EU shows climate leadership through legislative package

Publish date: January 23, 2008

Written by: Eivind Hoff

BRUSSELS - On January 23rd, the European Commission tabled a package of legislative proposals that sets out rules for how the European Union should meet its unilateral goal of reducing greenhouse gas emissions by 20 percent below 1990 levels by 2020 – or by 30 percent if other developed countries take on reduction commitments.

“These proposals are crucial and courageous. They will enable real curbs of EU emissions. We are particularly happy that the proposals on carbon capture and storage (CCS) reflect the arguments that we have made repeatedly,” said Bellona President Frederic Hauge. Bellona has been actively involved in the European technology platform for zero-emission fossil fuel power plants (ETP-ZEP), which has drawn up recommendations for how to promote full-scale demonstration plants for CCS.

Carbon capture and storage
One of the Commission proposals is for a directive regulating carbon storage. This seeks to distribute responsibilities for monitoring, reporting and liability among other things, in order to make carbon storage safe. The Commission also tabled a communication with recommendations for how to finance the dozen full-scale demonstration plants that are needed by 2015.

The Commission is welcoming all financial contributions – including state aid. That is good news for the CCS demonstration projects at Norway’s Mongstad and Kårstø gas-fired power plants to which the Norwegian government has promised its assistance. Furthermore, the Commission has put forward other funding opportunities for CCS that need not be a drain on public coffers, such as revenues from the auctioning of emission allowances under the EU emission trading system (ETS).

Auctioning of emission allowances
The ETS directive is indeed also up for review through the climate package, with a proposal to radically reform it after the current second phase of the ETS ends in 2012. The proposal covers approximately 40 percent of total EU emissions and sets out an EU-wide emissions allowance ceiling that will be 21 percent lower in 2020 than emissions of the covered sectors in 2005.

“The radical novelty of the proposal is to phase out free emission allowances between 2013 and 2020. We support the idea to make power generators buy all their allowances from 2013 through auctioning by Member States,” said Paal Frisvold, chairman of Bellona Europa.

“It is also wise to gradually phase in the auctioning of allowances to other industries through this period. This must be done carefully with industries exposed to international competition.”

Auctioning will mean huge revenues for Member States’ treasuries. Calculations show it could result in EUR 50-75 billion annually by 2020, said Frisvold.

“We are very pleased that the proposal specifies that X percent of these revenues shall be earmarked for climate change mitigation and adaptation measures,” he added.

In order to cap the 60 percent of EU emissions that are not covered by the ETS directive – such as transport, and buildings – a separate Commission proposal sets out the burden sharing of non-ETS emission caps between the Member States. Overall, these will be reduced by 10 percent below 2005 levels within the EU.

More than doubling of renewable energy
Lastly, the Commission proposes a new directive for renewable energy. This is where it has shown the greatest political courage by suggesting ambitious – and binding – increases in the shares of renewable energy out of total energy consumption in each Member State.

By 2020, the share shall on average be 20 percent, compared to 8.5 percent today. Rich countries shall increase the percentage more than others – even if they already exceed the 20 percent threshold. As an example, Sweden has the highest share amongst the Member States, with about 40 percent renewable energy. This must increase to 49 percent by 2020. Many Member States will have great challenges in reaching their target, which makes the proposal highly controversial.

”The proposals are not perfect. A target to increase the share of biofuels in transport to 10 percent by 2020 may have problematic side effects if not further qualified. But the important thing is that the Commission with these proposals has responded to people’s expectation that the EU lead the way in combating climate change and that it has shown considerable political courage in doing so,” said Frisvold.

“Now the dog fight starts between Member States, European Parliament and the Commission on what the final directives will look like. Much may change, and Bellona will continue working to ensure that these changes are for the better.”

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