EU Climate Change Policy

1. EU Climate Change Policy Jos Delbeke Director General - DG Climate Action European Commission Leuven, 27.01.2011

2. EU Environmental Policy: a new policy field • 1986/87: Single European Act: • Co-decision Council and EU Parliament • QMV (Qualified Majority Voting) • Today: • Comprehensive set of EU legislation covering air, water, nature, waste • Why European level? • Common problems • Pollution does not respect borders • Internal market (product standards and competitiveness issues)

3. Sustainability Imperative • POPULATION: today 7 billion, 9 billion until 2050 • ENERGY: IEA: 2030 – 40% increase in energy demand • (3/4 fossil fuels) • 2050 > 1000 ppm GHG concentration • WATER: OECD: 2030 – 4 bn people in water stress • FOOD: doubling of production in next 40 years • CITIES: UN: more than half population in cities • 2050: 80% population in cities • TRANSPORT: 2050: 3 bn vehicles (850 m today)

4. Climate change: Science reveals serious problem CO2 in 2050 (BAU) CO2 today CO2 last 600.000 yrs Temp. last 600.000 yrs

5. Kilimanjaro then and now 1912 2000

6. EU global vision: global peak by 2020 and deep cuts by 2050

7. Total CO2 and per capita emissions by major emitter in 2009 Source: J. Olivier and J.A. Peters: No growth in total CO2 emissions in 2009. Netherlands Environment Agency; IEA data for EU-27

8. EU emission reduction objectives for Copenhagen (COP15) For 2020: industrialized countries: 25-40% reductions developing countries: 15-30% below BAU (business as usual forecasts) For 2050: 50-85% reductions globally Comparability of efforts: income, efficiency, population trends, past efforts

9. The Cancún Package • UNFCCC decisions on: • Tropical deforestation (REDD+) • Adaptation • Green Fund • MRV/mitigation • Capacity building • Technology transfer • Market mechanisms • Process on legally binding nature of commitments/actions • Continuation of Kyoto • Actions by “developing countries”

10. Cancún – COP 16 • Legal Outcome • Kyoto Protocol: 2nd Commitment Period • Conditions: AAUs/LULUCF • Other players: US? • Convention: parallel “commitments” (e.g. emerging economies)?

11. Tropical Deforestation (REDD+) • Goal of reducing deforestation • Halving by 2020 • Stopping by 2030 • Three phases: • Readiness • Implementation • Result-based payments (e.g. carbon market) • Link biodiversity/social considerations

12. Mitigation • “Anchoring” the pledge: • From Copenhagen Accord to UNFCCC context • Only a starting point (2°C) • Legally binding • Implementation • For developed countries: • Robust accounting system (transparency) • For developing countries: • Registry: NAMAs seeking support • Encourage LEDS (low emission development strategies) • Collective deviation 15-30% from business as usual

13. MRV • Development and developing: • Improved national communications • Process to develop detailed MRV guidelines next year • I.C.A. • Facilitative • Technical analysis • International dimension

14. Kyoto commitments:The EU is delivering • EU-15 target for 2008-2012: - 8% • EU-15 - 1990-2008: • GHG emissions: - 6.5% • GDP growth: +45% • EU-27 - 1990-2008: • GHG emissions: -11% • GDP growth: +46%

15. Kyoto commitments:The EU is delivering Actual and projected emissions for EU-15

16. Kyoto commitments:The EU is delivering

17. EU decides to reduce CO2 emissions in 2020 by 20% Greenhouse Gas Emissions: • today: -6.5%(compared to 1990/including aviation) • to do: 14% (compared to 2005) Renewable Energy: • today: 8.5% (mainly through large scale hydro and conventional biomass) • to do: 11.5%

18. EU ETS as of 1.1.2005 Emitting CO2 has a price (becomes a cost): cost-effective incentive to use cleaner technology Some 10,000 installations in power and industry face quantitative limits to CO2 emissions (allowances) Covers ±45% of EU emissions Overall cap: 2005: 2.3 bn tonnes 2008: 2.08 bn tonnes 2020: 1.72 bn tonnes - 21% compared to 2005

19. EU ETS: a predictable EU-wide cap beyond 2020 (gradual steps) Starting point: 1974 Mt in 2013 Gradient: -1.74% 2083 Mt/yr 1720 Mt -20% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 • Linear factor to be reviewed by 2025 • Aviation to be included; will change figures correspondingly, but cap not reduced • Disclaimer: all figures are provisional and do not account for new sectors in third period

20. EU ETS: price development

21. EU ETS: Harmonised Allocation Rules Fully harmonised allocation rules Auctioning is default allocation method – for power sector Free allocation (partial or full) on basis of ex-ante benchmark (10% best) for energy-intensive manufacturing sectors

22. EU ETS: International offsets • Certainty and predictability: credits to be used up to 2020 • Quantity restriction (supplementarity: 50% of reduction effort): • minimum 11% of NAP2 allocation • corresponding to roughly 6% of phase 2 and 3 caps • resulting in 1.6 to 1.7 Bt over 2008-20 • Quality: comitology (harmonised approach) to ensure that credits represent real emission reductions • no nuclear and forestry allowed

23. EU ETS: Aviation included as from 2012 Cap: 2012: 97% of 2004-06 emissions From 2013 onwards: 95% Auctioning: 15% as from 2012 Scope: internal, outbound and inbound aviation A third country can take equivalent measures

24. Incentivising CCS and RES projects Carbon price is main incentive for CCS/RES In addition, up to 300 million allowances available until end 2015 for CCS and innovative renewable energy technology demonstration projects (± 4/5 bn €) Projects selected on the basis of objective and transparent criteria, ensuring geographical balance Operators receive support only after demonstrated performance

25. Renewable Energy Directive • Sets mandatory targets per MS for renewable energy shares in 2020 • - 2009: 8,5% of EU’s energy consumption renewable • - 2020: 20% • Reduction of administrative barriers, regulatory stability,and improved access to the electricity grid • Creates a sustainability regime for biofuels • By 2020 every kwh of power out of 3 produced will be from renewable origin

26. 13% 16% 13% 30% 18% 25% 16% 18% 20% 23% 17% 13% 42% 23% 11% 13% 10% 14% 34% 15% 31% 24% 25% 14% 38% 49% 15% Renewable Energy Directive: MS targets BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK RES share in 2020

27. CO2 from cars • Reduction of CO2 from new passenger cars (fleet-wide average): • 2015: 130 g/km (48mpg) • 2020: 95 g/km (65mpg) • 2009: 146g/km (1995: 186g/km) • Taxation of motor fuels: a major driver towards energy-efficient cars (± 50% of price at pump) • Importance of scrappage schemes and CO2 modulation of registration taxes • Being extended to light duty vehicles (VANs)

28. CO2 from cars

29. Energy efficiency of products • Minimum performance requirements of energy-using and energy-related products (Eco-design Directive (2009/125/EC)) • Labelling of energy efficiency class of products (Labelling Directive (92/75/EEC))

30. Energy efficiency of products

31. Energy efficiency of products +/- 140 mio. tonnes of CO2

32. Energy performance of buildings • Minimum energy performance requirements set by Member States: • for all new and existing buildings • for technical building systems and building elements • Commission develops benchmarking methodology to compare the level of ambition • All new buildings will be “nearly zero-energy buildings” at end of 2020

33. Fuel Quality Directive 6% reduction by 2020 of life cycle greenhouse gas emissions per unit of energy from fuel saves 60 million tonnes CO2eq by 2020 How? substitution of fossil fuels by other fuels such as sustainable biofuels (~50% of the target) LPG and CNG (~5% of the target) electric cars (~10% of the target) reducing upstream emissions in and outside of the EU (could be 50% or more of the target)

34. The Effort Sharing Decision Covers ±55% of EU emissions "small emitters", not covered by EU ETS A diverse set of sectors: transport, heating in buildings, services & SME’s, agriculture (N20, CH4), waste (CH4), HFC’s Major differences in cost-effective emission reduction potential (eg. high for some non CO2 emissions and buildings, low in transport) National, regional and local action very important

35. EU long term climate policy targets • EU and Cancun Agreement objective to globally limit climate change to 2ºC • Agreement to develop long term low carbon strategies • European Council has set 2050 targets for EU • October 2009: -80-95% by 2050 compared to 1990 in line with IPCC as target for all industrialised countries and the EU • Commission prepares low-carbon economy roadmap 2050 to be published in the coming months

36. 2050 Low carbon economy roadmap: objectives • Possible pathways for the transition to a low carbon economy for the EU • Achieve EU climate targets • ensure sustainable growth and jobs • make the EU energy secure • Identify practical steps for next years • Contribute to Europe 2020 strategy • Resource efficient Europe flagship initiative

37. 2050 and interim steps • EU -20% target by 2020 is important step, but not fully in line with scientific evidence • IPCC: Industrialised countries -25-40% by 2020 • EU offer to move to 30% if conditions are right • Environment Council October 2010 • the roadmap for a safe and sustainable low-carbon economy by 2050 should also inform the analysis of policy options up to 2020 • May 2010 analysis of options to move beyond 20%, discussed by other EU institutions

38. Cost of -20%/30% revisited

39. Cost of 20-30% revisited • Costs of -20% lower due to: - economic recession - higher energy prices - higher energy efficiency (new baseline for 2020 includes ETS, CO2 from cars, eco-design measures) • Carbon price lower, weaker incentive for innovation: • now: 15 € • 2020: less than 20 € (unused allowances) • Costs of -30% remain substantial: • ETS: target from -21% to -34% • Effort Sharing: target from -10% to -16%