The good, the bad and the unknown: The EU’s 2030 Framework on Climate and Energy Policy

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Policy discussions, proposals and stakeholder engagement on issues of climate, environment and energy are notoriously difficult. With multiple voices arguing for a myriad of different measures, methodologies and targets, negotiations can take months and even years to complete. Significant announcements and conclusions emanating from such policy negotiations are therefore rare beasts indeed. That said, the past few weeks have been full of climate related announcements and guidance.

Novembers Conference of the Parties (COP) meeting in Warsaw saw the international community agreed to provide details of emission reduction targets by early 2015, December saw the publication of the Climate Change Committee advice on the Fourth Carbon Budget and 2014 has started with a bang with the European Commission's proposals for a framework on climate and energy policy between 2020 and 2030.

Given the importance of European legislation on the UK, this particular announcement was widely anticipated and included the following headline announcements:

· A binding emissions reduction target of 40%. This overall target will be divided up into individual binding commitments for Member States (MS).

· A 27% renewable energy target which, whilst is binding at an EU level, it is not envisaged to be binding for individual MS.

· A non-binding energy efficiency target of 25% was also set

This announcement was interesting for several reasons. Arguably, the most important was due to the shift in emphasis from being seen to announce the strictest (in terms of targets) to taking into account the actual cost of meeting such targets and it's long term impact on productivity, competitiveness and carbon leakage. In fact, Commission President Jose Manuel Barroso repeatedly called on the proposals to be “affordable” in his address. This dramatic change in rhetoric can only be viewed as a good thing and goes some way in recognising the concerns of the manufacturing sector, across Europe, in relation to the costs of energy and environmental regulation on day-to-day businesses competing in a global marketplace.

That said there is plenty in the proposals to be concerned about. For regular readers of this blog, you'll be aware of our view that the UK's current emissions reduction ambition may be out of line with our competitors and as such, UK government must be careful to consider all the evidence when reviewing the Fourth Carbon Budget. We would (and have) argued that the Government needs to make good its 2011 commitment to review UK targets and ensure we are in line with our European negotiating partners.

Another area we're holding out reservation on is the renewables and energy efficiency targets. In this, the devil is very much in the detail and in particular the section of the proposals that state “if necessary [member state 2030 commitments] will be complemented by further EU action and instruments to ensure delivery of the EU target” and that “the Directive on renewable energy sources will need to be substantially revised for the period after 2020 to give the EU the means of ensuring that the 2030 EU level target is met”. It remains to be seen how exactly these will be practically translated into Member State commitments in the long term, but we hope that the UK continues to resist any moves to reduce its flexibility to decide upon its own energy mix and cost-effective route to EU emissions reductions.

Of course, these announcements aren't final and we expect further tussling and debate between various Member States (with particularly loud voices expected in the run-up to Ban-Ki Moons September 2014 summit in New York). We expect the particular issue of a renewables target to be debated and possibly amended within those discussions. The outcomes will then need to be debated at both European Parliament and Council level and it is expected to be discussed at the Spring meeting of European Leaders, taking place in on the 20-21st March

The Commission now has the opportunity to develop the view that reducing the EU's competitiveness on the global stage doesn't equate to lower global emissions. What it does mean is that emissions will just be moved to countries without such targets and the European manufacturing industry will suffer, but for no gain in terms of reducing global GHG. The Commission must use this new focus to press ahead with meaningful and urgent action on a wide range of issues including a reform of the EU ETS, developing a pathway to reducing publically funded support for low carbon electricity generation and the reform of state aid rules with regards to building a strong, low carbon Europe.


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