How permitting processes are hampering Europe’s energy transition

The complexity and duration of industrial permitting in the EU are considered major obstacles to investing in the EU by 83% of companies, as per a BusinessEurope survey.

Four out of five European companies see response times of public authorities, the complexity of EU and member-state legislation and the lack of coordination between these authorities as among the top challenges encountered in the industrial permitting process.

With that in mind, it is unsurprising that a staggering 81% of European renewable wind capacity is stuck in various permitting stages. That’s the most out of major global economies, surpassing the United States (79%), China (74%) and India (64%) respectively.

Delayed permitting processes pose a major threat to the EU’s emission reduction targets for 2030, which are already being questioned by the public.

It is not uncommon for permitting approvals to take seven to nine years and there are examples of processes exceeding 10 years. These lengthy timelines come at a cost for renewable projects’ developers, reaching 10-35% of the total project value, according to Accenture's analysis.

This can largely be attributed to the unique structure of the EU – a union made up of 27 member states, all with their own distinct legal systems. The complexity of permitting and processing timelines can thus vary significantly – between and within member states, as legal and procedural differences can exist at regional levels too.

It is worth noting that the EU has acknowledged the importance of harmonized permitting processes in its Net Zero Industry Act and has taken steps towards this goal. However, this has not yet been reflected in business sentiment.

The understanding that permitting delays are threatening the EU’s climate ambitions triggered collaboration between the European Commission and private sector players, particularly in the renewable energy sector. In 2023, the partnership resulted in a report analyzing the sources of the key barriers to renewable project development across wind, solar, hydro and geothermal energy.

The recommendations to remove these barriers include but are not limited to, digitalization, the establishment of a one-stop-shop for permitting, centralization of information, streamlined procedures and treating renewable projects as public interest.

These recommendations proved to work. The Danish Energy Agency and Consolidated Environmental Law in the Netherlands are prime examples of establishing digitally enabled single point of contact that centrally manages permitting.

In Ontario, Canada, digitalization and centralization help drive the development of broadband networks. Digitalization, centralization, and accountability have proved crucial in speeding up permitting timelines, as evidenced by Serbia’s successful transformation of construction permitting in 2016, for which the country has been lauded by the World Bank. Serbia recently took a similar approach to permitting in the energy sector based on input from investors.

Despite progress, the EU must do more to secure its position as a global climate leader. Ensuring a successful energy transition in Europe requires the deployment of more diverse technologies. In addition to those already discussed, the European Commission has identified biogas and biomethane, batteries and storage, and hydrogen and carbon capture and storage as critical net-zero technologies.

Whilst the biogas industry has already called for similar recommendations (to wind, solar, hydro and geothermal) to cover its industry, the situation becomes nuanced when assessing the needs for hydrogen and carbon capture and storage permitting.

Besides domestic production and infrastructure permitting, the sourcing and transportation of hydrogen require a global supply chain. This creates requirements for import-export permits for multiple forms of hydrogen (pure but also ammonia and other derivatives).

Blending hydrogen into natural gas grids adds another novel area of permitting and carbon capture and storage, a further layer of complexity, as the underground storage of CO2 requires geological permits like those found in the mining industry. The transportation of CO2 from emitting facilities into storage requires permitting for yet non-existing infrastructure and import-export permits to transport it between EU member states.

New technological advancements in the renewable energy sector will emerge as the energy transition continues. It is important to strategically plan and align technology development with the refinement of Europe’s permitting systems. Planning permitting processes well ahead of these technologies reaching market maturity becomes imperative to assuring their successful scale-up.

An analysis of the existing permitting landscape and the ever-evolving nature of technology reveals five best practices for renewable energy permitting in the European Union.

These practices need to be applied quickly and efficiently. This requires making permitting processes, or at least parts of them, as technology-agnostic as possible within technically achievable boundaries. On the other hand, regular public-private-community collaboration and efficient feedback loops are required to react and adapt to changes in the market swiftly and with the fewest disruptions.

The sequence of best practices, starting with strategic planning, through centralization, standardization and digitalization to public engagement, is still ongoing.

Strategic planning can foster a forward-looking approach to permitting, including emerging renewable technologies. However, it also enables examining the entire energy system in the EU, as those places with the greatest renewable generation potential only sometimes have the highest energy consumption.

Centralization primarily creates a platform for member states to exchange best practices and learn from each other. Standardization is the result of the learning that makes digitalization easier and faster. Finally, public engagement ensures the participation of communities in decision-making and feeds back to future strategies.

In our upcoming report on Private Sector Alignment with the Green Deal targets, to be published at the Annual Meeting in Davos 2025, we will deep-dive into some of these solutions.

There is one inevitable discussion ahead for the EU. The winning levers for efficient permitting are known and efficient permitting is a much-needed enabler of effective energy transition. While respecting the subsidiarity principle, EU-wide consensus on permitting is imperative to meet the climate ambitions.

A central permitting platform with standardized processes integrated into member states decision frameworks can be a catalyst of better permitting, while EU-wide consensus is being reached.

This article also received contributions from Ewa Jaracz, a strategy consultant at Accenture, and Emmy van Enk, a specialist at the World Economic Forum.