2030-ICTSD • Divisions Apparent as EU Ministers Debate 2030 Climate, Energy Goals

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Over a dozen EU ministers have joined together to call for a rapid agreement on the trading bloc’s 2030 climate and energy goals, either at a leaders’ summit later this month or in June. This week’s meetings marked the first occasion of the new framework being formally discussed at the ministerial level by the 28 member states.

The self-dubbed “green growth group” - which includes the UK, France, Italy, and Germany, as well as other mainly western European countries - issued a statement stressing that climate policy should not be an enemy to competitiveness, warning that putting off an agreement would be a mistake.

“A delay risks undermining commercial sector confidence, deferring critical energy investments, increasing the cost of capital for these investments, and undermining momentum towards a global climate deal,” their joint statement read.

The EU’s executive arm in January outlined a new 10-year climate and energy framework that would take effect from the end of this decade. The Commission’s document calls for a 40 percent reduction in greenhouse gases (GHG) target below 1990 levels and an EU-wide binding renewable energy target of at least 27 percent. (See Bridges Weekly, 23 January 2014)

Opposition to an ambitious climate policy has largely been led by coal-reliant Poland, but resistance has also been seen from countries such as the Czech Republic and Bulgaria - all of whom are wary of burdensome targets that might limit their energy independence.

British Energy and Climate Change Secretary Edward Davey suggested that careful negotiations could work to bridge Europe’s divide on climate policy.

“The Poles, Slovaks, Czechs, and Bulgarians have voiced some concerns and we need to listen to them, we need to find a way to meet their realistic asks,” he told journalists.

The green growth group also indicated that a speedy EU agreement would be important to adding momentum to current UN climate talks, which negotiators hope will lead to a deal during their meeting next year in Paris, France. Warsaw is particularly opposed to Europe taking the lead in these international negotiations, stating that the bloc’s targets should be conditional and equivalent to efforts made by other global players.

Marcin Korolec, Poland’s deputy environment minister, warned reporters that expecting an agreement in March was “a very optimistic approach.”

“The EU should present a provisional goal which will be finally accepted only if the new [2015] agreement will be understood by the EU as a universal one [applying to all large global players],” Korolec added.

Meanwhile, Commission climate chief Connie Hedegaard underlined that the ongoing Ukraine-Russia situation - which could put oil imports to Europe at risk - demonstrates the need for the EU to expand output from renewable sources in order to secure more energy autonomy. (For more on Ukraine, see related story, this issue)

UK on-board for renewables

Monday also saw the UK relax its position against the inclusion of a renewables target in the new framework, with Davey indicating his country would now support a binding EU-level target, as long as this did not involve nation-specific requirements.

London had previously lobbied hard for a “greenhouse gas (GHG) cuts only” approach, while France and Germany called for “robust” renewable energy targets.

Flexibility and competitiveness key

In the two days of public debate by EU environment and energy ministers on the framework, a number of delegations applauded the flexibility afforded to individual economies to achieve the overall GHG target according to national circumstances, although questions were raised as to how this flexibility would work in practice.

Council press releases also indicated that some participants suggested that future state aid rules should not reduce the flexibility needed to deliver on climate and energy objectives in an efficient way.

Energy ministers further highlighted the need to achieve a truly integrated EU energy market and infrastructure, with a strong EU approach.

A key message throughout the debates was that the 2030 framework should balance environmental sustainability, competitiveness, and security of energy supply. The need to keep energy prices down and guarantee the EU’s competitiveness was also discussed - a recent inflammatory topic in politics across the trading bloc.

Critics have suggested that EU’s climate and energy policies are to blame for the growing energy price gap between member states and other major economies, although other camps argue that such prices have little bearing on bloc’s overall competitiveness.

Energy firms call for more urgent ETS reform

Environment ministers generally slated the EU’s Emissions Trade System (ETS) as a key instrument for reducing emissions, although further discussion on its future operation, as well as on the contribution of sectors currently outside the ETS, was also suggested.

Slow growth in a post-crisis world has at times caused carbon permits to sink to basement trading prices of under €5 per metric tonne. Early this year, member states agreed to withhold up to 900 million carbon permits until 2019-2020, as a temporary solution. (See Bridges Weekly, 16 January 2014)

The Commission’s announcement in January included a legislative proposal for a more long-term ETS fix in the form of an “automatic stabiliser” by 2021 - which would mechanically adjust the supply of allowances in the EU carbon market according to pre-defined rules.

On Monday, however, the CEOs of four Fortune 500 companies called for an urgent withdrawal of two billion carbon allowances from the EU’s ETS. Alstom UK, Shell UK, Doosan and SSE suggested that the Commission’s proposal for an automatic stabiliser was six years too far away.

“Two billion allowances are supressing cost efficient carbon abatement and delaying investments in energy efficiency and lower carbon processes, products, and services for the medium and long term,” read the letter, seen by news agency EurActiv.

The overall 2030 framework, as well as the Commission’s communication on an “industrial renaissance,” will next be discussed at the heads of state and government level when EU leaders meet later this month. Greece, the current chair of the Council rotating presidency, will report on the outcome of this week’s ministerial discussions.

ICTSD reporting; “UK supports non-binding renewable energy goal,” EUROPEAN VOICE, 4 March 2014; “Thirteen ministers urge EU to agree green energy goals in March,” REUTERS, 3 March 2014; “Energy firms call for urgent carbon market action,” EURACTIV, 5 March 2014, “EU’s re-industrialisation dream ‘hostage’ of high energy prices,” EURACTIV, 26 February 2014.

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