The Parliament’s environment committee yesterday (7 October) voted largely in favour of three separate reports on emissions trading, greenhouse gas reduction ‘effort’ sharing and CO2 capture and storage in a show of support for the EU’s ambitious climate change policy.
On the EU ETS proposal, the environment (ENVI) committee gave its backing to all but one of the compromise amendments introduced by Parliament’s rapporteur, Irish Christian Democrat MEP Avril Doyle. The main elements of the Doyle report (adopted with 44 votes in favour, 20 against with one abstention) include:
- The power sector should be obliged to obtain 100% of CO2 permits at auction after 2013;
- Energy-intensive industries should be required to obtain 15% of emissions permits at auction in 2013, with a gradual phase-in towards 100% auctioning by 2020 (a 5% decrease compared to the Commission’s initial proposal for a 20% auctioning requirement);
- 500 million spare emissions allowances, normally reserved for new entrants into the EU ETS scheme, should be made available as an incentive/financing measure for large-scale commercial carbon capture and storage (CCS) demonstration plants;
- The threshold for installations affected by the EU ETS should be raised from 10,000 to 25,000 tonnes of annual CO2 emissions;
- 100% of member states’ auction revenues should be set aside or ‘ring fenced’ for climate-related purposes, whereby half of the money should be earmarked for developing countries;
- Installations should be able to achieve at least 40% of their targets through the financing of emissions reductions projects in third countries under the Kyoto Protocol’s Joint Implementation and Clean Development Mechanisms (JI/CDM), but stricter rules on the validity of CDM projects would need to be respected;
- Up to 5% of emissions reductions could be obtained through the preservation of forests in developing countries under the condition that an international climate deal is in place.
Scuffle over carbon leakage
Doyle was credited for having carried the file through to completion despite infighting and an attempted ‘mutiny’ within her own political group, the European People’s Party (EPP). An 11th hour attempt by a group of EPP MEPs, led by Christian Democrat MEPs Karl-Heinz Florenz (Germany) and Eija-Rita Korhola (Finland), to change the order of voting on amendments to the report was rejected by the president of the ENVI committee on procedural grounds.
In what was widely considered a blow to several industry lobbies, the committee then voted down a set of consolidated amendments co-authored and tabled earlier by Florenz and Korhola, who had the backing of a number of EU energy-intensive industries concerned about exposure to competition from producers in third countries with less stringent CO2 reduction policies.
Three quarters of MEPs from the EPP-ED group ended up voting against the Doyle report as a result.
By voting in favour of Doyle’s compromises, the committee endorsed the rapporteur’s position that sectors eligible for 100% free emissions allowances should be identified only after the conclusion of international climate talks in Copenhagen in December 2009. Doyle’s report also sets stricter criteria on the use of benchmarks for determining which sectors could receive free emissions permits.
Going for 30
The committee also gave nearly unanimous backing to the Finnish Green MEP Satu Hassi’s report on the Commission’s ‘effort sharing’ proposal concerning the distribution of CO2 reduction measures between member states in non EU ETS sectors such as transport, agriculture, home heating and waste management.
Hassi’s report calls for an automatic increase of the EU’s target for reducing greenhouse gas emissions by 2020 from 20% to 30% in the event that an international climate change deal is reached in Copenhagen. Her report also paves the way for possible financial penalties on member states that fail to realise their commitments, and it limits by one third (compared to the Commission’s initial proposal) the amount of external credits member states can obtain through the funding of emissions reductions projects in developing countries.
The ‘Schwarzenegger amendment’
In their last major vote of the day, ENVI committee MEPs signed off a report on a legal framework for CCS, authored by UK Liberal MEP Chris Davies. MEPs backed an amendment in the report that would require member states to set limits on the CO2 performance of power stations: after 2015, power plants’ emissions cannot exceed 500 Kg of CO2 per kilowatt hour (Kwh).
The amendment, based on a similar measure introduced by California’s governor Arnold Schwarzenegger, is designed to oblige power companies to install CCS equipment in particular on their coal-fired power plants, which produced the highest amount of CO2 compared to other types of electricity-generating installations.
Davies and Doyle had collaborated closely in the months leading up the vote, whereby Doyle’s amendment on the use of funds from the EU ETS new entrants reserve combined with Davies’s amendment for a CO2 limit on power stations are meant to drive the commercial development of CCS technology.
The Commission breathed a sigh of relief after the vote. "It is important that the committee, while approving a range of amendments, has voted to keep the broad architecture of our proposals unchanged," EU Environment Commissioner Stavros Dimas said in a statement.
Speaking to reporters after the vote, one Commission official also praised the outcome as "fantastic", saying it provided a sound basis for further negotiations with the Council.
German Christian Democrat MEP Karl-Heinz Florenz was less enthusiastic. "We have missed the chance to come up with a practical solution. Europe will face a tough burden in the internal market, while America and China's industry will enjoy a light regime. This is going to cost us jobs," he said in a statement.
UK Socialist MEP Linda McAvan, the group's vice-chair, congratulated her colleagues for defeating what she called a 'right wing' attempt to water down the EU's climate package. Green MEP Caroline Lucas, also from the UK, was "delighted that the environment committee saw off attempts by industry to completely derail the ETS," but criticised the committee's support for the use of ETS funds to support CCS.
The European Association of Metals (Eurometaux) was dismayed by the outcome and warned that the ETS could destroy the EU's metals industry. "Today's vote opens the door to a significant delocalisation of energy-intensive industries, like ours, to regions without restrictions on greenhouse gas emissions," Guy Thiran, the organisation's secretary general, said in a statement.
Cefic, the European chemical industry association, said it was pleased that the environment committee accepted the use of benchmarking "as a concept" for distributing CO2 emissions rights. "What is needed is a fair and rewarding system for world-class industry performers who develop new low carbon processes and who receive free allocations on this basis," Cefic said in a statement. "Without such benchmarking processes, the European Union faces the risk of relocations because of a loss of competitiveness," it added, saying a balance needs to be found to "preserve European industries’ competitiveness and jobs".
But the association regretted that auctioning was finally kept as the preferred option. "Increasing the costs of emissions rights through auctioning is not an effective way to tackle climate change. Without a truly international agreement with the same rules across the board, the auctioning system will place a unilateral and costly burden on the European chemical industry."
Sanjeev Kumar, ETS coordinator for the WWF, congratulated Doyle on warding off "the most horrible rebellion she could possibly have within her own party," and was positive that the use of auctioning for the power sector and for energy intensive industries was maintained in the basic architecture of the climate package.
Greenpeace lamented that the committee supported the push towards CCS technology. "EU taxpayers should not be asked to pay for so called 'clean coal', diverting resources and attention away from renewable energy and energy efficiency," Joris den Blanken, the group's climate and energy policy director, said in a statement.
Oxfam welcomed the notion of using 50% of ETS auction revenues towards climate change related efforts in developing countries.
But Irish Christian Democrat MEP and rapporteur Avril Doyle expects the amendment to get a rough ride in the Council. There will be a "battle royale" on the issue of how to spend member states' auction revenues, she said.
On 23 January 2008, the Commission presented a series of proposals designed to transform into law the political commitments made by EU member states in March 2007 to reduce the EU's emissions of CO2 and related greenhouse gases (GHGs) by 20% by 2020, while boosting the bloc's share of renewable energy use to 20% over the same period.
A proposal to revise and strengthen the EU's Emissions Trading Scheme (ETS), the 'flagship' EU policy to tackle climate change, as well as a proposal that outlines how member states should divide the 'effort' of sharing CO2 reductions in sectors not affected by the ETS between themselves, is the mainstay of the so-called 'climate and energy package'.
A proposal on a legal framework to regulate the geological storage of CO2 captured during power generation is also part of the package.
- End 2008: The Council, Parliament and Commission will now negotiate in a so-called trialogue in order to reach a deal on the package;
- March 2009: End of Parliament's legislature and alternate date for finalising the climate package;
- Dec. 2009: UN climate summit in Copenhagen.
- Commission press release:Commissioner Dimas welcomes EP Environment Committee vote on climate—energy package(07 October)
- MEP Satu Hassi (Finland, Green)EU emissions reductions rules: Overwhelming support from MEPs for strong EU rules on emissions reductions in member states(07 October)
- MEP Karl-Heinz Florenz (German, EPP Group):Emission Trading: Environment Committee for wrong tools. Karl-Heinz Florenz MEP(07 October)
- MEP Caroline Lucas (UK, Green)Emissions trading scheme: Environment committee votes for viable ETS as industry fails to dictate terms(07 October)
- MEP Linda McAvan (UK, Socialist):Euro MPs rebuff right-wing and endorse new rules on climate change.(07 October)
Business & Industry
- European Confederation of Iron and Steel Industries (Eurofer):Joint Appeal to the political decision makers on the revision of the EU Emissions Trading System (EU-ETS)(02 October)
- European Chemical Industry Council (Cefic):Press release in advance of vote(06 October)
- European Association of Metals (Eurometaux):EU Parliament’s Environment Committee threatens the long-term future of Europe’s metals industry(07 October)
- European Cement Association (Cembureau):Carbon leakage: European cement industry at risk(07 October)
NGOs and Think-Tanks
- WWF, Greenpeace, CAN Europe, Friends of the Earth Europe:EU Parliament falls short of improving EU’s answer to climate change(07 October)