EU issues 2030 energy and climate policy proposals

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The European Commission has published its proposals for an energy and climate policy framework for 2030, setting goals for “a competitive, secure and low-carbon EU economy”. They include a 40% reduction in greenhouse gas (GHG) emissions below the 1990 level, an EU-wide binding target for renewable energy of at least 27%, and a mechanism to improve the robustness of the EU emissions trading system (ETS).

The framework builds on the existing climate and energy package of targets for 2020 as well as the Commission’s 2050 roadmaps for energy and for a low-carbon economy. These documents reflect the EU's goal of reducing greenhouse gas emissions by 80-95% below 1990 levels by 2050.

Thumbs up from the gas industry: Significantly, the proposals have been described as “a step in the right direction” by Eurogas, a trade association representing the interests of European gas companies. Secretary General Beate Raabe said: “Eurogas welcomes today’s proposals by the Commission. If well implemented, they can enable the transition to a low-carbon energy system that is both competitive and secure, thanks to a harmonised, market-based approach.

“The proposed 40% reduction in GHG emissions by 2030, compared with 1990, has been one of Eurogas’s key policy asks. Of course, for EU action to be successful it should be part of a global effort. The 2030 framework should determine the negotiating position of the EU for a 2015 global climate agreement.”

Launching the new policy framework on the 22nd of January – alongside Energy Commissioner Günther Oettinger and Connie Hedegaard, Commissioner for Climate Action –  European Commission President José Manuel Barroso said:

"Climate action is central for the future of our planet, while a truly European energy policy is key for our competitiveness. Today's package proves that tackling the two issues simultaneously is not contradictory, but mutually reinforcing . . . An ambitious 40% greenhouse reduction target for 2030 is the most cost-effective milestone in our path towards a low-carbon economy. And the renewables target of at least 27% is an important signal: to give stability to investors, boost green jobs and support our security of supply.”

“In spite of all those arguing that nothing ambitious would come out of the Commission today, we did it,” added Hedegaard. “A 40% emissions reduction is the most cost-effective target for the EU and it takes account of our global responsibility. And of course Europe must continue its strong focus on renewables. That is why it matters that the Commission is proposing a binding EU-level target. The details of the framework will now have to be agreed, but the direction for Europe has been set.”

Next step –  the European Council’s spring meeting: The Commission’s Communication setting out the 2030 framework will be debated by the European Council and European Parliament. The European Council is expected to consider the framework at its spring meeting on 20-21 March.

The Communication is accompanied by a legislative proposal for a market stability reserve for the EU emissions trading system (EU ETS) to improve its robustness.

If the proposals become law, the centrepiece target of a 40% emissions reduction below the 1990 level is to be met through domestic measures alone. The annual reduction in the cap on emissions from EU ETS sectors will be increased from 1.74% now to 2.2% after 2020. Emissions from sectors outside the EU ETS will need to be cut by 30% below the 2005 level, and this effort will be shared between member states.

The Commission has “invited” the Council and the European Parliament to agree by the end of 2014 that the EU should pledge the 40% reduction in early 2015 as part of the international negotiations on a new global climate agreement due to be concluded in Paris at the end of 2015.

The EU-wide binding target for renewable energy of at least 27% in 2030 will not be translated into national targets through EU legislation, “leaving flexibility for member states to transform the energy system in a way that is adapted to national preferences and circumstances”.

Reform of the ETS: The Commission proposes to establish a market stability reserve at the beginning of the next ETS trading period in 2021. The reserve would both address the surplus of emission allowances that has built up in recent years and improve the system's resilience by automatically adjusting the supply of allowances to be auctioned. The creation of such a reserve would be in addition to the recently agreed delay in the auctioning of 900 million allowances until 2019-2020 – a policy known as “back-loading”.

The Communication setting out the 2030 framework is accompanied by a report on energy prices and costs, which assesses the key drivers and compares EU prices with those of its main trading partners. Energy prices have risen in nearly every member state since 2008 – mainly because of taxes and levies, but also due to higher network costs.

The comparison with international partners highlights rising price differentials, notably with US gas prices – which could undermine Europe's competitiveness, particularly for energy intensive industries.