A strengthened emissions trading scheme (ETS) will be vital to drive further CO2 reductions in the European Union as the bloc discusses an increase of its 2030 climate target, policymakers say.
European Commission President Ursula von der Leyen announced plans in September to target a 55% cut in greenhouse gas emissions by 2030 as part of a broader European Green Deal programme aimed at reaching “climate neutrality” by mid-century.
A broad review of EU climate legislation is planned for June next year to achieve this objective, which will include a revision of the ETS, the EU’s flagship carbon trading scheme.
“It is of upmost importance to strengthen the current ETS by aligning the emissions ceiling with the increased target for 2030,” said Sophie van Eck from the Dutch Permanent Representation to the EU, who spoke at a EURACTIV event earlier this week.
The ETS has already meant coal is less viable than wind and solar power. But although it has driven change towards greener energy, policymakers say it needs to be updated again to further boost renewables and put Europe on track to reaching climate neutrality by 2050, the EU’s stated objective.
“Many of the political and legal frameworks that govern climate policies, such as the ETS, were adopted quite recently after the Paris Agreement and were not even in the vicinity of being Paris compliant,” remarked Jakop Dalunde, a Swedish MEP from the Greens/EFA political group in the European Parliament.
The proposed European Climate Law, which enshrines the EU’s 2050 climate neutrality goal into legislation, is a step in the right direction but there is ground to make up, especially in the transport sector where emissions are still increasing, Dalunde added.
To reach the 2030 objective, the Commission says the share of renewable energies must double to around 38-40% of the EU’s energy mix, up from around 20% currently. The EU’s current target, agreed in 2018 after two years of strenuous talks, is to grow renewables up to 32% by 2030, an objective which already sounded ambitious at the time.
But reaching the EU’s updated 2030 climate goals will require efforts from across the entire economy, not just the energy sector, policymakers say.
“We need all the sectors in the economy to contribute to this very high target, so we cannot talk about energy only,” said Cristina Lobillo Borrero, director of energy policy at the European Commission’s energy department.
“Particularly in the road transport sector, greenhouse gas emissions are increasing. And we cannot forget agriculture as well,” she added, saying so-called ‘carbon sinks’ – forests and oceans – will “need to do a significant effort” to increase their capacity to absorb CO2 from the atmosphere.
The European Council, the body bringing together the EU’s 27 heads of states, is still debating the bloc’s overall climate target for 2030. While the Commission has put forward a 55% greenhouse gas reduction goal, the European Parliament voted to raise the level of ambition to 60%.
“It is clear that higher targets will need higher financial support,” Borrero said. “The challenge now is to make sure that this takes place as soon as possible.”
A 55% climate target is perfectly possible to achieve and needs a rapid build-up of renewable electricity generation, according to Matthias Buck from Agora Energiewende, a German think tank.
“In order for this to happen, we need governments across the continent to do their homework to put in place the regulatory frameworks and the financing conditions to have this scaling of renewable happen at the speed it needs to happen and as cheap as possible,” he said.
Across Europe, wholesale electricity prices have been depressed by the advent of cheap renewables like solar and wind. To boost renewables even further, a level playing field must be restored against fossil fuels by removing taxes and levies currently slapped on electricity, some argue.
“The sooner we move, the better the emissions are reduced and the more likely it is we achieve the final objective,” said Elena León Muñoz from Spanish energy utility Iberdrola, which supported the EURACTIV event.
To underpin the shift to renewables and meet the bloc’s new 2030 goals, the European Commission is also looking to raise the EU’s energy efficiency target to 38-39%, up from a target of 32.5% currently.
That will be a tall order. EU member states have been dragging their feet on energy savings and have repeatedly failed to meet energy efficiency targets, which are currently not legally-binding.
But there are reasons to believe Europe could meet the objective this time, thanks in part to a building “renovation wave”, which the European Commission launched in October.
Even so, Swedish MEP Dalunde warned against one-size-fits-all solutions for buildings across the EU, saying regional differences need to be taken into account. Buildings in southern Europe “are bleeding energy” and uniform regulations risk worsening energy poverty in those areas, warned Dalunde, who called instead for using EU funds to renovate entire neighbourhoods.
“Only using regulation and targets to ask for energy efficiency is not the best way to do it,” Dalunde said. “It’s much better to create economic incentives for stakeholders to do it themselves and use raised revenues through those economic incentives to support technology and pilot projects.”
Muñoz, for her part, said EU funding in areas like southern Europe would be better invested in electrification rather than big housing renovations projects. According to EU projections, a doubling of the share of electricity in EU energy consumption will be necessary to achieve the 2050 climate neutrality goal.
“Economically, it’s better for electrification because construction is not always working,” said Muñoz whose country, Spain, faces a second real estate crash caused by the coronavirus crisis.
Building renovation “generates a lot of employment, but at the end of the day, people aren’t willing to accomplish those measures at home because it’s a lot of work inside their houses,” she said.
Hydrogen still on the horizon
While the Commission sees electricity as the new “backbone” of the EU energy system in 2050, much remains to be done to decarbonise sectors which cannot be easily electrified – such as heavy industries and long-distance transport, which are currently reliant on fossil fuels.
For those sectors, hydrogen is the new buzzword.
“Electrification is not the answer in all our energy sectors, mainly in energy intensive industries in the Netherlands,” van Eck said. “Also when it comes to long distance transports, especially in the maritime and aviation sectors, we see an importance in the role of hydrogen as a renewable gas.”
However, hydrogen is still highly inefficient and takes a lot of energy to produce, Muñoz pointed out. Producing green hydrogen from renewables will also require an extensive build-up of electricity grids to take advantage of excess energy from renewables such as wind turbines and use this for electrolysis to produce hydrogen, she remarked.
“We all welcome green hydrogen as part of the promising solutions that will enable us to achieve decarbonisation by 2050,” said Muñoz.
But she added that it should be reserved for areas like aviation and steelmaking where no other alternatives are available at the moment.
“It’s a very, very expensive solution at the moment. It’s not efficient,” Muñoz said.
(Edited by Frédéric Simon)