According to a survey by BusinessEurope, 83% of companies believe that the complexity and length of EU industrial permitting processes are major obstacles to investment within the EU.
Four out of five European companies cite slow response times from public authorities, the complexity of EU and national legislation, and lack of coordination among these authorities as the primary challenges in the industrial permitting process.
Given this, it is unsurprising that 81% of Europe's wind energy capacity remains stuck in various stages of approval. This percentage is higher than other major global economies, including the U.S. (79%), China (74%), and India (64%).
Undermining EU Climate Goals
The delays in permitting processes seriously threaten the EU's 2030 emissions reduction targets, which are already facing public scrutiny.
It is not uncommon for permitting processes to take 7 to 9 years, with some extending beyond 10 years. According to an analysis by consulting firm Accenture, these lengthy approval processes negatively impact the development of renewable energy projects, consuming between 10% and 35% of a project's total value.
This is primarily due to the EU's unique structure, comprising 27 member states, each with its legal system. As a result, the complexity and length of the permitting process can vary significantly between member states. Even within individual countries, different regions may have varying laws and procedures, leading to approval discrepancies.
Notably, the EU, in its Net-Zero Industry Act, acknowledges the importance of streamlined permitting procedures and has taken steps towards this goal. However, these efforts have yet to be reflected in business sentiment.
Effective Solutions to Permitting Challenges
Recognizing that permitting delays is jeopardizing the EU's climate ambitions, the European Commission has collaborated with the private sector, particularly key players in the renewable energy sector. In 2023, they co-authored a report analyzing the main barriers to developing renewable energy projects, including wind, solar, hydro, and geothermal energy.
Recommendations to overcome these barriers include digitization, one-stop-shop permitting services, centralized information, streamlined procedures, and classifying renewable energy projects as matters of public interest. These recommendations have proven effective in certain cases. The Danish Energy Agency and the Netherlands’ Integrated Environmental Law serve as exemplary models, establishing digital single points of contact for managing permits in a centralized manner.
In Ontario, Canada, digitization and centralization have facilitated broadband network development. Serbia, in 2016, successfully reformed its construction permitting system and received praise from the World Bank, demonstrating that digitization, centralization, and accountability are crucial to accelerating the permitting process. Serbia has recently adopted a similar approach in the energy sector based on investor feedback.
The Complex Permitting Process for Clean Energy
While the EU has made some progress in climate governance, ensuring leadership in this area remains challenging. To achieve its energy transition, Europe must deploy a diverse range of technologies.
In addition to the technologies discussed above, the European Commission has identified biogas and biomethane, battery storage, hydrogen, and carbon capture and storage (CCS) as critical net-zero technologies. The biogas industry has proposed implementing permitting suggestions similar to those for wind, solar, hydro, and geothermal. However, the permitting requirements for hydrogen and CCS are more complex.
Beyond domestic production and infrastructure permits, a global supply chain for procurement and transportation is also needed for hydrogen. This requires import and export licenses for different forms of hydrogen (pure hydrogen, ammonia, and other derivatives). Permits for hydrogen blending into natural gas grids are another new area to address.
Permitting for CCS is even more complicated. Underground CO₂ storage requires various geological permits, similar to those in the mining industry. When transporting CO₂ from emissions facilities to storage sites across EU member states, import and export licenses, along with infrastructure permits (which are yet to be built), are necessary.
Aligning Permitting Systems with Emerging Technologies
As the energy transition continues, new technological advancements in the renewable energy sector will emerge. Strategic planning to continuously improve Europe's permitting systems to align with technological developments is critical. Properly planning permitting processes before new technologies reach market maturity is key to successfully scaling these innovations.
By analyzing current permitting practices and the characteristics of technological advancements, this article proposes five best practices for managing EU renewable energy permits: strategic planning, centralization, standardization, digitization, and public participation.
Strategic planning fosters a forward-looking approach to permitting, including for emerging renewable energy technologies. It also encourages a holistic examination of the EU's entire energy system, as regions with the highest renewable energy potential are often not the regions with the highest energy consumption.
Centralization creates a platform for member states to share best practices and learn from each other. Standardization is the outcome of this exchange, paving the way for the easier adoption of digitization. Finally, public participation ensures that communities play a vital role in future strategic decisions and feedback.
These best practices must be swiftly implemented and executed efficiently. On one hand, where technologically feasible, the permitting process—or at least parts of it—should be decoupled from specific technologies. On the other hand, regular public-private collaboration and an effective feedback loop are essential to quickly respond to and adapt to market changes, minimizing disruptions.
Consensus on Permitting Reform Is Key for the EU
The EU is expected to release a report titled “Private Sector Benchmarks for the Green Deal " at the upcoming 2025 Davos summit. The report will include an in-depth analysis of solutions to improve permitting processes.
A pivotal discussion lies ahead for the EU. However, the means to achieve efficient permitting are already well understood, and a successful energy transition urgently requires a streamlined permitting system. Achieving consensus on permitting reforms among EU member states, in adherence to the subsidiarity principle, is crucial to realizing climate ambitions.
As consensus is reached across EU member states, incorporating a centralized permitting platform with standardized processes into national decision-making frameworks can further accelerate improvements in permitting systems.