The EU ''energy-climate'' package
The ultimate objective of the United Nations Framework Convention on Climate Change [see section 16.3.4] is to stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. In order to meet that objective, the overall global annual mean surface temperature increase should not exceed 2°C above pre-industrial levels and, therefore, global emissions of greenhouse gases must be reduced gradually by 2020. This implies increasing efforts of the European Union, the quick involvement of developed countries and encouraging the participation of developing countries in the emission reduction process.
As far as the EU is concerned, the European Council, on 12 December 2008 (together with the European recovery plan), and the European Parliament, on 17 December 2008, approved the so called ''energy-climate'' package of proposals of the European Commission. This package is also called the ''20-20-20 plan'' on account of the EU's energy and climate targets for the year 2020: a 20% reduction in greenhouse gas emissions, a 20% improvement in energy efficiency, and a 20% share for renewables in the EU energy mix. The package ensures the strict implementation of the unconditional commitment to reduce greenhouse emissions by 20% by 2020 and to reduce them by 30% if the developed countries make a comparable commitment and the developing countries make fitting, yet precise and verifiable, commitments.
The energy-climate package embodies the EU policies of reducing green-house gas emissions, achieving sustainable development, ensuring energy security and realising the Lisbon Strategy for innovation. The legislative package includes:
1. a directive improving and extending the greenhouse gas emission allowance trading system of the Community;
2. a decision on the effort of Member States to reduce their greenhouse gas emissions;
3. a directive on the promotion of the use of energy from renewable sources;
4. a directive on the geological storage of carbon dioxide;
5. a regulation setting emission performance standards for new passenger cars; and
6. a directive on quality specification of petrol, diesel and gas-oil.
1. Improvement of the European Emission Trading System
On 1 January 2005, the European Emission Trading System (EU ETS) started operation on the basis of Directive 2003/87 [see section 16.3.4]. The aim of the EU ETS is to help EU Member States achieve their commitments to limit or reduce greenhouse gas emissions in a cost-effective way. The EU ETS is a 'cap and trade' system, that is to say it caps (puts a ceiling on) the overall level of emissions allowed but, within that limit, allows participants in the system to buy and sell allowances as they require.
The amended directive sets the goal, for the period beyond 2012, to strengthen, expand and improve the functioning of the ETS as one of the most important and cost-effective tools for achieving the EU's target for reducing greenhouse gas emissions. The main changes brought about by the amendment of the directive are the following:
· One EU-wide cap on the number of emission allowances will replace 27 national allocation caps (NAPS).
· The EU annual cap will decrease along a linear trend line, leading to the 20% overall reduction of greenhouse gases, in 2020, compared to 1990.
· A much larger share of allowances will be auctioned instead of allocated free of charge. The auctioning process should generate significant revenues for Member States, which should help towards the process of adjustment to a low carbon economy.
· Full auctioning will be the rule from 2013 onwards for electricity generators, which represent a large part of CO2 emissions. In other sectors, allocations for free will be phased out progressively from 2013, starting at 20% auctioning in 2013, increasing to 70% auctioning in 2020 with a view to reaching 100% in 2027.
· At least 20% of the proceeds from the auctioning of allowances should be used to reduce greenhouse gas emissions, to adapt to the impacts of climate change, to develop renewable energies, to increase energy efficiency and to develop the geological storage of greenhouse gases.
· Harmonised rules governing free allocation will be introduced, ensuring as far as possible that the allocation promotes carbon-efficient technologies.
· In a spirit of solidarity, 10% of the rights to auction allowances will be redistributed from the Member States with high per capita income to those with low per capita income in order to strengthen the financial capacity of the latter to invest in climate friendly technologies and help them adapt to the effects of climate change.
· The scope of the ETS will be extended. Now the ETS covers only carbon dioxide emissions from power stations and other combustion plants. As from 2013, the scope of the ETS will be extended to CO2 emissions from petrochemicals, ammonia and aluminium and to more gases. As of 2012, aviation will also be included in the EU ETS.
· Member States will be allowed to exclude from the scope of the system small installations emitting less than 10 000 tonnes of CO2, provided equivalent measures are in place to ensure their adequate contribution to reduction efforts.
· Member States can achieve part of their emission reduction commitments by investing in emission-saving projects in developing countries, through the Clean Development Mechanism (CDM) recognised by the Kyoto Protocol.
2. Sharing the effort to reduce greenhouse gas emissions
A new Decision determines the contribution of Member States to meeting the Community's greenhouse gas emission reduction commitment from 2013 to 2020 for greenhouse gas emissions from sources outside the European Emission Trading System (EU ETS), i.e. sources not covered under Directive 2003/87, notably buildings, transport, agriculture, waste and industrial plants falling under the threshold for inclusion in the ETS. These sources currently account for about 60% of all EU greenhouse gas emissions. The target for these sectors is a 10% reduction in emissions between 2013 and 2020 from 2005 levels, with specific targets for each Member State. Some of this reduction will be driven by EU measures - like tougher standards on CO2 emissions from cars and fuel, and EU-wide rules to promote energy efficiency - but otherwise Member States will be free to determine where to concentrate their efforts, and what measures to bring into play to leverage change. Member States will also have access to the Clean Development Mechanism (CDM) credits under Article 12 of the Kyoto Protocol.
Member State reduction efforts are based on the principle of solidarity. Thus, Member States that currently have a relatively low per capita GDP and thus high GDP growth expectations may increase their greenhouse emissions compared to 2005, while taking measures to limit the growth of their emissions.
3. Promotion of energy from renewable sources
Directive 2001/77 on the promotion of electricity produced from renewable energy sources in the internal market sets a 21% indicative share of electricity produced from renewable energy sources in total Community electricity consumption by 2010; but with current policies and efforts in place, it can be expected that only a share of 19% will be reached by 2010 [see section 19.3.5]. Directive 2003/30 on the promotion of the use of biofuels or other renewable fuels for transport sets a target of 5.75% of biofuels of all petrol and diesel for transport placed on the market by 31 December 2010, but current expectations are for a share of about 4.2%.
The proposed Directive sets mandatory targets according to which the share of renewable energy in the EU final energy consumption would reach at least 20% by 2020, and establishes national overall targets for each Member State. The overall approach is for Member States to retain discretion as to the mix of measures in reaching their national target. However, each Member State should achieve at least a 10% share of renewable energy (primarily biofuels) in the transport sector by 2020, because biofuels tackle the oil dependence of the transport sector and, due to their production costs, they would hardly be developed without a specific requirement. However, in a world first, the directive fixes biofuels sustainability criteria to ensure that that they have no negative environmental impact.
The proposed directive translates the overall EU 20% target into individual targets for each Member State, with due regard to a fair and adequate allocation taking account of different national Gross Domestic Products, starting points and potentials, including the existing level of renewable energies and energy mix. By contrast, the 10% target for renewable energy in transport is set at the same level for each Member State in order to ensure consistency in transport fuel specifications and availability, although it is both likely and desirable that the target will be met through a combination of domestic production and imports. The main purpose of binding targets is to provide the business community with the long term stability it needs to make rational investment decisions in the renewable energy sector.
4. The geological storage of carbon dioxide
In the context of the global reduction of carbon dioxide (CO2) emissions of 50% by 2050, all mitigation options must be harnessed, among them the carbon dioxide capture and storage, or CCS. The CCS includes the capture of CO2 from industrial installations, its transport to a storage site and its injection into a suitable geological formation for the purposes of permanent storage.
At Community level, a number of legislative instruments are already in place to manage some of the environmental risks of CCS. Council Directive 96/61 (codified version 2008/1) concerning integrated pollution prevention and control for certain industrial activities is suitable for regulating the risks of CO2 capture and geological storage from installations covered by that Directive [see section 16.3]. Council Directive 85/337 (consolidated version 25.06.2003) on the assessment of the effects of certain public and private projects on the environment should be applied to the capture and transport of CO2 streams for the purposes of geological storage [see section 16.2.2].
The proposed Directive establishes a legal framework for the geological storage of CO2 in such a way as to prevent or reduce as far as possible negative effects on the environment and any resulting risk to human health. CCS shall apply to the geological storage of CO2 on the territory of the Member States, their exclusive economic zones and on their continental shelves.
Member States retain the right to determine the areas within their territory from which storage sites may be selected, which present no significant risk of leakage for the indefinite future. The storage permit is the core instrument to ensure that the substantial requirements of the Directive are met and that geological storage hence takes place in an environmentally safe way. All draft storage permits will be submitted to review at Community level and all storage sites will be subject to monitoring to assess whether injected CO2 is behaving as expected and whether any identified leakage is damaging the environment or human health.
5. Reducing CO2 emissions from passenger cars
Passenger car use accounts for about 12% of overall EU emissions of carbon dioxide (CO2), the main greenhouse gas. Improvements in vehicle motor technology, in particular fuel efficiency, have led to a 12.4% fuel efficiency improvement between 1995 and 2004 [see section 16.3.4]. However, improvements in fuel efficiency have been offset mainly by the increase in demand for transport and vehicle size and, thus, the CO2 emissions from road transport have increased by 26%. Whereas the present objective of average emissions from the new car fleet is 120 g CO2/km, the new objective is to limit the average CO2 emissions from the new car fleet in the Community to 130g CO2/km by 2012.
The new Regulation aims to achieve this objective by creating incentives for the car industry to invest in new technologies and by envisaging penalties if it does not. Thus, the Regulation actively promotes eco-innovation and technological developments and, thus, the competitiveness of the European industry and the creation of more high-quality jobs.
The proposal sets mandatory targets for the specific emissions of CO2 of passenger cars from 2012 onwards. The targets will apply to the average specific emissions of CO2 in g/km for new passenger cars for each manufacturer which are registered in the EU in each calendar year. Member States will be obliged to collect data on the new cars registered in their territory and to report this data to the Commission for the purposes of assessing compliance with the targets. If a manufacturer fails to meet its target, it will be required to pay an excess emissions premium in respect of each calendar year from 2012 onwards. The excess emissions penalty will be 20 euros for emissions in 2012, 35 euros for emissions in 2013, 60 euros for emissions in 2014 and 95 euros for emissions in 2015 and each subsequent year.
6. Improving fuel quality
The combustion of road transport fuel is responsible for around 20% of EU Greenhouse Gas (GHG) emissions. One aspect of greenhouse gas emissions from transport has been tackled through the Community policy on CO2 and cars. Directive 98/70 established minimum specifications for petrol and diesel fuels for use in road and non-road mobile applications [see section 16.3.4].
In view of the EU's ambition to further reduce greenhouse gas emissions and the important role that road transport emissions play, the new directive provides a mechanism requiring fuel suppliers to report the life-cycle greenhouse gas emissions of the fuel that they supply and to reduce those emissions by a fixed amount per year from 2010 onwards through the decarbonisation of transport fuel.
The main changes proposed to Directive 98/70 are:
· The mandatory date for a maximum of 10ppm sulphur in diesel is confirmed as 2009, thus facilitating the introduction of other pollutant control equipment and providing certainty to industry.
· The maximum poly aromatic hydrocarbon content in diesel will be reduced to 8% from 2009.
· The maximum sulphur content in non-road gas-oil will be reduced from 1000ppm to 10ppm for land based uses and from 1000ppm to 300ppm for inland waterways.
· To enable a higher volume of biofuels to be used in petrol, a separate petrol blend is established with higher permitted oxygenate content (including up to 10% ethanol).
· A mandatory monitoring of lifecycle greenhouse gases is introduced from 2009. From 2011 these emissions must be reduced by 1% per year, thus stimulating vehicle efficiency and further development of low carbon fuels.
Some critics say that the energy-climate package comes with exemptions, to avoid hurting European industries. It is true that, in order to cushion the impact on eastern European countries, notably Poland - highly dependent on coal - the EU's emissions trading scheme will subsidise the modernisation of their power sectors. But those countries power sectors will pay for a portion of their emissions quotas starting in 2013, rising to 100 percent in 2020. It is also true that Britain secured more funding to research burying carbon in old gas fields. But, in general, national economic stimulus plans totalling 200 billion euros got the green light, some of that from EU funds, plus five billion for the car sector. Greenpeace and other environmental associations say the EU has betrayed its ambitions. Others, notably chemical and other business organisations, say that strong CO2 reduction targets that have not been adopted by other major emitting nations will weaken the European industry's competitiveness within the global business environment without achieving effective environmental benefits.
The truth is that the European Union is the world's first major economy to adopt a precise and binding commitment to reduce greenhouse gas emissions by 2020. The EU has thus proved its capacity to achieve ambitious objectives on an issue that is critical for the future of the planet and, this, in a time of tremendous economic crisis. The energy-climate package represents a ''green new deal", which will enhance the competitiveness of EU industry in an increasingly carbon-constrained world. Moving to a low carbon economy will encourage innovation, provide new business opportunities and create new green jobs.
At least the EU can claim a clear negotiating position. It can tell other major polluters, the US first: "you can do it as well". While the European Union is leading the fight against climate change, it hopes that the other developed economies and the major emerging economies will, in turn, adopt precise objectives to be achieved by 2020, along with operational roadmaps, so that a fitting global agreement can be reached, in 2009, in Copenhagen.
Discuss this theme
- 4 January 2009
The package is made of most by directives, which means that the measures it contains have to be implemented by the Member States and I doubt that many will implement them, under the influence of strong pressure groups.
You are probably right. There will be strong business groups, which will exert pressure on governments to delay the implementation of the climate saving measures. But, on the other side, there will be environmental organisations and other pressure groups, which are becoming quite popular and will press for the execution of the engagements of the Member States; and at the end of the line, there will be the European Commission and the Court of Justice, which will force governments to take the measures agreed at European level [see section 16.2.3].
- 9 January 2009
Maybe renewable enrgies would also lessen our dependence from Russian oil and gaz. But this would take many years and what do would do meantime? Maybe Americans were right to push for other pipelines out of Russia and Ukraine.
- 11 January 2009
Thank you Europedia! I had searched in vain in the Europa site of the Commission to find the actual texts of the energy-climate package; and here I found them with a click. This site is really informative and user-friendly for whoever wants to know what is actually happening in Brussels. Please keep up the good work.
- 13 January 2009
Apart from the links to EU legislation, very useful are the bibliographies on the various European policies. I noticed that they have been updated recently and thus the reader can easily find the most recent publications and articles of particular interest to him or her.
- 15 January 2009
Je vois l'intérêt du paquet pour le climat, mais pour l'instant on grelotte à cause du manque de gaz russe et on voit l'UE impuissante à résoudre le conflit russo-ukrainien. Ce n'est pas bon pour l'image de l'UE.
- 19 January 2009
Και εμένα μου φαίνεται ότι πρέπει η Ευρωπαϊκή Ένωση να αποκτήσει μια κοινή πολιτική για τις προμήθειές της σε ενέργεια. Δεν μπορεί 500 εκατομμύρια καταναλωτών να εξαρτώνται από τα καρτέλ των πολυεθνικών εταιρειών και των πετρελαιοπαραγωγών χωρών της Μέσης Ανατολής και της Ασίας. Επιτέλους, ας αποφασίσει η ΕΕ να επιδείξει τη δύναμή της, τουλάχιστον σε ένα νευραλγικό τομέα, όπως είναι η ενέργεια.