A Tale of Three Targets: The 2030 Climate and Energy Debate

This post was written for the IIEA‘s Environment Nexus web site. View the original post

Are targets falling out of fashion? The Irish government has just published the general scheme of a “Climate Action and Low Carbon Development” Bill which is largely a rehash of the 2010 Climate Change Response Bill with the emission reduction targets for 2030 and 2050 removed. Instead, the Bill adopts a general aim of “transition to a low carbon, climate resilient and environmentally sustainable economy in the period up to and including the year 2050”, and promises to be consistent with any existing or future obligations under international agreements. In other words the Bill commits the Irish government to whatever it might sign up to in the future, through the EU or UNFCCC. The underlying assumption is that the EU will adopt binding emissions reduction targets for 2030 and 2050, as it has already done for 2020, and that the Irish state will go along with whatever these might turn out to be (as it will be obliged to do in any case).

What the 2030 targets turn out to be is the subject of discussion at European Commission level at present. As mentioned in my last post, the Commission is currently working on a Green Paper on the EU’s own climate and energy framework for 2030, and the Commissioners met on 20 February 2013 to consider the issues. One of the main questions being considered is whether to replicate the 2020 framework in terms of targets.

For 2020 the EU has adopted binding targets for both greenhouse gas (GHG) emission reduction and renewable energy adoption, as well as a third, non-binding, target for energy efficiency. The Commission is considering whether a single target, for GHG reduction, could also drive the renewables and energy efficiency objectives without the need for separate targets in these areas. A single target would address some of the criticism of the 2020 package, which some stakeholders argued was not properly analysed for coherence in terms of the interactions between the various instruments. For example there was debate within the Commission itself as to whether proposals to drive energy efficiency, could undermine the Emissions Trading Scheme (ETS). A recent report for the European Parliament concludes that such effects are limited, however it does point to important interactions between the ETS and the Renewables Directive.

Of course another way to address this criticism is to undertake a proper analysis of the interactions between the three targets in the first instance. The Commission certainly seem determined that the 2030 package will be based on solid analysis, however there is concern in some quarters that the issue is being pre-judged, with references to “streamlining” the current approach. The renewable energy industry is understandably keen to see the target for renewable share retained and environment and energy NGOs are arguing strongly for the retention of all three targets, with the Climate Action Network and others calling for a binding energy savings target. Their strongest argument in favour of this approach is that the binding targets in the 2020 package have worked. Partly through the effects of recession, the EU is on track to meet its binding GHG and renewable targets, but not the voluntary energy savings target. The benefit of meeting the energy savings target is estimated by Ecofys to be more than €200 billion a year by 2020.

Whatever direction the Commission takes on this issue, steering the ultimate package through the other European institutions will be far from straightforward. The Commission has already set out its high-level programme for decarbonisation by 2050 in a series of roadmaps or White Papers published during 2011, but the Council has been unable to adopt conclusions on these documents, because of the reluctance of some Member States to commit to 2030 milestones. It is widely known that Poland is the Member State showing most reluctance in committing to these targets, indeed its present policy seems totally set against any agreement that would bind it to serious reductions in carbon emissions.

Poland’s problem is largely one of energy security. It wants to continue burning its own coal so that it doesn’t have to rely on Russian natural gas. As well as being one of the ten largest producers of coal in the world, Poland is dependent on the fuel for 90% of its electricity generation. It wants the freedom to replace its aging coal-fired power stations with massive new plants, maintaining its carbon-intensive power generation and industrial system, and leaving little room for investment in renewables. The sensitivity of Poland’s policymakers to this energy security issue is perhaps demonstrated in the heavy-handed way they have dealt with environmental groups who have questioned the provision of new coal-fired power stations.

As a bloc, however, the EU is more heavily dependent on energy imports than the US or Japan, which drives the need to increase the share of renewables and reduce overall energy demand. Poland’s specific conditions and concerns will have to in some way be accommodated in order for the EU to move forward with this larger agenda. The Commission’s Green Paper will have to indicate what flexibilities it might be able to offer to take account of “national circumstances”. However the path Poland is currently taking is incompatible with decarbonisation and there is a limit to how much “flexibility” can be offered in these circumstances.

At the present time, therefore, targets for 2020, 2030 and 2050 are all in play. Of these, 2030 is probably the most critical. While the final level of ambition for 2020 has not been set, a binding target for emissions reductions is in place and how the burden of these reductions will be shared among member states is known. The EU has signaled its willingness to move from a 20% reduction target to a 30% target in the context of a global climate deal, but national policymakers and the investment community broadly know the parameters in which they will operate up until 2020. Given its distance into the future, goals set for 2050 can still be treated as aspirational. One suspects, for example, that while investors will take note of the Transport White Paper goal of no conventionally-fuelled cars in cities by 2050, this proposal will not drive any major decisions until the policy pathway emerges in greater detail.

2030, on the other hand, is well within the time horizon of major decisions which are currently being made on energy, infrastructure and other investment. Infrastructure developed now will largely still be in place in 2030, so when we talk about decisions for 2030 we are really talking about the present day. This is well-recognised by the Commission, which is pushing to have the 2030 framework ready by the end of 2013. However political and practical realities, highlighted by the current difficulties in agreeing the ETS backloading proposal, suggest that the timeframe for adoption of any such package will be much longer. Indeed it will probably be well into the term of the next Commission and Parliament before any targets are set.

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