Rhein on Energy and Climate

The EU is in the process of defining its energy/climate policy beyond 2020.

This is timely for two reasons:

  • European business needs to be fixed on the policy framework for their long-term investments related to energy, transport, buildings, grids etc.
  • The EU must have advanced on its medium-term climate strategy before engaging in the negotiations on an international agreement in 2015.

There is a wide consensus on the need for ambitious 2030 targets.

By 2050 the EU aims at having reduced its C02 emissions by 80-95 per cent over 1990. By 2020 it will have achieved at best 20 per cent reduction! We are therefore far away from the ultimate objective and have to speed up the process.

2030 being mid-term towards the middle of the century, the EU needs to have reduced its emissions by at least 45 per cent over 1990! That may come as a shock; but it is time to make citizens aware of the implications of a low carbon society.

The crucial issue is how to achieve a much more ambitious target in 2030.

Should the EU again fix separate targets for the share of renewable sources in the energy mix and the rise of energy efficiency? This is what part of the business community, especially the solar and wind industries, claim.

Or is it preferable to stick to one over-riding target – 45 per cent of C02 emission reduction – and focus on concrete policies for implementing it.

Defining more ambitious targets for renewable energies will become tough. To be meaningful, wind and solar electricity would have to supply about two thirds of EU power consumption in 2030. That seems unrealistic without a generous EU-wide system of incentives. But more important, we would need 28 targets, as the comparative advantages for generating renewable energies vary widely among member states. In some of them renewable energies are very difficult to generate at competitive costs, while others have enough land, wind or the sun to generate essentially all their electricity demand even without granting any subsidies.

To achieve a quantum leap in the reduction of C02 emissions within the next 15 years the EU will need to put in place an effective policy framework. This requires a balanced inter-action between EU and member states.

Member states should bear the main responsibility for implementing the average EU emission target, which should continue to be differentiated according to per capita emissions.

The new framework should introduce a regular policy dialogue between Commission and energy ministries of member countries, under which member states will have to report to Commission and all member states on the concrete policy measures they intend to take and their effective transposition.

At EU level the main policy instruments should be reinforced:

  • A reformed carbon cap and trading (ETS)

    The pace of annual C02 reductions will have to be lifted in according with the tougher 2030 target and provide for possibilities of adjustment to avoid the violent fluctuations of carbon prices that have impaired the effectiveness of EU climate policy during the last few years.

  • Tough energy efficiency standards wherever possible.In the automobile sector these are under preparation for cars, light utility vehicles and trucks.
  • Accelerated energetic renovation of public buildings

    The pace of renovation needs to be accelerated.

    A € 200 billion programme for energetic renovation of private buildings, enabling the EU to tackle its biggest source of C02 emissions, to be financed by EIB and structural funds.

  • Phasing out all subsidies on fossil energies

    This job is progressing slowly, due to political obstacles. But the principle to tax fossil energies according to C02 emissions is largely accepted, except for heating fuel and gas.

    The EU must lift taxes on heating fuel/gas in view of encouraging house owners to improve insulation and heating systems. This politically unpopular measure will boost employment in the construction and mechanical industries.

In conclusion, the EU has the unique chance of putting in place a comprehensive strategy by which to tackle its excessive C02 emissions and show the rest of the world that such a strategy pays. The Commission must urgently come up with effective recipes to enable EP and Council to adopt the new package before the end of the present legislature in May 2014.

Eberhard Rhein, Brussels

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