By Jennifer Kho

The European Union on Friday set binding targets that require all member nations to generate 20 percent of their electricity from renewable sources by 2020. The EU also mandated that member states replace 10 percent of their transportation fuels with biofuels within the same time frame.

The targets were introduced as part of a EU directive that analysts predicted will provide a significant boost to companies developing clean-energy technologies. As more individual states consider so-called renewable energy standards in the United States, the EU targets also could be the harbinger of more such standards throughout the world.

United States

“This will significantly stimulate the market,” said John Balbach, a managing partner at the Cleantech Venture Network. “It sends a very strong signal of long-term and consistent policy direction, and long-term and consistent policies are what are needed to address the market.”

That’s because long-term targets like the EU’s will help assure investors that early-stage technologies will have a market, said Michael Liebreich, CEO of London-based research firm New Energy Finance.

The EU also agreed to reduce greenhouse-gas emissions down to 20 percent below 1990 levels by that time—and to reduce emissions by 30 percent if other countries agree to the same goal. Member states also agreed to increase energy efficiency to save 20 percent of energy consumption compared to 2020 projections.

But renewable-energy standards are not accepted everywhere. The United States has no federal standards, for instance, but 21 states and WashingtonD.C. have adopted their own targets. Earlier this month, Minnesota set a goal of getting 25 percent of its electricity from renewables by 2025, and states such as Oregon and Kansas are considering standards as well.

MinnesotaKansas

Opponents say such standards will raise the price of electricity for consumers, a fact that is likely to spark fierce debates over the costs of renewable energy, particularly in the United States where consumer costs get more scrutiny than in Europe.

Europe

But politicians seem to like renewable-energy standards and cleantech proponents expect to see more of them.

“It’s going to take a lot of work to get to these targets, but I think they are becoming less surprising,” said Ron Pernick, a principal at research firm Clean Edge.