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

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Energy savings could slash greenhouse gas emissions by 25% by as early as 2020, according to a draft copy of the EU's long-awaited 'roadmap for moving to a low-carbon economy in 2050,' seen by EURACTIV.

The EU's current goals for 2020 involve reducing emissions by 20% on 1990 levels, increasing the share of renewables in the bloc's energy mix by 20% and improving energy efficiency by 20%.  

But in a twist to the debate over whether the economic crisis has made a 30% emissions reduction more realisable, the document says implementing the EU's stalling energy savings goals would reduce emissions by a further 5%.   

"The analysis shows that the cost-efficient pathway to the necessary reduction in 2050 requires a 25% domestic reduction in 2020," the paper reads. "It also shows, however, that the EU can produce this reduction if it delivers on its existing commitment to increase energy efficiency by 20% by 2020."

The document is expected to be published shortly. Commission sources say they hope that it will be presented in a package with the energy efficiency plan drawn up by the energy department at the European Commission and a white paper on transport.

The environmental group Friends of the Earth hailed the news, but with caveats.

"A 25% reduction represents little more than business as usual and is a clear step-down from the proposed 30%," said the group's climate and energy campaigner, Brook Riley.

EU Climate Action Commissioner Connie Hedegaard, maintains that the offer to reduce emissions by 30%, agreed by EU leaders on the condition that other big polluting countries follow suit, is wholly unrelated to the roadmap.

"We're proposing new exercises, models and energy efficiency measures to liven the debate up," a Commission source told EURACTIV. 

"We're being active and stepping up our policies and plans so that we're even more ambitious. The commissioner would never diminish her commitment to the 30% target."

Nonetheless, the 25% number will inevitably be viewed in the context of Brussels horse-trading, as it sits elusively between the 20% and 30% CO2 reduction targets. And failure to reach it will most likely be blamed on the Commission's current inability to enforce binding energy savings goals.

Towards 80-95% reduction by 2050

The roadmap document, dated 9 February 2011, is mostly a cost-analysis of the various steps needed to reach the EU's goal of reducing greenhouse gas emissions by 80-95% on 1990 levels by 2050.

It sets suggested targets for emissions reductions in 2020 (25%), 2030 (40%), 2040 (60%) and 2050 (80-95%). It also offers modelling and sectoral breakdowns of the most cost-efficient "pathways" it sees for achieving these.

A "major and sustained investment" is proposed for renewable energy, smart grids, carbon capture and storage (CCS), advanced industrial processes and electrification of transport over a 40-year period.

The paper predicts that the increase in spending would amount to some €270 billion annually or an additional 1.5% of EU GDP per annum – on top of the 19% of GDP which is currently invested.

An additional €50 billion in research and development will also be required over the next ten years.  

But over a 40-year period, savings from energy efficiency and renewables are expected to net reductions in the EU's average fuel costs of between €175 billion and €320 billion per year, depending on the extent and speed at which climate action is taken.

Significantly perhaps, the roadmap proposes that should the electrification of the transport sector prove successful, "the demand for biofuels could stay at levels not much higher than in 2020," i.e. probably around 10% of the energy mix. 

This would mostly involve powering heavy duty vehicles and aviation.

Carbon capture and storage would also need to be deployed "on a broad scale after 2035" at an annual cost of €10 billion.

ETS to drive low carbon technologies

The EU's emissions trading scheme (EU ETS) "will need to be strengthened to drive a wide range of low- carbon technologies" and to this end both a "sufficiently strong carbon price signal and long-term predictability" will be needed, the paper says.

Immediately, the roadmap proposes setting aside between 500-800 million allowances in the transition between Phase Two and Phase Three of the ETS, from 2013-2020 to offset excess allowance allocations during the Phase Two period.

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.”

The EU has set itself a legally binding goal to reduce its emissions by 20% from 1990 levels by 2020. Moreover, it has pledged to raise this to 30% if other countries make comparable commitments.

The EU agreed a new Renewable Energies Directive in December 2008, which turns into law its binding target to source 20% of the bloc's energy from renewable sources by 2020.

In October 2009, EU leaders endorsed a long-term target of reducing collective developed country emissions by 80-95% by 2050 compared to 1990 levels. This is in line with the recommendations of the UN's scientific arm - the Intergovernmental Panel on Climate Change (IPCC) - for preventing catastrophic changes to the Earth's climate.

  • 9 March: European Commission expected to publish low-carbon roadmap for 2050.

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