Carbon Market Watch Blog

Today, the report “Trend and projections in Europe 2013” was published by the European Environmental Agency (EEA). It tracks progress towards Europe’s climate and energy targets until 2020. The good news is that Europe’s Member States are on track and will achieve 21% reduction below 1990 levels in 2020 with current climate policies in place. Together with additional measures at planning stage, a 24% reduction below 1990 levels in 2020 is expected. This confirms that reaching our climate targets was possible and much easier than actually expected. The study also shows that growing our economies while reducing emissions is possible.

The not so good news is that the current rate of progress implies roughly an average rate of reduction of only 0.8% per year which will only bring 48% reduction by 2050. But science tells us that we need to reduce by 80-95% by 2050 to keep global warming below 2 degrees. We also need to spur our domestic investments and move away from spending scarce climate finance on international offsets. The report finds that Member States have spent more than 2.3 billion Euros on international offsets to achieve their Kyoto targets. At the same time renewable energy and energy efficiency measures have been neglected.

The new report reveals that the potential of the Effort Sharing Decision, the piece of legislation that covers sectors outside the EU’s Emissions Trading Scheme and could create enormous incentives for energy efficiency measures, hasn’t been utilized. This is especially important in the context of the debate around the 2030 climate and energy framework which should be the successor of the 2020 climate package.

Why does the EU need a framework for non-ETS emissions?

If the EU is serious about reaching GHG reductions of 80-95% reductions by 2050 it must transition to low carbon development in all key sectors as soon as possible. These transitions take time. Almost 60% of the EU’s GHG emissions are from sectors outside EU-ETS, yet these sectors are only required to reduce emissions by 10% by 2020. Significant gaps exist in the EU regulation of key sectors, such as agriculture, mining, transport, lighter industry and consumers. Gaps also exist for particular GHG gases such as methane emissions. Binding, economy-wide targets are essential to drive national measures.

The binding EU GHG reduction target for 2020 only exists through the ESD and the ETS legislation, there is no other legislation that makes the EU goal legally binding. The ESD is the structural instrument or ‘chapeau’ that translates the economy wide GHG target into national binding targets. If for the period from 2020-2030 the EU only had the ETS plus sectoral policies, e.g. Energy Efficiency Directive, Renewable Energy Directive, Landfill Directive, there would be no legally binding economy wide target for the EU. The ESD ensures such an economy wide target and offers flexibility to EU Member States in their choice of policy mix to achieve GHG reductions. It furthermore aims to share the reduction effort in an equitable way by allocating different targets to different Member States.

What about Energy Saving Targets?

CO2 is the largest contributor to man-made climate change. In the EU CO2 emissions are responsible for over 80% of greenhouse gas (GHG) emissions. But also other gases need to be addressed if the EU is to meet its 2050 reduction goal. Unlike the ETS, which primarily regulates CO2 emissions, the EU Effort Sharing Decision covers all of the six most important GHGs.

The recent numbers published by the EEA show that only three Member States are considered to be making progress towards energy efficiency targets. This is largely due to the fact that only a small number of European legislations exist that obliges Member States to implement energy efficiency measures. The ESD could help drive higher ambition for a broader set of energy savings measures by translating the EU economy wide GHG target into binding obligations for each MS.

To effectively reduce emissions from all greenhouse gases, the EU will therefore need both, ambitious Energy Savings Targets and an instrument like the ESD to provide a governance framework for the economy wide GHG target, in order to be on track for a nearly fully decarbonised economy by 2050.

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