emission trading scheme by numbers


 

The EU’s Emission Trading Scheme reform took a huge step forward last year when the European Parliament’s Environment Committee voted in favour of MEP Ian Duncan’s report. He talks us through the process and what happens next.

Ian Duncan is an MEP with the European Conservatives and Reformists (ECR) and represents the Scottish Conservative Party at a domestic level.

Once upon a time, not so far away… well the 15 December in Brussels, the Environment Committee of the European Parliament held its final session of 2016.

It was an extraordinary session, in more ways than one, with only one item of business: to vote on the reform of the EU’s Emissions Trading Scheme (ETS).

The vote had been scheduled to take place the week before, but despite my best efforts the distance between the groups was just too great, and so I postponed the vote.

In truth, the distance was still too great 24 hours before the rescheduled vote, but there was magic in the air that Thursday and by a margin of 41 (53 votes for, five against with seven abstentions) the merry legislators passed the report, so beginning the legislative journey of ETS reform.

As we count down the days to the final parliamentary plenary vote (scheduled for 15 February) I thought it might be interesting to explore the ETS in numbers.

The reform takes shape…

The vote took place on 15 December, which was 518 days after the European Commission first published its proposal, 455 days after I was appointed rapporteur, and 197 days since my report was published, 174 days since I tendered my resignation as rapporteur on ETS reform and 162 days since the chair of the ENVI committee turned down my resignation. (Ah, Brexit… It seems just like yesterday…).

Alongside me, negotiating the reform, were seven MEPs (my shadows and I) representing the eight political groups, together with 14 assistants (who knew far more than the eight of us).

We spent over 40 hours in official session and countless more unofficially on the telephone, in various corridors and occasionally in bars (alcohol may have been taken) to distill the 729 amendments laid against my report into a document compromising 17 amendments, spanning 78 pages and over 20,000 words.

The year of our labour saw Brexit, Trump and the entry into force of the Paris Agreement. It also saw actual labour: S&D shadow Jytte Guteland gave birth to a baby boy. He will be five by the time the reform we have begun actually enters into force.

What was agreed

2.4% – The annual rate by which allowances will be removed from the market (equal to the elimination of 528 million tonnes of CO2) from 2021-30.

This figure represents an increase of 0.2% on the Commission proposal, and means an additional 242 million tonnes of CO2will be removed during the term of the reform, so ensuring the EU meets it ambition of reducing emissions by at least 80% by 2050.

57% – the proportion of allowances to be auctioned by member states (or by the Commission) to provide the money for the Modernisation Fund, the Innovation Fund, and part of the harmonised scheme to compensate for indirect costs.

The ENVI Committee agreed that up to 5% of this share could be transferred to support industry should the number of ‘free allowances’ ever run out (during negotiations it was termed the ‘Duncan mechanism’; I suspect my late mother would have been immensely proud of that fact, even if she didn’t quite understand its significance. I am writing this article on what would have been her 80th birthday).

If the Duncan mechanism is not triggered, or if the full 5% is not needed to compensate industry, up to 200 million additional allowances will be cancelled, so reducing further the surplus of allowances on the market.

100% – the share of revenues from auctioned allowances that member states must use for climate action.  At present, member states spend only 80% of the auction revenues on climate projects. Increasing this to 100% will make available a further €120 billion of funding for renewables, energy efficiency and climate mitigation.

1 billion – the number of allowances that will be cancelled during the phase in order to reduce oversupply in the market. Due to the financial crash in 2008 and the related dip in EU industrial production, analysts estimate the market will be oversupplied by roughly 2.5 billion allowances by 2021.

Removing 1 billion of these permits will help restore market balance and deliver a carbon price that incentivises industrial innovation in Europe.

24% – which represents a doubling of the rate of withdrawal of carbon permits from the market, compared to the Commission proposal. The permits will be banked in what is known as the Market Stability Reserve (MSR).

Coupled with the cancellation noted above, this doubling of withdrawal (12 to 24%) will help reduce oversupply in the market and encourage a meaningful carbon price.

100 – the number of sectors that will no longer qualify for free allowances and therefore exit the ‘carbon leakage’ list. The ENVI Committee agreed with the Commission to focus the list on those sectors most at risk of upping sticks and departing the EU, to lands where carbon costs are lower.

0 – the number of new coal fired power plants that can be funded through the ETS funding mechanisms.

Next steps

MEPs will be asked to endorse the ENVI Committee’s report on 15 February 2017, in a plenary vote. By then it will be only 1,416 days until the actual reform comes into being (and 685 days until the Market Stability Reserve actually starts stabilising the market), and around 5.6 billion tonnes of CO2will have entered the atmosphere

If MEPs endorse my report, then the Parliament will shortly thereafter (the number of days is anyone’s guess) enter into negotiations with the European Council – termed the trialogue, since it is chaired by the European Commission – and the carbon market reform will have taken another step to becoming law.

Easy as one, two, three…

Source: www.euroactiv.com


energising european recovery


 

Last year’s Winter Energy Package contains the seeds of two fundamental economic and political requirements needed for the EU to prosper: returning some ‘power to the people’, alongside European investment and network integration, write a number of energy experts.

Michael Grubb is professor of climate change policy at University College London; Simon Müller is an analyst at the International Energy Agency in Paris; Jean-Michel Glachant is the director of the Florence School of Regulation; and Karsten Neuhoff heads the climate policy department at DIW Berlin.

Energy is a backbone of economic development. The origin of the EU itself lies in the European Coal and Steel Community, an energy-based treaty that helped to power post-war reconstruction.

December’s Winter Package marks recognition that the energy challenge has changed fundamentally. Embodying the much-vaunted Energy Union, it is constructed around major challenges, which also offer profound opportunities.

The first opportunity lies in the way in which new technologies are revolutionising the potential role of energy consumers, and indeed could create a whole new class of ‘prosumers’.  Farmers, retail chains and even households, particularly in rural areas, have new opportunities to be active participants in the energy system.

They can offer generation from localised renewables, and deliver flexibility, for example from automated management of thermal (think fridge and freezers) or electrical (think electric cars) storage. Industrial consumers could also make money from smart scheduling of industrial production or cheap on-site backup generation.

If trust is a problem (and in few sectors is trust in suppliers so low as in energy), and ‘take control’ is seen as an answer, then offering more consumer control over energy use and potentially generation is not a bad place to start.

The EU package offers basic standards, legislative frameworks and data protection systems required to underpin this. Becoming ‘prosumers’ could give hundreds of millions of people a bigger stake in the energy system, and also stem the sense that technology modernisation is leaving rural economies behind.

But the energy transition also demands huge investment, at a time when European economies are struggling with stagnation. Much of European energy infrastructure is aged and polluting, and dependent on fossil fuel imports.

Better networks could improve security and reduce costs. Dramatic reductions in the cost of solar and wind energy in particular (in addition to batteries) brings within reach two interrelated goals: the delivery of the Paris Agreement goals on climate change, and reducing European energy dependence in a world of increasingly febrile international relations just as the US is losing its strategic interest in Middle East oil security.

The Winter Package establishes a governance system to coax and coordinate member states towards the goals already agreed. The transition cannot be bankrolled by government expenditure or by imposing more costs on consumers, but neither is needed.

As many have noted, the paradox of modern finance is the huge pools of private capital which are earning next to nothing, indeed, some institutional investors are accepting negative interest rates for perceived safe havens, like German railway bonds.

This is effectively paying for infrastructure to hold their money. With such cheap capital, renewable energy and network infrastructure can make attractive destinations for investment in an energy transition with investment potentially exceeding €100 billion a year across Europe: enough to help inject some momentum into European economic recovery.

Programmes to improve Eastern Europe’s building efficiency and maybe infrastructure for electric vehicles would make the endeavour even bigger. And even more than modern railways, energy efficiency, and energy sources which once constructed will be very cheap to run, have every prospect of boosting long run productivity.

The key need is to establish investor confidence born of a clear commitment to building a consumer-oriented low carbon energy system fit for the 21st century. The Winter Package makes first promising steps into the direction.

The revised renewables directive includes an article on “Stability of financial support”, which is essential to attract cheap capital to the sector.

Effective reform of carbon pricing can underline the strategic direction for European energy (and raise finance). The financial framework in the package could further facilitate investment in particular against the background of the fragile finances of many southern European countries.

Those countries too would form the natural nucleus for a trans-Mediterranean investment programme to engage North Africa – countries with abundant clean energy resources just cables away, with a desperate need for productive investment which could also help to stem the tide of refugees.

Like the original coal and steel community, the key to stability is not markets, but investment with a common purpose.

A crucial factor in Europe’s malaise is that it has lost its sense of ambition and mission. Developing the energy industries and infrastructure for a 21st century energy system is an investment in all our futures, for which Europe is still best placed to lead.

And who knows, by bringing investment, purpose, and engagement, it might even save the Union itself.

Source: www.euractiv.com


eu risks missing climate goals without 'sustainable' biofuels, experts warn.


 

The European Commission’s proposal to gradually phase out “sustainable” first generation biofuels will prevent the EU from meeting its 2030 climate goals, experts claim.

In November last year, the European Commission presented its draft proposal to review the Renewable Energy Directive for the post-2020 period as part of a Clean Energy Package.

The executive proposed that biofuels should have a limited role in decarbonising the transport sector and should not receive public support after 2020.

The Commission’s plan is to reduce the contribution of conventional biofuels in transport from a maximum of 7% in 2021 to 3.8% in 2030, effectively bringing crop-based biofuels use to pre-2008 levels.

It also created an obligation to raise the share of other ‘low emissions fuels’ such as renewable electricity and advanced biofuels in transport to 6.8%.

The Commission was heavily criticised by industry. Ethanol producers accused the executive of being supportive of oil use in EU transport, while the biodiesel industry called the proposal “unacceptable”, predicting an increase of fossil fuels in transport due to a lack of availability of advanced biofuels.

Missing climate goals

Speaking at an event in the European Parliament on Tuesday (10 January) organised by the European renewable ethanol association, ePURE Secretary General Emmanuel Desplechin pointed out that the use of “sustainable conventional biofuels” such as ethanol made from corn, wheat, and sugar beets would help the EU meet its climate and energy goals for transport.

He, also, said that it could be a real “missed opportunity” for the EU.

“Instead of further encouraging the use of renewable low-carbon fuels, such as biofuels made in Europe from sustainably produced European feedstock, the Commission’s proposal is friendly to oil,” he noted.

The industry claims that ethanol produced in Europe has 64% GHG higher savings compared to petrol, which is equivalent to the annual GHG emissions of 4 million cars.

In apolicy paper, the industry calls the Commission’s proposal “counteractive” and says that it risks missing the EU 2030 climate and energy goals, leaving a shortfall of approximately 10% from what is needed.

Policy confusion

Tory MEP Julie Girling [ECR], who hosted the event, expressed her concerns regarding the European Commission’s proposed policy framework.

“I worry about the confusion policy backdrop,” the British MEP noted, adding that EU lawmakers should focus on science.

“Renewable energy use in transport requires a serious and sensible grip on what can be achieved […] to change the policy rules for biofuels – not once, not twice, but three times – doesn’t strike me as a sensible way forward,” she emphasised.

Electric vehicles

Dr Paul Deane of the Environmental Research Institute, University College Cork, noted that transport was responsible for about 1/3 of the energy that we consume in Europe and about ¼ of our emissions.

“It’s the only sector that emissions are on increase across Europe and this is worrying,” he said, adding that a lot of member states have a lot of ground to cover and many others will not meet their binding 10% goal by 2020.

For Dr Deane, this slow progress could be attributed to the fact that bioenergy policies have been one of the most volatile policy areas in Europe. “The political uncertainty around the policy has stalled a lot of investments,” he emphasised.

Another reason, according to Deane, is that the original renewable directive’s “hopes” for advanced biofuels were not met over the last few years, primarily due to costs, the collapse of the oil market and political instability, which has contributed to the lack of investment in a number of projects.

Referring to electric vehicles, he said that they would play an important role in delivering emissions’ reductions for passenger cars from now to 2050. However, their impact in the short to medium term is “small or ineligible”.

“Modelling by the Commission shows electricity in road transport reaching between 1%-3% (of energy in transport) by 2030 and up to 20% by 2050. The same modelling shows liquid biofuels meeting 36% of energy in transport in 2050,” he explained, stressing that their expensive technology will be faced with a difficult commercial landscape.

More common sense

Deane also emphasised that we should not forget biofuels.

“Biofuels that demonstrate proven emission reductions and low indirect land use change (iLUC) should play a role in decarbonizing transport in Europe,” he said, adding that there was a need for a more common sense approach of energy in transport, where “policies encourage the correct type of biofuels that deliver significant emissions’ reductions and policies that discourage biofuels which don’t”.

He noted that bioenergy was a wide family of fuels, and that the challenge to EU lawmakers is to develop a policy that is clear and makes distinctions between the different families of biofuels.

Deane also criticised the perception of science in EU policy, saying that one should not be picky.

“Policy should be science-based and evidence-driven. In Europe, we either accept the science or we don’t,” he concluded.

No information on employment

Bernd Kuepker, policy officer with DG Energy, explained the executive’s rationale behind the proposed plan and noted that member states might set a lower limit and distinguish between different types of biofuels, for instance, by setting a lower limit for the contribution from food or crop-based biofuels produced from oil crops, taking into account iLUC.

But, he stressed that there was a difference between the ethanol from crop-based starch and advanced biofuels, which have low or negative estimates for iLUC.

“On the contrary, [crop-based starch] has clearly positive and really significant iLUC and will not be able to achieve the savings that the Commission aims at,” the EU official said.

Another important angle is the risk for job losses, where the industry believes that the Commission’s plan will lead to the permanent loss of 133,000 direct and indirect rural jobs.

Asked by EurActiv.com whether the Juncker Commission has conducted an employment impact study of the case, Kuepker said that there was none in place.

“We looked at different factors and generally what has been considered is that the highest share of jobs is in the agricultural sector and we don’t expect it to stop,” he stated, adding that with the plans for advanced biofuels, job losses related to first generation biofuels will be compensated.

“So, it’s certainly not a policy whose main objective is to create jobs, but the proposal will not decrease the employment rates either,” he concluded.

POSITIONS

Dr. Carlo Hamelinck, an energy expert at Ecofys consultancy, said that sustainable biofuels are essential for sustainable transport and noted that it was remarkable that the Commission decided to limit them as without biofuels, more cropland is abandoned and a decline of EU agricultural sector is expected.

He explained that conventional biodiesel feedstocks had typically large ILUC impact due to the loss of soil organic carbon in grass and forest land contrary to the conventional ethanol and advanced fuels, which both have a lower ILUC impact thanks to the lack of connection to palm oil.

Source: www.euractiv.com


waste reform: from environmental disaster to economic opportunity


 wasteee

MEPs have the chance to unlock over 800,000 jobs by improving waste management and waste prevention across the EU. If they support progressive waste reform, the benefits will be huge for citizens, businesses and governments, writes Piotr Barczak.

Piotr Barczak is waste policy officer at the European Environmental Bureau.

On 24 January, the European Parliament’s environment committee will vote on the pending legislative proposals on the 2015 Waste Package put forward by the European Commission.

The Waste Package is the main set of legislation accompanying the Circular Economy strategy, which aims to support the transition towards a more sustainable and stronger economy by expanding recycling, reuse and repair.

However, the package has been widely criticised by campaigners and progressive businesses. Despite the announcement by European Commission Vice-President Frans Timmermans that the 2015 Circular Economy Package would be more ambitious than the 2014 proposal, the targets for recycling and reducing landfill waste are weaker. The plan also fails to adequately address waste prevention by repair and reuse, and lacks a legal framework that incentivises prevention.

MEP Simona Bonafè, Rapporteur for the Waste Directive from the Socialists & Democrats group, put forward a new set of proposals in June last year outlining the importance of having stronger targets. In her report, which will be put to a vote on 24 January, she proposes to increase recycling targets for municipal solid waste from the current 65% proposed by the Commission to 70% by 2030. The suggested amendments also include the implementation of an 80% target for the recycling of packaging waste.

An ambitious Waste Package would provide a unique opportunity for EU decision-makers to put Europe back on track towards economic recovery. The European Commission’s own impact assessmentestimated the targets put forward by Bonafè would unlock 580,000 jobs by 2030, as well as €72 billion a year in savings for businesses benefiting from greater resource security. But figures for job creation could go up to 867,000if, on top of the 70% recycling target, the executive adopted better policies for reuse – especially with regards to furniture and textiles.

In addition, a more effective combination of waste management and prevention policies would bring member states closer to achieving their climate change targets by cutting down between 146 and 244 million tonnes of greenhouse gas emissions by 2020.

These proposals are badly needed. Today we are far from reaping the full benefits of a circular economy. In Europe, we still burn or bury 50% of the waste we produce, destroying valuable resources that are often imported from overseas at a high price. This outdated model of a linear economy has made member states heavily dependent on imports at the expense of competitiveness for European industries.

It is for this reason that much more is expected from the MEPs gathering in Brussels on 24 January. Legally binding targets for waste prevention are needed just as much as higher recycling targets for waste management. Member states are currently exempt from any legal obligation on food wasteand marine litter, despite their commitment to introducing reduction targets under the Sustainable Development Goals. Such political targets need to be legally anchored to the Waste Package in order to make governments accountable and avoid empty promises.

Furthermore, MEPs should reconsider the time derogations for recycling targets that are granted to certain underperforming member states. This is primarily in the interests of such countries, which would risk being left even further behind. Member states should instead be incentivised to generate less waste by receiving more adequate recycling targets based on their level of waste generation. This way, prevention would be rewarded, rather than wastefulness.

As waste generation becomes increasingly costly from both an economic and environmental perspective, MEPs are called to support a swift and ambitious transition to the circular economy. The benefits are well known – it’s now down to EU decision-makers to put in place the measures necessary to close the loop.

Source: www.euractiv.com


pro-europeans call for more erasmus funding


 

As Erasmus turns 30, politicians and teachers have called for a massive increase to the programme’s funding. Hugely popular and undeniably successful, Erasmus is currently accessible to just 7% of young people.

“€17 billion out of a €1 trillion budget is not enough for this important tool of citizenship,” said Harlem Désir, the French minister of European Affairs. Like the majority of the participants at the 30th anniversary celebrations in Paris last monday, Désir believes the success of the Erasmus programme is a clear case for more funding.

The anniversary event brought together teachers, students and politicians, including the French ministers of education, labour and European affairs, as well as Italian Europe minister Sandro Gozi and French European Commissioner Pierre Moscovici.

Erasmus has changed a great deal since its modest beginnings as a student exchange programme three decades ago. Since then, a total of five million people have taken part, including 600,000 from France. And the number is accelerating.

Currently, 35,000 French secondary school and university students, as well as 16,000 apprentices, take part in Erasmus each year, according to the ministry of education.

“We often hear politicians saying they will extend Erasmus to apprentices, but this has already been done,” said Education Minister Najat Vallaud-Belkacem.

The next objective, which is not due to be completed until 2020, is to extend the programme to people in professional training.

100% satisfaction

The Erasmus budget was increased by 40% for the period 2014-2020. But while reaches just 7% of all 18-25 year-olds, three quarters would like to benefit from the scheme, given the opportunity.

And with good reason: 100% of Erasmus students recommend the programme.

For Italian minister Gozi, himself a former Erasmus student at the Sorbonne in Paris, the programme’s resources should be massively increased. “With a budget of €150bn, we would have ten times more exchanges,” the minister said, before being brought down to earth by Commissioner Moscovici.

“The problem is that the European budget represents less than 1% of the GDP of the member states. This is not enough, by a long way,” the Commissioner for economic and financial affairs said.

“We spend 40% of the EU budget on agriculture, 40% on structural funds, whose effectiveness is questionable, and too little on human capital and research,” he added, in a call for a rethink of the EU’s budgetary priorities post-2020.

The political challenges related to the programme were only tentatively raised. “Education should play a role in citizenship education, in learning the freedom of expression,” said Vallaud-Belkacem.

She mentioned the terrorist attack carried out against Charlie Hebdo in Paris two years ago, after which EU education ministers tried to establish a European citizenship programme.

“At a time when some people want education to be purely national and mobility to be reserved for the elite, we should highlight the benefits of the EU,” the minister added.

But the strongest message of support for the European dream came from Naliaa Vakulenko, a young Ukrainian Erasmus student on exchange at the University of Amiens, who took part in the Euromaidan demonstrations in 2014.

“We fought for the right to become part of the EU. Many of us died, very young people gave their lives to change the world,” the young woman said. She encouraged participants in the Erasmus programme to realise their dreams.

“We are living in a time when certain people like to say that enlargement was a bad thing and that it should stop. My father was of Romanian origin and my mother Polish. Europe has to be an open society. We have to do this cultural groundwork to establish what Europe really is so that it remains a reality,” said Moscovici.

BACKGROUND

Built on the foundations of pilot student exchanges between 1981 and 1986, the Erasmus programme was adopted on 15 June 1987 by the Education Council. At the time, the programme only involved 12 countries: Germany, Belgium, Denmark, Spain, France, Greece, Ireland, Italy, the Netherlands, Portugal and the United Kingdom.

In the 1987-88 academic year, Erasmus allowed 3,244 students to study abroad.

Over the last 30 years, the programme has given more than five million people, including 3.3 million students, the chance to travel and live abroad. In the 1990s the programme was exclusively for students, but the more recent Erasmus+ programme is aimed at a more varied audience: primary, secondary and professional school pupils, apprentices, job-seekers, students, young volunteers, education and training professionals, youths and sports clubs.

Since 2014, the Erasmus+ programme has brought together 33 participant countries and 169 partner countries around the world.

Source: www.euractiv.com

Address: Charles Martel 54, 1000 Brussels, Belgium                e-mail: info@eu-about.eu                  Telephone: +322 2682002