International climate protection

EU climate and energy policies

Louise-Weiss-Gebäude in Straßburg, Sitz des Europäischen Parlaments

The European Union has an important role in climate and energy policy. Climate change is a transnational problem – it cannot be solved solely on the national or subnational level. As part of environmental policy, the topic of climate and energy is part of the shared competences between the EU and its member states. Climate action has become one of the top priority of the EU. Thereby, the Paris Agreement is the guiding principle for the EU. Accordingly, global warming shall be kept well below 2°C and if possible 1.5°C compared to preindustrial times

Climate and Energy Targets of the EU

Back in 2007, the European Union adopted its 2020 climate and energy package. Under the pithy title of the “20-20-20-targets”, the following objectives for 2020 were set: Greenhouse gas emissions are supposed to be reduced by 20 percent compared to 1990, the share of renewable energies shall increase to 20 percent and energy efficiency shall be improved by 20 percent as well.

In the meantime, the EU has updated its climate and energy policy with the 2030 climate and energy framework. The new targets build upon the 2020 targets and continue through to 2030. Specifically, the targets call for a reduction of greenhouse gas emissions by 40 percent until 2030 compared to 1990 levels, an increase in renewable energy consumption to at least 32 percent and an improvement of energy efficiency by at least 32.5 percent. In 2018, the EU has raised the targets for renewable energies and energy efficiency from 27 percent, respectively.

In the long-term, the EU wants to reduce its greenhouse gas emissions by 80 to 95 percent until 2050 compared to 1990. In November 2018, the European Commission has released a communication called “A Clean Planet for all – A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy”. This document shall stimulate discussions on a 2050 long-term strategy with a target to reach net-zero emissions in 2050.The transformation to an energy-efficient and low-carbon economy is supposed to result in economic prosperity, an increase in competitiveness and job creation.

The EU Emissions Trading System and the Effort Sharing Decision, which divides further efforts among the member states, are the main instruments to implement these targets.

EU Emissions Trading System

Trading in emission allowances for greenhouse gases is a key element of EU climate policy. The EU Emission Trading System (ETS) started already in 2005. It covers power plants and facilities in the power as well as in the industrial sector and aviation within the EU. Thus, the EU ETS regulates almost half of the greenhouse gas emissions in Europe and about 30 percent in Baden-Württemberg. Operators have to acquire certificates for their emissions. The total number of tradable certificates is limited; supply and demand determine the price of the certificates. The more expansive the certificate price, the higher is the incentive to take measures in order to reduce or avoid greenhouse gas emissions.

However, owing to continued low prices for emission allowances, the ETS did not have the desired effect for a long time. Since mid-2017, the price has increased, though. Meanwhile, a certificate costs between 20 and 30 euros.

In 2021, the fourth trading phase will begin. Then, the number of tradable allowances will be reduced by 2.2 percent annually instead of the present 1.74 percent. In addition, in 2019, decision-makers created a market stability reserve in order to cut back the number of surplus allowances based on a precalculated model.

Effort Sharing Decision

The Effort Sharing Decision covers emissions that fall outside the scope of the Emissions Trading System. This includes emissions from buildings, transport, agriculture and waste. The target set for 2030 is to reduce these emissions throughout Europe by 30 percent compared to 2005. For this purpose, the EU member states assigned themselves different objectives dependent on their economic power, ranging from zero to 40 percent. In Germany, a reduction by 38 percent is envisaged.

Other Climate Measures of the EU

Beyond that, the EU has defined further measures and activities to reach its climate and energy targets. For instance, vehicle manufacturers have to comply with performance standards for CO2 emissions for new passenger cars and light commercial vehicles. Additionally, domestic appliances and other machines and gadgets have to satisfy certain energy efficiency standards.

Moreover, the EU member states are obliged to promote renewable energies within their jurisdictions. Last but not least, the EU provides substantial financial means. From 2014 until 2020, the EU earmarked 20 percent of its budget for climate action, corresponding to 180 billion euros. Under the multiannual financial framework of the EU from 2021 to 2027, this share is supposed to be raised further.

The EU Commission has set out a framework for its climate and energy policies up to 2030. The new targets will take these policies forward at the end of the current 2020 framework.

In particular, the targets call for a reduction of greenhouse gas emissions by 40 percent compared to 1990 levels, an increase in renewable energy consumption to at least 27 percent and an improvement of energy efficiency by at least 27 percent, with an option after a review to increase the efficiency goal to 30 percent by 2020.

Two important instruments of EU climate policy are the Emissions Trading System and the Effort Sharing Decision, are summarised here as examples.

Emissions Trading System

Trading in emission allowances for greenhouse gases is a key element of EU climate policy. It covers almost half of the greenhouse gas emissions in Europe and about 30 percent in Baden-Württemberg. However, owing to continued low prices for emission allowances, the system has not had the desired effect. The rules for the fourth trading phase beginning in 2021 are currently being modified and updated. Among other measures, the number of tradable allowances will be reduced by 2.2 percent annually instead of the present 1.74 percent. A market stability reserve will be created as early as 2019 in order to cut back the number of surplus allowances based on a precalculated model.

Effort Sharing Decision

Emissions that fall outside the scope of the Emissions Trading System are covered by the Effort Sharing Decision. This includes emissions from buildings, transport, agriculture and waste. The target, set for 2030, is to reduce these emissions throughout Europe by 30 percent compared to 2005, with a range of 0 to 40 percent. In Germany a reduction by 38 percent is planned.