It comes as no surprise that Brussels recently conceded that the 2010 renewable energy targets that it set five years ago would not be reached. No doubt, this is due to a number of factors, but one key issue is that the directive under which these targets were given had a number of failings. These failings must be addressed if a successful Europe-wide renewable energy program is to be implemented.

The targets were part of a directive on the promotion of electricity produced from renewable energy sources, which set a 2010 target that 22% of overall electricity consumption in the EU should be from renewable energy sources.

However, the directive is not legally binding and the targets are not only overly ambitious but also suggestive. One cannot forget that nominal energy prices are at their highest and, with the majority of western Europe experiencing economic difficulties, the appetite for structural changes to energy policy is lacking. Additionally, it would be impractical for the accession countries to implement a feasible renewable energy program given that most have a developed nuclear and thermal infrastructure, making any movement away from them impractical.

The renewable energy directive also fails to determine a framework governing access to grid networks. Subsequently, this has led to the development of two different systems - a feed-in tariff system and a quota system - thus making talk of a harmonized European renewable energy system unrealistic.

Germany, for example, has seized the initiative to promote renewable energy through subsidies and legislation, and is now the European leader in renewable energy generation. The UK, in contrast, has embraced a market-based approach, but is likely to miss its target despite having some of the best resources and infrastructure in Europe.

Renewable energy policy is now at a critical conjuncture; compliance to the directive is the responsibility of individual governments, but this can only be achieved by the EU setting uniform, realistic and non-quantifiable objectives. Forcing countries to achieve targets may lead to investment in inefficient projects and eventual state involvement and protection of these projects.

On the other hand, the opportunity exists to create a Europe-wide sustainable renewable energy program that is market-based, transparent and capital efficient. Once consumers are assured of a reliable and cost-effective supply of electricity, and investors confident of competitive returns, the renewable energy industry could be as sustainable as the energy sources themselves.