A Comparative Study of Renewable Energy Laws in India and the European Union

Kumar Sourav
TERI-SAS
2000295LLM

Introduction
The conventional definition of renewable energy refers to non-conventional sources of
energy. Renewable energy comes from natural sources or processes that are constantly replenished. 1
Renewable sources of energy include Solar, Wind, Hydro, Biomass, Geothermal and Ocean. The
policies, regulations and laws which govern renewable energy sources and their usage are
commonly called Renewable Energy laws. These laws are a subset of energy laws and govern the
development, implementation and commercialization of renewable sources of energy. The most
common usage of renewable energy is in electricity generation with heating, cooling and transport
following behind.
India being the second largest country in terms of population has an overwhelming need of
energy to satisfy energy needs of the expanding middle class and the rural areas. European Union
on the other hand has been the stalwart in terms of environmental policies and with almost all
European countries following a set of common policies and targets makes it easier for the region to
achieve results with high efficiency.

What are Renewable Energy Sources?

As per Directive 2003/54/EC, renewable energy sources in the European context means
renewable non-fossil energy sources, namely, wind, solar, geothermal, wave, tidal, hydropower,
biomass, landfill gas, sewage treatment plant gas and bio-gases. 2 In India, as per the draft bill
proposed by the MNRE, the National Renewable Energy Act 2015, renewable energy sources are
defined as energy derived from non-depleting resources and includes wind, solar radiation, mini
hydro, biomass, biofuels, landfill & sewage gas, municipal solid waste, industrial waste, geothermal
energy, ocean energy and hybrids of the aforementioned energy sources.3
These definitions form the basis of the policy framework for renewable energy in both the
European Union and India. Our understanding of the renewable sources of energy has evolved over

1 Lora Shinn, Renewable Energy: The Clean Facts, NRDC.org, Jun. 15, 2018,
https://www.nrdc.org/stories/renewable-energy-clean-facts.
2 Directive 2003/54/EC (2003), Art. 2 (30).
3 National Renewable Energy Bill (Draft) (2015), § 3 (22).
the years and with the ever looming threat of global climate change and rising sea levels, renewable
sources of energy are our best bid towards a cleaner environment and sustainable development.

The Policies in India

In India, the Electricity Act, 2003 was the first legislation that dealt with the renewable
energy sources. Since then, we have come far and focused on building a sustainable model of
developed that is based on renewable sources of energy. The Ministry of New and Renewable
Energy (previously Ministry of Non-Conventional Energy Sources) has been instrumental in
developing policies for renewable energy in India.
The Electricity Act, 2003 encourages State Electricity Regulatory Commissions to connect
electricity generated from renewable sources to the grid by mandating the SERCs to purchase a
fixed minimum level of power from renewable energy sources. 4 The National Electricity Policy of
2005 actively promoted production and commercialization of renewable energy on industrial level.
The National Electricity Policy allows SERCs to buy energy at preferential rates from
renewable energy producers, although these preferential tariff rates are to be made par with those of
non-renewable energy in the future.5 These policy decisions make the intention of the Central
Government clear with regards to the promotion of renewable energy sources as the means to meet
the growing energy needs of the country but once renewable energy becomes mainstream the tariffs
will eventually be charged at appropriate market price. It is estimated that the electricity demand in
India will triple by 2040 with energy demands being doubled by the same year.6
With such high demands of energy and electricity increasing our power generating
capability with renewable sources of energy is a major challenge for the country. The current trend
has been encouraging as in 2018 India invested more in solar PV than all fossil fuel sources of
electricity generation combined.7 IREDA (India Renewable Energy Development Agency) has been
set up with the sole motive of providing renewable energy projects with the required financial
support. India therefore aims to achieve 175 GW of renewable energy (100 GW Solar, 10 GW bio-
power, 60 GW Wind power, and 5 GW hydropower) by 2022. With estimates of 750 GW solar
power and 410 GW of wind power by 2047, India has started its journey of transferring its reliance
on fossil fuels to non-conventional energy sources for its energy needs.
The MNRE has been providing CFA (Central Finance Assistance) to small and micro hydro
projects in both public as well as private sectors as part of the 3 year action agenda put forwards by
NITI Aayog in 2017. Policy for biomass energy production was also amended in 2018 by MNRE to

4 The Electricity Act, no. 36 (2003), § 86 (1)(e).

5 National Electricity Policy, (2005), § 6.4(2).
6 India 2020 Energy Policy Review, https://niti.gov.in/sites/default/files/2020-01/IEA-India%202020-In-depth-
EnergyPolicy.pdf.
7 Id.
encourage bio energy production from agriculture and industry generated bio waste. The 2018
amendments to the Tariff policy were aimed at promoting electricity generation from renewable
energy sources. The energy laws of India are driven by the need of self-sufficiency and maintaining
energy security in an energy hungry nation.

The Policies in European Union

Back in 2011, 76% of the EU’s energy needs were provided for by conventional sources
of energy while only 10% was from renewable sources of energy. 8 The member states that
consumed the most energy were Germany, France, the United Kingdom, Italy, Spain, Poland, and
the Netherlands. 9
It would be wise point out that according to EU regulations, EU had to have a minimum
of 20% energy consumption from energy produced from renewable sources of energy. What this
means is, that as a whole EU must source 20% of its energy needs from renewable sources while
the same is not true for its member states. For members of the EU, the obligation varies from each
member state and takes into account the infrastructural and economic capabilities of the country to
meet the projected obligation. On one hand, Sweden was required to increase its share of renewable
energy sources to 49% while Malta only had to increase it to 10%.
Directive 2009/28/EC, also known as the renewable energy directive is the definitive
legislation with regards to renewable energy in the European Union. The renewable energy
regulations and policy is all provided for by this directive, although it is important to note that
Directive 2018/2001 will repeal it once it reaches its end of term on 1 July, 2021. It is this very
directive that directs 20% of EU’s gross energy consumption be satisfied by energy from renewable
sources10 and 10% of each member states energy needs be met by renewable sources of energy. 11
Going further article 16 (2) provides for priority treatment for electricity provided from renewable
sources in the electricity grid of the member state.
The member states are expected to co-operate with each other on joint as well as third
party states on renewable energy projects. Among all this, EU takes it approach one step further as
they introduce the need for their renewable sources of energy be sustainable in case of bio-fuels.
Although all seems good, there have been legal issues among member states when it comes to
supporting policies and transactions within member states.
In the case of Outokumpu, Finland was providing tariff benefits for electricity produced
from renewable sources of energy in its own country while all electricity imported from outside the

8 Rafael Leal-Arcas & Andrew Filis, Legal Aspects of the Promotion of Renewable Energy within EU and in Relation
to the EU’s Obligation in the WTO, 5(1) RELP 3-25 (2014).
9 Id.
10 Directive 2009/28/EC, Art. 3(1).
11 Directive 2009/28/EC, Art. 3(4).
country was taxed at a flat rate with no differentiation between electricity produced from renewable
and non-conventional energy sources. This disparity of treatment was held to be discriminatory.
It is thus not all roses and no thorns as member states have been struggling internally to
meet their energy obligations under directive 2009/28/EC with domestic policies and regulations
that have been called to question from time to time.

Conclusion
Both India and European Union have been determined to lessen their dependency on
non-conventional energy sources by the mid of the 21 st century and have put policies, action plans
and legislations in place in addition to signing various environmental accords and protocols. What
stands out is the method of execution and the challenges faced. While India has been able to come
far and plan far ahead there are infrastructural and financial challenges in making the country
largely dependent on renewable sources of energy. Whereas for the European Union, while the
collective has shown signs of progress, there is also friction among the member states with regards
to domestic laws that favour their domestic interests and violate the principle of internal market
that is the core basis of the European Union. With so many member states, it’s harder for EU to
ensure a uniform resolution although it gains from the fact that nearly all members are developed
countries and have little to no infrastructure related challenges in switching to the renewable
sources of energy.