Overview of EU climate policy: past experience and future

prospects

Bangkok, 6 September 2012

Artur Runge-MetzgerDirector, DG Climate Action

European Commission

Outline

• EU domestic climate change policy• The context: Wider EU policy objectives• Starting point: Where do we stand?• Next steps: EU climate action 2013 – 2020• Planning ahead: EU Roadmap 2050

• International climate change policy• From Durban to Doha

• Conclusions

3

Wider EU policy objectives:Smart, sustainable and inclusive growth

• Innovation, jobs & growth• EU traditionally strong in manufacturing industries,

ensure continued leadership while other regions start investing in green growth

•Energy security• EU increasingly dependent on imported fossil fuels• Risks from high price of oil and gas

•Adverse effects of climate change will increasingly threaten future growth

Where do we stand?

• Decoupling of economic growth and GHG emissionsis happening.

• Since 2009, EU economy faces a deep economic and financial crisis.

50

60

70

80

90

100

110

120

130

140

150

1990 1995 2000 2005 2010

Ind

ex

(19

90

=1

00

)

GDP (EU-27)

Energy consumption(EU-27)CO2 emissions (EU-27)

GHG/GDP (EU-15)

GHG/GDP (EU-27)

5

EU climate action 2013 – 2020 (1)

Climate and Energy Package• enacted legislation for reaching -20% GHG by 2020

• conditional step-up to -30%• EU Emission Trading System as core instrument

• Increase share of renewable energy to 20 % by 2020• Improve energy efficiency by 20% by 2020

EU climate action 2013 - 2020 (2)

EU Emissions Trading System• Auctioning: mainly for the

power sector, use of auctioning revenue (eg NER 300)

• Benchmarking to avoid carbonleakage in industries at risk

• Registries• Inclusion of aviation• Address market imbalance

CO2(Energy production, refineries, industry(steel, cementetc.),Aviation);N2O (fertilizer)

EU climate action 2013 – 2020 (3)

• Including aviation into the ETS: timetable

• 2011• 26 December Deadline for Member States to publish

allocations of allowances to aircraft operators• 2012

• 28 February Issuing of free allowances for 2012• 31 March Submission by aircraft operators to

States of 2011 verified emissions report• 2013

• 28 February Issuing of free allowances for 2013• 31 March Submission by aircraft operators to

States of 2012 verified emissions report• 30 April Surrender of allowances equal to the 2012

emissions

EU climate action 2013 - 2020 (4)

Phase 2: EU ETS characterised by oversupply•4.5% increase in allowances issued•Trifold increase in the use of international credits for compliance (~ 550 million by 2011)•10% decrease in emissions

A surplus of 955 million units in 2011, expected to exceed 1.4 billion in 2012

EU climate action 2013 – 2020 (5)

Sectors outside the ETS• Implement national targets

(Effort Sharing Decision)• Emission performance

standards for cars and light duty vehicles for 2020

• Common accounting for land use, land use change and forestry

• Recast of F-gases regulation• Transport White Paper• Energy Efficiency Directive

CO2(Households, Services, Transport),CH4 (Waste, Agriculture),N2O (Agriculture)

EU climate action 2013 - 2020 (7)

Additional legislative proposals• Updating Monitoring Mechanism Regulation• Proposal for mainstreaming climate into next EU Multiannual

Financial Framework 2014-2020: min 20% of expenditure climaterelated• Regional funds• Common Agricultural Policy• Research and Innovation• Transeuropean infrastructure (energy and transport)• Development cooperation

• Maritime transport• Adaptation

• Clearing House Mechanism• Adaptation Strategy in 2013

EU Roadmap 2050 (1): Setting the level of ambition on the basis of science

• Globally halving emissions by 2050 cp to 1990• EU objective of reducing greenhouse gas emissions

by 80-95% by 2050 compared to 1990, in the context of necessary reductions by developed countries

• Need for a low carbon 2050 strategy as framework for longer term action

• Need to fix intermediary stages towards reaching the 2050 objective

• Need to keep developments under review on a regular basis

EU Roadmap 2050 (2): A cost-efficient pathway

0%

20%

40%

60%

80%

100%

1990 2000 2010 2020 2030 2040 20500%

20%

40%

60%

80%

100%

Current policyPower Sector

Residential & Tertiary

Non CO2 Other Sectors

Industry

Transport

Non CO2 AgricultureEfficient pathway:-25% in 2020-40% in 2030-60% in 2040

80% domestic reduction in 2050 feasible•with currently available technologies• If all economic sectors contribute

EU Roadmap 2050 (3):Benefits for growth and jobs

• Shift from fuel costs to investment expenditure• Innovation in key growth

sectors crucial for future competitiveness

• Potential net job creationup to 1.5 million by 2020

• GDP more secure from energy price shocks

GDP and GHG decoupling

40

60

80

100

120

140

160

180

200

220

1990 2000 2010 2020 2030

1990

= 1

00%

GDP GHG emissions

International (1): Durban outcomes

Implementation• Kyoto Protocol continues

• 2nd Commitment period: US, CA, RU, JP will not participate• Start on 1.1.2013, LULUCF rules, scope, improved CDM

• Cancun agreements are operational• Pledges, Transparency, Climate Technology Center

Network, Adaptation Committee, New Market Based Mex• Green Climate Fund

Negotiation• Durban Platform for Enhanced Action

• Negotiating a new legally binding agreement by 2015• Addressing the ambition gap until 2020

International (2): Towards DohaImplementation

• Kyoto Protocol• QELROs, length of commitment period, continuity for Kyoto

mechanisms, carry-over of surplus units

• Cancun agreements made operational• Progress on implementing pledges, ~ 100 countries

without pledges• Sources of funding up to 2020• New Market Mechanism

Negotiation• Durban Platform for Enhanced Action

• Work plan, especially 2013• Identify additional short-term mitigation action

International (3): New Market Mechanisms

Why?• Scale up of emission reduction efforts• Improve environmental integrity• Greater host country involvement

How?Host country• appoints authority, sets up MRV system and registry• defines sectoral scope, policy objectives (=baseline) and policy

instruments including incentive system• proposes crediting thresholds

UN • agrees on common set of rules, checks and balances (review of reports) • provides faciltation and guidance (standards, templates)• organises oversight (implementation, questions, recommendations)• Approves crediting thresholds and issues credits

International challenge: The Gap

Conclusions• EU will push ahead on designing and implementing

domestic climate policies. EU climate policies demonstratethat, if designed in a smart way, GHG emissions can bereduced while growing the economy in a sustainable and resilient manner.

• Credibility of the UNFCCC depends on (i) swift progress in the implementation of pledges under the Cancunagreements, and (ii) on identifying new mitigationinitiatives to close the ambition gap by the end of 2013.

• The success of the negotiations under the Durban Platformwill hinge on the collective capability to design and implement a new legally binding agreement that isenvironmentally effective, economically efficient, fair and politically acceptable.

19

Thank you for your attention!

More information:•

• http://ec.europa.eu/clima/

The EU has a comprehensive approach to address aviation’s climate impacts

• ATM Modernisation• Single European Sky• SESAR Joint Undertaking

• Research and Development of New Technology• Clean Sky Joint Technology Initiative (€1.6 bn over 7 years)• Sustainable alternative fuels

• New Standards• Through ICAO, e.g. new aircraft CO2 standard

• Market-Based Measures• EU Emissions Trading System

Includes direct support for aviation biofuels

EU ETS is compatible with ICAO’s approach• Incorporation of aviation into State’s existing

emissions trading system• Open system – access to emissions reduction in

other sectors• Non-discriminatory – provides a level playing field• Application based on arrival/ departure, not

airspace - which was considered ‘impracticable’in ICAO guidance on emissions trading

• Consistent with the 15 guiding principles for MBMs adopted at 2010 Assembly

• Legislation obliges the EU to continue to seek an agreement on global measures

Estimated costs per passenger

• CO2 emissions from ICAO carbon calculator – reflecting typical aircraft and load factors• Carbon price = €12• Assumes growth in aviation from baseline – typical long haul airlines receive around 80% of

their required allowances for free

Route CO2 emissions CostLow case

CostHigh case

Brussels to Montreal 379 kg €0.91 €4.55

Paris to Beijing 627 kg €1.50 €7.52

Amsterdam to Johannesburg

683 kg €1.64 €8.20

Frankfurt to Singapore 753 kg €1.81 €9.04

London to Rio de Janeiro

746 kg €1.79 €8.95