S.1. Energy Strategies


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The new EC Climate Strategy – a rocky road to climate neutrality

Tuesday, December 4, 2018

On 28 November, the EC published its European strategic long-term vision ‘A Clean Planet for All’, in which it calls for a climate-neutral Europe by 2050. The strategy highlights eight scenarios for the future of the EU and aims to show “how Europe can lead the way to climate neutrality by investing into realistic technological solutions, empowering citizens, and aligning action in key areas such as industrial policy, finance, or research – while ensuring social fairness for a just transition”.

The EC proposes that Member States choose from eight scenarios that cover the EU’s energy future from business-as-usual emission reductions to net-zero options. According to the EU Commissioner for Climate Action and Energy, Miguel Arias Cañete, “climate neutrality by 2050 is of course the preferred option. It’s feasible and it’s necessary. We have all the tools to be ambitious”.

While the EU already has a climate strategy – the 2011 Energy Roadmap 2050 – the EC’s new proposal is characterised by strengthened political ambition in energy, climate action and environmental protection, and operates within the context of significant industry transformation.

At this time, RES are  increasingly becoming the desired option for many European citizens, some Member States have held “subsidy-free” wind auctions, and the EU is on its path to meet its 2020 targets while already setting its future targets and the new electricity market design as part of the “Clean Energy for All Europeans” Package. In addition, the Paris Agreement requires its signatories to finalise their long-term energy and climate plans by 2020.

The ambitious 2050 Climate Strategy is thus suitably presented right before the 24th Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), known as COP24, the finalisation of the debates on the EU’s Clean Energy Package and the upcoming European elections in May 2019.

The Climate Strategy Proposal and COP24

According to the EC’s proposal, “the aim of this long-term strategy is to confirm Europe’s commitment to lead in global climate action and to present a vision that can lead to achieving net-zero greenhouse gas emissions by 2050 through a socially-fair transition in a cost-efficient manner”.

The EC outlines a path towards a climate neutral EU economy, which requires “joint action in seven strategic areas: (i) energy efficiency; (ii) deployment of renewables; (iii) clean, safe and connected mobility; (iv) competitive industry and circular economy; (v) infrastructure and interconnections; (vi) bio-economy and natural carbon sinks; (vii) carbon capture and storage to address remaining emissions”.

The current EU overall emissions reduction target seeks to lower emissions by 40% by 2030 compared to 1990 levels. However, for the 2050 proposal, the EC is using a working baseline scenario of 45%, arguing that the EU will reach this target thanks to the new legislative rules that will be adopted in the coming months.

According to the latest UN Intergovernmental Panel on Climate Change (IPCC), the emission targets will be insufficient to meet the Paris Agreement goal of limiting the rise in global temperatures to 2 degrees Celsius and reducing the risks of more extreme weather, rising sea levels and species extinction. As a result, some MEPs and environmental organisations have argued for an increase of the emission target to 55% and even for a net-zero target for 2040.

However, the EC’s proposal does not include a specific target but  rather  gives eight options to reach a common vision of net-zero greenhouse gas emissions for the EU. The eight scenarios include: (i) Electrification (ELEC); (ii) Hydrogen (H2); (iii) Power-to-X (P2X); (iv) Energy Efficiency (EE); (v) Circular Economy (CIRC); (vi) Combination (COMBO); (vii) 1,5oC Technical (1,5TECH); and (viii) 1,5oC Sustainable Lifestyles (1,5LIFE). The latter ones are more radical options and preferred by the EC.

Source: EC in-depth analysis A Clean Planet for all

According to the EU Commissioner for Climate Action and Energy, achieving a climate neutral EU economy by 2050 makes both environmental and economic sense. The EC scenarios of net-zero emissions show an “estimated benefits of up to 2% of GDP by 2050 compared to the baseline”. Additionally, the EU GDP is expected to double from its 1990 level by 2050, which means savings of up to €400 billion. Aiming for a climate neutral Europe by 2050 means that energy and infrastructure investments, would need to be increased from the current 2% to 2,8% of GDP.

However, even though the figures clearly show the economic benefits of the EU’s climate and energy actions, they do not cover a very important aspect: the price of inaction, which can be significant and is not purely economic. It includes a.o. societal disruptions, blackouts, flooding, and droughts that can be eliminated or at least partly reduced in various areas.

The ambitious 2050 strategy proposed by the EC prior to COP24 was warmly welcomed by the UN Secretary General, António Guterres, who stated that “climate scientists have issued an ear-splitting wake-up call to the world, which the EU is answering with more ambition for the needed Climate Action, starting with a 45% reduction by 2030”.

While the Parties to the UNFCC held a number of meetings following the adoption of the Paris Agreement, COP24 in Katowice, Poland, is particularly important because 2018 is “the deadline that the signatories of the Agreement agreed upon in order to adopt a work programme for the implementation of the Paris commitments”. Additionally, the financing of climate action worldwide still remains to be agreed between the signatories.

Although it sets the right signal before the summit in Poland and is ambitious, certain observers state that some of the proposed 2050 EU climate strategy scenarios would fall short of achieving the overall Paris Agreement goals.

The proposed EU Climate Strategy scenarios include a few bold, albeit uncertain, factors. First, it sets a path towards up to 60% of EU energy coming from RES by 2050. Second, they do not include any solid fuels like coal, the contribution of which is foreseen to drop by half by 2030, and the 1,5 degrees scenarios include almost no fossil liquids like oil and gas, although they are still present in non-energy uses (e.g. chemicals, manufacturing, plastics). Third, all scenarios show a rise in electricity consumption, with some relying heavily on storage while others rely on alternatives like hydrogen.

Source: EC in-depth analysis A Clean Planet for all

These numbers are particularly favourable to both wind and solar power. More specifically, the EC’s scenarios foresee wind capacity to “increase in 2050 from some 140 GW in 2015 and some 350 GW in 2030 to between 700 GW (EE) and some 1200 GW (P2X) in scenarios achieving 80% GHG reduction and 1.5TECH scenario goes slightly higher to over 1200 GW, meaning a further doubling to tripling compared to 2030”.

Furthermore, “the solar capacity that starts from smaller base today shows also a spectacular growth, from 95 GW in 2015 and some 320 GW in 2030 to between some 500 GW (EE) and 970 GW (P2X) in 2050 for scenarios achieving 80% GHG reduction and up to some 1000 GW in the 1.5TECH scenario”.

Although this is in line with the climate ambitions set by the EC, some Member States do not appear ready for a near complete phase-out of fossil fuels in the next 20 years.

Historically, in 2011 and again in 2012, Poland vetoed the EC’s attempts to propose an all-encompassing climate strategy for the EU, arguing that the set greenhouse gas emissions targets were unfair towards some Member States because they put them in an economically uncompetitive position. Taking this into account in the current proposal, the EC does not include specific targets but instead sets a general direction towards net-zero emissions, leaving it to the Member States to decide how to reach this goal through their national energy plans.

More recently, the Commission in Germany (one of the Member States aiming to phase out coal-fired power plants known as Kohleausstieg) tasked with planning the coal phase-out scrapped its plans to present a decision on the next steps by 01 February 2019. Accordingly, the biggest EU economy and a leading proponent of the coal phase-out will attend the COP24 without an approved plan, which could somewhat undermine the German green position at the upcoming summit.

Next Steps

Following the highly anticipated COP24 summit, the proposed strategy will be discussed during the energy and environment Council of the EU meetings, scheduled respectively on 19 and 20 December. However, because it is an all-encompassing strategy, the Council configurations dealing with transport, economy, agriculture and others will also have a say on the EC plans.

The EP Committees, in particular ITRE and ENVI, will also hold debates dedicated to the new strategy, while others will contribute opinions towards an EP Resolution to follow up on the one prepared for COP24. Based on previous positions and discussions, the EP is more prone to support the more radical scenarios proposed by EC for net-zero emissions, which could collide with the views supported by some Member State officials.

Bodies such as the Committee of the Regions (CoR) and the European Economic and Social Committee (EESC), as well as various associations and private actors are also expected to voice their positions on the “right path” for Europe.

Institutional and stakeholder discussions will take place at the beginning of 2019, culminating in the Future of Europe European Council Summit on 09 May 2019 in Sibiu, Romania. The EU leaders will meet under the banner of the Romanian Presidency just before the European elections. Climate change is expected to be high on the agenda, together with migration and the EU budget, in order “to make a renewed commitment to an EU that delivers on the issues that really matter to people”. It follows that once adopted, the strategy will become a major part of the future EU vision. This was already hinted at and supported by EU leaders from ten countries representing half of the EU population, namely Denmark, Finland, France, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, Spain and Sweden.

Following the Summit and the European elections, the new EC will propose new legislation pertaining to climate and energy to the co-legislators in accordance with the new strategy as agreed.