EU leaders reach agreement on proposed 2030 climate, energy goals

27 October 2014

EU heads of state and government reached a political agreement last Thursday on a new climate and energy policy framework for 2030.

After some reportedly late night haggling, the 28 political leaders endorsed a binding 40 percent greenhouse gas (GHG) emissions reduction target by 2030 from 1990 levels, an EU-wide binding renewable energy target of at least 27 percent, and an EU-wide indicative energy efficiency target of at least 27 percent.

The new package will take over from the bloc’s current “20-20-20” goals – which set emissions reduction, renewables usage, and energy efficiency targets for the end of this decade.

“It was not easy, not at all, but we managed to reach a fair decision. It sets Europe on an ambitious yet cost-effective climate and energy path.” said Herman van Rompuy, President of the EU Council, the bloc’s highest decision-making body.

Rompuy’s remarks point towards deep divisions that emerged between member states in the past months over the shape of the framework. Poland, whose economy relies on emissions-intensive coal for much of its electricity, was said to have galvanised a group of eastern European states to protest against the level of ambition. Meanwhile, Portugal and Spain also allegedly threw up red flags, calling for the strong language on building an interconnected EU energy market.

Road to Paris

The move has been closely watched by the international community due to its potential significance for the ongoing multilateral climate talks.

Conducted under the umbrella of the UN Framework Convention on Climate Change (UNFCCC), nearly 200 nations are working to seal a universal, binding emissions-cutting deal, in time for a meeting in Paris, France next year. 

The EU has traditionally been characterised as a leader in this area following comparatively strong efforts to tackle climate change and engagement in past UN climate talks.

Furthermore, any mitigation action by the group is considered significant in economic terms, given that it accounts for 24 percent of global GDP and represents the world’s largest single market. One objection voiced by various participants in the UN climate process over the years is the fear that unilateral climate action could hamper growth and the competitiveness of exports on world markets.

Last week’s conclusions on the 2030 framework open with a reference to the UNFCCC process, underlining that the EU will revisit its new targets after the Paris conference. Earlier this year, some EU countries had pushed to delay agreement on the proposed framework until after other major economies such as China and the US outlined their climate ambition.

Speaking with journalists on Thursday, however, Rompuy stressed that the so-called review clause was primarily geared towards ramping up climate efforts.

“The [review clause] is not in order to water down the objectives on which we agreed,” he confirmed.

Cutting emissions

According to the Council conclusions, all EU member states will participate in the target, balanced by calls for solidarity and equity.

The emissions-cutting target agreed on Thursday follows a proposal put forward by the EU’s executive branch in January. (See BioRes, 23 January 2014)

José Manuel Durão Barroso, President of the out-going European Commission, welcomed the development.

“When we tabled our strategy back in January, many said it was the wrong thing to do at the wrong moment. Tonight we proved those doubters wrong,” Barroso said in a press conference on Friday, referring to some critics’ suggestion that the EU’s sluggish economy would not be able to cope with the proposed 40 percent reduction.

Carbon market

Leaders agreed on Thursday that 43 percent of the emissions reduction target would be met using the EU’s Emissions Trading System (ETS).

According to media reports, free carbon allowances were offered to countries such as Poland in order to sweeten the overall deal. The Council conclusions on the proposed framework grant member states with a GDP per capita below 60 percent of the EU average the flexibility to hand out free ETS allowances to the energy sector.

However, Thursday’s document notes that the maximum free hand out should be no more than 40 percent of a member state’s auctionable allowances. A call is made for an improvement on transparency from the current modalities of free allocation. 

The conclusions also endorse the channelling of funds from two percent of the total EU ETS allowances for the period to address some of the structural energy transition challenges facing poorer EU nations. Proceeds from the new reserve will be used to improve energy efficiency and modernise energy systems in member states with a GDP per capita below 60 percent of the EU average.

The document calls for an eventual fund set up by the reserve to be managed by beneficiary member states with input from the European Investment Bank (EIB). This allegedly follows concerns by some member states that structural funds in the current climate and energy legislation are being misappropriated to prop up the fossil fuel industry. 

Back in January, the Commission had also put forward a legislative proposal for a market stability reserve for the EU’s ETS, which has faced major pricing difficulties in recent years. The proposal included an “automatic stabiliser” to be put in place from 2021. The instrument would adjust the supply of allowances on the EU carbon market, operating independently under pre-defined parameters.

Mention of this proposal is not, however, included in Thursday’s document.

Energy connectivity, security

In a win for countries such as Spain and Portugal, Thursday’s document makes a bid to bolster energy connectivity between member states.

The conclusions renew commitments to take urgent measures to achieve a minimum target of ten percent of existing electricity interconnections. The Commission is also mandated to report regularly on the process and technical needs of this planned integration in order to arrive at a target of 15 percent intra-EU export of generation capacity by 2030.

This ambition would see the bloc invest in new pipeline and grid infrastructure across EU borders. Lisbon and Madrid reportedly pushed hard in the final stages to ensure the inclusion of such language in order to export the region’s excess wind and solar power across the Pyrenees. A specific mention of both countries is made in the document alongside the Baltic States.

Over the past 10 months, the situation in Ukraine has also put considerable pressure on the shape of the new framework, with the EU’s eastern European members raising specific concerns around energy security. A third of the region’s gas is imported from Russia, with almost half passing through Ukraine.

Thursday’s conclusions reaffirm statements made by the European Council in June around the Commission’s proposed European Energy Security Strategy (EESS). Leaders agreed to implement infrastructure projects related to the gas sector such as the “North-South corridor” pipeline and others, improve arrangements for gas storage capacity, as well as wield foreign policy instruments to achieve energy security.

The two targets on energy efficiency and renewable energy are also pitted as key instruments in shoring up energy access. According to Commission modelling estimates, a 25 percent energy efficiency target would reduce EU gas imports by nine percent, while a 35 percent target would slash these by 33 percent by 2030.

Will it be enough?

Both of the renewables and energy efficiency targets will not be binding on individual member states and the energy efficiency target is voluntary as it is in the current regime, a decision that has been criticised by some environmental groups. The European Commission had initially proposed a 30 percent binding EU-wide energy savings target for 2030. (See BioRes, 4 August 2014)

"Insufficient action like this from the world's richest countries places yet more burden on the poorest people most affected by climate change, but least responsible for causing this crisis," said Natalia Alonso,  deputy advocacy and campaigns director for charity group Oxfam.

Meanwhile consultancy Ecofys has cautioned that a 40 percent reduction would not be enough to keep the EU on track towards its stated ambition of reducing emissions by 80 to 95 percent by 2050.

Moving forward the European Council has invited the Commission to table a legislative proposal to translate Thursday’s agreement into formal legislation. This will be undertaken by the new EU executive body headed up by Jean-Claude Juncker, due to take office next month, and is expected to be unveiled in 2015.

ICTSD reporting; “EU agrees target to cut gas emissions,” FINANCIAL TIMES, 24 October 2014; “German industry issues stark warning ahead of EU climate summit,” EURACTIV, 22 October 2014; “EU leaders adopt ‘flexible’ energy and climate targets for 2030,” EURACTIV, 24 October 2014; “EU nations threaten to block green energy rules at summit talks,” REUTERS, 22 October 2014; “Analysis: Who wants what from the EU 2030 climate framework,” THE CARBON BRIEF, 17 October 2014. 

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