Delivering the 2030 climate and energy targets Long term policy commitments to trump short-term politics Seminar on Europe’s Climate and Energy Crossroads, European Parliament, Brussels, 19 November 2014 24/11/14 Sebastian Oberthür & Tomas Wyns Outline 1. 40-27-27 by 2030 2. Long-term policy commitment and investor certainty 3. EU Emissions Trading Scheme (ETS) 4. Energy Efficiency 5. Renewable Energy 24/11/14 Sebastian Oberthür & Tomas Wyns 1. 40-27-27 by 2030 2020 24/11/14 Sebastian Oberthür & Tomas Wyns 1. 40-27-27 by 2030 20 20% GHG reductions by 2020 from 1990 20 20% Renewable Energy by 2020 20 20% Energy Savings by 2020 ref. BAU Binding Binding Indicative • EU-‐wide target for EU ETS (-‐21% from 2005 – ETS Direc;ve) Na;onal targets under RE Direc;ve • Indica;ve targets for MS (Energy Efficiency Direc;ve -‐ EED) • Menu of measures (EED, EPBD, Ecodesign, CO2&cars, Labelling…) • Na;onal targets under Effort Sharing Decision (-‐10% from 2005 – ESD) 24/11/14 Sebastian Oberthür & Tomas Wyns 1. 40-27-27 by 2030 2030 24/11/14 Sebastian Oberthür & Tomas Wyns 1. 40-27-27 by 2030 40 40% GHG reductions by 2030 from 1990 Binding • EU-‐wide target for EU ETS (-‐43% ref 2005) • Na;onal targets under Effort Sharing Decision (-‐30% from2005) 27 27 27% Renewable Energy by 2030 Binding (at EU level – no national binding targets) 27% Energy Savings by 2030 ref. BAU Indicative • new governance system • new governance system • Na;onal Energy Plans • Na;onal Energy Plans • Reviews of EED, EPBD, Ecodesign, CO2 & cars ?! – indica-ve targets, binding measures? • Review of RE direc-ve?! 24/11/14 Sebastian Oberthür & Tomas Wyns 2. Long-term policy commitment … • Policy risk is (next to regulatory barriers) important factor in financing renewable energy & energy efficiency – two examples: “A clear poli-cal and societal long-‐term commitment towards renewable energy is required.[…]This effect can be significant: the levelized cost of electricity can be reduced by 10 to 30%, as compared to a support scheme with no par-cular aQen-on to risk mi-ga-on.” De Jager et al 2011 for European Commission Uncertainty over scrapping Australia’s renewable energy target made that “[investments worth] billions of dollars have been put on hold” CEO General Electric, Sydney Morning Herald 2014 24/11/14 Sebastian Oberthür & Tomas Wyns 3. EU ETS From carbon price-only to modernisation and innovation tool • Market Stability Reserve would increase price stability and hence investor certainty • Increased Linear Reduction Factor brings EU ETS more in line with long-term (2050) decarbonisation. • N e w p o t e n t i a l : U s i n g E U E T S a l l o w a n c e s t o f u n d modernisation in CEE Member States and innovation in industry/energy sector. Ø Can increase support by (critical) stakeholders Ø Can help address competitiveness concerns while incentivising investments in Europe Ø Can push structural change (RE and EE) 24/11/14 Sebastian Oberthür & Tomas Wyns 4. Energy Efficiency: Reinforcing the policy flotilla (don’t throw away the baby with the bathwater) Efficiency of fridges sold Types of boiler installed Buildings’ efficiency 24/11/14 Sebastian Oberthür & Tomas Wyns Sources: DECC & Carbonbrief 4. Energy Efficiency: Reinforcing the policy flotilla (don’t throw away the baby with the bathwater) UK domes;c energy consump;on Efficiency of fridges sold Directive on energy labels Buildings’ efficiency Types of boiler installed Ecodesign directive EPBD directive Sources: DECC & Carbonbrief 24/11/14 Sebastian Oberthür & Tomas Wyns 4. Energy Efficiency Use the flotilla of EU policy tools (EPBD, Ecodesign, EED, CO2&cars, Labelling) • Quite effective, even if results take time to materialise • Benefit consumers • Promote domestic innovation, production (comparative advantage) and employment Goals for 2030 policy framework: • Strengthen and streamline these policy instruments • Lower administrative burden/simplify (where possible), e.g. through link with IT innovation • Smart/targeted funding (see also below) 24/11/14 Sebastian Oberthür & Tomas Wyns 6. Renewable Energy How to implement an EU level binding target in absence of national targets? • EU energy governance needs legal framework – thus review of RE Directive (and EED) are required! • Main challenges: 1. How to strengthen the directive and ensure growth of RE across the EU in the absence of binding national targets? 2. How to enhance investor certainty, reduce policy risk, improve finance, enhance cooperation between Member States and address other barriers? 24/11/14 Sebastian Oberthür & Tomas Wyns 6. RE and EE Some preliminary ideas • No backsliding & anchoring of national commitments and policies for RE growth • Indicative national growth targets and trajectories with corrective action if excessive deviation from trajectory • Link Member State access to EU finance to approval of national plans and compliance • Increase EU support for Member State cooperation (e.g. Projects of Common Interest) • New mechanisms to remove financing barriers (leverage institutional investors etc.) 24/11/14 Sebastian Oberthür & Tomas Wyns 6. RE and EE Some preliminary ideas (continued) • Enhance demand side mechanisms (e.g. public sector procurement) • Keep and enhance existing mechanisms to remove regulatory barriers + consider introducing investor complaints procedure • Introduction of downstream binding measures? (e.g. US type Renewable Portfolio Standard for suppliers)?? • Review by 2024-5 with option of re-introducing binding national targets (in case of underperformance) • Strengthen and streamline national planning and reporting (e.g. NREAP and NEEAP consolidation) 24/11/14 Sebastian Oberthür & Tomas Wyns 6. Renewable Energy …but also don’t forget the bigger picture • EU economic governance (SGP, MIP, EDP) Ø can be barrier for government support for renewable energy, energy efficiency, energy infrastructure investments Ø could introduce more flexibility for these types of investments – Example: allowing budgetary flexibility for projects that receive “investment grade (AAA)” label (through EIB) 24/11/14 Sebastian Oberthür & Tomas Wyns “When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the actions.” Confucius Thank you! For more information please contact: [email protected] [email protected] 24/11/14 Sebastian Oberthür & Tomas Wyns
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