ENERGY UNION PACKAGE, AGRICULTURE AND IRISH FARMINGAlan MatthewsProfessor Emeritus of European Agricultural Policyalan.matthews@tcd.iePresentation to the IrBEA 2016 Annual ConferenceDublin, 3 February 2016

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The question• Why bioenergy is important

• Plays a critical role in meeting Ireland’s RES and decarbonisation targets to 2020 and Energy Union objectives to 2030

• Contributes to bio-economy, circular economy and rural development strategies

• Key for further develoment is availability of sustainably-produced biomass

• What developments in EU policy will influence future of Irish bioenergy? (presentation does not discuss Irish policy under development)• Renewables targets and governance• Accounting for emissions from the AFOLU sector• The sustainability debate

• Implications for Irish agriculture

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EU biomass supply and demand, tonnes

Source: SCAR 4th Foresight report, 2015

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Expected trend in bioenergy demand in EU

Source: JRC, Scarlet et al, based on NREAPs

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Renewable energy mix in 2005 and 2020

The share of bioenergy in EU gross final energy consumption will increase from 5.0% in 2005, 8.5% in 2012 to almost 12% in 2020,

Source: JRC, Scarlet et al, based on NREAPs

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The Energy Union: process 2014-2015January 2014 Commission proposal for 2030 climate and energy policy

framework COM(2014)15February 2014 European Parliament Resolution on 2030 climate and

energy policy frameworkOctober 2014 European Council agreement on the 2030 Climate and

Energy Policy FrameworkFebruary 2015 Commission Climate and Energy Package

COM(2015)80March 2015 European Council conclusions

Submission of INDC to UNFCCC prior to COP21

November 2015 Commission, State of the Energy Union 2015COM(2015)572

November 2015 Energy Council Conclusions on the governance system for the Energy Union

December 2015 European Parliament Resolution on Energy Union

UNFCCC Paris COP21 Agreement

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The process – 2016 onMarch 2016 Commission ”to assess the results of COP21..., in

particular in view of the 2030 climate and energy framework and to prepare the next steps”.

Mid-2016 Commission legislative proposal on the Effort-Sharing DecisionCommission legislative proposal on inclusion of Land Use, Land Use Change and Forestry (LULUCF) into the 2030 Climate and Energy Framework

Autumn 2016 Commission proposal for revised Renewable Energy Directive (Consultation period closes 10 Feb 2016; Bioenergy sustainability policy will be covered by a separate consultation)

2018 Renewable Energy Roadmap for period after 2020

2017-19 Review of the Environment and Energy State Aid Guidelines promised

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2030 Climate and Energy Framework

Source: Froggatt and Hadfield 2015

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Targets for 2020• EU Climate and Energy Package 2020 20/20/20

• 20% reduction in GHG emissions compared to 1990• 20% share of renewable energy in the energy mix by 2020• 20% improvement in energy efficiency compared to forecasts for 2020

• Renewable Energy Directive I (2009)• Mandatory national targets (10-49%) consistent with a 20% share of

energy from renewable sources by 2020• Mandatory national targets of 10% share of energy from renewable

sources in transport by 2020• ILUC decision 2015 – maximum 7% from crop-based biofuels including

crops grown as main crops primarily for energy purposes, • Advanced fuels ‘sub-target’

• Revised Fuel Quality Directive (2009)• Reduction of the greenhouse gas intensity of the fuels used in vehicles by

6 % by 2020 compared to 2010

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Targets for 2030• European Council

• a binding EU target of at least 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990

• Non-ETS reduction target of 30% compared to 2005 distributed by MS on the basis of relative GDP per capita, with caveats

• A binding EU target of at least 27% for the share of renewable energy consumed in the EU in 2030 (to be reviewed by 2020 having in mind an EU target of 30%).

• An indicative target at the EU level of at least 27% is set for improving energy efficiency in 2030 compared to projections of future energy consumption based on the current criteria.

• No EU target for renewable energy in transport after 2020 (14-16% contribution required)

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Are 2030 targets settled?• European Parliament

• Wants binding 2030 climate and energy targets of at least 40 % reduction in CO2 emissions, at least 30 % for renewables and 40 % for energy efficiency, to be implemented by means of individual national targets

• Parliament has also called for extension of transport fuel targets after 2020

• Parliament can influence outcome through co-decision on revised Renewable Energy Directive expected later this year

• Review in light of COP21 Agreement ambitions• No real appetite for this among Member States• Commission Communication on follow-up expected in March

• Incorporation of LULUCF into targets• Will this be additional or contribute to the ‘at least 40%’?

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The emerging energy governance system• How to ensure Member States work ambitiously and

collectively to reach the 2030 Energy Union targets?• Question addressed by the energy governance regime• Some clarification at the Nov 2015 Energy Council• Essential component will be National Energy and

Climate Plans ('National Plans') to be adopted by each MS, followed by Progress Reports on implementation • Intended to allow constructive dialogue between the

Commission and the Member States; and• Monitoring and evaluation based inter alia on key

indicators

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AFOLU sector in the 2020 package• AFOLU emissions regulated under two different pillars in

2013-2020 period• Agricultural GHG emissions under the ESD national targets• LULUCF emissions covered under Kyoto Protocol second

commitment period (KP2), but not taken into account in ESD national target

• LULUCF emissions accounted for differently under Kyoto Protocol to the way they are reported in UNFCCC inventories.

• New KP2 rules on LULUCF accounting were incorporated into and extended in the EU’s Decision on LULUCF accounting rules in 2013

• Under KP2, MS must ensure that LULUCF sector does not generate net debits when accounting for all emissions and removals in the sector. If net debits arise, these must be compensated.

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Climate policy and agriculture

• More stringent emissions targets to 2030 will focus more attention on need to reduce agricultural emissions

• Supply-side versus demand-driven reductions• Increasing efficiency – “sustainable intensification”• Substituting for fossil fuel energy emissions – bioenergy• Carbon sequestration in soils, forests, agro-forestry• Changing diets and reducing food waste

• Policy design to incentivise emission reductions

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The CAP and bioenergy• The Common Agricultural Policy does not provide direct support for

the production of biomass for bioenergy• But farmer retains Pillar 1 Basic Payment on afforested land

• Indirect incentive in arable areas through Ecological Focus Area requirements for Pillar 1 greening payment• Individual trees, agro-forestry, short-rotation coppice, afforested land• Perennial energy crops not counted as part as arable area for crop

diversification purposes• Rural Development Programmes

• Support for investments in biomass processing, distribution and renewable energy infrastructure

• Support for producer groups involved in biomass supply chains• Investments to mobilise wood and forest residues for energy generation• Research financing

• Future of CAP after 2020

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AFOLU in 2030 climate targets• Including agriculture, forestry and other land use (AFOLU)

to take into account the multiple objectives of this sector• Three options under consideration

• Option 1 — LULUCF pillar: Maintain non-CO2 agriculture sector emissions in a potential future Effort Sharing Decision, and further develop a LULUCF sector policy approach separately;

• Option 2 — Land use sector pillar: Merging the LULUCF and agriculture sector non-CO2 emissions into one new and independent pillar of the EU’s climate policy;

• Option 3 — Effort Sharing: Include the LULUCF sector in a potential future Effort Sharing Decision.

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A new bioenergy sustainability policy

• Will cover biofuels but also solid biomass and biogas in heat and power

• Will ensure robust and verifiable greenhouse gas emissions savings,

• Will address direct and indirect impacts, including on carbon stocks, and including sustainable land management.

• Integrated either into RED II or a stand alone instrument but part of the renewable energy policy framework.

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Key messages• Although EU policy framework to 2020 in place, many

open questions still for 2030 framework• Is there the political will to fix the broken ETS?• Member state GHG reduction targets waiting for ESD proposal• Policy framework for renewables not fully clear until National Plans

due end-2019• Biomass availability will be influenced by treatment of AFOLU

sector in 2030 climate policy framework• Biomass availability will also be influenced by new sustainability

criteria, may determine eligibility for public support under state aids guidelines

• MS policy decisions will be crucial in implementation

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Implications for Irish agriculture

• CAP remains the key policy environment for Irish agriculture

• Bioenergy – ‘Room to grow’ with great potential• Yet profitability at farm level remains an issue

• The policy regime is critical• Markets on their own will not deliver the necessary

incentives• Public policies should be ‘technology-neutral’