Commission Proposes 40% Greenhouse Gas Emission Reduction Target for 2030 – Renewables Target without Individual Member Country Target

A centre piece of the EU framework on climate and energy for 2030 proposed yesterday by the European Commission is a 40% reduction target for greenhouse gas (GHG) emissions below the 1990 level. The proposal also includes an EU-wide binding target for renewable energy of at least 27%, which shall, however, not be translated into national targets through EU legislation. A new energy efficiency target has not yet been set.

1. 40% Greenhouse Gas Reduction Target

The target, which the Commission calls the centre piece of its proposal, shall be met through domestic measures alone. The annual reduction in the cap on emissions from sectors covered by the European Emission Trading System (EU ETS) shall increase from 1.74% now to 2.2% after 2020. Emissions from sectors outside the EU ETS would need to be cut by 30% below the 2005 level, and this effort would be shared equitably between the Member States, the Commission says. It invites the Council and the European Parliament “to agree by the end of 2014 that the EU should pledge the 40% reduction in early 2015 as part of the international negotiations on a new global climate agreement due to be concluded in Paris at the end of 2015”.

A  40% reduction target for CO2 emissions on the EU level has also been demanded by Sigmar Gabriel, the new German Minister of Economic Affairs and Energy just two days ago.

2. 27% Renewables Target

An EU-wide binding target of 27% for renewable energy was necessary to drive continued investment in the sector, the Commission argues. It shall, however, not be translated into national targets through EU legislation, “thus leaving flexibility for Member States to transform the energy system in a way that is adapted to national preferences and circumstances”. Reaching the EU renewables target shall be ensured by the new governance system based on national energy plans (please see below).

The new German coalition government wants to raise share of renewables in the energy mix to 40% to 45% by 2025 and 55% to 60% by 2035 in Germany. Minister Gabriel also spoke out in favour of an EU target for the expansion of renewables.

3. Energy Efficiency

A new energy efficiency target beyond the 20% target for 2020 has not yet been set by the Commission. The role of energy efficiency in the 2030 framework will be further considered in a review of the Energy Efficiency Directive due to be concluded later this year, the Commission says, adding that it would consider the potential need for amendments to the directive once the review has been completed. Member States’ national energy plans will also have to cover energy efficiency, the Commission says.

4. Reform of EU ETS

In order to help boost ailing emission allowance prices that do not provide sufficient incentives to invest in clean energy, the Commission has made a legislative proposal to establish a market stability reserve at the beginning of the next EU ETS trading period in 2021. “The reserve would both address the surplus of emission allowances that has built up in recent years and improve the system’s resilience to major shocks by automatically adjusting the supply of allowances to be auctioned”, the Commission says. The reserve shall operate entirely according to pre-defined rules which would leave no discretion to the Commission or Member States in its implementation.

5. Key Indicators to Assess Progress made towards Competitive, Affordable and Secure Energy

The Commission also proposes a set of key indicators to assess progress made towards competitive, affordable and secure energy over time and to provide a factual base for potential policy response. “These indicators relate to, for example, energy price differentials with major trading partners, supply diversification and reliance on indigenous energy sources, as well as the interconnection capacity between Member States”, the Commission explains.

6. New Governance System

The 2030 framework also proposes a new governance framework based on national plans for competitive, secure and sustainable energy. “Based on upcoming guidance by the Commission, these plans will be prepared by the Member States under a common approach, which will ensure stronger investor certainty and greater transparency, and will enhance coherence, EU coordination and surveillance”, the Commission says. An iterative process between the Commission and Member States shall ensure that the plans are sufficiently ambitious, as well as their consistency and compliance over time.

7. Report on Energy Prices and Costs

The 2030 framework is accompanied by a report on energy prices and costs, which assesses the key drivers and compares EU prices with those of its main trading partners (for more information, please see here). The findings of the report have informed the framework, the Commission points out.

8. Next Steps

The European Council is expected to consider the framework at its spring meeting on 20-21 March.

Barbara Hendricks, Germany’s new Environment Minister, a party colleague of Mr Gabriel, called the Commission proposal a good starting point. Apart from the 40% greenhouse gas reduction target, ambitious and binding goals for renewables and energy efficiency were also needed, she said. She welcomed the proposed market stability reserve, suggesting to introduce it “considerably earlier” than 2021 and to include emission allowances that are temporarily withheld by so-called backloading.

Source: European Commission

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