Climate Action

The EU's Climate and Energy Policy

Manchester, 24 October 2012

Damyana Stoynova

DG Climate Action

European Commission

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Climate Action

Outline

• Climate policy challenges• The EU's key policy instruments until 2020

• Emissions Trading System• Effort Sharing Decision• Renewable Energy• Energy Efficiency

• 2050 Low-carbon Roadmap• 2050 Energy Roadmap• Next Steps

• Review of the ETS auction time profile• Climate mainstreaming in the next MFF• Further initiatives

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Climate Action

Limiting climate change – a global challenge

• 2°C goal requires that global emissions are cut by 50% by 2050 compared 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 and strong action by emerging economies

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

• Need to fix intermediary stages towards reaching the 2050 objective

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Climate Action

Where does the EU stand now?

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• 2010 greenhouse gas emissions 15.5% below 1990 levels

• EU GDP grew by more than 40% during the same time

• EU on track towards 20% emission reduction by 2020

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Where is the rest of the world?

•Concrete emission pledges made by countries responsible for > 80% of global GHG emissions

•Copenhagen pledges: take halfway to 2020 emissions levels securing chances to stay below 2°C – 6 to 11 GtCO2e mitigation gap by 2020 to close

•Share of non-Annex I emissions in total emissions >50% CO2 and >60% including all GHGs (2011)

•Durban roadmap to global agreement in 2015

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2020 Climate and Energy Policy Framework and

Key Instruments

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Europe 2020 headline targets forclimate and energy

1. Reduce greenhouse gas emissions by 20% compared to 1990 as a first step, and move to -30%, if conditions are right.

2. Increase the share of renewable energy to 20% in gross final energy consumption by 2020.

3. Improve energy efficiency by 20% by 2020.

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Emission reduction target (1):key policy instruments

GHG Target in 2020: -20% compared to 1990

Non ETS sectors (transport, buildings, waste, agriculture)

-10% compared to 2005

-14% compared to 2005

EU Emissions Trading System (ETS)

-21% compared to 2005

27 Member State targetsstretching from -20% to +20%

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The EU Emissions Trading System

• Single carbon price across the EU

• Flexibility for EU companies

• Functioning and liquid market

• Adequate measures to address carbon leakage

• Incentives for new technologies (NER300)

• Using revenues to spur smart and sustainable growth and jobs

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Climate Action

The Effort Sharing Decision:not all MS expect meeting their national

non-ETS targets

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2020 projections 2020 national target

Current projections show the EU would meet its 2020 target. However, for 13 Member States, the existing policies would not be sufficient to reach their national target.

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Renewables target: All countries are contributing

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•Share of renewable energy (% of total energy use)

2020 national target2009 performance

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Energy efficiency target:Key policy instruments

Diverse set of policies and measures, e.g.• CO2&cars: 130g/km in 2015, 95g/km in 2020• Energy efficiency standards: light bulbs, appliances, electric

motors• Energy labelling: domestic appliances• Buildings Directive• Energy Efficiency DirectiveChallenges ahead• Finance: renovation of buildings – link with EU budget• Structural changes: e.g. urban planning, modal shift• System changes: e.g. electrification

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Climate Action

The Energy Efficiency Directive

•Brings forward legally binding measures to step up Member States' efforts to use energy more efficiently at all stages of the energy chain

•Requires MS to set indicative national targets for 2020

•On 4 October the Council formally adopted the Directive, after the positive vote of the EP on 11 September

•The Directive is expected to enter into force by the end of 2012.

•Then Member States would have 18 months to transpose and start implementing it (May-June 2014)

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2050 Low Carbon Roadmap

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2050 Low-carbon Roadmap

•Identifies cost-effective pathway, with intermediate milestones

•Identifies key technologies guiding R&D

•Identifies investments needs and benefits

•Identifies opportunities and trade-offs

•Guides EU, national and regional policies

•Gives direction to private sector and private households for long term investments

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A cost-efficient pathway towards 2050

Efficient pathway and milestones:•-25% in 2020•-40% in 2030•-60% in 2040

80% domestic reduction in 2050 is feasible:•With currently available technologies,•With behavioural change only induced through prices•If all economic sectors contribute to a varying degree & pace.

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Current policy

Power Sector

Residential & Tertiary

Non CO2 Other Sectors

Industry

Transport

Non CO2 Agriculture

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2050 Low-carbon Roadmap: Investing in innovation and fuel savings

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Additional domestic investment: € 270 billion annually during 2010-2050, equivalent to 1.5% of GDP (Total investment – 19% of GDP in 2009), of which• Built environment (buildings and appliances): € 75 billion• Transport (vehicles and infrastructure): € 150 billion• Power (electricity generation, grid): € 30 billion

Fuel savings: € 175 to 320 billion on average annually during 2010-2050Making EU economy more energy secure:• Halves imports of oil and gas compared to today• Saving € 400 billion of EU oil and gas import bill in 2050,

equivalent to > 3% of today’s GDPAir quality and health benefits: € 27 billion in 2030 and € 88 billion in 2050

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2050 Energy Roadmap

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Scenarios explore routes to decarbonisation of the energy system

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Currenttrends

scenarios

Decarbonisationscenarios

. Reference scenario (as of March 2010)

. Current Policy Initiatives (as of April 2011)

40% GHG reduction by 2050

. High Energy Efficiency

. Diversified Supply Technologies

. High RES

. Delayed CCS

. Low Nuclear

80% GHG reduction

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Energy savings throughout the system are crucial

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Range for current trends scenarios

Range regarding decarbonisation scenarios

Gross energy consumption - range in current trend (REF/CPI) and decarbonisation scenarios (in Mtoe)

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Electricity plays an increasing role

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Share of electricity in current trend and decarbonisation scenarios of the Energy Roadmap (in % of final energy demand)

Range for current trends scenarios

Range regarding decarbonisation scenarios

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Renewables move centre stage –all fuels can contribute in long-run

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2005 Decarbonisation scenarios - fuel ranges (primary energy consumption in %)

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Next steps

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Next steps (1): Review of the ETS auction time profile

State of the EU carbon market

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• Liquid and growing market• From 2013 the ETS

undergoes substantial overhaul

• Growing supply, demand imbalance

• Surplus build-up with the start of the economic crisis, accelerated by a large inflow of international credits

• Surplus expected to increase rapidly up to 2013, in part due to regulatory provisions

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Review of the ETS auction time profile: back-loading

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• Back-loading: changing the auction time profile during phase 3 of the ETS

• The 25 July package: Draft for a future amendment of the Auctioning

Regulation Proposal for a Decision amending the ETS Directive SWD on the functioning of the ETS and the impact of

back-loading• Process: Vote in the Climate Change Committee, scrutiny

by Council and Parliament; Co-decision procedure for the proposed Decision to amend the ETS Directive.

• Need for discussion on structural measures

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Next steps (2): The next EU budget 2014-2020

•Mainstreaming the climate-related share of the EU budget will be raised significantly to 20% of the whole EU budget (at least €200bn for climate-related expenditures)

•Horizon 2020: around 35% of the Horizon 2020 budget should be climate-related expenditure.

•Cohesion policy: more developed and transition regions should allocate at least 20% of their ERDF resources to investment in efficiency and renewables. Less developed regions would allocate at least 6%.

•Connecting Europe Facility

•Greening of the CAP

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Next steps (3): Further initiatives

• Under negotiation with Council and Parliament Monitoring Mechanism Regulation Land use, land use change and forestry Decision Review of cars and vans regulation

• Under preparation Carbon Market Report Review of F-gases regulation Maritime emissions Adaptation Strategy

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