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Ó Centre for European Studies 2012 This study examines the current state of renewable energy in the European Union (EU). It outlines the evolution of the EU's renewable energy policy, assesses the current status of renewables within Europe's transformation toward a green economy, analyses the challenges that the Union currently faces in this effort and, finally, formulates policy implications. A European policy on renewable energy dates back to the 1997 White Paper, Energy for the Future: Renewable Sources of Energy. But it was not until 2009 that the EU adopted legally binding targets in the form of the current '2020' goals (20 % renewable energy, 20 % increase in energy efficiency, 20 % reduction of greenhouse gas emissions, all by 2020). This study finds that Europe has been progressing towards these goals but that many challenges still lie ahead; the EU needs to do its homework now and to readjust its policies to keep the 2020 goals within reach. Given strong international competition, a great deal of volatility in the relatively young renewables sector and the fact that most alternative energy technologies have not yet achieved price parity vis-à-vis conventional forms of energy production, the EU needs to generate and maintain the general framework conditions under which the eco-industry can grow sustainably. The authors identify the need to mobilise adequate amounts of private investment capital as the most pressing current challenge to this endeavour. New investment forms, sustainable financial products along with greater transparency on the part of the eco-industry are necessary to make available more venture capital, which the industry requires in order to maintain the necessary technological edge. Further, public investment, especially in the R&D sector, remains necessary until green technologies become economically viable on their own. Subsidies and public incentives have helped get the young eco-industry off This is an executive summary of a research paper published by the CES. The full version can be found at www.thinkingeurope.eu.