EU's Climate Policy, 2016-2017 CEPS, end of the year address 14 December 2016 Jos DELBEKE Director General for Climate Action European Commission
Table of contents: International Climate issues Progress on 2030 Climate Proposals Clean Energy for all Europeans package Commission proposals for next year 2
International Climate Issues
Ratification of the Paris Agreement 2016 Timeline Build-up of political momentum throughout the year Record speed of ratification EU triggering entry into force As of 9 December, 116 Parties have ratified 4
COP22 Marrakech Main Deliverables Sustained momentum and global determination Steady progress on the Paris rulebook Strong evidence of solidarity and action 5
COP22 Marrakech Non-State Actors Involvement Marrakech Partnership for Global Climate Action to support work of "Champions" 1200 events on initiatives, alliances, partnerships, platforms Involvement of businesses, cities, civil society Global transition seen as unstoppable and irreversible 6
Phase-down of HFCs The Kigali Amendment to the Montreal Protocol introduced a mandatory phase-down of HFCs for developed and developing countries and created an opportunity for green growth Developed countries to reduce to 15% of 2011-13 HFC levels by 2036 Most developing countries (including China) to reduce to 20% of 2020-22 HFC levels by 2045; the rest (including India) to 15% of 2024-26 by 2047 Compliance support to be provided by donor countries via the Multilateral Fund 7
2016 ICAO Assembly 39 th ICAO Assembly: Resolution for a global market-based measure on international aviation emissions. Positive development, but only a 1 st step towards more meaningful action. Offsetting measure to enable Carbon Neutral Growth from 2020: compensating emissions above 2020 levels with international credits. Differentiation: phased implementation (2021-2026 voluntary period) and exemptions for routes to/from smaller aviation states 20% gap to achieve Carbon Neutral Growth 2020. Work in progress: rules on MRV, quality of units, double counting and registries + governance arrangements still to be developed. 8
Progress on 2030 Climate Proposals
Timing and Process ETS ESR LULUCF ITRE opinion ENVI report 13 Oct 15 Dec 2016 2016 ENVI Draft report 15 Dec 2016 Public Hearing 30 Jan 2017 Plenary vote Feb 2017 (TBC) ENVI Draft report 20 March 2017 ENVI report 29 May 2017 ENVI report 22 June 2017 ENV Council 19 Dec ENV Council 28 Feb European Council 9-10 March 10
EU ETS: Key issues in Council and EP 1. Protect competitiveness of industry : Carbon leakage Innovation Fund 2. Strengthening the EU ETS 3. Develop successful and transparent low-carbon funds Modernisation Fund 10c derogation for power sector NB: In the absence of agreement, many provisions relating to 11 free allocation would expire in 2020.
Fit-for-purpose carbon leakage regime Overarching goal is to avoid/minimise correction factor: key objective across EU institutions; many elements in Commission proposal; (need for) additional assurances debated. Carbon leakage groups: tiering is an interesting concept; growing convergence to continue for the time being with the binary approach in the Commission's proposal. Benchmark update: convergence on update of benchmarks that properly incorporates technological progress, with limits to provide predictability, ensure fairness and reward innovation. Indirect cost compensation: a strive for more harmonisation 12 but limited means to achieve this.
Strengthening the EU ETS European leaders want a well-functioning carbon market Growing concerns in light of sustained weakness of the price signal Context: Paris agreement, 1 st publication of the MSR indicator in May 2017, winter package (RES/EE). Menu of possible measures: higher LRF increasing MSR feeding rate (voluntary) cancellation or expiry for allowances adjust for overlapping policies 13
Develop successful and transparent low carbon funds Modernisation Fund: Need for transparent, simple and coherent governance structure. Debate continues on how / by who decisions are taken, including role of EIB. Transparency can be ex-ante (clarity on what can be funded) or expost (open/inclusive arrangements for decision-making process) Article 10c derogation: Optional mechanism for certain MS, but considered important tool for energy sector modernisation. Need for improved modalities, including transparency (via competitive bidding). Debate continues on how to combine this with sufficient 14 flexibility for MS and companies.
The Effort Sharing proposal Achieve a 30% reduction in GHG emissions below 2005 that is fair: taking into account different economic capacities of Member States cost-efficient: taking into account differences in cost-effective mitigation potentials between Member States, increasing flexibilities ensures environmental integrity so that the EU 2030 GHG target is met Costefficient Environmental integrity Fair 15
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The LULUCF proposal Brings the CO2 commitment for this sector into the EU climate and energy framework for the first time as a stand-alone policy pillar Ensures that accounted emissions from land use are entirely compensated by an equivalent removal of CO₂ from the atmosphere (no debit rule) Ensures that emissions of biomass will be recorded and counted; promoting bio-energy feed-stocks that are most sustainable Compatible with food security and biodiversity objectives 17
Clean Energy for All Europeans Package
Clean Energy package Energy Union Governance New Electricity Market Design Renewables Energy Efficiency and Energy Performance of Buildings Accelerating Clean Energy Innovation 19
Energy Union Governance To allow meeting the Energy Union objectives (notably the 2030 targets) To ensure compliance with the EU's international climate commitments To enhance investor certainty and predictability To enhance coherence of policy areas through integrated plans by MS To ensure inclusiveness, participation, enhanced regional cooperation 20
A flexible wholesale market for electricity to integrate increasing production of renewables Strengthen short-term markets Increase cross-border trading opportunities over short time frames (intraday and balancing markets) Reward flexibility for generation, demand-response and storage Allow prices to show real value of electricity (scarcity pricing) Levelplaying field Remove priority dispatch for all energy sources Curtailment rules Extended balancing responsibilities Capacity mechanisms Reliability standards to be set by Member States Transparent adequacy assessment, taking into account cross border capacities Minimize impact on decarbonisation objectives, exclusion of capacities with high emissions 21
Renewables Directive EU-wide target of 27% Electricity, heating and cooling, transport New governance to reach EU-wide target EU and Member States' measures as "gap fillers" e.g. MS could use EU ETS revenues to contribute to EU financing platform Support schemes Opening up to participation of cross-border investments Detailed rules to be set in new State aid guidelines 2030 target for low-emission fuels of 6.8% in transport To incentive advanced biofuels and "power-to-gas/liquid" Cap on first-generation biofuels Sustainability of bioenergy e.g. use of biomass only in highly efficient CHP and not in electricityonly plants 22
Energy Efficiency Directive New 30% target for 2030, binding a EU level to emphasise commitment to put energy efficiency first Setting the framework to improving energy efficiency in general continued obligation of 1.5% annual savings Improving energy efficiency in buildings, promote e-mobility by installing recharging points for electric vehicles Improving energy performance of products (Ecodesign) and informing consumers (energy labelling) Financing for energy efficiency with the smart finance for smart buildings 23
Commission Proposals for Next Year
Proposal on EU ETS - Aviation The derogation for a reduced scope (intra-eea) ends this year. Without new amendment the system is back to full scope. Commission due to report on the outcome of the ICAO Assembly and make proposals. The impact assessment is being finalised, the proposal is expected in January. The intra-eea ETS works well (99% compliance) and delivers (~17Mt emission reductions per year) 25
Road Transport Cars/vans: proposal on post-2020 CO 2 standards Key action under Low-Emission Mobility Strategy Support long term decarbonisation of the economy Deliver on Effort Sharing Regulation and Paris Agreement commitments Targets to be based on new test procedure WLTP More realistic emission figures from type approval Foster move towards low- and zero-emission vehicles Heavy Duty Vehicles Proposal on certification of CO 2 emission data (DG GROW) adoption held up due to Council - EP disagreement on "Lisbonisation" Proposal on monitoring/reporting of (certified) CO 2 emissions Emission standards: within this Cion mandate 26
Looking forward to 2017 Challenges US new President Many elections in Europe Brexit Opportunities Strong international determination to implement Paris "Train of low carbon technology (and competition) left the station" Reinforced bilateral action, e.g. China, carbon markets, technical modeling 27
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