EC sets out new targets for emissions, renewables

The European Commission on January 23 set out detailed proposals for meeting its target to cut greenhouse gas emissions by 20% by 2020, including new national targets for renewable energy, emissions reductions and reforms to the EU's Emissions Trading Scheme, European Commission President Manuel Barroso told MEPs in Brussels.

Barroso dismissed critics who have said that the cost of tackling climate change was too high, saying that this was "manageable".

"We have worked very hard on coming up with the right design to meet Europe's ambitions in the right way. So the additional effort needed to realize the proposals would be less than 0.5% of GDP by 2020," Barroso said.

Power generators lose free CO2 allocation

An EU-wide cap on greenhouse gas emissions will replace individual national allocation plans in the European emissions trading scheme.

In an explanatory document, the EC said it wanted to scrap national allocation plans, whereby member states had decided the total quantity of allowances to be issued because they had "generated significant differences in allocation rules, creating an incentive for each member state to favor its own industry, and has led to great complexity".

The annual cap would fall along a trend line from 2083 million metric tons of CO2 equivalent in the current second phase of the ETS (2008-2012) to 1.974 million metric tons by 2013 and 1.720 million mt of CO2 equivalent in 2020.

In the intervening years the annual caps would be 1.974 million mt in 2013, 1.937 million mt in 2014, 1.901 million mt in 2015, 1.865 million mt in 2016, 1.829 million mt in 2017, 1.792 million mt in 2018 and 1.756 million mt in 2019. The EC said.

As expected, power generators will lose their free allocation of emissions allowances under the proposals as the EC proposes that a much larger share of the allowances would be auctioned instead of being allocated free of charge.

But other sectors including aluminum and ammonia would be included for the first time and there are new targets for emissions cuts in sectors outside the ETS like transport and agriculture.

The EC projects that around 60% of allowances allocated in 2013 would be sold at auction and that this proportion would rise in subsequent years. There would be common EU rules on the allocation of free allowances so that industries are treated in the same way across the 27 countries.

Those rules have yet to be hammered out, but Environment Commissioner Stavros Dimas made it clear that allocation of free allowances would not change the overall cap.

"The 20% cut is going to be achieved even if we give free allowances to energy intensive-industry," he told journalists in Brussels. "We won't change the ETS cap."

Richer member states would also see some of their rights to auction emissions allowances transferred to poorer member states in an effort to boost investment in climate-friendly technology in poorer member states.

No binding 2020 renewable power targets

The package also includes details of national targets for renewable energy, but EU countries will not have to adopt binding national targets for renewable power and heat, as had been proposed in an earlier leaked draft of the renewables law.

In March 2007, EU leaders backed EC proposals for a binding 10% biofuels share by 2020 in each member state, included in an overall binding EU target of 20% renewables by 2020.

The EC has translated these into 27 binding national renewables targets annexed to its proposed law, but has left EU countries free to decide on the split between power, heating/cooling and transport by 2020.

Renewables' share of final EU energy use was 8.5% in 2005, leaving 11.5 percentage points more needed to reach the 2020 target. The EC has split this between EU countries based on a flat rate increase for all of 5.5 percentage points, with the remainder allocated according to GDP/capita--with richer countries having to do more--and efforts already made.

The national targets range from a 49% share for Sweden--which had the highest renewables share in the EU in 2005 at 39.8%--to 10% for Malta, which had no renewables in 2005.

The EC has set indicative progressive interim targets for every second year from 2010, when the EC hopes the new law would enter into force. These targets are set to curve upwards to be "innovation-friendly," so that EU countries will have to achieve 25% of the difference between their 2005 and 2020 share by 2012, rising to 65% by 2018.

EU countries can also ask the EC to take post-2020 production from large renewable plants with very long lead times into account when assessing final renewable energy use in 2020. The EC is to develop rules to govern this option by end-2012 at the latest.

The proposed law includes initial conditions that building work must have started by 2016, the plant capacity must be at least 5 GW, and must be online by 2022.

The proposals adopted by the EC January 23 have to be debated and agreed on by both the European Parliament and the EU Council of member state governments before they can take effect. The EC is hoping to get the package through before the EP elections in June 2009.

Created: January 24, 2008