E.On is shifting its focus to renewables, distribution networks and energy efficiency services.

The German energy giant says it’s “radically” altering its business — splitting into two companies with one focused on clean energy and a second, new firm focused on fossil fuel generation and energy trading — in anticipation of “huge forces at play” in the global energy sector and the UK market.

The new set up will be implemented by 2016, the company says.

In late October European Union leaders agreed on a climate and energy package that sets a binding carbon reduction target of “at least” 40 percent by 2030, compared to a 1990 baseline. The deal also commits member states to generating at least 27 percent of energy from renewable sources by 2030. Currently, the EU’s share of renewables is about 14 percent.