Deal on EU climate package by year’s end?

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The incoming French EU Presidency is confident that it will be able to shepherd a deal on the EU’s climate and energy package through to adoption before the end of the year. But the ‘weight’ of the legislative agenda is unprecedented, and member states’ views diverge on a number of key points.

France, which will take over the EU’s six-month rotating presidency from Slovenia on 1 July, is preparing what some are calling the “heaviest” presidency in EU history (EURACTIV 02/06/08).

Climate and energy policy will make up the major part of the presidency’s work. Paris’ ministers and diplomats will need to broker compromises between 27 EU member states on a number of key dossiers:

  • A review of the EU Emissions Trading Scheme (EU ETS) for the period beyond 2012;
  • Sharing between member states the ‘effort’ of reducing EU CO2 emissions by 20% (possibly 30%) by 2020 in sectors not covered by the EU ETS; 
  • A new framework for the promotion and trade of renewable energies, including biofuels;
  • A mechanism to finance 12 carbon capture and storage (CCS) demonstration plants by 2015, as well as a legal framework for CO2 storage.

Although not directly part of the climate and energy package, the presidency will also be required to tackle controversial proposals on reducing vehicle CO2 emissions and on further liberalising the EU’s gas and electricity markets.

Where there’s a will…

EU leaders have repeatedly stressed that enough political will exists to push through the package before the end of the year. Slovenia’s outgoing EU Presidency, for example, “has all reasons to believe” the French can pull it off, a presidency source said on Monday (2 June). 

The “general political will” is there, and there is a “strong incentive for all member states” to come to Copenhagen with a solid deal in their hands, the source said.

In addition to political will, France’s own diplomats may also be motivated by sheer obligation, with the EU’s international reputation on climate change resting to some extent on the shoulders of the presidency. 

“We don’t have a choice on the energy-climate package because of the international calendar,” according to a senior French diplomat in Brussels. “If we sacrifice Europe’s position, we sacrifice a lot of the international negotiation because it is Europe which is holding it together,” the diplomat said.

Meanwhile French Ecology Minister Jean-Louis Borloo has the official support of his ministerial colleagues in the future Czech and Swedish EU Presidencies respectively, which will take over after France’s mandate expires on 31 December. 

“The three ministers agreed to further the EU internal negotiations on the climate and energy legislative package with the aim to finalise the negotiations before next year’s elections to the European Parliament and in the perspective of facilitating the conclusion of international negotiations on the post-Kyoto protocol in Copenhagen in December 2009,” said a 30 May Czech government press statement.

But despite the confidence and apparent goodwill of EU leaders, a number of key files in the package remain contentious.

East versus West?

Some of the EU’s newer members, for example, are questioning the reference year 2005 chosen by the Commission to calculate how each of the 27 EU member states will contribute to the EU’s promised 20% cut in greenhouse gas emissions (EURACTIV 02/06/08).

The Slovene Presidency has downplayed the issue. “The idea is not new,” according to a presidency source. “It is one of the many proposals on the desk” of the Council’s working groups, the source said.

But the incident points to a divergence of views between the EU’s newer and oldest members about who should shoulder the greatest responsibility for reducing industrial greenhouse gas (GHG) emissions. 

Seven EU member states, including Hungary, Latvia, Malta and Lithuania, Poland and the Czech Republic, are already taking the Commission to court on the grounds that the EU ETS emissions caps being mandated by the EU will unduly harm their industries. 

The delocalisation debate

The EU’s energy intensive industries have also indicated strong apprehension over Brussels’ climate and energy agenda. 

Tightening the ‘screws’ on the EU’s carbon market too much, particularly in the absence of an international deal on CO2 reductions, will push many factories outside EU borders where their CO2 emissions will be ‘leaked’ rather than capped, according to a growing chorus of industry voices that is pushing for exemptions to mandatory CO2 permit auctioning after 2012 (EURACTIV 16/05/08). 

The issue is likely to be central to the negotiations over the revision of the EU ETS. Most member states are asking the Commission to specify which industries might qualify for exemptions earlier than planned, according to a detailed briefing note prepared by the Slovenian EU Presidency.

The Commission has said it will follow-up only by June 2010, following the Copenhagen climate conference.

Renewables, biofuels and coal 

In addition to high-level political debates on CO2 effort sharing and on the role of heavy industry in the EU’s carbon market, France will also need to finalise the EU’s commitment to boosting the level of biofuels in its transport mix, with the EU sharply divided on sustainability issues (EURACTIV LinksDossier).

There are also concerns that the member states will fail to commit the necessary funds to get 12 CCS demonstration plants up and running by 2015, raising the spectre of run-away CO2 emissions from an extensive investment in new coal-fired power plants (EURACTIV 30/05/08).

Promoting renewable energies may prove to the ‘easiest’ file for the French, although member states’ views diverge significantly over the modalities of virtual trading in renewable energy certificates.

A busy week

Two Council meetings at the end of this week may provide an early indication of progress. 

The Environment Council will convene on 5 June, and the Energy Council one day later on 6 June. No common positions are expected from the Councils since the Parliament has yet to vote on the package, but the meetings may shed light on the extent to which member states views converge or diverge on key aspects of the package.

On 23 January, the Commission proposed a series of legislative proposals, dubbed the climate and energy package, designed to reduce EU CO2 emissions by 20% by 2020. That figure will be upped to 30% if an international deal on reducing global CO2 emissions can be reached – a condition that was endorsed by EU heads of state during a landmark summit in March 2007.

With a major UN climate change conference scheduled for Copenhagen in December 2009, EU leaders are keen to reach a deal on the proposals by the end of 2008 or, at the latest, by the Spring European Council of March 2009, when the end of the current Parliament's tenure will bring the EU's legislative machine to a halt.

  • 5 June: Environment Council;
  • 6 June: Energy Council;
  • July - Dec.: French EU Presidency;
  • 16 July: Parliament Industry (ITRE) Committee vote on Turmes' renewables report;
  • 7 Oct.: Parliament Environment (ENVI) Committee vote on EU ETS review and non-ETS effort sharing; 
  • Oct. (tbd): Vote on Davies' report for CCS legal framework in ENVI Committee;
  • Dec.: UN climate change conference, Poznan, Poland;
  • March 2009: Spring European Council and end of current Parliament legislature;
  • June 2009: End of Barroso Commission mandate;
  • Dec. 2009: UN climate change conference in Copenhagen.

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