EU Climate

Change Policy Jos Delbeke

Director General - DG Climate Action

European Commission

Leuven, 27.01.2011

1

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) 2

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) 3

Climate change: Science reveals serious problem

CO2 today

CO2 last 600.000 yrs

CO2 in 2050 (BAU)

Temp. last 600.000 yrs

4

Kilimanjaro then and now

1912 2000

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EU global vision: global peak

by 2020 and deep cuts by 2050

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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

Region Gt GHG World share % t GHG/cap

China 8,06 25,8 6,1United States 5,31 17,0 17,2EU 27 3,85 12,3 7,8India 1,67 5,3 1,4Russian Federation 1,57 5,0 11,2Brazil 0,38 1,2 1,9

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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

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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” 9

Cancún – COP 16

• Legal Outcome

• Kyoto Protocol: 2nd Commitment Period• Conditions: AAUs/LULUCF• Other players: US?

• Convention: parallel “commitments” (e.g. emerging economies)?

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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 considerations11

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

12

MRV

• Development and developing:• Improved national communications• Process to develop detailed MRV guidelines

next year

• I.C.A.• Facilitative• Technical analysis• International dimension

13

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% 14

Kyoto commitments:The EU is delivering

Actual and projected emissions for EU-15

3.600

3.800

4.000

4.200

4.400

4.600

4.800

1990 1995 2000 2005 2010

Mt

CO

2 e

q.

EU-15 emissions Kyoto mechanisms use by governmentsEU-15 existing measures Carbon sinksEU-15 Kyoto target Allowance and credit acquisition by EU ETS sectors Business as usual EU-15 additional measures 15

Kyoto commitments:The EU is delivering

Energy Supply

Energy Use

Transport

Industrial Processes

Agriculture

Waste

Solvents & Other

Past change in GHG emissions, 1990-2007

1%-15%

24%-11%-11%

-39%-24%

-50% -40% -30% -20% -10% 0% 10% 20% 30%

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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%

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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 18

-20%

2083 Mt/yr

Gradient: -1.74%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

EU ETS: a predictable EU-wide cap beyond 2020 (gradual

steps)

Starting point: 1974 Mt in 2013

1720 Mt

•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

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0

5

10

15

20

25

30

Jan-

07

Mar

-07

May

-07

Jul-0

7

Sep

-07

Nov

-07

Jan-

08

Mar

-08

May

-08

Jul-0

8

Sep

-08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep

-09

Nov

-09

Jan-

10

Mar

-10

EU

A p

rices

€/t

Source: Point Carbon

EU ETS: price development

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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

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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 allowed22

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

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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

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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 25

49%

13%

16%

13%

30%

18%

25%

16%

18%

20%

23%

17%

13%

42%

23%

11%

13%

14%

34%

15%

31%

24%

25%

14%

38%

15%

10%

RES share in 2020

BEBGCZDKDEEEIEELESFRITCYLVLTLUHUMTNLATPLPTROSISKFISEUK

Renewable Energy Directive: MS targets

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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)

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CO2 from cars

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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))

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Energy efficiency of products

Adopted implementing measures

Date of application

Greenhouse gas emission reductions in 2020 compared to BAU development, mln. tons of CO2 equivalent[Source: “Analysis of impact of efficiency standards on EU GHG emissions” by Ökopol GmbH, 2010]

Electric motors 16.6.2011 ~ 32.1

Televisions 20.8.2010 ~ 8.6

Street & office lighting 13.4.2010 ~ 12.3

Domestic lighting 1.9.2009 ~ 9.7 – 12.2

Standby & off mode electrical power consumption

8.1.2010 ~ 10.7

Glandless circulators 1.1.2013 ~ 7

External power supplies 27.4.2010 ~ 2.8

Domestic fridges & freezers

1.7.2010 ~ 1.4

Simple set-top boxes 25.2.210 ~ 2.830

Energy efficiency of products

Implementing measures in the pipeline

Greenhouse gas emission reductions in 2020 compared to BAU development, mln. tons of CO2 equivalent[Source: “Analysis of impact of efficiency standards on EU GHG emissions” by Ökopol GmbH, 2010]

Boilers ~ 15.4 – 27.1

Water heaters ~ 6.6 – 13.0

Fans ~ 13.3 – 18.3

Air conditioning and ventilation ~ 3.9 – 9.5

… …

+/- 140 mio. tonnes of CO2 31

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

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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)33

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

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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

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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 36

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

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Cost of -20%/30% revisited

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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%

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