Commentary

Q&A: Lowdown on the EU 2030 climate and energy package

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On Wednesday, European Commission President José Manuel Barroso will launch a White Paper on the EU’s 2030 Climate and Energy Package. This will contain recommendations for Europe’s climate and energy targets and policies for the next two decades, setting the direction of Europe’s economy and coming at a crucial point to build ambition for a global climate deal to be finalised in Paris in 2015.

What can we expect this week?

With the Brussels rumour mill working overtime to match last minute Commission meetings, gossip evolves on an hourly basis about what the Commissioners will agree on. Indications point to the White Paper proposing a unilateral Greenhouse Gas emissions reduction target of -35% or -40% domestic reductions - despite persistent attempts by some Commissioners to push for -35% - with perhaps a promise to look at increasing this later in the context of international negotiations for the Paris 2015.

The Commission may propose an EU-wide renewables target of 24 -27% that does not place legal obligation on Member States to meet it. Similar in form to the failing 2020 energy efficiency target, it is unclear if this compromise will simultaneously satisfy the German desire for investor certainty and UK demands for technology neutrality. Further measures on energy efficiency are likely to be delayed until after this summer’s review of the Energy Efficiency Directive.  Announcements are also expected on changes to the EU Emissions Trading Scheme, shale gas regulation (or lack of it) and an analysis of energy prices and competitiveness.  And while there has been speculation about additional measures in areas such as energy grids, finance and carbon capture and storage in the package, nothing tangible has yet been seen.

What is clearer is that a perceived lack of political will in Member States for ambitious climate action has left a weak Commission settling for recommendations that seem to offer a political solution for the March Council, but which will fail to deliver on fundamental European interests. The package outlined above is not ambitious enough to build momentum among other countries to commit to emission reductions which will keep climate change below the danger threshold of 2C. Unless changed, this package will bequeath a legacy of serious economic damage to European countries – especially in Southern regions – and undermining development and poverty elimination globally.

It will also fail to deliver the level of investor confidence and market growth needed to keep Europe’s leading low carbon industries investing at home. The resulting “low carbon leakage” will cost jobs and growth across the EU, as European companies invest in faster growing markets in Asia and the Americas. Europe will lose its current hard won leadership in the global low carbon market.

In response to the inadequacies of the White Paper a wide range of constituencies are mobilising to try and secure the type of package they want to see.

Where does the debate go next?

The White Paper by no means seals the deal or sets a final limit on European ambition. After Wednesday, it is up to Member States to finalise their positions and reach agreement on key headline elements of the package at the Heads of State Council on 20-21 March 2014. Energy ministers will meet two weeks earlier to try to prepare the ground for agreement. As the debate shifts back to the Member States, more voices can weigh in. In the past couple of weeks new constituencies have mobilised, injecting the real-world consequences of failing to manage climate risk. Progressive businesses have highlighted the risks to European jobs and industry from failing to unlock low carbon investment in Europe, while development groups have emphasised that surpassing a 2 degree temperature rise will make poverty eradication impossible. This kind of pressure, directed at Heads of State and Government, will intensify up to the March Council.

What to watch across the Member States?

Plenty of questions remain over the positions Member States will advocate. The UK’s opposition to a renewables target, and the inclusion of international offsets within its position of a 50% GHG target, has failed to motivate other Member States to articulate a higher number beyond 40%. Although several - like Germany - have qualified their position by calling for “at least” 40% cuts. Poland is threatening to veto the whole deal unless it secures significant opt outs for its coal power sector. Attention will turn to Hollande’s meeting with Cameron at the end of the month, where climate is on the agenda, and the Franco-German ministerial summit scheduled for 19 February 2014 where a common position could be agreed between the EU’s two major players. Hollande has even floated the idea of a Franco-German industrial alliance on renewable energy as the industrial motor to move forward Europe. Concerted efforts from French and German civil society groups in particular will focus on using this summit to galvanise other Member States to agree a GHG target in March that won’t shut the door on keeping global temperature rise within 2 degrees.

Why is this important?

The stance the EU agrees to take on climate and energy in March has implications that go far beyond the policy wrangles and personality battles which dominate the media reporting. Without a strong statement of intent in March, the EU will effectively renege on its longstanding commitment to work to keep the world within 2 degrees of warming, damaging the its ability to align with the large number of emerging and developing countries calling for higher climate ambition. But the negative impact on European global influence will go far beyond climate change, as other major countries will interpret this as a sign that after the financial crisis the EU is unwilling, or unable, to continue driving forward one of its key foreign policy objectives. This will call into question Europe’s capability to shape other global regimes on investment, human rights, proliferation, corruption and financial stability.

The fact that the European Commission has struggled to form an internal consensus on the energy and climate change package will have lasting impacts on its role as a core European institution. Major Member States will strengthen their role in defining the direction and pace of European energy and climate policy, while smaller countries find it harder to have their interests heard.

The domination of the Brussels debate by chemical and energy intensive companies representing a relatively small number of jobs and GDP, calls into question the lobby culture surrounding the EU institutions. It also challenges the large low carbon business sector to address the way Business Europe claims to reflect broad European industrial interests, while actually only representing a minority view. The effective absence of any representation in the 2030 debate of  constituencies who will face devastating damages from a high climate risk future – for example, pensioners, coastal cities, agriculture and fisheries - shows a significant gap in European climate democracy.

Member States must act together over the next two months to increase European ambition beyond the lowest common denominator approach of the White Paper. The time for words is over, in 2014, the world needs action, and the EU must lead the way. 

Where can I find out more?

For further analysis, briefing and commentary, keep a close eye on the EU 2030 showcase.

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