European energy and climate targets

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1 european council for an energy efficient economy European energy and climate targets Nils Borg, eceee Executive Director European Council for an Energy Efficient Economy 2015 BP Madrid Forum on Energy & Sustainability 29 September 2015

2 About eceee Promote, generate and analyse evidence-based knowledge on EE Membership-based non-profit association 75 organisations 100s of individuals Focus on end-use efficiency Five-day Summer Study every two years in the South of France Industrial efficiency Arranges workshops and publishes reports Popular web site BP Madrid Sustainability Forum

3 How much can energy efficiency deliver? Much more than we think! BP Madrid Sustainability Forum

4 IEA World Energy Outlook 2012 Yearly assessment of energy status in the world For the first time, energy efficiency is featured as main strategy Nothing new, but now it is official! BP Madrid Sustainability Forum

5 The Efficient World Scenario: a blueprint for an efficient world Total primary energy demand Mtoe New Policies Scenario Efficient World Scenario Reduction in 2035 Coal Mtce Oil 12.7 mb/d Gas 680 bcm Others 250 Mtoe IEA World Energy Outlook 2012 BP Madrid Sustainability Forum

6 Targets or goals? something that you are trying to do or achieve (m-w.com) BP Madrid Sustainability Forum

7 Setting targets for EC energy and climate policy is not easy All EU or per member state? Indicative or legally binding? Targets for absolute use, for intensity etc, or for measures? How do we evaluate them? Grandfathering (early actions) One target (GHG) or multiple targets? In the end it is about how you see energy efficiency (cf growth, education, health etc) BP Madrid Sustainability Forum

8 Burden sharing? Opportunity sharing? BP Madrid Sustainability Forum

9 EC 2030 policy framework 27% energy efficiency (indicative, all-eu) 25% first proposal 30% second proposal 27% Council decision October % renewables 40% GHG reductions (binding) BP Madrid Sustainability Forum

10 Key issue: one or many targets? Economistic view point that setting a GHG targets is enough Let market forces and programmes work it out Too much faith in ETS to deliver But is it the case? Germany was very pro one target Three recent individual studies for German government show multiple targets is a more cost effective approach Sub-targets are set in en EPBD, EED etc! BP Madrid Sustainability Forum

11 Example: EED article 7 All MSs must deliver one way or the other 1,5%/year Not necessary to go for EEOs (white certificates etc) Freedom to create alternative measures Good practice for larger and bolder targets! BP Madrid Sustainability Forum

12 2014 Impact assessment on 2030 Energy and climate policy Criticised for using high discount rates (17,5%) But even with high discount rates higher ambitions it was very appealing Growth, employment, multiple benefits However, ambitions were scaled down BP Madrid Sustainability Forum

13 2014 Impact assessment: Primary energy/energy system Primary energy ex non energy % EE27 Eurostat, ex non energy Mtoe Baseline scenario Reference scenario EE40 20% target for GHG40 EE27 EE EE29 EE30 EE EE BP Madrid Sustainability Forum

14 2014 Impact assessment: Energy Security (gas imports) Net Natural Gas Import = BP Madrid Sustainability Forum

15 2014 Impact assessment: GDP impacts 5,0% GDP impacts in EU % change from reference 4,0% 3,0% 2,0% 1,0% GEM E3 E3ME 0,0% 1,0% EE25 EE28 EE30 EE35 EE40 2,0% BP Madrid Sustainability Forum

16 2014 Impact assessment: Employment 3,5% 3,0% EU28 Employment 2030 % difference from reference 2,5% 2,0% 1,5% GEM E3 E3ME 1,0% 0,5% 0,0% EE25 EE28 EE30 EE35 EE40 BP Madrid Sustainability Forum

17 2014 Impact assessment: Energy system cost Bill Total energy system cost Ref GHG40 EE27 EE28 EE29 EE30 EE35 EE40 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% Total cost, bill Change compared to reference BP Madrid Sustainability Forum

18 Discount rates in the impact assessment Criticised for using high discount rates (17,5%) Yes I agree Problem with PRIMES Only one model Same rate for predicting investment behaviour (implicit rates) as for societal energy system cost analysis BP Madrid Sustainability Forum

19 PRIMES not transparent and process is not good No one understands how the rates have come in place Policy makers don t understand the models Modelling replaces policy do we want that? No test of PRIMES against other models to see if results are realistic Much higher than Member states apply (2 6% vs 17,5%) Why did Commission apply so high rates compared to their own guide MSs (4%)? BP Madrid Sustainability Forum

20 Conclusions Targets are needed Multisector is good We need to break them down in manageable units (such as requirements for buildings codes, EED article 7, etc) We should share opportunities, not avoid burdens We should and can do much more BP Madrid Sustainability Forum