EU 'low-carbon roadmap' aims for 25% cuts by 2020

Simone Ruiz, European policy director at the International Emissions Trading Association, told EurActiv that only the numbers were new in the roadmap's proposed ETS offset – adjusted to the 25% domestic reductions target.

"We do have questions about how this could be implemented," she said. "According to the ETS Directive you have to auction all allowances that are not allocated free of charge, so we would expect that this requires a change of the directive and then it's a question of how such a signal will be picked up by the markets."  

"In the end, such a policy has a goal to influence market dynamics and to enhance or boost the carbon price and this only works if market participants consider this as a permanent reduction of supply," she added. 

Abyd Karmali, the managing director of Merrill Lynch Bank of America’s Global Carbon Markets European office in London also highlighted the sensitivity of the markets to change. “Any attempts to adjust aspects of the EU ETS need to be handled with great care,” he said “because market participants expect there to be no ex-post adjustments, for there to be communication in advance about any proposed changes, and for those to be implemented on a schedule that is communicated to all market participants well in advance."

"In theory however, efforts to remove 500-800m EU allowances from the market is within the powers of the European Commission to manage in part because of the shift from free allocation to auctioning and because the Commission will be essentially running the platform for auctioning. If there are delays in the timing of those auctions that would have the same effect as delaying the release to market of volumes of EU allowances. The question is would they contemplate delaying such a large volume and is that something that would not cause disruption to the marketplace based on the expectations already communicated about timing and volumes?"

Brook Riley, the climate and energy campaigner for Friends of the Earth said that the issue was one of purpose. "Climate science and historical responsibility tell us Europe must reduce emissions by at least 40%, without relying on international offsetting," he said. "We cannot afford to let pressure from big business and other vested interests derail strong action from Europe on tackling the climate crisis. In this context the position of Commissioner Oettinger in opposing the move to a 30% target is particularly regrettable.”

Commenting on indications that energy savings will account for a significant proportion of the emission reductions, he added: “Commissioner Hedegaard’s reliance on energy efficiency to deliver higher CO2 emission cuts strengthens the case for a binding 2020 energy savings target. The cleanest energy is the energy a country doesn’t use - but it’s common knowledge that at present rates the EU will miss its energy savings target by more than half. We need to set a binding energy savings target now.”

Jason Anderson, the head of climate change and energy policy at World Wildlife Fund commented: “The 2050 Roadmap seems set to confirm that our current 20% target is less than business as usual: living up to existing commitments will allow us to exceed that level, and Europe can do even more. We willexpect Council and Parliament to take this analysis and call for a move to at least 30% targets for 2020.” He went on: ”We expect the Commission will deliver an analysis indicating deep reduction potentials in all sectors across the economy, at a net cost savings.Development of effective policies in energy savings will be crucial – the Commission’s upcoming legislative proposal needs to deliver 20% savings by 2020 – starting by setting a binding target. We will also have to adjust the EU Emissions Trading System, otherwise, given carryovers and offsets, it risks becoming a means of increasing rather than decreasing European industrial emissions.”

For Stephen Boucher, the programme director of the European Climate Foundation, the draft document was a step forward – as far as it went. “There’s good news in the draft Commission communication" he noted, "by sticking to current levels of investment into renewables and putting ourselves back on track with energy efficiency improvements, we’ll register at least 25% domestic emissions cuts by 2020 – so this is essentially business as usual. But without a clear target for domestic reductions above business as usual and without a tightened ETS, we won’t have a carbon price nor policy direction to stimulate Europe’s low-carbon investments and allows us to compete with China. It’s welcome that the Commission acknowledges that 30% is still open and that the ETS cap needs to be lowered.”

Sandrine Dixson-Declève, the director of The Prince of Wales's EU Corporate Leaders Group on Climate Change welcomed the roadmap because she said it would “give business leaders and investors the long term investment security they need. However, we still need clarity as to whether the Commission is indicating that 25% is the new 20% or BAU scenario and whether the next cost effective solution for 2030 is 40%. As the Roadmap gets fleshed out we look forward to working with the Commission to ensure that the right policy and pricing signals are in place to reach our ultimate 2050 reduction targets and that the necessary public and private funding is properly allocated.”

“At the end of the day it is essential that member state governments step up to the plate and demonstrate whether they stand behind the roadmap's intent or not.  To date it is unclear in several countries what their position is on targets and timetables.  Last July, France, Germany, and the UK indicated in an open letter to the Financial Times that they were supportive of a 30% target. This call was supported by a group of businesses.  However, many EU countries still have not indicated whether they support a more ambitious target than 20% by 2020 and in some countries retroactive policy changes in the area of renewable energy have created uncertainty as to domestic support for low carbon investments.”