Wednesday, January 23, 2008

Review: EU approves energy and climate change package.

The EU Comissions has today announced (official statement) what it calls a 'climate change package'. These measures are the follow up from a previous meting (march 9th, Guardian) where a 20% reduction target for energy usage and carbon emissions was made alongside a pledge to increase European renewable energy penetration to 20% (from the current 8%). A two page citizens guide is avialable to explain the motivations behind the climate package and the elements that it is trying to balance.

The citizens guide is the straightest talking policy document i have ever seen:

What is the problem?
  • The EU needs to cut its greenhouse gas emissions. This is not happening fast enough.
  • Dependence on imports of oil and gas is growing. The EU needs to find new energy alternatives and to produce more of its own energy.

According to EurActiv some of the most significant issues are:

  • Total EU industrial emissions in 2020 capped at 21% below 2005 levels which equates to a 1.7% annual reduction. [I thought the 20% was on 1990 levels is this back tracking?]
  • The scheme will be enlarged to include new sectors, including aviation, petrochemicals, ammonia and the aluminium sector...around 50% of all EU emissions will be covered. [Road Transport, Shipping, Buildings, Waste, Agriculture and Forestry will remain excluded].
  • In order to achieve an average 10% reduction of greenhouse gases from sectors not covered... the Commission has set national targets according to countries' GDP. Richer countries are asked to make bigger cuts – of up to 20% in the case of Denmark, Ireland and Luxembourg – while poorer states...will in fact be entitled to increase their greenhouse emissions in these sectors – by up to 19 and 20% respectively for Romania and Bulgaria. [Understandable but environmentally inadequate if this principal where to be expanded to the rest of the world at Romanian development levels...what we need is a deal where such countries take on these targets and the wealthy take on a portion of the costs]
  • Smaller installations, emitting under 10,000 tonnes of CO2 per year, will be allowed to opt out from the ETS, provided that alternative reduction measures are put in place. [I see why--red tape--but i wonder how significant this is are we talking about double digit percentages that can opt out?]
  • Industrial greenhouse gases prevented from entering the atmosphere through the use of so-called carbon capture and storage (CCS) technology are to be credited as not emitted under the EU Emissions Trading Scheme. [I fully support this...its long past time such schemes where implemented]
  • The proposal foresees a huge increase (up to 60% of total credits) in auctioning as early as 2013. It adds that "full auctioning should be the rule from 2013 onwards for the power sector", which is expected to lead to a 10-15% rise in electricity prices. In other sectors, free allocations will gradually be completely phased-out on an annual basis between 2013 and 2020. Nevertheless, certain energy-intensive sectors could continue to get all their allowances for free in the long term if the Commission determines that they are at significant risk of relocation to third countries with less stringent climate protection laws. [This increase in auctioned credits appear to me as the start of a serious emissions trading scheme, it is the most efficient way to do things and has the added benefit of brining in large revenues which if sensibly hypothicated to renewable energy projects, and --my personal favourite--paying for international climate funds e.g REDD, Tech Transfer, Adaptation, can go a long way to helping the world cope with and mitigate climate change.]
  • The distribution method for free allowances will be developed at a later stage by expert panels within the Commission (through the so-called 'comitology procedure'). [It's going to be some kind of grandfathering but the good news is that this part is becoming rapidly less relavent]
  • Competativeness concerns are a significant so decision on these issues has been put of untill 2011. Nevertheless, the text warns that if no global pact is reached by then, some sort of "carbon equalisation system" will be introduced – whether in the form of additional free allocations or by making third-country producers of carbon-heavy goods participate in the ETS in order to access the EU market. [Translation: shit gets ugly if we dont reach a global deal...is forced participation of foreign firms a tariff on high carbon goods? The avoidance of such tarrifs is apparently the reason the Kyoto protocol was initiated.]
  • Assuming a global climate change deal is reached, member states will continue to be entitled to meet part of their target by financing emission reduction projects in countries outside the EU, although the use of such credits will be limited to 3% of member states' total emissions in 2005 –around one quarter of the total reduction effort. [This is still a significant amount of carbon trade, but it seems to me that markets and trade of all kinds in carbon makes this kind of limit hard to measure: how do personal and business offests work into this, or internal business trades...i think this is all getting murky we need a global treaty with a cap.]

The talk on competativeness and forced involvement in the EU ETS for foregin companies trading into europe brings up our old friend the WTO (past article). Commission President José Manuel Barroso:

"If our expectations about an international agreement are not met, we will look at other options such as requiring importers to obtain allowances alongside European competitors, as long as such a system is compatible with WTO requirements."

On the issue of cuts in emissions from industries not included in the ETS, national targets vary dramatically based on prosperity, but buy in large everyone has been hard done by; some have been more stoic but it's ammusing none the less. Germany's economy minister is quite typical:

"We really don't need this plan to reduce carbon dioxide emissions, it will destroy jobs in industries which consume a lot of energy"
The main points that i have seen made on this are 'its simply not good enough' and 'it's to far, its to tough on this country, why do we need to take orders from Brusselles.' The former has been the message of Rajendra Pachuri of the IPCC, and the science if you would care to read it, the latter is from the likes of the Times and other right leaning papers.

Related:
  • Extensive coverage of this "climate change package" and its role in Eu climate policy can be found on the EurActiv website.
  • The climate change package and associated documents.

Related General Articles:
Articles on the main issues:
[UPDATE]

  • Celsias has just posted an article on this topic.
  • Treehugger has also briefly covored the issues.

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Climate Change Action

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