1. Climate Action Policy Developments
Velina Pendolovska
DG Climate Action
ESTAT Working Group on Environmental Accounts/Expenditure Statistics
20 February 2014
Luxembourg

2. International climate developments
2011 Durban: Durban Platform for Enhanced Action (ADP) – agreement for a binding global regime for emission reductions post-2020, to be agreed by 2015
2012 Doha: Kyoto Protocol 2nd Commitment Period (2CP), raising ambition before 2020
2013 Warsaw: main EU expectation was to get a timeline and key elements of the 2015 Agreement; Main outcomes:
All Parties "to initiate or intensify domestic preparations for their intended nationally determined contributions"
"to communicate them well in advance of the twenty-first session of the Conference of the Parties (by the first quarter of 2015 by those Parties ready to do so)"
Transparency and clarity on "intended contributions"
2014 Lima and 2015 Paris: "intended contributions" to be tabled – EU working on 2030 climate and energy framework; Legal character of the new agreement
Current discussions are on-going on the internal distribution of the 20% target across all MS+HR+IS.

3. Where do we stand? Current progress under KP
Levels:
EU-28 emissions down to 19.4% below 1990 levels
EU-15 emissions down to 15.3% below Kyoto baseline year levels
Targets: KP CP1
The EU-15 have a collective target of -8% over the period Current progress: 11.8%
Targets: KP CP2
The EU28+IS to reach -20% by 2020
* Source: 15 January MS submissions under the Monitoring Mechanism Regulation

4. Progress under EU Climate and Energy Package
Reduce Greenhouse Gas Emissions levels by 20%
Increase share of Renewables to 20%
Reduce energy consumption by 20%
Share in 2011:
12.7%
Reductions in 2012:
-18%
2020 Projection
Target types: national or EU? Sectoral or total? Intensity-type targets or in absolute terms?
Factors to be taken into account: rising energy prices, the need to invest in new energy infrastructure and to avoid "lock-in" scenarios, the need to continue with the reduction of emissions: 2050 Roadmap – 80-95% GHG emissions reduction by 2050, will require 40% emissions reduction by 2030.
Competitiveness must remain intact, renewable sources of energy would be competitive on a par with other more conventional sources by 2020.
Distributional aspects and different starting points must be taken into account
2020 Targets
2020 Projection
2020 Projection

5. EU 2030 framework for climate and energy
Adopted by the Commission on 22 January
Main points:
Reducing greenhouse gas emissions by 40%
Increasing the share of renewable energy to at least 27%
Continued improvements in energy efficiency
Reform of the EU emissions trading system
Competitive, affordable and secure energy
New governance system
Report on energy prices and costs
More information:

6. -20 % Greenhouse Gas Emissions
EU 2030 framework for climate and energy: set up
-20 % Greenhouse Gas Emissions
20% Renewable Energy
20 % Energy Efficiency
2020
- 40 % Greenhouse Gas Emissions
Min 27 % Renewable Energy
New Key Indicators
2030
Review
2014
New Governance system

7. 2030 framework: key indicators
Diversification imports,
share of indigenous energy
Smart grids & connectors between Member States
Energy price differentials
Higher shares of renewables and improved energy efficiency will contribute to a more competitive and secure energy system. However, they are not sufficient to ensure progress towards all aspects of these fundamental objectives in a 2030 perspective, especially as regards competitive and affordable energy, market integration and supply diversification. Therefore, and to make the 2030 Framework sufficiency comprehensive, the Commission comes forward with a set of key indicators to assess progress over time and the provide a facts base for potential policy response.
These indicators are [DRAFT! To be checked with final Communication]:
Energy price differentials between the EU and major trading partners, building on the report on energy prices and costs
Diversification of energy imports and the share of indigenous energy sources used in energy consumption over the period up to 2030.
Deployment of smart grids and interconnections between Member States, with particular urgency between those that are furthest away from meeting the already agreed objective for Member States to ensure a level of electricity interconnections beyond 10% of their installed production capacity.
Intra-EU coupling of energy markets, building on the liberalisation of gas and electricity markets achieved already by EU legislation the Commission.
Competition and market concentration on energy markets at the national level and in regions with functioning coupling at the wholesale level.
Technological innovation (R&D expenditure, EU patents, competitive situation on technologies compared to third countries).
Intra-EU coupling energy markets
Competition and market concentration
Technological innovation

8. 2030 framework: new governance
Commission develops detailed guidance
Member States prepare plans based on an iterative process
Commission assesses Member States' plans and commitments
Include domestic objectives on:
non-ETS GHG emissions
renewable energy
energy savings
energy security ….
Strong European governance framework will deliver EU objectives for renewable energy and energy efficiency in a way consistent with GHG targets and coherent with wider principles of EU energy policy.
There are three steps envisaged for this process:
Firstly, the Commission develops detailed guidance on governance process and the contents of national plans;
Member States then prepare their plans in consultation with their neighbours;
The Commission reviews Member States' plans and commitments, assessing whether they are compatible with the Union's climate and energy targets. If a plan is judged insufficient, a deeper process is launched between the Commission and Member State to reinforce its content.
The Commission considers that national plans should be operational well before 2020 to guide Member State actions in good time for the period and encourage European and national investments.

9. EU 2030 framework: main challenges
Increasing in any event: renew ageing energy system, rising fossil fuel prices, adherence to existing policies
Energy costs
Shift away from fuel expenditure towards investments, additional € 38 billion investment/year compared to the reference scenario
Additional investments to achieve 2030 framework
Future discussion will have to be centred on how to ensure an equitable burden sharing affordable for all
Differences between Member States
Cost efficient implementation sees additional energy system costs increase by 0.15% by 2030.
Investments increase per annum by €38 billion ( ).
Costs and investments relatively higher in lower income Member States.
For instance countries with a GDP below 90% of the EU average see higher than average increases in investments, equivalent to some €3 billion per annum ( ).
Need to take into account of distributional factors
Address the investment challenge through solutions that contribute to improved finance.
Emissions: in both the EU-28 and the EU-15 have been decreasing while the economy has grown significantly. The figure demonstrates that the decoupling of economic growth from GHG emissions has been progressing steadily since 1990.
GDP: Between 1990 and 2012: the EU-28 GDP grew by 45 % while emissions decreased by 19 %.
GHG Intensity: The overall GHG emissions intensity (i.e. emissions per unit of economic output) for the EU-28 has been steadily decreasing since 1990, reaching nearly half the 1990 levels by 2011, as the figure shows.

10. EU 2030 framework: …and main benefits
Decoupling of Gross Domestic Product growth from Greenhouse Gas Emissions will continue
Reductions vs 2005:
ETS -43%
Non ETS -30%
All scenarios show reduced energy consumption (both primary and final) compared to the Reference scenario, with more pronounced energy savings and improved energy intensity in scenarios with strong energy efficiency policies.
Additional fuel savings of € 18 bn fuel per annum next 2 decades.
Energy security: additional 11% less energy imports in 2030
Innovation => jobs & growth
Health and Air pollution benefits of €7 to € 13.5 billion in 2030.
Emissions: in both the EU-28 and the EU-15 have been decreasing while the economy has grown significantly. The figure demonstrates that the decoupling of economic growth from GHG emissions has been progressing steadily since 1990.
Between 1990 and 2011:
the EU-28 GDP grew by 45 % while emissions decreased by 18.3 %.
The overall GHG emissions intensity (i.e. emissions per unit of economic output) for the EU-28 has been steadily decreasing since 1990, reaching nearly half the 1990 levels by 2011, as the figure shows.
Is projected to continue.
Fuel savings: additional € 18 billion fuel per year next 2 decades
Energy security: additional 11% cut in energy imports in 2030
Innovation: jobs & growth
Health and air pollution benefits: € billion in 2030

11. EU ETS
Large and persistent market imbalance (surplus >2 billion allowances)
Back-loading of auction volume only a first, temporary step
Proposal to create a market stability reserve from 2021 onwards to make EU Emissions Trading System more resilient to demand shocks
After decision on 40% Greenhouse Gas Emissions reduction target: Increase linear reduction factor as of 2021 from 1.74 % to 2.2% to align the Emissions Trading System cap to agreed 2030 target
Carbon leakage: Stable framework for this decade, continued but more focused free allocation after 2020
The surplus now amounts to more than two billion emission allowances, which approximately corresponds to the annual emissions of all installations covered by the EU ETS. This lack of scarcity will continue for at least the next ten years.
Adaptation measures (proposal on back-loading) were rejected by the Committee on Industry, Research and Energy of the European Parliament at the end of January 2013.
A sustainable solution to the growing imbalance between supply and demand requires structural changes to the EU ETS. The six options are:
Increasing the EU’s greenhouse gas emissions reduction target for 2020 from 20% to 30% below 1990 levels;
Retiring a certain number of phase three allowances permanently;
Revising the 1.74% annual reduction in the number of allowances to make it steeper;
Bringing more sectors into the EU ETS;
Limiting access to international credits; 
Introducing discretionary price management mechanisms such as a price management reserve.

12. Monitoring Mechanism Regulation (MMR) Adoption
MMR has been adopted on 21 May 2013, Regulation 525/2013/EU
Currently process of preparing the implementing and delegated acts, including on the formats and structure of reporting
A new element possibly suitable for now-casting on air emissions accounts (greenhouse gases) – the approximated inventories
Article 8
Approximated greenhouse gas inventories
1. By 31 July each year (year X), Member States shall, where possible, submit to the Commission approximated greenhouse gas inventories for the year X-1. The Commission shall, on the basis of the Member States’ approximated greenhouse gas inventories or, if a Member State has not communicated its approximated inventories by that date, on the basis of its own estimates, annually compile a Union approximated greenhouse gas inventory. The Commission shall make this information available to the public each year by 30 September.
Provisional agreement between co-legislators reached on 21 December 2012.
The aim of the new regulation is to enhance the monitoring and reporting framework within the EU, in the light of lessons learned from implementation of the current decision, to take account of developments at both Union and international level. In particular, the proposal incorporates new reporting and monitoring requirements arising from the 2009 Climate and Energy Package and from recent decisions adopted under the United Nations Framework Convention on Climate Change (UNFCCC).

13. Thank you! 'Like' us on Facebook!