Results from the Swedish Environmental Protection Agency analysis of the ESR-proposal

Transcription

1 1(15) SW E D I SH E N V IR O N M EN T A L P R OT E C T IO N AG E NC Y Results from the Swedish Environmental Protection Agency analysis of the ESR-proposal In short: The ambition in the 2030 climate framework is too low in relation to the temperature targets in the Paris Agreement which in turn leads to the ESRproposal being too low in its targets. The proposed ESR-reduction target trajectories, including allowed flexibilities, result overall in limited need for additional measures in the ESRsectors compared to business-as-usual. When the need for further reduction is low, the introduction of new flexibilities (LULUCF-units and ETS allowances), will have reduced effect, primarily contributing to a possible build- up of surpluses. The additionality of the proposed new flexibilities can also be questioned. The introduction of additional flexibilities in the ESR needs to be limited in relation to current target level. The limitation is essential for the ESR to contribute to EUs NDC under the Paris agreement and for EUs long-term low carbon development. The way the emission limits at the starting point in 2021 are defined impacts the overall gap/surplus level in the ESR significantly. The potential surplus in the system and for individual MS would increase further throughout the period if the trajectory is allowed to start at the 2020-target level according to the Effort Sharing Decision. Uncertainties in the gap analysis may affect the ESR-target analysis. An updated analysis of possible future mitigation in the EU, also taking into account the favourable progress seen in recent years in the development and deployment of clean-energy technologies, for instance Zero Emissions Vehicles, may demonstrate good economic-technological capacity to tighten the EU s 2030 targets and the reduction trajectories. Several MS will be allowed to increase their emissions compared to current emission levels and projected emission levels in 2030-reference scenarios. O F F IC E: ST O C K H O LM VALH A L L AV ÄG E N 195 Ö ST E R SU N D F O R SK AR E N S V ÄG 5, HUS U B P O ST A L AD D R E SS:SE ST O C K H O LM PHONE: F AX: E-MAI L: R E G IST R AT O R@NAT U R V AR D SV E R K E T.SE IN T E R N E T: WWW. SW E D ISH E P A. SE

2 2 Introduction The Swedish Environmental Protection Agency in cooperation with the Swedish Energy Agency has analysed the European Commission proposals and impact assessments from 20 July 2016 for a 2030 regulation on an effort sharing for emission reductions for MS (ESR-regulation) and on a LULUCF- regulation. This non-paper summarizes some selected parts of the results that have been compiled and presented by the Swedish Agencies. The compilation uses, to a large extent, the same data and data sources as the European Commission does in the ESR-impact assessment. Another main source of information has been the EEA were the data from MS national work with emission trends and projections can be found. The ambition in the 2030 climate framework is too low in relation to the temperature targets in the Paris Agreement The Intergovernmental Panel on Climate Change (IPCC) will provide a special report in 2018 on the impacts of global warming of 1,5 degree above pre-industrial levels and related global greenhouse gas emission pathways 1. Based on this coming report, the EU intends to develop its strategy for emission reductions up to Previous IPCC reports (for example, the assessment reports from 2013 and 2014) are sufficient, however, to establish that the Paris Agreement temperature targets severely restricts the global carbon budget compared to the global budget that can be linked to the EU s current 2 degree target. The European Council stated in 2009 that the EU's objective is to reduce GHG emissions by 80-95% in 2050 compared to Such a reduction would be in line with an objective to likely limit the global warming below two degrees 2. According to the 1.5 degree emission pathways (well below 2 degree pathways) that have been modelled to date 3, the Paris Agreement s temperature targets require a steep reduction of emissions from 2020 at the latest, to reach, net zero carbon dioxide emissions from fossil-fuel use no later than the middle of this century in all sectors globally, while emissions of other greenhouse gases need to be limited to low levels. 1 In the context of the global response to the threat of climate change, sustainable development and efforts to eradicate poverty. Outline of the report decided during the 44 th session in Bangkok Thailand October With a probability of at least 66 percent. The Euopean Council statement was in line with scientific findings reported by the International Panel on Climate Change (IPCC) in its fourth Assessment Report, 3 van Vuuren D.P., van Sluisveld M., Hof A.F. (2015). Implications of Long-Term Scenarios for Medium-Term Targets (2050). Netherlands Environmental Assessment Agency, The Netherlands. Rogelj J., Luderer G., Pietzcker R.C., Kriegler E., Schaeffer M., Krey V., Riahi K. (2015). Energy system transformations for limiting end-of-century warming to below 1.5 C. Nature Climate Change vol. 5, p

3 3 Moreover, total greenhouse gas emissions need to reach net-zero levels soon after 2050 to then shift to become net-negative, according to these emission trajectories. The idea that it may prove possible in the future to, on a large scale, implement measures that contribute to net negative emissions globally (primarily via enhanced carbon sinks and CCS technology linked to the combustion of biomass, BECCS) is however questioned, in part because the scenarios require very large volumes of biomass and consequently the land areas to be utilised globally for this to become reality 4. As the global temperature increases, the risks of passing one or multiple tipping-points 5 also increases. 6 These risks make rapid and large emission cuts, to low emission levels, even more essential. The minimum level in relation to the global development described above is greenhouse gas emissions also in EU countries achieving net-zero by 2050 and that requirements contributing to net negative emissions are developed. For it to be possible to achieve, 2030 emissions also need to be lower than is required by the proposed EU targets. See figure 1 below for an illustration. Figure 1 Emission reduction trajectories to 2030 in the current ESR-proposal compared to possible EU-2050 low-carbon emission pathways for the ESR-sectors. Source: Own calculations based on European commission 2016: EU reference scenario 2016, the ESR IA and the Commission SWD to COM (2011)112 A roadmap for moving to a to a competitive low carbon economy in The proposed reduction trajectories, including allowed flexibilities, result in limited need for additional measures in the ESR sectors by 2030 Overall, the Commission s impact assessment results in a relatively small difference between emissions (cumulatively) in the Commission s latest reference scenario for the period, and the cumulative emissions in the (preliminary) greenhouse gas reduction trajectory, which the Commission 4 See for example SEI working paper no The risk of relying on tomorrows negative emission to guide todays mitigation action. Kartha S. and K. Dooley. 5 A treshold for abrubt and irreveresebilechange. 6 IPCC AR5

4 4 proposes is to apply to the target pathway for the period, even when the calculation excludes proposed additional flexibilities. The difference, or emission gap, amounts in total to just over 500 million tonnes of carbon dioxide equivalents over the ten-year period in question, which means that the emissions up to 2030 in ESR sectors need to be reduced by an additional 3.5 percentage points compared to 2005 to achieve the targets (if the future reduction is linear over the period). See figure 2 below. If instead, the reduction trajectory is compared with the Member States most recent national projections the emission gap would be larger. When studying the projections we find that three Member States (WEM 7 ) projections are considerable higher in emissions in 2030 compared to the Commission s reference scenario from They alone explain a major part of the difference in total numbers. We also find that the Member States scenarios need to be updated to make the comparison with the Commission s reference scenario 2016 more adequate. Figure 2 Proposed ESR-reduction trajectory for EU28 without additional flexibilities and the EU 2016 reference scenario for EU 28. Starting point based on average emissions. A 2021 starting point based on 2020-ESD targets is also illustrated in the graph. Source: Own calculations based on European commission (2016): EU reference scenario 2016 and the ESR IA In the Commission s ESR-proposal the following flexibilities, that can be used to cover emissions in the ESR, are proposed in addition to keeping the existing flexibilities from the ESD 8 : LULUCF credits (totalling a maximum of 280 million tonnes during the period) a one-off flexibility from the Emissions Trading System (EU-wide to a maximum of 100 million tonnes over the period); and 7 With Existing Measures 8 Excluding use of international credits

5 5 In addition to the above flexibilities a special compensatory allocation of emission rights to lower-income member States (totalling 39 million tonnes), is proposed. When the gap analysis also takes account of the additional flexibilities the difference between the emissions in the reference scenario and the allowed emissions in the proposed reduction trajectory is reduced to an overall total of less than 100 million tonnes of carbon dioxide equivalents in the period. See figure 3 below for an illustration. Figure 3 Proposed ESR-reduction trajectory for EU28 with and without proposed additional flexibilities and the EU 2016 reference scenario for EU 28. Starting point based on average emissions. A 2021 starting point based on 2020-ESD targets is also illustrated in the graph. Source: Own calculations based on European commission (2016) EU reference scenario 2016 and the ESR IA To meet the proposed ESR-trajectory, including flexibilities, the emissions in the entire EU 28 only needs to be reduced with nearly one percentage point compared to the reference scenario (an increased reduction from around 24 per cent to just under 25 per cent below 2005 emission levels in 2030). This means that the EU as a whole in principle can meet the ESR trajectory requirements even if the remaining gap to the 30 per cent emission reduction would be relatively large in the year If the proposed additional flexibilities were used to the maximum, there would consequently be little need for additional measures beyond the business-as-usual scenario (the reference scenario). The result also depends, in addition to the assumption of a maximum use of the new flexibilities, on whether there will be a surplus relative to the EU-wide reduction trajectory early in the period ( ). This situation is affected by the way emission limits at the starting point of the target trajectory are set. Any

6 6 surplus that arises early on can be used later to achieve the targets towards the end of the period. A surplus in the ESR by 2030 is likely to arise as the energy efficiency and renewable targets are to be met by 2030 The EU 2030 framework also includes energy efficiency targets (27 or 30 per cent increased energy efficiency) and an increased share of renewable energy (at least 27 per cent by 2030). The Commission has therefore also drawn up two scenarios in which the EU targets of 27 or 30 per cent energy efficiency and 27 per cent renewable energy production are reached by 2030 at the same time as collective greenhouse gas emissions also fall by 30 per cent in the ESR by To achieve these targets, it is for instance assumed that CO2 emission requirements for passenger cars and light goods vehicles will be tightened in two stages (2025 and 2030). The application of the directives on the energy performance of buildings and energy efficiency will also be tightened in these two scenarios. When the effects of tightening these policy instruments are added to the analysis above, making use of the allowed flexibilities in the system, a surplus emerges in the ESR to 2030 (of around 700 million tonnes of carbon dioxide equivalents) in the Commission s analysis. A surplus of that size correspond to a possible additional increase of the ESR-emission target in 2030 by 5 per cent points 9 Uncertainties in the gap analysis may also affect the results The Commission notes in the impact assessment of the ESR proposal, that the difference between the proposed EU-wide reduction trajectory for the ESRemissions and the latest EU reference scenario from 2016 (excluding new flexibilities) is around a third lower than the equivalent gap between the ESRreduction trajectory and the 2013 EU reference scenario 10. The lowering of the reference scenario between 2013 and 2016 is in line with earlier development. The greenhouse gas emission levels in the EU s reference scenarios have gradually been reduced and the difference between future climate targets and trajectories and an assumed reference development has, as a consequence, become smaller and smaller 11. The stepwise strengthening of climate and energy policies and measures at EU and MS level are of course central explanations behind this development, but there are also other contributing factors. 9 Assuming that the additional reduction is linear from zero to140 mtonnes/year in the period. 10 The 2013 EU reference scenario were used for the Commissions impact assessment of the 2030 climate and energy framework proposal in The previous editions of the EU reference scenarios can be found at

7 7 There are factors indicating that also the resulting future emission levels and cost estimates in the most recent reference scenario may turn out to be on the high side. One factor pointing in that direction is that the new and lower technology costs, on which the Commission s updated 2016 impact assessment is now based, are still higher than other market assessments of the same development (and actual market prices in 2016). Battery cost estimates in the Commission s impact assessment (2030 and 2050) are, for example, higher than current assessments and development goals set by car manufacturers for cost developments in the much shorter term (2020 and 2025) 12 A major shift towards a more rapid and comprehensive electric vehicle development and deployment has also taken place during 2016 among leading car manufacturers in Europe and in other parts of the world, especially in China. One conclusion that can be drawn from the findings of the impact assessment and the above reasoning is that an updated analysis of possible mitigation potentials in the EU, using an updated reference scenario, may demonstrate good economic-technological capacity to tighten the EU s 2030 targets and reduction trajectories compared to those now proposed to be implemented. The use of additional flexibilities needs to be limited in relation to current target levels In principle, the introduction of additional flexibilities to the system has already been negotiated in connection with the consideration of the framework in the European Council in As the gap has now become smaller in accordance with the Commission s new reference scenario, these flexibilities risk contributing to the emergence of a surplus in the ESR, reducing the need for further measures; see above. Such development also reduces the need for using the already existing flexibilities, especially emission transfers between member states. The proposed LULUCF- accounting rules mean that credits will be generated for afforestation schemes that have already been implemented before the rules was in place. Having such credits in the system will reduce the overall ambition in the EU and in the ESR to See for example IEA Global EV outlook 2016 and the USDOE Revolution. Now The Future Arrives for Five Clean Energy Technologies Tech Update September 2016)

8 8 Some Member States are allowed to increase their emissions compared to current levels and levels in 2030-projections Figure 4 and 5 below shows how large the gap is in per cent for each Member State in order to achieve its greenhouse gas emission targets by 2030 in accordance with the proposed Effort Sharing Regulation (ESR). The gap is assessed in three ways: (i) compared to the country s 2014 emission levels; (ii) for 2030 in relation to each Member State s own emission projections, using existing policy instruments; and (iii) in relation to the Commission s 2016 EU Reference Scenario in Nine MS emissions in 2014 were below their proposed ESR- emission target in According to the MS own projections, six MS emissions levels are below their proposed ESR- emission target in Eleven MS GHG-emission levels in 2030 are below their proposed ESR-emission target when comparing with their EU reference scenario from Figure 4 Emission gap (-) or surplus (+), in percentage points, to the proposed reduction targets in 2030 for MS with GDP/Capita below EU average. The gaps/surpluses are assessed in relation to the emissions in 2014, in relation to MS national projections (WEM) levels in 2030 and in relation to EU Reference scenario levels in Note: For the calculations of the gap in 2014 and the gap in relation to MS projections, EEA base-year emissions 2005 have been used. Source: EU reference scenario Trends and Projections in Europe 2015 (EEA). ESD emissions for 2014 has been taken from Fig.4 on EEA website:

9 9 Figure 5 Emission gap (-) or surplus(+), in percentage points, to the proposed reduction targets in 2030 for MS with GDP/Capita above EU average. The gaps/surpluses are assessed in relation to the emissions in 2014, in relation to MS national projections (WEM) levels in 2030 and in relation to EU Reference scenario levels in Note: For the calculations of the gap in 2014 and the gap in relation to MS projections, EEA base-year emissions 2005 have been used. Source: EU reference scenario Trends and Projections in Europe 2015 (EEA). ESD emissions for 2014 has been taken from Fig.4 on EEA website: The way the emission limits at the starting point in 2021 are defined impacts the overall gap/surplus level in ESR significantly The estimation below does not include effects of the proposed new flexibilities in the system. For EU member states with GDP per capita levels below the EU average (Figure 6), the assessed surplus will increase further throughout the target period if the trajectory path were allowed to start at the target level that applies in the Effort Sharing Decision for 2020 (2020 targets). Five MS with a GDP per capita level above EU average (Figure 7) will on the other hand benefit from the Commission`s proposed starting point compared with starting at their 2020 target according to the assessment. The Commission s impact assessment demonstrates, moreover, that the whole ESR sector will land at surplus emissions throughout the entire period if the 2020 targets are chosen as starting point.

10 10 Figure 6 Impact of starting point options on Member State annual average surplus (+) or deficit (-) over the period as % of total emission limits under preliminary reduction trajectories. No use of flexibilities included. Calculations based on the EU Reference scenario Note: The annual surplus/deficit in % points would have been somewhat lower if compared the base year instead Figure 7 Impact of starting point options on Member State annual average surplus (+) or deficit (-) over the period as % of total emission limits under preliminary reduction trajectories. No use of flexibilities included. Calculations based on the EU Reference scenario Note: The annual surplus/deficit in % points would have been somewhat lower if compared the base year instead

11 11 The cost estimates The European Commission impact assessment 13 of the ESR-regulation proposal suggest that the overall costs for the EU of achieving the emission reductions target in 2030 are likely to be lower than what was reported by the impact assessment 14 accompanying the climate and energy framework proposal of Several factors contribute to this; the main explanations being lower costs in the reference scenario, smaller total emissions gap in 2030, and the possibility to use the new flexibilities. The ESR- reduction trajectory prosed for Sweden results in limited need for additional measures in In 2014 the GHG-emissions in the Swedish ESR-sectors were 19 percent lower than the emission level in This means that the Swedish ESR-emissions already in 2014 were below the country s greenhouse gas emissions reduction target in 2020 according to EUs decision on effort sharing between Member States, ESD 15. The development in emissions between 2005 and 2014 can to a large extent be explained by a decrease in emissions from road transport, small industrial installations, the waste sector and buildings 16. According to the latest national reference scenario for Sweden 17, with existing measures, the emissions in the ESR-sectors are expected to continue to decrease slowly, and in 2030 be about 31 percent below the 2005 level 18. In the reference scenario it is emission decreases from road transports, mainly due to further improvements of the fuel efficiency of light-duty vehicles 19, decreases of the emissions in the agricultural sector, the waste sector and of emissions of fluorinated greenhouse gases that are the main contributors to the development. 20 According to the proposed ESR-reduction targets, Swedish emissions are to be reduced by 40 percent between 2005 and The proposed reduction trajectory for Sweden between are preliminary estimated, by applying the 13 COM(2016) 482 final 14 COM(2014) 15 final 15 Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community s greenhouse gas emission reduction commitments up to Swedens second biennial report under the UNFCCC Swedens second biennial report under the UNFCCC 2015, Report for Sweden on assessment of projected progress, March 2015 In accordance with articles 13 and 14 under Regulation (EU) No 525/2013 of the European parliament and of the Council Decision a mechanism for monitoring and reporting green-house gas emissions and for reporting other information at national and Union level relevant to climate change and re-pealing Decision No 280/2004/EC 18 The national reference scenario for the ESR-sectors in Sweden ends up at almost the same percentage level of reduction in 2030 as the 2016 reference scenario from the European commission. 19 Only to small extent due to the introduction of electric vehicles 20 As the fossil fuel use in the building sector, mainly for heating purposes, is expected to reach near zero already in 2020, the sector cannot contribute to further reductions after that.

12 12 proposed starting-point definition in 2021 proposed by the Commission, to start at an emission level about 21 percent below 2005 in 2021 and arrive at 40 percent below 2005 in When also including the maximum amount of new flexibilities proposed for Sweden, in the form of LULUCF-credits and the one-off flexibility from the EUETS, the gap between the national reference scenario and the preliminary reduction trajectory is very small. In fact, the need for further mitigation ends up being close to zero. In the Commission s 2016 ESR impact assessment 21, the scenarios that reach 27 or 30 percent energy efficiency and 27 per cent renewable energy at the same time as the collective ESR-greenhouse gas emissions fall by 30 per cent by 2030, see above, the Swedish GHG-emissions are reduced by some 40 percent, mainly due to further vehicle CO2-emission improvements. In these scenarios a total surplus of emission-units may emerge for Sweden as well as for the EU overall. Figure 8 Historical non-ets - emissions (ETS ), SE reference scenario, ESD-targets and proposed preliminary ESR targets for without and with proposed flexibilities (LULUCF-units and EU ETS-allowances) The Swedish Cross-Party Committee on Environmental Objectives proposes more ambitious national non-ets targets in 2030 compared to the current ESR-proposal In June 2016 the Swedish Cross-Party Committee on Environmental Objectives 22 put forward a proposal for a (cross-party) national Climate strategy with intermediate targets that included how emissions of greenhouse gases in Sweden from the non-ets-sectors should develop by 2030 and by 2040 in working 21 COM(2016) 482 final 22 On 18 December 2014, the Swedish Government decided to task the Cross-Party Committee on Environmental Objectives with proposing a climate policy framework and a strategy for an overall long-term climate policy (ToR 2014:165). The Committee`s proposals were submitted in March and June of 8 parties in the Swedish Riksdag were represented in the Committee.

13 13 towards the Committee`s proposed economy-wide long-term goal for net zero emissions in The proposed intermediate targets for the non-ets-sectors by 2030 and 2040 should constitute, according to the Committee, important steps on the road towards net zero emissions. They demand a considerably more rapid transition of society to low emission levels compared with developments to date. The point of departure for the Cross-Party Committee proposals were the temperature targets in the Paris agreement. According to the Committees proposals the emissions in the non-ets sectors in Sweden should by 2030 at the latest be at least 63 per cent lower than emissions in 1990 (corresponds approximately to an emission level 59 per cent below 2005). A maximum of 8 percentage points of the reduction in emissions may be achieved through supplementary measures (flexibilities), for instance in the LULUCF-sector or by international project mechanisms. The Committee also expressed their view that the EU s climate targets for 2030 need to be made more stringent in order to bring them more in line with the Paris Agreement. The Committee also proposed that an emissions target for domestic transport 23 should be introduced. The target which is expressed as a reduction in emissions from the sector of at least 70 per cent by 2030 at the latest, compared with Progress towards the proposed emissions target in the transport sector are assumed also to contribute to cutting emissions of air pollutants and may also make a significant contribution to sustainable societal planning and other sobenefits. A major part of the additional emission reductions needed to reach the proposed targets, are estimated to be achieved by ramping up the introduction of Low Emission Vehicles and Zero Emission Vehicles so that at least one fourth of the national fleet of light-duty vehicles in 2030 constitutes of vehicles with different types of electric drive-train (Electric Vehicles, Plug-in Electric Vehicles and Fuel Cell Electric Vehicles) In order to meet the target the useage of advanced biofuels is also assumed to increase compared to the reference scenario. The main part of these fuels is assumed come from an increase in the use of drop-in fuels, mainly from forest residues, i.e. biofuels that can be used in existing fuel infrastructure and vehicle fleet. Measures that increases the overall efficiency of the transport system, by for instance encouraging the shift to lower emission transport modes, sustainable infrastructure investments and societal planning along with expanding the use of digital technologies are also expected to contribute to the emission reductions 23 Not including domestic air travel, which is part of the EU-Emissions Trading System.

14 14 towards the proposed target in Further efficiency improvement and use of advanced biofuels, improved logistics and modal shifts are also expected to contribute to emission reductions from heavy duty vehicles. Figure 9 Sectorial ESR-emissions 2015, 2013 and 2030 according to the latest national reference scenario (SE REF) and a SE 2030 low carbon scenario from The Swedish Cross-Party Committee on Environmental Objectives analysis. (Mtonnes CO2 equivalents, Submission 2015)

15 15