A New Era for Energy in Europe
IEEP Briefing - 23 January 2008
Today a package of legislation was presented by the European Commission that
heralds the beginning of a new era in Europe’s relationship with energy. From now on
the consideration of climate impacts can no longer be separated from economic and
political energy choices.
Research shows that the benefits of avoiding dangerous climate change will more than
outweigh the costs of doing so – although there will still be costs. While the challenge
presented by this legislation may seem daunting, it should not be argued in terms of
the old paradigms of short-term and self-interested gains and losses. Rather, we need
to harness the policy tools, behavioural and technology changes at our disposal to
achieve significant emission reductions now, in recognition that yet deeper cuts will
be needed later - creating efficient and creative responses now will make this possible.
Below IEEP’s climate specialists highlight important considerations raised by today’s
climate and energy package.
 Europe’s plans to expand renewable energy use to 20 per cent will put yet more
wind in the sails of an industry that is rapidly becoming a major contributor to the
European economy. However, with so much emphasis on the 20 per cent
reduction target by 2020, we must not forget that the EU has committed itself to a
30 per cent reduction in international negotiations. It would be presuming the
failure of a process, which the EU has also committed itself to lead, not to be seen
to be prepared to make this higher level of emission cuts.
 The EU Emissions Trading Scheme had a rocky start in its initial period of 2005-7
due to over-allocation of emissions credits and application of varying approaches
among Member States. However, a great deal has been learned from this
experience and the suggested improvements are a significant step forward,
including the harmonised allocation process and increased levels of auctioning.
While concerns have been expressed about the impact on European business of
such a system, trading was in fact devised in response to business’s desire for
flexibility in achieving compliance. The EU ETS should be judged in light of other
options for emission reduction not the status quo.
 The biofuels target of 10 per cent by 2020 is problematic on several fronts but can
be made to work given sufficient safeguards. Our analysis indicates that biomass
is most often far more efficiently converted to electricity or heat than to transport
fuel: those opportunities need to be maximized. Secondly, it is simply a waste of
hard-won resources to pour biofuels into an inefficient vehicle. The recent
proposal to improve the CO2 performance of cars needs to be agreed without
watering down, and further more ambitious targets prepared.
 The sustainability criteria presented for biofuels are clearly inadequate in the
face of the evidence of how fuel crops are produced around the world today –
without further safeguards on the displacement of unsustainable land uses, the
impact on food prices and availability, environmental degradation will be a
predictable outcome. These issues are complex and inherent to biofuels, which
means the approach to solving them needs to be vigorous; simply reducing or
throwing out the 10 per cent target is not in itself the most useful response.
 Displacement impacts of biofuel production are a major concern, however, it is
not possible to simply address these through a project based approach using
standards for sustainable production. To ensure proper monitoring national level
systems for reporting need to be developed in the long term.
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Carbon dioxide capture and storage is another mitigation technology with
promise, but whose application needs to be achieved sensibly and sustainably.
Today’s Directive outlines several changes that provide some broad top-level
assurances that CCS will be achieved safely and for the long term. Nevertheless,
much important detail is left to Member States and future review processes,
arguing for a further process of capacity building, harmonisation, and stakeholder
oversight.
Support options for Carbon Capture and Storage outlined by the Commission,
including inclusion in the EU ETS and opening the door to state aid, may inspire
some facilities to be built. However, it remains to be seen how the gap from
concept to commercialisation will be bridged in a timely fashion – CCS cannot
remain a ‘technology of the future’ while coal power enjoys a renaissance now. It
has to play its part mitigating fossil emissions as soon as possible, or it may do
more harm than good as an instrument of rhetoric promoting coal power without
then delivering on its promise to limit emissions.
On 13 February IEEP will host a high-level roundtable on the climate and energy
package for invited stakeholders, in cooperation with Climate Change Capital. In
addition we are preparing analyses of the final texts for clients of our advisory
services. Please follow these links or details of our recent work on climate policy,
emissions trading, biofuels, CCS or go to www.ieep.eu.
The Institute for European Environmental Policy (IEEP) is an independent and
influential centre for the analysis and development of policies affecting the
environment in Europe and beyond.
Contact Details
For further queries or comments please contact:
Catherine Bowyer – [email protected] , Tel 020 7799 2244
Senior Policy Analyst, Climate and Pollution