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(EU) EU/CLIMATE CHANGE: Commission unveils energy/climate package in five legislative proposals to engage Europe on road to low carbon economy Brussels, 23/01/2008 (Agence Europe) - On Wednesday 23 January, the European Commission presented the packet of concrete measures it has been preparing for months. This has seen some bitter negotiations with member states, in an effort to translate them into texts that are as binding as the objectives of the European Council of March 2007 on energy and climate (EUROPE 9583 and 9581).

It embarked upon a real balancing act to respond to the urgent need of providing an effective response to the challenge of climate change and promoting renewable energy and getting the right dose in sharing efforts by each member state, without harming European competitiveness. The Commission was put under much pressure, which is testimony to the complexity of the stakes at play. The cost/efficiency relationship and the principle of equity as a guarantee to fairly distribute proportional efforts to be made by member states, guided the elaboration of the package, consisting of five proposals whose architecture and details were presented to the press on 23 January. The European Parliament got a taster of it at the special plenary session the same day (EUROPE will be returning to it).

The president of the Commission, José Manuel Barroso said that this involved, “the most complete package of measures in the world”, which would provide the EU with tools to reduce the 1990 (reference year for Kyoto Protocol) level of its emissions by 20% by 2020 - multilateral objective on which the EU made a firm commitment and which it is prepared to increase to -30% if an international agreement can be concluded before the end of 2009 on a global system for post-2012, involving efforts comparable to those of other industrialised countries. At the same time, the package gives the EU the means to increase the renewable energies share to 20% by 2020, including 10% for sustainable biofuels (see other article) and to now examine toll and carbon storage technology development and to have updated guidelines to frame state aid for environmental protection (see other article). Mr Barroso said that the objective of developing the global carbons market was at the heart of their proposal to establish a world carbon price. He highlighted the opportunities to European by way of these “ambitious measures in terms of innovative investments that had potential for growth and jobs” but which were also attainable. Barroso recognised that although implementation had a cost, this should not go over 0.5% of European GDP a year by 2020. he added that this should be compared to the cost of doing nothing, which the Stern report put at between 5 and 20% of annual GDP.

Stavros Dimas, the Commissioner for the environment said that he was very happy that the measures, “still unimaginable three years ago” had been adopted and which strengthen the EU's position in international negotiations for a global agreement on the post-2012 regime. Pre-empting criticism from all those who, following the line of the Greens at the Parliament and environmental NGOs, deplore the fact that the EU is at this stage satisfied with the low level unilateral objective, Dimas explained, that they would unilaterally reduce EU emission by 20% but there was a trigger mechanism in their proposals to adjust the mechanism to -30% if it is concluded internationally. The Commission said that the revised emissions trading system was a key instrument to reduce greenhouse gas emissions and would serve as a model to other countries to elaborate comparable systems. Dimas was also convinced that tolls and carbon storage would prove absolutely necessary in the future, especially for reducing global emission by 2050 by half.

The Commission's proposals aim to set up a legal framework to guarantee the safe and ecological practice of tolls and carbon stocking in geological mines under the sea. It also seeks to encourage member states to develop the potential in this technique and in pilot projects.

Revision of the Community emissions trading system (ETS) proposed by the Commission for the third period of trading beginning 2013, aims to improve environmental and economic efficiency in an instrument that is well developed (ETS transactions in 2006 represented more than 80% of the monetary value of carbon trading on the world market and more than 60% of their total volume) but efficiency has been undermined by the over-allocation of quotas practised by member states over the first experimental period (2005-07) and the subsequent collapse in carbon prices on the market.

National ceilings for quota allocation will be replaced by a European ceiling which will allow a 21% reduction in emissions by 2020, compared with 2005, the only year for which the EU has verified data on the real emissions of all member states. In 2005, the EU stood at -6% of emissions (compared with 1990). A further 14% reduction on 2005, therefore, will be needed.

Currently limited only to CO2, the ETS will be extended to include the six greenhouse gases covered by the Kyoto Protocol/ Methane (CH4), nitric oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).

The Commission also proposes to extend the scope of the scheme (which currently covers 10,000 major industrial installations including electric power plants, refineries, steel plants, paper mills, chemical plants) to all activities, such as aviation, the emissions of which can be monitored, reported and verified reliably. Small industrial installations emitting less than 10,000 tonnes of CO2, will be exempt from the system, in order to limit the administrative burden.

The Commission's desire to put an end to free “pollution permits” by putting them up for auction from 2013 is another major innovation. These auctions could generate between €25 and 50 billion per year, the Commission estimates. Member states will be encouraged to use this revenue wisely, by investing in R&D or in innovative technologies (such as renewable energy, carbon capture and geological storage) which will help the EU to move towards being an environmentally friendly economy. The Commission also wants to encourage member states to invest a proportion of the revenue in technology transfer towards developing countries.

The electricity sector, which is responsible for most of the EU's emissions, will have to pay for its permits from 2013. For the other sectors, such as aviation, the proportion of the quotas put up for auction will increase gradually reaching 100% in 2020.

Sensitive to the arguments of the industries which are heavy users of energy (such as steel making, the petrochemical industry, the production of ammonia and nitric acid), which threatened to relocate if they have to pay the cost of competition from third countries which do not have the same constraints, the Commission finally gave itself the room for manoeuvre to leave the decision until 2011 on what will happen in 2013 to energy intensive industries facing strong international competition , depending on whether or not an international agreement has been reached creating fair competition conditions at global level.

If there were to be no agreement, the Commission reserves the right to act. There are three options: the free allocation of all quotas; international sectoral agreements on emissions reduction; or the inclusion of similar imports in the ETS - a form of carbon import tax.

“We have various options for the industries which are heavy consumers of energy if there is no agreement on post-2012, but our aim is to get an international agreement. We will do all in our power to achieve this. One of the elements of this international agreement will be precisely how to deal with energy intensive sectors,” said Commissioner Stavros Dimas. He said that “free allocations should not prevent us from achieving our ceiling”, which will remain a 21% in emissions by 2020.

On how efforts are to be shared for all the sectors not covered by the ETS, the Commission proposes that sectors like transport, buildings, agriculture and waste, which currently are the responsibility of national governments, should also have a larger share in the collective effort by working to reduce their emissions by 10% compared with 2005 levels.

The objective is set out in ceilings for each member state, as a function of its GDP per inhabitant. There will be a range of effort from -20% to +20%. Here are the figures proposed: Austria: -16%; Belgium: -16%; Bulgaria: +20%; Cyprus: -5%; the Czech Republic: +9%; Denmark: -20%; Estonia: +11%; Finland: -16%; France: -14%; Greece: -4%; Hungary: +10%; Ireland: -1%; Italy: -13%; Latvia: +17%; Lithuania: +15%; Luxemburg: -1%; Malta: +5%; the Netherlands: -16%; Poland: +14%; Portugal: +1%; Romania: +19%; Slovakia: +13%; Slovenia: +4%; Spain: -10%; Sweden: -17%; the United Kingdom: -16%. If, as the EU hopes, there is an international agreement requiring the EU to set a 30% reduction in emissions by 2020, national ceilings will be amended. The European Commission recommends the increased use of market instruments such as the clean development mechanism (CDM) and joint implementation, giving the right to emissions credits against technology transfer to developing countries or investment in third countries with economies on transition. (A.N.)


(EU) EU/ENERGY: directive will implement objectives on renewable energy set by European Council in 2007 by 2020
Brussels, 18/01/2008 (Agence Europe) - As part of its “energy and climate” package which brings together measures to combat global warming (see other news item), the European Commission proposed a directive on Wednesday 23 January to implement the objectives on renewable energy adopted by the European Council of March 2007 at Community level (EUROPE 9383).

Guiding principles. In its legislative proposal, the Commission sets national objectives for each member state which will combine to achieve an overall binding objective of 20% (of total primary consumption) of the EU's energy mix to come from renewable sources by 2020. This figure of 20% compares to a share of the EU's energy mix in 2005 of 8.5% from renewable sources. Three sectors are concerned: electricity, heating/refrigeration and transport. For the transport sector, each member state will be assigned a minimum binding objective of 10% of the overall consumption of petrol and diesel to come from biofuels by 2020. This figure compares to the non-binding objective of 5.75% by 2010 set in the current directive on biofuels which, generally speaking, will not be adhered to.

Although the draft directive on the promotion and use of renewable energy sets a series of gradual overall objectives for 2012, 2014, 2016 and 2018 (not for biofuels), the member states will retain the ability to decide how to spread their national efforts across the three sectors in order to achieve the national objectives. Each member state will therefore be able to choose the methods which are best adapted to the national situation and potential. The member states will also have the possibility to achieve their objectives by supporting the development of renewable energy in other member states and third countries through the creation of a transferable guarantee of origin scheme: instead of developing domestic renewable energy sources, member states could buy guarantees of origin (certificates proving the renewable source of energy) from other member states where the production of renewable energy is less problematic.

Finally, the directive includes provisions designed to eliminate obstacles to the growth of renewable energy, in particular by simplifying the administrative procedures for new developments in this area, and encouraging the development of improved sources of renewable energy (setting ecological viability standards for biofuels, for example).

The member states would have to transpose the legislation at national level and submit their implementation plans by 31 March 2010 at the latest. (E.H.)

Method used to calculate the objectives and efforts for each member state. In order to achieve the overall objective of 20% of energy from renewable sources, the Commission has attempted to distribute action across the member states as fairly as possible, using a 5 step approach (see also EUROPE 9583): - the share of renewable energy in the EU's energy mix in 2005 (base year for all calculations in the energy and climate package) was modulated to reflect the starting point at national level and efforts already made by member states that achieved an increase in renewable energy of more than 2% between 2001 and 2005; - for each member state 5.75% is added to the modulated 2005 renewable energy share; - the remaining effort (0.16 tonnes of oil equivalent for every individual living in the EU) is weighted by a GDP per capita index to reflect different levels of wealth from state to state, then multiplied by the population of the member state; - these two elements are added together to obtain the complete renewable energy share of total final energy consumption in 2020; - finally, an overall cap (50%) setting a limit for the maximum effort demanded per member state (in reality this is only applied to Sweden, which is assigned an objective of 49%). At the same time, as seen above, the creation of a transferable guarantee of origin scheme should allow the member states to achieve their objectives in the most cost-effective manner possible.

The efforts demanded per member state are as follows: Austria (34% of the national energy mix from renewable energy in 2020); Belgium (13%); Bulgaria (16%); Cyprus (13%); Czech Republic (13%); Denmark (30%); Estonia (25%); Finland (38%); France (23%); Germany (18%); Greece (18%); Hungary (13%); Italy (17%); Ireland (16%); Latvia (42%); Lithuania (23%); Luxembourg (11%); Malta (10%); Netherlands (14%); Poland (15%); Portugal (31%); Romania (24%); Slovakia (14%); Slovenia (25%); Spain (20%); Sweden (49%); United Kingdom (15%). For comparison, in 2005 the share of the national energy mixes from renewable energy ranged from 0% in Malta to 39.8% in Sweden, with 1.3% in the UK, 2.2% in Belgium, 5.2% in Italy, 5.8% in Germany, 7.2% in Poland, 8.7% in Spain, 10.3% in France and 28.5% in Finland.

Environmental sustainability criteria for biofuels. The 10% target for biofuels for transport was fixed at the same level for all member states in order to ensure consistency in fuel specification and availability destined for transport use. Member states that do not have the necessary resources to produce biofuels for transport “may easily procure such fuels elsewhere”, the Commission said. It added that, although it is technically possible for the EU to meet its biofuel needs through domestic production alone, it is both plausible and desirable that, in reality, such needs are met using not only internal EU production but also imports.

Although the Commission considers that biofuels are an excellent solution to the rise in emissions from transport and that most biofuels currently consumed in the EU are produced in an environmentally sustainable manner, it wished to take account in its proposal of the “legitimate concerns” voiced about the sustainable nature of biofuel production. Its draft text therefore sets out strict environmental sustainability criteria to ensure that biofuels taken into account for achieving the 10% objective for each member state will be compatible with sustainable development and will not compromise the EU's overall environmental objectives. In order to be counted for achieving the objective, biofuels should respect a minimum 35% threshold of CO2 emissions savings compared to traditional fuels. This threshold was preferred to the 50% threshold requested by members of the Commission who expressed the most reservations about “green” fuels. Furthermore, biofuels should not be produced by growing raw materials on land that has hitherto been used to stock carbon or safeguard natural diversity (natural forests, nature conservation areas, wetlands). In 2012, the Commission will study the possibility of extending this system to other forms of bioenergy.

With regards imports, the Commission suggests giving its endorsement to agreements with third countries able to guarantee that the biofuels they produce come from crops grown in full respect of the environmental criteria fixed for Community production.

Economic arguments. The Commission does not fail to justify its strategy in favour of renewable energy sources. Given the impact that renewables have on climate change, energy supply security and long-term economic use, the many advantages of renewable energy sources are broadly recognised, the Commission stresses. An analysis carried out by its services ensures that the achievement of EU objectives for renewables must allow: - reduction of CO2 emissions by way of 600-900 million tonnes annually; - reduction of fossil fuel consumption (largely imported) by way of 200-300 million tonnes annually; - and the relaunching of high tech industry, new economic perspectives and job creation. If the overall cost of its plan is assessed at between €13 and 18 billion annually, the Commission nonetheless considers that investment made will, in time, allow the price of green technology to come down. Also, the certification system allowing investment to be directed towards places where the most profitable renewable energy is produced should ensure savings of €1.8 billion compared to the announced cost.

The Commission takes the view that renewable energies can be unquestionably justified from an economic point of view. They are an economically sustainable alternative solution to hydrocarbons given the surge in oil prices. Also, as biofuels are increasingly used, the EU can expect their cost to fall over time, all the more as a considerable fall has already been registered in recent years. In 2006, investment in green energies increased by 43% worldwide and the commercial proceeds of wind power and solar power, biofuels and fuel cells is expected to reach €150 billion in 2016. The use of renewable energy sources also promotes the use of local and regional labour forces. The renewables sector currently represents a turnover of €30 billion and employs nearly 350,000 persons in the EU. Employment possibilities are plentiful, not only in the high tech manufacturing industries (photovoltaic components) but also in the sector for maintenance of wind power plants or in the field of agricultural biomass. Renewables can also be justified for being environmentally friendly. Energy from fossil fuels has an impact on the environment at all stages of extraction, production, transport and final use. Renewables will allow such adverse effects to be at least alleviated. Also, the EU may find it difficult to reach its targets for reduction of greenhouse gas emissions without significantly increasing the share of renewables in its energy mix. Finally, renewables can be justified from the point of view of energy supply security. While the EU's dependency on a limited number of energy sources (gas and oil), which are becoming increasingly costly, becomes a cause for concern, by producing most of the renewables that it consumes on its own territory, the EU will be less vulnerable to interruptions in supplies and will be able to attenuate the increases in fuel prices. (E.H.)