EU Negotiators Strike Deals on Three Clean Energy Files, Eyeing 2030 Climate Goals

21 June 2018

Over the past few days, negotiators from the European Commission, Parliament, and Council have reached political agreements on three major legislative proposals under the European Commission’s Clean Energy Package, namely those on renewable energy, energy efficiency, and energy union governance.

Together with the deal on the energy performance of buildings reached last month, this wraps up half of the Commission’s proposals under the overall package.

The Clean Energy Package was proposed by the European Commission in November 2016 to create a stable legislative environment for the bloc’s clean energy transition. The eight proposals are intended to make the EU energy sector more stable, competitive, and sustainable, and help achieve the EU’s international climate goals through at least the year 2030.

Under the UN’s Paris Agreement on Climate Change, the EU has committed to reducing its greenhouse gas emissions by at least 40 percent below 1990 levels by 2030. The Paris Agreement was reached in 2015 and entered into force at the end of 2016.

Renewable energy

On Thursday 14 June, negotiators agreed on a new, binding renewable energy target of 32 percent by 2030. A review on increasing the new target further will be conducted by 2023 at the latest. These would be part of a revised “Renewable Energy Directive,” given that the existing version sets targets only through 2020.

Welcoming the deal, EU climate commissioner Miguel Arias Cañete said that “this new ambition will help us meet our Paris agreement goals and will translate into more jobs, lower energy bills for consumers, and less energy imports.”

The EU had previously endorsed a renewable energy goal of 27 percent for 2030. This target was reached in 2014 and was criticised by many environmental groups for being insufficiently ambitious as the EU was already on track to exceed it. In 2016, renewable energy consumption in the bloc stood at 17 percent.

The EU’s updated Renewable Energy Directive, along with revising that target upwards, will now include a 14 percent target for transport fuels from renewable energy to support the move towards cleaner transportation. More specifically, that goal aims to support the use of more sustainable biofuels, moving away from those which could have unintended, adverse effects on emissions. 

Under the transport goal, the EU also agreed to phase out palm oil by 2030. Palm oil is an important driver of emissions from indirect land-use change (ILUC) as palm oil plantations displace vast areas of  tropical forests which store large amounts of carbon. The phase-out will start by freezing existing quantities of imported palm oil, a move that will affect existing trade patterns. Malaysia and Indonesia, the world’s biggest producers of palm oil, have previously threatened to impose trade measures in response, should any ban come to pass.

Other first generation biofuels, like ethanol, must be capped at the EU’s 2020 production level and their share in final consumption in road and rail transport cannot exceed seven percent. This is meant to address concerns over the sustainability of food-based biofuels due to their impacts on food prices, deforestation, and biodiversity. In order to move increasingly towards second generation biofuels from non-food crops or plant residues, their share in transport fuels has been set at a minimum of 3.5 percent by 2030.

The deal also encourages renewable energy self-consumption by exempting installations of 25 kilowatts from certain grid obligations, such as taxes on energy for self-consumption. Environmental groups have welcomed this move to support citizens and small businesses in producing, consuming, storing, and selling their own renewable energy as an important step for the bloc’s clean energy revolution.

Energy efficiency

After energy efficiency talks broke down one week ago, negotiators were able to conclude that file in resumed talks on Tuesday evening, reaching a political deal on an EU-wide target of 32.5 percent by 2030. Those talks have been looking at how to save energy at multiple levels, such as power generation, building construction, and energy consumption.

The new energy efficiency goal, which raises the previous 27 percent target, is a compromise deal between the Council and Parliament positions, who had advocated for 30 and 35 percent, respectively.

The Energy Efficiency Directive also contains an upwards revision clause for 2023. However, unlike the renewable energy target, the energy efficiency target is a non-binding indicative goal, or a “headline” target.

Arias Cañete described the target as a “major push for Europe’s energy independence” that will boost the EU’s “industrial competitiveness, create jobs, reduce energy bills, help tackle energy poverty, and improve air quality.” He flagged in particular what this would mean for trade in fossil fuels.

“Europe is by far the largest importer of fossil fuels in the world. Today we put an end to this,” he said.

Energy union governance

Following the agreement on the updated Renewable Energy and Energy Efficiency Directives, negotiators were able to clinch a deal on energy governance in the early hours of Wednesday 20 June. Energy governance is a particularly challenging issue, in light of the need to balance EU-wide targets with national needs, along with ensuring a stable business climate that will enable investors to make long-term, low-carbon commitments. 

Under the agreement announced this week, the EU as a whole will aim for a net-zero economy as early as possible, referring to a situation where carbon emissions and removals balance each other out. 

Under the Paris Agreement, countries have committed to bringing global emissions down to net-zero in the “second half of this century.”

The European Parliament had pushed for including the 2050 deadline in the agreement, but due to pushback from some member states, negotiators ultimately chose not to set a specific date.

By the end of next year, member states will have to prepare long-term decarbonisation strategies for 2050 in addition to their 2030 plans. 

As part of the deal, the Commission has been tasked to elaborate a proposal by 1 April 2019 for a 2050 EU strategy for greenhouse gas emissions that is in line with the Paris Agreement. The analysis should consider the remaining “carbon budget,” both globally and at the EU level, to keep global warming below the two degree Celsius goal and close to 1.5 degrees, as well as scenarios for how the EU can contribute to net-zero emissions by 2050 and negative emissions thereafter. 

The governance directive also sets pathways for the contribution of member states to the 2030 renewable energy and energy efficiency goals, with intermediary goals set for 2022, 2025, and 2027. This “gap-filler” mechanism is meant to ensure that all countries are on track to contribute to the overall goals and do not free ride by expecting others to “fill the gap.”

Next steps

The three agreements will need official approval by the European Parliament and Council in the coming months, which is expected to be a formality. Afterward, these new rules will enter into force and member states will be required to transpose their elements into domestic law.

ICTSD reporting; “EU strikes early morning deal on energy governance bill,” EURACTIV, 20 June 2018; “Energy savings law limps across the finish line,” EURACTIV, 19 June 2018;  “Energy: new target of 32% from renewables by 2030 agreed by MEPs and ministers,” EUROPEAN PARLIAMENT PRESS RELEASE, 14 June 2018; “EU raises renewable energy targets to 32% by 2030,” THE GUARDIAN, 14 June 2018; “EU strikes deal on 32% renewable energy target and palm oil ban after all-night session,” EURACTIV, 14 June 2018.

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