Targets and the EU’s New Energy Policy

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Christian Egenhofer, in this Centre for European Policy Studies (CEPS) policy brief, examines the nature and effectiveness of targets set by the EU in the context of its new energy and climate-change package.

The Commission proposed a range of measures on the 10 January 2007 in a bid to reduce the EU’s dependency on imported fuels. These included proposals for a ‘unilateral’ 20% reduction in greenhouse-gas emissions by 2020, as well as targets for renewables, biofuels, and energy efficiency measures.

The author writes that one of the most controversial issues in the package has been the nature of these long-term targets, especially for specific sectors such as renewables as a share of electricity generation. 

The author identifies in the paper a number of key conditions that are crucial in order to make indicative or ‘aspirational’ targets work in the EU. 

He says that EU targets need to be long-term, credible, backed by detailed and realistic implementation strategies and quantifiable, so that achievements can be measured.

In addition, he argues that best results are achieved if the targets are set on an EU-wide basis with significant objectives (eg energy security or long-term climate change). It is also important that they concentrate on the desired outcome (e.g. near-zero carbon technologies) rather than prescribing solutions (e.g. carbon capture and storage, renewables, nuclear or fusion), according to the author.

If these steps are taken, he argues, targets can be useful in steering investment in a desirable direction while avoiding the most important risks: market segmentation, rent-seeking, lack of credibility or reversal of a policy leading to stranded investment.

The discussion about the need for additional sectoral targets is likely to come to the fore again in the negotiations in the Energy and Environment Councils in February, to be finally settled in the European Council on 8-9 March 2007.

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