Europe needs policies to halt coal, not more debate on targets

Now that the EU 2030 climate package has landed, Europe should turn its attention to policy, not re-run the targets debate

By Stephen Tindale

The European Council has accepted the proposals from the European Commission for a -40% greenhouse gas target, a 27% renewables target and a 27% energy efficiency target.

As well as the numbers, the council accepted the commission’s suggestion that the greenhouse gas target should be legally binding and divided up between member states, the renewable energy target should be legally-binding but only at EU level, and the energy efficiency target should be indicative.

Poland and other central and eastern European countries got more flexibility and more money – an entirely just and sensible concession by western Europe which got rich by burning coal.

Initial reactions have been entirely predictable. Outgoing climate action commissioner Connie Hedegaard hailed an “important and ambitious step forward”. Brook Riley of Friends of the Earth Europe claimed that the deal “does nothing to end Europe’s dependency on fossil fuels or to speed up our transition to a clean energy future”.

ANALYSIS: EU 2030 climate package holds key to global deal

As usual, an accurate assessment lies somewhere between what the politicians and the NGOs say.

Hedegaard is right that the agreement is important. Failure to agree at EU-level would have derailed international climate negotiations.

The UNFCCC talks should focus more on money and less on targets, so the financial agreements may prove more significant in the long run than the framework itself.

Hedegaard is wrong, though, to say this is an ambitious step forward. A 40% reduction level is not as high as is needed, and 27% for renewables and energy efficiency and renewables are not as much as either could contribute to climate mitigation, or indeed to energy security.

Clean energy

Friends of the Earth is wrong to say that the agreement does nothing for clean energy. To give one example, the council agreed to increase the revenue from auctioning emissions allowances which will go towards renewable and carbon capture and storage projects.

But an EU-wide “binding” target for renewables is pretty meaningless. If the target is not met, what is the commission expected to do? Take itself to court? Take the council to court?

The commission will probably use the target as a reason to push for greater control of member state renewable energy policy. An EU-wide renewable energy support scheme might be a desirable outcome (provided it had different levels of support for different technologies in different countries), but will never happen.

National governments will not give up control of a form of indirect taxation any time soon. And the arguments about changing the support schemes will cause more regulatory instability, so increasing the cost of capital. The commission should drop its centralising ambition on this.

Energy efficiency

The 27% energy efficiency target remains indicative. It will be reviewed in 2020 “having in mind an EU level of 30%”.

Whether this means a binding EU-level 30% target, a binding target divided between member-states or just a slightly higher indicative target could take many years of debate. And probably will.

Politicians love targets – particularly “not in my term of office” (NIMTO) ones. NGOs love targets – easier to run a campaign around a number than around several complex policy issues. Journalists love targets for similar reasons.

So, now that a review of the energy efficiency target has been set for 2020 (and the greenhouse gas target will also be reviewed in the light of what the UNFCCC agrees, or doesn’t agree, in Paris next December), the debate about whether the 2030 framework could dominate the entire fiver-year period of the Jean-Claude Juncker’s incoming commission.

This would be an enormous waste of time and money. More importantly, it would mean that practical ways of reducing carbon emissions and protecting the climate between now and 2030 were overlooked.

Policy proposals

The commission and NGOs should focus instead on policies. Here are my three suggestions:

1. Coal subsidies. The EU, Germany, the UK, France agreed at the 2009 G20 summit to phase out inefficient fossil fuels subsidies. Not much has been done since. Indeed, the commission has just given state-aid clearance to the UK to give more subsidies to coal power stations as part of its capacity market. The commission should reverse this decision. If it does not, NGOs should fund a legal challenge. Coal is an inefficient way to back up intermittent renewables, so this is clearly an inefficient fossil fuel subsidy.
2. Combined heat and power. The commission proposed, in its draft energy efficiency directive, that most new power stations should also generate heat. The council rejected this, on the grounds that not all new power stations have any potential heat customers in the vicinity. To which the logical answer is: don’t build them in those places. The Juncker commission should propose this rule again, as soon as it takes office.
3. NGOs should launch a Europe-wide campaign for an emissions performance standard. Europe should follow Obama’s lead and introduce one not only for new coal plants (as the UK already has) but also for existing coal.

We Europeans like to claim that we are leading the debate on climate policy. Indeed José Manuel Barroso, the outgoing commission president, did so again today.

“No player in the world is as ambitious as the European Union when it comes to cutting greenhouse gas emissions,” he said.

The polite description of this is that it is nonsense. The Chinese and Americans are ahead of us on renewable deployment; the US is ahead of us on carbon regulation; Japan is ahead of most of us on energy efficiency.

Europe needs to catch up, by implementing policies now rather than discussing targets for 16 years time.

Stephen Tindale is associate fellow at the Centre for European Reform