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EU's emissions reduction mechanisms spotlighted at Brussels Briefing

Date
14 December 2011
EU's emissions reduction mechanisms spotlighted at Brussels Briefing

LONDON: European delegates from political and business interest groups convened at the Dods’ Brussels Briefing last week to discuss issues driving Brussels’ policy agenda, where the spotlight fell firmly on Europe's climate targets.

There was a particular focus on the impacts of Europe’s Emissions Trading System (EU ETS), including a breakout focus session on the system and Europe’s climate targets.

Yvon Slingenberg, Head of Unit “Implementation of the EU ETS” in the Directorate General for Climate Action, declared Europe as a leading voice in carbon emissions reductions, but warned that a lot more will have to be done if we are to limit the effects of global warming to the 2⁰C target agreed on by the Copenhagen Accord

While all European member states of the Kyoto Protocol look set to achieve their legally-binding emissions targets for the 2008-2012 commitment period, it is apparent that more ambitious targets will have to be developed, with energy efficiency identified as an area that needs increased attention in the following commitment period (2013-2020).

Europe’s targets set out in its 2008 Climate and Energy Package, dubbed 20:20:20, are as follows: 

  • 20% absolute greenhouse gas (GHG) emissions reductions based on 1990 levels
  • 20% of energy to be provided by renewable sources
  • 20% increase in energy efficiency   

Roadmap to 2050

Despite these commendable targets, the discussion also highlighted the growing feeling that there is still an ambition gap between current EU policy and the 2⁰C target agreed on by the Copenhagen Accord. In order to forge a cost effective path towards 2050, where the EU aims for an 80% reduction in GHG emissions, further improvements of the legal framework will be necessary.

Energy efficiency was identified as an area where major potential so far remains unexploited. Currently the only non-binding amongst the 20:20:20 targets, the 20% increase in energy efficiency is also the only target on which the region is not likely to deliver, achieving more like 10% on current trajectories. Further ambitious measures must therefore be adopted in the new energy efficiency directive currently under discussion, and a binding target adopted as soon as possible.

Clarity in long term policy is seen as vital in order to encourage investment in low carbon markets. A roadmap to 2050 will include individual projections for sectors such as transport and energy. In addition to this, the EU encourages the development of independent national low carbon growth strategies. 

The post 2020 EU policy framework must be clear and concise in order to send out clear market signals. The 1.74% annual linear reduction in the EU ETS cap is a valid example of where policy foresight will be key, the cap reduction likely necessitating review in view of the 2050 ambition for 80% emissions reductions. 

Due to the historic over-allocation of emission permits, the carbon price within the ETS remains too low to provide adequate price signals for low carbon investment. Aggravated by the current Euro-crisis, it has recently dropped to 7.5 EUR per ton, reducing the momentum for the development of energy efficiency technologies and renewable energy.

The International Energy Agency has warned that significant clean technology investments will have to be made over the next five years if Europe is to avoid lock-in to a non-sustainable path. Fixing the ETS by setting aside parts of the excess permits and tightening the cap in line with Europe’s long-term reduction targets will be a crucial investment signal in this direction. 

While the EU once again showed leadership during the UNFCCC negotiations recently concluded at COP17 in Durban, it is vital that the region remains to be perceived as a quintessential example of strong climate legislation. The EU ETS was the first regional mechanism of its kind, but now has to show ongoing ambition through regulatory modification. 

The persisting impression left by the conference was that there is still much to do. Bridging the ambition gap between policy and the 2⁰C target will need to mainstream and legally bind energy efficiency as an emissions reduction technique, legislate stronger caps and enhanced implementation of climate mechanisms like the EU ETS, and develop an ambitious long term policy frameworks looking beyond 2020.

The Clean Revolution is underway, but Europe will have to prove its continued leadership when it comes to climate legislation. 

See more on energy efficient technologies

Read more about the EU ETS

Written by Samuel Ramsden. 

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