligned with the new Green Deal rules, including the provision of arrangements for self-consumption and energy communities in RES systems[iii].

However, the draft CEEAG failed to create a fair and level playing field for energy communities. In particular, the draft of these Guidelines on State aid:

• Does not provide sufficient acknowledgement for the different factual situation of smaller and non-commercial market players, in particular energy communities.
• Does not recognise the market failures that prevent these communities from further developing in the RES sector and does not take into account the fact that the model of energy communities is very new and their institution is still non-existent in many Member States.
• Imposes competitive bidding procedures for the support of RES projects, without taking into account the challenges faced by small and non-commercial actors in accessing such procedures.
• Fails to balance the criteria of cost-effectiveness and other market-based outcomes against social criteria such as the social acceptability of RES projects[iv].

In order to align with the Green Deal and the CEP, the draft CEEAG must include:

• Dedicated provisions on energy Communities acknowledging their unique market position and challenges as non-commercial market actors.
• Increased thresholds to exempt energy Communities and other small RES production installations from having to participate in competitive bidding procedures.
• Clear and concrete guidance to help Member States integrate Energy Communities into their support schemes consistent with their legal obligations under the Renewable Energy Directive.
• Simpler administrative burdens on Member States that want to create dedicated support for Energy Communities in their national renewables support schemes
• Acknowledgment of social impacts on local communities from RES projects, along with supportive provisions on the integration of social criteria into competitive bidding procedures for RES projects
• The continuation of dedicated chapter for support of the EEAG guidelines that dealt with support for RES.

Tackling the climate crisis: a stake that concerns us all

The scale of the challenge is enormous and beyond generous funding it requires holistic, profound changes in the way we structure our economy and society and a general reconsideration of how we think and act. Tackling climate change and moving to a healthier, fairer and more democratic system requires a broader social transition.

The term transition refers to an uncertain long-term process of structural change, evolving in a non-linear way as a result of parallel, external and internal pressures to transform the system. Thus, the energy transition can be understood as a process of profound, non-linear change in the organisation and overall quality of the energy system. In a transition process, emerging new combinations of alternative ideas, technologies, practices and other new factors are linked to transformative trends within the existing system and can lead to its systemic restructuring and transformation.

So, we can say that, in order to achieve the transition to a fair and sustainable energy model, which enhances our quality of life while respecting the environment, we need holistic changes and policies at European and national level. This means that if we still insist that the transition to competitive processes is necessary for the proper use of available resources, then the competition framework should be amended to include the mandatory assessment of social impact and criteria. Thus, apart from the economic aspects of the projects, we should see how they affect, for example, the following dimensions:

• Level of knowledge: How does the proposed project intend to influence the formal and informal knowledge that guides people's behaviour? This relates to the social acceptance of RES projects and the interest of citizens to engage in them. Knowledge arguments are used to grow the (socio-political) acceptance of actions aimed at realising the desired transformation towards sustainability versus maintaining the existing fossil fuel based system. Discussion and arguments are needed, inter alia, to address the resistance and fear often found in society regarding the energy transition. After all, a just and sustainable energy transition means that when developing RES and energy saving projects, local communities are given the opportunity to participate both in the decision making regarding the development of these projects and the benefits arising from their participation. In this way, energy democracy is put into practice and the possibility of more effective citizen control is given.
• User practices, i.e. users' preferences and routines in relation to energy. When one becomes a member of an energy community, one moves from the status of a passive energy consumer to an energy producer-consumer. Membership of an energy community helps, even temporarily, to monitor (and reduce) energy consumption[v] [vi] (5&6).
• A competitive process should also take into account a project's contribution to the rational use of energy by the society.
• Scope of stakeholders: The involvement and activation of the wider society and of people of different gender, age, ethnicity and culture, and generally with different preferences, needs and practices, should be assessed. Energy communities are aware of and are attempting to improve their performance on this.

Furthermore, if we wish to have a total restructuring of our energy system, we must bear in mind the following:

• Organisational logic, what are the processes and activities of the organisations/companies preparing the project?
• What know-how and networks are used in them?
• We need to look at the division of labour and coordination across the value chain, as well as ownership issues and relationships between investors, producers and users.

As the climate crisis unfolds quite rapidly, more and more individuals and communities around the world are beginning to recognise that renewable energy can offer much more than reliable clean electricity, pollution reduction and climate change mitigation. RES “provides potential to transform society by redistributing jobs, wealth, health, and political power more equitably”[vii].

Energy communities, and more specifically energy cooperatives, are seen as a source of democratisation of the energy system as well as a means of redistributing political and economic power.

In conclusion, the participation of citizens and communities is crucial for a successful transition to a just and sustainable energy system beyond fossil fuels. Implementing an intersectional approach is likely to increase the success of future energy policies and projects due to the higher number of stakeholders, higher interest and acceptance of the energy transition.

In order to achieve the objectives adopted at European level to tackle the climate crisis, it is crucial that all parts can participate in the energy transition on an equal footing.

You can also respond to the Public Consultation on the draft Guidelines on State Aid (CEEAG) that will affect the ability of energy communities to participate in the energy market in a non-discriminatory way.

Let us jointly defend the right of Energy Communities to contribute to the urgent energy transition!