Agreement on the European Union Renewable Energy Directive has paved the way for significant expansion of CHP.

The boost is expected to come as part of the economic bloc's plans to achieve a 20% cut in greenhouse gas emissions by 2020, part of the so-called 20:20:20 plan. Despite some concessions, most elements of the legislation were approved.

Under the terms of the Directive, each Member State has a legally binding renewables target for 2020 and is required to have drawn up a National Action Plan (NAP) detailing their proposals to achieve their 2020 targets by June 2010. For all countries, 10% of energy used in transport will have to come from renewables by then. This 10% target will now also include other types of sustainable transport.

Member states will report on progress to the Commission every two years. The EU Commission will have full power to monitor these plans and launch infringement procedures against those not implementing the Directive.

From 2013 an emissions cap will be set at EU level and cut each year to reach a 21% cut in 2020.

Philip Wolfe, director general of the UK Renewable Energy Association said: ‘Spending money on boosting renewable heat, electricity and transport fuel production can help lift us out of recession. We'll be investing this money to reduce our energy costs and protect us against future oil price hikes.'

Commission president José Manuel Barroso said: ‘The EU's climate and energy package is part of the solution both to the climate crisis and to the current economic and financial crisis. It represents a green ‘new deal' which will enhance the competitiveness of EU industry in an increasingly carbon-constrained world.'

The move follows the publication of a new EU Energy Security and Solidarity Action Plan by the European Commission, which among other things, sets out a strategy to increase the contribution CHP makes to Europe's energy supplies.

For the near future, the communication suggests actions to ensure that cogeneration is taken into consideration as an element of the National Energy Efficiency Action Plans. Access to distribution grids for electricity produced from cogeneration should also become easier, the Commission adds.

The Commission plans a thorough evaluation of the 2006 European Action Plan for Energy Efficiency this year.

However, Greenpeace argues that the Commission has downgraded the importance of energy efficiency. Frauke Thies, Greenpeace EU renewables policy campaigner, said: ‘The Commission has yet again missed the chance to take a bold step forward on energy efficiency — the backbone of any secure and sustainable energy supply system. The review of existing efficiency legislation may bring marginal improvements, but the Commission has shieded away from the most obvious and simple solution — to make the EU's 20% efficiency target binding.'